UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from              to             

Commission File No. 000-26257

INCA DESIGNS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	11-3461611
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
2317 Collins Avenue, Miami Beach, FL 33139	(305) 673-9170
(Address of Principal Executive Offices)	(Issuer’s Telephone Number)

976 Lexington Avenue, New York, NY 10021

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

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

The number of shares outstanding of the Issuer’s Common Stock as of November 15, 2010 was 1,075,789,314.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

Unaudited Consolidated Balance Sheet as of March  31, 2009 and Consolidated Balance Sheet as of December 31, 2008	3
Unaudited Consolidated Statements of Operations for the three months ended March  31, 2009 and 2008	4
Unaudited Consolidated Statement of Stockholders’ Deficit for the period from January  1, 2008 through March 31, 2009	5
Unaudited Consolidated Statements of Cash Flows for the three months ended March  31, 2009 and 2008	6
Notes to Unaudited Consolidated Financial Statements	7-15

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INCA DESIGNS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

	March 31, 2009			December 31, 2008
	(Unaudited)
ASSETS
Current Assets:
Cash	$	9,317		$	4,735
Accounts receivable, net of allowance for doubtful accounts of $0 at March 31, 2009 and December 31, 2008		2,123			1,741
Inventory		127,570			86,495
Other current assets		10,840			—
Total current assets		149,850			92,971
Fixed Assets:
Store equipment		27,566			30,747
Leasehold improvements		199,417			220,953
		226,983			251,700
Accumulated depreciation		(21,181	)		(16,415	)
Net fixed assets		205,802			235,285
Other Assets:
Security deposits		21,250			58,923
Lease purchase costs, net of amortization of $0 and $22,405 at March 31, 2009 and December 31, 2008, respectively		—			97,595
		21,250			156,518
Total assets	$	376,902		$	484,774
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Convertible notes payable, net of debt discount of $73,372 and $135,871 at March 31, 2009 and December 31, 2008, respectively	$	966,628		$	904,129
Notes payable		859,000			859,000
Accrued interest		856,973			746,925
Due to officer and related parties		627,567			384,467
Related party convertible notes payable, net of debt discount of $74,515 and $152,014 at March 31, 2009 and December 31, 2008, respectively		525,485			447,986
Accounts payable		169,742			235,581
Accrued expenses and other liabilities		129,129			123,337
Total current liabilities		4,134,524			3,701,425
Commitments and Contingencies		—			—
Stockholders’ Deficit:
Preferred stock - par value $0.0001; 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock - par value $0.0001; 2,500,000,000 shares authorized; 714,894,814 shares issued and outstanding		71,489			71,489
Additional paid-in capital		3,576,956			3,576,956
Accumulated deficit		(7,406,067	)		(6,865,096	)
Total stockholders’ deficit		(3,757,622	)		(3,216,651	)
Total liabilities and stockholders’ deficit	$	376,902		$	484,774

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

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INCA DESIGNS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

	March 31,
	2009			2008
Revenues, net	$	59,497		$	63,079
Cost of revenues		34,508			30,586
Gross profit		24,989			32,493
Operating expenses:
General and administrative		168,324			188,405
Selling expense		15,999			9,152
Depreciation and amortization		14,486			5,034
Total operating expenses		198,809			202,591
Operating loss		(173,820	)		(170,098	)
Other expense
Amortization of debt discount		139,998			244,769
Interest expense		110,047			76,091
Loss on write-off lease costs		94,967			—
Loss on disposal of assets		22,139			—
Change in derivatives		—			376,434
Total other expense		367,151			697,294
Loss before income taxes		(540,971	)		(867,392	)
Provision for income taxes		—			—
Net loss	$	(540,971	)	$	(867,392	)
Earnings Per Share, Basic and Diluted:
Net loss	$	(0.00	)	$	(0.02	)
Weighted Average Number of Shares Outstanding		714,894,814			52,309,814

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

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INCA DESIGNS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD FROM JANUARY 1, 2008 THROUGH MARCH 31, 2009

	Common Stock				Additional Paid In Capital		Accumulated Deficit			Total
	Shares		Amount
Balance, January 1, 2008		52,309,814	$	5,231	$	678,044	$	(3,684,286	)	$	(3,001,011	)
Shares issued for debt conversion		662,585,000		66,258		596,327		—			662,585
Beneficial conversion feature of convertible note		—		—		2,302,585		—			2,302,585
Net loss		—		—		—		(3,180,810	)		(3,180,810	)
Balance, December 31, 2008		714,894,814		71,489		3,576,956		(6,865,096	)		(3,216,651	)
Net loss		—		—		—		(540,971	)		(540,971	)
Balance, March 31, 2009		714,894,814	$	71,489	$	3,576,956	$	(7,406,067	)	$	(3,757,622	)

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

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INCA DESIGNS, INC. AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008

	March 31,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(540,971	)	$	(867,392	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization expense		14,486			5,034
Change in fair value of derivative instruments		—			376,434
Amortization of debt discount		139,998			244,769
Disposal of fixed assets		22,139			—
Write-off of lease purchase costs, net		94,967			—
Changes in assets and liabilities:
Accounts receivable		(382	)		57,291
Inventory		(41,076	)		(3,277	)
Prepaid expenses and other current assets		22,319			12,264
Accounts payable		(66,338	)		(147,884	)
Accrued interest		110,047			76,090
Accrued expenses and other current liabilities		6,293			130,203
Net cash flows used in operating activities		(238,518	)		(116,468	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		—			(2,021	)
Net cash flows used in investing activities		—			(2,021	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loan		243,100			10,100
Proceeds from convertible notes payable		—			100,000
Net cash flows provided by financing activities		243,100			110,100
Increase in cash		4,582			(8,389	)
Cash, beginning of period		4,735			14,172
Cash, end of period	$	9,317		$	5,783
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	—		$	—
Cash paid for income taxes	$	—		$	—

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

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE A – BASIS OF PRESENTATION

Throughout these Notes to Consolidated Financial Statements, the terms “we,” “us,” “our,” “INCA,” or “our Company” refers to INCA Designs, Inc., and unless otherwise specified, includes its wholly owned subsidiary, S2 New York Design, Inc., a New York corporation ("S2NY"), and S2NY’s wholly owned limited liability corporations, INCA of South Beach, LLC, a Florida corporation (“INCA of SB”), and INCA on Lex, LLC, a New York corporation (“INCA on LEX”) or collectively (“S2NY’s subsidiaries").

Interim reporting

While the information presented in the accompanying interim consolidated financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of application as used in the December 31, 2008 audited financial statements of the Company. All adjustments are of a normal, recurring nature. Interim financial statements and the notes thereto do not contain all of the disclosures normally found in year-end audited financial statements and these Notes to Consolidated Financial Statements are abbreviated and contain only certain disclosures related to the three month periods ended March 31, 2009 and 2008. It is suggested that these interim financial statements be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2008. Operating results for the three months ended March 31, 2009 are not necessarily indicative of the results that can be expected for the year ending December 31, 2009.

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued and Newly Adopted Accounting Pronouncements

Accounting Standards Codification

The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”).

The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE C – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a loss from operations of approximately $174,000 during the three months ended March 31, 2009, had an accumulated deficit, and had negative cash flow from operations of approximately $239,000. These matters raise substantial doubt about the Company’s ability to continue as a going concern.

NOTE D – CONVERTIBLE NOTES PAYABLE

As of March 31, 2009 and December 31, 2008, the Company had the following convertible promissory notes (the “Convertible Notes”) listed below. During 2008, the following changes were made to the Convertible Notes: (A) on June 27, 2008, the Company’s Board of Directors approved a change in the conversion rate for the below listed Convertible Notes from “a forty percent discount to the market price of the Company’s Common Stock or $0.50 per share, whichever is lower” to a fixed conversion rate of $0.001 per share. (B) certain Convertible Note holders agreed to forbear from exercising their conversion rights under their respective Convertible Notes for a period of six months beginning June 27, 2008 provided that a predetermined repayment schedule was met during the six month period. The repayment schedule was not met and in accordance with the terms of the forbearance agreement, the forbearance agreement was voided. This occurrence of the default gave the Convertible Note holders the right to immediately convert their holdings into the Company’s Common Stock at a conversion rate of $0.001 per share. (C) on July 1, 2008 certain Convertible Note holders agreed to forbear from exercising certain rights under their respective Convertible Notes including the collection of default interest and legal actions for a period of six months beginning July 1, 2008 or on the 11^th day from the date the Convertible Note holders delivers a Notice of Conversion of $160,000 of its $180,000 Convertible Note then in default. Upon expiration of the forbearance agreement, the interest rate on any unpaid balance of the Convertible Notes increased to 25% per annum.

	March 31, 2009		December 31, 2008
On July 17, 2008, the Company issued a Convertible Promissory Note to an individual for $250,000 with a due date of July 15, 2009 (the “July Note 2008”). The July 2008 Note accrues interest at a rate of 18% per annum. The July 2008 Note contains 4.99% ownership cap provisions. The shares underlying the July 2008 Note are covered under a registration rights agreement. In conjunction with the July 2008 Note, the Company issued Warrants to purchase 250,000,000 shares of Common Stock of the Company with an exercise price of $0.001 per share.	$	250,000	$	250,000

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE D – CONVERTIBLE NOTES PAYABLE (Continued)

COVERED UNDER (A and B) ABOVE:
On May 21, 2007, the Company assumed and reissued a Convertible Promissory Note with an effective date of November 20, 2006 to an individual for $100,000 with a due date of September 30, 2007 (the “Note”). The Note accrued interest at a rate of 24% per annum. The Note is currently in default. Upon default, the interest rate increased to 25% per annum. The shares underlying the Note are covered under a registration rights agreement. In conjunction with the Note, the Company issued Warrants to purchase 200,000 shares of Common Stock of the Company with an exercise price of $0.50 per share, none having been exercised at March 31, 2009, all of which expired unexercised on October 31, 2009.	100,000	100,000
On May 21, 2007, the Company assumed and reissued a Convertible Promissory Note with an effective date of November 20, 2006 to an individual for $125,000 with a due date of September 30, 2007 (the “Note”). The Note accrues interest at a rate of 24% per annum. The Note is currently in default. Upon default, the interest rate increased to 25% per annum. The shares underlying the Note are covered under a registration rights agreement. In conjunction with the Note, the Company issued Warrants to purchase 250,000 shares of Common Stock of the Company with an exercise price of $0.50 per share, none having been exercised at March 31, 2009, all of which expired unexercised on October 31, 2009.	125,000	125,000
On May 21, 2007, the Company assumed and reissued a Convertible Promissory Note with an effective date of November 20, 2006 to an individual for $100,000 with a due date of September 30, 2007 (the “Note”). The Note accrues interest at a rate of 24% per annum. The Note is currently in default. Upon default, the interest rate increased to 25% per annum. The shares underlying the Note are covered under a registration rights agreement. In conjunction with the Note, the Company issued Warrants to purchase 200,000 shares of Common Stock of the Company with an exercise price of $0.50 per share, none having been exercised at March 31, 2009, all of which expired unexercised on October 31, 2009.	100,000	100,000

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE D – CONVERTIBLE NOTES PAYABLE (Continued)

On May 21, 2007, the Company assumed and reissued a Convertible Promissory Note with an effective date of November 20, 2006 to an individual for $100,000 with a due date of September 30, 2007 (the “Note”). The Note accrues interest at a rate of 24% per annum. The Note is currently in default. Upon default, the interest rate increased to 25% per annum. The shares underlying the Note are covered under a registration rights agreement. In conjunction with the Note, the Company issued Warrants to purchase 200,000 shares of Common Stock of the Company with an exercise price of $0.50 per share, none having been exercised at March 31, 2009, all of which expired unexercised on October 31, 2009.	100,000	100,000
On May 21, 2007, the Company assumed and reissued a Convertible Promissory Note with an effective date of November 20, 2006 to an individual for $75,000 with a due date of September 30, 2007 (the “Note”). The Note accrues interest at a rate of 24% per annum. The Note is currently in default. Upon default, the interest rate increased to 25% per annum. The shares underlying the Note are covered under a registration rights agreement. In conjunction with the Note, the Company issued Warrants to purchase 150,000 shares of Common Stock of the Company with an exercise price of $0.50 per share, none having been exercised at March 31, 2009, all of which expired unexercised on October 31, 2009.	75,000	75,000
COVERED UNDER (A and C) ABOVE:
On June 20, 2007, the Company issued a Convertible Promissory Note to an entity for $200,000 with a due date of June 20, 2008 (the “Note”). The Note accrues interest at a rate of 10% per annum. The Note is currently in default. The shares underlying the Note are covered under a registration rights agreement. In December 2007, the Company made a $20,000 payment towards principle. On July 1, 2008, the entity converted $160,000 of the principle balance into 160,000,000 restricted shares of Common Stock of the Company.	20,000	180,000
On October 2, 2007, the Company issued a Convertible Promissory Note to an entity for $250,000 with a due date of October 1, 2008 (the “Note”). The Note accrues interest at a rate of 10% per annum. The Note called for separate fundings of $50,000 each on October 2, October 18, November 12, and December 7, 2007 and January 10, 2008. The Note is currently in default. The shares underlying the Note are covered under a registration rights agreement. In December 2007, the Company made a $50,000 payment towards principal.	200,000	150,000

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE D – CONVERTIBLE NOTES PAYABLE (Continued)

On November 28, 2007, the Company issued a Convertible Promissory Note to an entity for $70,000 with a due date of November 28, 2008 (the “Note”). The Note accrues interest at a rate of 10% per annum. The Note is currently in default. The shares underlying the Note are covered under a registration rights agreement.		70,000			70,000
		1,040,000			1,040,000
Debt Discount		(73,372	)		(135,871	)
TOTAL	$	966,628		$	904,129

Amortization of the debt discount totaled $62,499 and $244,769 for the three months ended March 31, 2009 and 2008, respectively.

NOTE E – NOTES PAYABLE

The Company has the following notes and loan obligations.

	March 31, 2009		December 31, 2008
The principal balance on promissory notes with a financial institution totaled $484,000. The note carries an interest rate of 9.25% per annum. In August 2002, the Company negotiated a settlement with the financial institution with payment terms of $5,000 per month on the promissory notes. During the three months ended March 31, 2009 and the year ended December 31, 2008, no payments were made. This obligation is currently in default.	$	484,000	$	484,000
In June 2002, the Company issued a note for $150,000 with a maturity date of July 1, 2006 and an interest rate of one (1%) percent. As a result of a default for non-payment, the interest rate on the note accelerated to fifteen (15%) percent per annum on the date of maturity. The default also prompted a late charge of five (5%) per annum on any overdue amount. This obligation is currently in default.		150,000		150,000
In October 2004, the Company issued a promissory note for $62,500 with a maturity date of April 30, 2005 and an interest rate (5.75%) equal to the Prime Rate on the day prior to the date the principal payment is due. This obligation is currently in default.		62,500		62,500
In December 2004, the Company issued a promissory note for $62,500 with a maturity date of April 30, 2005 and an interest rate (5.75%) equal to the Prime Rate on the day prior to the date the principal payment is due. This obligation is currently in default.		62,500		62,500

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE E – NOTES PAYABLE (Continued)

In April 2007, the Company issued a Single Payment Promissory Note to an individual for $100,000. The note accrues interest at a rate of 15% per annum and is due on April 2, 2008. This obligation is currently in default.		100,000		100,000
TOTAL	$	859,000	$	859,000

NOTE F – RELATED PARTIES

Related party convertible notes payable

On June 25, 2008, INCA issued a Convertible Promissory Note to Josloff, for $652,585 with a due date of July 1, 2009 (the “Note”). The Note was issued in consideration for amounts previously advanced to the Company by Josloff. The Note accrues interest at a rate of 10% per annum. The Note is convertible into shares of the Company’s Common Stock at any time after the date of issuance at a fixed conversion price of $.001 per share. On July 1, 2008 Josloff converted $171,293 into 171,292,500 shares of the Company’s Common Stock. Also on July 1, 2008 Josloff sold $171,293 to a then officer and director of the Company, which shares were, on July 1, 2008, also converted into 171,292,500 shares of the Company’s Common Stock. At March 31, 2009 and December 31, 2008, the outstanding balance was $310,000. Debt discount at March 31, 2009 and December 31, 2008 totaled $74,515 and $152,014, respectively. Amortization of debt discount totaled $77,499 and $0 for the three months ended March 31, 2009 and 2008.

During 2008 and 2007, a related party loaned the Company $50,000 and $470,000, respectively, of which $70,000 was repaid during 2007. The Company delivered three separate convertible promissory notes to the related party for $250,000, $200,000, and $70,000. These convertible promissory notes accrued interest at 10% per annum. On June 27, 2008, the Company’s Board of Directors approved a change in the conversion rate for the these convertible promissory notes from “a forty percent discount to the market price of the Company’s Common Stock or $0.50 per share, whichever is lower” to a fixed conversion rate of $0.001 per share. On July 1, 2008 the related party agreed to forbear from exercising certain rights under its convertible promissory notes including the collection of default interest and legal actions for a period of six months beginning July 1, 2008 or on the 11^th day from the date the related party delivers a Notice of Conversion of $160,000 of its $180,000 convertible promissory notes then in default. Upon expiration of the forbearance agreement, the interest rate on any unpaid balance of the convertible promissory notes increased to 25% per annum. At March 31, 2009 and December 31, 2008 the outstanding balance was $290,000. On August 31, 2010, the Company’s Board of Directors approved the conversion of $360,895 of the principal and interest of the convertible promissory notes into 360,894,500 shares of its Common Stock.

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE F – RELATED PARTIES (Continued)

Due to officers and related parties

During the three months ended March 31, 2009 and 2008, Josloff loaned the Company $224,052 and $10,100, respectively. The loans accrue interest at a rate of 6% per annum.

During the three months ended March 31, 2009 and 2008, a related party loaned the Company $19,048 and $0, respectively. The loans accrue interest at a rate of 6% per annum.

NOTE G – DERIVATIVES

In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the conversion features associated with the convertible debentures are variable and contain an embedded derivative that requires bifurcation from their host contacts. The company has recognized the embedded derivatives as a liability at the date the debentures were issued. As of July 1, 2008, the conversion rate for all outstanding convertible debt was changed to a fixed conversion rate of $0.001, thereby eliminated the requirement for further treatment of the embedded derivatives. At March 31, 2009 and December 31, 2008, the derivatives liability was $0. The gain from the change in fair value of the derivative liabilities was $0 and $376,434 for the three months ended March 31, 2009 and 2008, respectively.

NOTE H – STOCKHOLDERS’ EQUITY

Common Stock

On June 27, 2008, the Company’s Board of Directors approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 1,000,000,000 to 2,500,000,000.

On July 1, 2008, Stacy Josloff, (“Josloff”), the Company’s Chief Executive Officer, Chief Financial Officer, and Treasurer converted $171,293 of her outstanding promissory note with the Company in exchange for 171,292,500 shares of the Company’s Common Stock. Also on July 1, 2008, Josloff sold $171,293 of her outstanding promissory note to Stephanie Hirsch, the Company’s President and Secretary (“Hirsch”), at which time Hirsch converted the $171,293 in exchange for 171,292,500 shares of the Company’s Common Stock.

On July 1, 2008, two entities each converted $90,000 of the principle balance of their $180,000 convertible promissory notes and the entire balance of their $70,000 convertible promissory notes into 90,000,000 and 70,000,000 shares of Common Stock of the Company, respectively. (Shares of Common Stock of the Company issued under these conversions totaled 320,000,000).

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE H – STOCKHOLDERS’ EQUITY (Continued)

Common Stock (Continued)

In July 2008, the Company entered into a Convertible Note transaction which involved the receipt of cash totaling $250,000 and the issuance of a Warrant totaling 250,000,000. The Warrant has an exercise price of $0.001 per share and expires in July 2011. The relative fair value of the Warrant was $120,690. The relative fair value of the Warrant was estimated as of the date of grant using the Black-Scholes pricing model, based on the following weighted average assumptions: annual expected return of 0%, annual volatility of 274.45%, based on a risk-free interest rate of 2.7% and expected life of 3 years.

NOTE I – COMMITMENTS AND CONTINGENCIES

Leases

976 Lexington Avenue, New York, NY

On August 16, 2007, INCA on LEX, LLC, purchased the remaining term of the lease for the property on 976 Lexington Avenue from the prior occupant for a total of $150,000 (the “Lexington Ave. Lease”). The price included a security deposit of $30,000 (the “Security Deposit”) and purchase fee of $120,000 (the “Lease Purchase Cost”). The original term of the lease was for ten years, commencing on January 1, 2005 with monthly payments of $10,000. The Lease Purchase Cost was amortized over the remaining life of the lease.

On February 28, 2009, the Company vacated the premises, terminated its lease on the property (forfeiting its Security Deposit), and was released from the remaining term of the lease. The Security Deposit was applied to rent expense and the unamortized balance of the Lease Purchase Cost of $94,967 was written off in the first quarter of 2009. The Company also recorded a loss on disposal of fixed assets of $22,139 for the write-off of store equipment and leasehold improvements in the first quarter of 2009. Rent expenses for the three months ended March 31, 2009 and 2008 was $ 22,510 and $30,289, respectively.

2317 Collins Avenue, Miami Beach, FL

In June 2006, while renovations were in progress, the Company’s wholly-owned subsidiary, INCA of South Beach, LLC, entered into a 10 year Retail Lease with Sandy Lane Retail, LLC for retail space totaling approximately 1,000 square feet located in the Hotel Gansevoort South, 2317 Collins Avenue, Miami Beach, FL (the Collins Ave. Lease”). The Company took occupancy in November 2008. Terms of the Collins Ave. Lease include a security deposit of $21,250 and monthly payments of $7,083 for years 1 through 3 with a 3% escalation each year for years 4 through 10.

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INCA DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2009

NOTE I – COMMITMENTS AND CONTINGENCIES (Continued)

2317 Collins Avenue, Miami Beach, FL

Future minimum rent payments are as follows:

2009	$	63,750
2010		85,000
2011		85,624
2012		90,502
2013		93,218
Thereafter		496,383
	$	914,477

Simultaneous with the vacating of its office on 976 Lexington Avenue, the Company moved its entire operation to Miami Beach, Florida and moved its corporate office to 2317 Collins Avenue, Miami, FL 33139. Rent expenses for the three month periods ended March 31, 2009 and 2008 were $21,250 and $0, respectively.

NOTE J – SUBSEQUENT EVENTS

In October 2010, a related party converted a portion of its convertible notes payable. The amount of the conversion totaled $360,895 in principle and interest. The Company issued 360,894,500 shares of its Common Stock.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis provides information which management of the Company believes to be relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read together with the Company’s financial statements and the notes to the financial statements, which are included in this report. This information should also be read in conjunction with the information contained in our Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission (“SEC”) on November 1, 2010 including the audited financial statements and notes included therein. The reported results will not necessarily reflect future results of operations or financial condition.

Caution Regarding Forward-Looking Statements

When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends which may affect the Company’s future plans of operations, business strategy, operating results and financial position. These statements are projections and are subject to known and unknown risks, uncertainties, and other factors that may cause our 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. Those risks include the risks identified in Section 1A: Risk Factors in the Company Form 10-K for year ended December 31, 2008. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or achievements. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements.

This Report contains certain estimates and plans related to us and the industry in which we operate, which assumes certain events, trends and activities will occur and the projected information based on those assumptions. We do not know that all of our assumptions are accurate. If our assumptions are wrong about any events, trends and activities, then our estimates for future growth for our business may also be wrong. There can be no assurances that any of our estimates as to our business growth will be achieved.

Overview

The Company was incorporated in Nevada in 1998 under the name Accident Prevention Plus, Inc. In December 2004, the Company filed an amendment to its Articles of Incorporation and thereby changed its name to Transportation Safety Technology, Inc. In March 2007, the Company filed a Certificate to Accompany Restated Articles changing its name to INCA Designs, Inc.

In early 2005, the Company ceased operations and remained inactive until May 21, 2007, when the Company and S2 New York Design Corp., a New York corporation (“S2NY”) entered into a Securities Exchange Agreement (the “Securities Exchange Agreement”) whereby INCA acquired 100% of the issued and outstanding shares of common stock of S2 in exchange for 26,000,000 shares of the Company’s common stock.

On June 27, 2008, the Company’s Board of Directors approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock to 2,500,000,000. The Company established the record date for those shareholders entitled to vote on the matter as July 2, 2008. On August 13, 2008, the Company filed a Certificate of Amendment to its Articles of Incorporation to effect the above-mentioned increase in authorized common shares.

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On February 28, 2009, INCA on LEX, LLC, a New York corporation (“INCA on LEX”), the Company’s wholly owned subsidiary, vacated the premises and terminated its lease on property located at 976 Lexington Avenue, New York, NY. INCA on LEX forfeited it $30,000 security agreement and was released from the remaining term of the lease. Simultaneous with the vacating of its office on 976 Lexington Avenue, New York, NY, the Company moved its entire operation to Miami, Florida. The Company moved its office to 2317 Collins Avenue, Miami, FL 33139, which is the also the office of its wholly owned subsidiary, INCA of South Beach, LLC, a Florida corporation (“INCA of South Beach”).

INCA designs, contracts for the manufacture of, and retails comprehensive collections of resort wear, swimwear and accessories. INCA believes that its unique designs, innovative sourcing, product positioning, wide range of price points, and commitment to branding attracts a customer seeking a ‘resort lifestyle experience.’ INCA’s cross-generational collections are timeless and sophisticated emphasizing beautiful fabrics, a great fit and price points positioned well below that of the upscale designer market. INCA believes a significant market exists for attainable luxury fashions purchased by a wide age range of strong fashionable women who are seeking sophisticated, high-quality, culturally driven collections.

Recent Events

On October 12, 2010 a related party converted $360,895 of debt into 360,895 shares of the Company’s Common Stock.

Results of Operations

The following discussion and analysis sets forth the major factors that affected the Company’s results of operations and financial condition reflected in the unaudited financial statements for the three month period ended March 31, 2009. This discussion and analysis should be read in conjunction with the information contained in our Annual Report on Form 10-K for year ended December 31, 2008 filed with the SEC on November 1, 2010, including the audited financial statements and notes included therein.This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Results of Operations – Comparison of the Three Months Ended March 31, 2009 and 2008

For the three months ended March 31, 2009, the Company had revenues of $59,497 compared to revenues of $63,079 for the same period in 2008. The Company attributes this $3,582 reduction to the closing of the INCA on Lex retail store during the period in 2009.

For the three months ended March 31, 2009, the Company had an operating loss totaling $173,820 compared to operating loss of $170,098 for the same period in 2008.

Although the Company’s operating loss was increased slightly from $170,098 for the three months ended March 31, 2008 to $173,820 for the same period in 2009, the Company recorded other expenses totaling $367,151 for the three months ended March 31, 2009 compared to $697,294 during the same period in 2008. The decrease of $330,143 was attributable to:

• a $376,434 reduction from changes in derivatives. This reduction occurred primarily due to the change in market price.

• $139,998 expense from amortization of debt discount during the three months ended March 31, 2009 compared to a $244,769 during the same period in 2008. This $104,771 decrease is related to the accounting treatment of the capital raised in prior periods.

• a $94,967 from the write-off of lease costs and a $22,139 from disposal of fixed assets during the three months ended March 31, 2009, resulting from the closing the INCA on Lex retail store, more fully described in the Overview above.

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• a $33,956 increase in interest expense during the three months ended March 31, 2009 compared to the same period in 2008. This increase is related to additional loans made to the Company since March 31, 2008.

As a result of the reduction in other expenses during the three months ended March 31, 2009, the Company recorded a net loss of $540,971 for the period in 2009, compared to a net loss of $867,392 for the period in 2008.

Liquidity and Capital Resources

INCA began its current operations in 2007, and has not as yet attained a level of operations which allows it to meet its current overhead. We do not contemplate attaining profitable operations until late 2012, nor is there any assurance that such an operating level can ever be achieved. We will be dependent upon obtaining additional financing in order to adequately fund working capital, infrastructure, manufacturing expenses and significant marketing/investor related expenditures to gain market recognition, so that we can achieve a level of revenue adequate to support our cost structure, none of which can be assured. While INCA has funded its initial operations with private placements of equity and bridge loans, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us. These factors raise substantial doubt about our ability to continue as a going concern and the accompanying consolidated financial statements do not include any adjustments related to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

As of March 31, 2009, INCA’s cash balance was $9,317. Outstanding debt as of March 31, 2009 totaled $4,134,524 including $1,153,052 in loans from related parties. The Company’s working capital deficit as of March 31, 2009 was $3,984,674.

Since March 31, 2009, funds necessary to sustain the business have been derived from operations and loans from Stacy Josloff, the Company’s President and CEO. As of March 31, 2009, the Company owed Ms. Josloff the principle amount of approximately $780,000. There is no guarantee that Ms. Josloff will continue such funding, and funds from operations may not be adequate to continue operations. The Company will need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of financing that may be raised may not be on terms acceptable to the Company. If adequate funds cannot be raised, our business may fail.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company is a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and, as such, is not required to provide the information required under this item.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management carried out an evaluation, under the supervision and with the participation of Josloff, the Company’s Chief Executive Officer, and Chief Financial Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2009, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, Josloff concluded that the Company’s disclosure controls and procedures as of March 31, 2009 were not effective and had the following material weaknesses: (i) Josloff is the Company’s sole executive and financial officer, (ii) the Company has no qualified internal accounting personnel, and (iii) the above weaknesses provide for no separation of accounting and financial procedures.

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Changes in Internal Controls

There were no changes in our internal controls over financial reporting during the three month period ended March 31, 2009 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None for period ended March 31, 2009.

Item 3. Defaults upon Senior Securities

The below table lists each Convertible Promissory Note (“Note”) issued by the Company in default as a result of non-payment as of the date of this filing.

Notes in Default	Date of Default	Principle and Interest Currently Outstanding		Penalty
$100,000 Note Dated November 20, 2006	July 12, 2008	$	185,653	Interest rate increase to highest rate allowable by law
$100,000 Note Dated November 26, 2006	July 12, 2008	$	185,653	Interest rate increase to highest rate allowable by law
$125,000 Note Dated November 26, 2006	July 12, 2008	$	230,313	Interest rate increase to highest rate allowable by law
$75,000 Note Dated May 16, 2006	July 12, 2008	$	139,490	Interest rate increase to highest rate allowable by law
$100,000 Note Dated May 16, 2006	July 12, 2008	$	185,986	Interest rate increase to highest rate allowable by law
$200,000 Note Dated June 20, 2007 ($20,000 Current Balance)	July 12, 2008	$	50,897	Interest rate increase to highest rate allowable by law
$250,000 Note Dated October 2, 2007 ($200,000 Current Balance)	July 12, 2008	$	318,858	Interest rate increase to highest rate allowable by law
$70,000 Note Dated November 30, 2007 (20,000 Current Balance)	July 12, 2008	$	57,507	Interest rate increase to highest rate allowable by law
$652,585 Note Dated June 25, 2008 ($310,000 Current Balance)	July 1, 2009	$	440,685	Interest rate increase to highest rate allowable by law
$250,000 Note Dated July 17, 2008	July 15, 2009	$	354,792	N/A

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Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exh. No.	Date of Document	Description of Document
3.1	October 28, 1998	Articles of Incorporation (1)
3.2	March 3,1999	Certificate of Amendment to Articles of Incorporation (1)
3.3	October 27, 2004	Certificate of Amendment to Articles of Incorporation (name change to Transportation Safety Technology, Inc.) (2)
3.4	March 9, 2007	Certificate to Accompany Restated Articles (name change to INCA Designs, Inc.) (3)
3.5	May 1, 2007	Certificate of Amendment to Articles of Incorporation (3)
3.6	August 13, 2008	Certificate of Amendment to Articles of Incorporation (8)
3.7	N/A	Bylaws (3)
10.0	June 13, 2006	Building Lease for INCA of South Beach, LLC in Miami Beach, Florida (8)
10.1	May 21, 2007	Employment Agreement with Stacy Josloff (7)
10.3	September 7, 2007	First Amendment to Lease for INCA of South Beach, LLC (8)
10.4	June 25, 2008	Convertible Note for $652,585 issued to Stacy Josloff (4)
10.5	July 17, 2008	Convertible Promissory Note for $250,000 issued to Richard Girouard (5)
10.6	October 15, 2008	Settlement Agreement and Release (6)
31.1	November 15, 2010	Certification of Chief Executive Officer and Chief Financial Officer of Periodic Report pursuant to Rule 13a-14a.*
32.1	November 15, 2010	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14b.*

(1) Previously filed with Form 10B12G filed with the Commission on June 3, 1999.

(2) Previously filed with the Preliminary Information Statement filed with the Commission on June 18, 2004.

(3) Previously filed with Form 10-KSB for year ended December 31, 2007 filed with the Commission on March 28, 2008.

(4) Previously filed with Form 8-K filed with the Commission on July 2, 2008.

(5) Previously filed with Form 10-Q for quarter ended September 30, 2008 filed with the Commission on July 9, 2010.

(6) Previously filed with Form 8-K filed with the Commission on October 15, 2008.

(7) Previously filed with Form 8-K filed with the Commission on October 15, 2007.

(8) Previously filed with Form 10-K for year ended December 31, 2008 filed with the Commission on November 1, 2010.

(*) Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE: November 15, 2010

INCA DESIGNS, INC.
By:	/s/ Stacy Josloff
	Stacy Josloff, President and Chief Executive Officer
By:	/s/ Stacy Josloff
	Stacy Josloff, Chief Financial Officer and Accounting Officer

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