UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-QSB




(Mark
One)




x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934




For the
quarter ended May
31, 2008




o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934




For the
transition period from _____________ to ____________




Commission
File Number:









SEW
CAL LOGO, INC.


(Exact
name of Registrant as specified in charter)








Nevada
            46-0495298(State or other
      jurisdiction of
              incorporation or
      organization)
            (I.R.S.
      Employer I.D. No.)




207 W. 138th Street, Los Angeles, California
90061


(Address
of principal executive offices) (Zip Code)




Issuer's
telephone number, including area code: (310)
352-3300




Check
whether the Issuer (1) has filed all reports required to be filed by section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.




Yes xNo o




State the
number of shares outstanding of each of the Issuer's classes of common equity as
of the latest practicable date: At May 31, 2008, there were 89,291,535shares of the registrant's Common Stock outstanding and 300,000 shares of
Series A Preferred Stock outstanding.






1




Index
              Page
      NumberPART
      I
              FINANCIAL
      INFORMATION
              3ITEM
      1.
              Financial
      Statements
              3Report
      of Independent Registered Public Accountant
              4Consolidated
      Balance Sheets as of May 31,
      2008 (Unaudited) and August 31, 2007
              5Consolidated
      Statements of Operations (Unaudited) for the nine and
      three months ended May 31, 2008 and 2007
              6Consolidated
      Statements of Stockholders' Equity (Unaudited) cumulative from August
      31, 2005 to May 31, 2008
              7Consolidated
      Statements of Cash Flows (Unaudited) for the nine and three
      months ended May 31, 2008 and 2007
              8Notes
      to Financial Statements
              9ITEM
      2.
              Management's
      Discussion and Analysis of Continuing and Future Plan of
      Operations
              16ITEM
      3.
              Controls
      and Procedures
              18PART
      II
              OTHER
      INFORMATION
              18ITEM
      1.
              Legal
      Proceedings
              18ITEM
      2.
              Changes
      in Securities
              18ITEM
      3.
              Defaults
      Upon Senior Securities
              18ITEM
      4.
              Submission
      of Matters to Vote of Security Holders
              18ITEM
      5.
              Other
      Information
              18ITEM
      6.
              Exhibits
              19SIGNATURES
              
              19
  2




PART
I




ITEM
1. FINANCIAL STATEMENTS




The
financial statements included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. However, in the opinion of management, all
adjustments (which include only normal recurring accruals) necessary to present
fairly the financial position and results of operations for the periods
presented have been made. The results for interim periods are not necessarily
indicative of trends or of results to be expected for the full year. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's most recent registration statement
on Form SB-2 as amended.








3






MOORE
& ASSOCIATES, CHARTERED






ACCOUNTANTS AND
ADVISORS




PCAOB
REGISTERED





REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


Sew Cal
Logo, Inc.








We have
reviewed the accompanying condensed consolidated balance sheet of Sew Cal Logo,
Inc. as of May 31, 2008, and the related statements of operations, stockholders’
equity (deficit), and cash flows for the nine-month and three-month periods
ended May 31, 2008 and May 31, 2007. These interim financial statements are the
responsibility of the Corporation’s management.





We
conducted our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  A review of interim
financial information consists of principally applying analytical procedures and
making inquiries of persons responsible for the financials and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we
do not express such an opinion.





Based on
our reviews, we are not aware of any material modifications that should be made
to such condensed consolidated financial statements for them to be in conformity
with accounting principles generally accepted in the United States of
America.





We have
previously audited, in accordance with standards of the Public Company
Accounting Oversight Board (United States), the balance sheet of Sew Cal Logo,
Inc. as of August 31, 2007, and the related consolidated statements of income,
stockholders’ equity and cash flows for the year then ended (not presented
herein); and in our report dated November 29, 2007, we expressed a qualified
opinion with a going concern paragraph on those financial
statements.  In our opinion, the information set forth in the
accompanying balance sheet as of May 31, 2008 is fairly stated, in all material
respects, in relations to the balance sheet from which it has been
derived.





/s/
Moore & Associates, Chartered


Moore
& Associates, Chartered


Las
Vegas, Nevada


July 14,
2008




2675 S. JONES BLVD. SUITE 109, LAS VEGAS, NEVADA 89146
(702) 253-7499 Fax: (702)253-7501








4




SEW
      CAL LOGO, INC.BALANCE
      SHEETS(Unaudited)August
      31,May
      31,
              
              
              20072008
              
              
              (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
              
              $
              30,881
              
              
              $
              155,704Accounts
      Receivable, net
              
              
              175,190
              
              
              
              141,361Inventory
              
              
              80,215
              
              
              
              96,875Security
      Deposits
              
              
              2,200
              
              
              
              6,000Prepaid
      Expenses
              
              
              6,000
              
              
              
              3,800Total
      current assets
              
              
              294,486
              
              
              
              403,740Equipment
      and machinery, net
              
              
              160,767
              
              
              
              217,266Other
      assets
              
              
              -
              
              
              
              -Total
      assets
              
              $
              455,253
              
              
              $
              621,006LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
              
              $
              61,229
              
              
              $
              53,317Note
      Payable-shareholder
              
              
              353,884
              
              
              
              347,884Other
      current liabilities
              
              
              309,982
              
              
              
              252,630Current
      Poriton of Long Term Debt
              
              
              176,402
              
              
              
              227,659Total
      current liabilities
              
              
              901,497
              
              
              
              881,490Long-term
      liabilitiesNote
      Payable-related party
              
              
              30,454
              
              
              
              46,019Convertible
      Debentures
              
              
              2,655,975
              
              
              
              2,331,517Discount
      on Convertible Debentures
              
              
              (646,899
              )
              
              
              (646,899
              )Equipment
      Loans
              
              
              10,201
              
              
              
              11,851Total
      liabilities
              
              
              2,951,228
              
              
              
              2,623,978Stockholders'
      Equity (Deficit)Preferred
      stock, authorized 300,000 shares,Par
      value $0.001, issued and outstanding at11/30/07
      and 8/31/07 is 300,000 respectively
              
              
              300
              
              
              
              300Common
      stock, authorized 500,000,000 shares,$0.001
      par value,  issued and outstanding at2/29/08
      and 8/31/07 is 44,175,535 and 34,080,702shares
      respectively.
              
              
              89,292
              
              
              
              34,081Additional
      Paid in Capital
              
              
              4,165,008
              
              
              
              4,154,977Stock
      Subscribed
              
              
              -
              
              
              
              -Accumulated
      Deficit
              
              
              (6,750,575
              )
              
              
              (6,192,330
              )Total
      stockholders' equity (deficit)
              
              
              (2,495,975
              )
              
              
              (2,002,972
              )Total
      liabilities and stockholders' equity
              
              $
              455,253
              
              
              $
              621,006The
      accompanying notes are an integral part of these
  statements





5




SEW
      CAL LOGO, INC.STATEMENTS OF
      OPERATIONS(Unaudited)Nine
      Months Ended
              
              
              Three
      Months EndedMay
      31,
              
              
              May
      31,
              
              
              May
      31,
              
              
              May
      31,2008
              
              
              2007
              
              
              2008
              
              
              2007Revenue:Sales
      of Caps, Embroidery and Other
              
              $
              1,440,119
              
              
              $
              1,511,255
              
              
              $
              436,484
              
              
              $
              497,355Total
      Revenue
              
              
              1,440,119
              
              
              
              1,511,255
              
              
              
              436,484
              
              
              
              497,355Cost
      of Goods Sold
              
              
              1,340,481
              
              
              
              1,413,501
              
              
              
              415,813
              
              
              
              497,961Gross
      profit
              
              
              99,638
              
              
              
              97,754
              
              
              
              20,671
              
              
              
              (606
              )Expenses:General
      and Administrative
              
              
              236,705
              
              
              
              310,938
              
              
              
              76,136
              
              
              
              147,260Officer
      and Administrative Compensation
              
              
              139,719
              
              
              
              284,535
              
              
              
              47,812
              
              
              
              83,269Consulting,
      Legal and Accounting
              
              
              130,000
              
              
              
              160,754
              
              
              
              36,242
              
              
              
              53,285Depreciation
              
              
              56,499
              
              
              
              60,638
              
              
              
              18,790
              
              
              
              18,854Rent
              
              
              36,000
              
              
              
              152,000
              
              
              
              12,000
              
              
              
              12,000Total
      expenses
              
              
              598,923
              
              
              
              968,865
              
              
              
              190,980
              
              
              
              314,668Loss
      from Operations
              
              
              (499,285
              )
              
              
              (871,111
              )
              
              
              (170,309
              )
              
              
              (315,274
              )Other
      Income (Expenses)Interest
      (Expense)
              
              
              58,960
              
              
              
              1,005,814
              
              
              
              21,114
              
              
              
              330,563Total
      other expenses
              
              
              58,960
              
              
              
              1,005,814
              
              
              
              21,114
              
              
              
              330,563Loss
      before income taxes
              
              
              (558,245
              )
              
              
              (1,876,925
              )
              
              
              (191,423
              )
              
              
              (645,837
              )Provision
      for income taxes
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Net
      loss
              
              $
              (558,245
              )
              
              $
              (1,876,925
              )
              
              $
              (191,423
              )
              
              $
              (645,837
              )Basic
      and Diluted Earnings (Loss) per Share
              
              $
              (0.02
              )
              
              $
              (0.12
              )
              
              $
              (0.01
              )
              
              $
              (0.04
              )Weighted
      Average Number of Common Shares
              
              
              27,595,484
              
              
              
              15,248,849
              
              
              
              27,595,484
              
              
              
              15,248,849The
      accompanying notes are an integral part of these
  statements






6




SEW
      CAL LOGO, INC.STATEMENTS OF STOCKHOLDERS'
      EQUITY(Unaudited)Additional
            
            
            
            
            
            
            
            
            TotalPreferred
      Stock
            
            
            Common
      Stock
            
            
            Paid
      in
            
            
            Stock
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Shares
            
            
            Amount
            
            
            Capital
            
            
            Subscribed
            
            
            (Deficit)
            
            
            EquityBalance,
      August 31, 2005
            
            
            234,800
            
            
            $
            235
            
            
            
            5,176,168
            
            
            $
            5,176
            
            
            $
            187,517
            
            
            $
            36,000
            
            
            $
            (673,814
            )
            
            $
            (444,886
            )Shares
      issued for Servicesat
      $0.15 per share
            
            
            
            
            
            
            
            
            
            
            50,000
            
            
            
            50
            
            
            
            7,450
            
            
            
            
            
            
            
            
            
            
            
            7,500Fair
      Value of Warrants attached toConvertible
      Debentures
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,081,657
            
            
            
            
            
            
            
            
            
            
            
            1,081,657Beneficial
      Conversion Feature attached toConvertible
      Debentures
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,500,000
            
            
            
            
            
            
            
            
            
            
            
            2,500,000Shares
      issued for Servicesat
      $0.10 per share
            
            
            
            
            
            
            
            
            
            
            33,334
            
            
            
            33
            
            
            
            3,300
            
            
            
            
            
            
            
            
            
            
            
            3,333Shares
      issued for Conversion of Debt
            
            
            
            
            
            
            
            
            
            
            290,000
            
            
            
            290
            
            
            
            32,741
            
            
            
            
            
            
            
            
            
            
            
            33,031Net
      Loss for Year
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,947,833
            )
            
            
            (2,947,833
            )Balance,
      August 31, 2006
            
            
            234,800
            
            
            
            235
            
            
            
            5,549,502
            
            
            
            5,549
            
            
            
            3,812,665
            
            
            
            36,000
            
            
            
            (3,621,647
            )
            
            
            232,802Preferred
      Shares issued for Services
            
            
            65,200
            
            
            
            65
            
            
            
            
            
            
            
            
            
            
            
            1,891
            
            
            
            
            
            
            
            
            
            
            
            1,956Common
      Stock Issued for Cash
            
            
            
            
            
            
            
            
            
            
            61,000
            
            
            
            61
            
            
            
            60,939
            
            
            
            (36,000
            )
            
            
            
            
            
            
            25,000Shares
      issued for Services
            
            
            
            
            
            
            
            
            
            
            3,500,200
            
            
            
            3,501
            
            
            
            214,000
            
            
            
            
            
            
            
            
            
            
            
            217,501Shares
      issued for Conversion of Debt
            
            
            
            
            
            
            
            
            
            
            24,970,000
            
            
            
            24,970
            
            
            
            65,482
            
            
            
            
            
            
            
            
            
            
            
            90,452Net
      Income (Loss) for period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,570,683
            )
            
            
            (2,570,683
            )Balance,
      August 31, 2007
            
            
            300,000
            
            
            
            300
            
            
            
            34,080,702
            
            
            
            34,081
            
            
            
            4,154,977
            
            
            
            -
            
            
            
            (6,192,330
            )
            
            
            (2,002,972
            )Shares
      issued for Services
            
            
            
            
            
            
            
            
            
            
            9,150,000
            
            
            
            9,150
            
            
            
            36,600
            
            
            
            
            
            
            
            
            
            
            
            45,750Shares
      issued for Conversion of Debt
            
            
            
            
            
            
            
            
            
            
            744,833
            
            
            
            745
            
            
            
            292
            
            
            
            
            
            
            
            
            
            
            
            1,037Shares
      issued for Conversion of Debt
            
            
            
            
            
            
            
            
            
            
            200,000
            
            
            
            200
            
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            200Shares
      issued for Services
            
            
            
            
            
            
            
            
            
            
            17,200,000
            
            
            
            17,200
            
            
            
            (8,450
            )
            
            
            
            
            
            
            
            
            
            
            8,750Shares
      issued for Conversion of Debt
            
            
            
            
            
            
            
            
            
            
            27,916,000
            
            
            
            27,916
            
            
            
            (18,411
            )
            
            
            
            
            
            
            
            
            
            
            9,505Net
      Income (Loss) for period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (558,245
            )
            
            
            (558,245
            )Balance,
      May 31, 2008
            
            
            300,000
            
            
            
            300
            
            
            
            89,291,535
            
            
            
            89,292
            
            
            
            4,165,008
            
            
            
            -
            
            
            
            (6,750,575
            )
            
            
            (2,495,975
            )The
      accompanying notes are an integral part of these
  statements






7




SEW CAL
LOGO, INC.




STATEMENTS
OF CASH FLOWS


(Unaudited)






Nine
      Months Ended
              
              
              Three
      Months EndedMay
      31,
              
              
              May
      31,
              
              
              May
      31,
              
              
              May
      31,2008
              
              
              2007
              
              
              2008
              
              
              2007Operating
      Activities:Net
      income (loss)
              
              $
              (558,245
              )
              
              $
              (1,876,925
              )
              
              $
              (191,423
              )
              
              $
              (645,837
              )Adjustments
      to reconcile net income (loss)Depreciation
              
              
              56,499
              
              
              
              60,638
              
              
              
              18,790
              
              
              
              18,854Stock
      issued for services
              
              
              54,500
              
              
              
              84,017
              
              
              
              8,750
              
              
              
              78,157Stock
      issued to convert debt
              
              
              10,742
              
              
              
              131,512
              
              
              
              9,505
              
              
              
              -Amortization
      of Discount on Debentures
              
              
              -
              
              
              
              925,113
              
              
              
              -
              
              
              
              310,471Changes
      in Assets and Liabilities(Increase)
      decrease in prepaid expenses
              
              
              (2,200
              )
              
              
              (5,581
              )
              
              
              -
              
              
              
              4,309(Increase)
      decrease in inventory
              
              
              16,660
              
              
              
              8,595
              
              
              
              (1,320
              )
              
              
              7,902(Increase)
      decrease in security deposits
              
              
              3,800
              
              
              
              -
              
              
              
              -
              
              
              
              -(Increase)
      decrease in accounts receivable
              
              
              (33,829
              )
              
              
              105,810
              
              
              
              (33,231
              )
              
              
              4,165Increase
      (decrease) in accounts payable
              
              
              7,912
              
              
              
              (23,993
              )
              
              
              (20,775
              )
              
              
              (23,875
              )Increase
      (decrease) in other current liabilities
              
              
              (99,948
              )
              
              
              49,223
              
              
              
              (264,613
              )
              
              
              (31,267
              )Net
      cash provided by (used in) operating activities
              
              
              (544,109
              )
              
              
              (541,591
              )
              
              
              (474,317
              )
              
              
              (277,121
              )Investing
      Activities:(Purchases)
      disposal of equipment
              
              
              -
              
              
              
              (6,700
              )
              
              
              -
              
              
              
              8,299Cash
      (used) in investing activities
              
              
              -
              
              
              
              (6,700
              )
              
              
              -
              
              
              
              8,299Financing
      Activities:Notes
      Payable
              
              
              90,478
              
              
              
              -
              
              
              
              152,047Debentures
      Payable
              
              
              324,458
              
              
              
              -
              
              
              
              325,495
              
              
              
              (62,238
              )Stock
      Subscription
              
              
              -
              
              
              
              (36,000
              )
              
              
              -
              
              
              
              -Stock
      Sales
              
              
              -
              
              
              
              61,000
              
              
              
              -
              
              
              
              25,000Increase/(Decrease)
      in shareholder loan
              
              
              6,000
              
              
              
              -
              
              
              
              -
              
              
              
              -Repayment
      of loans
              
              
              -
              
              
              
              (214,755
              )
              
              
              -
              
              
              
              (4,998
              )Proceeds
      from equipment loan
              
              
              (1,650
              )
              
              
              -
              
              
              
              (768
              )
              
              
              (11,543
              )Net
      cash provided by (used in) financing activities
              
              
              419,286
              
              
              
              (189,755
              )
              
              
              476,774
              
              
              
              (53,779
              )Net
      increase (decrease) in cash and cash equivalents
              
              
              (124,823
              )
              
              
              (738,046
              )
              
              
              2,457
              
              
              
              (322,601
              )Cash
      and cash equivalents at beginning of the period
              
              
              155,704
              
              
              
              988,251
              
              
              
              28,424
              
              
              
              572,806Cash
      and cash equivalents at end of the period
              
              $
              30,881
              
              
              $
              250,205
              
              
              $
              30,881
              
              
              $
              250,205Cash
      Paid For:Interest
              
              $
              58,960
              
              
              $
              22,192
              
              
              $
              21,114
              
              
              $
              22,192Taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Non
      Cash Activities:Depreciation
              
              $
              56,499
              
              
              $
              60,638
              
              
              $
              3,118
              
              
              $
              18,854Stock
      issued for services
              
              $
              54,500
              
              
              $
              84,017
              
              
              $
              200
              
              
              $
              78,157Warrants
      issued for convertible debt
              
              $
              10,742
              
              
              $
              131,512
              
              
              $
              -
              
              
              $
              -Amortization
      of Discount on Debentures
              
              $
              -
              
              
              $
              925,113
              
              
              $
              -
              
              
              $
              310,471The
      accompanying notes are an integral part of these
  statements





8
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)


NOTE
1. Summary of Significant Accounting Policies





The
Company





C J
Industries was incorporated in the State of California on August 30, 1985 and
changed its name to Southern California Logo, Inc (the Company). The Company
transacts business as Sew Cal Logo.





On
February 24, 2004 the Company merged with Calvert Corporation, a Nevada
Corporation.  This was a recapitalization accounted for as a stock
exchange transaction (reverse merger).  Calvert also changed its name
to Sew Cal Logo, Inc.  See Note 9 for more details of this
merger.





The
Company is located in Los Angeles, California.  The Company produces
and manufactures custom embroidered caps, sportswear and related corporate
identification apparel.  The Company provides an in-house,
full-service custom design center where original artwork and logo reproduction
for embroidery are available.  The Company also offers contract
embroidery and silk-screening to the manufacturing and promotional
industry.  The Company’s products are sold, primarily in the United
States, to Fortune 500 companies, major motion picture and television studios,
retailers, and local schools and small businesses.





Use
of Estimates





The
financial statements have been prepared in conformity with accounting principles
generally accepted in the United States, which require management to make
estimates, and assumptions that affect the reported amounts of assets and
liabilities (including disclosure of contingent assets and liabilities) at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ
from those estimates.





Accounts
Receivable





The
Company’s trade accounts receivable and allowance for doubtful accounts are
shown below.






5/31/08
            
            
            8/31/07Gross Trade Accounts
      Receivable
            
            $
            176,959
            
            
            $
            142,798Allowance for
      Doubtful Accounts
            
            
            (1,769
            )
            
            
            (1,428
            )Accounts Receivable,
      net
            
            $
            175,190
            
            
            $
            141,361




Revenue
Recognition





The
Company recognizes revenue from product sales upon shipment, which is the point
in time when risk of loss is transferred to the customer, net of estimated
returns and allowances.





Cash
and Cash equivalents





The
Company maintains cash deposits in banks and in financial institutions located
in southern California.  Deposits in banks are insured up to $100,000
by the Federal Deposit Insurance Corporation (“FDIC”).  The Company
has not experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash deposits.




Inventory





Inventory
is stated at the lower of cost (first-in, first-out method) or market and
consists of raw material, work-in-process and finished
goods.  Normally the Company ships out to the customer the finished
goods as soon as they are produced and therefore usually does not maintain a
finished goods inventory.  Overhead items are applied on a standard
cost basis to work in process and finished goods.






5/31/08
            
            
            8/31/07Raw Materials and
      WIP
            
            $
            80,215
            
            
            $
            96,875Finished
    Goods
            
            
            -
            
            
            
            -Total
      Inventory
            
            $
            78,895
            
            
            $
            96,875




9
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE 1. Summary of
Significant Accounting Policies-
continued




Equipment
and Machinery





Equipment
and machinery are stated at cost.  Depreciation is computed using the
straight-line method over their estimated useful lives ranging from five to
seven years.  Depreciation and amortization expense for the fiscal
years ended August 31, 2007 and 2006 amounted to $79,493 and $81,430
respectively.  Gains from losses on sales and disposals are included
in the statements of operations.  Maintenance and repairs are charged
to expense as incurred.  As of February 29, 2008 and August 31, 2007
equipment and machinery consisted of the following:






5/31/08
            
            
            8/31/07Equipment and
      Machinery
            
            $
            942,890
            
            
            $
            968,644Less:Accumulated
      depreciation
            
            
            (782,123
            )
            
            
            (678,586
            )$
            160,767
            
            
            $
            290,058




Fiscal
Year





The
Company operates on a fiscal year basis with a year ending August
31.





Earnings
and Loss Per Share Information





Basic net
earnings (loss) per common share is computed by dividing net earnings (loss)
applicable to common shareholders by the weighted-average number of common
shares outstanding during the period.





Segment
Reporting





Pursuant
to Statement of Financial Accounting Standards No. 131 (“SFAS No. 131”),
“Disclosure about Segments of an Enterprise and Related Information,” the
Company has determined it operated in only one segment.







NOTE
2.  Going Concern





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the liquidation of liabilities in the normal course of
business.  However, the Company has accumulated a loss $6,361,287
during its years of operation.  This raises substantial doubt about
the Company’s ability to continue as a going concern.  The financial
statements do not include any adjustments that might result from this
uncertainty.





Managements
Plan





Management
continues to seek funding from its shareholders and other qualified investors to
pursue its business plan.  It is in the process of expanding its sales
and distribution capability.




NOTE
3.  Accounts Payable and Other Current Liabilities





As of the
period ends shown, accounts payable and accrued liabilities consisted of the
following:






5/31/08
            
            
            8/31/07Trade accounts
      payable
            
            $
            61,229
            
            
            $
            53,317Sales tax
      payable
            
            $
            3,802
            
            
            $
            2,443Short Term Loan –
      Related Party
            
            
            157,300
            
            
            
            86,600Payroll
      Liabilities
            
            
            22,334
            
            
            
            31,389Credit Card
      Debt
            
            
            20,110
            
            
            
            32,778Revolving bank line
      of credit (Prime + 3.8 %, interest payable monthly), Principal due upon
      maturity on 7/1/07 unless renewed by bank, secured by accounts
      receivable
            
            
            106,436
            
            
            
            99,420-
            
            
            
            -$
            309,982
            
            
            $
            252,630




10
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE
4.  Note Payable- Related Party





On March
1, 2003, for purposes of working capital, the sole shareholder and spouse made a
$355,384 subordinated loan to the Company.  The Company is obligated
to pay monthly interest only on the subordinated loan during its term at the
rate of 10% per annum (fixed-rate calculated as simple interest).  The
entire principal amount of the loan was originally due on March 1, 2004, and has
continued from that time on a month-to-month basis.  The subordinated
loan, which was consented to by United Commercial Bank and subsequent banks, is
collateralized by the assets of the Company, including but not limited to any
and all equipment owned by the Company, inventory, and outstanding
receivables.  The balance due at May 31, 2008 is
$353,884.





On April
4, 2005 a shareholder loaned the company $100,000 on a five year monthly
installment loan at 5% per annum for the purchase equipment.  Balance
of loan as of  May 31,, 2008 is $30,454.








NOTE
5. Commitments and Contingencies





Long-Term
Debt





On March
25, 2002 the Company entered into an agreement with United Commercial Bank for a
$515,000 SBA loan.  For the years ending August 31, 2003 and 2002, the
unpaid principal balance of the loan was $462,100 and $500,313
respectively.  The monthly required payment varied with an annual
interest rate of 6.75% and a maturity date of March 1, 2012.  This
loan related to the purchase of equipment.





On August
11, 2004 the Company refinanced this SBA loan with Pacific Liberty
Bank.  As of May 31, 2008 the balance was $176,402.  Monthly
payments are made the 15th of each
month with interest at prime plus 2.5.  Currently the interest rate is
9.5%.  This loan is collateralized by the assets of the corporation
and is in first place before the shareholder loan.





On April
16, 2003 the Company entered an installment sale contract with GMAC for the
purchase of a vehicle.  The total amount financed at signing was
$40,754 that represents the total sale price.  The agreement requires
60 monthly payments of approximately $679 beginning on May 16, 2003 and ending
on April 16, 2008.  This Loan has been paid off.





The
Company has a second installment loan with GMAC on a vehicle with a balance as
of May 31, 2008 of $10,201.





Lease
Commitments




The
Company leases warehouse and office facilities under an operating lease
requiring the Company to pay property taxes and utilities.  In July
2004 this building was purchased by a related party (a corporation controlled by
the officers) and the lease was re-written for 5 years.  Lease expense
is currently $12,500 per month.





The lease
obligation is shown below for the next five years.






Year
    1
            
            
            Year
    2
            
            
            Year
    3
            
            
            Year
    4
            
            
            Year
    5Office
      /warehouse lease
            
            $
            150,000
            
            
            $
            150,000
            
            
            $
            150,000
            
            
            $
            150,000
            
            
            $
            150,000




Callable
Convertible Debentures





On
February 16, 2006 the Company executed an equity financing agreement wherein it
will issue an aggregate of $2,000,000 callable convertible debentures in three
segments.  The Company has received a net of
$1,955,000.  The debentures are convertible to common stock at 45%
below the lowest three intra-day trading price during the 20 trading days
immediately preceding conversion.





The
Debentures also carry five-year warrants exercisable at $0.50 per
share.  The aggregate number of warrants to be issued is 2,142,855.
The Company has recorded an expense of $585,343 for the fair value of the
warrants. The value was determined using the Black-Scholes pricing model and
assumes a 5 year maturity, a risk free interest rate of 4.85% and a volatility
of 207%.





The
Company has recorded a discount on the convertible debentures of $2,000,000
which represents the beneficial conversion feature.  During the years
ended August 31, 2007 and 2006 the Company converted $90,452 and $33,031 debt
into stock, respectively.  During the years ended August 31, 2007 and
2006 the Company expensed $983,485 and $565,752 of the recorded discount as
interest expense, respectively.  The Company will amortize the
remaining discount over the remaining life of the debentures. The discount was
determined using the Black-Scholes pricing model and assumes a 2 year maturity,
a risk free interest rate of 4.85% and a volatility of 207%.




11
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE 5. Commitments and
Contingencies-
continued




On July
31, 2006 the Company executed an equity financing agreement wherein it has
issued $500,000 in callable convertible debentures and 20,000,000 seven year
warrants exercisable at $0.05 per share.  The debentures are
convertible to common stock at 40% below the lowest three intra-day trading
price during the 20 trading days immediately preceding
conversion.  The aggregate number of shares to possibly be issued at
100% conversion is 69,444,444 shares.  Calculated using a current 3
day trading average price per share of $0.012 per share less 40% is $0.0072 per
share divided into $500,000 equals 69,444,444 shares.





During
the year ended August 31, 2006, the Company recorded an expense of $496,314 for
the fair value of the warrants. The value was determined using the Black-Scholes
pricing model and assumes a 5 year maturity, a risk free interest rate of 4.85%
and a volatility of 207%.





The
Company recorded a discount on the convertible debentures of $500,000 which
represents the beneficial conversion feature and is amortized to interest
expense over the 2 year life of the debentures. The Company recorded an expense
of $ 250,000 and $20,833 respectively for the years ended August 31, 2007 and
2006. The discount was determined using the Black-Scholes pricing model and
assumes a 2 year maturity, a risk free interest rate of 4.85% and a volatility
of 207%.







NOTE
6.  Stockholders’ Equity





Preferred
Stock





The
Company (post merger) is authorized to issue three hundred thousand (300,000)
shares of series A preferred stock at a par value of $0.001.  The
preferred stock is convertible to common stock at one share of preferred for
every 100 shares of common.  The preferred shares can only be
converted when the Company reaches $10,000,000 in sales for any fiscal
year.  As of August 31, 2004 there were 234,800 shares of preferred
stock.  The value was placed at par.  The conversion to
common stock would be 23,480,000 shares.  Based upon the actual growth
for the last two years, the $10,000,000 in sales will not be reached within five
years.  Therefore, these shares are not considered in calculating the
loss per share.


During
the quarter ended May 31, 2007 the Company issued 65,200 preferred shares for
services to key employees for services.





Common
Stock





On August
25, 2006 the Company’s authorization to issued common stock was increased from
50,000,000 shares to 500,000,000 shares at par value of $0.001





As of
August 31, 2004 (post merger) the Company had 5,020,000 common shares issued and
outstanding. The Company’s financial statements have been restated to reflect
the recapitalization on a retroactive basis.





In May
2005 the Company purchased equipment valued at $114,100 for 33,334 common share
and issued 122,834 common shares for services valued at $12,283.





As of 31
May 2005 the Company had received from investors $36,000 in investment funds for
which restricted common shares will be issued.  The exact number of
shares has not yet been determined.





On
January 6, 2006 the Company issued 50,000 common shares for services valued at
$7,500.





On February 16, 2006 the Company
entered into a securities purchase agreement for a total subscription amount of
$2,000,000 that includes stock purchase warrants and callable convertible
debentures.  A discount on convertible debentures was recorded as
additional paid in capital of $2,000,000 for the beneficial conversion feature
which is being amortized over the life of the debentures.  The total
subscription includes an aggregate of 2,142,858 five-year warrants exercisable
for the same number of common shares at $0.50 per share.An
aggregate of 25,974,026 common shares have been registered and are available for
issue to potentially convert the full $2,000,000.





On July
31, 2006 the Company issued $500,000 in convertible debentures which are
convertible to shares of the Company’s common stock at a 40% discount to the
market price at the time of conversion.  A discount on convertible
debentures was recorded as additional paid in capital of $500,000 for the
beneficial conversion feature which is being amortized over the life of the
debentures.  Common stock registered to convert the full $500,000 was
calculated at 69,444,444 shares using the current three day average price per
share of $0.012 less a 40% discount.




12
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE
6.  Stockholders’ Equity-
continued




On May
31, 2006 the Company issued 290,000 common shares by converting $33,031 of
debenture debt and issued 33,334 common shares for consulting services valued at
$3,333.





The
Company issued 61,000 common shares for cash of $25,000 and the subscription
deposit of $36,000 received in May 2005 in a private placement.





During
the Year ended August 31, 2007 the Company issued 3,500,200 common shares for
various services valued at $217,501 including 2,750,000 common shares in
settlement of a finders fee dispute valued at $200,000.  The Company
converted $90,452 debenture debt by issuing 24,970,000 common
shares.





During
the three months ended November 30, 2007 the Company issued 9,150,000 common
shares for various services valued at $45,750.  The Company converted
$1,037 debenture debt by issuing 744,833 common shares.





During
the three months ended February 29, 2008 the Company converted $200 debenture
debt using 200,000 common shares.





During
the three months ended March 31, 2008 the Company converted $9,505 debenture
debt by issuing 27,916,000 commons shares and issued 17,200,000 common shares
for $8,750 services.





Warrants


With the
$1,955,000 worth of convertible debentures described above 2,000,000 five-year
warrants for commons stock exercisable at $0.50 per share were issued and with
the $500,000 convertible debentures 20,000,000 seven-year warrants for common
shares exercisable at $0.05 per share were issued.  Both exercisable
prices are “out of the money” therefore no discount has been
recorded.







NOTE
7.  Interest Expense





Interest
expense for the nine months ended March 31, 2008 and the year ended August 31,
2007 is $58,960 and $1,309,263 respectively.







NOTE
8.  Income Taxes





The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.





SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.  In the
Company’s opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total
deferred tax asset is calculated by multiplying a 15% estimated tax rate by the
items making up the deferred tax account.  For the Company only the
Net Operating Loss (NOL) was available for a tax asset.





The
provision for income taxes is comprised of the net changes in deferred taxes
less the valuation account plus the current taxes payable.





At August
31, 2006, federal income tax net operating loss carry forwards (“NOL’s”) which
were available to the Company were the following with the year in which they
expire.




Year (8/31)
            
            Amount
            
            Expires1996
            
            $
            2,104
            
            20111997
            
            
            9,265
            
            20121998
            
            
            26,317
            
            20131999
            
            
            21,074
            
            20192000
            
            
            50,619
            
            20202001
            
            
            21,675
            
            20202002
            
            
            319,424
            
            20222003
            
            
            45,381
            
            20232005
            
            
            105,366
            
            20252006
            
            
            2,947,833
            
            20262007
            
            
            2,570,683
            
            2027Total
            
            $
            6,119,741




Were the
NOL tax asset to be recorded at 8/31/07 it would be a long-term asset of
$917,961.  Continued profitability by the Company will be a major
factor in the valuation account being removed and the recording of this
asset.


13
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE
9.  Merger with Calvert





On
February 24, 2004 the Company merged with Calvert Corporation, an inactive
Nevada Corporation.  This was a recapitalization accounted for as a
stock exchange reverse acquisition with Calvert being the surviving legal entity
and Southern California becoming the surviving historical
entity.  Before the merger Southern California had 100 shares of
common stock issued and outstanding that were owned by a single
shareholder.  As part of the merger Calvert issued to this
shareholder 189,800 shares of series A preferred stock and 3,000,000 shares of
common stock in exchange for all the shares (100) of Southern
California.  These share totals have been retroactively applied to
previous years.





As part
of the merger 45,000 shares of preferred stock and 1,500,000 shares of common
stock were issued for services rendered.  A value of $1,545 was placed
upon these shares.





Calvert
had a zero book value prior to the merger and is shown as the acquired company
on the statement of stockholders’ equity with 520,000 shares outstanding prior
to the merger.





After the
completion of the merger the Company had 5,020,000 shares of common stock and
234,800 shares of series A preferred stock.







NOTE  10.  The
Effect of Recently Issued Accounting Standards





Below is
a listing of the most recent Statement of Financial
Accounting Standards (SFAS) SFAS 155-160 and 141 (revised 2007) and their
effect on the Company.





Statement
No. 155 –Accounting
for Certain Hybrid Financial Instruments




In
February 2006, the FASB issued SFAS No. 155,Accounting
for Certain Hybrid Financial Instruments, which amends SFAS No. 133,
Accounting for Derivatives
Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities.  SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.  SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.




Statement
No. 156 –Accounting
for Servicing of Financial Assets




In March
2006, the FASB issued SFAS No. 156,Accounting
for Servicing of Financial Assets, which provides an approach to simplify
efforts to obtain hedge-like (offset) accounting.  This Statement
amends FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. The Statement (1) requires an entity to recognize a
servicing asset or servicing liability each time it undertakes an obligation to
service a financial asset by entering into a servicing contract in certain
situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.




Statement
No. 157 – Fair Value
Measurements




In
September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements, to clarify how to measure fair value and to expand
disclosures about fair value measurements.  The expanded disclosures
include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.




Statement No. 158 –Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R)




In
September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R).To improve financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions.




Statement No. 159 –The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115




In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115.This Statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions.  This Statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments.




14
 SEW
CAL LOGO, INC.
 NOTES
TO UNAUDITED FINANCIAL STATEMENTS
 (May
31, 2008 and August 31, 2007)




NOTE  10.  The
Effect of Recently Issued Accounting Standards-
continued




Statement No. 141 (revised 2007) –Business
Combinations




In
December 2007, the FASB revised SFAS No. 141, Business
Combinations.This revision changes the way the minority
interest in a company is measured, recorded and reported in the parent companies
financial statements to the end that a statement user can better evaluate the
nature and financial effects of the business combination.




Statement No. 160 –Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No. 51




In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements—an amendment of ARB No.
51.A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. The objective of this Statement is to improve the
relevance, comparability, and transparency of the financial information that a
reporting entity provides in its consolidated financial statements related to
the noncontrolling or minority interest.




The
adoption of these new Statements is not expected to have a material effect on
the Company’s current financial position, results or operations, or cash
flows.







NOTE  11. 
Restated Financial Statements




The
Company’s financial statements for the year ended August 31, 2006 have been
restated to reflect the beneficial conversion feature and the warrants attached
to the convertible debt issued during 2006. A summary of the effect of the
restatements is as follows:




Balance
Sheet:




Discount
on Convertible Debentures






Original
            
            $
            485,014As
      Restated
            
            
            1,880,384




Additional
Paid in Capital






Original
            
            $
            746,008As
      Restated
            
            
            3,812,665




Accumulated
Deficit




Original
            
            $
            1,950,360As
      Restated
            
            
            3,621,647


Statement of
Operations:





Warrant
Expense




Original
            
            $
            -As
      Restated
            
            
            1,081,657




Interest
Expense




Original
            
            $
            126,810As
      restated
            
            
            716,440




15
  ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONTINUING AND FUTURE PLAN OF
OPERATIONS.


FORWARD
LOOKING STATEMENTS





This
analysis should be read in conjunction with the condensed consolidated financial
statements, the notes thereto, and the financial statements and notes thereto
included in the Company's Registration Statement on Form SB-2, as amended,
initially filed on March 20, 2004. All non-historical information contained in
this annual report is a forward-looking statement. The forward-looking
statements contained herein are subject to certain risks and uncertainties that
could cause the actual results to differ materially from those reflected in the
forward-looking statements.


Results
of Operations


Total
revenue was $436,484 for the quarter ended may 31, 2008 as compared to $497,355for the quarter ended May 31, 2007, a net decrease of
$60,871.  The net decrease is a result of our continued effort to
replace non-profitable with profitable business. Also, overall losses as a
percentage of sales continue to decline. This can be attributed directly to both
internal restructuring and to our significant investment in the research and
development of our new surf based brand. Our line of merchandise is continuing
to be  developed and advertising and promotional campaigns are
initiated and underway.   Officer and Administrative Compensation
was $47,812 for the
quarter ended May 31, 2008 as compared to$83,269for the
quarter ended May 31, 2007, a net decrease of $35,457.  The net
decrease is due to the continued restructuring and streamlining of management
responsibilities, helping facilitate more focused company direction and the
anticipated resulting profitability.  Total Assets were $$455,253at May 31, 2008 as compared to $621,006at August 31, 2007, a net decrease of $165,753.  The net
decrease was primarily due to cash used for development expenses and reduction
of inventory.


Plan
of Operation





We
continue promoting and marketing the Pipeline Posse product line, a recognized
name in the world of surf and action sports. Our intent  remains the
manufacturing, selling and distributing of our own lines of surf wear and to
promote this and other lines of goods in appropriate trade journals and other
media as they are developed, expanded and distributed. Our first full length
movie (surf video) – “Pipeline Posse – Project One” is now for sale in surf
shops nationwide as well as available on the website:
pipelineposse.com.  Ads have been placed in major surf publications as
well as on selected internet websites and the video trailers are available for
viewing in our website video section.  Private label business is
beginning to return in spite of the continuing competition with aggressively
marketed inexpensive overseas manufacturing. We continue to advocate the value
of “Made in the USA” products and this is having some effect on new business as
well as the return of previous customers. Our unique ability to respond to
client needs for fast delivery also adds to our value as a domestic producer of
quality goods. Should we be able to perpetuate and expand this trend we will add
to our existing staff to support expansion and growth of both our private label
business and entertainment business now that the writer’s strike has ended and
remain cautiously optimistic on both issues.


Private
Labeling
 
 Domestic
headwear suppliers have been drastically reduced as a result of increased lower
pieced imports. Suppliers remaining in this business each have their own niche
in the market place. Few remain in California and our customer base is
increasing somewhat with this reduced competition. There are U.S. suppliers
located in the Midwest and on the East Coast. They seldom manufacture for our
market and deal mainly in the golf, major league baseball and ad specialty-type
businesses.
 
 Overseas
suppliers are a different situation. They can produce a cap at a fraction of the
price we can and we are constantly in competition with them. They can copy all
that we create, but if they are asked to create on their own, they may fall
short, as our industry is constantly changing by way of fabrics, styles, and
method of decorating. Overseas suppliers are in the business of mass production
for export. Our current customers use overseas suppliers for some of their
"bread and butter" styles but tend to use U.S. suppliers for the more cutting
edge products. However, overseas manufacturers require considerably more time in
creating new products because of their inability to provide face-to-face contact
with designers and domestic customers. They also require greater lead times for
shipping and cannot make changes overnight (literally) when required. The
logistics also may not allow them to be immediately aware of developing trends,
forecasting them, and then developing an appropriate finished product
instantly.


At
present, the youth oriented "action sports" lifestyle-clothing market
(surf/skate/snow) is led by labels such as "Quiksilver" of Huntington Beach,
California, representing in excess of $1 billion in annual sales. Also, "O'Neill
Sportswear", "Rip Curl", "Lost", "Billabong", "Volcom", and numerous other
Orange County, California-based clothing companies service this market and can
be considered competition for our new brands. We believe that teens and young
adults are looking for something new and trendy to identify with, purchase, and
wear.
 
 Although
we believe we now have the experience and resources to take advantage of and
fulfill the needs of this market and we have already made significant steps
towards doing so, the youth, active and sports apparel industry is highly
competitive, with many of our competitors having greater name recognition and
resources than we do. Many of our competitors are well established, have
longer-standing relationships with customers and suppliers, greater name
recognition and greater financial, technical and marketing resources. As a
result, these competitors may be able to respond more quickly and effectively
than we can to new or changing opportunities or customer requirements. Existing
or future competitors may develop or offer products that provide price, service,
number or other advantages over those we intend to offer. If we fail to compete
successfully against current or future competitors with respect to these or
other factors, our business, financial condition, and results of operations may
be materially and adversely affected.
 
 We
currently have no market share data available for competition in these areas. We
work on each job through personal contacts and are frequently the only company
contacted for the particular project.
 
 We do not
depend on any one or a few major customers.
  16
  ITEM 2. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF CONTINUING AND FUTURE PLAN OF OPERATIONS.-
continued
  Patents,
Trademarks, Franchises, Concessions, Royalty Agreements, or Labor
Contracts
 
 We
recently applied to the USTPO for the trademark “Pipeline Posse” in several
categories. Each of our applications is active and currently under review for
approval by the USPTO examiners We will continue to assess the need for any
copyright, trademark or patent applications on an ongoing basis. Any
applications approved yet?
 
 Film
Wardrobe & Entertainment Related Business
 
 Film
wardrobe and related business remains slow as productions continue to be
produced outside the United States.  This holds true for nearly all of
the major studios as well as independent filmmakers, causing the majority of the
local costume houses to downsize.
 
 To
counter this trend and help regain our lost dollar volume in this area we will
continue our existing strategy of marketing directly to movie and television
productions before they begin filming locally and send units out of town on
location.  Our strategy of dealing directly with producers, wardrobe
personnel, and talent is beginning to pay off with recent orders from major
films such as “Superman Returns” and the recently released “American Gangster”
starring Denzel Washington and Russell Crowe. Any new movies or TV programs to
add?
 
 Corporate
Sales
 
 While
corporate clients currently account for less than fifteen percent (15%) of our
business, we continue to focus on growing this area of our business over the
next year with the addition of in-house salespeople. Also, the addition of new
silk screening equipment has given us the capability to accept and produce large
orders of promotional t-shirts and related items for corporate programs through
outside sales and advertising organizations. Our salespeople are now attempting
to solicit business to our existing client base via telephone and Internet as
well as to potential new customers through the same means as well as through
print advertising via mailing and placement in trade publications. We are
committed to making this new division profitable and more qualified labor has
been retained to operate the new equipment as needed.   Second
and third manufacturing shifts can be added as growth requires. We have assigned
two in-house clerical persons to service new inquiries and added accounts, as
well as order finished goods for embellishment and shipping. Current production
capacity is adequate to handle the anticipated increased volume.  No
other major capital expenditures are anticipated at this time.
 
 Development
of new Product Lines
 
 We have
identified and developed an opportunity to export the California life style to
the rest of America and to the worldwide markets in general. Started as an idea
born in San Clemente, California, home of the premier surfing beaches in the
world, we have created a number of California Driven brands of
products.
  Under the
California Driven umbrella, several lines are being developed with specific
target markets in mind. Currently, several California Driven products are being
developed by us but they do not represent any significant amount of our current
overall revenue. The California Driven brand lines are being developed as an
expansion into our own line of products to market and sell.





The first
identified brand line is Pipeline PosseTM.Three trademarks have been
applied for and are under active review for approval by the USPTO. We have completed
initial design of a line of surf wear under the Pipeline PosseTM logo and have
manufactured  lifestyle oriented goods to begin a sales and marketing
campaign. The exclusive rights for  Pipeline PosseTM were acquired on
August 15, 2005  from Braden Dias of Hawaii.  Mr. Dias is a
world renowned surfer and is under agreement with us to represent Pipeline Posse
as a professional athlete in the development of Surf and Sportswear
lines.  In addition to Mr. Dias, several additional professional
Hawaiian surfers are currently under agreement to represent the project and 3
support people have been hired, both in Hawaii and
California.  Clothing design is being aggressively developed by both
in-house personnel and professional independent contractors experienced in
product development for the Action Sports Industry.
 
 Contact
with our target market has been initially established in several major surf
publications  through personal interviews with our athletes as well as
editorials on The Pipeline Posse itself.  Print and on-line
advertising campaigns have commenced in both industry related magazines and
websites.  We have also published and activated PIPELINEPOSSE.COM, our
website which features up to date information on the athletes, activities, photo
and video galleries, an active news blog, related action sports links, and a
fully developed online store.  The secure site and shopping capability
has been recently activated to accept credit cards and offer shipment of
merchandise worldwide.  A multi- faceted major advertising and
marketing campaign is being budgeted and developed for the end of 2008 and
professional sales organizations are being interviewed and considered for
representation and distribution of the brand both domestically and
worldwide.
  Additional
Action Sport related brands are being considered and are in various stages of
development in regard to trademarks, competition, market potential, and strategy
and cost.  Target dates for launch have not been yet
established.




This Form
10-QSB includes forward looking statements concerning the future operations of
the Company. This statement is for the express purpose of availing the Company
of the protections of such safe harbor with respect to all forward looking
statements contained in this Form 10-QSB. We have used forward looking
statements to discuss future plans and strategies of the Company. Management's
ability to predict results or the effect of future plans is inherently
uncertain. Factors that could affect results include, without limitation,
competitive factors, general economic conditions, customer relations,
relationships with vendors, the interest rate environment, governmental
regulation and supervision, seasonality, distribution networks, product
introductions, acceptance, technological change, changes in industry practices
and one-time events. These factors should be considered when evaluating the
forward looking statements and undue reliance should not be placed on such
statements. Should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described herein.




17




ITEM
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONTINUING AND FUTURE PLAN OF
OPERATIONS.-
continued




Critical
Accounting Policies


Sew
Cal’s financial statements and related public financial information are based on
the application of accounting principles generally accepted in the United States
("GAAP"). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
  Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact its financial
condition and results of operations, Sew Cal's views certain of these policies
as critical. Policies determined to be critical are those policies that have the
most significant impact on Sew Cal's consolidated financial statements and
require management to use a greater degree of judgment and estimates. Actual
results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other
reasonable judgments or estimate methodologies would cause effect on our
consolidated results of operations, financial position or liquidity for the
periods presented in this report. During the next twelve months, we expect to
take the following steps in connection with the further development of our
business and the implementation of our plan of operations.




ITEM
3. CONTROLS AND PROCEDURES


Our
management, under the supervision and with the participation of our Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the
effectiveness of our disclosure controls and procedures as defined in Securities
and Exchange Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of
the period covered by this report.  Based upon that evaluation,
management  has concluded that our  disclosure  controls 
and  procedures  are  effective  to ensure  that
information  we are required to disclose in reports that we file or submit
under the Securities Exchange Act is communicated to management, including the
CEO and CFO, as appropriate to allow timely decisions  regarding required
disclosure and is  recorded,  processed,  summarized 
and  reported  within the time periods specified in the SEC’s rules
and forms.




There
were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the Third quarter 2008 that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.







PART
II - OTHER INFORMATION




ITEM
1. LEGAL PROCEEDINGS




Naranjo
v. Sew Cal Logo Inc., CaliforniaCase
No. BC368353


Case has
been settled in a manner satisfactory to both parties and no other legal issues
are pending.






ITEM
2. CHANGES IN SECURITIES




None






ITEM
3. DEFAULTS UPON SENIOR SECURITIES




None.






ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None.






ITEM
5. OTHER INFORMATION




None





18




ITEM
6. EXHIBITS AND REPORTS ON FORM 8-K




(a)
EXHIBITS






31.1
            Certification of the Chief Executive Officer
      Pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
            Certification of the Chief Financial Officer
      Pursuant to Section 302 of the
      Sarbanes-Oxley Act32.1
            Certification of the Chief Executive Officer
      Pursuant to Section 906 of the
      Sarbanes-Oxley Act32.2
            Certification of the Chief Financial Officer
      Pursuant to Section 906 of the
      Sarbanes-Oxley Act




(b)
REPORTS ON FORM 8-K




None










SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




Date:
      July 15, 2008
              By:
              /s/  
      Richard SongerRichard
      SongerPresident,
      Director and ChiefExecutive
      Officer






Date:
      July 15, 2008
              By:
              /s/ Judy
      SongerJudy
      SongerDirector
      and ChiefFinancial
      Officer
















19