10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

EXCHANGE ACT OF 1934

For the quarter ended February 28, 2007

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

EXCHANGE ACT OF 1934

For the transition period from _____________ to ____________

Commission File Number:

SEW CAL LOGO, INC.

(Exact name of Registrant as specified in charter)

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

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

(Address of principal executive offices) (Zip Code)

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

Check whether the Issuer (1) has filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

State the number of shares outstanding of each of the Issuer's classes of common equity as of the latest practicable date: At February 28, 2007, there were17,764,036 shares of the registrant's Common Stock outstanding and 234,800 shares of Series A Preferred Stock outstanding.

PART I

ITEM 1. FINANCIAL STATEMENTS

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

MOORE & ASSOCIATES, CHARTERED

ACCOUNTANTS AND ADVISORS

PCAOB REGISTERED

Report of Independent Registered Public Accounting Firm

We have reviewed the accompanying balance sheet of Sew Cal Logo Inc. as of February 28, 2007, and the related statements of income, retained earnings, and cash flows for the six months then ended, in accordance with the standards of the Public Company Accounting Oversight Board (United States). All information included in these financial statements is the representation of the management of Sew Cal Logo Inc.

A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the company will continue as a going concern. The Company has had a net loss since inception this raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.

/s/ Moore & Associates, Chartered

Moore & Associates, Chartered

Las Vegas, Nevada

April 12, 2007

2675 S. JONES BLVD. SUITE 109, LAS VEGAS, NEVADA 89146 (702) 253-7511 Fax:

(702)253-7501

1

SEW CAL LOGO, INC.

BALANCE SHEETS

(Unaudited)

			August 31,
	February 28,		2006
	2007		(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	572,806	$	988,251
Accounts Receivable, net		159,870		261,515
Inventory		123,356		124,049
Prepaid Expenses		14,109		4,219
Total current assets		870,141		1,378,034
Equipment and machinery, net		263,273		290,058
Other assets		-		-
Total assets	$	1,133,414	$	1,668,092

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	39,108		$	39,226
Note Payable-shareholder		347,884			347,884
Other current liabilities		181,842			115,463
Current Poriton of Long Term Debt		258,694			285,764
Total current liabilities		827,528			788,337
Long-term liabilities
Note Payable-related party		56,077			77,298
Convertible Debentures		2,353,071			2,421,969
Discount on Convertible Debentures		(463,476	)		(485,014	)
Equipment Loans		23,394			28,070
Total liabilities		2,796,594			2,830,660
Stockholders' Equity (Deficit)
Preferred stock, authorized 300,000 shares,
Par value $0.001, issued and outstanding at
28-Feb-07 and 31-Aug-06 is 234,800 shares
respectively.		235			235
Common stock, authorized 500,000,000 shares,
$0.001 par value, issued and outstanding at
28-Feb-07 and 31-Aug-06 is 17,934,556 and
5,549,502 shares respectively.		17,764			5,549
Paid in Capital		883,526			746,008
Stock Subscribed		-			36,000
Retained Earnings(Deficit)		(2,564,705	)		(1,950,360	)
Total stockholders' equity (deficit)		(1,663,180	)		(1,162,568	)
Total liabilities and stockholders' equity	$	1,133,414		$	1,668,092

2

SEW CAL LOGO, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

	Six Months Ended					Three Months Ended
	February 28,					February 28,
	2007			2006		2007			2006
Revenue:
Sales of Caps, Embroidery and Other	$	1,005,468		$	1,076,652	$	443,864		$	555,061
Total Revenue		1,005,468			1,076,652		443,864			555,061
Cost of Goods Sold		907,108			827,157		455,655			453,710
Gross profit		98,360			249,495		(11,791	)		101,351
Expenses:
General and Administrative		163,678			30,507		61,232			12,571
Officer and Administrative Compensation		201,266			144,502		94,423			83,880
Consulting, Legal and Accounting		107,469			7,747		52,597			247
Depreciation		41,784			4,759		20,892			2,379
Rent		140,000			21,000		60,000			7,500
Interest Expense		58,509			32,395		18,160			19,552
Total expenses		712,706			240,910		307,304			126,129
Income (loss) before income taxes		(614,346	)		8,585		(319,095	)		(24,778	)
Provision for income taxes		-			5,718		-			-
Net income (loss)	$	(614,346	)	$	2,867	$	(319,095	)	$	(24,778	)
Basic and Diluted Earnings (Loss) per Share	$	(0.05	)	$	0.00	$	(0.03	)	$	(0.00	)
Weighted Average Number of Common Shares		12,030,707			5,020,000		12,030,707			5,020,000

3

SEW CAL LOGO, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

															Retained			Total
	Preferred Stock				Common Stock				Paid in			Stock			Earnings			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Subscribed			(Deficit)			Equity
Balance, August 31, 2002		189,800	$	190		3,000,000	$	3,000	$	1,810		$	-		$	(573,885	)	$	(568,885	)
Contributed Officer Services										60,000									60,000
Net (Loss) for the year																(45,381	)		(45,381	)
Balance, August 31, 2003		189,800		190		3,000,000		3,000		61,810						(619,266	)		(554,266	)
Recapitalization 2/24/04
Shares issued at par value						520,000		520		(520	)
Shares issued for services at par		45,000		45		1,500,000		1,500											1,545
Net Income for the year																50,818			50,818
Balance, August 31, 2004		234,800		235		5,020,000		5,020		61,290						(568,448	)		(501,903	)
Equipment Purchase						33,334		33		114,067									114,100
Shares issued for Services
at $0.10 per share						122,834		123		12,160									12,283
Stock Subscribed													36,000						36,000
Net Income (Loss) for year																(105,366	)		(105,366	)
Balance, August 31, 2005		234,800		235		5,176,168		5,176		187,517			36,000			(673,814	)		(444,886	)
Shares issued for Services
at $0.15 per share						50,000		50		7,450									7,500
Discount on Convertible Debentures										515,000									515,000
Shares issued for Services
at $0.10 per share						33,334		33		3,300									3,333
Shares issued for Conversion of Debt						290,000		290		32,741									33,031
Net Income (Loss) for period																(1,276,545	)		(1,276,545	)
Balance, August 31, 2006		234,800		235		5,549,502		5,549		746,008			36,000			(1,950,359	)		(1,162,567	)
Common Stock Issued for Cash						61,000		61		60,939			(36,000	)					25,000
Shares issued for Services						683,534		684		19,151									19,835
Shares issued for Conversion of Debt						11,470,000		11,470		57,428									68,898
Net Income (Loss) for period																(614,346	)		(614,346	)
Balance, February 28, 2007		234,800	$	235		17,764,036	$	17,764	$	883,526		$	-		$	(2,564,705	)	$	(1,663,180	)

4

SEW CAL LOGO, INC.

Statements of Cash Flows

(Unaudited)

	Six Months Ended
	February 28,
	2007			2006
Operating Activities:
Net income (loss)	$	(614,346	)	$	(306,146	)
Depreciation		41,784			23,954
Stock issued for services		19,835			7,500
Amortization of Discount on Debentures		21,538			-
Stock issued in conversion of debt		68,898			-
Adjustments to reconcile net income (loss)
(Increase) decrease in prepaid Expenses		(9,890	)		(18,374	)
(Increase) decrease in inventory		693			38,071
(Increase) decrease in other assets		-			-
(Increase) decrease in accounts receivable		101,645			22,568
Increase (decrease) in accounts payable		(118	)		(28,272	)
Increase (decrease) in other current liabilities		66,379			(312,971	)
		-
Net cash provided by (used in) operating activities		(303,582	)		(573,670	)
Investing Activities:
Purchases/disposals of equipment		(15,000	)		(33,239	)
Cash (used) in investing activities		(15,000	)		(33,239	)
Financing Activities:
Notes Payable		(48,291	)		(9,017	)
Debentures Payable		(68,898	)		700,000
Stock Sales		25,000			-
Increase/(Decrease) in shareholder loan					(7,500	)
Repayment of equipment loan		(4,674	)		(52,616	)
Net cash provided by (used in) financing activities		(96,863	)		630,867
Net increase (decrease) in cash and cash equivalents		(415,445	)		23,958
Cash and cash equivalents at beginning of the year		988,251			56,865
Cash and cash equivalents at end of the year	$	572,806		$	80,823
Supplemental Information
Interest	$	58,509		$	29,165
Taxes	$	-		$	-

5

SEW CAL LOGO, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(February 28, 2007 and August 31, 2006

NOTE 1. Summary of Significant Accounting Policies

The Company

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

On February 24, 2004 the Company merged with Calvert Corporation, a Nevada Corporation. This was a recapitalization accounted for as a stock exchange transaction (reverse merger). Calvert also changed its name to Sew Cal Logo, Inc. See Note 8 for more details of this merger.

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

Use of Estimates

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

Accounts Receivable

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

	28-Feb-07			31-Aug-06
Gross Trade Accounts Receivable	$	161,120		$	262,765
Allowance for Doubtful Accounts		(1,250	)		(1,250
Accounts Receivable, net	$	159,870		$	261,515

Revenue Recognition

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

6

Cash and Cash equivalents

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

Inventory

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

	28-Feb-07		31-Aug-06
Raw Materials and WIP	$	123,356	$	124,049
Finished Goods		0		0
Total Inventory	$	123,356	$	124,049

Equipment and Machinery

Equipment and machinery are stated at cost. Depreciation is computed using the straight-line method over their estimated useful lives ranging from five to seven years. Depreciation and amortization expense for the period ended February 28, 2007 and the fiscal year August 31, 2006, amounted to $41,784 and $98,189 respectively. Gains from losses on sales and disposals are included in the statements of operations. Maintenance and repairs are charged to expense as incurred. As of February 28, 2007 and August 31, 2006 equipment and machinery consisted of the following:

	28-Feb-07		31-Aug-06
Equipment and Machinery	$	983,644	$	968,644
Less:
Accumulated depreciation		720,371		678,856
	$	263,273	$	290,058

Fiscal Year

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

Earnings and Loss Per Share Information

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

7

Segment Reporting

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

NOTE 2. Going Concern

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

Managements Plan

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

NOTE 3. Accounts Payable and Other Current Liabilities

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

	28-Feb-07		31-Aug-06
Trade accounts payable	$	39,108	$	39,226
Sales tax payable		1,651		4,896
Short Term Loan - Related Party
Payroll Liabilities		65,204		71,177
Credit Card Debt		21,475		15,299
Revolving bank line of credit (Prime +
3.8 %, interest only)		93,512		24,091
Revolving bank line of credit (prime +
3.8750 % Interest only, reviewed yearly)				0.00
	$	181,842	$	115,463

NOTE 4. Note Payable- Related Party

On March 1, 2003, for purposes of working capital, the sole shareholder and spouse made a $355,384 subordinated loan to the Company. The Company is obligated to pay monthly interest only on the subordinated loan during its term at the rate of 10% per annum (fixed-rate calculated as simple interest). The entire principal amount of the loan was originally due on March 1, 2004, and has continued from that time on a month-to-month basis. The subordinated loan, which was consented to by United Commercial Bank and subsequent banks, is collateralized by the assets of the Company, including but not limited to any and all equipment owned by the Company, inventory, and outstanding receivables. Balance at November 30, 2006 is $347,884.

8

NOTE 5. Commitments and Contingencies

Long-Term Debt

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

On August 11, 2004 the Company refinanced this SBA loan with Pacific Liberty Bank. As of February 28, 2007 the balance was $258,694. Monthly payments are made the 15^th of each month with interest at prime plus 2.5. Currently the interest rate is 9.5%. This loan is collateralized by the assets of the corporation and is in first place before the shareholder loan.

On April 16, 2003 the Company entered an installment sale contract with GMAC for the purchase of a vehicle. The total amount financed at signing was $40,754 that represents the total sale price. The agreement requires 60 monthly payments of approximately $679 beginning on May 16, 2003 and ending on April 16, 2008. The outstanding balance at February 28, 2007 was $11,228. This vehicle note was obtained by GMAC under special financing and carries no interest.

The Company has a second installment loan with GMAC on a vehicle with a balance as of February 28, 2007 of $12,165.

Lease Commitments

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

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

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

Callable Convertible Debentures

On February 16, 2006 the Company executed an equity financing agreement wherein it will issue an aggregate of $2,000,000 callable convertible debentures in three segments. The Company has received a net of $1,955,000. The debentures are convertible to common stock at 45% below the lowest three intra-day trading price during the 20 trading days immediately preceding conversion. The Debentures also carry five-year warrants exercisable at $0.50 per share. The aggregate number of warrants to be issued is 2,142,855.

Because the current stock price is well below the exercisable price of the warrants, they are considered “out of the money” and no discount has been recorded.

The Company has recorded a discount on the convertible debentures of $315,000. During the period ended May 31, 2006 the Company has converted $33,031 debt into stock and expensed $14,985 of the recorded discount as interest expense. The company will amortize the remaining discount over the life of the debentures.

On July 31, 2006 the Company executed an equity financing agreement wherein it has issued $500,000 in callable convertible debentures and 20,000,000 seven year warrants exercisable at $0.05 per share. The debentures are convertible to common stock at 40% below the lowest three intra-day trading price during the 20 trading days immediately preceding conversion. The aggregate number of shares to possibly be issued at 100% conversion is 69,444,444 shares. Calculated using a current 3 day trading average price per share of $0.012 per share less 40% is $0.0072 per share divided into $500,000 equals 69,444,444 shares. Because the current stock price is well below the exercisable price of the warrants, they are considered “out of the money” and no discount has been recorded. The Company has recorded a discount on the convertible debentures of $200,000 which represents the 40% discount and will be amortized to interest expense over the life of the debentures.

9

NOTE 6. Stockholders’ Equity

Preferred Stock

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

Common Stock

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

As of August 31, 2004 (post merger) the Company had 5,020,000 common shares issued and outstanding.

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

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

On February 16, 2006 the company entered into a securities purchase agreement for a total subscription amount of $2,000,000 that includes stock purchase warrants and callable convertible debentures. A discount on convertible debentures was recorded against additional paid in capital of $315,000 which will be amortized over the life of the debentures. The total subscription includes an aggregate of 2,142,858 five-year warrants exercisable for the same number of common shares at $0.50 per share. An aggregate of 25,974,026 common shares have been registered and are available for issue to potentially convert the full $2,000,000.

On July 31, 2006 the company issued $500,000 in convertible debentures at a 40% discount. A discount on convertible debentures was recorded against additional paid in capital of $333,333 which will be amortized over the life of the debentures. Common stock registered to convert the full $500,000 was calculated at 69,444,444 shares using the current three day average price per share of $0.012 less a 40% discount.

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

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

The Company issued 683,534 common shares for services valued at $19,835.

10

The Company converted $68,898 debt into 11,470,000 common shares during the period ended February 28, 2007.

Warrants

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

NOTE 7. Interest Expense 

Interest expense for the period ended February 28, 2007 and the year ended August 31, 2006 and is $58,509 and $29,165 respectively.

NOTE 8. Income Taxes

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

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

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

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

Year (8/31)	Amount		Expires
1996	$	2,104		2011
1997		9,265		2012
1998		26,317		2013
1999		21,074		2019
2000		50,619		2020
2001		21,675		2020
2002		319,424		2022
2003		45,381		2023
2005		105,366		2025
2006		1,276,546		2026
Total	$	1,877,771

11

Were the NOL tax asset to be recorded at August 31, 2006 it would be a long-term asset of $281,666. Continued profitability by the Company will be a major factor in the valuation account being removed and the recording of this asset.

NOTE 9. Merger with Calvert

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

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

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

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

NOTE 10. The Effect Of Recently Issued Accounting Standards

Below is a listing of the most recent accounting standards SFAS 150-154 and their effect on the Company.

Statement No. 150Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (Issued 5/03)

This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

Statement No. 151Inventory Costs-an amendment of ARB No. 43, Chapter 4 (Issued 11/04)

This statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “…under some circumstances, items such as idle facility expense, excessive spoilage, double freight and re-handling costs may be so abnormal ass to require treatment as current period charges….” This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.

Statement No. 152Accounting for Real Estate Time-Sharing Transactions (an amendment of FASB Statements No. 66 and 67)

This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions.

This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, states that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2.

12

Statement No. 153Exchanges of Non-monetary Assets (an amendment of APB Opinion No. 29)

The guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, includes certain exceptions to the principle. This Statement amends Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assts and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.

Statement No. 154 - Accounting Changes and Error Corrections (a replacement of APB Opinion No. 20 and FASB Statement No. 3)

This Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed.

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

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

FORWARD LOOKING STATEMENTS

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

Results of Operations

Total revenue was $443,864 for the quarter ended February 28, 2007 as compared to $555,061 the quarter ended February 28, 2006, a net decrease of $111,197. The net decrease is primarily due to loss of private label business as the market for headwear manufacturing continued moving to Chinese imports. Officer and Administrative Compensation was $94,423 for the quarter ended February 28, 2007 as compared to $83,880 for the quarter ended February 28, 2006, a net increase of $10,543. The net increase is due to the addition of administrative staff and scheduled increases in officer compensation. Total Assets were $1,133,414 at February 28, 2007 as compared to $1,668,092 at August 31, 2006, a net decrease of $534,678. The net decrease was primarily due increased investment, legal expenses, and advertising in development of our trademarks and branding of our own apparel line.

Plan of Operation

In 2005 we acquired the rights to a branded line of Surf and Sports Wear items named Pipeline Posse. We have developed the necessary relationships, executed exclusive marketing and advertising programs with some of the top names in the Surfing World, designed an initial line of related surf and sports clothing, created and activated an on-line retail store for Pipeline Posse, and are planning a Summer - Fall 2007 launch of these products into selected retail stores.

We are currently in the process of developing our comprehensive business plan to include branded equipment, film and television projects, sports equipment and accessories, as well as brand endorsement for several major categories of products related to the action sports and youth markets.

Private Labeling

Domestic headwear suppliers have been drastically reduced as a result of increased lower pieced imports. Suppliers remaining in this business each have their own niche in the market place. Few remain in California and our customer base is increasing somewhat with this reduced competition. There are U.S. suppliers located in the Midwest and on the East Coast. They seldom manufacture for our market and deal mainly in the golf, major league baseball and ad specialty-type businesses.

Overseas suppliers are a different situation. They can produce a cap at a fraction of the price we can and we are constantly in competition with them. They can copy all that we create, but if they are asked to create on their own, they may fall short, as our industry is constantly changing by way of fabrics, styles, and method of decorating. Overseas suppliers are in the business of mass production for export. Our current customers use overseas suppliers for some of their "bread and butter" styles but tend to use U.S. suppliers for the more cutting edge products. However, overseas manufacturers require considerably more time in creating new products because of their inability to provide face-to-face contact with designers and domestic customers. They also require greater lead times for shipping and cannot make changes overnight (literally) when required. The logistics also may not allow them to be immediately aware of developing trends, forecasting them, and then developing an appropriate finished product instantly.

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At present, the youth oriented "action sports" lifestyle-clothing market (surf/skate/snow) is led by labels such as "Quiksilver" of Huntington Beach, California, representing in excess of $1 billion in annual sales. Also, "O'Neill Sportswear", "Rip Curl", "Lost", "Billabong", "Volcom", and numerous other Orange County, California-based clothing companies service this market and can be considered competition for our new brands. We believe that teens and young adults are looking for something new and trendy to identify with, purchase, and wear.

Although we believe we now have the experience and resources to take advantage of and fulfill the needs of this market and we have already made significant steps towards doing so, the youth, active and sports apparel industry is highly competitive, with many of our competitors having greater name recognition and resources than we do. Many of our competitors are well established, have longer-standing relationships with customers and suppliers, greater name recognition and greater financial, technical and marketing resources. As a result, these competitors may be able to respond more quickly and effectively than we can to new or changing opportunities or customer requirements. Existing or future competitors may develop or offer products that provide price, service, number or other advantages over those we intend to offer. If we fail to compete successfully against current or future competitors with respect to these or other factors, our business, financial condition, and results of operations may be materially and adversely affected.

We currently have no market share data available for competition in these areas. We work on each job through personal contacts and are frequently the only company contacted for the particular project.

We do not depend on any one or a few major customers.

Patents, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor Contracts

We recently applied to the USTPO for the trademark “Pipeline Posse” in several categories. Each of our applications is active and currently under review for approval by the USPTO examiners We will continue to assess the need for any copyright, trademark or patent applications on an ongoing basis.

Film Wardrobe & Entertainment Related Business

Film wardrobe and related business remains slow as productions continue to be produced outside the United States. This holds true for nearly all of the major studios as well as independent filmmakers, causing the majority of the local costume houses to downsize.

To counter this trend and help regain our lost dollar volume in this area we will continue our existing strategy of marketing directly to movie and television productions before they begin filming locally and send units out of town on location. Our strategy of dealing directly with producers, wardrobe personnel, and talent is beginning to pay off with recent orders from major films such as “Superman Returns” and the upcoming “American Gangster” starring Denzel Washington and Russell Crowe.

Corporate Sales

While corporate clients currently account for less than fifteen percent (15%) of our business, we continue to focus on growing this area of our business over the next year with the addition of in-house salespeople. Also, the addition of new silk screening equipment has given us the capability to accept and produce large orders of promotional t-shirts and related items for corporate programs through outside sales and advertising organizations. Our salespeople will further solicit business to our existing client base via telephone and Internet as well as to potential new customers through the same means as well as through print advertising via mailing and placement in trade publications. Additional labor has been hired to operate the new equipment as needed and second and third manufacturing shifts can be added as growth requires. We have added two in-house clerical persons to service new inquiries and added accounts, as well as order finished goods for embellishment and shipping. Current production capacity is adequate to handle the anticipated increased volume.

Development of new Product Lines

We have identified and developed an opportunity to export the California life style to the rest of America and to the worldwide markets in general. Started as an idea born in San Clemente, California, home of the premier surfing beaches in the world, we have created a number of California Driven brands of products.

Under the California Driven umbrella, several lines are being developed with specific target markets in mind. Currently, several California Driven products are being developed by us but they do not represent any significant amount of our current overall revenue. The California Driven brand lines are being developed as an expansion into our own line of products to market and sell. To develop this market, capital of $2,500,000 in the form a convertible debenture has been secured and is being budgeted to support both current operations and develop our brands of apparel and related projects.

The first identified brand line is Pipeline Posse™. Three trademarks have been applied for and are under active review for approval by the USPTO. We have completed initial design of a line of surf wear under the Pipeline Posse™ logo and have manufactured lifestyle oriented goods to begin a sales and marketing campaign. The exclusive rights for Pipeline Posse™ were acquired on August 15, 2005 from Braden Dias of Hawaii. Mr. Dias is a world renowned surfer and is under agreement with us to represent Pipeline Posse as a professional athlete in the development of Surf and Sportswear lines. In addition to Mr. Dias, several additional professional Hawaiian surfers are currently under agreement to represent the project and 3 support people have been hired, both in Hawaii and California. Clothing design is being aggressively developed by both in-house personnel and professional independent contractors experienced in product development for the Action Sports Industry.

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Contact with our target market has been initially established in several major surf publications through personal interviews with our athletes as well as editorials on The Pipeline Posse itself. Print and on-line advertising campaigns have commenced in both industry related magazines and websites. We have also published and activated PIPELINEPOSSE.COM, our website which features up to date information on the athletes, activities, photo and video galleries, an active news blog, related action sports links, and a fully developed online store. The secure site and shopping capability has been recently activated to accept credit cards and offer shipment of merchandise worldwide. A multi- faceted major advertising and marketing campaign is being budgeted and developed for launch in early 2007 and professional sales organizations are being interviewed and considered for representation and distribution of the brand both domestically and worldwide.

Additional Action Sport related brands are being considered and are in various stages of development in regard to trademarks, competition, market potential, and strategy and cost. Target dates for launch have not been yet established.

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

Critical Accounting Policies

SewCal's financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 1 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, SewCal's views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on SewCal's consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report. During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:

Item 3. Controls and Procedures

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 under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of February 28, 2006. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the first quarter of 2006/2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

16

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

SEW CAL LOGO, INC. v. BURT MARTIN ARNOLD SECURITIES, INC., ET AL. Superior Court of California for the County of Los Angeles CASE NO. BC351248

In April, 2006 we filed suit against Burt Martin Arnold Securities (“BMA”) for breach of contract and return of deposit. BMA counter sued for a finder’s fee. The case has settled, wherein Sew Cal agreed to issue BMA 2,750,000 shares of restricted stock, with mutual dismissals entered on 03/22/2007.

GRAPHIC PRINTS, INC. v. SEW CAL LOGO, INC. United States District Court for the Central District of California CASE NO.: CV06-6427 JFW (PJWx)

In October Plaintiff Graphic Prints Inc. filed suit asserting infringement and related causes of action with respect to its alleged trademarks. Sew Cal denies that any such activities have taken place, disputes the validity of plaintiff’s purported trademarks and will vigorously defend the suit.

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

In March Mr. Naranjo filed a purported class action suit against Sew Cal asserting wages due and violations of various sections of the California Labor Code relating to his purported tenure with the company.  Sew Cal denies all allegations in the complaint and intends to defend the suit accordingly.

ITEM 2. CHANGES IN SECURITIES

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

17

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

None

ITEM 5. OTHER INFORMATION

18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

32.2 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

(b) REPORTS ON FORM 8-K

None

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SIGNATURES

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

Date: April 12, 2007	By:	/s/ Richard Songer
		Richard Songer President, Director and Chief Executive Officer

By:	/s/ Judy Songer
	Judy Songer Director and Chief Financial Officer

20

EX-31.1

CERTIFICATION

OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Songer, certify that:

1. I have reviewed this Form 10-QSB of Sew Cal Logo, 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 present 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 13-a-15(f) and 15d-15(f)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, 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 there liability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(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 financing reporting that occurred during the small business issuer's most recent fiscal quarter that has 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 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 information; and

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

Date: April 12, 2007
By:	/s/ Richard Songer
	Richard Songer
	Chief Executive Officer

EX-31.2

CERTIFICATION

OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Judy Songer, certify that:

1. I have reviewed this Form 10-QSB of Sew Cal Logo, 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 present 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 13-a-15(f) and 15d-15(f)) for the small business issuer and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, 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 there liability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

(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 financing reporting that occurred during the small business issuer's most recent fiscal quarter that has 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 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 information; and

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

Date: April 12, 2007
By:	/s/ Judy Songer
	Judy Songer
	Chief Financial Officer,

EX-32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Quarterly Report of Sew Cal Logo, Inc. (the "Company") on Form 10-QSB for the period ending February 28, 2007, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Richard Songer, Chief Executive Officer and Chief Financial Officer of the Company, certifies to the best of his knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

1. Such Quarterly Report on Form 10-QSB for the period ending February 28, 2007 complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Quarterly Report on Form 10-QSB for the period ending February 28,2007 fairly presents, in all material respects, the financial condition and results of operations of Sew Cal Logo, Inc.

Date: April 12, 2007

SEW CAL LOGO, INC.

By:	/s/  Richard Songer
	Chief Executive Officer

EX-32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with this Quarterly Report of Sew Cal Logo, Inc. (the "Company") on Form 10-QSB for the period ending, a February 28, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Judy Songer, Chief Financial Officer of the Company, certifies to the best of her knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

1. Such Quarterly Report on Form 10-QSB for the period ending February 28, 2007, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Quarterly Report on Form 10-QSB for the period ending February 28, 2007, fairly presents, in all material respects, the financial condition and results of operations of Sew Cal Logo, Inc.

Dated: April 12, 2007

SEW CAL LOGO, INC.

By:	/s/ Judy Songer
	Chief Financial Officer,