**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20429





FORM
      10-KSB





x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT
                OF 1934





For
      the
      fiscal year ended December 31, 2007.





Commission
      file number: 333-142516





SOUTHERN
      BELLA, INC.


(Exact
      name of small business issuer as specified in its charter)




Delaware
            
            20-8602410(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                employer identification no.)





1006
                Delaware AvenueLexington,
                Kentucky
            
            40505-0464(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer’s
      telephone number (859) 231-0464





Securities
      registered pursuant to Section 12(b) of the Exchange Act:





Title
                of Each Class
            Name
                of Exchange on Which RegisteredCommon
                stock, par value $0.000001 per share
            None





Securities
      to be registered under Section 12(g) of the Exchange Act: None





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Check
      whether the issuer (1) filed all reports required to be filed by section 13
      or
      15(d) of the Securities 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. x
      Yes     o  No




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.  o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


o
      Yes     x  No





Issuer's
      revenues for the period from February 22, 2007 (inception) through December
      31,
      2007: $965,413





The
      aggregate market value of the voting stock held by non-affiliates as of April
      1,
      2008, was approximately $50,000. The value is based on the sales price of the
      common stock purchase in the private placement during 2007. There have been
      so
      sales of the common stock since the initial purchase by the non-affiliates
      in
      the private placement. For purposes of this computation only, all executive
      officers, directors, and beneficial owners of more than 10% of the outstanding
      Common Stock, are assumed to be affiliates.





The
      number of shares outstanding of the issuer's Common Stock on March 31, 2008
      was
      8,666,667.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





None





Transitional
      Small Business Disclosure Format (Check one): o Yes     x  No







**Southern
      Bella, Inc.**


**FORM
      10-KSB**


**TABLE
      OF CONTENTS**




Page
                No.**PART
                I**Item
                1.
            Description
                of Business
            
            1Item
                2.
            Description
                of Property
            
            6Item
                3.
            Legal
                Proceedings
            
            6Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            
            6**PART
                II**Item
                5.
            Market
                for Common Equity and Related Stockholder Matters and Small Business
                Issuer Purchases of Equity Securities
            
            7Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            8Item
                7.
            Financial
                Statements
            
            13Item
                8.
            Changes
                in and Disagreements With Accountants on Accounting and Financial
                Disclosure
            
            28Item
                8A.
            Controls
                and Procedures
            
            29Item
                8B.
            Other
                Information
            
            30**PART
                III**Item
                9.
            Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance with Section 16(a) of the Exchange Act
            
            31Item
                10.
            Executive
                Compensation
            
            32Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters.
            
            33Item
                12.
            Certain
                Relationships and Related Transactions
            
            34Item
                13.
            Exhibits.
            
            34Item
                14.
            Principal
                Accountant Fees and Services
            
            35Signatures
            
            36




i


**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





Overview





Southern
      Bella, Inc. was incorporated in Delaware on February 22, 2007. Southern Bella,
      Inc. was organized to acquire catering companies throughout the United States.
      The first catering company acquired by Southern Bella, Inc. was Dupree Catering,
      Inc. (“Dupree”). Dupree is a Kentucky corporation, formed on October 28, 1991.
      As a result of the closing of a share purchase agreement on March 1, 2007,
      with
      the sole shareholder of Dupree, Dupree is now the wholly-owned subsidiary of
      Southern Bella, Inc. The price paid by Southern Bella, Inc. to acquire all
      of
      the shares of stock of Dupree was $110,000.





Southern
      Bella Inc.’s address is 1006 Delaware Avenue, Lexington, Kentucky 40505-0464,
      and its telephone number is 859.231.0464.




Business





Through
      Dupree, a Kentucky corporation, our wholly-owned subsidiary, we engage in the
      catering business. Southern Bella seeks to acquire other catering businesses
      throughout the United States. Southern Bella currently does not have any
      agreements and is not currently in negotiations with any other catering
      businesses to acquire such businesses.




*Service.* Dupree
      commenced its catering business in 1991. Dupree caters both public and
      private events, including cocktail parties, wedding receptions, rehearsal
      dinners, company picnics, events requiring kosher catering, corporate luncheons
      and galas. As an added service, Dupree helps its customers to locate a facility
      for the event and to decorate the facility should the need arise by the
      customer. Dupree also provides tables, chairs, linens, tableware, flowers,
      centerpieces and complete bar service.




Dupree
      has serviced events honoring U. S. Presidents, governors, European royalty,
      and
      movie stars. In addition, Dupree has been featured in many publications,
      including The Lane Report, the Lexington Herald-Leader, Keeneland Magazine,
      Design Magazine, and ACE Magazine, which has given Dupree its Best of Lexington
      Award.




*Pricing
      Strategy* .
      The
      services provided by Dupree are priced to earn a profit of approximately ten
      percent (10%) on every event. **




Markets
      We Serve




Dupree
      primarily provides catering services in Central Kentucky. Dupree’s target market
      consists of companies of all sizes and high net worth individuals in the Central
      Kentucky Market. Southern Bella seeks to acquire other catering businesses
      throughout the United States to expand its market outside Central
      Kentucky.




Dupree
      currently operates in the city of Lexington, Kentucky. Lexington is the second
      largest city in the Commonwealth, with a population of 275,000. Lexington is
      home to the University of Kentucky, Keeneland Racetrack, and numerous horse
      farms. The Lexington region serves as a health care, retail, and cultural center
      for both Central and Eastern Kentucky.




The
      economy in Lexington, Kentucky is generally healthy. The thoroughbred horse
      business, which accounts for approximately 20% of Dupree’s sales, has grown over
      the last two years. Alltech Biotechnology Company, has pledged $10 million
      to be
      the main sponsor of the FEI World Equestrian Event which will be held in
      Lexington, Kentucky in 2010. Dupree has catered several events for Alltech
      in
      connection with its sponsorship of the FEI World Equestrian Event including
      a
      dinner on March 16, 2007, for 150 individuals at Alltech, an event on March
      13,
      2007, and an event with the Mayor on March 20, 2007. Because Alltech is a
      current customer of Dupree, Dupree believes that it will be requested to cater
      Alltech’s corporate tent during the FEI World Equestrian Event. At this time,
      Dupree does not have any contracts to cater functions in connection with the
      FEI
      World Equestrian Event.









The
      University of Kentucky is the largest employer in Central Kentucky. In June,
      2007, Dupree catered a seated dinner for 900 guests in celebration of the
      University of Kentucky’s groundbreaking of a new $700 million hospital. As a
      result of Dupree’s success at this dinner, Dupree has booked and catered
      additional events for the University of Kentucky, including two events for
      the
      University of Kentucky College of Medicine in June, 2007, an event for the
      University of Kentucky College of Health Sciences on August 31, 2007, an event
      for the University of Kentucky Gastroenterology and Nutrition Department on
      September 8, 2007, a fundraiser for the University of Kentucky College of Music
      on September 29, 2007, and an event for the University of Kentucky Neurosurgery
      department on December 7, 2007. Dupree received approximately $6,800 in revenues
      from the two events held in June, 2007, and received approximately $22,400
      in
      additional revenue from the events to be held in August, September and
      December.




Dupree
      has expanded its services into the Louisville market. For nine days preceding
      and including Kentucky Derby Day, Dupree catered breakfast and lunch each day
      for hundreds of guests in a tent on the Churchill Downs property hosted by
      an
      equine pharmaceutical company. Dupree has also catered the J.B. Speed Museum
      Gala Dinner in Louisville.




Marketing **




While
      every successful event that Dupree caters is its best advertising, Dupree felt
      that additional advertising was essential to attract those customers who were
      not aware of its services. Beginning in the fall of 2006, Dupree commenced
      an
      advertising campaign which included:




·
            print
                advertising in regional
                publications




·
            direct
                mailing of hand-signed letters to existing customers;
                and




·
            participation
                in charity events.




Dupree
      currently advertises in Kentucky Homes and Gardens and Keeneland magazines.
      Dupree participates in the Taste of the Blue Grass, vendor shows and donates
      its
      services to auctions for charity events.




Customers




In
      addition to catering public events, Dupree has catered numerous special events
      for private customers. Approximately twenty percent (20%) of the events that
      Dupree caters are in connection with the thoroughbred horse business in Central
      Kentucky. The following is a list of the public events that Dupree has serviced
      over the years:




·
            Alltech
                Biotechnology Symposium


Seated
                dinner for 1600 guests. May, 2007




2




·
            OCD
                Equine Breakfast


Breakfast
                for 2,700 guests at Churchill Downs. May,
                2007




·
            University
                of Kentucky - Gala for New Hospital
                Groundbreaking


Seated
                Dinner for 900 guests. June, 2007




·
            Fundraiser
                for President George W. Bush





Seated
                Dinner for 400 at Lane's End Farm. June, 2000




·
            Markey
                Cancer Foundation/ The Lexington
                Foundation


The
                Lexington Ball, May, 2005


The
                Lexington Ball, May, 2004


The
                Lexington Ball, May, 2003


The
                Lexington Ball, May, 2000


Seated
                Dinner for 500-700 at Donamire Farm




·
            The
                Kentucky Horse Park Foundation, Lexington, Kentucky




·
            Grand
                Opening Gala Dinner for All the Queen's Horse's Exhibit honoring


Her
                Royal Highness Princess Ann of Great Britain


Seated
                Dinner for 1350 at the Kentucky Horse Park. April, 2003




·
            Grand
                Opening Gala Dinner for The Chinese Exhibit


Seated
                Dinner for 900 at The Kentucky Horse Park. April,
                2000




·
            Thoroughbred
                Owners and Breeder's Association (TOBA)


Lexington,
                Kentucky


TOBA
                Annual Awards Dinner


September
                2006 at Vinery Farm


September
                2004 at Juddmonte Farm for 800


September
                2003 at Walmac Farm for 800


September
                2002 at Winstar Farm for 1300


September
                2001 at Adena Springs Farm for 800


September
                2000 at Vinery for 800


September
                1998 at Northridge Farm for 750




·
            Kentucky
                Educational Television - PBS affiliateLexington,
                Kentucky





·
            Summer
                Celebration: 1993, 1994, 1995, 1999, 2002, 2003, 2004, 2005, 2006Catered
                buffet dinner for 500 - 800 at Keeneland, Pegasus Stud, and Donamire
                Farms





·
            The
                Speed Museum Ball
              J.
                  B. Speed Museum
                Louisville,
                  Kentucky
                Seated
                  Dinner and Dance Buffet for
                  650




3




·
            Bardstown
                Convention and Visitors Bureau
              Bardstown,
                  Kentucky
                Kentucky
                  Bourbon Festival Gala Dinner 2003
                Kentucky
                  Bourbon Festival Gala Dinner 2002
                Kentucky
                  Bourbon Festival Gala Dinner 2001
                Kentucky
                  Bourbon Festival Gala Dinner 1998
                Seated
                  dinner for 1200 guests at My Old Kentucky Home State Park




·
            American
                Life and Accident Insurance Company
              Louisville,
                  Kentucky
                Dinner
                  honoring Her Royal Highness Princess Ann - April 1998
                Catered
                  private dinner for 150 at Elmendorf Farm




·
            Kentucky
                Tourism Council
              Frankfort,
                  Kentucky
                Southern
                  Governor's Conference dinner for 500 including nine Governors
                June,
                  2001




Competition




There
      are
      approximately 30 catering businesses in the Lexington, Kentucky area that
      provide the same type of service and new specialty services that Dupree
      provides. Dupree’s principal competitors are:


·South
                  Van Catering
              
              ·Darae’s
                    Catering·Catering
                by Donna
              
              ·Turf Catering·Seasons
                Catering




Some
      of
      these companies are much larger than Dupree. Dupree’s competitive strength is
      comprised of Harriet Dupree Bradley’s culinary skills and reputation in the
      industry. Harriet Dupree Bradley has spent 21 years owning and operating Dupree.
      She holds an undergraduate degree in fine arts from the University of the South
      in Sewanee, Tennessee. She also has a diploma from Le Cordon Bleu Cooking School
      in London, England. In addition to her experience catering, she has been a
      consultant in the areas of recipe and menu development for a number of
      foodservice enterprises owned by the founder of KFC, Governor John Y. Brown.
      These include Kenny Roger’s Roasters and Chicken by George. Ms. Bradley is the
      founder of a meal assembly franchise called Entrée Vous which currently has 23
      stores in states from coast to coast. She is the acting president of that
      enterprise.




Another
      competitive strength is that Dupree has been in the catering business for over
      15 years. Dupree also provides a full array of services such as (i) providing
      assistance in locating a facility, (ii) decorating the facility, (iii) providing
      tables, chairs, linens, tableware, flowers, and centerpieces, (iv) providing
      a
      full-service bar; some of the catering firms in Kentucky do not provide all
      of
      these services.




Business
      Challenges




The
      main
      challenge foreseen confronting Dupree is that the peak of the demand cycle
      is
      compressed into a relatively short time period from Spring to Autumn. It is
      necessary to lengthen the peak demand cycle to maximize profits. Dupree proposes
      to accomplish this task by focusing business development with companies, local
      universities, and the chamber of commerce in its market to service indoor
      banquets and luncheons during the off peak season of Winter. In addition,
      management of Southern Bella is looking for merger candidates to maximize
      shareholder value. Management has not identified any targets or merger
      candidates at this time.




4




Insurance




Dupree
      carries commercial general liability insurance, including liquor liability
      coverage, as well as automobile liability insurance.




Employees




We
      have
      22 employees. Nine of our employees are full-time and 13 are part-time. We
      have
      two members of management, Viola J. Heitz and Terry Riggleman.




We
      entered into a Consulting Agreement with Harriet Dupree Bradley in connection
      with the acquisition of the shares of Dupree. Ms. Bradley was the sole
      shareholder of Dupree before we acquired all of the shares on March 1, 2007.
      Under the Consulting Agreement, Ms. Bradley will provide consulting services
      to
      us, including, without limitation, management of the staff of Dupree. The term
      of the Consulting Agreement was for a period of seven months ending on September
      30, 2007. In exchange for her consulting services, Ms. Bradley is entitled
      to
      any net income after taxes earned by Dupree. During this seven month period,
      all
      amounts paid to Ms. Bradley for her consulting services were recognized as
      an
      expense. We paid Ms. Bradley for her services at the end of the seven month
      term. This arrangement had a material impact on our net income and liquidity
      during the term of the Consulting Agreement. During this time, we had no income
      and no retained earnings to reinvest in the business or to otherwise distribute
      to shareholders.




On
      August
      29, 2007, we entered into a Consulting Agreement with Harriet Dupree Bradley
      for
      a term commencing on October 1, 2007, and continuing through June 30, 2008.
      Under this Consulting Agreement, we have agreed to pay Ms. Bradley a consulting
      fee to $4,000 a month. Upon expiration of the Consulting Agreement, Ms. Bradley
      will continue to provide consulting services to Southern Bella on a month to
      month basis for the same consideration unless terminated by both Ms. Bradley
      and
      Southern Bella.




Ms.
      Bradley has owned and operated Dupree for 21 years. She holds an undergraduate
      degree in fine arts from the University of the South in Sewanee, Tennessee.
      She
      also has a diploma from Le Cordon Bleu Cooking School in London, England. In
      addition to her experience catering, she has been a consultant in the areas
      of
      recipe and menu development for a number of foodservice enterprises owned by
      the
      founder of KFC, Governor John Y. Brown. These include Kenny Roger’s Roasters and
      Chicken by George. Ms. Bradley is also the founder of a meal assembly franchise
      called Entrée Vous which currently has 23 stores in states from coast to coast.




Ms.
      Bradley is training Eileen McCormick to take over the management of Dupree.
      Ms. McCormick has worked for Dupree for over 12 years as a sales executive
      and event coordinator. Prior to working for Dupree, Ms. McCormick ran her own
      catering business, owned a restaurant called The Inn Between in Lexington,
      and
      was the Executive Chef at the Kentucky Governor’s Mansion from 1981 to 1983. She
      is a graduate of the University of Kentucky and has attended professional
      cooking classes at the French Culinary Institute in New York City. Ms. McCormick
      supervises all day to day operations of Dupree.




5




Dupree
      has recently hired Cooper Vaughan, a native of Lexington, to oversee the
      training of our staff and to elevate the level of service provided by Dupree.
      Mr. Vaughan received a degree from Transylvania University in Hotel and
      Restaurant Management. He continued his education at Le Cordon Bleu Cooking
      School in London, England where he received its Grand Diploma. Upon graduation
      from Le Cordon Bleu Cooking School, Mr. Vaughan worked for the Inn at Blackberry
      Farm in Walland, Tennessee, as the Training Manager for Dining Room Service.
      Mr.
      Vaughan moved to Charlottesville, Virginia to become the Restaurant Manager
      at
      Keswick Hall, a four star restaurant. After returning to Lexington, Kentucky,
      Dupree hired Mr. Vaughan. In addition to overseeing the training of our
      staff, Mr. Vaughan’s duties include Customer Relationship Management and event
      coordinating.




Lucy
      Gardner also recently joined Dupree as a sales assistant and office manager.
      She
      graduated from Transylvania University with a degree in Business Administration
      with an emphasis in Hotel and Restaurant Management and Tourism.




Patents
      and Trademarks




We
      do not
      own, either legally or beneficially any patent or trademarks.





Government
      Supervision and Regulation





The
      services Dupree provides are subject to various federal, state and local laws
      and regulations including regulations relating to the storage, handling and
      preparation of food and to the supplying of alcoholic beverages. We believe
      Dupree is in substantial compliance with applicable laws, regulations and
      guidelines.





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





Southern
      Bella, Inc. is leasing office space consisting of approximately 3,000 square
      feet located at 1006 Delaware Avenue, Lexington, Kentucky 40505 (the “Premises”)
      from Harriet Dupree Bradley pursuant to a Lease Agreement dated March 1, 2007.
      The lease expires on February 28, 2009. Southern Bella, Inc. may terminate
      the
      lease upon 60 days prior written notice after September 1, 2007. In addition,
      Southern Bella, Inc. may extend the term of the lease for one consecutive
      two-year period beginning on March 1, 2009, and ending February 28, 2011. The
      rent under the lease is $1,300 per month during the initial term and $1,400
      per
      month during any extension.




We
      do not
      intend to renovate, improve, or develop properties. We are not subject to
      competitive conditions for property and currently have no property in insure.
      We
      have no policy with respect to investments in real estate or interests in real
      estate and no policy with respect to investments in real estate mortgages.
      Further, we have no policy with respect to investments in securities of or
      interests in persons primarily engaged in real estate activities.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





None





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





None





6


**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





Common
      Stock





We
      are
      authorized to issue 1,000,000,000 shares of common stock with $0.000001 par
      value. As of March 31, 2008, there were 8,666,667 shares of common stock issued
      and outstanding held by 43 shareholders of record.





Market
      Information





We
      are
      not registered on any public stock exchange. There is no established public
      trading market for our securities and a regular trading market may not develop,
      or if developed, may not be sustained. We have no plans, proposals,
      arrangements, or understandings with any person with regard to the development
      of a trading market in any of our securities. There is no guarantee that our
      securities will ever trade on the OTC Bulletin Board or other exchange.





OTC
      Bulletin Board Qualification for Quotation





To
      have
      our shares of common stock on the OTC Bulletin Board, a market maker must file
      an application on our behalf in order to make a market for our common stock.
      We
      have filed an application but not have not received a symbol as of March 31,
      2008.





Dividends





Holders
      of common stock are entitled to receive ratably such dividends, if any, as
      may
      be declared by the Board of Directors out the surplus of Southern Bella, Inc.
      We
      have not paid any dividends since our inception, and we presently anticipate
      that all earnings, if any, will be retained for development of our business.
      There are no restrictions in our Articles of Incorporation or Bylaws that
      prevent us from declaring dividends. Any future disposition of dividends will
      be
      at the discretion of our Board of Directors and will depend upon, among other
      things, our future earnings, operating and financial condition, capital
      requirements, and other factors.





Preferred
      Stock





The
      Company is authorized to issue 20,000,000 shares of preferred stock with a
      par
      value of $0.000001 per share. As of the date of this Annual Report, there are
      no
      preferred shares outstanding.





Preferred
      stock may be issued in series with preferences and designations as the Board
      of
      Directors may from time to time determine. The board may, without shareholders
      approval, issue preferred stock with voting, dividend, liquidation and
      conversion rights that could dilute the voting strength of our common
      shareholders and may assist management in impeding an unfriendly takeover or
      attempted changes in control.





Securities
      Authorized for Issuance under Equity Compensation Plans





We
      do not
      have any compensation plans or arrangement under which equity securities are
      authorized for issuance.





Recent
      Sales of Unregistered Securities





There
      have been no sales of unregistered securities within the last three years which
      would be required to be disclosed pursuant to Item 701 of Regulation S-B, except
      as follows:





(a)  Five
      hundred thousand (500,000) shares of common stock of Southern Bella, Inc. were
      offered and sold in a private placement to accredited investors at a price
      per
      share equal to $0.10. Southern Bella, Inc. stopped accepting subscriptions
      on
      April 6, 2007, and the subscription proceeds were paid out of escrow to Southern
      Bella, Inc. on April 17, 2007. The total offering price for the shares was
      $50,000. The private placement was exempt from registration under Section 4(2)
      of the Securities Act or Rule 506 of Regulation D, promulgated by the SEC.
      In
      the offering, no general solicitation was made by Southern Bella, Inc. or any
      person acting on Southern Bella Inc.’s behalf; the securities were sold subject
      to transfer restrictions, and the certificates for the shares contained an
      appropriate legend stating that such securities have not been registered under
      the Securities Act and may not be offered or sold absent registration or an
      exemption there from. There were no underwriting discounts or commissions.




7





(b)  On
      March
      1, 2007, Dupree and Southern Bella, Inc. entered into a Share Purchase Agreement
      providing for the acquisition of all of the shares of Dupree by Southern Bella,
      Inc. The effective date of the acquisition was March 1, 2007.




Purchases
      of Equity Securities





No
      purchases of our own equity securities, either as a part of a publicly announced
      plan or otherwise, were made during any month in 2007.





**ITEM
      6.**  **MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF **OPERATION****





SPECIAL
      INFORMATION REGARDING FORWARD LOOKING STATEMENTS





Some
      of
      the statements in this Form 10-KSB are “forward-looking statements.” These
      forward-looking statements involve certain known and unknown risks,
      uncertainties and other factors which may cause our actual results, performance
      or achievements to be materially different from any future results, performance
      or achievements expressed or implied by these forward-looking statements. These
      factors include, among others, the factors set forth above under “Risk Factors.”
The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar
      expressions identify forward-looking statements. We caution you not to place
      undue reliance on these forward-looking statements. We undertake no obligation
      to update and revise any forward-looking statements or to publicly announce
      the
      result of any revisions to any of the forward-looking statements in this
      document to reflect any future or developments.





The
      following discussion should be read in conjunction with our financial statements
      and the notes thereto which appear elsewhere in this report. The results shown
      herein are not necessarily indicative of the results to be expected in any
      future periods. This discussion contains forward-looking statements based on
      current expectations, which involve uncertainties. Actual results and the timing
      of events could differ materially from the forward-looking statements as a
      result of a number of factors.





Southern
      Bella was formed on February 22, 2007, to acquire Dupree Catering, Inc. Since
      Southern Bella had no prior operations but succeeded to the business of Dupree,
      Dupree is considered the “predecessor” entity and Southern Bella as the
“successor” entity. As a result of this treatment, the consolidated statements
      of operations shows the successor information from February 22, 2007, through
      December 31, 2007. The consolidated statements of operations also shows the
      successor financial information from January 1, 2006, through December 31,
      2006.
      The proforma unaudited information showing the predecessor information from
      January 1, 2007 through February 21, 2007 is included in footnote
      11.




8





Overview




As
      of
      December 31, 2007, Dupree, the subsidiary of Southern Bella, has increased
      its
      sales by 27.46% over the same time period in 2006, and its profits have also
      increased. There are several components to this increase in sales.




The
      first
      component is the addition of personnel. Dupree hired Cooper Vaughan to oversee
      the training of its staff and to elevate the service provided by Dupree and
      hired Lucy Gardner as a sales assistance and office manager. Mr. Vaughan has
      implemented a staff training program for service staff and established a uniform
      program for all staff. Mr. Vaughan has been successful in elevating the level
      of
      service provided by Dupree. At some events, a new synchronized style has been
      implemented which involves the service of each course of the meal to all
      individuals at the same time.




The
      second component is the successful completion of several high profile social
      events. The University of Kentucky is the largest employer in Central Kentucky.
      Dupree catered an elaborate seated dinner in June, 2007, for 900 guests, which
      celebrated the groundbreaking of a new $700 million hospital. As a direct result
      of its success at this event, Dupree has booked additional events for the
      University of Kentucky, including two events for the University of Kentucky
      College of Medicine in June, 2007, an event for the University of Kentucky
      College of Health Sciences on August 31, 2007, an event for the University
      of
      Kentucky Gastroenterology and Nutrition Department on September 8, 2007, a
      fundraiser for the University of Kentucky College of Music on September 29,
      2007, and an event for the University of Kentucky Neurosurgery department on
      December 7, 2007. Dupree received approximately $6,800 in revenues from the
      two
      events held in June, 2007, and received approximately $22,400 in additional
      revenue from the events to be held in August, September and December.




The
      third
      component is the economy in Lexington and Central Kentucky. The economy in
      Lexington in general is healthy. The thoroughbred horse business, which accounts
      for approximately 20% of Dupree’s sales, has enjoyed increased prices and sales
      trends in the last two years. In addition, one of our corporate clients, Alltech
      Biotechnology Company, has pledged $10 million to be the main sponsor of the
      FEI
      World Equestrian Event (equestrian Olympics) being held in Lexington in 2010.
      Dupree has catered several events for Alltech in connection with its sponsorship
      of the FEI World Equestrian Event including a dinner on March 16, 2007, for
      150
      individuals at Alltech, an event on March 13, 2007, and an event with the Mayor
      on March 20, 2007. Because Alltech is a current customer of Dupree, Dupree
      believes that it will be requested to cater Alltech’s corporate tent during the
      FEI World Equestrian Event. At this time, Dupree does not have any contracts
      to
      cater any functions connected to this event.




Dupree
      has expanded its services into the Louisville market. For nine days preceding
      and including Kentucky Derby Day, Dupree catered breakfast and lunch each day
      for hundreds of guests in a tent on Churchill Downs property hosted by an equine
      pharmaceutical company. Dupree also catered the J.B Speed Museum Gala Dinner
      in.




In
      order
      to continue our success, we will need to reinvest some of our profits. Dupree’s
      catering software has not been upgraded since 2000 and our website is also
      outdated.




While
      Dupree has many repeat customers, catering is a very competitive business and
      Dupree needs to continuously improve its operations to maintain its position
      in
      Central Kentucky.




9




Plan
      of Operation




For
      the
      year 2007, our goal was to increase Dupree’s sales by twenty percent (20%) over
      2006. We increased sales by 27.46% for the year ended December 31, 2007. In
      2007, Dupree’s sales were just under $1,000,000. In 2008, we expect Dupree to
      reach over $1,000,000 in sales.




In
      March,
      2007, we added one new salesperson, Cooper Vaughan, to help Dupree achieve
      its
      sales goal. Mr. Vaughan is being paid a small base salary with a commission
      to
      incent his sales. Mr. Vaughan was trained from one of the top hotels in the
      United States, The Inn at Blackberry Farm. Mr. Vaughan will perform additional
      roles for Dupree, including the implementation of a new training program for
      the
      kitchen and wait staff.




Another
      goal for 2007 was to elevate Dupree’s level of service. We hired Cooper Vaughan
      to oversee the training of Dupree’s staff and to elevate the service provided by
      Dupree and hired Lucy Gardner as a sales assistance and office manager. Mr.
      Vaughan has implemented a staff training program for service staff and
      established a uniform program for all staff. Mr. Vaughan has already been
      successful in elevating the level of service provided by Dupree. At some events,
      a new synchronized style has been implemented which involves the service of
      each
      course of the meal to all individuals at the same time. Dupree increased the
      price paid by customers for each staff person from $100 per event to $108 per
      event to cover the cost of Mr. Vaughan’s salary and commission.




We
      plan
      to upgrade our website and our catering software. We anticipate taking these
      steps in the first half of 2008. New catering software will allow Dupree to
      quickly send proposals to customers, and will also provide Dupree with sales
      reports, a listing of the staff for each events, menu options and will help
      Dupree to manage its rentals of equipment.




Another
      goal is to obtain at least one exclusive catering venue. We are working on
      obtaining Talon Winery as an exclusive catering venue.




In
      addition, management of Southern Bella is looking for merger candidates to
      maximize shareholder value. Management has not identified any targets or merger
      candidates at this time.




We
      do not
      believe we will need any additional funding over the next twelve months in
      order
      to sustain our business and to achieve the above milestones.




Presentation
      of Predecessor and Successor Financial Statement Information




Southern
      Bella was formed on February 22, 2007, to acquire Dupree Catering, Inc. Since
      Southern Bella had no prior operations but succeeded to the business of Dupree,
      Dupree is considered the “predecessor” entity and Southern Bella as the
“successor” entity. As a result of this treatment, the consolidated statements
      of operations shows the successor information from February 22, 2007, through
      December 31, 2007. The consolidated statements of operations also shows the
      successor financial information from January 1, 2006, through December 31,
      2006.
      The proforma unaudited information showing the predecessor information from
      January 1, 2007 through February 21, 2007 is included in footnote
      11.





Analysis
      of Financial Condition and Results of Operation




Southern
      Bella was formed on February 22, 2007. On March 1, 2007, Southern Bella acquired
      Dupree Catering, Inc. (“Dupree”). Southern Bella has had no operations other
      than through its wholly-owned subsidiary, Dupree, since the acquisition of
      Dupree.




10




Comparison
      of 2007 to 2006




Set
      forth
      below is an analysis of the financial condition and results of operation of
      Southern Bella for the year ended December 31, 2007 compared to the year ended
      December 31, 2006 for Dupree.




December
                31, 2007
            
            December
                31, 2006Catering
                revenue
            
            $
            996,135
            
            $
            781,533Total
                revenue
            
            $
            996,135
            
            $
            781,533




Southern
      Bella’s revenues for year ended December 31, 2007 were 27.46% higher than its
      revenues for the year ended December 31, 2006 due the addition of personnel
      and
      catering several high profile events. Southern Bella hired a person to oversee
      the training of its staff and to elevate the service provided by Southern Bella
      and hired another employee as a sales assistance and office manager. The second
      reason for increased revenues is the successful completion of several high
      profile social events.





December
                31, 2007
            
            December
                31, 2006Operating
                expenses before depreciation
            
            $
            214,682
            
            $
            107,307




For
      year
      ended December 31, 2007, Southern Bella’s operating expenses were 100.06% higher
      than expenses for year ended December 31, 2006. This is due to several factors:
      the main reason is an increase of 1,123.96% in professional fees from the year
      ended from $6,829 in 2006, to $83,584 in 2007, due to the cost of going public,
      another is an increase of 170.34% from $2,862 in 2006, to $7,737 in 2007, of
      advertising expenses due to increased advertising. In addition, general and
      administrative expenses of $87,210 during the year ended December 31, 2007
      were
      46.22% higher than general and administrative expenses of $59,642 for year
      ended
      December 31, 2006. The reason for the increase was the hiring of the additional
      sales assistant office manager and staff trainer.





December
                31, 2007
            
            December
                31, 2006Depreciation
                expense
            
            $
            30,475
            
            $
            7,684




Depreciation
      expense is not comparable between the year ended December 31, 2007, and December
      31, 2006, because there are two different sets of depreciable assets.




Accordingly,
      Southern Bella had the following total operating expenses and net operating
      income (loss) before other income (expense) is:





December
                31, 2007
            
            December
                31, 2006Total
                expenses
            
            $
            245,157
            
            $
            114,991Net
                operating income (loss)
            
            $
            (131,865
            )
            $
            18,713




11




There
      was
      an $131,865 operating loss for year ended December 31, 2007, and a $18,713
      operating gain for year ended December 31, 2006.




Liquidity
      and Capital Resources




Our
      annual operating expenses vary based upon the type and number of catering jobs
      Dupree undertakes, as the majority of our expenses are direct catering costs.
      We
      believe that as we increase Dupree’s client base and bid jobs competitively, we
      will be able to have cash flow cover our operating expenses during 2008. We
      do
      not have any material commitments for capital during 2008, except for an
      additional $10,000 in the half of 2008 to upgrade Dupree’s website and catering
      software; however, we believe we have sufficient cash flow to fund such capital
      expenditures. Due to the uncertainties involved, our auditors have included
      a
      going concern paragraph in their opinion on our audited financial
      statements.




We
      do not
      believe there are any trends in the catering business that will have a material
      impact on our revenues during 2008.




We
      entered into a Consulting Agreement with Harriet Dupree Bradley in connection
      with the acquisition of the shares of Dupree. Under the Consulting Agreement,
      Ms. Bradley will provide consulting services to us, including, without
      limitation, management of the staff of Dupree. The term of the Consulting
      Agreement is for a period of seven months ending on September 30, 2007. In
      exchange for her consulting services, Ms. Bradley is entitled to any net income
      after taxes earned by Dupree. During this seven month period, all amounts paid
      to Ms. Bradley for her consulting services were recognized as an expense. We
      paid Ms. Bradley for her services at the end of the seven month term. This
      arrangement had a material impact on our net income and liquidity during the
      term of the Consulting Agreement. During this time, we no income and no retained
      earnings to reinvest in the business or to otherwise distribute to shareholders.




On
      August
      29, 2007, we entered into a Consulting Agreement with Harriet Dupree Bradley
      for
      a term commencing on October 1, 2007 and continuing through June 30, 2008.
      Under
      this Consulting Agreement, we have agreed to pay Ms. Bradley a consulting fee
      to
      $4,000 a month. Upon expiration of the Consulting Agreement, Ms. Bradley will
      continue to provide consulting services to Southern Bella on a month to month
      basis for the same consideration unless terminated by both Ms. Bradley and
      Southern Bella. A copy of the Consulting Agreements  is
      attached hereto as Exhibits 10(ii) and 10.3(iii).




Off-Balance
      Sheet Arrangements




There
      are
      no off-balance sheet arrangements.




12




**ITEM
      7.**  **FINANCIAL STATEMENTS**





**SOUTHERN
      BELLA, INC.**


**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Page(s)**Report
                of Independent Registered Public Accounting Firm
            
            14Report
                of Independent Registered Public Accounting Firm
            
            15Consolidated
                Balance Sheet as of December 31, 2007 - Successor
            
            16Consolidated
                Statement of Operations for the period February 22, 2007 (Inception)
                through December 31, 2007 with Statements of Operations for Dupree
                Catering, Inc. (Predecessor) for the twelve months ended December
                31,
                2006
            
            17Consolidated
                Statement of Changes in Stockholders’ Equity -Successor for the period
                February 22, 2007 (Inception) through December 31, 2007
            
            18Consolidated
                Statement of Cash Flows for the period February 22, 2007 (Inception)
                through December 31, 2007 (Successor) with Statements of Cash Flows
                for
                Dupree Catering, Inc. (Predecessor)for the twelve months ended December
                31, 2006
            
            19Notes
                to Consolidated Financial Statements
            
            20-27





13





**Report
      of Independent Registered Public Accounting Firm**




To
      the
      Board of Directors




Southern
      Bella, Inc.




Lexington,
      Kentucky




We
      have
      audited the accompanying consolidated balance sheet of Southern
      Bella, Inc. as
      of
      December 31, 2007, and the related consolidated statements of operations,
      stockholders' equity and cash flows for the period from inception February
      22,
      2007 (inception) through December 31, 2007. These consolidated financial
      statements are the responsibility of the management of Southern
      Bella, Inc. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits. The consolidated financial statements for the predecessor, Dupree
      Catering, Inc., for the year ended December 31, 2006, were audited by other
      auditors whose reports expressed unqualified opinions on those statements.





We
      conducted our audit in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Southern
      Bella, Inc. as
      of
      December 31, 2007, and the results of its operations and its cash flows the
      period described above in conformity with accounting principles generally
      accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that Southern
      Bella, Inc. will
      continue as a going concern. As shown in the consolidated financial statements, Southern
      Bella, Inc. suffered
      losses from operations and has an accumulated deficit at December 31, 2007.
      These factors and others raise substantial doubt about Southern
      Bella, Inc. 's
      ability to continue as a going concern. Management's plans in regard to these
      matters are described in Note 3 to the financial statements. The consolidated
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or to the amounts and
      classification of liabilities that might be necessary in the event Southern
      Bella, Inc cannot
      continue in existence.






/s/
      McElravy, Kinchen & Associates, P.C.




www.mkacpas.com




Houston,
      Texas




April
      9,
      2008




14





**Report
      of Independent Registered Public Accounting Firm**





To
      the
      Directors of


Dupree
      Catering, Inc.





I
      have
      audited the accompanying balance sheets of Dupree Catering, Inc. as of
      December 31, 2006, and the related statements of operations, changes in
      stockholders’ equity and cash flows for the year ended December 31, 2006. These
      financial statements are the responsibility of the Company's management. My
      responsibility is to express an opinion on these financial statements based
      on
      my audit.





I
      conducted the audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that I
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. I believe that my audit provides a reasonable
      basis for my opinion.





In
      my
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of the Company as of December 31,
      2006, and their results of operations and cash flows for the years then ended,
      in conformity with accounting principles generally accepted in the United States
      of America.







/s/
      Michael Pollack CPA





Cherry
      Hill, New Jersey


April
      2,
      2007





15


**SOUTHERN
                BELLA, INC.****CONSOLIDATED
                BALANCE SHEET - SUCCESSOR****DECEMBER
                31, 2007**




**ASSETS****CURRENT
                ASSETS**Cash
            
            $
            20,325Accounts
                receivable
            
            
            87,819Prepaid
                expense
            
            
            1,314**Total
                current assets**
            
            
            109,458Fixed
                assets, net of accumulated depreciation
            
            
            6,734Customer
                lists, net of amortization
            
            
            65,235**TOTAL
                ASSETS**
            
            $
            181,427**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable and accrued expenses
            
            $
            98,887Related
                party payables
            
            
            10,000**Total
                current liabilities**
            
            
            108,887**TOTAL
                LIABILITIES**
            
            
            108,887**STOCKHOLDERS'
                EQUITY**Preferred
                stock, $0.000001 par value, 20,000,000 shares authorized,none
                issued and outstanding
            
            
            -Common
                stock, $0.000001 par value, 1,000,000,000 shares
                authorized,8,666,667
                shares issued and outstanding
            
            
            9Additional
                paid in capital
            
            
            179,991Accumulated
                deficit
            
            
            (107,460
            )**Total
                stockholders' equity**
            
            
            72,540**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            181,427





The
                accompanying notes are an integral part of these consolidated financial
                statements.





16




**SOUTHERN
                BELLA, INC.****CONSOLIDATED
                STATEMENTS OF OPERATIONS FOR THE PERIOD****FEBRUARY
                22, 2007 THROUGH DECEMBER 31, 2007 (SUCCESSOR)
                WITH****STATEMENTS
                OF OPERATIONS FOR DUPREE CATERING, INC. (PREDECESSOR)****FOR
                THE TWELVE MONTHS ENDED DECEMBER 31, 2006**




**SOUTHERN
                BELLA**
            
            **DUPREE****FEBRUARY
                22, 2007**
            
            **JANUARY
                1, 2006****THROUGH**
            
            **THROUGH****DECEMBER
                31, 2007**
            
            **DECEMBER
                31, 2006****(SUCCESSOR)
                *****
            
            **(PREDECESSOR)****REVENUE**
            
            $
            965,413
            
            $
            781,533**COST
                OF REVENUES**Salaries
                and wage related expenses
            
            
            500,585
            
            
            381,769Food
                and beverages
            
            
            276,812
            
            
            225,350Other
                costs of revenues
            
            
            72,517
            
            
            40,710**Total
                costs of revenues**
            
            
            849,914
            
            
            647,829**GROSS
                (PROFIT)**
            
            
            115,499
            
            
            133,704**OPERATING
                EXPENSES**Advertising
            
            
            7,330
            
            
            2,862Professional
                fees
            
            
            81,882
            
            
            6,829Rent
                and utilities
            
            
            31,043
            
            
            37,974General
                and administrative
            
            
            76,181
            
            
            59,642Depreciation
                and amortization
            
            
            29,263
            
            
            7,684**Total
                operating expenses**
            
            
            225,699
            
            
            114,991**NET
                INCOME (LOSS) BEFORE OTHER INCOME (EXPENSE)**
            
            
            (110,200
            )
            
            18,713**OTHER
                INCOME (EXPENSE)**Rental
                income
            
            
            3,500
            
            
            4,100Interest
                expense, net
            
            
            (760
            )
            
            (9,003
            )**Total
                other income (expense)**
            
            
            2,740
            
            
            (4,903
            )**NET
                INCOME (LOSS)**
            
            $
            (107,460
            )
            $
            13,810**INCOME
                (LOSS) PER SHARE-BASIC AND DILUTED**
            
            $
            (0.01
            )
            $
            138.10**WEIGHTED
                AVERAGE NUMBER OF SHARES OUTSTANDING**
            
            
            8,502,037
            
            
            100





*******
              **Includes
                a net loss of $5,822 of Dupree Catering, Inc. for the period February
                22,
                2007 through February 28, 2007 -****pre-acquisition
                by Southern Bella, Inc. when comparing to accumulated deficit on
                Consolidated Balance Sheet and in the Consolidated Statement of Changes
                in
                Stockholders’ Equity**




The
                accompanying notes are an integral part of these consolidated financial
                statements.





17





**SOUTHERN
                BELLA, INC.****CONSOLIDATED
                STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -
                SUCCESSOR****FOR
                THE PERIOD FEBRUARY 22, 2007 (INCEPTION) THROUGH DECEMBER 31,
                2007**




**Preferred
                Stock**
            
            **Common
                Stock**
            
            **Additional****Paid-In**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Total**Balance
                -February
                22, 2007
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Common
                shares issued to founder for cash
            
            
            -
            
            
            -
            
            
            8,166,667
            
            
            8
            
            
            122,492
            
            
            -
            
            
            122,500Common
                shares issued for cash
            
            
            -
            
            
            -
            
            
            500,000
            
            
            1
            
            
            57,499
            
            
            -
            
            
            57,500Net
                loss for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (107,460
            )
            
            (107,460
            )Balance
                -December
                31, 2007
            
            
            -
            
            $
            -
            
            
            8,666,667
            
            $
            9
            
            $
            179,991
            
            $
            (107,460
            )
            $
            72,540





The
                accompanying notes are an integral part of these consolidated financial
                statements.





18


**SOUTHERN
                BELLA, INC.****CONSOLIDATED
                STATEMENT OF CASH FLOW****FOR
                THE PERIOD FEBRUARY 22. 2007 THROUGH DECEMBER 31, 2007 (SUCCESSOR)
                WITH****STATEMENTS
                OF CASH FLOW FOR DUPREE CATERING, INC. (PREDECESSOR) FOR THE****TWELVE
                MONTHS ENDED DECEMBER 31,
                2006**




**SOUTHERN
                BELLA**
              **FEBRUARY
                22, 2007**
              **THROUGH**
              **DECEMBER
                31, 2007**
              **(SUCCESSOR)*****
            
            **DUPREE**
              **JANUARY
                1, 2006**
              **THROUGH**
              **DECEMBER
                31, 2006**
              **(PREDECESSOR)****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                income (loss)
            
            $
            (107,460
            )
            $
            11,801**Adjustments
                to reconcile net income (loss)****to
                net cash provided by (used in) operating
                activities:**Depreciation
                and amortization
            
            
            29,263
            
            
            7,684**Change
                in assets and liabilities**(Increase)
                decrease in accounts receivable
            
            
            (87,819
            )
            
            (39,902
            )(Increase)
                in prepaid expenses
            
            
            (1,314
            )
            
            273Increase
                (decrease) in accounts payable and accruedexpenses
            
            
            98,887
            
            
            (15,024
            )**Total
                adjustments**
            
            
            39,017
            
            
            (46,969
            )**Net
                cash provided by (used in) operating****activities**
            
            
            (68,443
            )
            
            (35,168
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Acquisitions
                of equipment
            
            
            (10,907
            )
            
            -Acquisition
                of customer lists
            
            
            (90,325
            )
            
            -**Net
                cash (used in) investing activities**
            
            
            (101,232
            )
            
            -**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Issuance
                of stock for cash
            
            
            180,000
            
            
            -Proceeds
                from line of credit
            
            
            8,500
            
            
            100Repayment
                of line of credit
            
            
            (8,500
            )
            
            -Repayments
                of debt
            
            
            -
            
            
            (15,338
            )Increase
                in related party payables
            
            
            10,000
            
            
            36,344**Net
                cash provided by financing activities**
            
            
            190,000
            
            
            21,106**NET
                INCREASE IN CASH AND CASH EQUIVALENTS**
            
            
            20,325
            
            
            (14,062
            )**CASH
                AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
            
            
            -
            
            
            30,124**CASH
                AND CASH EQUIVALENTS - END OF PERIOD**
            
            $
            20,325
            
            $
            16,062**SUPPLEMENTAL
                NONCASH INVESTING AND FINANCING ACTIVITIES**Acquisition
                of Dupree Catering, Inc.**(Eliminated
                in Presentation)**Cash
                paid for acquisition
            
            $
            110,000
            
            $
            -Customer
                lists acquired
            
            
            (90,325
            )
            
            -Accounts
                receivable acquired
            
            
            (12,678
            )
            
            -Fixed
                assets acquired
            
            
            (5,628
            )
            
            -Accounts
                payable assumed
            
            
            22,350
            
            
            -Net
                cash acquired
            
            $
            23,719
            
            $
            -





*****
                Includes a net loss of $5,822 of Dupree Catering, Inc. for the period
                February 22, 2007 through February 28, 2007 - pre-acquisition by
                Southern
                Bella, Inc. when comparing to accumulated deficit on Consolidated
                Balance
                Sheet and in the Consolidated Statement of Changes in Stockholders
                Equity**


The
        accompanying notes are an integral part of these consolidated financial
        statements.
  19


**SOUTHERN
      BELLA, INC.**


Notes
      to
      Consolidated Financial Statements





**NOTE
      1 - ORGANIZATION AND BASIS OF PRESENTATION**





On
      February 22, 2007, Southern Bella, Inc. (the “Company”) was incorporated in the
      State of Delaware. On March 1, 2007 Company executed a Share Purchase Agreement
      whereby the Company acquired 100% of the outstanding shares of Dupree Catering,
      Inc., (“Dupree”) a corporation incorporated in the State of Kentucky on October
      28, 1991 for a total purchase price of $110,000, $100,000 paid in cash at
      closing and the remaining $10,000 in the form of a promissory note that bears
      no
      interest and was due on February 28, 2008. The promissory note was subsequently
      paid at closing on March 1, 2007.




Dupree
      was formed to provide catering services to individuals, corporations and
      foundations. They provide catering services for corporate events and parties,
      weddings, fundraising events for foundations and kosher style events including
      bar and bat mitzvahs.




The
      transaction is treated as an acquisition under the purchase method of
      accounting. The new management of the Company will maintain control of the
      operations of Dupree, and thus the transaction is treated as a purchase under
      FASB 141. For the consolidated statements of operations and cash flows, the
      Company (the SUCCESSOR) has included results of its operations and cash flows
      of
      Dupree (the PREDECESSOR) for the period prior to inception, the comparative
      twelve months ended December 31, 2006 period of the PREDECESSOR.




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




**Use
      of Estimates**




The
      preparation of financial statements, in conformity with accounting principles
      generally accepted in the United States, requires management to make estimates
      and assumptions that affect the amounts reported in the financial statements
      and
      accompanying notes. Actual results could differ from these
      estimates.




**Cash
      and Cash Equivalents**




The
      Company considers all highly liquid debt instruments and other short-term
      investments with a maturity of three months or less, when purchased, to be
      cash
      equivalents. There are no cash equivalents at December 31, 2007.




**Concentrations
      of Credit Risk**




Financial
      instruments which potentially subject the Company to concentrations of credit
      risk consist principally of cash and receivables. The Company places its cash
      with high credit quality financial institutions. At times, such amounts may
      exceed the FDIC limits; however, these deposits typically may be redeemed upon
      demand and therefore bear minimal risk. In monitoring this credit risk, the
      Company **** periodically
      evaluates the stability of the financial institutions. Generally, no collateral
      or other security is required to support receivables. To reduce credit risk,
      a
      customer’s credit history is evaluated before extension of credit. In addition,
      an allowance for doubtful receivables has been established as needed based
      on
      facts surrounding the credit risk of specific customers, historical trends
      and
      other information.




20




**Allowance
      for Doubtful Accounts**




The
      Company provides an allowance for doubtful accounts, which is based upon a
      review of outstanding receivables as well as historical collection information.
      The Company receives approximately 99% of its sales through credit card payments
      prior to shipment. In determining the amount of the allowance, management is
      required to make certain estimates and assumptions. Management has determined
      that as of December 31, 2007, no allowance for doubtful accounts is
      required.




**Fixed
      Assets**




Fixed
      assets are stated at cost, less accumulated depreciation. Depreciation is
      provided using the straight-line method over the estimated useful lives of
      the
      related assets (five years for the computer equipment and automobiles and ten
      years for leasehold improvements). Costs of maintenance and repairs are charged
      to expense as incurred.




**Impairment
      of Long-Lived Assets**




The
      Company reviews the recoverability of its long-lived assets on a periodic basis
      whenever events and changes in circumstances have occurred which may indicate
      a
      possible impairment. The assessment for potential impairment is based primarily
      on the Company’s ability to recover the carrying value of its long-lived assets
      from expected future cash flows from its operations on an undiscounted basis.
      If
      such assets are determined to be impaired, the impairment recognized is the
      amount by which the carrying value of the assets exceeds the fair value of
      the
      assets. Fixed assets to be disposed of by sale are carried at the lower of
      the
      then current carrying value or fair value less estimated costs to
      sell.




**Revenue
      Recognition**




The
      Company generates revenue from the sales of their products in accordance with
      Staff Accounting Bulletin 104. The criteria for recognition are as
      follows:




Persuasive
      evidence of an arrangement exists;




1)
            Delivery
                has occurred or services have been
                rendered;




2)
            The
                seller’s price to the buyer is fixed or determinable, and




3)
            Collectability
                is reasonably assured.




In
      accordance with the above criteria, the Company generally recognizes the revenue
      upon completion of the event being catered.




The
      Company does require a deposit on the jobs they cater prior to performing the
      service. This is reflected as a current liability until the service is
      performed, which at that time it is reclassified to revenue. The remainder
      of
      the fee is billed upon completion of the event being catered. Collections
      generally occur within 30 days of billing, by cash, check or credit
      card.




21




**Basic
      and Diluted Net Loss Per Share**




The
      basic
      net loss per common share is computed by dividing the net loss by the weighted
      average number of common shares outstanding. Diluted net loss per common share
      is computed by dividing the net loss adjusted on an "as if converted" basis,
      by
      the weighted average number of common shares outstanding plus potential dilutive
      securities.




For
      the
      years ended December 31, 2007 and 2006, there were no potentially dilutive
      securities outstanding.




**Customer
      Lists**




The
      Company acquired customer lists in the amount of $90,325 in its acquisition
      of
      Dupree Catering, Inc. on March 1, 2007. The customer lists are being amortized
      over a straight-line basis for a period of three years.




The
      changes in customer lists are as follows:


Balance
                  - February 22, 2007
              
              $
              -Acquisition
                  of customer lists
              
              
              90,325Amortization
                  - February 22, 2007 - December 31, 2007
              
              
              (25,090
              )Balance
                  - December 31, 2007
              
              $
              65,235




**Fair
      Value of Financial Instruments**




Carrying
      amounts for cash and cash equivalents, accounts receivable, prepaid expenses,
      accounts payable and accrued liabilities and related party payables approximate
      fair value due to the short-term nature of these instruments and interest at
      market rates. However, these values may not be representative of actual values
      that could have been realized as of the balance sheet dates or that will be
      realized in the future.




**Income
      Taxes**




The
      Company recognizes deferred tax assets and liabilities based on differences
      between the financial reporting and tax bases of assets and liabilities using
      the enacted tax rates and laws that are expected to be in effect when the
      differences are expected to be recovered. The Company provides a valuation
      allowance for deferred tax assets for which it does not consider realization
      of
      such assets likely.




Effective
      January 1, 1992, Dupree Catering, Inc. elected to be treated as an S
      Corporation. As an S Corporation, the Company is generally not subject to
      corporate income taxes and the income, deductions, credits and other tax
      attributes generated by the Company flow to its stockholders.




**Stock
      Based Compensation**




The
      Company accounts for stock-based employee compensation arrangements using the
      fair value method in accordance with the provisions of Statement of Financial
      Accounting Standards No.123(R) or SFAS No. 123(R), Share-Based Payments, and
      Staff Accounting Bulletin No. 107, or SAB 107, Share-Based Payments. The company
      accounts for the stock options issued to non-employees in accordance with the
      provisions of Statement of Financial Accounting Standards No. 123, or SFAS
      No.
      123, Accounting for Stock-Based Compensation, and Emerging Issues Task Force
      No.
      96-18, Accounting for Equity Instruments with Variable Terms That Are Issued
      for
      Consideration other Than Employee Services Under FASB Statement No. 123. The
      fair value of stock options and warrants granted to employees and non-employees
      is determined using the Black-Scholes option pricing model. The Company has
      adopted SFAS 123(R) and applied it in the period presented. Through December
      31,
      2007 no options to employees have been granted.




22




**Recently
      Issued Accounting Pronouncements**




The
      Company does not expect the adoption of recently issued accounting
      pronouncements to have a significant impact on its results of operations,
      financial position or cash flow.




**NOTE
      3 - GOING CONCERN**




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As shown in the accompanying financial
      statements, the Company suffered a loss of $107,460 in 2007, respectively,
      has
      an accumulated deficit of $107,460 at December 31, 2007. These conditions raise
      substantial doubt as to the Company's ability to continue as a going concern.
      The financial statements do not include any adjustments that might be necessary
      if the Company is unable to continue as a going concern. Management intends
      to
      finance these deficits by selling its common stock.




**NOTE
      4 - FIXED ASSETS**




Fixed
      assets consist of the following as of December 31, 2007:


**Estimated
                  Useful****Lives
                  (Years)**Equipment
              
              
              5
              
              $
              7,925Automobiles
              
              
              5
              
              
              1,305Leasehold
                  improvements
              
              
              10
              
              
              1,67710,907Less:
                  Accumulated depreciation
              
              
              
              
              
              4,173Total,
                  net
              
              
              
              
              $
              6,734




Depreciation
      expense was $4,173 for the period February 22, 2007 (Inception) through December
      31, 2007.




**NOTE
      5 - LINE OF CREDIT**




The
      Company established a credit line with a bank in March 2007. During March 2007,
      the Company was advanced $8,500. This amount was repaid on April 4,
      2007.




Dupree
      entered into a line of credit with a bank on April 14, 2000 in the amount of
      $75,000 that matured on April 14, 2005, and was extended through April 14,
      2006
      and then again until April 14, 2007. Interest on the line of credit was
      calculated at the bank’s prime rate with a floor of 5.75% per annum. The balance
      outstanding of $66,289 was repaid on March 5, 2007 upon the closing of the
      sale
      of Dupree to the Company on March 1, 2007 and is not part of the Dupree
      acquisition by Southern Bella due to this amount being repaid and prior to
      and
      outside of the acquisition.




23




**NOTE
      6 - NOTE PAYABLE - BANK**




Dupree
      entered into a note payable with a bank on April 19, 2004 in the amount of
      $45,500. The note was to mature on April 19, 2007, however, the balance of
      $3,811 was repaid March 5, 2007 upon the closing of the sale of Dupree to the
      Company on March 1, 2007 and is not part of the Dupree acquisition by Southern
      Bella due to this amount being repaid and prior to and outside of the
      acquisition.




**NOTE
      7 - LOAN FROM STOCKHOLDER/RELATED PARTY TRANSACTIONS**




Dupree
      had been advanced amounts from its shareholder for operations. These were
      unsecured demand advances. Dupree accrued interest at a rate of 8% per annum.
      The balance of $60,000 was forgiven by the shareholder prior to the sale of
      Dupree to the Company.




In
      addition, this stockholder owns the building in which Dupree’s and now the
      Company’s offices are located. Rent is charged to the Company at an amount that
      is approximate with the fair market value rentals in Lexington, Kentucky. The
      Company also sub-lets a portion of that space to another non-related entity
      and
      collects rent from them on a monthly basis. Both agreements are month-to-month
      terminable by either party with 30 days written notice. Rent expense for the
      period February 22, 2007 (inception) through December 31, 2007 was $13,138.
      Rental income charged by the Company for the period February 22, 2007
      (inception) through December 31, 2007 was $3,500.




**NOTE
      8 - STOCKHOLDERS’ EQUITY**




The
      Company was incorporated with 1,000,000,000 shares of common stock at $0.000001
      par value and 20,000,000 shares of preferred stock at $0.000001 par value.
      On
      February 22, 2007, the Company issued 8,166,667 shares of common stock for
      $122,500 to its founder.




The
      Company has also issued an additional 500,000 shares of common stock at $.10
      for
      $57,500 as part of a private placement from March through April 2007.




The
      Company has issued no options or warrants since inception.




**NOTE
      9 - PROVISION FOR INCOME TAXES**




Deferred
      income taxes are determined using the liability method for the temporary
      differences between the financial reporting basis and income tax basis of the
      Company’s assets and liabilities. Deferred income taxes are measured based on
      the tax rates expected to be in effect when the temporary differences are
      included in the Company’s tax return. Deferred tax assets and liabilities are
      recognized based on anticipated future tax consequences attributable to
      differences between financial statement carrying amounts of assets and
      liabilities and their respective tax bases.




24




As
      of
      December 31, 2007, there is no provision for income taxes, current or
      deferred.


Net
                  operating losses
              
              $
              37,611Valuation
                  allowance
              
              
              (37,611
              )$
              -




At
      December 31, 2007, the Company had net operating loss carryforward in the
      approximate amount of $107,460, available to offset future taxable income
      through 2027. The Company established valuation allowances equal to the full
      amount of the deferred tax assets due to the uncertainty of the utilization
      of
      the operating losses in future periods.




Dupree
      Catering was an S Corporation. All net earnings generated passed through to
      the
      shareholders and taxed at their respective tax rates.




**NOTE
      10 - CONCENTRATIONS**




For
      the
      twelve months ended December 31, 2007 and 2006, the Company and Dupree had
      one
      major customer that represented approximately 12% and 11% of the Company’s
      sales, respectively.




For
      the
      twelve months ended December 31, 2007 and 2006, the Company and Dupree had
      two
      major vendors that represented approximately 50% and 65% of the Company’s food
      and beverage purchases, respectively.




**NOTE
      11 - ACQUISITION OF DUPREE CATERING, INC.**




On
      March
      1, 2007, the Company and Dupree Catering, Inc. closed a Share Purchase Agreement
      whereby the Company acquired 100% of the outstanding shares of Dupree for a
      total purchase price of $110,000, $100,000 paid in cash at closing and the
      remaining




$10,000
      in the form of a promissory note that bears no interest and was due on February
      28, 2008. The promissory note was subsequently paid at closing on March 1,
      2007.




The
      primary reason that the Company acquired Dupree Catering, Inc. was to utilize
      its resources and management expertise along with any capital the Company raises
      to expand the catering business throughout the regional areas as well as
      expansion into national markets.




The
      Company has included the results of the operations of the two entities in the
      consolidated statements of operations in the column marked SUCCESSOR based
      upon
      guidance from the SEC due to the fact that the Company succeeded to
      substantially all of the business of Dupree and the Company’s operations prior
      to the Dupree acquisition were insignificant relative to Dupree’s operations.
      Therefore, based on Item 405 of Regulation C and the Securities Act and Item
      310
      in the Regulation S-B, financial information for Dupree is required for all
      periods prior to formation with no lapse in the periods presented.




25




The
      purchase price of $110,000 ($100,000 cash and a note increase of $10,000) has
      preliminarily been allocated as follows:







Cash
            
            $Accounts
                receivable
            
            
            12,678Fixed
                assets
            
            
            5,628Goodwill
            
            
            90,325Accounts
                payable
            
            
            (22,350
            )$
            110,000




26




Proforma
      information representing the consolidated statement of operations for the
      Company and Dupree Catering, Inc. had these companies been consolidated for
      the
      period January 1, 2006 through December 31, 2006 is not considered necessary
      as
      Southern Bella was not formed until February 22, 2007. The effect of the
      transaction had it appeared on January 1, 2007 would be as follows:




**SOUTHERN
                BELLA, INC.**
              **PROFORMA
                CONSOLIDATED STATEMENTS OF OPERATIONS**
              **FOR
                THE TWELVE MONTHS ENDED DECEMBER 31, 2007**
              **(UNAUDITED)**




**DUPREE**
              **JANUARY
                1, 2007**
              **THROUGH**
              **FEBRUARY
                21, 2007**
              **(PREDECESSOR)**
            
            **SOUTHERN
                BELLA**
              **FEBRUARY
                22, 2007**
              **THROUGH**
              **DECEMBER
                31, 2007**
              **(SUCCESSOR)
                *****
            
            **PROFORMA**
              **JANUARY
                1, 2007**
              **THROUGH**
              **DECEMBER
                31, 2007****REVENUE**
            
            $
            30,722
            
            $
            965,413
            
            $
            996,135**COST
                OF REVENUES**Salaries
                and wage related expenses
            
            
            17,236
            
            
            500,585
            
            
            517,821Food
                and beverages
            
            
            6,862
            
            
            276,812
            
            
            283,674Other
                costs of revenues
            
            
            8,831
            
            
            72,517
            
            
            81,348**Total
                costs of revenues**
            
            
            32,929
            
            
            849,914
            
            
            882,843**GROSS
                PROFIT (LOSS)**
            
            
            (2,207
            )
            
            115,499
            
            
            113,292**OPERATING
                EXPENSES**Advertising
                expenses
            
            
            407
            
            
            7,330
            
            
            7,737Professional
                fees
            
            
            1,702
            
            
            81,882
            
            
            83,584Rent
                and utilities
            
            
            5,108
            
            
            31,043
            
            
            36,151General
                and administrative
            
            
            11,029
            
            
            76,181
            
            
            87,210Depreciation
                and amortization expense
            
            
            1,212
            
            
            29,263
            
            
            30,475**Total
                operating expenses**
            
            
            19,458
            
            
            225,699
            
            
            245,157**NET
                (LOSS) BEFORE OTHER INCOME (EXPENSE)**
            
            
            (21,665
            )
            
            (110,200
            )
            
            (131,865
            )**OTHER
                INCOME (EXPENSE)**Rental
                income
            
            
            700
            
            
            3,500
            
            
            3,500Interest
                expense, net
            
            
            (40
            )
            
            (760
            )
            
            (760
            )**Total
                other income (expense)**
            
            
            660
            
            
            2,740
            
            
            2,740**NET
                (LOSS)**
            
            $
            (21,005
            )
            $
            (107,460
            )
            $
            (129,125
            )**LOSS
                PER SHARE**
            
            $
            (210.05
            )
            $
            (0.01
            )
            $
            (0.02
            )**WEIGHTED
                AVERAGE NUMBER OF SHARES OUTSTANDING**
            
            
            100
            
            
            8,502,037
            
            
            8,502,037




Includes
                a net loss of $5,822 of Dupree Catering, Inc. for the period February
                22,
                2007 through February 28, 2008 - pre-acquisition by Southern Bella,
                Inc.
                when comparing to accumulated deficit on Consolidated Balance Sheet
                and in
                the Consolidated Statement of Changes in Stockholders’
                Equity





27





**ITEM
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





Michael
      Pollack CPA, LLC was dismissed as the independent registered public accounting
      firm of Southern Bella, Inc. (the “Company”) on January 7, 2008.




Michael
      Pollack’s report on the audited balance sheet of Dupree Catering, Inc. (the
      predecessor to the Company) as of December 31, 2006 and 2005, and the related
      statements of operations, changes in stockholders’ equity and cash flows for the
      years ended December 31, 2006, and 2005 and Mr. Pollack’s report on the
      Company’s unaudited consolidated balance sheet as of September 30, 2007, and the
      related consolidated statements of operations, changes in stockholders’ equity
      (deficit) and cash flows for the three months ended September 30, 2007, and
      the
      period February 22, 2007, (Inception) through September 30, 2007, did not
      contain an adverse opinion or disclaimer of opinion, nor were they qualified
      or
      modified as to uncertainty, audit scope or accounting principles.




The
      decision to dismiss Michael Pollack CPA, LLC was approved by the Company’s Board
      of Directors.




There
      were no disagreements between the Company and Michael Pollack CPA, LLC on any
      matter of accounting principles or practices, financial statement disclosure,
      or
      auditing scope or procedure which, if not resolved to the satisfaction of
      Michael Pollack CPA, LLC would have caused Michael Pollack CPA, LLC to make
      reference to the matter of the disagreement in connection with its
      reports.




Southern
      Bella provided Michael Pollack CPA, LLC with a copy of the foregoing disclosure,
      and requested that Michael Pollack CPA, LLC furnish Southern Bella with a letter
      addressed to the Securities and Exchange Commission stating whether or not
      it
      agreed with such disclosure. Southern Bella filed as an Exhibit to the Form
      8-K,
      a copy of the letter from Michael Pollack CPA, LLC as required by Item 304
      of
      Regulation S-B. On January 8, 2008, Michael Pollack CPA, LLC provided a letter
      agreeing with the foregoing disclosure in Southern Bella’s Form 8K
      filing.





On
      January 8, 2008, Southern Bella executed an engagement letter with McElravy,
      Kinchen & Associates, P.C. ("MKA") to assume the role of its new certifying
      accountant. MKA has been asked to perform the audit for the year ended December
      31, 2007.





During
      the periods ended December 31, 2006 and the subsequent interim period ended
      September 30, 2007, and through the date of the firm's engagement, Southern
      Bella did not consult with MKA with regard to:


(i)  the
      application of accounting principles to a specified transaction, either
      completed or proposed; or the type of audit opinion that might be rendered
      on
      Southern Bella’s financial statements; or





(ii)  any
      matter that was either the subject of a disagreement or a reportable event
      (as
      described in Item 304(a) (1) (iv) of Regulation S-B.





The
      engagement of the new principal auditor was recommended and approved by the
      Board of Directors of Southern Bella.





Other
      than the changes described above, there were no changes in the Company’s
      internal control over financial reporting that occurred during the Company’s
      fiscal year ended December 31, 2007 that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal controls over
      financial reporting.





28





**ITEM
      8A. CONTROLS AND PROCEDURES**




Conclusion
      Regarding the Effectiveness of Disclosure Controls and Procedures




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      in
      Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the
      "Exchange Act"), as of the end of the period covered by this report. Based
      on
      this evaluation, our principal executive officer and our principal financial
      officer concluded that our disclosure controls and procedures were not effective
      to provide reasonable assurance that information required to be disclosed by
      us
      in reports we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the SEC's rules
      and
      forms, and is accumulated and communicated to our management, including our
      principal executive officer and principal financial officer, as appropriate
      to
      allow timely decisions regarding required disclosures.




Management's
      Report on Internal Control Over Financial Reporting




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in
      Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control
      system was designed to provide reasonable assurance regarding the reliability
      of
      financial reporting and the preparation of financial statements for external
      purposes, in accordance with generally accepted accounting principles. Because
      of inherent limitations, a system of internal control over financial reporting
      may not prevent or detect misstatements. Also, projections of any evaluation
      of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate due to change in conditions, or that the degree of compliance with
      the policies or procedures may deteriorate.




Our
      management conducted an evaluation of the effectiveness of our internal control
      over financial reporting using the criteria set forth by the Committee of
      Sponsoring Organizations of the Treadway Commission (COSO) in Internal
      Control—Integrated Framework. Based on its evaluation, our management concluded
      that there is a material weakness in our internal control over financial
      reporting. A material weakness is a deficiency, or a combination of control
      deficiencies, in internal control over financial reporting such that
      there is a reasonable possibility that a material misstatement of the
      Company’s annual or interim financial statements will not be prevented or
      detected on a timely basis.




The
      material weakness relates to the lack of sufficient accounting staff and the
      performance of the principal accounting functions by one officer. Our chief
      executive officer also serves as our chief financial officer. All of our
      financial reporting is carried out by one individual, and we do not have an
      audit committee. Our board of directors consists of one individual, who serves
      as our chief executive officer and chief financial officer. This lack of
      accounting staff results in a lack of segregation of duties and accounting
      technical expertise necessary for an effective system of internal
      control.




In
      order
      to remedy our existing internal control deficiencies, as soon as our finances
      allow, we will hire a Chief Financial Officer who will be sufficiently versed
      in
      public company accounting to implement appropriate procedures for timely and
      accurate disclosures. We will also establish an audit committee and recruit
      members to serve on our board of directors.




This
      annual report does not include an attestation report of Southern Bella, Inc.’s
      registered public accounting firm regarding internal control over financial
      reporting. Management’s report was not subject to attestation by Southern
      Bella’s registered public accounting firm pursuant to temporary rules of the SEC
      that permit Southern Bella, Inc. to provide only management’s report in this
      annual report.




29




**Changes
      in Internal Control Over Financial Reporting**




There
      were no changes in our internal control over financial reporting during the
      fourth quarter of fiscal 2007 that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial reporting.




**ITEM
      8B.**  **OTHER
      INFORMATION**





None





30




**PART
      III**





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.**





Directors
      and Executive Officers





Our
      directors and executive officers are as follows:





Ms.
      Viola
      J. Heitz, age 56, has been our Chief Executive Officer and Director since March
      1, 2007. Ms. Heitz earned a Bachelor of Science degree from West Virginia
      University and an Master of Arts degree from Eastern Kentucky University. She
      taught high school English in public and private schools for 18 years. In 2000,
      she left her career in education to focus on traveling, volunteering on the
      local and international level, and working on a free-lance basis. From November
      1, 2002, through December 1, 2004, Ms. Heitz was the president of Mega Machinery
      Movers, the only minority-owned industrial moving company in Kentucky. Ms.
      Heitz
      was also employed by the Multi-Specialty Foundation, an international medical
      organization, from November, 2004, through June, 2005. She organized its annual
      educational conference at the Bellagio Hotel in Las Vegas in 2006. Ms. Heitz
      has
      served on the Board of Directors for Habitat for Humanity, the Lexington
      Philharmonic Guild, and the McConnell’s Springs Foundation. She has built houses
      for Habitat for Humanity in Mexico, Costa Rica, New Zealand, South Africa,
      Mongolia, and Cambodia. Ms. Heitz devotes 30% of her time to our business and
      the remaining 70% of her time to family matters and public service.





Mr.
      Terry
      Riggleman, age 59, has been our Secretary and Director since March 1, 2007.
      Since November, 2002, Terry Riggleman has been the customer service manager
      for
      the Valley Gas and Oil Company in Moorefield, West Virginia. From 1970 to June,
      2001, he was the manager of Arc Welders in Baltimore, Maryland. Mr. Riggleman
      devotes 2% of his time to our business.




Family
      Relationships





Terry
      Riggleman is the brother of Viola J. Heitz.





Legal
      Proceedings




No
      officer, director, or persons nominated for such positions, promoter or
      significant employee has been involved in the last five years in any of the
      following:




·
            Any
                bankruptcy petition filed by or against any business of which such
                person
                was a general partner or executive officer either at the time of
                the
                bankruptcy or within two years prior to that time;


·
            Any
                conviction in a criminal proceeding or being subject to a pending
                criminal
                proceeding (excluding traffic violations and other minor offenses);


·
            Being
                subject to any order, judgment, or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining, barring suspending or otherwise limiting
                his
                involvement in any type of business, securities or banking activities;
                and


·
            Being
                found by a court of competent jurisdiction (in a civil action), the
                Commission or the Commodity Futures Trading Commission to have violated
                a
                federal or state securities or commodities law, and the judgment
                has not
                been reversed, suspended, or vacated.





31




Section
      16(a) Beneficial Ownership Reporting Compliance





Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's
      directors and executive officers, and persons who beneficially own more than
      10%
      of a registered class of the Company's equity securities, to file reports
      of beneficial ownership and changes in beneficial ownership of the
      Company's securities with the SEC on Forms 3 (Initial Statement of Beneficial
      Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities)
      and 5
      (Annual Statement of Beneficial Ownership of Securities). Based on our records
      and other information, we believe that in 2007 our directors, executive officers
      and shareholders owning 10% or more of the common stock of Southern Bella,
      Inc.
      met all applicable SEC filing requirements.





Code
      of Ethics





Southern
      Bella, Inc. has adopted a Code of Ethics that applies to the Company’s principal
      executive officer, principal financial officer, principal accounting officer
      and
      any other senior executive officers. Viola Heitz, the President of Southern
      Bella, Inc. has executed the Code of Ethics. A copy of the Code of Ethics is
      attached as Exhibit 14 to this Annual Report on Form 10-K.





Changes
      to Nomination Process





There
      were no material changes to the procedures by which shareholders may recommend
      nominees to Southern Bella, Inc.’s board of directors.





Audit
      Committee





Southern
      Bella, Inc. does not have a separately-designated audit committee. The entire
      board of directors serves as the audit committee of the company. Southern Bella,
      Inc. does not have an “audit committee financial expert” as defined in the
      applicable rules and regulations of the Securities Exchange Act of 1934, as
      amended.





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





Compensation
      Agreements




Our
      directors or officers have not received any compensation since Southern Bella,
      Inc. was formed on February 22, 2007.




We
      have
      no formal plan for compensating our directors for their service in their
      capacity as directors; however, directors are entitled to reimbursement for
      reasonable travel and other out-of-pocket expenses incurred in connection with
      attendance at meetings of our board of directors.




There
      are
      no arrangements or plans in which we provide pension, retirement or similar
      benefits for directors or executive officers. We do not have any bonus or profit
      sharing plans pursuant to which cash or non-cash compensation is or may be
      paid
      to our directors or executive officers.





We
      have
      not granted any stock options to any of our officers since inception and none
      of
      our officers hold any options to purchase any shares of our common or preferred
      stock.





32




Employment
      Agreements




We
      do not
      have employment agreements with either Viola J. Heitz or Terry Riggleman or
      any
      other officer or employee except for the Consulting Agreement with Harriet
      Dupree Bradley.




Director
      Compensation




We
      do not
      pay directors any fees or other compensation for serving as a director. We
      have
      not granted any stock options or stock awards to our directors.





**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





The
      following table sets forth certain information concerning the number of shares
      of our common stock owned beneficially as of March 31, 2008, by: (i) each person
      known by us to be the beneficial owner of more than 5% of our outstanding common
      stock; (ii) each of our directors; (iii) each of our officers; and (iv) our
      executive officers and directors as a group.




Shares
                of Common Stock
              Beneficially
                OwnedNames
                and Address of
              Beneficial
                Owner
            
            **Number**
            
            **Percent****Viola
                J. Heitz**
            
            
            **8,166,667**
            
            
            **94**
            **%****Terry
                Riggleman**
            
            
            -
            
            
            -**All
                Directors and named Executive Officers as a group****[2
                persons]**
            
            
            **8,166,667**
            
            
            **94**
            **%**





The
      table
      above is based upon information derived from our stock records. Unless otherwise
      indicated in the footnotes to the table and subject to community property laws
      where applicable, each of the shareholders named in the table has sole or shared
      voting and investment power with respect to the shares indicated as beneficially
      owned. Except as set forth above, applicable percentages are based upon
      8,166,667 shares of common stock outstanding as of March 31, 2008.





The
      information presented above regarding beneficial ownership of our voting
      securities has been presented in accordance with the rules of the Securities
      and
      Exchange Commission and is not necessarily indicative of ownership for any
      other
      purpose. Under these rules, a person is deemed to be a “beneficial owner” of a
      security if that person has or shares the power to vote or direct the voting
      of
      the security or the power to dispose or direct the disposition of the security.
      A person is deemed to own beneficially any security as to which such person
      has
      the right to acquire sole or shared voting or investment power within 60 days
      through the conversion or exercise of any convertible security, warrant, option
      or other right. More than one person may be deemed to be a beneficial owner
      of
      the same securities. The percentage of beneficial ownership by any person as
      of
      a particular date is calculated by dividing the number of shares beneficially
      owned by such person, which includes the number of shares as to which such
      person has the right to acquire voting or investment power within 60 days,
      by
      the sum of the number of shares outstanding as of such date plus the number
      of
      shares as to which such person has the right to acquire voting or investment
      power within 60 days. Consequently, the denominator used for calculating such
      percentage may be different for each beneficial owner. Except as otherwise
      indicated below and under applicable community property laws, we believe that
      the beneficial owners of our common stock listed above have sole voting and
      investment power with respect to the shares shown.




33




We
      are
      unaware of any contract or other arrangement the operation of which may at
      a
      subsequent date result in a change in control of the company.





Southern
      Bella, Inc. does not have a compensation plan under which equity securities
      are
      authorized for issuance.




**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





Related
      Transactions




Harriet
      Dupree Bradley was the sole shareholder of Dupree Catering prior to the
      acquisition of Dupree Catering by Southern Bella in March, 2007.





Harriet
      Dupree Bradley advanced money to Dupree Catering for operations. These advances
      were in the form of unsecured demand advances that accrued interest at the
      rate
      of 8% per annum. The outstanding balance of these advances at December 31,
      2006,
      was $62,116. Dupree Catering paid down the balance of the advances to $60,000
      by
      March 1, 2007. In connection with Southern Bella, Inc.’s acquisition of Dupree
      Catering, Harriet Dupree Bradley forgave the remaining balance of $60,000.




Southern
      Bella, Inc. is leasing office space consisting of approximately 3,000 square
      feet located at 1006 Delaware Avenue, Lexington, Kentucky 40505 (the “Premises”)
      from Harriet Dupree Bradley pursuant to a Lease Agreement dated March 1, 2007.
      The lease expires on February 28, 2009. Southern Bella, Inc. may terminate
      the
      lease upon 60 days prior written notice after September 1, 2007. In addition,
      Southern Bella, Inc. may extend the term of the lease for one consecutive
      two-year period beginning on March 1, 2009 and ending February 28, 2011. The
      rent under the lease is $1,300 per month during the initial term and $1,400
      per
      month during any extension.




Director
      Independence




Our
      directors, Viola Heitz and Terry Riggleman, are not independent under the NASDAQ
      listing standards because they are executive officers of Southern Bella,
      Inc.




**ITEM
      13.**  **EXHIBITS**





The
      following exhibits are filed as part of this Form 10-KSB and this list includes
      the Exhibit Index.


No.
              
              Description(2)
              
              Share
                  Purchase Agreement*(3)
              
              (i)
              Articles
                  of Incorporation *(ii)
              Bylaws
                  *(10)
              
              (i)
              Lease
                  Agreement with Harriet Dupree Bradley*(ii)
              Consulting
                  Agreement with Harriet Dupree Bradley dated March 1,
                  2007*(iii)
              Consulting
                  Agreement with Harriet Dupree Bradley dated August 29,
                  2007*
  34
  (14)
              
              Code
                  of Ethics(21)
              
              Subsidiaries
                  of Registrant(31)
              
              Certification
                  as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act
                  of
                  2002(32)
              
              Certification
                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                  906of
                  Sarbanes-Oxley Act of 2002




*
      Incorporated herein by reference from Southern Bella Inc.’s Registration
      Statement on Form SB-2, filed with the Securities and Exchange Commission on
      November 14, 2007.





**ITEM
      14** . **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**





Audit
      Fees





The
      following fees were paid to Michael Pollack CPA, an independent registered
      certified public accountant:





Audit
      Fees for fiscal year end December 31, 2007: $9,000.00




Audit
      Fees for fiscal year end December 31, 2006: $20,000.00





The
      following fees were paid to McElravy, Kinchen & Associates, P.C, an
      independent registered certified public accounting firm:





Audit
      Fees for fiscal year ended December 31, 2007: $0





Southern
      Bella, Inc. did not
      pay any other fees as specified in Item 9(e) of Schedule 14A.





Southern
      Bella, Inc. does
      not
      have audit committee pre-approval policies and procedures.





35


SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




Southern Bella, Inc.Date:
              April 14, 2008
            By:
            /s/
              Viola HeitzName:
              Viola HeitzTitle:President,
                Chief Executive Officer, Principal Financial Officer, Principal Accounting
                Officer, and Director




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.


Date:April
              14, 2008
            
            
            By: 
                /s/ Viola HeitzName:
                Viola Heitz
              Title:
                Director





Date:April
              14, 2008
            
            
            By: 
                /s/ Terry RigglemanName:
                Terry Riggleman
              Title:
                Director





36


**EXHIBIT
      14**





**CODE
      OF ETHICS**





Southern
      Bella, Inc.





Southern
      Bella Inc.’s (the “Company”) mission includes significant efforts to promote
      ethical conduct in the practice of financial management throughout the company.
      Senior officers hold an important and elevated role in corporate governance.
      While members of the management team, they are uniquely capable and empowered
      to
      ensure that all shareholders’ interests are appropriately balanced, protected
      and preserved. This Code provides principles to which senior officers are
      expected to adhere and advocate. They embody rules regarding individual and
      peer
      responsibilities, as well as responsibilities to employers, the public and
      other
      stakeholders. Violations of the Company’s Code of Ethics may subject the officer
      to censure, suspension or expulsion under procedural rules adopted by the
      Company’s Board of Directors.





All
      senior officers of the Company will:





· Act
        with
        honesty and integrity, avoiding actual or apparent conflicts of interest
        in
        personal and professional relationships.





· Provide
      constituents with information that is accurate, complete, objective, relevant,
      timely and understandable.





· Comply
      with rules and regulations of federal, state, provincial and local governments,
      and other appropriate private and public regulatory agencies.





· Act
      in
      good faith, responsibly, with due care, competence and diligence, without
      misrepresenting material facts or allowing one’s independent judgment to be
      subordinated.





· Respect
      the confidentiality of information acquired in the course of one’s work except
      when authorized or otherwise legally obligated to disclose. Confidential
      information acquired in the course of one’s work will not be used for personal
      advantage.





· Share
      knowledge and maintain skills important and relevant to constituents’ needs.





· Proactively
      promote ethical behavior as a responsible partner among peers, in the work
      environment and the community.





· Achieve
      responsible use of and control over all assets and resources employed or
      entrusted.





In
      my
      role as a senior executive officer of the Company, I certify to you that I
      adhere to and advocate the aforementioned principles and responsibilities
      governing my professional and ethical conduct.




Date:
            
            _______________________________[Signature]_______________________________
              [Title]









**EXHIBIT
      21**





**Subsidiaries
      of the Registrant**





Dupree
      Catering, Inc.







**EXHIBIT
      31**





Certification
      on Controls and Procedures





I,
      Viola
      Heitz, certify that:





1.  I
      have
      reviewed this annual report on Form 10-KSB of Southern Bella,
      Inc..;





2.  Based
      on
      my knowledge, this report does not contain any untrue statement of a material
      fact or omit to state a material fact necessary to make the statements made,
      in
      light of the circumstances under which such statements were made, not misleading
      with respect to the period covered by this annual report;





3.  Based
      on
      my knowledge, the financial statements, and other financial information included
      in this annual report, fairly present in all material respects the financial
      condition, results of operations and cash flows of the small business issuer
      as
      of, and for, the periods presented in this report;





4.  The
      small
      business issuer’s other certifying officer(s) and I are responsible for
      establishing and maintaining disclosure controls and procedures (as defined
      in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
      reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
      small business issuer and have:





a)  Designed
      such disclosure controls and procedures, or caused such internal control over
      financial reporting to be designed under our supervision, to ensure that
      material information relating to the small business issuer , including its
      consolidated subsidiary, is made known to us by others within those entities,
      particularly during the period in which this report is being
      prepared;





b)  Designed
      such internal control over financial reporting, or caused such internal control
      over financial reporting to be designed under our supervision, to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles;





c)  Evaluated
      the effectiveness of the small business issuer’s disclosure controls and
      procedures and presented in this report our conclusions about the effectiveness
      of the disclosure controls and procedures, as of the end of the period covered
      by this report based on such evaluation; and





d)  Disclosed
      in this report any change in the small business issuer’s internal control over
      financial reporting that occurred during the small business issuer’s most recent
      fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of
      an annual report) that was materially affected, or is reasonably likely to
      materially affect, the small business issuer’s internal control over financial
      reporting; and





5.  The
      small
      business issuer’s other certifying officer(s) and I have disclosed, based on our
      most recent evaluation of internal control over financial reporting, to the
      small business issuer’s auditors and the audit committee of the small business
      issuer’s board of directors (or other persons performing the equivalent
      functions):





a)  All
      significant deficiencies and material weaknesses in the design or operation
      of
      internal control over financial reporting which are reasonably likely to
      adversely affect the small business issuer’s ability to record, process,
      summarize and report financial data; and





b)  Any
      fraud, whether or not material, that involves management or other employees
      who
      have a significant role in the small business issuer’s internal control over
      financial reporting.




Date:April
              14, 2008
            
            /s/
              Viola HeitzViola
                Heitz
              President,
                Chief Executive Officer, Principal
              Financial
                Officer, Principal Accounting
              Officer
                and Director







**EXHIBIT
      32**





**CERTIFICATION
      PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED**





**PURSUANT
      TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**





In
      connection with the Annual Report of Southern Bella, Inc. (the “Company”) on
      Form 10-KSB for the period ending December 31, 2007 as filed with the U.S.
      Securities and Exchange Commission (the “Report”), the undersigned President,
      Principal Executive Officer, Principal Financial Officer, and Principal
      Accounting Officer of the Company certifies, pursuant to 18 U.S.C. Section
      1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that based
      on his knowledge and belief: 1) the Report fully complies with the requirements
      of Section 13(a) or 15 (d), as applicable, of the Securities Exchange Act of
      1934, and 2) the information contained in the Report fairly presents, in all
      material respects, the financial condition and results of operations of the
      Company.







/s/
      Viola
      Heitz


President,
        Principal Executive Officer,
 Principal
        Financial Officer and
 Principal
        Accounting Officer