UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





(Mark
      One)





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





For
      the
      quarterly period ended June 30, 2007





OR





o
            TRANSITION
                REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF
                1934





From
      the
      transition period from ____________ to ___________.





Commission
      File Number 0-22236





SKRM
      Interactive, Inc.


(formerly
      SKREEM Entertainment Corp.)





-----------------------------------------------------------------


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





Delaware
            33-0565710(State
                or other jurisdiction of
            (IRS
                Employer Identification No.)incorporation
                or organization)




11637
      Orpington Street, Orlando, Florida 32817


(Address
      of principal executive offices)





(407)
      207-0400


(Issuer's
      telephone number)





N/A


(Former
      name, former address and former fiscal year,if changed since last
      report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of
      the
      Exchange Act during the past 12 months (or for such sorter 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 xNo
o





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




Class
            Shares
                Outstanding
            DateCommon,
                $.001 par value
            26,548,292
            July
                25, 2007




1





TABLE
      OF
      CONTENTS





SKRM
      Interactive, Inc.


(formerly
      SKREEM Entertainment Corp.)





Part
                I. Financial InformationItem
                1.
            Consolidated
                Financial StatementsUnaudited
                Consolidated Balance Sheet - as of June 30, 2007 and March 31,
                2007
            3Unaudited
                Consolidated Statements of Operations for the three months ended
                June 30,
                2007 and 2006 and for the period from inception, August 19, 1999,
                to June
                30, 2007
            4Unaudited
                Consolidated Statement of Changes in Shareholders' Deficit for the
                period
                from inception, August 19, 1999, to June 30, 2007
            5Unaudited
                Consolidated Statements of Cash Flows for the three months ended
                June 30,
                2007 and 2006 and for the period from inception, August 19, 1999,
                to June
                30, 2007
            6Notes
                to the Unaudited Consolidated Financial Statements
            7Item 2.
            Management's
              Discussion
              and Analysis or Plan of Operation
            8Item 3.
            Controls and
              Procedures
            11Part
                II. Other InformationItem
                1.
            Legal
                Proceedings
            12Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            12Item
                3.
            Defaults
                Upon Senior Securities
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            12Item
                5.
            Other
                Information
            12Item
                6.
            Exhibits
            12





2


Item
      1.
      CONSOLIDATED FINANCIAL STATEMENTS




SKRM
      Interactive, Inc.


(formerly
      SKREEM ENTERTAINMENT CORPORATION)


(A
      DEVELOPMENT STAGE COMPANY)


UNAUDITED
      CONSOLIDATED BALANCE SHEETS


As
      of
      June 30, 2007 and March 31, 2007





June
                30, 2007
            
            March
                31, 2007ASSETSCurrent
                assets:Cash
                and Cash equivalents
            
            $
            397
            
            $
            1,781Due
                from affiliate
            
            
            14,123
            
            
            -Note
                receivable, net of impairment allowance of $0 and $10,710
            
            
            -
            
            
            400,000Deferred
                financing costs
            
            
            14,427
            
            
            11,438Total
                current assets
            
            
            28,947
            
            
            413,219Deferred
                financing costs, net of amortization of $4,752 and $2,806
            
            
            70,821
            
            
            75,756Total
                assets
            
            $
            99,768
            
            $
            488,975LIABILITIES
                AND SHAREHOLDERS' DEFICITCurrent
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            145,395
            
            $
            154,410Derivative
                liabilities
            
            
            1,870,209
            
            
            1,396,245Notes
                payable - shareholder
            
            
            8,500
            
            
            35,000Due
                to affiliate
            
            
            -
            
            
            13,078Total
                current liabilities
            
            
            2,024,104
            
            
            1,598,733Callable
                secured convertible notes payable net of unamortized discount of
                $588,720
                and $592,806
            
            
            11,280
            
            
            7,194Total
                liabilities
            
            
            2,035,384
            
            
            1,605,927Shareholders'
                deficit:Preferred
                shares - $0.001 par value; 1,000,000 authorized, no shares issued
                or
                outstanding
            
            
            -
            
            
            -Common
                shares - $0.001 par value; 50,000,000 authorized; 26,548,292 shares
                issued
                and outstanding
            
            
            26,548
            
            
            26,548Additional
                paid - in capital
            
            
            7,080,898
            
            
            7,080,898Deficit
                accumulated during the development stage
            
            
            (9,043,062
            )
            
            (8,224,398
            )Total
                shareholders' deficit
            
            
            (1,935,616
            )
            
            (1,116,952
            )Total
                liabilities and shareholders' deficit
            
            $
            99,768
            
            $
            488,975





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





3


SKRM
      Interactive, Inc.


(formerly
      SKREEM ENTERTAINMENT CORPORATION)


(A
      DEVELOPMENT STAGE COMPANY)


UNAUDITED
      CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months


Ended
      June 30, 2007 and 2006 and for the Period From Inception, August 19,
      1999,


to
      June
      30, 2007





Three
                Months Ended
            
            Inception
                toJune
                30,
            
            June
                30,
            
            June
                30,2007
            
            2006
            
            2007ExpensesGeneral
                and administrative
            
            $
            325,629
            
            
            -
            
            $
            1,247,863Impairment
                of note receivable
            
            
            -
            
            
            -
            
            
            10,701Total
                expenses
            
            
            325,629
            
            
            -
            
            
            1,258,564Loss
                from operations
            
            
            (325,629
            )
            
            -
            
            
            (1,258,564
            )Other
                income (expense)Interest
                income
            
            
            -
            
            
            -
            
            
            10,701Interest
                expense
            
            
            (19,071
            )
            
            -
            
            
            (45,268
            )Change
                in fair value of derivatives
            
            
            (473,964
            )
            
            -
            
            
            (1,270,209
            )Total
                other income/(expense)
            
            
            (493,035
            )
            
            -
            
            
            (1,304,776
            )Loss
                from continuing operations
            
            
            (818,664
            )
            
            -
            
            
            (2,563,340
            )Discontinued
                operationsLoss
                from operations of subsidiary
            
            
            -
            
            
            (433,538
            )
            
            (6,778,804
            )Gain
                on disposal of subsidiary
            
            
            -
            
            
            -
            
            
            299,082Loss
                from discontinued operations
            
            
            -
            
            
            (433,538
            )
            
            (6,479,722
            )Net
                loss
            
            $
            (818,664
            )
            $
            (433,538
            )
            $
            (9,043,062
            )Weighted
                Average Shares Outstanding - basic and diluted
            
            
            26,548,292
            
            
            24,612,455Basic
                and diluted loss per shareContinuing
                Operations
            
            $
            (0.03
            )
            $
            -Discontinued
                Operations
            
            $
            -
            
            $
            (0.02
            )Net
                Loss
            
            $
            (0.03
            )
            $
            (0.02
            )





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


4


SKRM
      Interactive, Inc.


(formerly
      SKREEM ENTERTAINMENT CORPORATION)


(A
      DEVELOPMENT STAGE COMPANY)


UNAUDITED
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT


For
      the
      period from inception, August 19, 1999, to June 30, 2007





Additional
            
            During the
            
            LossesCommon Stock
            
            Paid-In
            
            Development
            
            AccumulatedShares
            
            Amount
            
            Capital
            
            Stage
            
            TotalBalance
                at Inception, August 19,1999
            
            
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Issuance
                of common stock
            
            
            20,000
            
            
            20
            
            
            -
            
            
            -
            
            
            20Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (84,021
            )
            
            (84,021
            )Balance
                at December 31, 1999
            
            
            20,000
            
            
            20
            
            
            -
            
            
            (84,021
            )
            
            (84,001
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (230,879
            )
            
            (230,879
            )Balance
                at December 31, 2000
            
            
            20,000
            
            
            20
            
            
            -
            
            
            (314,900
            )
            
            (314,880
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (494,816
            )
            
            (494,816
            )Balance
                at December 31, 2001
            
            
            20,000
            
            
            20
            
            
            -
            
            
            (809,716
            )
            
            (809,696
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (384,590
            )
            
            (384,590
            )Balance
                at December 31, 2002
            
            
            20,000
            
            
            20
            
            
            -
            
            
            (1,194,306
            )
            
            (1,194,286
            )Reclassification
                of debt to equity
            
            
            43,000
            
            
            43
            
            
            1,581,940
            
            
            -
            
            
            1,581,983Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (736,364
            )
            
            (736,364
            )Balance
                at December 31, 2003
            
            
            63,000
            
            
            63
            
            
            1,581,940
            
            
            (1,930,670
            )
            
            (348,667
            )Effect
                of issuance of common stock and recapitalization in a reverse acquisition
                transaction
            
            
            25,943,925
            
            
            25,944
            
            
            (25,944
            )
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (205,994
            )
            
            (205,994
            )Balance
                at March 31, 2004
            
            
            26,006,925
            
            
            26,007
            
            
            1,555,996
            
            
            (2,136,664
            )
            
            (554,661
            )Proceeds
                from issuance of common stock
            
            
            603,856
            
            
            604
            
            
            301,324
            
            
            -
            
            
            301,928Cancellation
                of shares
            
            
            (3,502,925
            )
            
            (3,503
            )
            
            3,503
            
            
            -
            
            
            -Net
                loss
            
            
            -
            
            
            -
            
            
            (1,592,469
            )
            
            (1,592,469
            )Balance
                at March 31, 2005
            
            
            23,107,856
            
            
            23,108
            
            
            1,860,823
            
            
            (3,729,133
            )
            
            (1,845,202
            )Proceeds
                from issuance of common stock
            
            
            276,400
            
            
            276
            
            
            276,124
            
            
            -
            
            
            276,400Stock
                issued for accounts payable
            
            
            50,000
            
            
            50
            
            
            49,950
            
            
            -
            
            
            50,000Stock
                issued for conversion of debt
            
            
            1,050,000
            
            
            1,050
            
            
            1,048,950
            
            
            -
            
            
            1,050,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,376,529
            )
            
            (1,376,529
            )Balance
                at March 31, 2006
            
            
            24,484,256
            
            
            24,484
            
            
            3,235,847
            
            
            (5,105,662
            )
            
            (1,845,331
            )Proceeds
                from issuance of common stock
            
            
            24,694
            
            
            25
            
            
            24,670
            
            
            -
            
            
            24,695Stock
                issued for services
            
            
            1,102,000
            
            
            1,102
            
            
            1,306,500
            
            
            -
            
            
            1,307,602Stock
                issued for debt
            
            
            817,342
            
            
            817
            
            
            1,838,204
            
            
            -
            
            
            1,839,021Stock
                issued for investment
            
            
            3,000,000
            
            
            3,000
            
            
            4,017,000
            
            
            -
            
            
            4,020,000Stock
                rescinded relating to investment
            
            
            (2,880,000
            )
            
            (2,880
            )
            
            (3,856,323
            )
            
            -
            
            
            (3,859,203
            )Expenses
                paid by shareholder
            
            
            -
            
            
            -
            
            
            515,000
            
            
            -
            
            
            515,000Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,118,736
            )
            
            (3,118,736
            )Balance
                at March 31, 2007
            
            
            26,548,292
            
            
            26,548
            
            
            7,080,898
            
            
            (8,224,398
            )
            
            (1,116,952
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (818,664
            )
            
            (818,664
            )Balance
                at June 30, 2007
            
            
            26,548,292
            
            $
            26,548
            
            $
            7,080,898
            
            $
            (9,043,062
            )
            $
            (1,935,616
            )





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




5


SKRM
      Interactive, Inc.


(formerly
      SKREEM ENTERTAINMENT CORPORATION)


(A
      DEVELOPMENT STAGE COMPANY)


UNAUDITED
      CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months


Ended
      June 30, 2007 and 2006 and for the Period From Inception, August 19,
      1999,


to
      June
      30, 2007





Three
                Months Ended
            
            Inception
                toJune
                30,
            
            June
                30,
            
            June
                30,2007
            
            2006
            
            2007Cash
                Flows from Operating Activities:Net
                loss
            
            $
            (818,664
            )
            $
            (433,538
            )
            $
            (9,043,062
            )Loss
                on discontinued operations
            
            
            -
            
            
            433,538
            
            
            6,479,722Loss
                from continuing operations
            
            
            (818,664
            )
            
            -
            
            
            (2,563,340
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Impairment
                of loan receivable
            
            
            -
            
            
            -
            
            
            10,701Stock
                issued for services
            
            
            -
            
            
            -
            
            
            692,650Amortization
                of deferred financing costs
            
            
            1,946
            
            
            -
            
            
            4,752Accretion
                of discount on convertible notes
            
            
            4,086
            
            
            -
            
            
            11,280Change
                in fair value of derivatives
            
            
            473,964
            
            
            -
            
            
            1,270,209Changes
                inAccounts
                payable and accrued liabilities
            
            
            (9,015
            )
            
            -
            
            
            145,393Due
                to affiliate
            
            
            (27,201
            )
            
            -
            
            
            (14,123
            )Interest
                receivable
            
            
            -
            
            
            -
            
            
            (10,701
            )Net
                cash used in operating activities
            
            
            (374,884
            )
            
            -
            
            
            (453,179
            )Cash
                Flows from Investing ActivitiesInvestment
                in note receivable
            
            
            -
            
            
            -
            
            
            (400,000
            )Proceeds
                from note receivable
            
            
            400,000
            
            
            -
            
            
            400,000Net
                cash provided by investing activities
            
            
            400,000
            
            
            -
            
            
            -Cash
                Flows from Financing ActivitiesProceeds
                from issuance of common stock
            
            
            -
            
            
            -
            
            
            24,695Proceeds
                from notes payable - shareholder
            
            
            8,500
            
            
            -
            
            
            43,500Proceeds
                from convertible notes payable
            
            
            -
            
            
            -
            
            
            600,000Payments
                on notes payable - shareholder
            
            
            (35,000
            )
            
            -
            
            
            (35,000
            )Debt
                issuance costs
            
            
            -
            
            
            -
            
            
            (90,000
            )Net
                cash provided by financing activities
            
            
            (26,500
            )
            
            -
            
            
            543,195Discontinued
                operationsDiscontinued
                operating activities
            
            
            -
            
            
            (139,230
            )
            
            (4,506,211
            )Discontinued
                investing activities
            
            
            -
            
            
            (373
            )
            
            (187,748
            )Discontinued
                financing activities
            
            
            -
            
            
            84,695
            
            
            4,604,340Net
                cash provided by (used in) discontinued operations
            
            
            -
            
            
            (54,908
            )
            
            (89,619
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            (1,384
            )
            
            (54,908
            )
            
            397Cash
                and cash equivalentsBeginning
                of period - continuing operations
            
            
            1,781
            
            
            -
            
            
            -Beginning
                of period - discontinued operations
            
            
            -
            
            
            62,383
            
            
            -End
                of period - continuing operations
            
            $
            397
            
            $
            -
            
            $
            397End
                of period - discontinued operations
            
            $
            -
            
            $
            7,475
            
            $
            -





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




6


SKRM
      Interactive, Inc.


(formerly
      SKREEM ENTERTAINMENT CORPORATION)


(A
      DEVELOPMENT STAGE COMPANY)


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





Note
      1 -
      BASIS OF PRESENTATION





The
      accompanying unaudited consolidated financial statements of SKRM Interactive,
      Inc. formerly SKREEM ENTERTAINMENT CORPORATION have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and with the instructions to Form 10QSB and
      Item 310(b) of Regulation S-B. Certain information and footnote disclosures
      normally in financial statements prepared in accordance with generally accepted
      accounting principles have been or omitted pursuant to the rules and regulations
      of the Securities and Exchange Commission; however, management believes the
      disclosures which are made are adequate to make the information presented not
      misleading. Management believes that all adjustments have been made to the
      financial statements as are necessary to the fair statement of the results
      of
      the interim period. These consolidated financial statements and footnotes should
      be read in conjunction with the consolidated financial statements and notes
      thereto included in the Company’s Annual Report on Form 10-KSB for the year
      ended March 31, 2007, and Management’s Discussion and Analysis of Financial
      Condition and Results of Operations. Certain prior year amounts have been
      reclassified to conform to the current year presentation.





Note
      2 -
      GOING CONCERN





The
      accompanying consolidated financial statements have been prepared on a going
      concern basis, which contemplates the realization of assets and the satisfaction
      of liabilities in the normal course of business. SKRM Interactive sustained
      losses of $818,664 and $433,538 for the three months ended June 30, 2007 and
      June 30, 2006, respectively. The Company had an accumulated deficit of
      $9,043,062 as of June 30, 2007. These factors raise substantial doubt about
      the
      ability of SKRM Interactive to continue as a going concern for a reasonable
      period of time. SKRM Interactive is highly dependent on its ability to continue
      to obtain investment capital and loans from an affiliate and shareholder in
      order to fund the current and planned operating levels. No assurance can be
      given that SKRM Interactive will be successful in these efforts.





The
      consolidated financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded asset amounts or the amounts
      and
      classification of liabilities that might be necessary should SKRM Interactive
      be
      unable to continue as a going concern.





Note
      3 -
      REGISTRATION RIGHTS AGREEMENT





The
      Company has not filed its Registration Statement with the SEC as of the date
      of
      this filing. Since the Company has not been able to file its Registration
      Statement in a timely manner, the Company has recorded a liability of $84,000.
      The liability represents the Company’s obligation under its registration rights
      agreement to its note holders as partial relief for damages. The Company has
      included in the consolidated statement of operations the expense of $36,000
      within its general and administrative expenses for the three months ended June
      30, 2007. The liability of $84,000 will continue to increase by approximately
      $12,000 each month until the Registration Statement becomes effective or the
      note holders are paid in full. The Company may pay the obligation in cash or
      in
      common stock. If the payment is made in common stock, the Company is required
      to
      use the conversion rate of $1.27. The Company plans to file its Registration
      Statement with the SEC by August 31, 2007.





Note
      4 -
      DERIVATIVE LIABILITES





The
      impact of the application of SFAS No. 133 and EITF 00-19 in regards to the
      derivative liabilities on the balance sheet is presented below. The change
      in
      fair value of the derivative liabilities from March 31, 2007 to June 30, 2007
      is
      reflected as either a gain or loss in the consolidated statement of
      operations.





Description
            
            June
                30, 2007
            
            March
                31, 2007Derivative
                liability - single compound embedded derivatives Within the convertible
                notes
            
            $
            26,319
            
            $
            27,210Derivative
                liability - warrants
            
            
            1,843,890
            
            
            1,369,035Total
            
            $
            1,870,209
            
            $
            1,396,245





*Derivative
      Liability - Single Compound Embedded Derivatives within Convertible
      Notes*





SKRM
      Interactive, Inc. valued the single compound embedded derivatives within the
      convertible notes based on a probability weighted discounted cash flow model.
      The value at inception of the single compound embedded derivative liability
      was
      $139,286 and was bifurcated from the debt host contract and recorded as a
      derivative liability.





The
      compound embedded derivative liability was measured at fair value again at
      June
      30, 2007 and the change in fair value was recorded as a gain in the amount
      of
      $891 in the consolidated statement of operations.





7




The
        assumptions used within the model are included below:
 
 *Probability-Weighted
        Expected Cash Flow Methodology -* *Assumptions:
        Single Compound Embedded Derivative within Convertible Note*
 
 Description
              
              June
                  30, 2007
              
              March
                  31, 2007Risk-free
                  interest rate
              
              
              4.89
              %
              
              4.54
              %Default
                  status
              
              
              10.00
              %
              
              10.00
              %Alternative
                  financing available and exercised
              
              
              1.00
              %
              
              1.00
              %Trading
                  volume, gross monthly rate increase
              
              
              1.00
              %
              
              1.00
              %Annual
                  growth rate of stock price
              
              
              22.05
              %
              
              21.76
              %Future
                  projected volatility
              
              
              125.85
              %
              
              100.00
              %
  *Derivative
        Liabilities - Warrants*
 
 The
        warrants were valued at June 30, 2007 for $1,843,890 and the change in fair
        value was recorded as a loss in the amount of $474,855 in the consolidated
        statement of operations.
 
 *Black-Scholes
        Option Pricing Model* *Assumptions
        -*
 
 Description
              
              June
                  30, 2007
              
              March
                  31, 2007Risk-free
                  interest rate
              
              
              4.96
              %
              
              4.58
              %Expected
                  warrant life
              
              
              6.42
                  years
              
              
              6.67
                  yearsExpected
                  volatility
              
              
              141.90
              %
              
              119.82
              %Dividends
              
              
              none
              
              
              noneExercise
                  pricing reset probability
              
              
              10
              %
              
              -
 
 The
        Company felt it was necessary to consider a possible reset of its exercise
        price
        for the warrants due the probability of the Company issuing new debt with
        additional equity or derivative instruments. The issuance of new debt could
        trigger a reset price for the warrants from an exercise price of $1.75 to
        $0.20.
        The Company has placed a probability of this event occurring at 10%.
 Note
          5 -
          SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
 For
          the
          three months ended June 30, 2007, the Company paid $100 in interest expense
          and
          $0 in income taxes and had no non-cash transactions.
 
 The
          Company paid $0 interest expense and $0 in income taxes for the three months
          ended June 30, 2006.
 
 The
          Company has included in its discontinued operations for the three months
          ended
          June 30, 2006, a one-year agreement with Hobson, Bowersock, & Associates,
          LLC (HLB) in which HLB prepared and implemented a promotional campaign
          for the
          Company. The Company issued 250,000 shares of common stock and recorded
          $250,000
          in advertising expense.
  **ITEM
        2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
        OPERATION**
 
 **This
        report contains forward looking statements within the meaning of Section
        27a of
        the Securities Act of 1933 and Section 21e of the Securities Exchange Act
        of
        1934. These forward looking statements are subject to certain risks and
        uncertainties that could cause actual results to differ materially from
        historical results or anticipated results, including those set forth under
        "Risk
        Factors" in this Management's Discussion and Analysis of Financial Condition
        and
        Results of Operations" and elsewhere in this report. The following discussion
        and analysis should be read in conjunction with "Selected Financial Data"
        and
        the Company's financial statements and notes thereto included elsewhere in
        this
        report.**
 
 **Plan
        of Operation**
 
 On
        February 5, 2007, we spun off our wholly owned subsidiary SKREEM Entertainment
        Corporation (“SKREEM”) whose business was to find and manage artists in the
        music industry.
 
 We
        currently have a Letter of Intent to acquire 75% of the stock of Sector 10
        Services USA, Inc. (“Sector 10”), a Washington corporation, for 50,000,000 newly
        issued shares and 15,000,000 issued and outstanding shares owned by Jeffery
        Martin, a major shareholder.
 
 Sector
        10
        seeks to become the leading provider of pre-deployed emergency life response
        equipment across all major US cities. Sector 10 is the exclusive provider
        of
        Pericles LogiX System in the United States. Sector 10’s core focus is on the
        first response solutions, utilizing two lines of patented products, Mobile
        Response United (“MRU”) and Stationary Response Units (“SRU”).
 
 As
        of
        July 31, 2007, Sector 10 expects to complete its audit within 30 days as
        required by the Letter of Intent and SKRM expects to close the transaction
        30
        days thereafter.
 
 **GOING
        CONCERN**
 
 Our
        notes
        to the consolidated financial statements disclose that the cash flow of the
        Company has been absorbed in operating activities and has incurred net losses
        for the three months, and have a working capital deficiency. In the event
        that
        funding from internal sources or from public or private financing is
        insufficient to fund the business at current levels, we will have to
        substantially cut back our level of spending which could substantially curtail
        our operations. These factors raise substantial doubt about our ability to
        continue as a going concern. Our going concern uncertainty may affect our
        ability to raise additional capital, and may also affect our relationships
        with
        suppliers and customers. Investors should carefully examine our financial
        statements.
 
 **Results
        of Operations for the Three Months Ended June 30, 2007 as Compared to the
        Three
        Months Ended June 30, 2006**
 
 *Revenues
        -*
 
 The
        Company’s had no revenues for the three months ended June 30, 2007; however, we
        are actively pursuing opportunities for revenue growth in the near future.
  8
 
 We
        do not
        have revenue relating to SKRM for the three months ended June 30, 2006. Our
        discontinued operations had revenues of $66,695 which were comprised of revenue
        from licensing agreements and sales of records for this same
        period.
 
 *Operating
        Expenses -*
 
 SKRM
        had
        no operating expenses for the three months ended June 30, 2007 and 2006,
        respectively.
 
 Our
        discontinued operations had operating expenses of $323,105 for the three
        months
        ended June 30, 2006. The operating expenses related to the support of our
        artists touring in Germany and other countries.
 
 *General
        and Administrative Expenses -*
 
 General
        and administrative expenses were $325,629 for the three months ended June
        30,
        2007. These expenses are made up in large part by compensation expense to
        a
        major shareholder of $234,897, accounting fees of $43,873, consulting and
        professional fees of $24,845 and additional expense relating to our 2% penalty
        for the late filing of our registration statement.
 
 General
        and administrative expenses were $0 for the three months ended June 30, 2006.
        Our discontinued operations had general and administrative expenses of $149,352
        which were mainly attributed to salaries, professional fees and delivery
        expenses.
 
 *Interest
        Expense -*
 
 Interest
        expense for the three months ended June 30, 2007 was $19,071. The interest
        expense is comprised of $1,946 of amortization of deferred financing costs,
        $4,086 of accretion of debt discount, $12,939 relating to the convertible
        notes
        payable and $100 relating to a notes payable to a major shareholder.
 
 Interest
        expense for the three months ended June 30, 2006 was $0 for SKRM. Our
        discontinued operations had interest expense of $27,776 which was attributed
        to
        interest due on our notes payable during this period.
 
 *Change
        in Fair Value of Derivatives*
 
 The
        change in fair value of our derivatives for the three months ended June 30,
        2007
        was a loss of $473,964. The loss is comprised of (a) the fair value of our
        single compound embedded derivatives within the convertible notes decreased
        in
        value by $891, and (b) the fair value of our warrants increased by $474,855,
        with a net change of $473,964 for the period. Our warrants increased in value
        due to a change in one of our assumptions within the valuation model. We
        felt it
        was necessary to consider a possible reset of the exercise price of the warrants
        due to a small possibility of the Company issuing new debt with additional
        equity or derivative instruments.
 
 The
        change in fair value of our derivatives for the three months ended June 30,
        2006
        was $0. We did not have any embedded or freestanding derivatives during this
        period. Our discontinued operations also did not have any embedded or
        freestanding derivatives during this same period.
 
 *Discontinued
        Operations*
 
 Our
        discontinued operations are only reflected in the three months ended June
        30,
        2006. The discontinued operations for our wholly owned subsidiary SKREEM
        Entertainment Corporation (“SKREEM”) had a net loss of $433,538 for the three
        months ended June 30, 2006. SKREEM’s core business was to find and management
        artist in the music industry. SKREEM was spun-off on February 5, 2007 into
        its
        own separate and distinct company.
 
 **Liquidity
        and Capital Resources**
 
 As
        of
        June 30, 2007, SKRM had cash of $397 and a deficit in working capital of
        $1,995,157 and we believe this is not sufficient to meet our working capital
        requirements for the coming year.
 
 We
        have
        financed our operations almost exclusively through the sale of our common
        shares
        to investors and borrowers. We expect to finance operations through the sale
        of
        equity in the foreseeable future as we receive minimal revenue from our current
        business operations. There is no guarantee that we will be successful in
        arranging financing on acceptable terms.
 
 We
        anticipate that up to $375,000 of additional working capital will be required
        over the next 9 months to meet our budgeted needs for the current fiscal
        year.
        We do not have sufficient cash on hand to meet these anticipated obligations.
 
 We
        do not
        currently have any arrangements for financing and we may not be able to find
        such financing if required. Obtaining additional financing would be subject
        to a
        number of factors, including investor sentiment. Market factors may make
        the
        timing, amount, terms or conditions of additional financing unavailable to
        us.
 
 Our
        continuation as a going concern is dependent upon continued financial support
        from our shareholders and other related parties.
 
 *Total
        Assets -*
 
 SKRM
        currently has $99,768 in total assets as of June 30, 2007. Our total assets
        are
        comprised of (a) $397 in cash, (b) $14,123 due from our affiliate and (c)
        $85,248 of deferred financing costs.
  9
 
 *Total
        Liabilities -*
 
 SKRM
        currently has $2,035,384 in total liabilities as of June 30, 2007. Our total
        liabilities are comprised of (a) $145,395 of accounts payable and accrued
        liabilities, (b) $1,870,209 of derivative liabilities, (c) $8,500 in notes
        payable to an affiliate, and (d) a net balance of $11,280 on our callable
        convertible notes payable, with the callable convertible notes having a notional
        balance of $600,000 and $588,720 of discount to the debt still remaining
        to be
        accreted.
 
 *Operating
        Activities -*
 
 Cash
        used
        in operations for the three months ended June 30, 2007 was $374,884. Operating
        activities were affected by non-cash expenses of $473,964 for the change
        in fair
        value of the derivative liabilities and $6,032 of amortized deferred financing
        costs and accreted discounts on the convertible notes. Operating activities
        were
        also affected by the change in accounts payable and accrued liabilities of
        $9,015 and the change in the amount due to an affiliate by $27,201.
 
 Cash
        used
        in operations for the three months ended June 30, 2006 was $0. Cash used
        in
        discontinued operations for this same period was $139,230.
 
 *Investing
        Activities -*
 
 Cash
        from
        our investing activities for the three months ended June 30, 2007 was $400,000.
        We received payment from Weaver Interactive, Inc. for a notes receivable
        in the
        amount of $400,000 in April of 2007.
 
 Cash
        used
        in investing activities for the three months ended June 30, 2006 was $0.
        Our
        discontinued operations used $373 for this same period in investing activities.
 
 *Financing
        Activities -*
 
 Cash
        used
        in financing activities for the three months ended June 30, 2007 was $26,500.
        Our financing activities for this period are comprised of (a) payments made
        by a
        shareholder on a notes payable of $35,000 and (b) proceeds from a new notes
        payable of $8,500.
 
 Cash
        used
        in financing for the three months ended June 30, 2006 was $0. Our discontinued
        operations provided $84,695 in cash for financing activities for this same
        period which was provided by new promissory notes to SKREEM.
 
 **RISK
        FACTORS**
 
 **Our
        business is subject to many risk factors, including the following (references
        to
        "our," "us," "we," and words of similar meaning in these Risk Factors refer
        to
        the Company.**
 
 **WE
        HAVE NOT PAID ANY CASH DIVIDENDS IN THE PAST AND HAVE NO PLANS TO ISSUE CASH
        DIVIDENDS IN THE FUTURE, WHICH COULD CAUSE THE VALUE OF OUR COMMON STOCK
        TO HAVE
        A LOWER VALUE THAN OTHER SIMILAR COMPANIES WHICH DO PAY CASH
        DIVIDENDS.**
 
 We
        have
        not paid any cash dividends on our common stock to date and do not anticipate
        any cash dividends being paid to holders of our common stock in the foreseeable
        future. While our dividend policy will be based on the operating results
        and
        capital needs of the business, it is anticipated that any earnings will be
        retained to finance our future expansion. As we have no plans to issue cash
        dividends in the future, our common stock could be less desirable to other
        investors and as a result, the value of our common stock may decline, or
        fail to
        reach the valuations of other similarly situated companies who have historically
        paid cash dividends in the past.
 
 **THE
        MARKET FOR OUR COMMON STOCK MAY BE VOLATILE.**
 
 The
        market for our common stock has historically been volatile and we anticipate
        that such market will continue to be subject to wide fluctuations in response
        to
        several factors, including, but not limited to:
 
 (1)
        actual or anticipated variations in our results of operations;
 
 (2)
        our
        ability or inability to generate new revenues;
 
 (3)
        increased competition; and
 
 (4)
        conditions and trends in our industry.
 
 Our
        common stock is traded on the over-the-counter Bulletin Board under the symbol
        "SKMI.OB." In recent years, the stock market in general has experienced extreme
        price fluctuations that have often times been unrelated to the operating
        performance of the affected companies. Similarly, the market price of our
        common
        stock may fluctuate significantly based upon factors unrelated or
        disproportionate to our operating performance. These market fluctuations,
        as
        well as general economic, political and market conditions, such as recessions,
        interest rates or international currency fluctuations may adversely affect
        the
        market price of our common stock.
 
 **IF
        WE ARE LATE IN FILING OUR QUARTERLY OR ANNUAL REPORTS WITH THE SEC, WE MAY
        BE
        DE-LISTED FROM THE OVER-THE-COUNTER BULLETIN BOARD.**
 
 Pursuant
        to new Over-The-Counter Bulletin Board ("OTCBB") rules relating to the timely
        filing of periodic reports with the SEC, any OTCBB issuer which fails to
        file a
        periodic report (Form 10-QSB's or 10-KSB's) by the due date of such report
        (not
        withstanding any extension granted to the issuer by the filing of a Form
        12b-25), three (3) times during any twenty-four (24) month period is
        automatically de-listed from the OTCBB. Such removed issuer would not be
        re-eligible to be listed on the OTCBB for a period of one-year, during which
        time any subsequent late filing would reset the one-year period of de-listing.
        If we are late three times in any twenty-four (24) month period and are
        de-listed from the OTCBB, our securities may become worthless and we may
        be
        forced to curtail or abandon our business plan.
  10
 
 **OUR
        COMMON STOCK IS A "PENNY STOCK," AND COMPLIANCE WITH REQUIREMENTS FOR DEALING
        IN
        PENNY STOCKS MAY MAKE IT DIFFICULT FOR HOLDERS OF OUR COMMON STOCK TO RESELL
        THEIR SHARES.**
 
 Currently
        there is no public market for our common stock. If the common stock is ever
        listed in the public market in what is known as the over-the-counter market
        and
        at least for the foreseeable future, our common stock will be deemed to be
        a
        "penny stock" as that term is defined in Rule 3a51-1 under the Securities
        Exchange Act of 1934. Rule 15g-2 under the Exchange Act requires broker/dealers
        dealing in penny stocks to provide potential investors with a document
        disclosing the risks of penny stocks and to obtain from these inventors a
        manually signed and dated written acknowledgement of receipt of the document
        before effecting a transaction in a penny stock for the investor's account.
        Compliance with these requirements may make it more difficult for holders
        of our
        common stock to resell their shares to third parties or otherwise, which
        could
        have a material adverse effect on the liquidity and market price of our common
        stock.
 
 Penny
        stocks are stocks with a price of less than $5.00 per share unless traded
        on
        NASDAQ or a national securities exchange; Penny stocks are also stocks, which
        are issued by companies with: Net tangible assets of less than $2.0 million
        (if
        the issuer has been in continuous operation for at least three years); or
        $5.0
        million (if in continuous operation for less than three years); or average
        revenue of less than $6.0 million for the last three years.
 
 **JEFFREY
        MARTIN OWNS DIRECTLY AND INDIRECTLY THOURGH RELATED PARTIES APPROXIMATELY
        81% OF
        OUR OUTSTANDING COMMON STOCK, AND HAS SIGNIFICANT INFLUENCE OVER OUR CORPORATE
        DECISIONS, AND AS A RESULT, IF YOU INVEST IN US, YOUR ABILITY TO AFFECT
        CORPORATE DECISIONS WILL BE LIMITED.**
 
 Jeffrey
        Martin holds 21,466,818 shares of our common stock, representing approximately
        81% of the outstanding shares of our common stock Accordingly, Mr. Martin
        will
        have significant influence in determining the outcome of all corporate
        transactions or other matters, including mergers, consolidations and the
        sale of
        all or substantially all of our assets, and also the power to prevent or
        cause a
        change in control even after such conversion and exercise by other investors,
        as
        Mr. Martin will likely continue to be our largest shareholder. The interests
        of
        Mr. Martin may differ from the interests of the other stockholders and thus
        result in corporate decisions that are adverse to other shareholders.
        Additionally, potential investors should take into account the fact that
        any
        vote of shares purchased will have limited effect on the outcome of corporate
        decisions.
 
 **WE
        OWE FOUR INVESTOR A SUBSTANTIAL AMOUNT OF MONEY WHICH WE DO NOT
        HAVE.**
 
 We
        owe
        four investors such a substantial of money, which we can not repay at this
        point. Since we can not repay them we may be subject to legal action to collect
        such amount(s), which might result in a judgment against us, or other types
        of
        enforcement actions. A result of any litigation may be a loss of control
        over
        the company, Involuntary bankruptcy or other liquidation attempts.
 
 
 **WE
        WILL NEED ADDITIONAL CAPITAL TO ALLOW US TO EXPAND OUR BUSINESS PLAN TO
        IMPLEMENT OUR SALES AND MARKETING PLANS AND SUCH FINANCING MAY BE UNAVAILABLE
        OR
        TOO COSTLY.**
  Our
        ability to continue our sales and marketing strategies is dependent on our
        ability to secure financing and allocate sufficient funds required to support
        our marketing activity. Additional financing may not be available on favorable
        terms, or even at all. If we raise additional funds by selling stock, the
        percentage ownership of our then current stockholders will be reduced. If
        we
        cannot raise adequate funds to satisfy our capital requirements, we may have
        to
        limit our operations significantly. Our ability to raise additional funds
        may
        diminish if the public equity markets become less supportive of the industry.
        If
        we raise additional capital through debt offerings, it will have a significant
        impact on our cash flow.
 
 ITEM
        3.
        CONTROLS AND PROCEDURES
 
 Evaluation
        of disclosure controls and procedures. Our chief executive officer and our
        chief
        financial officer, after evaluating the effectiveness of the Company’s
“disclosure controls and procedures”(as defined in the Securities Exchange Act
        of 1934 Rule 13a-14(c) and 15-d-14(c) as of a date (the “Evaluation Date”)
        within 90 days before the filling date of this quarterly report, have concluded
        that as of the Evaluation Date, our disclosure controls and procedures were
        not
        effective to ensure that material information relating to us and our
        consolidated subsidiaries would be made known to them by others within those
        entities because of errors in recording debt and related derivative liabilities
        as well as share-based compensation. We plan on implementing within the next
        fiscal year adjustments to the procedures for recording financial transactions
        and tracking expenses to rectify the ineffectiveness of our controls.
  11
 
 PART
        II – OTHER INFORMATION
 
 ITEM
        1.
        LEGAL PROCEEDINGS
 
 None
 
 ITEM
        2.
        UNREGISTERED SALES OF EQUITY 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
 
 None
 
 ITEM
        6.
        EXHIBITS -
 
 31.1
              Certification
                  of the Chief Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.
 31.2
              Certification
                  of the Chief Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.
 32.1
              Certification
                  of the Principal Executive Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
 32.2
              Certification
                  of the Principal Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
  12