**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**Form
      10-Q**




(Mark
      One)




x Quarterly Report under Section 13 or 15(d) of the Securities


Exchange
      Act of 1934




For
      the
      quarterly period ended March 31, 2008




 ̈ Transition Report under Section 13 or 15(d) of the Exchange Act For
      the


Transition
      Period from ________ to ___________





**Adrenalina**


(Name
      of
      Small Business Issuer in its Charter)





Nevada
            333-134568
            20-8837626(State or other jurisdiction
              of incorporation)
            (Commission
              File Number)
            (IRS Employer
              Identification No.)





20855 NE 16 Ave., Suite #C-16


Miami, Florida 33179


(Address of principal executive offices)





Phone: 305-770-4488 Fax:
      305-770-4489


(Issuer's
      telephone numbers)





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
      past 12 months (or for such shorter period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.  Yes x No  ̈ .


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 definition of “accelerated filer”, “large accelerated
      filer”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of
      the Exchange Act.




Large accelerated filer ̈
            Accelerated filer ̈
            Non-accelerated filer ̈
            Smaller reporting companyx





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




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date:




As
      of May
      20, 2008 the registrant's outstanding common stock consisted of 19,453,000
      shares, $0.001 par value. Authorized - 50,000,000 common voting shares. No
      preferred shares issued, 5,000,000 authorized.





**ADRENALINA
      AND SUBSIDIARIES**


**CONSOLIDATED
      FINANCIAL STATEMENTS**


**FOR
      THE QUARTER ENDED MARCH 31, 2008**





**TABLE
      OF CONTENTS**


**Page****PART
                  I - FINANCIAL INFORMATION**Item
                  1. Financial Statements (Unaudited)Condensed
                  Consolidated Balance Sheet (unaudited)
              F-1Condensed
                  Consolidated Statement of Operations (unaudited)
              F-2Condensed
                  Consolidated Statement of Cash Flows (unaudited)
              F-3Notes
                  to Condensed Consolidated Financial Statements (unaudited)
              F-4Item
                  2. Management’s Discussion and Analysis or Plan of
                  Operation
              1Item
                  3. Controls and Procedures
              10**PART
                  II - OTHER INFORMATION**Item
                  1. Legal Proceedings
              10Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              10Item
                  3. Defaults Upon Senior Securities
              10Item
                  4. Submission of Matters to a Vote of Security Holders
              10Item
                  5. Other Information
              10Item
                  6. Exhibits
              11**SIGNATURES**
              12


i


**PART
      I. FINANCIAL INFORMATION**


**ADRENALINA**


Condensed
      Consolidated Balance Sheets


March
      31,
      2008 and December 31, 2007





March 31, 2008
              (Unaudited)
            
            December 31,
              2007Current
                Assets:Cash
                and cash equivalents
            
            $
            528,357
            
            $
            444,843Investments
                in securities available for sale
            
            
            40,261
            
            
            27,773Accounts
                receivable, net
            
            
            28,481
            
            
            35,197Merchandise
                inventories
            
            
            1,832,356
            
            
            1,678,937Film
                costs, net
            
            
            80,350
            
            
            96,800Prepaid
                expenses and other current assets
            
            
            73,004
            
            
            211,621Total
                Current Assets
            
            
            2,582,809
            
            
            2,495,171Deferred
                loan costs, net
            
            
            717,673
            
            
            643,027Property
                and equipment, net
            
            
            5,974,833
            
            
            4,963,920Intangible
                assets, net
            
            
            246,444
            
            
            248,444Total
                Other Assets
            
            
            6,938,950
            
            
            5,855,391Total
                Assets
            
            $
            9,521,759
            
            $
            8,350,562**Liabilities
                and Shareholders’ Equity**Current
                Liabilities:Accounts
                payable and accrued liabilities
            
            $
            676,827
            
            $
            1,106,924Shareholder
                advances
            
            
            700,000
            
            
            399,930Current
                portion of converted debentures, net discount
              of
                $306,814 and $0, respectively
            
            
            498,742
            
            
            -Total
                Current Liabilities
            
            
            1,875,569
            
            
            1,506,854Long-Term
                Liabilities:Deferred
                rent
            
            
            1,389,468
            
            
            582,114Related
                party note
            
            
            3,294,267
            
            
            3,294,267Convertible
                debentures, net of discount of $1,831,321and
                $1,258,366, respectively
            
            
            2,863,123
            
            
            1,741,634Total
                Long-Term Liabilities
            
            
            7,546,858
            
            
            5,618,015Total
              Liabilities
            
            
            9,422,427
            
            
            7,124,869Commitments
                and contingenciesShareholders’
                Equity:Common
                stock, $0.001 par value, 50,000,000 shares
              authorized,
                19,453,000 issued and outstanding
            
            
            19,453
            
            
            19,453Additional
                paid-in-capital
            
            
            11,659,341
            
            
            10,614,128Accumulated
                deficit
            
            
            (11,579,462
            )
            
            (9,407,888
            )Total
                Shareholders’ Equity
            
            
            99,332
            
            
            1,225,693Total
                Liabilities and Shareholders’ Equity
            
            $
            9,521,759
            
            $
            8,350,562




See
      accompanying notes to the condensed consolidated financial
      statements.




F-1


**ADRENALINA**


Condensed
      Consolidated Statements of Operations


For
      the
      Three Months Ended March 31, 2008 and 2007


(Unaudited)





2008
            
            2007Revenues:Merchandise
                sales
            
            $
            1,065,211
            
            $
            451,941Entertainment –
                related party
            
            
            -
            
            
            282,219Entertainment –
                other
            
            
            16,632
            
            
            81,900Publishing
            
            
            34,875
            
            
            46,201Total
                Revenues
            
            
            1,116,718
            
            
            862,261Cost
                of Revenues:Merchandise
            
            
            646,378
            
            
            253,101Entertainment
                licensing fees
            
            
            10,907
            
            
            364,476Production
            
            
            43,651
            
            
            98,318Total
                Cost of Revenues
            
            
            700,936
            
            
            715,895Gross
                Profit
            
            
            415,782
            
            
            146,366Operating
                Expenses:Payroll
                and employee benefits
            
            
            505,734
            
            
            452,788Occupancy
                expense
            
            
            878,718
            
            
            284,507Marketing
                and advertising expense
            
            
            32,188
            
            
            113,172Professional
                fees
            
            
            124,154
            
            
            56,084Other
                selling, general and administrative
            
            
            277,653
            
            
            220,189Amortization
            
            
            18,450
            
            
            168,285Depreciation
            
            
            154,629
            
            
            74,388Total
                Operating Expenses
            
            
            1,991,526
            
            
            1,369,413Other
                (Income) and Expenses:Interest
                income
            
            
            (22
            )
            
            (1,029
            )Loss
                on sale of available for sale securities
            
            
            89,455
            
            
            -Interest
                expense
            
            
            506,397
            
            
            -Total
                Other (Income) and Expenses
            
            
            595,830
            
            
            (1,029
            )Net
                Loss
            
            $
            (2,171,574
            )
            $
            (1,222,018
            )Net
                loss per share
            
            $
            (0.11
            )
            $
            (0.06
            )Weighted
                average common shares used in calculation of per share
                data
            
            
            19,453,000
            
            
            19,100,000




See
      accompanying notes to the condensed consolidated financial
      statements.


F-2


ADRENALINA
     Common
                    Shares
                  
                  Common
                    Stock
                  
                  Additional
                    Paid
                      In Capital
                  
                  (Accumulated
                    Deficit)
                  
                  Total
                    EquityBalance
                      at December 31, 2007
                  
                  
                  19,453,000
                  
                  
                  19,453
                  
                  
                  10,614,128
                  
                  
                  (9,407,888
                  )
                  
                  1,225,693Issuance
                      of warrants with convertible
                    debt
                  
                  
                  -
                  
                  
                  -
                  
                  
                  1,044,789
                  
                  
                  -
                  
                  
                  1,044,789Share-based
                      compensation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  424
                  
                  
                  -
                  
                  
                  424Net
                      loss
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (2,171,574
                  )
                  
                  (2,171,574
                  )Balance
                      at March 31, 2008 (Unaudited)
                  
                  
                  19,453,000
                  
                  
                  19,453
                  
                  $
                  11,659,341
                  
                  $
                  (11,579,462
                  )
                  $
                  99,332
 See
            accompanying notes to the condensed consolidated financial
            statements.


F-3




**ADRENALINA**


Condensed
      Consolidated Statements of Cash Flows


For
      the
      Three Months Ended March 31, 2008 and 2007


(Unaudited)




2008
            
            2007Cash
                from Operating Activities:Net
                loss
            
            $
            (2,171,574
            )
            $
            (1,222,017
            )Adjustments
                to reconcile net loss to net cashprovided
                by (used in) operating activities:Depreciation
                and amortization
            
            
            189,528
            
            
            242,673Amortization
                of discount on convertible debenture
            
            
            219,348
            
            
            -Deferred
              Rent Expense
            
            
            807,354
            
            
            -Loss
                on sale of investments
            
            
            89,455
            
            
            -Changes
              in assets and liabilities:Accounts
                receivable
            
            
            6,716
            
            
            142,961Merchandise
                inventories
            
            
            (153,419
            )
            
            (234,546
            )Prepaid
                expenses and other assets
            
            
            138,617
            
            
            57,833Accounts
                payable and accrued liabilities
            
            
            (430,097
            )
            
            521,894Total
                Adjustments
            
            
            867,502
            
            
            730,815Net
                Cash Used in Operating Activities
            
            
            (1,304,072
            )
            
            (491,202
            )Cash
                Flows from Investing Activities:Incurred
                film costs
            
            
            -
            
            
            (493,190
            )Purchase
                of investments available for sale securities
            
            
            (2,612,822
            )
            
            -Proceeds
                from sale of investments available for sale
              securities
            
            
            2,510,879
            
            
            -Purchase
                of property and equipment, net
            
            
            (1,165,541
            )
            
            (1,067,351
            )Net
                Cash Used in Investing Activities
            
            
            (1,267,484
            )
            
            (1,560,541
            )Cash
                Flows from Financing Activities:Repayments
                of notes receivable – related parties
            
            
            -
            
            
            (298,903
            )Proceeds
                from related party notes
            
            
            300,070
            
            
            2,405,094Deferred
                loan costs
            
            
            (145,000
            )
            
            -Proceeds
                from convertible note payable
            
            
            2,500,000
            
            
            -Net
                Cash Provided by Financing Activities
            
            
            2,655,070
            
            
            2,106,190Net
                Increase in Cash and Cash Equivalents
            
            
            83,514
            
            
            54,447Cash
                and Cash Equivalents – Beginning of Period
            
            
            444,843
            
            
            297,801Cash
                and Cash Equivalents – End of Period
            
            $
            528,357
            
            $
            352,248Supplemental
                Disclosures of Cash Flow Information:Cash
                paid for interest
            
            $
            49,776
            
            $
            -Supplemental
                Disclosure of Non-Cash Information:Issuance
                of warrants with convertible debt
            
            $
            843,748
            
            $
            -Beneficial
                conversion feature
            
            $
            201,041
            
            $
            -





See
      accompanying notes to the condensed consolidated financial
      statements.


F-4


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007




**Note
      1 – Description of Business, Basis of Presentation and Summary of
      Significant Accounting Policies**




**Description
      of Business and Basis of Consolidation**


The
        accompanying condensed consolidated financial statements for the three months
        ended March 31, 2008 and March 31, 2007, are unaudited except for the balance
        sheet information at December 31, 2007, which is derived from the audited
        consolidated financial statements filed on April 15, 2008 in the Company’s
        Annual Report on Form 10-KSB for the year ended December 31, 2007. These
        statements have been prepared in accordance with generally accepted accounting
        principles in the United States of America (“GAAP”) for interim financial
        information and with the instructions to Form 10-Q and Article 10 of Regulation
        S-X. Accordingly, they do not include all of the information and footnotes
        required by GAAP for complete financial statements. In the opinion of
        management, all adjustments (consisting of normal recurring accruals) considered
        necessary for a fair presentation have been included. These financial statements
        should be read in conjunction with the consolidated financial statements
        included in the Company’s Annual Report on Form 10-KSB for the year ended
        December 31, 2007.


Adrenalina
      (the “Company” or “Adrenalina”), f/k/a LQD Adrenalina, LLC, a privately-held
      Limited Liability Company headquartered in Miami, Florida was formed on
      September 13, 2004.




Basic
      Services, Inc. (“BSI”), a Nevada corporation, was organized March 28, 2007 (Date
      of Inception) and incorporated as a subsidiary of Eaton Laboratories, Inc.,
      ("Eaton"), also a Nevada corporation. On March 30, 2007, BSI's parent
      corporation, Eaton entered into an Acquisition Agreement and Plan of Merger
      ("Agreement") with Hydrogen Hybrid Technologies, Inc. ("HHT"), a privately-held
      Canadian corporation. Pursuant to the terms of the Agreement, HHT acquired
      Eaton, and Eaton agreed to spin off its wholly-owned subsidiary, Basic Services,
      Inc. On April 30, 2007, the record shareholders of Eaton received one
      unregistered, par value $0.001, share of Basic Services, Inc. common stock
      for
      every share of Eaton Laboratories common stock owned. The Basic Services, Inc.
      stock dividend was based on 10,873,750 shares of Eaton common stock that were
      issued and outstanding as of the record date. The spin off did not include
      any
      stock issued to the shareholders of Hydrogen Hybrid Technologies, Inc., who
      received Eaton shares pursuant to the Agreement with Eaton. Eaton retained
      no
      ownership in BSI following the spin off. Further, BSI was no longer a subsidiary
      of Eaton.




On
      October 26, 2007, BSI and a newly formed subsidiary of BSI ("Merger Sub") and
      Adrenalina entered into an Acquisition Agreement and Plan of Merger
      ("Acquisition") pursuant to which BSI, through its wholly-owned subsidiary,
      Merger Sub, acquired 100% of the membership interests in Adrenalina in exchange
      for 18,000,000 shares of the BSI common stock which were issued to the owners
      of
      the membership interests in Adrenalina. Immediately after the Acquisition was
      consummated and further to the Acquisition Agreement, the four largest
      shareholders of BSI cancelled 9,773,750 shares of the BSI Common Stock held
      by
      them. The transaction contemplated by the Agreement was intended to be a
      "tax-free" reorganization pursuant to the provisions of Section 351 and
      368(a)(1)(A) of the Internal Revenue Code of 1986, as amended. Immediately
      prior
      to the Acquisition, BSI was a reporting corporation with limited activity.




For
      accounting purposes, this transaction was accounted for as a reverse
      acquisition, since the stockholders of Adrenalina own a majority of the issued
      and outstanding shares of common stock of BSI and the directors and executive
      officers of Adrenalina became the directors and executive officers of the BSI.
      As a consequence the historical financial information presented herein
      represents that of Adrenalina.





On
      December 13, 2007, BSI changed its name to Adrenalina.


F-5


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)


**Note
      1 – Description of Business, Basis of Presentation and Summary of
      Significant Accounting Policies (Continued)**




The
      Company is a media, retail and entertainment company headquartered in South
      Florida. The Company operates in Latin America and throughout the United States.
      Adrenalina’s operations are concentrated in three lines of business:




Entertainment:
      theatrical and TV film and music production and distribution




Merchandise
      Sales: extreme sports and adventure themed stores located in regional shopping
      malls, principally in Florida.




Publishing:
      extreme sports and music oriented periodical publishing and distribution.




As
      of
      March 31, 2008 and December 31, 2007, the consolidated financial statements
      include the company and all wholly-owned subsidiaries. All intercompany accounts
      and transactions between consolidated companies have been eliminated in
      consolidation.




**Use
      of Estimates**




The
      preparation of consolidated financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the amounts reported in the financial statements and
      footnotes thereto. Actual results could differ from those estimates. Significant
      estimates inherent in the preparation of the accompanying consolidated financial
      statements include accounting for depreciation and amortization, film costs,
      goodwill, barter transactions, business combinations, the beneficial conversion
      feature on the convertible debenture, warrants, deferred rent, loan costs and
      contingencies.


F-6


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 - Description of Business, Basis of Presentation and Summary of Significant
      Accounting Policies (Continued)**




**Inventories**




*Retail
      Merchandise*




The
      Company’s retail inventories are comprised primarily of extreme sports and
      adventure life-style equipment and clothing, which are valued at the lower
      of
      cost or market using the weighted average cost method that approximates the
      first-in, first-out (“FIFO”) method.





Inventory
          costs also include the direct cost of warehousing, handling, purchasing,
          and
          transporting the inventory to the stores. Vendor allowances, which primarily
          represent volume rebates and cooperative advertising funds, are recorded
          as a
          reduction of the cost of the merchandise inventories. The cost of warehousing,
          handling, purchasing, and transporting, as well as vendor allowances, are
          recognized through cost of sales when the inventories are
          sold.




The
      Company maintains a provision for estimated shrinkage based on the actual
      historical results of physical inventories. The Company also records an
      adjustment to the value of inventory to adjust for obsolete, non-salable and
      slow selling merchandise equal to the difference between the carrying value
      and
      the estimated market value, based on seasonal trends, sales activities of
      merchandise and assumptions about demand for products.




**Film
      Costs**




The
      Company accounts for film costs, as well as related revenues (“film
      accounting”), in accordance with the guidance in SOP 00-2, that requires the
      exercise of judgment related to the film’s ultimate revenues.




Film
      costs consist of the costs of completed television episodes, completed and
      unreleased episodes and in process production costs, all reflected at the lower
      of cost, less accumulated amortization, or fair value.




As
      film
      costs are capitalized by the Company, management estimates the ultimate
      revenues, less additional costs to be incurred, in order to determine whether
      the value of a film is realizable or has been impaired. Impairment, if noted,
      is
      recorded in the period of identification. Additionally, management amortizes
      the
      existing carrying value of film costs based on the proportion of the film’s
      revenues recognized for each period as compared to the film’s estimated ultimate
      revenues.





Prior
      to
      release, management bases its estimates of ultimate revenues for each film
      on
      factors such as the historical performance of similar films, the star power
      of
      the lead actors and actresses, the rating and genre of the film. Management
      updates such estimates based on information available on the progress of the
      film’s production and, upon release, the actual results of each film. Changes in
      estimates of ultimate revenues from period to period affect the amount of film
      costs amortized in a given period and, therefore, could have an impact on the
      financial results for that period. The Company recorded film cost
      amortization of approximately $16,500 and $168,000 for the three months ended
      March 31, 2008 and 2007, respectively.


F-7


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 – Description of Business, Basis of Presentation and Summary of
      Significant Accounting Policies(Continued)**


**Recent
          Accounting Standards**


In
      December 2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS
      No.
      141(R) will significantly change the financial accounting and reporting of
      business combination transactions. SFAS No. 141(R) establishes the criteria
      for
      how an acquiring entity in a business combination recognizes the assets acquired
      and liabilities assumed in the transaction; establishes the acquisition date
      fair value as the measurement objective for all assets acquired and liabilities
      assumed; and requires the acquirer to disclose to investors and other users
      all
      of the information they need to evaluate and understand the nature and financial
      effect of the business combination. Acquisition related costs including finder's
      fees, advisory, legal, accounting valuation and other professional and
      consulting fees are required to be expensed as incurred. SFAS No. 141(R) is
      effective for fiscal years beginning after December 15, 2008 and early
      implementation is not permitted. The Company has previously acquired ownership
      interest in several entities and may continue to do so in the future. The
      Company expects that the implementation of SFAS No. 141(R) will not have a
      material effect on its consolidated financial statements at the date of
      adoption.




In
      December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in
      Consolidated Financial Statements – an amendment of ARB No. 51. SFAS No.
      160 requires the Company to establish accounting and reporting standards for
      the
      non-controlling interest in a subsidiary and for the deconsolidation of a
      subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods
      within those fiscal years, beginning on or after December 15, 2008. Earlier
      adoption is prohibited. The Company does not expect the implementation of SFAS
      No. 160 to have a material impact on its consolidated financial statements.




In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities – an amendment of FASB Statement No. 133. SFAS No. 161
      changes the disclosure requirements for derivative instruments and hedging
      activities. Entities are required to provide enhanced disclosures about how
      and
      why an entity uses derivative instruments; how derivative instruments and
      related hedged items are accounted for under Statement 133 and its related
      interpretations; and how derivative instruments and related hedged items affect
      an entity’s financial position, financial performance and cash flows. SFAS No.
      161 is effective for fiscal years and interim periods beginning after November
      15, 2008, with early application permitted. The Company does not expect the
      implementation of SFAS No. 161 to have a material impact on its consolidated
      financial statements.




**Summary
      of Significant Accounting Policies**




**Accounts
      Receivable**




Accounts
      receivable, including credit card receivables, represent amounts currently
      due
      to the Company under contractual obligations or for services performed. When
      necessary, the Company evaluates and maintains an allowance for these accounts
      to reduce such balances to the amount deemed collectible. At March 31, 2008
      and
      December 31, 2007, the Company recorded an allowance for doubtful accounts
      of
      approximately $12,000 and $2,100, respectively.


F-8


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 – Description of Business, Basis of Presentation and Summary of
      Significant Accounting Policies (Continued)**




**Summary
      of Significant Accounting Policies –
(Continued)**




**Investments
      in Securities Available for Sale**




The
      Company’s investments in marketable securities are classified as available for
      sale, reported at fair market value, and unrealized gains and losses (if any)
      would be reported as a component of other comprehensive income. Recognized
      gains
      and losses from sales of marketable securities or permanent declines in value,
      if any, are reported in other income and expense as incurred. As of March 31,
      2008 and December 31, 2007, the cost approximated fair value.




F-9




**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 – Description of Business, Basis of Presentation and Summary of
      Significant Accounting Policies (Continued)**




**Summary
      of Significant Accounting Policies – (Continued)**




*Revenue
      Recognition*





Retail





Revenue
      for sales of merchandise is recognized when merchandise is sold and delivered
      to
      the customer. The Company maintains a reserve for product returns and discounts.
      Retail revenue also includes income from its point-of-sale entertainment
      attraction, the Flow Rider ®. Revenue, from the FlowRider ® is recorded at the
      time services are provided to the customer. Retail revenue is reported net
      of
      sales tax which amounted to approximately $61,600 and $31,100 for the three
      months ended March 31,  2008 and 2007, respectively.




*Film*




Television
      entertainment series are produced for foreign or domestic cable and syndicated
      television markets. Revenues from the distribution of television product are
      recognized when the following criteria are met: persuasive evidence of a sale
      or
      licensing arrangement exists; the film is complete and, in accordance with
      the
      terms of the arrangement, has been delivered or is available for immediate
      and
      unconditional delivery; the license period of the arrangement has begun and
      the
      Company can begin its exploitation, exhibition, or sale; the arrangement fee
      is
      fixed or determinable, and; collection of the arrangement fee is reasonably
      assured.


F-10


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 – Description of Business, Basis of Presentation and Summary of Significant
      Accounting Policies (Continued)**




**Summary
      of Significant Accounting Policies – (Continued)**




***Revenue
      Recognition – (Continued)***


*Barter*




In
      the
      normal course of operations, the Company enters into barter transactions whereby
      it exchanges programming product for advertising time that it can use or resell.
      The advertising time is provided by broadcasting companies in the United States
      and Central and South America. These transactions are valued at the fair value
      of the related programming products based on comparable arrangements in the
      broadcast areas. These transactions are accounted for at the time the
      programming is broadcast and the advertising is used.




During
      the three months ended March 31, 2007, the total value of the recorded barter
      transactions was $83,000 (none for the three months ended March 31, 2008).




Publishing





Magazine
                advertising revenues are recognized at the magazine cover date. Magazine
                sales revenues are primarily generated from bulk orders from retail
                outlets such as newsstands, supermarkets and convenience stores.
                Revenues
                from these sales are recorded when the magazines are placed with
                the
                vendor, less an allowance for returns. At March 31, 2008 and December
                31,
                2007, the Company recorded an allowance for returns of approximately
                $39,000 and $15,000 for all open
                issues.




**Gift
      Cards** ******




Cash
      received from the sale of gift cards is recorded as a liability, and revenue
      is
      recognized upon the redemption of the gift card or when it is determined that
      the likelihood of redemption is remote. At March 31, 2008 and December 31,
      2007
      the Company had recorded gift card liabilities of approximately $52,000 and
      $43,000, respectively.




**Advertising
      Costs**




The
      Company expenses advertising costs when incurred. Advertising expense paid
      to
      third parties during the three months ended March 31, 2008 and 2007 was $32,000
      and $116,500, respectively. Additionally the Company included in advertising
      expense bartered transactions with broadcasters, in which the Company provides
      its film for broadcast and receives in return air time which is used to promote
      their products.




F-11


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)





**Note
      1 – Description of Business, Basis of Presentation and Summary of Significant
      Accounting Policies (Continued)**




**Summary
      of Significant Accounting Policies – (Continued)**




**Convertible
      Debentures** **




In
      November 2007 and February 2008, the Company issued convertible debentures
      with
      beneficial conversion features whereby the conversion feature is “in the money”
in accordance with guidance supplied by Emerging Issues Task Force (“EITF”) No.
      98-5, “Accounting for Convertible Securities with Beneficial Conversion Features
      or Contingently Adjustable Conversion Ratios” and EITF No. 00-27, “Application
      of Issue EITF No. 98-5 to Certain Convertible Instruments”.





The
                beneficial conversion features were recorded at fair value as debt
                discount. The Company also issued warrants in connection with the
                convertible debt. The debt discount will be amortized to interest
                expense
                over the term of the debt. The recorded debt discount was calculated
                at
                the issuance date as the difference between the conversion price
                and the
                relative fair value of the common stock and warrants into which the
                security is convertible or
                exercisable.




**Income
      Taxes** **




Subsequent
      to October 26, 2007 the Company recognized deferred tax assets and liabilities
      for the future tax consequences attributed to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax basis. Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in which
      those temporary differences are expected to be recovered or settled. Under
      SFAS
      109, the effect on deferred tax assets and liabilities of a change in tax rates
      is recognized in income in the period that includes the enactment date. If
      it is
      more likely than not that some portion of a deferred tax asset will not be
      realized, a valuation allowance is recognized.




**Stock-Based
      Compensation**




During
      February 2008, members of the Board of Directors granted five year options
      to
      purchase and aggregate of  20,000 shares of the Company’s common stock at
      $1.50 per share.




The
      Company measures stock-based compensation cost at grant date, based on the
      estimated fair value of the award, and recognizes the cost as expense on a
      straight-line basis (net of estimated forfeitures) over the requisite service
      period. The Company estimated the fair value of stock options and as a result
      recorded a $400 charge to compensation expense for the three months ended March
      31, 2008.




**Earnings
      per share**




The
      Company computed basic and diluted loss per common share by dividing the losses
      applicable to  common
      stock by the weighted average number of basic and diluted common shares
      outstanding. The Company’s basic and fully diluted EPS calculation for the three
      months ended March 31, 2008 and 2007, respectively are the same since the number
      of shares that would be included in the dilutive calculation from assumed
      exercise of common stock equivalents would have been antidilutive due to of
      the net loss in each of the periods shown.


F-12


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      1 – Description of Business, Basis of Presentation and Summary of Significant
      Accounting Policies (Continued)**




**Comprehensive
      Income**




Comprehensive
      income is generally defined as the change in equity of a business enterprise
      during a period from transactions and other events and circumstances from
      non-owner sources. It includes all changes in equity during a period except
      those resulting from investments by owners and distributions to owners.
      Comprehensive income is the total of net income and all other non-owner changes
      in equity. Items that are to be recognized under accounting standards as
      components of comprehensive income are displayed in statements of shareholders'
      equity. The Company did not have components of comprehensive income to
      be reclassified at March 31, 2008 and December 31, 2007.




**Reclassifications**





Certain
      amounts from prior consolidated financial statements and related notes have
      been
      reclassified to conform to current year presentation.





**Note
      2 — Going Concern**




The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. The Company continued to incur significant
      operating losses through the three months ended March 31, 2008 which raise
      substantial doubt about the Company’s ability to continue as a going concern. As
      shown in the accompanying financial statements, the Company has incurred net
      losses of approximately $2,172,000 and $1,222,000 for the three months ended
      March 31, 2008 and 2007, respectively. Additionally, the Company has used cash
      flows in operations of approximately $1,304,000 and $491,000 for the three
      months ended March 31, 2008 and 2007, respectively. The operations of the
      Company have been funded through related party borrowings, contributed capital
      and convertible debentures. Management’s plans to generate cash flow include
      expanding the Company’s operations through additional store openings and raising
      additional capital through debt or equity offerings in an effort to fund the
      Company’s anticipated expansion. There is no assurance additional capital or
      debt financing will be available to the Company on acceptable terms. The
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




Note
      3 —
Investments in Securities Available for Sale




At
      March
      31, 2008 and December 31, 2007 investments in securities available for sale
      was
      comprised of approximately $40,200 and $28,000 of marketable common stock.
      The
      Company's costs approximated fair value, and therefore the Company did not
      record any unrealized gain or loss.


F-13


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




Note
      4 —
Film Costs




Film
      costs at March 31, 2008 and December 31, 2007 consisted of the
      following:





March 31,
              2008
            
            December 31,
              2007Film
                costs – television:Released
            
            $
            2,071,328
            
            $
            2,073,017Less:
                accumulated
                amortization
            
            
            (1,990,978
            )
            
            (1,976,217
            )Total
                film costs
            
            $
            80,350
            
            $
            96,800




Total
      amortization of film costs was approximately $16,500 and $160,000 for the three
      months ended March 31, 2008 and 2007, respectively.





Note
      5 —
Property and Equipment




Major
      categories of property and equipment at March 31, 2008 and December 31, 2007
      were as follows:







March 31,
              2008
            
            December 31,
              2007Leasehold
                improvements
            
            $
            2,309,401
            
            $
            2,243,998Furniture,
                fixtures and equipment
            
            
            1,697,855
            
            
            1,665,759Software
            
            
            90,978
            
            
            90,978Vehicles
            
            
            15,000
            
            
            15,000Construction
                in process
            
            
            291,169
            
            
            35,929Deposits
                on FlowRider ® equipment purchasecontracts
            
            
            2,149,257
            
            
            1,336,5006,553,660
            
            
            5,388,164Less:
                accumulated depreciation and amortization
            
            
            (578,827
            )
            
            (424,244
            )Total
                property and equipment
            
            $
            5,974,833
            
            $
            4,963,920




Depreciation
      expense totaled approximately $154,600 and $74,400 for the three months ended
      March 31, 2008 and 2007, respectively.


F-14


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




Note
      6 —
Intangible Assets




Trademarks
      and licensing agreements with indefinite and determinable lives at March 31,
      2008 and December 31, 2007 were as follows:





Lives
            
            March 31,
              2008
            
            December 31,
              2007Trademarks:Adrenalina®
            
            
            Indefinite
            
            $
            230,000
            
            $
            230,000Licensing
                Agreements
            
            
            5 Years
            
            
            40,000
            
            
            40,000Total
            
            
            
            
            
            270,000
            
            
            270,000Less:
                accumulated amortization
            
            
            
            
            
            (23,556
            )
            
            (21,556
            )$
            246,444
            
            $
            248,444




The
      Company anticipates that the future amortization of its licensing rights will
      approximate $8,000 for the years ended December 31, 2008 and 2009 and $2,444
      for
      December 31, 2010.




Note
      7 —
Long-term Debt





*Related
      party note*





On
      November 1, 2007 the Company issued a $3,294,267, 5% note payable to a
      shareholder, with monthly payments of $94,122 commencing on November 1, 2010
      and
      continuing monthly through October 2013, when the balance of unpaid principal
      and interest is due.




Convertible
      debentures




During
      December, 2007, the Company issued a note for a 5% Senior Secured Convertible
      Debenture in the principal amount of $3,000,000, with quarterly interest
      payments commencing in January 2008. Principal amounts under this debenture
      are
      payable in 18 equal monthly installments commencing the 12th month following
      the
      issuance date. The Company may also elect to make principal payments in shares
      of common stock if there exists an effective registration statement with respect
      to the shares issuable upon conversion of the Debenture. If the Company elects
      to make principal payments in common stock, the conversion rate will be the
      lesser of the then effective conversion price (see below) or 88% of the volume
      weighted average price for the ten consecutive trading days ending immediately
      prior to the applicable date a principal payment is due.




During
      February 2008, the Company issued a $2,500,000 Original Issue Discount 5% Senior
      Secured Convertible Debenture, with quarterly interest payments commencing
      in
      May 2008. Principal amounts under this debenture are payable in 18 equal monthly
      installments commencing the 12th month following the issuance date. The Company
      may also elect to make principal payments in shares of common stock if there
      exist an effective registration statement with respect to the shares issuable
      upon conversion of the Debenture. If the Company elects to make principal
      payments in common stock, the conversion rate will be the lesser of the then
      effective conversion price (see below) or 88% of the volume weighted average
      price for the ten consecutive trading days ending immediately prior to the
      applicable date a principal payment is due.


F-15


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




**Note
      7 — Long-term Debt (Continued)**




At
      any
      time during the life of the loans the holder may convert the debenture into
      shares of the Company’s common stock at a fixed conversion price of $0.75,
      subject to adjustment in the event that the Company issues new common stock
      at a
      price below the conversion price. Following the effective date of the
      registration statement filed in connection with the shares, the Company may
      force conversion of the debentures if the market price of their common stock
      is
      at least $2.75 for any 20 out of 30 consecutive trading days. The Company may
      also prepay these debentures in cash at 115% of the then outstanding principal
      balance provided there is a registration statement in effect with respect to
      the
      shares issuable upon conversion of the debentures.




These
      debentures rank senior to all of the Company’s current and future indebtedness
      and are secured by substantially all of the Company’s assets.





In
      connection with these financing transactions, the Company also issued five-year
      warrants to purchase 4,000,000 and 3,333,333 shares, respectively of common
      stock at $2.00 per share. The exercise price of these warrants is subject to
      full ratchet anti-dilution rights in the event that the Company issues
      securities at less than $1.38 per share.




Since
      this debt is convertible into equity at the option of the note holder at
      beneficial conversion rates, an embedded beneficial conversion feature amounting
      to approximately $407,000 at March 31, 2008 and $245,000 at December 31, 2007
      was recorded as a debt discount and will be amortized to interest over the
      life
      of the debenture, in accordance with EITF No. 00-27.




The
      interest expense for the amortization of the aggregated convertible debt
      discounts through March 31, 2008 was approximately $219,000. (None for the
      three
      months ended March 31, 2007). The Company’s annualized effective rate on these
      instruments approximates 22.5%, inclusive of the 5% stated rate in the note.




Maturities
      of the Company’s long term debt for the next five years are as follows:





2009
            
            $
            805,5562010
            
            
            3,666,6672011
            
            
            1,404,2652012
            
            
            1,129,4632013
            
            
            1,129,463Thereafter
            
            
            658,854Total
            
            $
            8,794,267




Pursuant
      to the Company's issuance of its $3,000,000 convertible debenture, including
      4,000,000 detachable warrants, and under the terms of a Registration Rights
      Agreement, the resale registration statement was to be filed with the SEC not
      later than 90 days from the closing date of the transaction, and be declared
      effective by the SEC not later than 180 days from the closing date. Failure
      to
      meet this deadline could result in the Company incurring certain payment
      obligations (the “Registration Damages”) amounting to 2% of the aggregate
      purchase price of the convertible debenture and warrants per month, pro rated
      for partial periods. As of May 20, 2008 the Company’s registration filing with
      the SEC had not been declared effective and, in connection therewith, the
      Company has accrued approximately $180,000 of liquidating damages which are
      included in the accompanying consolidated balance sheet as of March 31, 2008.


F-16


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)





Note
      8 —
Commitments and Contingencies




Operating
      Leases




The
      Company’s rent expense amounted to approximately $879,000 and $285,000 for the
      three months ended March 31, 2008 and 2007, respectively. The Company has
      various long-term noncancelable lease commitments certain of which are
      guaranteed by officers and shareholders of the Company, for its offices,
      warehouse and stores which expire through 2019. The minimum rental commitments
      under noncancelable long-term operating leases during the next five years are
      as
      follows:





2009
            
            $
            2,180,8292010
            
            
            2,709,8112011
            
            
            2,790,7652012
            
            
            2,809,3562013
            
            
            2,818,770Thereafter
            
            
            13,729,620Total
            
            $
            27,039,153




*Capital
      Commitments*




*FlowRider*®




Effective
      April 2007, the Company entered into an exclusive five year agreement to acquire
      thirty-six FlowRider®, water-themed entertainment units for placement in its
      future mall-based retail shops in an aggregate amount approximating $21,000,000.
      The agreement is subject to a performance schedule governing order timing and
      equipment deposits. Non-refundable deposits placed as of March 31, 2008 and
      December 31, 2007 were $2,150,000 and $1,336,500, respectively.




Retail
      Locations




At
      March
      31, 2008, the Company had signed lease and construction agreements to develop
      five new retail locations. Capital commitments under these agreements were
      approximately $6.0 million.




Litigation




The
      Company is involved in various claims and legal proceedings in the ordinary
      course of its business activities. The Company believes that any potential
      liability associated with the ultimate outcome of these matters will not have
      a
      material adverse effect on its financial position or results of operations.


F-17


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)




Note
      9 – Related Party Transactions




Advertising
      Revenue




During
      2007, the Company sold advertising to Parlux, Inc, a company whose Chairman
      and
      CEO was also a 67.7% shareholder of Adrenalina. These advertising revenues
      amounted to approximately $282,000 for the three months ended March 31, 2007.
      (None for the three months ended March 31, 2008).




*Related
      Party Note Payable*





On
      November 1, 2007, the Company issued a 5%, $3,294,267 note to a shareholder.
      (see note 7)




Note
      10 – Concentration of Risk




*Vendor
      Concentration*




During
      the three months ended March 31, 2008 and 2007, retail inventories supplied
      by
      one vendor constituted approximately 38% and 25%, respectively of total
      purchases and 28% and 35% of total inventory as of March 31, 2008 and December
      31, 2007, respectively.




*FlowRider*®




Sales
      for
      the use of the FlowRider® amounted to approximately $181,000 and $97,000 for the
      three months ended March 31, 2008 and 2007, respectively. These sales
      represented 17% and 22% of retail revenues and 16% and 11% of total revenues
      for
      the periods then ended.




F-18


**ADRENALINA**


Unaudited
      Notes to Condensed Consolidated Financial Statements


Three
      Months Ended March 31, 2008 and 2007


(Continued)





**Note
      11 – Income Taxes**




The
      Company has fully reserved its U.S. net deferred tax assets as of March 31,
      2008
      due to the uncertainty of future taxable income. The Company has U.S. net
      operating loss carry-forwards of approximately $2,208,000 which will expire
      through 2028 and the Company’s State net operating loss carry-forwards of
      approximately $2,209,000 which will expire through 2028.





**Note
      12 – Warrants**





In
      connection with the convertible debentures issued during December 2007 and
      February 2008, respectively, the Company issued five-year warrants to purchase
      4,000,000 and 3,333,333 shares of common stock, respectively, at $2.00 per
      share. The exercise price of these warrants is subject to full ratchet
      anti-dilution rights in the event that the Company issues securities at less
      than $1.38 per share. The warrants vested immediately and expire in five
      years.





The
      fair
      value of these warrants was estimated at approximately $1,056,000 and $844,000,
      respectively, based on the Black-Scholes option pricing model using the
      following assumptions: a risk free rate of 3.89% and 2.1%, respectively, an
      expected life of 3 years, a volatility factor of 69% and an expected dividend
      yield of 0%. This value was recorded to debt discount and is being amortized
      as
      interest expense over the period the debt is outstanding (see
      Note7).




**Note
          13 - Share-Based Compensation**
  On
          February 28, 2008, the Company granted 20,000 options to certain non-employee
          directors, to acquire common stock during a five-year period at $1.50 per
          share.
          The directors’ options vested over a five-year period at the annual rate of
          4,000 shares per year. The fair value of the options was determined to be
          $11,300.  The directors’ options will be expensed as share-based
          compensation over a five-year period in accordance with the applicable
          vesting
          periods.
  The
          fair
          value of these options at the date of grant was estimated using a Black-Scholes
          option pricing model with the following weighted average
          assumptions.
  Expected
                      life (years)
                  
                  
                  5.0Expected
                      volatility
                  
                  
                  69.0
                  %Risk-free
                      interest rate
                  
                  
                  2.10
                  %Dividend
                      yield
                  
                  
                  0.0
                  %
  The
          expected life of options represented the estimated period of time until
          exercise
          based on expectations of future behavior. The expected volatility was estimated
          using the historical volatility of the Company's stock which management
          believes
          is the best indicator at this time. The risk-free interest rate was based
          on the
          implied yield available on U.S. Treasury zero coupon issues with an equivalent
          term. The Company has not paid dividends in the past and does not intend
          to in
          the foreseeable future.
  Included
          in compensation expenses for the three months ended March 31, 2008, is
          $424 of
          share-based compensation relating to the options issued in February 2008.
          The
          Company did not have any share compensation during the three months ended
          March
          31, 2007.
  F-19
  **Note
        14 – Earnings per Share and Potential Dilution**





The
      earnings per share (basic and diluted) in the consolidated statement of
      operations are equal in amounts because the assumed exercise of common stock
      equivalents would be anti-dilutive, and because a net loss was reported for
      each
      period. Common shares that have been excluded from the computation of diluted
      loss per common share consist of the following:





Warrants
                issued in relation to debt arrangement (see Notes 7
                and 12)
            
            
            -Shares
                issuable under convertible debentures (see Note 7)
            
            
            612,770Total
                anti-dilutive securities excluded from EPS
            
            
            612,770


F-20




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




**Cautionary
      Note about Forward-Looking Statements**




**Forward-Looking
      Statements**





We
      caution that any forward-looking statements (as such term is defined in the
      Private Securities Litigation Reform Act of 1995) contained in this Quarterly
      Report on Form 10-Q or made by our management involve risks and uncertainties
      and are subject to change based on various important factors, many of which
      may
      be beyond our control. Accordingly, our future performance and financial results
      may differ materially from those expressed or implied in any such
      forward-looking statements. Accordingly, investors should not place undue
      reliance on forward-looking statements as a prediction of actual results. You
      can identify these statements as those that may predict, forecast, indicate
      or
      imply future results, performance or advancements and by forward-looking words
      such as *“believe,”
      “anticipate,” “expect,” “estimate,” “predict,” “intend,” “plan,” “project,”
“will,” “will be,” “will continue,” “will result,” “could,” “may,” “might”* or
      any
      variations of such words or other words with similar meanings. Forward-looking
      statements address, among other things, our expectations, our growth strategies,
      including our plans to open new stores, our efforts to increase our gross
      margins and create a return on invested capital, plans to grow our private
      label
      business, projections of our future profitability, results of operations,
      capital expenditures or our financial condition or other “forward-looking”
information and includes statements about revenues, earnings, spending, margins,
      liquidity, store openings and operations, inventory, private label products,
      our
      actions, plans or strategies. We are including this cautionary statement in
      this
      report to make applicable and take advantage of the safe harbor provisions
      of
      the Private Securities Litigation Reform Act of 1995 for any forward-looking
      statements made by, or on behalf, of us.





The
      following factors, among others, in some cases have affected and in the future
      could affect our financial performance and actual results and could cause actual
      results for fiscal 2008 and beyond to differ materially from those expressed
      or
      implied in any forward-looking statements included in this report or otherwise
      made by our management: the intense competition in the sporting goods industry
      and actions by our competitors; our inability to manage our growth, open new
      stores on a timely basis and expand successfully in new and existing markets;
      the availability of retail store sites on terms acceptable to us; the cost
      of
      real estate and other items related to our stores; our ability to access
      adequate capital; changes in consumer demand; risks relating to product
      liability claims and the availability of sufficient insurance coverage relating
      to those claims; our relationships with our suppliers, distributors or
      manufacturers and their ability to provide us with sufficient quantities of
      products; any serious disruption at our distribution or return facilities;
      the
      seasonality of our business; the potential impact of natural disasters or
      national and international security concerns on us or the retail environment;
      risks related to the economic impact or the effect on the U.S. retail
      environment relating to instability and conflict in the Middle East or
      elsewhere; risks relating to the regulation of the products we sell, risks
      associated with relying on foreign sources of production; risks relating to
      implementation of new management information systems; factors associated with
      our pursuit of strategic acquisitions; risks and uncertainties associated with
      assimilating acquired companies; risks associated with our exclusive brand
      offerings; the loss of our key executives, our ability to meet our labor needs;
      changes in general economic and business conditions and in the specialty retail
      or sporting goods industry in particular; our ability to repay or make the
      cash
      payments under our senior convertible notes; changes in our business strategies;
      any factor described under Part II-Item 1A Risk Factors in our Form 10-Q
      filings and other factors discussed in other reports or filings filed by us
      with
      the Securities and Exchange Commission.





In
      addition, we operate in a highly competitive and rapidly changing environment;
      therefore, new risk factors can arise, and it is not possible for management
      to
      predict all such risk factors, nor to assess the impact of all such risk factors
      on our business or the extent to which any individual risk factor, or
      combination of factors, may cause results to differ materially from those
      contained in any forward-looking statement. We do not assume any obligation
      and
      do not intend to update any forward-looking statements except as may be required
      by securities laws.





1


**Overview**





Adrenalina
      is a retail, entertainment, media and publishing company that is focused on
      the
      nature and lifestyle surrounding extreme sports and outdoor adventures. We
      are
      also the nation's first and only retailer that has enhanced the retail shopping
      experience, with our particular mix of shopping and entertainment that includes
      the FlowRider®. Currently we have two stores open and are in the process of
      opening 5 stores during 2008.





Historically
      we were considered a media company which produced the show “Adrenalina”
primarily in Latin America. However over the last twelve months we have moved
      away from our original focus and placed a greater emphasis on our retail stores,
      with current plans of expanding into new markets throughout the United States.
      During 2008 we will continue our transformation to a retail focused operation.
      Although we will continue to produce our television show we will no longer
      receive any material revenues related to its production. Instead our focus
      will
      be on getting the show as much air time as possible in an effort to increase
      our
      brand awareness and to put us in front of our targeted audience.





We
      expect
      the next 12 months to be our most challenging as we transform our operations
      and
      expand into new markets. We are also going to face extreme financial pressure
      as
      we continue the construction of our Tampa, Atlanta and Houston stores and start
      building out our stores in Dallas and Denver. Each of these endeavors will
      take
      significant cash to open and currently we do not have sufficient financial
      capacity to fund their openings.





Also,
      through the rest of 2008 we anticipate that our current trend of losses will
      continue and may exceed our losses incurred during 2007; these continued losses
      are a direct result of greater pressures put on our existing employees which
      may
      in turn lead to greater turnover, coupled with the fact that we may not be
      able
      to find suitable additional employees or replacements for key
      personnel for our growth strategy. We may also face additional delays in opening
      our new stores, and if they are not completed on time then we may miss our
      fourth quarter retail sales opportunities. We may additionally face economic
      pressures if our sales in our new markets do not meet up to our anticipated
      results, because of the continued pressure placed on our buying capacity because
      of a declining currency or our customers ability to purchase our products
      because of a decline in their disposable income.





We
      are
      however, developing additional channels to make our products available
      throughout the rest of the world with our wholesale and internet operations.
      During 2007 our total wholesale and internet operation were not material to
      our
      financial results. We believe that these segments will turn during the third
      quarter of 2008 and expect to see our sales in these areas increase, which
      in
      turn will help provide us with some of the cash flows that will be necessary
      to
      support our operations.





While
      many of our competitors are slowing their expansion because of recent declines
      in the national retail sales, we believe that now is the time to push into
      new
      markets and will be key for future success. While recent trends have softened
      the real estate market we believe that incentives offered by malls will
      help to off-set most of our cost to develop during the rest of 2008 and 2009.





**Critical
      Accounting Policies and Estimates**





We
      have
      prepared our financial statements in conformity with U.S. generally accepted
      accounting principles, and these financial statements necessarily include some
      amounts that are based on our informed judgments and estimates. Our senior
      management has discussed the development and selection of these critical
      accounting estimates, and the disclosure in this section of this report
      regarding them, with the Board of Directors. Our significant accounting policies
      are discussed in Note 1 of Notes to Consolidated Financial Statements. Our
      critical accounting policies represent those policies that are subject to
      judgments and uncertainties. As discussed below, our financial position and
      results of operations may be materially different when reported under different
      conditions or when using different assumptions in the application of these
      policies. In the event estimates or assumptions prove to be different from
      actual amounts, adjustments are made in subsequent periods to reflect more
      current information. Our critical accounting policies include:




2




*Merchandise
      Inventories* —Merchandise
      inventories are valued at the lower of cost or market, with cost determined
      using a weighted average method. Included in our cost basis are costs incurred
      in making inventories available for sale in our stores, such as freight and
      other distribution costs. We utilize perpetual inventory records to value
      inventory in our stores. Physical inventory counts are performed during each
      fiscal quarter and we adjust our perpetual records based on the results of
      the
      physical counts. Cost is calculated based upon the purchase order cost of an
      item at the time it is received by us, reconciled to actual vendor invoices,
      and
      also includes the cost of warehousing, handling, purchasing, and transporting
      the inventory to the stores. The cost of warehousing, handling, purchasing,
      and
      transporting, as well as vendor allowances, are recognized through cost of
      sales
      when the inventory is sold.  Due to systems limitations, it is
      impracticable for us to assign specific costs and allowances to individual
      units
      of inventory. As such, to properly match net costs against the related revenues,
      we must use all available information to appropriately estimate the costs and
      allowances to be deferred and recognized each period. Our estimate of when
      inventory is sold affects the deferral, and subsequent income statement
      recognition, of costs incurred in preparing inventory for sale and represents
      the most significant estimate in that calculation; any changes in this estimate
      could have a material impact on the financial statements.  Vendor
      allowances, which primarily represent volume rebates and cooperative advertising
      funds, are recorded as a reduction of the cost of the merchandise inventories.
      We earn vendor allowances as a consistent percentage of certain merchandise
      purchases with no minimum purchase requirements. We did not have any vendor
      allowance programs in fiscal 2007 and 2006 that were based on purchase volume
      milestones.





We
      maintain a provision for estimated shrinkage based on the actual historical
      results of our physical inventories. We compare our estimates to the actual
      results of the physical inventory counts as they are taken and adjust the
      shrinkage estimates accordingly. We also record adjustments to the value of
      inventory equal to the difference between the carrying value and the estimated
      market value, based on assumptions about future demand.





*Film
      Costs* —
We
      account for our film costs and related revenues (“film accounting”), in
      accordance with the guidance in SOP 00-2, which requires the exercise of
      judgment related to the film’s ultimate revenues. Our current film costs consist
      of the costs of completed television episodes, completed and unreleased episodes
      and in process production costs, all reflected at the lower of cost, less
      accumulated amortization, or fair value. Prior to release, we estimate our
      ultimate revenues for each film on factors such as our historical performance
      of
      similar films. On an annual basis we evaluate and update our estimates based
      on
      information available on the progress of the film’s production and, upon
      release, the actual results of each film. Changes in our estimate of the
      ultimate revenues from period to period affect the amount of film costs
      amortized in a given period and, therefore, could have an impact on the
      financial results for that period.





*Intangible
      Assets* —
We
      perform annual impairment tests of our intangible assets by comparing the book
      values of our reporting units to their estimated fair values. The estimated
      fair
      values of our reporting units are computed using estimates that include a
      discount factor in valuing future cash flows. There are assumptions and
      estimates underlying the determination of fair value and any resulting
      impairment loss. Another estimate using different, but still reasonable,
      assumptions could produce different results.





*Revenue
      Recognition*





*Retail
      Items* —
Revenue
      from sales of our merchandise is recognized at the time of the merchandise
      sale,
      Revenue is presented net of sales taxes collected. We allow for merchandise
      to
      be returned under most circumstances and provide for a reserve of estimated
      returns. Additionally, retail revenue includes income from our point-of-sale
      attraction, Flow Rider ® revenue, which is recorded at the time services are
      provided to the end user.





*Gift
      cards—* We
      record
      a gift card liability on the date we issue the gift card to the customer. We
      record revenue and reduce the gift card liability as the customer redeems the
      gift card. Gift card breakage is recorded as revenue based on an estimated
      amount of gift cards that are expected to go unused that are not subject to
      escheatment. For the periods ended March 31, 2008 and December 31,
      2007, we did not record an estimate for breakage due to our limited history
      and
      the overall estimated materiality for gift cards expected to remain
      unused.





*Film—* Revenue
      from our entertainment series are recognized when we have persuasive evidence
      of
      a sale or licensing arrangement; the film is complete and has been delivered
      or
      is available for immediate and unconditional delivery and the license period
      of
      the arrangement has begun.





*Publishing* —
We
      record magazine advertising revenues and subscriptions at the magazine cover
      date. Our magazine sales revenues are primarily generated from bulk orders
      from
      retail outlets such as newsstands, supermarkets and convenience stores. Revenues
      from bulk sales are recorded when the magazines are placed with the vendor,
      less
      an allowance for returns, based on our historical performance of the closed
      sales of our magazines.





*Internet
      Sales* — *-* Revenue
      from internet sales are recognized upon estimated receipt by the
      customer.




3




*Barter—* From
      time
      to time and in the normal course of operations we enter into various barter
      transactions whereby, we exchange programming product for advertising time
      that
      we can use or resell. Generally, this advertising time is provided to us by
      broadcasting companies in the United States and Central and South America.
      For
      all recorded barter transactions we record the fair value of the related
      programming products based on comparable arrangements in the broadcast areas
      or
      from our existing contracts. These transactions are accounted for at the time
      the programming is broadcast and the advertising is used.





*Convertible
      Debenture* —We account
      for our convertible debenture with beneficial conversion features, in accordance
      with EITF No. 98-5 and EITF No. 00-27 which require that we record a debt
      discount at the issuance date of our debentures if there exist a difference
      between the conversion price and the relative fair value of the common stock
      and
      warrants into which the security is convertible or exercisable.





*Income
      Taxes* —We
      record income tax expense using the liability method for taxes and are subject
      to federal, state, and local jurisdictions. As necessary, our current tax
      liability or asset is recognized for the estimated taxes payable or refundable
      on the tax returns for the current year and a deferred tax liability or asset
      is
      recognized for the estimated future tax effects attributable to temporary
      differences and carryforwards. Deferred tax assets and liabilities are measured
      using enacted income tax rates expected to apply to taxable income in the years
      in which those temporary differences are expected to be recovered or settled.
      The effect of a change in tax rates is recognized as income or expense in the
      period that includes the enactment date. Also a valuation allowance is recorded
      to reduce the carrying amounts of deferred tax assets unless it is more likely
      than not that such assets will be realized. If different assumptions had been
      used, our tax expense, assets, and liabilities could have varied from recorded
      amounts. If actual results differ from estimated results or if we adjust these
      assumptions in the future, we may need to adjust our deferred tax assets or
      liabilities, which could impact our effective tax rate.





**General**





**Accounting
      Items**




**Results
      of Reporting Lines**





We
      classify our business interests in three reportable lines:





Retail
      sales from our stores which focus on extreme sports and adventure themed
      clothing and merchandise; Entertainment which is comprised of theatrical and
      TV
      films as well as musical productions and distribution; and Publishing which
      is
      made up of publications centered around the life styles of extreme sports
      enthusiast and alternative music trends.





The
      following table sets forth the percentage relationship net sales to costs of
      sales for each of our reporting lines in our condensed consolidated statements
      of operations. This table should be read in conjunction with the following
      discussion and with our consolidated financial statements, including the related
      notes.





(Amounts
                in thousands of dollars)
            
            **2008**
            
            **2007****Retail
                Sales**
            
            
            1,065
            
            
            452Cost
                of sales
            
            
            646
            
            
            253**Gross
                profit**
            
            
            39.4
            %
            
            44.1
            %**Entertainment**
            
            
            16
            
            
            365Cost
                of sales
            
            
            11
            
            
            364**Gross
                profit**
            
            
            31.3
            %
            
            0.0
            %**Publishing**
            
            
            35
            
            
            46Cost
                of sales
            
            
            44
            
            
            98**Gross
                profit**
            
            
            (25.8
            )%
            
            (113.1
            )%**Total
                Sales**
            
            
            1,117
            
            
            862Cost
                of sales
            
            
            701
            
            
            715**Gross
                profit**
            
            
            37.3
            %
            
            17.1
            %




4




**Results
      of Operations**





*Net
      Revenues.* Net
      revenues for the three months ended March 31, 2008 increased $244,200 or 28.0%
      as compared to 2007, primarily due to increased volume in retail operations
      .
      During December 2007, we opened a new store in Miami, Florida. Revenues from
      our
      retail stores amounted to $1,065,200 for the three months ended March 31, 2008
      as compared to $452,000 for the three months ended March 31, 2007 resulting
      in a
      total increase of $613,200. Revenues from entertainment and publishing amounted
      to $16,600 and $34,900 for the three months ended March 31, 2008 as compared
      to
      $364,100 and $56,400 for the three months ended March 31, 2007; resulting in
      a
      total decrease of $369,000 in entertainment and publishing revenue from the
      same
      period in 2007. This decrease is attributable to a shift in corporate strategy
      from a film based entertainment company to one focused on expanding its revenue
      base primarily through merchandise sales and entertainment via retail operations
      nationwide.




*Gross
      Margin*  *.* Gross
      Margin for the three months ended March 31, 2008 increased $260,800 from
      $154,900 for the three months ended March 31, 2007. This increase of 168.4%
      from
      the three months ended March 31, 2008 is principally due to a greater volume
      of
      retail sales as media entertainment activity decreased.




*Payroll
      and Employee Benefits.* Payroll
      and employee benefits increased from $452,800 for three months ended March
      31,
      2008 to $505,700 for the three months ended March 31, 2007, an increase of
      $52,900 or 11.7%. This increase is primarily attributable to the additional
      employees to support the retail operations and the hiring of personnel to
      support the current and anticipated increase in operations.




*Occupancy
      Expense.* Occupancy expense includes rent, utilities, insurance and other costs necessary
      for the occupancy of the stores and main office. During the three months ended
      March 31, 2008 this cost increased $638,300 from $360,100 primarily due to
      the
      increase in rent expense related to the additional leases signed by us during
      the fourth quarter of 2007 and currently under construction. For the three
      months ended March 31, 2008 rent expense increased $594,200 an increase of
      208.9%. Additionally during this same period insurance costs increased by
      $33,800, an 81.0% increase over the previous year which was attributed to our
      second store opening in Miami, Florida.





*Other
      Selling, General and Administrative Expenses.* Other
      Selling, general and administrative expenses for the three months ended March
      31, 2008 is primarily made up of marketing and advertising expenses,
      professional fees, bad debt expense and cost related to maintaining our patents
      and trademarks. For the three months ended March 31, 2008 these costs decreased
      by $6,700, a decrease of 2.1% verse the three months ended March 31, 2007.





*Net
      Loss.* The net
      loss from operations for three months ended March 31, 2008 increased to
      $2,171,600 from $1,220,600 for the three months ended March 31, 2007, an
      increase of $951,000 or 78.0%. This increase is primarily due to our change
      in
      focus on retail sales which have lower margins and our increases in costs
      related to operating additional stores during 2007.





**Plan
      of Operation**





Currently
      we do not believe that the Company will be able to generate any significant
      cash
      flow during the coming year to fund our planned expansion or to fund our current
      operations. However, under our current model of funding operations through
      capital contributions and debt we believe that we can sustain ourselves for
      the
      next twelve months. Currently we are seeking additional outside funding to
      keep
      the business operational beyond 2008; however there is no assurance additional
      debt or capital will be available to us on acceptable terms.




5




**Liquidity
      and Capital Resources**





As
      of
      March 31, 2008, the Company's current assets exceeded its current liabilities
      by
      $707,240 even though the Company incurred a net loss of $2,171,600 for the
      three
      months ended March 31, 2008.




As
      of
      March 31, 2008, the Company has cash and cash equivalents of $528,400 and net
      accounts receivable of $40,300, which provided available capital for operations
      primarily from the proceeds of the debt incurred by the Company during February
      2008. The lack of available cash from the operations of the Company has an
      adverse impact on the Company's liquidity, activities and operations. Without
      realization of additional capital, it would be unlikely for the Company to
      execute its business plan. Management is seeking additional working capital
      through additional debt or equity private placements, additional notes payable
      to banks or related parties, 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 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, if at all.





During
      February 2008, we issued to three accredited investors our 5% Senior Secured
      Convertible Debentures in the principal amount of $2,500,000, most of the
      proceeds of that offering have already been used in connection with new store
      openings and equipment purchases. In addition, as of March 31, 2008, we had
      signed commitments to purchase equipment, build out our new store locations
      and
      committed under our lease agreements in excess of $57.2 million. Without
      additional funding, and the rapid generation of significant cash flow from
      operations, we will likely be unable to meet these commitments and we may have
      to curtail our operations. We are looking for additional funding which may
      or
      may not become available to us on acceptable terms. Any such funding may be
      in
      the form of equity and/or debt financing and will likely dilute the ownership
      interest of our current shareholders.





Net
      cash
      flows used in operating activities for the three months ended March 31, 2008
      were $1,304,100 as compared to net cash used in operating activities of $491,200
      for the three months ended March 31, 2007. For the three months ended March
      31,
      2008, our net loss amounted to $2,171,600, which included a non-cash adjustment
      due to depreciation and amortization of $408,900. Changes in assets and
      liabilities used $348,700 in cash, for three months ended March 31, 2007 our
      net
      loss amounted to $1,222,000, which included a non-cash adjustment due to
      depreciation and amortization of $76,400. Changes in assets and liabilities
      provided $654,400 in cash.





Net
      cash
      flows used in investing activities for the three months ended March 31, 2008
      was
      $1,267,500 as compared to $1,560,500 for the three months ended March 31, 2007.
      For the three months ended March 31, 2008 and 2007 our net cash used in
      investing activities was primarily attributable to the purchase of property
      and
      equipment. Additionally during the three months ended March 31, 2008 we
      purchased and sold available for sale securities. Our securities held at the
      end
      of the quarter were approximately $40,200.





Net
      cash
      flows for provided by financing activities the three months ended March 31,
      2008
      were $2,655,000 as compared to $2,106,200 for the three months ended March
      31,
      2007. This cash was primarily attributable to proceeds of $2,500,000 related
      to
      the issuance of convertible debentures. For the three months ended March 31,
      2007 $2,405,000 in cash was provided from related parties.




**Dividends**




Holders
      of common stock are entitled to receive such dividends as the board of directors
      may from time to time declare out of funds legally available for the payment
      of
      dividends. No cash dividends have been paid on our common stock, and we do
      not
      anticipate paying any cash dividends on our common stock in the foreseeable
      future.




On
      August
      13, 2007, we formed and spun-off our wholly-owned subsidiary, Generic Marketing
      Services, Inc. a Nevada corporation to its shareholders of record, in a
      one-for-one special stock dividend. Following the spin-off, we did not retain
      any ownership in Generic Marketing Services, Inc.





6




**Item
      4. Controls and Procedures**





**Disclosure
      Controls and Procedures**





As
      required by SEC Rule 13a-15 or Rule 15d-15, our Chief Executive and Chief
      Financial Officer carried out an evaluation under the supervision and with
      the
      participation of our management, of the effectiveness of the design and
      operation of our disclosure controls and procedures as of the end of the period
      covered by this report. Based on the foregoing evaluation, we have concluded
      that our disclosure controls and procedures are not effective as of March 31,
      2008, and that they do not allow for information required to be disclosed by
      the
      company in the reports that it files or submits under the Exchange Act to be
      recorded, processed, summarized and reported, within the time periods specified
      in the SEC's rules and forms. Based on the foregoing, our Chief Executive and
      Chief Financial Officer concluded that our disclosure controls and procedures
      were not effective. Specifically, the Company identified several material
      weaknesses in our internal control over financial reporting as described in
      Item
      8A and 8A(T) in our annual report on Form 10-KSB filed with the SEC on April
      15,
      2008, which had not been corrected as of March 31, 2008. Disclosure controls
      and
      procedures include, without limitation, controls and procedures designed to
      ensure that information required to be disclosed by the company in the reports
      that it files or submits under the Exchange Act is accumulated and communicated
      to the Company’s management, including its Chief Executive and Chief Financial
      Officer as appropriate to allow timely decisions regarding required
      disclosure.





Our
      management does not expect that our disclosure controls and procedures or our
      internal control over financial reporting will necessarily prevent all fraud
      and
      material error. Our disclosure controls and procedures are designed to provide
      reasonable assurance of achieving our objectives and our Chief Executive and
      Chief Financial Officer concluded that our disclosure controls and procedures
      are effective at that reasonable assurance level. Further, the design of a
      control system must reflect the fact that there are resource constraints, and
      the benefits of controls must be considered relative to their costs. Because
      of
      the inherent limitations in all control systems, no evaluation of controls
      can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision-making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the internal control. The design
      of
      any system of controls also is based in part upon certain assumptions about
      the
      likelihood of future events; and, there can be no assurance that any design
      will
      succeed in achieving its stated goals under all potential future conditions.
      Over time, controls may become inadequate because of changes in conditions,
      or
      the degree of compliance with the policies or procedures may
      deteriorate.




**Internal
      Control over Financial Reporting**




Pursuant
      to Rule 13a-15(d) or Rule 15d-15(d) of the Exchange Act, our management, with
      participation with the Company’s Chief Executive and Chief
      Financial Officer, are responsible for evaluating any change in the
      Company's internal control over financial reporting (as defined in Rule
      13a-15(f) or Rule 15d-15(f) under the Exchange Act), that occurred during each
      of our fiscal quarters that has materially affected, or is reasonably likely
      to
      materially affect, the Company's internal control over financial reporting.





Our
      internal controls over financial reporting are designed to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles and includes those policies and
      procedures that: (i) Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of the
      assets of the company; (ii) Provide reasonable assurance that transactions
      are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that receipts
      and
      expenditures of the company are being made only in accordance with
      authorizations of management and directors of the company; and (iii) Provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of the company’s assets that could have a
      material effect on the financial statements. Our internal controls framework
      is
      based on the criteria set forth in the Internal Control - Integrated Framework
      issued by the Committee of Sponsoring Organizations of the Treadway Commission
      (COSO).





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions or that the degree of compliance
      with the policies or procedures may deteriorate.




7




Based
      on
      the foregoing evaluation, the Company has concluded that there was no change
      in
      our internal control over financial reporting that occurred during the fiscal
      quarter ended March 31, 2008, that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial reporting.





We
      continue to have the following material weaknesses in our internal control
      over
      financial reporting, as described in Item 8A and 8A(T) in our annual report
      on
      Form 10-KSB filed with the SEC on April 15, 2008..





1.
            *Lack
                of sufficient resources in our accounting and finance
                organization*.
                The Company did not maintain a sufficient complement of personnel
                to
                maintain an appropriate accounting and financial reporting structure
                to
                support the activities of the Company. As of December 31, 2007, the
                Company had an insufficient number of personnel with clearly delineated
                and documented responsibilities in order to timely prepare and file
                its
                year-end financial statements and Annual Report on Form 10-KSB. Due
                to the Company’s limited resources, it has had to rely on an outside
                consultant to perform period closings and key reconciliations of
                the
                Company’s transactions and accounts, and a second outside accountant to
                prepare its annual financial statements in anticipation of the audit
                by
                the independent certified public accountants. In addition, the Company’s
                Chief Financial Officer is responsible for preparing or compiling
                certain
                critical portions of the annual financial information and is often
                responsible for performing the final review of this information.
                These
                represent a material weakness in design of internal controls over
                financial reporting. Due to the potential pervasive effect on the
                financial statements and disclosures and the absence of other mitigating
                controls there is a more than remote likelihood that a material
                misstatement of the annual financial statements could occur and not
                be
                prevented or detected. This material weakness has also contributed
                to the
                material weaknesses in Nos. 2 and 3
                below





2.
            *Lack
                of sufficient resources to provide for suitable segregation of
                duties*.
                Specifically, in connection with the lack of sufficient accounting
                and
                finance resources described in material weakness No. 1 above, certain
                financial and accounting personnel had incompatible duties that permitted
                creation, review, processing and potential management override of
                certain
                financial data with limited independent review and authorization
                affecting
                cash, inventory, accounts payable and accounts receivable. The increase
                in
                the Company’s administrative staffing has not been commensurate with the
                rapid growth in the volume of business transactions. These represent
                a
                material weakness in design of internal controls over financial reporting.
                Due to the potential pervasive effect on the financial statements
                and
                disclosures and the absence of other mitigating controls there is
                a more
                than remote likelihood that a material misstatement of the annual
                financial statements could occur and not be prevented or
                detected.





3.
            *Inadequate
                access controls with regard to computer master file
                information*.
                Specifically, certain of the Company’s personnel in accounts payable,
                accounts receivable and inventory had access and could make changes
                to
                master files without approval. The internal controls were not adequately
                designed. Due to the potential pervasive effect on the financial
                statements and disclosures and the absence of other mitigating controls
                there is a more than remote likelihood that a material misstatement
                of the
                interim and annual financial statements could occur and not be prevented
                or detected.





4.
            *Inadequate
                controls over the processing of certain expenses.*Costs relating to the Company’s products and services are a significant
                cost of operations. The internal controls were not adequately designed
                or
                operating in a manner to establish specific controls to ensure that
                all
                expenses were approved and processed on a timely basis. This material
                weakness is the result of aggregate deficiencies in internal control
                activities and could result in a material misstatement of financial
                statements that would not be prevented or
                detected.





5.
            *Inadequate
                controls over the processing of adjustments to accrued
                expense*.
                The internal controls over accrued expenses, period accruals and
                adjustments, were not adequately designed or operating in a manner
                to
                effectively support the expenditure cycle. Certain adjustments were
                processed without proper approval, or the Company’s procedures did not
                specifically document the approvals that would be required. This
                material
                weakness is the result of aggregate deficiencies in internal control
                activities and could result in a material misstatement of the accrued
                expenses and operating expenditures that would not be prevented or
                detected.





6.
            *Inadequate
                controls over the measurement and adjustments to Capitalized Film
                Costs.*The
                Company did not have in place adequate processes and procedures for
                measuring and evaluating capitalized film costs under the ultimate
                revenues method of accounting. This material weakness resulted in
                a
                restatement of our 2006 consolidated financial
                statements




8




7.
            *Inadequate
                Safeguards of Personnel Files and Customer Information.*The Company did not have in place adequate physical safeguards to
                prevent
                an employee from gaining access to sensitive customer information
                and
                employee records.





8.
            *Audit
                Committee and Financial Expert*.
                The Company does not have a formal audit committee with a financial
                expert, and thus the Company lacks the board oversight role within
                the
                financial reporting process.





9.
            *Fraud
                Prevention and Detection*.
                In conjunction with the lack of segregation of duties, the company
                did not
                institute specific anti-fraud
                controls.





10.
            *Whistle
                Blower Policy*.
                The company did not institute, as of December 31, 2007, a
                whistle-blower policy and procedure as required by Section 301 of the
                Sarbanes-Oxley Act.





11.
            *Written
                Policies and Procedures*.
                The Company did not have any written policies or procedures that
                cover the
                Board of Director, Management or its Employees. Currently the Company
                lacks any written policy regarding the
                following:





a)
            Code
                of Ethics


b)
            Management
                and Board over-site


c)
            Employee
                responsibilities


d)
            Program
                application and other IT
                applications


e)
            Data
                security and Customer Information


f)
            Fraud
                prevention and detection





*Remediation
      of Material Weaknesses*





As
      of
      December 31, 2007, and March 31, 2008, there were control deficiencies
      which constituted material weaknesses in our internal control over financial
      reporting. To the extent reasonably possible in our current financial condition,
      we will continue to seek the advice of outside consultants and internal
      resources to implement additional internal controls.





In
      addition, we are taking steps to hire additional personnel, implement new
      policies and procedures within the financial reporting process with adequate
      review and approval procedures.





Through
      these steps, we believe we are addressing the deficiencies that affected our
      internal control over financial reporting as of December 31, 2007, and
      March 31, 2008. Because the remedial actions additionally require hiring of
      personnel, upgrading certain of our information technology systems, and relying
      extensively on manual review and approval, the successful operation of these
      controls for at least several quarters may be required before management may
      be
      able to conclude that the material weaknesses have been remediated. We intend
      to
      continue to evaluate and strengthen our ICFR systems. These efforts require
      significant time and resources. If we are unable to establish adequate ICFR
      systems, we may encounter difficulties, which in turn may have a material
      adverse effect on our ability to prepare financial statements in accordance
      with
      GAAP and to comply with our SEC reporting obligations.




9


**PART
      II OTHER INFORMATION**




**Item
      1. Legal Proceedings**




The
      Company is not a party to any legal proceedings.





**Item
      1A. Risk Factors**





In
      addition to the other information set forth in this report, you should carefully
      consider the factors discussed in Part I, “Item 1A. Risk Factors” in
      our Annual Report on Form 10-KSB for the year ended December 31, 2007, as filed
      with the Securities and Exchange Commission on April 15, 2008, which could
      materially affect our business, financial condition, financial results or future
      performance. Reference is made to “Item 2. Management’s Discussion and
      Analysis of Financial Condition and Results of Operations — Forward-Looking
      Statements” of this report which is incorporated herein by reference.





**Unauthorized
      disclosure of sensitive or confidential customer information could harm the
      Company’s business and standing with our customers.**





The
      protection of our customer, employee and Company data is critical to us. The
      Company relies on commercially available systems, software, tools and monitoring
      to provide security for processing, transmission and storage of confidential
      customer information, such as payment card and personal information. Despite
      the
      security measures the Company has in place, its facilities and systems, and
      those of its third party service provider, may be vulnerable to security
      breaches, acts of vandalism, computer viruses, misplaced or lost data,
      programming and/or human errors, or other similar events. Any security breach
      involving the misappropriation, loss or other unauthorized disclosure of
      confidential information, whether by the Company or its vendors, could damage
      our reputation, expose us to risk of litigation and liability, disrupt our
      operations and harm our business.





**We
      may be subject to claims and our insurance may not be sufficient to cover
      damages related to those claims.**





We
      may be
      subject to lawsuits resulting from injuries associated with the use of sporting
      goods equipment that we sell. In addition, we may also be subject to lawsuits
      relating to the design, manufacture or distribution of our private label
      products. Additionally, we may incur losses relating to these claims or the
      defense of these claims and there is a risk that claims or liabilities will
      exceed our insurance coverage and we may be unable to retain adequate liability
      insurance in the future. Although we have entered into product liability
      indemnity agreements with many of our vendors, we cannot assure you that we
      will
      be able to collect payments sufficient to offset product liability losses or
      in
      the case of our private label products, collect anything at all.




**Item
      2. Changes in Securities and Use of Proceeds**




None




**Item
      3. Defaults upon Senior Securities**




None.




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




None.




**Item
      5. Other Information**




See
      Part
      II. Item 2 above.


10




**Item
      6. Exhibits**





**Index
      to Exhibits**





31.1 Certifications of the President
                pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.31.2
                Certifications of the Treasurer pursuant to Section 302 of the Sarbanes-
                Oxley Act of 2002.32.1
                Certifications of President pursuant to 18 U.S.C. Section 1350 as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
                Certifications of Treasurer pursuant to 18 U.S.C. Section 1350 as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.






11





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act
      of 1934, the Registrant has duly caused this report to be signed on May 20,
      2008
      on its behalf by the undersigned, thereunto duly authorized.




**Adrenalina**





By:
            /s/
                Ilia LekachIlia
                LekachChief
                Executive OfficerBy:
            /s/
                Jeffrey GellerJeffrey
                GellerChief
                Financial Officer





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