Almost Never Films Inc. - Annual Report: 2013 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

For the Year Ended June 30, 2013

OR

For the transition period from _________________to

SMACK SPORTSWEAR

(Exact name of registrant as specified in its charter)

(310) 787-1222

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 xo No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company, defined in Rule 12b-2 of the Exchange Act (Check one).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 6, 2013, the registrant's outstanding common stock consisted of 40,000,000 shares, $0.001 par value; and the registrant's outstanding preferred stock consisted of 1,000,000 shares, $0.001 par value

Smack Sportswear, Inc.

For the Year Ended June 30, 2013

TABLE OF CONTENTS

PART I

ITEM 1. DESCRIPTION OF BUSINESS

Forward-Looking Statements

This annual report contains forward-looking statements that relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” beginning on page 8 of this report, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) unless otherwise stated and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all references to "common shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", means Smack Sportswear, Inc.. and our wholly-owned subsidiary, Team Sports Superstore unless otherwise indicated.

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Business of the Issuer

History and Organization

SMACK Sportswear ("we", "us", "our", “the Company" or the "Registrant") was organized October 31, 2007 (Date of Inception) under the laws of the State of Nevada, as Reshoot Production Company. The Company was incorporated as a subsidiary of Reshoot & Edit, a Nevada corporation. The Company subsequently changed its corporate name from Reshoot Production Company to SMACK Sportswear on December 15, 2011.

On September 27, 2011, Bill Sigler took control over the management and ownership of SMACK Sportswear. Concurrently, he was managing Team Sports Superstore, Inc. a volleyball apparel retailer. As the sole shareholder Team Sports Superstore, Inc., Mr. Sigler entered into a Stock Value Agreement whereby he obtained control ownership of SMACK Sportswear in exchange for his commitment to sell Team Sports Superstore, Inc. to SMACK Sportswear upon completion of audited financials, as required by the U. S. Securities & Exchange Commission. Simultaneously, Mr. Bill Sigler on behalf of SMACK Sportswear entered into an Irrevocable Business Sales Agreement whereby he agreed to transfer 100% equity ownership of Team Sports Superstore to SMACK Sportswear in the form of a tax free exchange of stock, upon completion of the audit. This sale included all the assets, liabilities, trade names, and business operations of Team Sports Superstore, Inc.

Smack Sportswear, Inc. closed the purchase of Team Sports Superstore, Inc. (“Team Sports”) on December 6, 2012. Team Sports is a California corporation that markets and sells custom volleyball apparel and equipment products through the internet, retail, club teams and schools. This Report provides disclosure on behalf of the company as a whole when referring to Team Sports and Smack Sportswear.

On August 31, 2011, Mr. Sigler acquired 37,150,000 shares or 78.9% of the issued and outstanding shares of the Registrant in exchange for his commitment to sell Team Sports to Smack Sportswear upon completion of the audited financials. He subsequently became the Chief Executive Officer of the Company and is the major shareholder of Smack Sportswear.

Smack Sportswear has purchased one hundred (100%) percent ownership interest in Team Sports. The transaction is recorded as a reverse merger and resulted in a recapitalization with Team Sports being the acquirer for accounting purposes.

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Change in Fiscal Year

Smack Sportswear closed the purchase of Team Sports Superstore, Inc. (“Team Sports”) on December 6, 2012. This purchase represents a substantial portion of the Company’s business. In connection with this transaction, the Company changed its fiscal year end to June 30 from December 31 to conform its fiscal year end to that of Team Sports Superstore.

Exit of the Development Stage

With the purchase of Team Sports Superstore, Inc., the Company now has recurring revenue transactions, and as a result, it is no longer considered to be a development stage company.

Team Sports Superstore Business Plan

The Company does its business through its wholly-owned subsidiary, Team Sports Superstore, Inc.

The Team Sports primary focus is on the sport of volleyball. Management believes volleyball has experienced consistent growth since 1990. Management also believes, it is also the fastest growing sport among teenage girls, and is expected to grow even faster now that Sand Volleyball has become an NCAA scholarship sport. Growth spurts often occur after the Olympics, which was the case in 2008 when the U.S. won gold in women’s & men’s beach, as well as men’s indoor volleyball. Since a volleyball team generally consists of up to 12 players; it is easier to obtain volume orders selling the same uniforms of volleyball sportswear to a team rather than an individual. Since most volleyball players participate in a team, it is easier to obtain volume orders.

The Company has built sales with little investment capital. The Company currently has two successful business segments which can be significantly grown with additional financing. The two current segments are: Team Apparel sales and the E-Commerce/Catalog segment.

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Team Apparel Sales Segment

The SMACK Sportswear brand was established on the sands of Manhattan Beach in 1994. It holds approximately 10% of the Indoor Team Apparel market, and is looking to become a leader in the newly created Beach Uniform market. Although Asics and Mizuno hold the majority of sales in this space, the Company offers a number of benefits over these larger companies. The Company delivers a product which can be widely customized, and meets equal or better price points. Also the Company offers a “One Stop Shop” opportunity by offering other services like decorating, equipment, and fundraising apparel, which in turn saves coaches and club directors time and money. Historically the Company has not widely marketed to this segment and most sales have resulted from reputation and word of mouth. For the upcoming season, the company hopes to aggresively market to this custumer base via numerous marketing strategies including E-Commerce, Digital Catalogs, and direct contact methods.

E-Commerce/Catalog Segment

The management of Team Sports is developing a sophisticaed E-Commerce marketing program. This strategy includes both SmackSportswear.com, as well as the existing web store VBSuperstore.com. It also includes a market growth strategy utilizing certain internet marketing systems, social network marketing systems, and a cost reduction strategy under which the printed and mailed catalog will be replaced over a short time by a fully on-line digital catalog. As a licensed partner with the AVP Pro Volleyball Tour, USA Beach Volleyball, and the National Collegiate Sand Volleyball Association, the company was able to gain email lists of over 400,000 active athletes that will help to grow the E-commerce portion of the business. Other areas the company has been pursuing include setting up Affiliate Web Stores for 4000 volleyball clubs around the U.S., as well as setting up stores for the top pro volleyball tours and the National Collegiate Sand Volleyball Tour. Further expansion strategies include international expansion of the brand taking advantage of the great acceptance of California brands worldwide and the huge acceptance of volleyball internationally.

Management believes that Team Sports has a number of competitive advantages, which include:

·         In-house manufacturing

·         Strong and diverse management team

·         Educated and experienced staff

·         Online design capabilities for customers

Team Sports Superstore is building a brand to be respected and recognized. A capital infusion would be used explicitly for growing the Company via creative and aggressive marketing strategies leveraging the existing brand and expanding the existing channels of distribution. The following briefly details management’s growth plan in its business segments.

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Team Apparel

Indoor team apparel - there exists an opportunity for growth in the team segment. Although the company has a decent share of the custom uniform market, the stock uniform business is by far the largest segment and one in which the Company has little participation. The present distribution model is direct sales, however the company may expand distribution through the retailer network that sells volleyball equipment and apparel, online suppliers, and other wholesale avenues. Management also believes that growth opportunities can be achieved by additional financing and utilizing aggressive marketing strategies. International expansion offers another opportunity for growth. There are hundreds of pro indoor volleyball leagues throughout Europe, Asia, South America and Australia – with volleyball being the 2^nd most popular sport in the world, International expansion will allow for drastic growth.

Sand team apparel - The NCAA approved Sand Volleyball as a scholarship sport in 2011. This will provide another expanding market for the Company to exploit.

No other Company is making custom athletic beach team wear. SMACK has been the first to market and promote beach team wear since 2009. It is important for SMACK to capitalize on being the first to market and expand its ownership of this space thru strategic partnerships, and by using the existing reach SMACK has thru mail order, email lists, and a comprehensive marketing plan. Marketing to this demographic will fuel synergistic growth of Smack’s Beach Active wear.

E-Commerce/Catalog – Team Sports is enhancing and modifying its E-Commerce technology to take advantage over the competition’s online volleyball marketing. Management’s goal is to have multiple web-stores ranking on page 1 of Google (for all key volleyball related search terms) by the end of 2013. The Company is presently modifying its sites to maximize optimization, navigation, and aesthetics. Implementing a targeted marketing campaign and leveraging strategic partnerships will assist in reaching the goals. The Affiliate program will allow the Company to have stores on thousands of volleyball related websites, including large national organizations like USA Volleyball.

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Active BeachWear - The current two business segments are very recognized and after years of growth can now be used to aggressively launch a SMACK Active BeachWear Line to be sold thru multiple channels. In terms of active beachwear, there are the surf wear companies like Quiksilver and Roxy, which are viewed as cool but not necessarily functional for beach sports, as well as companies like Speedo and Nike, which when it comes to the beach, are not viewed as beach lifestyle brands. The Smack line of sportwear will be specifically designed and directed at the active person who is seeking supportive and functional active wear while simultaneously possessing the fashionality of the most current youthful and successful concepts. Smack’s bikinis are worn by the 2010 World Champions as well as more pro athletes than any other company. With the NCAA launching beach volleyball in 2012, Smack will aim to become positioned as the #1 player in this market, then expand to national retail chains. The Company believes there is an opportunity to fill a niche in the Action Sports apparel market with So Cal inspired performance beach/swim wear.

Agreement with Phiten

We have signed an agreement with Phiten, a Japanese company which is the innovative originator of the titanium necklace and precious metal infused sports accessories. The agreement gives Smack sportswear Inc. a license to infuse our clothing with Phiten’s ACQUA-METAL technology. The pupose of the technology is to help athletes excel during sports activity. The company’s plans to use the new technology in its beach, team and core performance apparel.

Business Strategy Opportunities

·         Duplicate the current apparel and e-commerce models into other sports

·         International distribution – Volleyball is the 2^nd most popular sport in the world. There are many opportunities to leverage relationships with top pros playing internationally to gain revenues in team, beach, and ecommerce.

·         Opening a Flagship store, then other similar stores, where only the Company brands are sold.

·         Expand into footwear, sunglasses, accessories

·         Acquisition of synergistic companies/brands that allow for exponential growth

·         Strategic partnerships/licensing deals that allow for revenue/profit growth.

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Competition

The Company is in direct competition with producers of sport apparel. Many of these producers have significantly greater resources. The Company also expects the number of competitors to increase. The sports apparel industry is highly competitive. Factors contributing to the industry's increasingly competitive market include fashion changes, fashion trends, acceptability of different fabrics and other personal fashion factors. Most all competitors, such as Asics and Mizuno have significantly greater financial, marketing and other resources, and larger customer bases than we have. As a result, these competitors may be able to adapt to changes in customer requirements more quickly; introduce new and more innovative products more quickly; better adapt to downturns in the economy or other decreases in sales; better withstand pressure for cancelled services, take advantage of acquisition and other opportunities more readily; devote greater resources to the marketing and sale of their products; and adapt more aggressive pricing policies. All of this may contribute to intensifying competition and may affect our future revenue growth.

Patents, trademarks, franchises, concessions, royalty agreements

Team Sports currently has no pending or provisional patents nor any trademark applications filed. The Smack brand has been operated since 1994. We have developed our own proprietary technology, and processes. We produce our finished apparel at our facilities in Torrance, California. We regard our technologies and processes as trade secrets. We recognize that trade secrets are difficult to protect. We intend to enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time consuming and the outcome is unpredictable.

Government Regulation

We are subject to federal, state and local laws and regulations affecting our business, including those promulgated under the Occupational Safety and Health Act, the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission and various environmental laws and regulations.

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This means we may be required to make significant expenditures to comply with governmental laws and regulations, including labeling laws and privacy laws, compliance with which may require significant additional expense. Complying with existing or future laws or regulations may materially limit our business and increase our costs. Failure to comply with such laws may expose us to potential liability and have a material adverse effect on our results of operations.

Employees

The Company has one full time employee, and nine (9) independent contractors, at this time.

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Item 1A - Risk Factors

RISK FACTORS

TEAM SPORTS SUPERSTORE HAS A LIMITED OPERATING HISTORY.

Team Sports has a limited operating history. Prospective investors should be aware of the difficulties encountered by such new enterprises, as management faces all of the risks inherent in any new business. These risks include, but are not limited to, competition, the absence of an operating history, the need for additional working capital, and the possible inability to adapt to various economic changes inherent in a market economy. The likelihood of success of Team Sports must be considered in light of these problems, expenses that are frequently incurred in the operation of a new business and the competitive environment in which Team Sports will be operating.

IF TEAM SPORTS'S BUSINESS PLAN IS NOT SUCCESSFUL, THERE IS SUBSTANTIAL DOUBT THAT TEAM SPORTS MAY BE ABLE TO CONTINUE OPERATIONS AS A GOING CONCERN AND IF WE DISCONTINUE OPERATIONS STOCKHOLDERS MAY LOSE THEIR ENTIRE INVESTMENT.

As discussed in the Financial Statements included in this Report, at the Year ended June 30, 2013, the Company had negative cash flow in operating activities of $(315,632). As of June 30, 2013, the Company’s current liabilities exceeded its current assets by $267,085. For the Year ending June 30, 2013, the Company had a net operating loss after taxes of $(495,953) and compared to a net operating loss, after taxes of $(245,619) for the same period last year.

These factors raise substantial doubt that the Company will be able to continue operations as a going concern, and Smack Sportswear’ independent auditors included an explanatory paragraph regarding this uncertainty in their report on the financial statements for the period from inception to June 30, 2012 and the Year ending June 30, 2013.

The Company’s ability to continue as a going concern is dependent upon generating cash flow sufficient to fund operations and reducing operating expenses. Smack Sportswear ' business plan may not be successful in addressing these issues. If Team Sports cannot continue as a going concern, its stockholders may lose their entire investment.

Failure to raise additional financing will cause us to go out of business. Further, we cannot guarantee that we will be successful in generating revenues and profit in the future. Failure to generate revenues and profit will cause us to suspend or cease operations. If this happens, you could lose all or part of your investment.

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IT IS DIFFICULT TO EVALUATE THE LIKELIHOOD THAT TEAM SPORTS WILL ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE.

Team Sports ability to continue to operate as a going concern is fully dependent upon Team Sports obtaining sufficient revenues or financing to continue its development and operational activities. The ability to achieve profitable operations is in direct correlation to Team Sports ability to generate revenues or raise sufficient financing. It is important to note that even if the appropriate financing is received, there is no guarantee that Team Sports will ever be able to operate profitably or derive any significant revenues from its operation.

Risks Related to Smack Sportswear’s Business

We have a limited product and technology portfolio at the current time.

There can be no assurance that any of Team Sports Superstore’s product concepts will be successfully developed, prove to be safe and efficacious, meet applicable regulatory standards, be capable of being produced in commercial quantities at acceptable costs or be successfully marketed.

There can be no assurance that any Team Sports Superstore’s concepts might license in or acquire in the future will be successfully developed, prove to be safe and efficacious, meet applicable regulatory standards, be capable of being produced in commercial quantities at acceptable costs or be successfully marketed.

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If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market products we may develop, we may not be able to generate increased product revenue.

We do not currently have a well defined organization for the sales, marketing and distribution of our apparel products. In order to market our products, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. In addition, we have no experience in developing, training or managing a sales force and will incur substantial additional expenses in doing so. The cost of establishing and maintaining a sales force may exceed its cost effectiveness. Furthermore, we will compete with many apparel companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

We are subject to various laws and regulations where we operate our business.

We are subject to federal, state and local laws and regulations affecting our business, including those promulgated under the Consumer Product Safety Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the rules and regulations of the Consumer Products Safety Commission as well as environmental laws and regulations. This means we may be required to make significant expenditures to comply with governmental laws and regulations, including labeling laws and privacy laws, compliance with which may require significant additional expense. Complying with existing or future laws or regulations may materially limit our business and increase our costs. Failure to comply with such laws may expose us to potential liability and have a material adverse effect on our results of operations.

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The sports apparel industry is subject to pricing pressures that may cause us to reduce the future gross margins for our products.

Average prices in the sports apparel industry have been declining over the past several years, primarily as a result of the growth of the mass merchant channel of distribution, increased competition, consolidation in the retail industry and a promotional retail environment.

To be competitive, we will be required to adjust our prices in response to these industry-wide pricing pressures. Many of our competitors source their product requirements, from lesser-developed countries to achieve lower operating costs. Our competitors may possibly source from regions with lower costs than those of our sourcing partners and those competitors may apply such additional cost savings to further reduce prices.

Moreover, increased customer demands for markdown allowances, incentives and other forms of economic support reduce our gross margins and affect our profitability. Our financial performance may be negatively affected by these pricing pressures if we are forced to reduce our prices without being able to correspondingly reduce our costs for finished goods or if our costs for finished goods increase and we cannot increase our prices.

We may not be able to keep pace with constantly changing sports apparel fashion trends, and if we misjudge consumer preferences, the image of one or more of our brands may suffer and the demand for our products may decrease.

Our success will depend, in part, on management's ability to anticipate and respond effectively to rapidly changing fashion sport trends and consumer tastes and to translate market trends into appropriate, saleable product offerings. If we are unable successfully to anticipate, identify or react to changing styles or trends and misjudge the market for our products or any new product lines, our sales may be lower and we may be faced with a significant amount of unsold finished goods inventory. In response, we may be forced to increase our marketing promotions, to provide markdown allowances to our customers, or to liquidate excess merchandise, any of which could have a material adverse effect on our net sales and profitability. Our brand image may also suffer if customers believe that we are no longer able to offer innovative products, respond to the latest fashion trends or maintain the quality of our products.

Even if we are able to anticipate and respond effectively to changing fashion sport trends and consumer preferences, our competitors may quickly duplicate or imitate one or more aspects of our products, promotions, advertising, brand image and business processes, whether or not they are protected under applicable intellectual property law, which may materially reduce our sales and profitability.

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The loss of one or more of our future suppliers of finished goods or raw materials may interrupt our supplies.

We purchase sport apparel from a limited number of third-party manufacturers. We do not have any material or long-term contracts with any of our suppliers. Furthermore, our finished goods suppliers also purchase the fabrics and accessories used in our products from a limited number of suppliers. The loss of one or more of these vendors could interrupt our supply chain and impact our ability to deliver products to our customers, which would have a material adverse effect on our net sales and profitability.

Increases in the price of raw materials used to manufacture our sports apparel could materially increase our costs and decrease our profitability.

The principal fabrics used in our business are made from cotton, synthetic fabrics and cotton-synthetic blends. The prices for these fabrics are dependent on the market price for the raw materials used to produce them, primarily cotton and chemical components of synthetic fabrics, and there can be no assurance that prices for these and other raw materials will not increase in the near future.

These raw materials are subject to price volatility caused by weather, supply conditions, power outages, government regulations, economic climate and other unpredictable factors. Fluctuations in crude oil or petroleum prices may also influence the prices of related items such as chemicals, dyestuffs, man-made fiber and foam. Any raw material price increase would increase our cost of sales and decrease our profitability unless we are able to pass higher prices on to our customers. In addition, if one or more of our competitors is able to reduce its production costs by taking advantage of any reductions in raw material prices or favorable sourcing agreements, we may face pricing pressures from those competitors and may be forced to reduce our prices or face a decline in net sales, either of which could have a material and adverse effect on our business, results of operations and financial condition.

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The worldwide sports apparel industry is heavily influenced by general economic conditions.

The worldwide sports apparel industry is highly cyclical and heavily dependent upon the overall level of consumer spending. Purchases of sports apparel and related goods tend to be highly correlated with changes in the disposable income of consumers. Consumer spending is dependent on a number of factors, including actual and perceived economic conditions affecting disposable consumer income (such as unemployment, wages and salaries), business conditions, interest rates, availability of credit and tax rates in the general economy and in the international, regional and local markets where our products are sold. As a result, any deterioration in general economic conditions, reductions in the level of consumer spending or increases in interest rates could adversely affect the future sales of our products.

A return to recessionary or inflationary conditions, whether in the United States or globally, additional terrorist attacks or similar events could have further adverse effects on consumer confidence and spending and, as a result, could have a material adverse effect on our financial condition and results of operations.

We may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.

Because of the emerging nature of the apparel markets in which we compete, our historical financial data is of limited value in estimating future operating expenses. Our budgeted expense levels are based in part on our expectations concerning future revenues. However, our ability to generate any revenues is solely dependent on our ability to market and sell our apparel products. The size of any future revenues depends on the choices of individuals the Company intends to recruit to assist with the development and implementation of future sales and marketing programs, which are difficult to forecast accurately. We may be unable to adjust our operations in a timely manner to compensate for any unexpected shortfall in revenues. Accordingly, a significant shortfall in demand for our products could have an immediate and material adverse effect on our business, results of operations, and financial condition. We may not be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business, operating results and financial condition.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as any indication of our future performance. Our quarterly and annual expenses are likely to increase substantially over the next several years. Our operating results in future quarters may fall below expectations. Any of these events could adversely impact our business prospects and make it more difficult to raise additional equity capital at an acceptable price per share. Each of the risk factors listed in this “Risk Factors” section may affect our operating results.

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Our business and the sport apparel industry are constantly changing and evolving over time. Furthermore, we compete in an unpredictable industry and regulatory environment. Our ability to succeed depends on our ability to compete in this fluctuating market. As such, our actual operating results may differ substantially from our projections.

If we lose or fail to retain the services of key management personnel, we may not be able to execute our business strategy effectively.

Our future success depends in a large part upon the continued service of key members of our senior management team. In particular, our CEO, Bill Sigler is critical to our overall management as well as the development of our technology, our culture and our strategic direction. All of our current executive officers and key employees are at-will employees, and we do not maintain any key-person life insurance policies. The loss of any of our management or key personnel could materially harm our business.

We may not be able to find suitable employees, who can help us move our business forward.

The Company currently relies heavily upon the services and expertise of Bill Sigler, CEO of the Company. In order to implement the aggressive business plan of the Company, management recognizes that additional clerical staff will be required. Our officers can manage the office functions and bookkeeping services until the Company can generate enough revenues to hire additional staff.

No assurances can be given that the Company will be able to find suitable employees that can support the above needs of the Company or that these employees can be hired on terms favorable to the Company.

We rely on trained personnel and, if we are unable to retain or motivate key personnel or hire additional qualified personnel, we may not be able to grow effectively.

Our performance is largely dependent on the talents and efforts of trained individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate, and retain trained personnel for all areas of our organization. Competition in the apparel industry for qualified employees is intense, especially on the West Coast and it is likely that certain of our competitors will directly target certain of our employees in the future. Our continued ability to compete effectively depends on our ability to retain and motivate those employees.

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We may also need to hire additional qualified personnel with expertise in the apparel industry, government regulation, manufacturing and sales and marketing. We compete for qualified individuals with numerous companies and other emerging entrepreneurial companies. Competition for such individuals, particularly in California is intense, and may not be able to successfully recruit or retain such personnel. Attracting and retaining qualified personnel will be critical to our success.

We may not successfully manage any growth that we may experience.

Our success will depend upon the expansion of our operations and the effective management of any such growth, which will place a significant strain on our management and on our administrative, operational, and financial resources. To manage any such growth, we must expand our facilities, augment our operational, financial and management systems, and hire and train additional qualified personnel. If we are unable to manage our growth effectively, our business would be harmed.

If we engage in any acquisition, we will incur a variety of costs and may never realize the anticipated benefits of the acquisition.

We may attempt to acquire technologies, services or products or in-license technologies that we believe are a strategic fit with our business. We have limited experience in identifying acquisition targets, and successfully completing and integrating any acquired businesses, technologies, services or products into our current infrastructure. The process of integrating any acquired business, technology, service or product may result in unforeseen operating difficulties and expenditures and may divert significant management attention from our ongoing business operations. As a result, we will incur a variety of costs in connection with an acquisition and may never realize its anticipated benefits.

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Risks Related to Our Intellectual Property

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information and may not adequately protect our intellectual property.

Because we operate in the highly competitive sports apparel field, we need to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We intend to enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, and other advisors. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by us during the course of the party’s relationship with us. These agreements also generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us. Enforcing a claim that a party illegally obtained and is using our trade secrets is difficult, expensive and time consuming and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain trade secret protection could adversely affect our competitive position.

Risks Related to Our Stock

WHEN BILL SIGLER, CEO OF THE COMPANY, BECAME THE LARGEST SHAREHOLDR OF THE COMPANY, IT GAVE THEM THE ABILITY TO CONTROL THE COMPANY WITHOUT THE OTHER SHAREHOLDER’S APPROVAL.

Mr. Bill Sigler is the largest stockholder and has the right to vote approximately 60.7%% of Smack Sportswear's outstanding common stock. As a result, he has the ability to control substantially all matters submitted to the Company’s stockholders for approval including:

a)      election of a board of directors;

b)      removal of any director;

c)      amendment of Articles of Incorporation or bylaws; and

d)      adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving the company.

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As a result of this ownership, it has the ability to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by Bill Sigler could affect the market price of its common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of shareholder investment in the company may decrease. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could reduce the stock price or prevent the stockholders from realizing a premium over the stock price.

We may, in the future, issue additional common shares, which would reduce investors' percent of ownership and may dilute our share value.

The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

Our common shares are subject to the "Penny Stock" Rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person's account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person; and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

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The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our Common shares and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

Because we do not intend to pay any cash dividends on our common stock, our stockholders will not be able to recIEve a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.

IN THE FUTURE, SMACK SPORTSWEAR WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY, AND MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO COMPLIANCE INITIATIVES.

Now that Smack Sportswear is a fully reporting company with the SEC, it will incur additional legal, accounting and other expenses. Moreover, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Our management will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Management expects to incur approximately $50,000 of incremental operating expenses in 2014.

21

ITEM 2. DESCRIPTION OF PROPERTY

Our executive and head office is located at 20316 Gramercy Place, Torrance CA 90501. Commencing July 2013, we leased 4,000 square feet for two years as our main operating facility.

This operating facility functions as our main operating facility and is adequate for our needs.

ITEM 3. LEGAL PROCEEDINGS.

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is quoted on the Financial Industry Regulatory Authority’s OTC Bulletin Board under the symbol "SMAK". The following quotations obtained from Yahoo! Finance reflect the highs and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. Currently, shares trade on average 100,000 shares per day; however prior to July, 2012 shares were very thinly traded.

22

The high and low bid prices of our common stock for the previous two fiscal years are as follows:

Transfer Agent

Our transfer agent for our common stock is Empire Stock Transfer, Inc. at 1859 Whitney Mesa Drive, Henderson NV 89014. Tel: 702 818-5898 Fax: 702 974-1444.

Holders of Common Stock

As of October 4, 2013, we have 718 registered shareholders holding 54,703,330 shares of our common stock. We have one holder of Preferred Stock.

Dividends

We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Our directors will determine if and when dividends should be declared and paid in the future based on our financial position at the relevant time. All shares of our common stock are entitled to an equal share of any dividends declared and paid.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

Please refer to our previous filings on our Quarterly Reports on Form 10-Q, or on our Current Reports on Form 8-K for information regarding all of our sales of our equity securities during the fiscal year that ended June 30, 2013.

23

Item 6. - Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

This Annual Report on Form 10-K contains forward-looking statements. When used in this Annual Report on Form 10-K, the words "anticipate," "believe," "estimate," "will," "plan," "seeks," "intend," and "expect" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Annual Report on Form 10-K. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Annual Report on Form 10-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Annual Report on Form 10-K. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Condition, Liquidity and Capital Resources

At June 30, 2013, we had negative working capital of ($267,085).

At June 30, 2013, our total assets were $465,156.

At June 30, 2013, our total liabilities were $722,241.

Cash Flows

The following is a summary of our cash flows for the periods set forth below:

24

The Year Ended June 30, 2013 Compared to the Year Ended June 30, 2012

Revenue

Team Sports Superstore was acquired December 6, 2012; however for comparison purposes this report includes the entire period for both 2013 and 2012.

Net sales for the Year ended June 30, 2013 totaled $947,223 versus $1,284,911 for 2012. Sales of wholesale revenue to teams and volleyball clubs totaled $904,416 for the Year ended June 30, 2013 versus $1,307,075 for the Year ended June 30, 2012. Sales discounts which are to volleyball clubs with recurring revenue were $54,988 for the Year ending June 30, 2013 compared to $87,448 for the Year ending June 30, 2012. Sales discounts are in line with expectations, with more team sales in 2012 and less club sales in 2013. Retail e-commerce revenue for the Year ending June 30, 2013 was $96,164 compared to $35,574 in the same period in 2012 as the Company ramps up its e-commerce website.

Expenses

The major components of our operating expenses are outlined in the table below:

For the Year ended June 30, 2013, our general and administrative expenses totaled $441,276 of which $60,036 was for advertising and marketing, $174,946 was for labor expense, bank and merchant account charges were $56,493, shipping expense was $68,465, and telephone costs were $18,149. For the Year ended June 30, 2012, our general and administrative expenses totaled $530,596, of which $30,021 was for advertising and marketing, $305,649 was for labor expense in line with increased activity, bank and merchant account charges were $30,611, shipping expense was $53,009, and telephone costs were $10,735.

25

For the Year ended June 30, 2013 professional fees were $306,491 compared to $192,776 in the same period in 2012. In 2013, accounting fees were $190,357, legal fees $29,155, marketing and sales consulting $81,874 and IT consulting was $5,106. In 2012, accounting fees were $125,704, legal fees $27,734, marketing and sales consulting $24,574 and IT consulting was $0.

E-commerce expenses consists of web hosting and domain fees, web marketing and web development.

Liquidity and Capital Resources

As of June 30, 2013 the Company has current assets of $455,156 and total current liabilities of $722,241. Much of the liabilities were as a result of the acquisition of Team Sports Superstore and include past due sales tax, payroll tax and income tax payments not paid because of lack of funds. The remainder of the liabilities are short term loans.

Going Concern

The financial statements included with this Annual report have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets business. As of June 30, 2013, the Company has accumulated operating losses of approximately ($629,742) since inception. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely affected the Company's ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. In order for the Company to remain a Going Concern it will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

26

These conditions raise substantial doubt about the Company's ability to continue as a going concern. Our financial statements do not include any adjustments that might arise from this uncertainty.

Plan of Operation

It is unclear whether the Company will be able to generate any significant profit during the coming year. Management believes that general and administrative costs and well as building its infrastructure will most likely exceed any anticipated revenues for the coming year.

The Company's current need for capital may change dramatically if it can generate significant additional revenues from its operations. Currently the Company requires additional funds and is seeking loans or equity placements to cover such cash needs. There are no assurances additional capital will be available to the Company on acceptable terms.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

New Accounting Standards

Management has evaluated recently issued accounting pronouncements through the filing date of this report and concluded that they will not have a material effect on the financial statements as of June 30, 2013.

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ITEM 7. FINANCIAL STATEMENTS.

28

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Smack Sportswear, Inc.

We have audited the accompanying balance sheets of Smack Sportswear, Inc. as of June 30, 2012 and 2013, and the related statements of income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period then ended. Smack Sportswear, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Smack Sportswear, Inc. as of June 30, 2012 and 2013, and the related statements of income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended June 30, 2013 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has revenue that is insufficient to cover its expenses, has negative working capital at June 30, 2013, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

October 15, 2013

50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

F-1

SMACK SPORTSWEAR INC.
AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

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

F-2

SMACK SPORTSWEAR INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

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

F-3

SMACK SPORTSWEAR INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ (DEFICIT) EQUITY

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

F-4

SMACK SPORTSWEAR, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

F-5

SMACK SPORTSWEAR, INC.
AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

The accompanying notes are an integral part of the consolidated financial statements

F-6

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Note 1. Organization and Corporate History

History and Organization

SMACK Sportswear ("we", "us", "our", “the Company" or the "Registrant") was organized October 31, 2007 (Date of Inception) under the laws of the State of Nevada, as Reshoot Production Company. The Company was incorporated as a subsidiary of Reshoot & Edit, a Nevada corporation. The Company subsequently changed its corporate name from Reshoot Production Company to SMACK Sportswear on December 15, 2011.

On September 27, 2011, Mr. Bill Sigler took control over the management and ownership of SMACK Sportswear. Concurrently, he was managing Team Sports Superstore, Inc. a volleyball apparel retailer. As the sole shareholder Team Sports Superstore, Inc., Mr. Sigler entered into a Stock Value Agreement whereby he obtained control ownership of SMACK Sportswear in exchange for his commitment to sell Team Sports Superstore, Inc. to SMACK Sportswear upon completion of audited financials, as required by the U. S. Securities & Exchange Commission.

Simultaneously, Mr. Sigler on behalf of SMACK Sportswear entered into an Irrevocable Business Sales Agreement whereby he agreed to transfer 100% equity ownership of Team Sports Superstore to SMACK Sportswear in the form of a tax free exchange of stock, upon completion of the audit. This sale included all the assets, liabilities, trade names, and business operations of Team Sports Superstore, Inc.

Smack Sportswear, Inc. closed the purchase of Team Sports Superstore, Inc. (“Team Sports”) on December 6, 2012. Team Sports is a California corporation that markets and sells custom volleyball apparel and equipment products through the internet, retail, club teams and schools. This Report provides disclosure on behalf of the company as a whole when referring to Team Sports and Smack Sportswear.

On August 31, 2011, Mr. Sigler, acquired 37,150,000 shares or 78.9% of the issued and outstanding shares of the Registrant in exchange for his commitment to sell Team Sports to Smack Sportswear upon completion of the audited financials. He subsequently became the Chief Executive Officer of the Company and is the major shareholder of Smack Sportswear.

Smack Sportswear has purchased one hundred (100%) percent ownership interest in Team Sports. The transaction is recorded as a reverse merger and resulted in a recapitalization with Team Sports being the acquirer for accounting purposes.

Change in Fiscal Year

Smack Sportswear closed the purchase of Team Sports Superstore, Inc. (“Team Sports”) on December 6, 2012. This purchase represents a substantial 2011portion of the Company’s business. In connection with this transaction, the Company changed its fiscal year end to June 30 from December 31 to conform its fiscal year end to that of Team Sports Superstore.

F-7

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of Smack Sportswear Inc. and its wholly-owned subsidiary, Team Sports Superstore. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. All estimates are of a normal recurring nature and are deemed necessary by management for the fair presentation of the financial statements. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, loan from officer approximate their respective fair values due to the short-term nature of these items.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At times, such cash and cash equivalents may exceed federally insured limits. The Company has not experienced a loss in such accounts to date. The Company maintains its accounts with financial institutions with high credit ratings.

Accounts Receivable

The Company extends credit to customers based upon an evaluation of the customer’s financial condition and credit history and generally required no collateral. Management performs regular evaluations concerning the ability of our customers to satisfy their obligations and records a provision for doubtful accounts based on these evaluations. Based on existing economic conditions and collection practices, the Company’s allowance for doubtful accounts has been

F-8

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

estimated to be approximately 1% of net sales, or $9,400 and $12,850 at June 30, 2013 and June 30, 2012, respectively. The Company’s credit losses for the periods presented have not significantly exceeded management’s estimates.

Revenue recognition

The Company recognizes revenue on an accrual basis of accounting when title transfers to the customer, which is typically at shipping point. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and the customer(s); 2) delivery has occurred; 3) the price to the customer is fixed or determinable; and 4) collectability is reasonably assured.

Cost of Goods Sold

The company computes cost of goods sold based on actual costs of raw materials, sewing and finishing for each specific garment.

Shipping and handling costs

The Company’s shipping and handling costs may be reported as either a component of cost of sales or selling, general and administrative expenses. The Company reports such costs, primarily related to outbound freight, in the Statements of Income as a component of General and Administrative expenses.

Return Policies

The Company has two (2) sets of policies for returns by customers. For e-commerce retail customers the company allows a 30-day period to return the products for refund. In regard to manufactured, customized or embroidered products for teams or clubs, the company accepts only returns when the products ordered by the customers did not conform to the product specifications as per purchase order or when there are material errors/mistakes on the products manufactured; otherwise the sales are final and not subject for return or refund. The Company’s sales are primarily customized made to order apparel where after deposit is made there are no refunds after customer has committed to the sale by contract. Therefore we have no allowances for returns.

Customer Deposits

Once a contract has been signed and The Company commences manufacturing custom apparel there is no refund. The company asks teams and clubs for a 50% deposit upon agreement, As of June 30, 2013 and June 30, 2012 there was $15,283 and $17,740, respectively in customer deposits.

F-9

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Advertising Policy

Our advertising fees are expensed as incurred. Advertising expenses included direct marketing, catalog, conventions, trade shows and printing cost. Total advertising costs for the year ended June 30, 2013 and 2012 was $60,036 and $30,021, respectively.

Use of estimates accounting estimates

The preparation of financial statements, in conformity with U. S. generally accepted accounting principles (GAAP), requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. While actual results could differ from these estimates, we do not expect the differences, if any, to have a material effect on the financial statements.

Inventory, procedures, treatment, and valuation

The Company on a regular basis conducts physical inventory of all materials/items in the warehouse and compared the results of the physical count against the general ledger balance. Adjustments to take up or reflect the results of the physical count had been made to reconcile the GL balance with the count. All inventories are valued at lower of cost or market with cost determined by the average cost method. Damaged and obsolete materials and items are properly accounted for and written-off from the books once a year.

Concentration of risk

Due to the nature of its operations and its broad customer and supplier base the company is not subject to significant concentration risk in these areas, except that the primary product line is geared towards volleyball.

Net Loss Per Common Share

Basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. For the periods presented on these financial statements the Company had no potentially dilutive securities

F-10

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

NOTE 3. GOING CONCERN

These interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of June 30, 2013, the company has accumulated operating losses of approximately $629,742 since inception. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These interim unaudited financial statements do not include any adjustments that might arise from this uncertainty.

Note 4. Common and Preferred Stock

Description of Securities

Our authorized capital stock consists of 70,000,000 shares of common stock, par value $0.001 and 5,000,000 shares of preferred stock, par value $0.001. As of June 30, 2013, there are 40,000,000 shares of our common stock issued and outstanding, held by approximately 700 shareholders of record and 1,000,000 unregistered Series A preferred stock issued and outstanding, held by Mr. Bill Sigler. The preferred shares have been issued to Mr. Sigler in exchange for transferring 2.5 million shares of his Common stock to the Company’s ESOP Plan, which transfer had not yet occurred at year-end.

Common Stock. Each shareholder of our common stock is entitled to a pro rata share of cash distributions made to shareholders, including dividend payments. The holders of our common stock are entitled to one vote for each share of record on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of our directors or any other matter. Therefore, the holders of more than 50% of the shares voted for the election of those directors can elect all of the directors. The holders of our common stock are entitled to receive dividends when and if declared by our Board of Directors from funds legally available therefore.

F-11

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Cash dividends are at the sole discretion of our Board of Directors. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment of our liabilities and after provision has been made for each class of stock, if any, having any preference in relation to our common stock. Holders of shares of our common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to our common stock.

Preferred Stock. We have two (2) Series of Preferred Shares. Series A Voting Preferred shares consists of 2,000,000 authorized shares, par value $0.001, of which 1,000,000 shares are issued and outstanding. The holder of the Series A Voting Preferred Stock are not entitled to receive any dividends and do not have any liquidation rights. The holders of Series A Voting Preferred Stock shall be entitled to (a) notice of any meeting of the shareholders of the Corporation; and

(b) have the power to vote each share at any shareholder meeting, where each share of Series A Voting Preferred Stock carries the weight of twenty (20) votes for each share of common stock.

On December 4, 2012, Smack Sportswear agreed to issue 1,000,000 shares of its unregistered Series A Preferred Voting Stock to Mr. Bill Sigler, CEO of the Company in exchange for the transfer of 2,500,000 restricted common shares from his personal holdings, to the Company’s Employee Stock Incentive Plan, which transfer had not occurred at year-end. No stock or options have been awarded under the plan.

We also have 3,000,000 undesignated authorized preferred shares of which there are no shares issued or outstanding. The designation of these shares have yet to be determined by the Board of Directors.

Dividend Policy. We have never issued any dividends and do not expect to pay any stock dividend or any cash dividends on our common stock in the foreseeable future. We currently intend to retain our earnings, if any, for use in our business. Any dividends declared on our common stock in the future will be at the discretion of our Board of Directors and subject to any restrictions that may be imposed by our lenders.

Note 5. Accounts Receivable

The Company had Accounts Receivable at June 30, 2013 and June 30, 2012 of $52,031 and $36,172, respectively. The allowance for doubtful accounts at June 30, 2013 and June 30, 2012 was $9,400 and $12,850 respectively.

F-12

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Note 6. Inventory

Inventory is valued at the lower cost or market with cost determined by the average cost method. Inventories consisted of the following:

Note 7. Commitments and Contingencies

As of June 30, 2012, the company did not enter or execute any major contracts or commitments with suppliers/vendors or customers or with any business partners for the delivery of materials and sales of products.

Our executive and head office is located at 20316 Gramercy Place, Torrance CA 90501. Commencing July 1, 2013, we leased 4,000 square feet for two years as our main operating facility.

As of June 30, 2012 the estimated future minimum lease payments, which have a non-cancelable term of more than one year, are as follows:

Note 8. Related Party Transactions

As of June 30, 2013 and June 30, 2012 officer and director Bill Sigler owed the Company $6,874 and $19,236, respectively. This unsecured obligation is due on demand, is non-interest bearing and is included in the accompanying financial statements as Due from Related Entity. This receivable has been evaluated for impairment and the Company has no doubt of being fully collected. In addition, Bill Sigler contributed $29,670 in capital. An officer has loaned the company $14,000 as described in Note 9. The mother of the Chief Executive Officer has loaned the company $19,508 as described in Note 9.

F-13

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Accrued Compensation

As of June 30, 2013 compensation accrued and due Bill Sigler is $86,964 and due to employees was $6,652. As of June 30, 2012, compensation accrued and due to Bill Sigler was $26,964 and due to employees was $7,151.

Note 9. Short Term Loans

On June 30, 2010 a loan was given to Team Sports Super Store in the amount of $19,508. The loan is non-interest bearing and was due upon demand. It is past due. The note was provided by the mother of William Sigler, the Chief Executive Officer of Smack Sportswear, Inc.

On July 14, 2012 a loan was given to Team Sports Super Store by an officer in the amount of $14,000. The loan is non-interest bearing and is due upon demand.

Convertible Note

On April 5, 2012 the Company entered into a $250,000 “Promissory Note with Conversion Option”, which was amended on October 19, 2012. The agreement consisted of a two year note payable in full on April 5, 2014 and bearing interest at a rate of 10% per annum payable monthly.

On October 19, 2012, the amount of the note was increased from $250,000 to $300,000 and the note holder had 70 days from October 19, 2012 to loan additional funds to the Company. The note holder forgave all accrued and future interest in exchange for the right to convert the note into Common stock of the Company at a conversion price of $0.06 per share. At October 19, 2012 $63,000 had been funded on the note and the closing price quoted on the OTCBB was $0.12. This gave rise to a beneficial conversion of $0.06 per share. The Company assumed a discount of 50% of the note due to the beneficial conversion of the Company’s common stock and calculated a beneficial conversion cost of $31,500 [$63,000*.50/.06per share X $0.06]. On December 24, 2012 an additional $65,000 was funded and the closing price quoted on the OTCBB was $0.18 per share. This gave rise to a beneficial conversion of $0.12 per share, or a 66.7% discount to the note and the company calculated a $43,300 [$65,000 *.333/$0.06 per share X $0.12] beneficial conversion cost. The total beneficial conversion cost totals $74,790 and is being amortized in the amount of $12,466 per quarter up to and including the quarter ending March 31, 2015.According to the amendment, the Company had until January 18, 2013 to buy back (repay) the note, and did not do so.

On January 10 and 11^th $101,000 was funded on the note and the closing price quoted on the OTCBB was $0.12. This gave rise to a beneficial conversion of $0.06 per share. The Company assumed a discount of 50% of the note due to the beneficial conversion of the Company’s common stock and calculated a beneficial conversion cost of $50,500 [$101,000*.50/.06per

F-14

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

share X $0.06]. On January 15^th, an additional $25,000 was funded and the closing price quoted on the OTCBB was $0.18 per share. This gave rise to a beneficial conversion of $0.12 per share, or a 66.7% discount to the note and the company calculated a $16,667 [$25,000 *.333/$0.06 per share X $0.12] beneficial conversion cost. The total beneficial conversion cost totals $141,957 ($74,790+$50,500+$16,667) and are being amortized in the amount of $25,900 per quarter up to and including the quarter ending March 31, 2015.

On May 1, 2013 $16, 197 had been funded on the note and the closing price quoted on the OTCBB was $0.05. As the conversion price is $0.06, there is no beneficial cost. On May 20, 2013 an additional $13,750 was funded and the closing price quoted on the OTCBB was $0.04 per share. As the conversion price is $0.06, there is no beneficial cost.

For the three month period ending June 30, 2013 an additional $25,900 of beneficial conversion cost is being amortized.

F-15

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Note 10. Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

The components of the net deferred tax asset at January 31, 2013 and 2012, the statutory tax rate, the effective tax rate and the amount of the valuation allowance are indicated below:

The significant components of deferred income tax assets and liabilities at January 31, 2013 and 2012 are as follows:

There will be no Federal or California State Income tax liability for FYE 6/30/2010, FYE 6/30/2011, FYE 06/30/2012 or FYE 6/30/2013. The remaining NOL carryover to future years will be $591,246. The NOL carryover will expire in FYE 6/30/2032.

F-16

Smack Sportswear, Inc. and Subsidiary

Notes to Financial Statements

June 30, 2012 and 2013

Note 11. Penalties on Taxes Payable

As of June 30, 2013 and June 30, 2012 there was sales tax liability outstanding of $62,495 and $50,460 respectively. This included penalties at 10% of the outstanding balance per the California Board of Equalization tax policies on penalties for non-paid sales taxes. The company was unable to pay down the balance due to shortage of cash.

As of June 30, 2013 and June 30, 2012 there was payroll tax liability outstanding of $153,708 and $149,192 respectively. This included penalties at 15% of the outstanding balance. The company was unable to pay down the balance due to shortage of cash.

Note 12. Subsequent Events

Additional funds on the Convertible Note (see footnote 9) totaling $29,943 have been received up to the date of this filing. The Company has decided to continue to accept funds up to the maximum amount of $300,000 stated in the promissory note.

On August 8, 2013, $200,000 of the convertible note was converted into 13,333,330 common shares of the Company at a conversion price of $0.015 per share.

On June 26, 2013 the Company entered into a new convertible Loan in the amount of $53,000 at an interest rate of 8% due on March 19, 2014. Only if not repaid by March 19, 2014, the Note is convertible into common shares of the company. The conversion rate is 58% of the market price of the average of the three (3) lowest closing prices of the common stock for the ten(10) trading days prior to the date of conversion.

On September 23, 2013 an officer of the company converted his loan of $14,000 into 700,000 common shares of the company. On September 23, 2013 the same officer converted $11,000 of accrued compensation into 550,000 common shares of the company.

On August 8, 2013, the company signed an agreement with Phiten, a Japanese company which is the innovative originator of the titanium necklace and precious metal infused sports accessories. The agreement gives Smack sportswear Inc. a license to infuse our clothing with Phiten’s ACQUA-METAL technology. The pupose of the technology is to help athletes excel during sports activity. The company’s plans to use the new technology in its beach, team and core performance apparel.

The Company has evaluated subsequent events through the date which this report was filed.

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Item 8A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described below under "Management's report on internal control over financial reporting," which are in the process of being remediated as described below under "Management Plan to Remediate Material Weaknesses."

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that:

·         pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

·         provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors; and

·         provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

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Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2013. In making its assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal control over financial reporting was not effective as of June 30, 2013.

A "material weakness" is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues and results, and other internal reviews and evaluations that were completed after the end of quarter related to the preparation of management's report on internal controls over financial reporting required for this quarterly report on Form 10-Q, management concluded that we had material weaknesses in our control environment and financial reporting process consisting of the following:

1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and

2) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

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We do not believe the material weaknesses described above caused any meaningful or significant misreporting of our financial condition and results of operations for the quarter ended June 30, 2013. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management Plan to Remediate Material Weaknesses

Management is pursuing the implementation of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. And we plan to prepare written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements

We believe the remediation measures described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This amended quarterly report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this quarterly report.

Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Item 8B – Other Information

None.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Directors

As at October 10, 2013, we have one director. His name, age and appointment details are as follows:

Executive Officers

As at October 10, 2013, we have two Executive Officers. their name, age and appointment details are as follows:

Significant Employee

As at October 10, 2013, we have a Significant Employee whose name, age and date of employment are set out below:

Business Experience

The following is a brief account of the education and business experience for at least the past five years of our director and our executive officer, indicating each person’s business experience, principal occupation during the period, and the name and principal business of the organization by which they were employed.

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Biography of William Sigler, CEO/President/Director

Mr. Sigler’s management of the business (since 1994), coupled with his entrepreneurial experience and passion for the sport, makes him the ideal leader to drive this endeavor. His relationships in the sport will be key to aligning strategic partners. He coached club volleyball from 2002-2009, coached some of the top players on the beach, and has been running amateur volleyball classes and leagues since 1996. He is a member of Vistage, the Los Angeles Venture Association, and has been on the board of 6 other companies. Mr. Sigler also established a non-profit called Southern California Foundation for Children in 2001, which has raised over $300,000 for underprivileged kids. He has also been an appointed member of the Hermosa Beach Parks and Rec Commission since 2002.

Mr. Sigler was hired by Stuart Pharmaceuticals (know Astra Zeneca). At that time is was a division of ICI Americas (based in Delaware). One of the largest companies in the world, Mr. Sigler was recruited in his senior year of college to participate in ICI’s Corporate Program, which included 25 of their top college hires across all divisions. The program was designed to train future management. Mr. Sigler first worked in the MIS department supporting sales and marketing senior management with PC Support, and systems development. He then was moved to marketing, where Mr. Sigler was the company’s youngest Assistant Product Manager, where he helped launch an innovative new anesthetic called Propofol, as well as prenatal vitamins. He was then transferred into sales in Raleigh, NC.

He then moved to California in 1992, where he became a Neonatal specialist for a regional medical equipment company. Mr. Sigler taught himself to play volleyball at age 23, and rose to the highest amateur rank (AAA) by age 32 (and was ranked in the top 100 players in California). Mr. Sigler’s passion for the sport led him to starting Smack Sportswear, an apparel company devoted to So Cal inspired volleyball apparel. The company was established in Manhattan Beach, CA in 1994. During the 90’s Mr. Sigler was able to build a brand that was sold in Sports Chalet, as well as specialty stores nationwide. In 2001, Mr. Sigler focused attention on the indoor volleyball apparel market, which allowed for higher profits thru a B2C model, as well as the ease at which one could gain volume orders.

Mr. Sigler graduated with a BS degree from University of Delaware with honors in both Economics and Management Information Systems in 1988, with a 3.4 GPA.

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Charles A. Lesser, Chief Financial Officer

Charles Lesser was Chief Financial Officer, and subsequently Chief Executive Officer of Panglobal Brands, Inc. (OTCBB:PNGB). Prior to that, Mr. Lesser was the Chief Financial Officer of True Religion Apparel, Inc. (Nasdaq:TRLG) and its wholly-owned subsidiary, Guru Denim Inc. from 2003 to March, 2007 and as a consultant to True Religion Apparel, Inc. to September, 2007. Prior to that, Mr. Lesser was Acting President and a Director of Alpha Virtual Inc., a software development company listed on the OTCBB and from 1997 until 2002, Mr. Lesser was Chief Financial Officer and a Director of CBCom, Inc., an internet service provider listed on the OTCBB. Mr. Lesser holds a B.A. degree from the University of Pittsburgh and an M.B.A. from the University of the Witwatersrand. Mr Lesser was appointed Chief Executive Officer (and remains Chief Financial Officer) on August 17, 2009.

Ramon Valdez – Chief Information Officer

Mr. Ray Valdez has 14 years of experience and a strong financial and technological background. He started his first online business while at California State University, where he received a Bachelor’s of Science in Business Administration and Finance. He has built and owned various successful retail and e-commerce companies and has received many awards including fastest growing companies by Inc. Magazine. Most recent company, which he was Co-Founder and CEO, was www.bambooki.com which has over 200+ suppliers worldwide and is now the largest online retailer of Bamboo products.

In his financial experience he has held positions such as Controller and CFO. He has developed various profitable drop ship, distribution center, big box and retail programs with major retailers including Sears, K-Mart, Home Depot, Wal-Mart, etc. He has conducted business all over the world and also has extensive knowledge in international trade, logistics and operations management.

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Family Relationships

There are no family relationships among our directors or officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

1. 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;

2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

3. 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; or

4. being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange 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.

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ITEM 10. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table summarizes the compensation of our executive officers, directors and the President of two of our product lines during the last fiscal year ended September 30, 2009. No other officers or directors received annual compensation in excess of $100,000 during the fiscal year.

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

The following tables set forth certain information concerning the number of shares of our common stock known by us to be owned beneficially as of October 10, 2013: (i) each person (including any group) that owns more than 5% of any class of the voting securities of our company; (ii) each director and officer of our company; and (iii) directors and officers as a group. Unless otherwise indicated, the stockholders listed possess sole voting and investment power with respect to the shares shown.

Security ownership of Management

⁽¹⁾ Based upon 54,703,330 issued and outstanding shares of common stock as of October 10, 2013.

⁽²⁾ William Sigler holds 21,643,500 shares of common stock.

⁽³⁾ Charles Lesser is due 500,000 shares as of June 30, 2013, not yet issued per his Employment Agreement.

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Transactions with Related Persons

During our last fiscal year and except as disclosed below, none of the following persons has had any direct or indirect material interest in any transaction worth more than $120,000 to which our company was or is a party, or in any proposed transaction to which our company proposes to be a party:

(a) any director or officer of our company;

(b) any proposed director of officer of our company;

(c) any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or,

(d) any member of the immediate family of any of the foregoing persons (including a spouse, parents, children, siblings, and in-laws).

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Item. 13. Exhibits

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The following table sets forth the fees billed to the Company for professional services rendered by the Company's independent registered public accounting firm, for the years ended June 30, 2013 and June 30, 2012:

Audit Fees. Consist of fees billed for professional services rendered for the audits of our financial statements, reviews of our interim consolidated financial statements included in quarterly reports, services performed in connection with filings with the Securities and Exchange Commission and related comfort letters and other services that are normally provided by Seale and Beers CPAs for the fiscal year ended June 30, 2013 and 2012 Tax Fees. Seale and Beers CPAs did not provide us with professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.

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SIGNATURES

Pursuant to the requirements 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.

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