**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
 
 **AMENDMENT
        NO. 1 ON**
 **FORM
        10-KSB/A**
  x **ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934**
  **For
        the fiscal year ended December 31, 2007**
 
 o **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
        ACT**
  **For
        the transition period from _____________________ to
        ______________**
 
 **Commission
        File Number: 000-51119**
 
 **SKINS
        INC.**
 (Exact
        name of small business issuer as specified in its charter)
 
 **Nevada**
                (State
                  or other jurisdiction of incorporation)
              
              **20-4711789**
                (I.R.S.
                  Employer Identification No.)**1115
                  Broadway, 12****th****Floor**
                **New
                  York, NY**
                (Address
                  of principal executive offices)
              
              **10010**
                (Zip
                  Code)
 
 **(212)
        710-2712**
 (Registrant's
        telephone number, including area code)
 
 Securities
        registered under section 12(b) of the Exchange Act: (none)
 
 Securities
        registered under Section 12(g) of the Exchange Act: Common Stock, $0.001
        value
        per share
 
 Check
        whether the issuer is not required to file reports pursuant to section 13
        or
        15(d) of the Exchange Act o
 
 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 shorter
        period
        that the registrant was required to file such reports), and (2) has been
        subject
        to such filing requirements for the past 90 days. Yes x No o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of the registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. o
 
 Check
        whether the registrant is a shell company (as defined in Rule 12b-2 of the
        Exchange Act). Yes o No x
 
 Issuer’s
        revenues for its most recent fiscal year: $0
 
 As
        of
        April 7, 2007, the aggregate market value of such common stock held by
        non-affiliates was approximately $13,522,000, based on the average of the
        bid
        $.43 and ask $.45 prices of such stock on that date. For purposes of this
        calculation only, all directors, officers, and each holder of a 10% or greater
        beneficial interest in the Company have been deemed affiliates.
 
 As
        of
        April 7, 2007 there were 41,679,088 shares of the registrant’s common stock
        issued and outstanding.
 
 Documents
        Incorporated By Reference: The information required by Part III of Form 10-KSB
        incorporated by reference from the Registrant's definitive proxy statement
        on
        Schedule 14A that will be filed no later than the end of the 120-day period
        following the Registrant's fiscal year end, or, if the Registrant's definitive
        proxy statement is not filed within that time, the information will be filed
        as
        part of an amendment to this Annual Report on Form 10-KSB/A, not later than
        the
        end of the 120-day period.
 
 Transitional
        Small Business Disclosure Format (Check one): Yes o No x
 
 Incorporation
        by Reference: None.
 
 *Explanatory
        Note* :
        This
        Form 10-KSB/A for the fiscal year ended December 31, 2007, is being filed
        in
        order to complete Part III of Form 10-KSB and fully comply with all required
        information pursuant to Regulation S-B and Section 13 or 15(d) of the Securities
        Exchange Act of 1934. This amendment contains only the sections to the original
        filing which are being amended, and those unaffected parts or exhibits are
        not
        included herein.
 
 
  SKINS
        INC.
 FORM
        10-KSB/A ANNUAL REPORT
 TABLE
        OF
        CONTENTS
 
 **PART
                  III**ITEM
                  9.
              
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSON AND CORPORATE GOVERNANCE;
                  COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
              
              3ITEM
                  10.
              
              EXECUTIVE
                  COMPENSATION
              
              5ITEM
                  11.
              
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
              
              9ITEM
                  12.
              
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
              
              11ITEM
                  13.
              
              EXHIBITSITEM
                  14.
              
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              
              14SIGNATURES
              
              
              15
 
 
 
 **PART
        III**
 
 **ITEM
        9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSON AND CORPORATE
        GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
        ACT**
  **Executive
        Officers, Directors and Key Employees**
 
 The
        following individuals constitute our board of directors and executive management
        as of the date of this report:
 
 Name
              
              Age
              
              PositionMark
                  Klein
              
              33
              
              Chief
                  Executive Officer, President and DirectorDeborah
                  A. Gargiulo
              
              41
              
              Chief
                  Financial OfficerMichael
                  J. Rosenthal
              
              64
              
              Chairman of
                  the BoardSteve
                  Reimer
              
              65
              
              DirectorFrank
                  Zambrelli
              
              41
              
              Director
 
 ***Mark
        Klein*** **.** Mr.
        Klein has served as the President and Chief Executive Officer of the Company
        since February 2006. He began working on the business concept behind the
        predecessor of Skins Footwear Inc. in 2002 and was appointed President and
        Chief
        Executive Officer of Skins Footwear Inc. on May 18, 2004. From 2001 to 2002,
        Mr.
        Klein served as the Sales Director on ICQ Mobile, the mobile instant messaging
        division of AOL Time Warner, where he set sales and marketing strategies
        for
        ICQ's Value Added Service (VAS) wireless operations and handled technical
        and
        marketing deployments and workshops with operators. From 1999 to 2000, he
        acted
        as a senior marketing and sales executive for both Comverse Network Systems
        and
        Oraios.com, where he directed, created and implemented sales and marketing
        initiatives. Mr. Klein launched his executive career from 1997 through 1999
        as
        the Sales Director of Convertbond.com, where he managed the business development
        and sales strategy for the online financial portal.
 
 ***Deborah
        Gargiulo*** .
        Ms.
        Gargiulo has served as our Chief Financial Officer since July 2007. Ms. Gargiulo
        most recently served as Chief Financial Officer of the Better Apparel segments
        at Jones Apparel Group, Inc. from September 2005 through January 2007, where
        she
        was responsible for strategic, financial planning, business development and
        opportunities, and efficiency improvement. Prior to her promotion, Ms. Gargiulo
        served as Vice President of Finance and Controller for Kasper /Anne Klein
        from
        March 2002 to September 2005, a company acquired by Jones Apparel Group,
        Inc.,
        which is a designer, marketer and wholesaler of branded apparel, footwear
        and
        accessories. Ms. Gargiulo acted as Assistant Corporate Controller from December
        2000 to March 2002 for Donna Karan International (a subsidiary of LVMH),
        where
        she oversaw financial consolidation, bank reporting and disclosures, as well
        as
        budgeting, forecasting and strategic planning covering all domestic and
        international markets. Donna Karan International is a wholesale and retail
        manufacturer of ready-to-wear apparel for men and women, childrenswear and
        accessories. From May 1999 to December 2000, Ms. Gargiulo served as Apparel
        Group Controller at Donna Karan International and she also served as Divisional
        Controller for Shoes & Accessories of Donna Karan International from October
        1996 to May 1999. Ms. Gargiulo earned a Masters in Business Administration
        in
        Finance from Pace University in 1995 and a Bachelor of Science in Accounting
        from St. John’s University in 1990.
  ***Michael
        J. Rosenthal*** **.** Mr.
        Rosenthal was appointed Chairman of the Board of Directors of Skins Footwear
        Inc. in October 2005. As of February 2006 Mr. Rosenthal was appointed Chairman
        of Bill Blass NY. He also served as CEO through November 2007. Since 1986,
        Mr.
        Rosenthal has served as Chairman and President of M.J. Rosenthal and Associates,
        Inc., an investment and consulting company. From 1984 to 1986, Mr. Rosenthal
        was
        a partner and managing director of Wesray Capital Corporation, an equity
        investment firm. From 1976 to 1984, Mr. Rosenthal served as a partner and
        a
        Managing Director of the Mergers and Acquisitions Department of Donaldson,
        Lufkin & Jenrette, Inc. an investment banking firm. During 2002 and 2003,
        Mr. Rosenthal served as Chief Restructuring Officer for Foster Wheeler Ltd.
        Mr.
        Rosenthal also serves as a director of MAXXAM, Inc., The Pacific Lumber Company,
        Nobel Learning Communities, Inc. and as a director and Treasurer of the
        Horticultural Society of New York. Over the last several years, Mr. Rosenthal
        has also served as Chairman, a director and/or Chief Executive Officer of
        a
        number of companies including American Vision Centers, Inc.; Northwestern
        Steel
& Wire Company; Star Corrugated Box Co., Inc. Vector Distributors, Inc;
        Western Auto Supply Company; and Wilson Sporting Goods Company. Mr. Rosenthal
        was an honors graduate from the New York University Law School and Columbia
        University Graduate School of Business.
  ***Steve
        Reimer*** **.** Mr.
        Reimer joined Skins Inc. as a Director in October 2005. From 1986 to 2001,
        he
        served as Senior Vice President of Kohl's Department Store. From 2001 to
        the
        present, he has served as a consultant to B.T.M. Consulting. Mr. Reimer is
        also
        currently a board member of the Two Ten Footwear Foundation, a non-profit
        organization that provides educational and social services to individuals
        working in the footwear industry.
 
 3
 ***Frank
        Zambrelli*** **.** Mr.
        Zambrelli was appointed to the Board of Directors of Skins Inc. in January
        2007.
        Mr. Zambrelli is a founder of Banfi Zambrelli, a leading fashion footwear
        design
        firm. As a Skins strategic business partner, Banfi Zambrelli has helped lead
        the
        direction of the Skins brand and will coordinate production design and oversee
        production and manufacturing of Skins footwear in Italy. Before founding
        Banfi
        Zambrelli in 2003 along with Silvano Banfi, Mr. Zambrelli has worked with
        a
        renowned group of clients including, Chanel, Cole-Haan and Coach. Currently,
        Mr.
        Zambrelli also designs for Calvin Klein footwear and serves as President
        of
        Judith Leiber as well as sitting on the Board of the prominent, New York
        based
        Fashion Institute of Technology.
 
 **Family
        Relationships**
 
 There
        are
        no family relationships among any of the officers and directors.
 
 **Advisory
        Board**
 
 We
        currently have an advisory board that renders advisory services to us with
        respect to technical, financial and marketing matters, in addition to matters
        related to recruitment of personnel. The advisory board meets with our Board
        of
        Directors approximately six to eight times per year.
 
 Members
        of our advisory board are:
 
 *Bill
        Priakos* .
        Mr.
        Priakos has served on our advisory board since October 2005. He has served
        as
        Vice President of Merchandising for the Dallas Cowboys Football Team for
        the
        past nine years.
 
 *Mark
        Itzkowitz* .
        Mr.
        Itzkowitz has been President of Atsco Footwear LLC since July 2001 to the
        present day. Mr. Itzkowitz's expertise in sourcing, development and design
        of
        footwear product has been extensive in the footwear community over the last
        35
        years.
 
 **Director
        Independence**
 
 As
        the
        Company is quoted on the OTC Bulletin Board and not one of the national
        securities exchanges, it is not subject to any director independence
        requirements.
 
 **The
        Board of Directors and Committees**
 
 We
        have
        an Audit Committee. Currently, our Audit Committee is comprised solely of
        Michael Rosenthal, who is the Chairman of our Board of Directors. Our Audit
        Committee recommends the selection and appointment of our independent registered
        public accounting firm to the Board of Directors and reviews the proposed
        scope,
        content and results of the audit performed by the accountants and any reports
        and recommendations made by them, after which these are presented to the
        entire
        Board for approval. Mr. Rosenthal qualifies as an audit committee financial
        expert under SEC Rules. Mr. Rosenthal does not meet the definition of
“independent” as defined in Rule 4200(a)(15) of the Marketplace Rules of the
        NASDAQ Stock Market, Inc. The Audit Committee currently does not have a formal
        charter, however the committee expects to adopt a charter in the near
        future.
 
 We
        have a
        Compensation Committee. The members of our compensation committee are Steve
        Reimer and Frank Zambrelli. Mr. Zambrelli does not meet the definition of
        an
“independent director” as defined in Rule 4200(a)(15) of the Marketplace Rules
        of the NASDAQ Stock Market, Inc. Mr. Reimer does meet such definition of
        “independent director.” This committee has two primary responsibilities: (1) to
        review and advise the Board of Directors with respect to senior executive
        compensation, and (2) to monitor our management resources, structure,
        development and selection process as well as the performance of key executives.
        The Compensation Committee currently does not have a formal charter, however
        the
        committee expects to adopt a charter in the near future.
  **Code
        of Business Conduct and Ethics**
  Our
        board
        of directors has adopted a code of ethics, which applies to all our directors,
        officers and employees. Our code of ethics is intended to comply with the
        requirements of Item 406 of Regulation S-K. Our code of ethics is posted
        on our
        Internet website at www.skinsfootwear.com . We
        will provide our code of ethics in print without charge to any stockholder
        who
        makes a written request to: Chief Financial Officer, Skins Inc., 1115 Broadway,
        12th Floor, New York, NY 10010. Any waivers of the application and any
        amendments to our code of ethics must be made by our board of directors.
        Any
        waivers of, and any amendments to, our code of ethics will be disclosed promptly
        on our Internet website, www.skinsfootwear.com .
 
 **Section
        16(a) Beneficial Ownership Compliance**
 
 Section
        16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
        officers, directors and persons who own more than 10% of a registered class
        of
        our equity securities to file with the Securities and Exchange Commission
        initial statements of beneficial ownership, reports of changes in ownership
        and
        annual reports concerning their ownership of common stock and other of our
        equity securities, on Forms 3, 4 and 5 respectively. Executive officers,
        directors and greater than 10% shareholders are required by Commission
        regulations to furnish us with copies of all Section 16(a) reports they file.
        To
        our knowledge, based solely on our review of the copies of such forms received
        by us, or written representations from certain reporting persons that no
        additional forms were required for those persons, other than one transaction
        for
        each of a Form 4 report of Frank Zambrelli, a Form 4 for Stephen Hochberg
        (former director), and a Form 5 report of Mark Klein, we believe that during
        fiscal 2007 all persons subject to these reporting requirements filed
        the
        required reports on a timely basis.
 
 4
 **ITEM
        10. EXECUTIVE COMPENSATION**
 
 **Summary
        Compensation Tables**
 
 The
        following table sets forth information concerning the compensation for the
        fiscal year ended December 31, 2007 and 2006 of the principal executive officer,
        principal financial officer, in addition to, as applicable, our three most
        highly compensated officers whose annual compensation exceeded $100,000,
        and up
        to two additional individuals for whom disclosure would have been required
        but
        for the fact that the individual was not serving as an executive officer
        of the
        registrant at the end of the last fiscal year (the “Named Executive
        Officers”).
 
 Name
                  and Position
              
              Year
              
              Salary
              
              Bonus
              
              Option
                Awards
              
              All other
                compensation(1)
              
              TotalMark
                  Klein
              
              
              2007
              
              $
              208,000
              (2)
              $
              -
              
              $
              -
              
              $
              5,376
              (1)
              $
              213,376*President and Chief Executive*
              
              
              2006
              
              $
              160,000
              (2)
              $
              25,000
              
              $
              -
              
              $
              -
              
              $
              185,000*Officer*Deborah
                  A. Gargiulo (3)
              
              
              2007
              
              $
              92,100
              
              $
              -
              
              $
              30,567
              
              $
              1,000
              (1)
              $
              123,667*Chief
                  Financial Officer*
              
              
              2006
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Antonio
                  Pavan (4)
              
              
              2007
              
              $
              178,225
              
              $
              -
              
              $
              91,255
              
              $
              7,551
              (1)
              $
              277,031*Former
                  Chief Operating Officer*
              
              
              2006
              
              $
              -
              
              $
              -
              
              $
              —
              
              $
              -
              
              $
              -
  
 (1)
        Relates to automobile and medical personal benefits.
 (2)
        Includes $10,000 for fees earned or paid in cash for service as a director
        of
        the Company.
 (3)
        Ms.
        Gargiulo became our Chief Financial Officer in July 2007.
 (4)
        Mr.
        Pavan became our Chief Operating Officer in April 2007 and resigned this
        position on March 27, 2008.
 
 **Employment
        Agreements**
 
 *Mark
        Klein*
 
 On
        September 28, 2007, we executed an Amended and Restated Employment Agreement
        (the “Klein Agreement”) with our President and Chief Executive Officer, Mark
        Klein, which superseded, amended and restated the prior employment agreement
        entered into when Mr. Klein was initially appointed Chief Executive Officer
        and
        President on March 20, 2006. Pursuant to the terms of the Klein Agreement,
        the
        Company will continue to employ Mr. Klein for a period of three years with
        successive one-year automatic renewals unless either party provides 180-days
        advance notice of intent not to renew the Company will pay Mr. Klein an annual
        base salary of $250,000 with a bonus of up to 50% of the base salary at the
        discretion of the Board of Directors. Mr. Klein is also eligible to receive
        paid
        vacation and other benefits made available by the Company to its executives,
        including a Company-owned or leased automobile.
 
 If
        Mr. Klein’s employment is terminated with cause, as defined in the Klein
        Agreement, Mr. Klein will receive that portion of any unpaid base salary
        that has been earned through the termination date and any accrued but unpaid
        vacation pay as well as any expense reimbursements due and owing to him.
        If
        Mr. Klein is terminated without cause, resigns with good reason or is
        terminated upon a change of control, he will receive, in addition to his
        accrued
        base salary, bonus compensation, vested deferred compensation, any benefits
        under any plans of the Company in which he is a participant to the full extent
        of his rights under such plan, and accrued vacation benefits prorated through
        the termination date, 12 months of his base salary along with health benefits,
        to be paid out proportionally, on the Company's usual paydays, over a 12
        month
        period.  Mr. Klein has agreed not to compete with the Company during his
        employment or in the 12 months that severance payments are made.
   5
  *Deborah
        Gargiulo*
 
 On
        October 29, 2007, we executed an Executive Employment Agreement (the “Gargiulo
        Agreement”) in connection with the employment of Ms. Gargiulo as our Chief
        Financial Officer. Pursuant to the terms of the Gargiulo Agreement, the Company
        will employ Ms. Gargiulo for a period of three years with successive one-year
        automatic renewals unless either party provides 180-days’ advance notice of
        intent not to renew. The Company will pay Ms. Gargiulo an annual base salary
        of
        $200,000 with a bonus of up to 40% of the base salary at the discretion of
        the
        Board of Directors or its Compensation Committee. Ms. Gargiulo is also eligible
        to receive paid vacation and other benefits made available by the Company
        to its
        executives, including a monthly automobile allowance. The Company had also
        previously granted to Ms. Gargiulo 200,000 options exercisable at fair market
        value on the date of grant under the Company’s 2005 Incentive Plan.
 
 If
        Ms.
        Gargiulo’s employment is terminated for cause, as defined in the Gargiulo
        Agreement, Ms. Gargiulo will receive that portion of any unpaid base salary
        that
        has been earned through the termination date and any accrued but unpaid vacation
        pay as well as any expense reimbursements due and owing to her. In the event
        Ms.
        Gargiulo is terminated without cause or she resigns with good reason, the
        Company will be entitled to severance pay from the company. The amount of
        the
        severance pay will be an amount equal to (i) nine months of her base pay
        if the
        termination of her employment occurs during the first year of employment
        under
        the Gargiulo Agreement, (ii) ten months of her base pay if termination of
        her
        employment occurs during the second year of employment under the Gargiulo
        Agreement, or (iii) eleven months of her base pay if the termination occurs
        during the third year of employment under the Gargiulo Agreement. The severance
        pay would be paid in accordance with the Company’s usual paydays during the
        applicable severance period. In addition, in the event of termination without
        cause or for good reason, she will receive all accrued base salary, bonus
        compensation to the extent earned, vested deferred compensation, any benefits
        under any plans of the Company in which she is a participant, accrued vacation
        pay and any as well as any expense reimbursements due and owing to her, all
        to
        the date of termination.
 
 *Dennis
        Walker*
 
 On
        February 9, 2008, we entered into an employment agreement with Dennis Walker
        in
        connection with the employment of Mr. Walker as our Senior Vice President
        of
        Sales. Pursuant to the terms of the agreement, we will employ Mr. Walker
        for a
        period of three years with successive one-year automatic renewals unless
        either
        party provides 180-days’ advance notice of intent not to renew. We will pay Mr.
        Walker an annual base salary of $200,000 with a bonus of up to 40% of the
        base
        salary at the discretion of the Board of Directors. If Mr. Walker’s employment
        is terminated for cause, Mr. Walker will receive that portion of any unpaid
        base
        salary that has been earned through the termination date and any accrued
        but
        unpaid vacation pay as well as any expense reimbursements due and owing to
        him.
        In addition to the foregoing payments, in the event Mr. Walker is terminated
        without cause or he resigns with good reason, he will be entitled to severance
        pay in an amount equal to (i) ten months of his base pay if the termination
        of
        his employment occurs during the first year of employment under the agreement,
        (ii) eleven months of his base pay if termination of his employment occurs
        during the second year of employment under the agreement, or (iii) twelve
        months
        of his base pay if the termination occurs during the third year of employment
        under the agreement. The severance pay would be paid in accordance with our
        usual paydays during the applicable severance period.
 
 **Skins
        Amended and Restated 2005 Incentive Plan**
 
 In
        connection with the Share Exchange Transaction in March 2006, we assumed
        the
        Skins 2005 Incentive Plan as the stock option plan of Skins Inc. Immediately
        after the closing of the Share Exchange Transaction, we assumed share purchase
        options granted under the 2005 Incentive Plan to purchase an aggregate of
        2,109,375 shares at an exercise price of $0.80 per share. At the Company’s 2007
        Annual Meeting of Stockholders held on September 28, 2007, the Company’s
        stockholders approved an amendment to the Company’s 2005 Incentive Plan to
        increase the maximum number of shares of common stock that may be issued
        under
        such plan by 1,625,000 shares to a total of 5,000,000 shares. The Amended
        and
        Restated 2005 Incentive Plan (the “Plan”) Plan provides for the granting of
        stock options, stock appreciation rights, restricted shares, and other
        stock-based awards for employees, directors and consultants. As of December
        31,
        2007, we had 3,486,500 options outstanding with an average exercise price
        of
        $1.00.
  **Repricing
        of Options**
 
 On
        April
        2, 2008, the board of directors of the Company acted to reprice a total of
        2,794,625 options that it had previously granted to certain employees, directors
        and consultants of the Company. The options, all of which had been previously
        issued pursuant to the Plan, were repriced to be $0.40 per share, which is
        greater than the $0.33 closing trading price of the Company’s common stock on
        the date of approval by the board of directors. The board of directors resolved
        that an exercise of $0.40 per share would provide an incentive to the recipients
        of the repriced options to continue to work in the best interests of the
        Company. The other terms of the options, including the vesting schedules,
        remained unchanged as a result of the repricing.
 
 The
        repriced options had originally been issued with $.80 to $1.37 per share
        option
        exercise prices, which prices reflected the then current market prices of
        the
        Company’s stock on the dates of original grant. As a result of the recent sharp
        reduction in the Company’s stock price, the board of directors believed that
        such options no longer would properly incentivize the Company’s employees,
        officers and consultants who held such options to work in the best interests
        of
        the Company and its stockholders. Moreover, the board of directors believed
        that
        if these options were repriced, that such options would provide better
        incentives to such employees, officers and directors.
 
 6
 The
        persons receiving the repriced options include executive officers, directors,
        and advisory directors of the Company that had received stock options granted
        between March 2006 to November 2007, including:
 
 ·
              Deborah
                  Gargiulo, Chief Financial Officer and Corporate Secretary, holds
                  options
                  to purchase 200,000 shares of the Company’s common stock at an exercise
                  price of $1.29 per share. All of these options were repriced to
                  $0.40 per
                  share.
  ·
              Antonio
                  Pavan, former Chief Operating Officer, holds options that includes
                  options
                  to purchase 250,000 shares of the Company’s common stock at an exercise
                  price of $1.25 per share. All of these options were repriced to
                  $0.40 per
                  share.
  ·
              Steve
                  Reimer, a director, holds options to purchase 421,875 shares of
                  the
                  Company’s common stock at an exercise prices of $0.80 per share. All of
                  these options were repriced to $0.40 per
                  share.
  ·
              Frank
                  Zambrelli, a director, holds options to purchase 150,000 shares
                  of the
                  Company’s common stock at an exercise price of $1.37 per share that were
                  issued to him as a director. All of these options were repriced
                  to $0.40
                  per share. Mr. Zambrelli is the beneficial holder of 25,000 options,
                  exercisable at $1.15 per share, that were granted for consulting
                  service,
                  and such options are not subject to the
                  repricing.
  ·
              Each
                  of Mark Itzkowitz and Bill Priakos, advisory board members, holds
                  options
                  to purchase 421,875 shares of the Company’s common stock at an exercise
                  price of $0.80 per share. All of these options were repriced to
                  $0.40 per
                  share.
  **Outstanding
        Equity Awards at Fiscal Year-End**
 
 The
        following table presents the outstanding equity awards held by each of the
        named
        executive officers as of the fiscal year ended December 31, 2007.
  Option
                  AwardsName
              
              Number
                  of
                securities
                underlying
                unexercised
                options
                  (#)
                exercisable
              
              Number
                  of
                securities underlying
                  unexercised options (#) unexercisable
              
              Equity incentive
                  plan awards: Number of securities underlying unexercised
                  unearned options (#)
              
              Option exercise
                  price ($)(1)
              
              Option
                expiration dateMark
                  Klein
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Deborah
                  A. Gargiulo(2)
              
              
              —
              
              
              200,000
              
              
              —
              
              $
              1.29
              
              
              7/3/2011Antonio
                  Pavan(3)
              
              
              85,000
              
              
              415,000
              
              
              —
              
              $
              1.25
              
              
              4/13/2011
 
 (1)
              See
                  above under “Repricing of Options” for information regarding the repricing
                  of options of Ms. Gargiulo and Mr. Pavan to $0.40 per share in
                  April
                  2008.
  7
 (2)
              Options
                  vest annually in equal amounts over the three year period following
                  the
                  July 3, 2007 date of grant, with the first 1/3 vesting on July
                  3,
                  2008.
 
 (3)
              Options
                  originally scheduled to vest in 1/6thincrements every six months from the April 13, 2007 date of grant.
                  On
                  April 8, 2008, we entered into a separation agreement and release
                  with Mr.
                  Pavan pursuant to which (i) 250,000 of the options vest immediately,
                  (ii)
                  such vested options shall be subject to the option repricing to
                  $0.40 per
                  share, (iii) such vested options shall have a term of one year
                  from the
                  date of the separation agreement, and (iv) all other options are
                  terminated and cancelled
                  immediately.
  **Director
        Compensation**
  The
        following table shows information regarding the compensation earned during
        the
        fiscal year ended December 31, 2007 by members of board of
        directors.
  Name
              
              Fees Earned or
                  Paid in Cash
                ($)
              
              Stock
                  Awards
                ($)
              
              Option
                Awards
                ($)(2)
              
              Non-Equity
                  Incentive Plan Compensation ($)
              
              Change in Pension
                Value and
                  Nonqualified Deferred Compensation Earnings
              
              All Other
                  Compensation
                ($)
              
              Total
                ($)Michael
                  J. Rosenthal
              
              
              100,000
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              100,000Steve
                  Reimer
              
              
              10,000
              (1)
              
              -
              
              
              36,894
              
              
              -
              
              
              -
              
              
              15,000
              (3)
              
              61,894Frank
                  Zambrelli
              
              
              10,000
              (1)
              
              -
              
              
              17,573
              
              
              -
              
              
              -
              
              
              132,300
              (4)
              
              159,873
  
 (1)
              Of
                  this amount, Mr. Reimer and Mr. Zambrelli, in April 2008, each
                  received
                  12,500 units in lieu of repayment of $2,500 due and payable to
                  them,
                  respectively, for fourth quarter board fees. The units were issued
                  on the
                  same terms as the private placement that we conducted in April
                  2008. Each
                  unit was sold for $0.20 and consists of one share of common stock
                  of the
                  Company and one share purchase warrant, exercisable at an exercise
                  price
                  of $0.40 per share at any time upon election of the holder during
                  the 24
                  month period following the
                  offering.
 
 (2)
              These
                  amounts reflect the dollar amount recognized for financial statement
                  reporting purposes for the fiscal year ended December 31, 2007,
                  in
                  accordance with FAS 123(R). Assumptions used in the calculation
                  of these
                  are included in the notes to the Company’s audited financial statements
                  commencing at page F-1 of this
                  report.
 
 (3)
              Represents
                  the amount due to Mr. Reimer in connection with consulting services.
                  Of
                  this amount, Mr Reimer, in April 2008, received 18,750 units in
                  lieu of
                  payment of $3,750 due and payable to Mr. Reimer for fourth quarter
                  consulting services, where the units were issued on the same terms
                  as the
                  private placement that we conducted in April 2008. Each unit was
                  sold for
                  $0.20 and consists of one share of common stock of the Company
                  and one
                  share purchase warrant, exercisable at an exercise price of $0.40
                  per
                  share at any time upon election of the holder during the 24 month
                  period
                  following the offering.
 
 (4)
              Consists
                  of $120,000 in cash received for consulting services and $12,300
                  for the
                  value of 50,000 options received for consulting services. The $12,300
                  reflects the dollar amount recognized for financial statement reporting
                  purposes for the fiscal year ended December 31, 2007, in accordance
                  with
                  FAS 123(R) and EITF 96-18.
  We
        have
        an established policy to provide compensation to members of our Board of
        Directors for their services in that capacity. Directors are compensated
        in
        amounts as indicated above and are eligible for option grants for their
        services. In addition, Directors are reimbursed for reasonable out-of-pocket
        expenses incurred in connection with attendance at Board meetings. Messrs.
        Priakos and Itzkowitz, who sit on our advisory board, receive $2,500 per
        quarter. In addition, each director was permitted to participate in the option
        repricing that we conducted in April 2008, as follows:
  8
 ·
              Steve
                  Reimer holds options to purchase 421,875 shares of the Company’s common
                  stock at an exercise prices of $0.80 per share. All of these options
                  were
                  repriced to $0.40 per share.
  ·
              Frank
                  Zambrelli, a director, holds options to purchase 150,000 shares
                  of the
                  Company’s common stock at an exercise price of $1.37 per share that were
                  issued to him as a director. All of these options were repriced
                  to $0.40
                  per share. Mr. Zambrelli is the beneficial holder of 25,000 options,
                  exercisable at $1.15 per share, that were granted for consulting
                  service,
                  and such options are not subject to the
                  repricing.
  ·
              Each
                  of Mark Itzkowitz and Bill Priakos, advisory board members, holds
                  options
                  to purchase 421,875 shares of the Company’s common stock at an exercise
                  price of $0.80 per share. All of these options were repriced to
                  $0.40 per
                  share.
 
 **Securities
        Authorized for Issuance Under Equity Compensation Plans**
 
   # of securities to be
                  issued upon exercise of
                outstanding options,
                  warrants and rights
                (a)
              
              Weighted-average exercise
                price of outstanding
                options, warrants and rights
                (b)
              
              # of securities
                remaining available
                for future issuance
                under equity
                compensation plans
                (excluding securities
                reflected in column
                (a))Equity
                  compensation plans approved by security holders
              
              
              3,486,500
              (1)
              $
              1.00
              
              
              1,513,500
              (2)Equity
                  compensation plans not approved by securities holders
              
              
              150,000
              (3)
              
              1.38
              
              
              —Total
              
              
              3,636,500
              
              $
              1.02
              
              
              1,513,500
  (1)
              Represents
                  stock options outstanding under our Amended and Restated 2005 Incentive
                  Plan (the “2005 Incentive Plan”), under which a total of 5,000,000 shares
                  are authorized to be issued.
 
 (2)
              Represents
                  shares available for future issuance under our 2005 Incentive
                  Plan.
 
 (3)
              Represents
                  warrants that were issued to third parties for
                  services.
 
 **Compensation
        Committee Interlocks and Insider Participation**
  During
        the last fiscal year, we did not have a standing compensation committee.
        The
        Board of Directors, as a whole, was responsible for the functions customarily
        performed by the compensation committee.
 
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
        STOCKHOLDER MATTERS**
 
 Beneficial
        ownership is determined in accordance with the rules of the SEC. In computing
        the number of shares beneficially owned by a person and the percentage of
        ownership of that person, shares of common stock subject to options and warrants
        held by that person that are currently exercisable or become exercisable
        within
        60 days of the date of this report are deemed outstanding even if they have
        not
        actually been exercised. Those shares, however, are not deemed outstanding
        for
        the purpose of computing the percentage ownership of any other
        person.
 
  9
  The
        following table sets forth certain information with respect to beneficial
        ownership of our common stock based on 56,066,793 issued and outstanding
        shares
        of common stock as of April 21, 2008, by:
 
 ·
              Each
                  person known to be the beneficial owner of 5% or more of the outstanding
                  common stock of our company;
 ·
                Each
                      executive officer;
 ·
                  Each
                        director; and
 ·
                      All
                              of the executive officers and directors as a
                              group.
 Unless
        otherwise indicated, the persons and entities named in the table have sole
        voting and sole investment power with respect to the shares set forth opposite
        the stockholder’s name, subject to community property laws, where applicable.
        Unless otherwise indicated, the address of each stockholder listed in the
        table
        is c/o Skins Inc. 1115 Broadway, 12th Floor, New York, NY 10010.
 
 **Name
                  and Address of Beneficial Owner**
              
              **Title**
              
              **Beneficially
                  Owned**
              
              **Percent
                  of Class Beneficially Owned*****Directors
                  and Executive Officers***Mark
                  Klein
              
              President
                  and Chief Executive Officer
              
              9,674,521
              (1)
              17.3%Deborah
                  A. Gargiulo
              
              Chief
                  Financial Officer
              
              184,091
              (2)
              *Michael
                  J. Rosenthal
              
              Chairman
                  of the Board
              
              2,328,923
              (3)
              4.1%Frank
                  Zambrelli
              
              Director
              
              62,250
              (4)
              *Steve
                  Reimer
              
              Director
              
              496,250
              (5)
              *Officers
                  and Directors as a Group (total of 5 persons)
              
              
              
              12,746,035
              (6)
              22.3%***5%
                  or more Stockholders***Geoffrey
                  Dubey(7)
              
              
              
              4,508,809
              (7)
              7.9%Joshua
                  Hermelin(7)
              
              
              
              5,380,061
              (7)
              9.4%
  
 *
        Indicates less than 1%.
 
 (1)
              Includes
                  706,068 shares of common stock that are held in escrow and subject
                  to
                  partial and full return to Skins Inc. contingent upon the number
                  of share
                  purchase warrants exercised by investors in Skins Inc. within a
                  period of
                  30 months following the closing of private placements and the Share
                  Exchange Transaction in March 2006.
  (2)
              Includes
                  75,000 shares underlying warrants that are currently
                  exercisable.
  10
  (3)
              Includes
                  565,725 shares underlying warrants that are currently exercisable.
                  Also
                  includes 70,200 shares of common stock that are held in escrow
                  and subject
                  to partial and full return to Skins Inc. contingent upon the number
                  of
                  share purchase warrants exercised by investors in Skins Inc. within
                  a
                  period of 30 months following the closing of private placements
                  and the
                  Share Exchange Transaction in March
                  2006.
  (4)
              Includes
                  25,000 shares underlying warrants and 12,250 shares underlying
                  options
                  that are currently exercisable or exercisable within 60 days of
                  April 21,
                  2008.
  (5)
              Includes
                  62,500 shares underlying warrants and 371,250 shares underlying
                  options
                  that are currently exercisable or exercisable within 60 days of
                  April 21,
                  2008.
  (6)
              Includes
                  728,225 shares underlying warrants and 383,500 shares underlying
                  options
                  that are currently exercisable or exercisable within 60 days of
                  April 21,
                  2008. Also includes 776,268 shares of common stock that are held
                  in escrow
                  and subject to partial and full return to Skins Inc. contingent
                  upon the
                  number of share purchase warrants exercised by investors in Skins
                  Inc.
                  within a period of 30 months following the closing of private placements
                  and the Share Exchange Transaction in March
                  2006.
  (7)
              Mr.
                  Dubey’s shares include 750,000 shares underlying warrants that are
                  currently exercisable. Mr. Hermelin’s shares include 950,000 shares
                  underlying warrants that are currently exercisable. Messrs. Dubey
                  and
                  Hermelin are consultants to the Company and utilize the Company's
                  address
                  for Company matters. Mr. Dubey’s and Mr. Hermelin’s shares includes
                  222,043 and 244,752 shares of common stock, respectively, that
                  are held in
                  escrow and subject to partial and full return to Skins Inc. contingent
                  upon the number of share purchase warrants exercised by investors
                  in Skins
                  Inc. within a period of 30 months following the closing of private
                  placements and the Share Exchange Transaction in March
                  2006.
  **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
        INDEPENDENCE**
  **Skins
        Footwear Inc.**
  Skins
        Footwear Inc. is our wholly-owned subsidiary. We have interlocking executive
        and
        director positions with Skins Footwear Inc.
 
 **Secured
        Promissory Notes**
 
 On
        February 14, 2008, we issued a Secured Promissory Note (the “Rosenthal Note”) to
        our Chairman of the Board of Directors, Michael Rosenthal (“Chairman”), in the
        principal amount of $100,000. Of the $100,000, $25,000 was used to pay certain
        amounts due and payable to Mr. Rosenthal, including Board member fees. Pursuant
        to the Rosenthal Note, it was to bear interest at the rate of 5% per annum
        compounded annually and was secured by the grant of a security interest by
        the
        Company in all of its intellectual property rights, patents, copyrights,
        trademarks which the Company now has or acquires and all proceeds and products
        thereof. The Company agreed to repay the Rosenthal Note upon the Company’s
        completion of a financing, and in no event later than six months from the
        Rosenthal Note’s date of issuance. Pursuant to the Rosenthal Note, and in
        consideration of entering into the Rosenthal Note, our Chairman received
        185,185
        shares of the Company’s common stock. In addition, our Chairman received
        piggy-back registration rights with respect to the shares.
 
 On
        February 28, 2008, we issued a Secured Promissory Note (the “Gargiulo Note”) to
        our Chief Financial Officer (“CFO”), Deborah Gargiulo, in the principal amount
        of $15,000. Pursuant to the Gargiulo Note, it was to bear interest at the
        rate
        of 5% per annum compounded annually and was secured by the grant of a security
        interest by the Company in all of its intellectual property rights, patents,
        copyrights, trademarks which the Company now has or acquires and all proceeds
        and products thereof. The Company agreed to repay the Gargiulo Note upon
        the Company’s completion of a financing, and in no event later than six months
        from the Gargiulo Note’s date of issuance. Pursuant to the Gargiulo Note, and in
        consideration of entering into the Gargiulo Note, our CFO received 32,609
        shares
        of the Company’s common stock. In addition, our CFO received piggy-back
        registration rights with respect to the shares.
 
 In
        April
        2008, we conducted a private placement, and in an effort to preserve cash
        for
        Company operations, we agreed to convert the $115,000 in principal debt owed
        under the Rosenthal Note and Gargiulo Note. The offering consisted of the
        sale
        of units at a sales price of $0.20 per unit, each of which consisted of (i)
        one
        share of common stock of the Company and (ii) one share purchase warrant,
        exercisable at an exercise price of $0.40 per share at any time upon election
        of
        the holder during the 24 month period following the offering. The Rosenthal
        Note
        and Gargiulo Note were converted into the offering, and as a result, Mr.
        Rosenthal and Ms. Gargiulo received 500,000 and 75,000 units, respectively.
        Other secured promissory note holders also converted outstanding amounts
        due
        under the notes into the private offering. Each of the secured note holders,
        including Mr. Rosenthal and Ms. Gargiulo, agreed to waive payment of any
        and all
        interest due under the note, which was cancelled upon conversion into the
        private offering.
  11
 Upon
        execution of the secured notes, the holders, including Mr. Rosenthal and
        Ms.
        Gargiulo, received shares of common stock in an amount that was equal to
        (x)
        half of the principal amount of the note *divided by* (y) the
        closing trading price of the Company’s common stock on the date of the note.
        This was equal to 185,185 and 32,609 shares for Mr. Rosenthal and Ms. Gargiulo,
        respectively, as discussed above. The lowest trading price used to calculate
        the
        number of shares to be issued under the secured notes was $0.22 per share.
        In
        consideration of the holders investing the principal due into private placement
        in lieu of payment and waiving any and all interest due, each holder that
        received shares upon the execution of the note based on a trading price higher
        than $0.22 per share, including Mr. Rosenthal and Ms. Gargiulo, was issued
        additional shares of common stock. These additional shares were equal to
        the
        number of shares that would have been received if $0.22 were in the formula,
        minus the number of shares actually received upon execution of the secured
        note.
        A total of 316,298 additional shares were issued to these secured note holders,
        and Mr. Rosenthal and Ms. Gargiulo received 42,088 and 1,482 shares of common
        stock, respectively.
 
 We
        believe that our arrangements with Mr. Rosenthal and Ms. Gargiulo are at
        fair
        market value and are on terms comparable to those that would have been reached
        in arm's-length negotiations had the parties been unaffiliated at the time
        of
        the negotiations.
 
 **April
        2008 Private Placement**
 
 In
        April
        2008, we conducted a private placement, and in an effort to preserve cash
        for
        Company operations, we agreed to convert a total of $40,645 owed by the Company
        to three non-employee board members and two advisory board members in lieu
        of
        payment for fees due to them. Our three non-employee directors, Mr. Rosenthal,
        Steve Reimer, and Frank Zambrelli were owed $13,145, $12,500, and $5,000,
        respectively, and in lieu of payment of such amounts received 65,725, 62,500,
        25,000 units, which consisted of (i) one share of common stock of the Company
        and (ii) one share purchase warrant, exercisable at an exercise price of
        $0.40
        per share at any time upon election of the holder during the 24 month period
        following the offering. Our two advisory board members, Mark Itzkowitz and
        Bill
        Priakos, were each owed $5,000, and in lieu of payment f such amount received
        25,000 units. We believe that our arrangements with Messrs. Rosenthal, Reimer,
        and Zambrelli are at fair market value and are on terms comparable to those
        that
        would have been reached in arm's-length negotiations had the parties been
        unaffiliated at the time of the negotiations.
 
 **Consulting
        Arrangements**
 
 We
        have
        consulting relationships with two of our directors, Steve Reimer and Frank
        Zambrelli. Pursuant to our arrangement with Mr. Reimer, through BTM Consulting,
        Inc., provides consulting services to our company in relation to sales and
        marketing of our product. We pay Mr. Reimer a quarterly fee of $3,750 for
        these
        consulting services. Mr. Zambrelli, through Design Quadrant, provides consulting
        services to our company to assist in the design and merchandising of our
        product. We pay Design Quadrant a monthly fee of $10,000. Our arrangement
        with
        Mr. Zambrelli is on a month-to-month basis. In 2007, we received $120,000
        in
        services from Design Quadrant. Of this amount, we paid $80,000 in 2007 and
        the
        remaining $40,000 in 2008. We believe that our arrangements with Messrs.
        Reimer
        and Zambrelli are at fair market value and are on terms comparable to those
        that
        would have been reached in arm's-length negotiations had the parties been
        unaffiliated at the time of the negotiations.
 
 **Atsco
        Footwear LLC**
 
 We
        had
        entered into a sourcing and buying agent agreement with Atsco Footwear, LLC
        pursuant to which Atsco Footwear will be responsible for sourcing,
        commercialization and product line review. According to the agreement, Atsco
        Footwear will be the exclusive sourcing and development agent for us and
        will
        assist us in developing a fit-and-wear tested marketable product. Atsco is
        responsible for the factory development and output as well as delivery,
        scheduling, supplier deadlines and other related matters. We will pay
        commissions to Atsco Footwear for its services under the agreement primarily
        based on merchandise sourced by Atsco Footwear and shipped to us. We decided
        not
        to exercise the option to extend the outsourcing agreement. Mark Itzkowitz,
        who
        is an advisory director of our company, is also a director Atsco
        Footwear.
 
 On
        November 28, 2007, the Company executed a Buying Agency and Sourcing Agreement
        with Atsco Footwear, LLC. Pursuant to the Agreement, Atsco will serve as
        the
        Company’s non-exclusive buying and sourcing agent and will be responsible for
        sourcing, commercialization and product line review. The Company will pay
        Atsco
        a commission of 7% of the first $5 million and 5% for the amounts above the
        first $5 million at the FOB country of origin price for merchandise sourced
        by
        Atsco and shipped to the Company. The Agreement has an initial term of one
        year,
        from November 15, 2007 through November 15, 2008, and each party has the
        option
        to extend the initial term of the Agreement for an additional year upon
        providing written notice to the other party no less than thirty days prior
        to
        the expiration of the initial term. Either party may terminate the Agreement
        at
        any time upon providing the other party with three months written notice.
        Mark
        Itzkowitz, the President of Atsco, is also an advisory member of the Board
        of
        Directors of the Company.
  12
 **Consulting
        Agreements**
 
 On
        April
        3, 2006, we entered into consulting agreements with two shareholders, Geoffrey
        Dubey and Joshua Hermelin, pursuant to which we agreed to issue 50,000 and
        72,000 shares of our common shares to Geoffrey Dubey and Joshua Hermelin
        respectively for an aggregate of 122,000 shares in exchange for consulting
        services to be provided by the two shareholders over a two year term. The
        total
        consulting services were valued at $145,180 based upon the closing price
        of our
        common stock of $1.19 per share on the date of the agreement. The consulting
        services include advising and counseling us with respect to technical, financial
        and marketing issues, recruitment of qualified personnel and specific technical
        issues, growth and business plans, and strategic planning. Messrs. Dubey
        and
        Hermelin beneficially own approximately 8.9% and 9.8%, respectively, of our
        outstanding securities. We believe that our arrangements with Messrs. Dubey
        and
        Hermelin are at fair market value and are on terms comparable to those that
        would have been reached in arm's-length negotiations had the parties been
        unaffiliated at the time of the negotiations.
 
 **Mage
        LLC**
  We
        had an
        oral consulting arrangement with Mage LLC pursuant to which Mage LLC receives
        approximately $5,000 per month for consulting services providing business
        advisory and financial services. Mage's services to us included strategic
        planning, development of business plan, and evaluation of funding including
        negotiation and structure, as well as, interim financial management and
        accounting services. This arrangement expired in June 2006 when we hired
        a VP of
        Finance and Operations and was later renewed on a month to month basis in
        January 2007. Pursuant to the terms of the renewed consulting agreement,
        Mage
        LLC will receive $15,000 per annum. In 2005, Mage Capital Partners, LLC received
        equity securities in Skins Footwear Inc. in exchange for services provided
        by
        Mage LLC. These equity securities were exchanged for 388,080 shares of our
        common stock upon the closing of the Share Exchange Transaction on March
        20,
        2006. Mr. Hochberg, a former member of our Board of Directors, was Chief
        Executive Officer of Mage LLC and Mage Capital Partners, LLC.
 
 **March
        2006 Share Exchange Transaction**
  In
        March
        2006, we completed the Share Exchange Transaction with Skins Footwear Inc.
        At
        the closing, Skins Footwear Inc. became a wholly-owned subsidiary of Skins
        Inc.
        and all outstanding securities of Skins Footwear Inc. were exchanged for
        securities of Skins Inc. The following sets forth information with respect
        to
        our affiliates holdings prior to the Share Exchange Transaction.
  ·
              Mark
                  Klein, our President, Chief Executive Officer and a Director, received
                  beneficial ownership of 9,758,221 shares of our common stock pursuant
                  to
                  the Share Exchange Transaction. This amount includes 70,200 shares
                  of
                  common stock that are held in escrow and subject to partial and
                  full
                  return to Skins Inc. contingent upon the number of share purchase
                  warrants
                  exercised by investors in Skins Inc. within a period of 30 months
                  following the closing of private placements and the Share Exchange
                  Transaction.
  ·
              Stephen
                  Hochberg, a former member of our Board of Directors, received beneficial
                  ownership of 388,080 shares of our common stock pursuant to the
                  Share
                  Exchange Transaction. This amount includes 28,080 shares of common
                  stock
                  that are held in escrow and subject to partial and full return
                  to Skins
                  Inc. contingent upon the number of share purchase warrants exercised
                  by
                  investors in Skins Inc. within a period of 30 months following
                  the closing
                  of private placements and the Share Exchange
                  Transaction.
  ·
              Michael
                  Rosenthal, Chairman of our Board of Directors, received beneficial
                  ownership of 970,200 shares of our common stock pursuant to the
                  Share
                  Exchange Transaction. This amount includes 70,200 shares of common
                  stock
                  that are held in escrow and subject to partial and full return
                  to Skins
                  Inc. contingent upon the number of share purchase warrants exercised
                  by
                  investors in Skins Inc. within a period of 30 months following
                  the closing
                  of private placements and the Share Exchange
                  Transaction
  ·
              Geoffrey
                  Dubey and Joshua Hermelin received 3,068,743 shares and 3,382,603
                  shares,
                  respectively, of our common stock pursuant to the Share Exchange
                  Transaction. Messrs. Dubey and Hermelin each beneficially own more
                  than 5%
                  of our securities.
  13
  **Director
        Independence**
 
 As
        the
        Company is quoted on the OTC Bulletin Board and not one of the national
        securities exchanges, it is not subject to any director independence
        requirements.
 
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 During
        the two fiscal years ended December 31, 2007, we retained Mahoney Cohen
& Company, CPA, P.C. to provide services as follows:
 
 **Fees
                  for the Year Ended****Service**
              
              **December
                  31, 2007**
              
              **December
                  31, 2006**Audit
                  fees(1)
              
              
              98,723
              
              
              93,000Audit-related
                  fees(2)
              
              
              9,431
              
              
              53,412Tax
                  fees(3)
              
              
              10,000
              
              
              7,000All
                  other fees(4)
              
              
              -
              
              
              -**Total**
              
              
              168,154
              
              
              146,412
 
 
 
 (1)
        The
        aggregate fees billed for fiscal 2007 and 2006 professional services rendered
        by
        the principal accountant for the audit of the Company’s annual financial
        statements and review of financial statements included in the Company’s Forms
        10-KSB, 10-QSB or services that are normally provided by the accountant in
        connection with statutory and regulatory filings or engagements were $98,723
        and
        $93,000, respectively.
 
 (2)
        Fees
        billed by the principal accountant relating to filing of the Company's
        Registration Statements were $9,431 and $53,412 for fiscal 2007 and fiscal
        2006,
        respectively.
 
 (3)
        There
        were approximately $10,000 and $7,000 in tax return preparation fees for
        fiscal
        2007 and fiscal 2006 paid to our principal accountants.
 
 (4)
        No
        fees were billed for each of fiscal 2007 and fiscal 2006 for products and
        services provided by the principal accountant.
 
 **Pre-Approval
        Policy**
 
 The
        Company’s audit committee pre-approves all services provided by Mahoney Cohen
& Company, CPA, P.C. Prior to the engagement of Mahoney Cohen & Company,
        CPA, P.C. for any non-audit or non-audit related services, the Board of
        Directors must conclude that such services are compatible with the independence
        of Mahoney Cohen & Company, CPA, P.C. as our auditors.
  14
  **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant has
        duly
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
 **SKINS
                  INC.**
                (Registrant)April
                  29, 2008
              By:
              /s/ Mark
                KleinMark
                KleinChief
                  Executive Officer, President and Director
                (Principal
                  Executive Officer)
  April
                29, 2008
              By:
              /s/ Deborah
                A. GargiuloDeborah
                A. GargiuloChief
                  Financial Officer
                (Principal
                  Financial and Accounting Officer)
 
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed by the following persons on behalf of the Registrant and in the
        capacities and on the dates indicated.
 
 SIGNATURE
              
              TITLE
              
              DATE/s/
                  Mark Klein
              
              Chief
                  Executive Officer, President and Director
              
              April
                  29, 2008Mark
                  Klein
              
              (Principal
                  Executive Officer)/s/
                  Michael J. Rosenthal
              
              Chairman
                  of the Board
              
              April
                  29, 2008Michael
                  J. Rosenthal/s/
                  Steve Reimer
              
              Director
              
              April
                  29, 2008Steve
                  Reimer/s/ Frank
                  Zambrelli
              
              Director
              
              April
                  29, 2008Frank
                  Zambrelli
 
 15