**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB/A**


**Amendment
      No. 2**




**x** **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




**For
      the quarterly period ended March 31, 2006**





**OR**





**o** **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**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
              or
                organization)
            
            **20-4711789**
              (I.R.S.
                Employer Identification
              No.)**45
                West 21st Street, 2nd Floor**
              **New
                York, NY**
              (Address
                of principal executive offices)
            
            **10010**
              (Zip
                Code)





**(212)
      561-5111**


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days. Yes x No 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




There
      were 34,526,006 shares outstanding of registrant’s common stock, par value $.001
      per share, as of May 30, 2006.




Transitional
      Small Business Disclosure Format (check one):    
Yes o No x




















**EXPLANATORY
      NOTE**




This
      Amendment No. 2 (this “Amendment”) on Form 10-QSB/A, which amends and restates
      items identified below with respect to the Form 10-QSB, filed by Skins Inc.
      (“we” or “the Company”) with the Securities and Exchange Commission (the “SEC”)
      on June 2, 2006 and as amended by Amendment No. 1 on Form 10-QSB/A filed with
      the SEC on August 18, 2006 (collectively, the “Original Filing”) is being filed
      to reflect the restatement of certain of our financial statements as described
      below and elsewhere in this Amendment.




On
      September 27, 2006, our management concluded that the Company’s previously filed
      financial statements as of and for three months ended March 31, 2006, should
      no
      longer be relied upon as a result of the Company’s determination that it
      misapplied accounting principles generally accepted in the United States of
      America in relation to common stock purchased and retired and warrants granted
      in conjunction with the close of two private placements outlined in the share
      exchange agreement. This conclusion was based upon conversations between the
      Company and its independent auditors (Mahoney Cohen & Company, CPA, P.C.).
      During this process, management and the Board of Directors of the Company were
      alerted to the facts and circumstances regarding the errors in accounting.
      Authorized officers of the Company discussed this matter with the Company's
      independent public accounting firm who agreed that the Company's previously
      issued financial statements described above could not be relied upon and needed
      to be restated. See “Note 10 - Restatement” in the Notes to Financial Statements
      for further details.





This
      Form
      10-QSB/A only amends and restates certain information in Item 1 (Financial
      Statements), Item 2 (Management’s Discussion And Analysis Of Financial Condition
      And Results Of Operation), and Item 6 (Exhibits). As a result of this Amendment,
      the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley
      Act of 2002, filed as exhibits to our 10-QSB have been revised, re-executed
      and
      re-filed as of the date of this Amendment. Except for the foregoing amended
      and
      restated information, this Amendment continues to describe conditions as of
      the
      date of the Original Filing, and the disclosures contained herein have not
      been
      updated to reflect events, results or developments that have occurred after
      the
      Original Filing, or to modify or update those disclosures affected by subsequent
      events. Among other things, forward-looking statements made in the Original
      Filing have not been revised to reflect events, results or developments that
      have occurred or facts that have become known to us after the date of the
      Original Filing, and such forward-looking statements should be read in their
      historical context. This Amendment should be read in conjunction with the
      Company’s filings made with the SEC subsequent to the Original Filing, including
      any amendments to those filings.



















**SKINS
      INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**


**FORM
      10-QSB/A QUARTERLY REPORT**





**TABLE
      OF CONTENTS**





**Page**PART
                I - FINANCIAL INFORMATION
            1ITEM
                1.
            FINANCIAL
                STATEMENTS
            1Consolidated
                Balance Sheet as of March 31, 2006 (unaudited)
            1Consolidated
                Statements of Operations for the Three Months ended March 31, 2006
                and
                2005 and period from Inception (May 18, 2004) to March 31, 2006
                (unaudited)
            2Consolidated
                Statement Stockholders' Equity (Deficiency) for the Year ended December
                31, 2005, the three months ended March 31, 2006 and the period from
                Inception (May 18, 2004) to December 31, 2004 (unaudited)
            3Consolidated
                Statements of Cash Flows for the Three Months ended March 31, 2006
                and
                2005, and period from Inception (May 18, 2004) to March 31, 2006
                (unaudited)
            4Notes
                to the Consolidated Financial Statements
            5ITEM
                2.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATION
            14PART
                II - OTHER INFORMATIONITEM
                6.
            EXHIBITS
            28SIGNATURES
            
            29














**SKINS
      INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





**CONSOLIDATED
      BALANCE SHEET**


**(Unaudited)**





**March
                31,**
              **2006**(As
                Restated)
              (See
                Note 10)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            2,019,139Prepaid
                expenses
            
            
            35,884Total
                current assets
            
            
            2,055,023Property
                and equipment, net (Note 3)
            
            
            3,182Patent
                costs (Note 4)
            
            
            60,407Total
                Assets
            
            $
            2,118,612**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesAccounts
                payable and accrued liabilities
            
            $
            440,456Related
                party payable
            
            
            2,080Derivative
                Liability
            
            
            586,800Total
                current liabilities
            
            
            1,029,336Commitments
                and Contingencies (Note 7)Stockholders'
                EquityCommon
                Stock, $.001 par value; 436,373,650 shares authorized; 34,404,006
                shares
                issued and outstanding at March 31, 2006
            
            
            34,404Additional
                paid in capital
            
            
            1,822,445Deficit
                accumulated in the development stage
            
            
            (767,573
            )Total
                stockholders' equity
            
            
            1,089,276Total
                Liabilities & Stockholders' Equity
            
            $
            2,118,612





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







1




**SKINS
      INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(Unaudited)**




**Three
                Months Ended**
              **March
                31,**
            
            **Period
                from**
              **Inception**
              **(May
                18, 2004)**
              **to**
              **March
                31,****2006**
            
            **2005**
            
            **2006**(As
                Restated)
              (See
                Note 10)
            
            
            
            (Unaudited)
              (As
                Restated)
              (See
                Note 10)Operating
                expenses:
            
            $
            -
            
            $
            -Design
                and development
            
            
            34,289
            
            
            42,424
            
            $
            173,080Selling,
                general and administrative
            
            
            443,696
            
            
            37,081
            
            
            963,399Total
                operating expenses
            
            
            477,985
            
            
            79,505
            
            
            1,136,479Operating
                Loss
            
            
            (477,985
            )
            
            (79,505
            )
            
            (1,136,479
            )Unrealized
                gain (loss) on derivative instruments
            
            
            19,237
            
            
            -
            
            
            (2,954
            )Interest
                Income
            
            
            1,268
            
            
            -
            
            
            1,268Interest
                Expense
            
            
            (931
            )
            
            (667
            )
            
            (5,266
            )Net
                loss
            
            $
            (458,411
            )
            $
            (80,172
            )
            
            (1,143,431
            )Basic
                and diluted loss per share
            
            $
            (0.02
            )
            $
            (0.01
            )Weighted
                average number of common shares outstanding, basic and
                diluted
            
            
            19,853,933
            
            
            16,723,277




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






2


**SKINS,
      INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





**CONSOLIDATED
      STATEMENTS OF**


**STOCKHOLDERS'
      EQUITY (DEFICIENCY)**


**(Unaudited)**




**Common
                  Stock**
              
              **Additional**
                **Paid-in
                  (Deficit)**
              
              **Deficit**
                **Accumulated**
                **During
                  the**
                **Development**
              
              **Total**
                **Stockholders'****Shares**
              
              **Amounts**
              
              **Capital**
              
              **Stage**
              
              **Equity/(Deficit)**Transfer
                  of net liabilities from a predecessor entity
                -
                  May 18, 2004
              
              
              
              
              $
              -
              
              $
              (32,312
              )
              $
              -
              
              $
              (32,312
              )Shares
                  issued on June 1, 2004
              
              
              954,513
              
              
              955
              
              
              9,045
              
              
              
              
              
              10,000Shares
                  issued on July 2, 2004
              
              
              954,513
              
              
              955
              
              
              9,045
              
              
              
              
              
              10,000Shares
                  issued on August 4, 2004
              
              
              1,909,026
              
              
              1,909
              
              
              18,091
              
              
              
              
              
              20,000Shares
                  issued on August 10, 2004
              
              
              1,909,026
              
              
              1,909
              
              
              18,091
              
              
              
              
              
              20,000Shares
                  issued on December 1, 2004
              
              
              8,338,484
              
              
              8,338
              
              
              79,162
              
              
              
              
              
              87,500Shares
                  issued on December 30, 2004
              
              
              144,077
              
              
              144
              
              
              1,356
              
              
              
              
              
              1,500Shares
                  issued on December 31, 2004
              
              
              3,818,053
              
              
              3,818
              
              
              36,182
              
              
              
              
              
              40,000Net
                  Loss
              
              
              
              
              
              -
              
              
              -
              
              
              (152,706
              )
              
              (152,706
              )Balances
                  at December 31, 2004
              
              
              18,027,692
              
              
              18,028
              
              
              138,660
              
              
              (152,706
              )
              
              3,982Shares
                  issued for services on October 20, 2005
              
              
              1,376,308
              
              
              1,376
              
              
              (1,370
              )
              
              -
              
              
              6Net
                  Loss January 1, 2005 to October 20, 2005
              
              
              
              
              
              
              
              
              
              
              
              (223,152
              )
              
              (223,152
              )Recapitalization
                  of deficit upon merger of Skin Shoes, LLC into Skin Shoes, Inc.
                  on October
                  2005 (Note 1)
              
              
              
              
              
              
              
              
              (375,858
              )
              
              375,858
              
              
              -Net
                  Loss Oct 21, 2005 to Dec 31, 2005
              
              
              
              
              
              -
              
              
              -
              
              
              (309,162
              )
              
              (309,162
              )Balances
                  at December 31, 2005,
              
              
              19,404,000
              
              
              19,404
              
              
              (238,568
              )
              
              (309,162
              )
              
              (528,326
              )Reclassification
                  of share based liability awards to equity awards upon the re-adoption
                  of
                  the 2005 Incentive Stock Plan on March 16, 2006
              
              
              
              
              
              
              
              
              241,157
              
              
              
              
              
              241,157Skins,
                  Inc. net assets assumed on March 20, 2006
              
              
              14,821,434
              
              
              14,821
              
              
              1,693,886
              
              
              
              
              
              1,708,707Conversion
                  of convertible debenture - Common Stock
              
              
              178,572
              
              
              179
              
              
              119,821
              
              
              
              
              
              120,000Share
                  based compensation on March 31, 2006
              
              
              -
              
              
              -
              
              
              6,149
              
              
              -
              
              
              6,149Net
                  Loss
              
              
              
              
              
              
              
              
              
              
              
              (458,411
              )
              
              (458,411
              )Balances
                  at March 31, 2006, as Restated, See Note 10
              
              
              34,404,006
              
              $
              34,404
              
              $
              1,822,445
              
              $
              (767,573
              )
              $
              (1,089,276
              )







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




3




**SKINS
      INC. AND SUBSIDIARY**


**(A
      Development Stage Company)**





**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(Unaudited)**




**Three
                  Months Ended**
                **March
                  31,**
              
              **Period
                  from**
                **Inception**
                **(May
                  18, 2004)**
                **to**
                **March
                  31,****2006**
              
              **2005**
              
              **2006**(As
                  Restated)
              
              
              
              (As
                  Restated)(See
                  Note 10)
              
              
              
              (See
                  Note 10)Cash
                  flows used in operating activities:Net
                  loss from operations
              
              $
              (458,411
              )
              $
              (80,172
              )
              $
              (1,143,431
              )Adjustments
                  to reconcile net loss from operations to net cash used in operating
                  activities:Depreciation
              
              
              371
              
              
              371
              
              
              2,294Amortization
              
              
              817
              
              
              592
              
              
              4,275Issuance
                  of common stock for services
              
              
              -
              
              
              -
              
              
              6Unrealized
                  gain (loss) on Derivative Instruments
              
              
              (19,237
              )
              
              
              
              
              2,954Share
                  based compensation expense
              
              
              133,400
              
              
              
              
              
              247,306Changes
                  in operating assets and liabilities:Prepaid
                  expenses
              
              
              (34,793
              )
              
              -
              
              
              (34,793
              )Accounts
                  payable and accrued expenses
              
              
              177,268
              
              
              42,733
              
              
              424,639Net
                  cash used in operating activities
              
              
              (200,585
              )
              
              (36,476
              )
              
              (496,750
              )Cash
                  flows used in investing activities:Purchases
                  of property and equipment
              
              
              -
              
              
              -
              
              
              (3,498
              )Patent
                  Costs
              
              
              -
              
              
              (1,388
              )
              
              (56,231
              )Net
                  cash used in investing activities
              
              
              -
              
              
              (1,388
              )
              
              (59,729
              )Cash
                  flows provided by financing activities:Cash
                  assumed in connection with Recapitalization
              
              
              2,261,462
              
              
              -
              
              
              2,261,462Related
                  Party payments
              
              
              (78,271
              )
              
              24,931
              
              
              (24,844
              )Proceeds
                  from issuance of Common Stock
              
              
              -
              
              
              -
              
              
              189,000Proceeds
                  from note payable
              
              
              -
              
              
              -
              
              
              150,000Net
                  cash provided by financing activities:
              
              
              2,183,191
              
              
              24,931
              
              
              2,575,618Net
                  increase/(decrease) in cash and cash equivalents
              
              
              1,982,806
              
              
              (12,933
              )
              
              2,019,139Cash
                  and cash equivalents at beginning of period
              
              
              36,533
              
              
              20,982
              
              
              -Cash
                  and cash equivalents at end of period
              
              $
              2,019,139
              
              $
              8,049
              
              $
              2,019,139Supplemental
                  Schedule of Non-Cash Investing and Financing Activities:On
                  May 18, 2004 the Company received net liabilitiesfrom
                  a predecessor entity totaling
              
              
              -
              
              
              -
              
              
              32,312Transfer
                  of deficit due to merger of Skin LLC into Skin Shoes, Inc.
                on
                  October 20, 2005
              
              
              
              
              
              
              
              
              375,568Net
                  liabilities assumed from reverse acquisition onMarch
                  20, 2006, net of cash of $2,261,462
              
              
              552,755
              
              
              -
              
              
              552,755Conversion
                  of convertible debenture, assumed fromreverse
                  acquisition, to common stock
              
              
              120,000
              
              
              -
              
              
              120,000Conversion
                  of convertible debenture, assumed from reverse acquisition, to
                  warrant
                  liability
              
              
              30,000
              
              
              
              
              
              30,000Reclassification
                  of share based liability awards to equity awards upon
                the
                  re-adoption of the 2005 Incentive Stock Plan on March 16,
                  2006
              
              
              241,157
              
              
              -
              
              
              241,157







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




4




**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




**NOTE 1: DESCRIPTION
      OF BUSINESS**




**Basis
      of presentation, organization and other matters**





On
      March
      20, 2006 Logicom Inc. (“Logicom”), acquired all of the outstanding capital stock
      of Skins Footwear Inc. (formerly known as Skin Shoes, Inc.) (“Skins Footwear”).
      Skins Footwear thereupon became a wholly owned subsidiary of Logicom. The
      business of Skins Footwear is the only business of Logicom.




Logicom
      was incorporated in the State of Nevada on January 23, 2004. Logicom was in
      the
      development stage since its formation and it had not realized any revenues
      from
      its planned operations. Logicom originally intended to develop, market and
      support a voice interface software platform that may make the information and
      services of enterprises, telecommunications networks and the Internet accessible
      from telephone. Logicom’s chief software designer resigned July 4, 2005. Logicom
      entered into a share exchange agreement with all of the shareholders of Skins
      Footwear, a privately held development stage footwear company, on November
      2,
      2005.




Skins
      Footwear was originally organized on May 18, 2004 as a New Jersey limited
      liability company under the name Skin Shoes, LLC. On October 11, 2005, Skins
      Shoes, LLC created a Delaware corporation under the name Skin Shoes, Inc. as
      a
      wholly owned subsidiary and merged with and into Skin Shoes, Inc. on October
      20,
      2005, resulting in Skin Shoes, Inc. becoming the surviving Delaware corporation
      and the limited liability company ceasing to exist. The merger on October 20,
      2005 was a conversion of a non-taxable entity to a taxable corporation, The
      deficit accumulated in the development stage on October 20, 2005 was treated
      as
      a return of capital to the members of Skin Shoes, LLC, which was then
      contributed to Skin Shoes, Inc., and as a result the accumulated deficit was
      reclassified to additional paid in capital to the extent of additional paid
      in
      capital that existed at October 20, 2005 in the consolidated statements of
      stockholders’ equity.




On
      April
      10, 2006, Logicom changed its corporate name to Skins Inc. (the “Company”) and
      Skins Shoes, Inc. changed its corporate name to Skins Footwear Inc. (“Skins
      Footwear”).




The
      acquisition of Skins Footwear by the Company on March 20, 2006 was accounted
      for
      as a recapitalization by the Company. The recapitalization was the merger of
      a
      private operating company (Skins Footwear) into a non-operating public shell
      corporation (the Company) with nominal net assets and as such is treated as
      a
      capital transaction, rather than a business combination. As a result no Goodwill
      is recorded. The transaction is the equivalent to the issuance of stock by
      the
      private company for the net monetary assets of the shell corporation. The pre
      acquisition financial statements of Skins Footwear are treated as the historical
      financial statements of the consolidated companies. The financial statements
      presented reflect the change in capitalization for all periods presented,
      therefore the capital structure of the consolidated enterprise, being the
      capital structure of the legal parent, is different from that appearing in
      the
      financial statements of Skins Shoes, LLC and Skins Shoes, Inc. in earlier
      periods due to the recapitalization.





The
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and pursuant to the rules and regulations
      of
      the Securities and Exchange Commission ("SEC"). Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      have been omitted. In the opinion of management, all material adjustments,
      consisting of normal recurring adjustments, considered necessary for a fair
      presentation have been included in the accompanying unaudited condensed
      financial statements.




The
      results of operations for the interim periods are not necessarily indicative
      of
      the results that maybe expected for the full year ending December 31,
      2006.




**Development
      Stage Company**




The
      Company is in the development stage. Since its formation the Company has not
      realized any revenues from its planned operations. The Company intends to
      design, manufacture and market high quality men’s and women’s footwear. The
      Company’s primary activities since incorporation have been conducting research
      and development, performing business, strategic and financial planning, and
      raising capital. The deficit accumulated in the development stage presented
      on
      the consolidated balance sheet on March 31, 2006 will not agree to the total
      loss from May 18, 2004 (inception date) to March 31, 2006 due to the treatment
      of the merger of the non-taxable entity to a taxable corporation on October
      20,
      2005 described in paragraph three of Note 1, basis of presentation, organization
      and other matters.




5




**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




**Going
      Concern**




The
      financial statements have been prepared using accounting principles generally
      accepted in the United States of America applicable for a going concern which
      assumes that the Company will realize its assets and discharge its liabilities
      in the ordinary course of business. As of March 31, 2006, the Company has no
      established source of revenues and has accumulated losses of approximately
      $1,143,431 since its commencement. Its ability to continue as a going concern
      is
      dependent upon achieving production or sale of goods, the ability of the Company
      to obtain the necessary financing to meet its obligations and pay its
      liabilities arising from normal business operations when they come due and
      upon
      profitable operations. The outcome of these matters cannot be predicted with
      any
      certainty at this time and raise substantial doubt that the Company will be
      able
      to continue as a going concern. These financial statements do not include any
      adjustments to the amounts and classification of assets and liabilities that
      may
      be necessary should the Company be unable to continue as a going concern. The
      Company anticipates additional funding needed will be attained in the form
      of
      equity and/or debt financing.





The
      Company intends to overcome the circumstances that impact its ability to remain
      a going concern through a combination of the commencement of revenues, with
      interim cash flow deficiencies being addressed through additional equity and
      debt financing. The Company’s ability to obtain additional funding will
      determine its ability to continue as a going concern. There can be no assurances
      that these plans for additional financing will be successful. Failure to secure
      additional financing in a timely manner and on favorable terms if and when
      needed in the future could have a material adverse effect on the Company’s
      financial performance, results of operations and stock price and require the
      Company to implement cost reduction initiatives and curtail operations.
      Furthermore, additional equity financing may be dilutive to the holders of
      the
      Company’s common stock, and debt financing, if available, may involve
      restrictive covenants, and strategic relationships, if necessary to raise
      additional funds, may require that the Company relinquish valuable
      rights.




**NOTE 2: SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**




*Principles
      of Consolidation*




The consolidated financial statements include the accounts of the Company and
      its wholly owned subsidiary, Skins Footwear. All significant intercompany
      transactions and balances have been eliminated in consolidation.




*Concentration
      of Credit Risk*




The Company maintains cash balances at various financial institutions. At
      various times throughout the years, the Company’s cash balances exceeded FDIC
      insurance limits.




*Cash
      Equivalents*




The
      Company considers all highly liquid investments with an original maturity of
      three months or less at the date of purchase to be cash
      equivalents.




*Property
      and Equipment*




Equipment is stated at cost, less accumulated depreciation, which is calculated
      using the straight-line method over the estimated useful lives of the respective
      assets, ranging between three and five years.




*Patent
      Costs*




Costs
      associated with the development and filing of patent applications are
      capitalized and amortized over the useful life of 20 years, using the
      straight-line method.




*Design
      and Development*




Costs
      to develop the Company’s products are expensed as incurred in accordance with
      Statement of Financial Accounting Standards (“SFAS”) No. 2, *“Accounting
      for Research and Development Costs.”* These
      costs include research, related overhead expenses, including salaries and other
      personnel related expenses, travel costs, supplies and depreciation of
      equipment.




*Use
      of Estimates*




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of contingent assets and liabilities at the
      date
      of the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.





6





**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




*Estimated
      Fair Value of Financial Instruments*




The Company’s financial instruments include cash, accounts payable and related
      party loans payable. Management believes the estimated fair value of cash and
      accounts payable at March 31, 2006 approximate their carrying value as reflected
      in the balance sheets due to the short-term nature of these instruments. Fair
      value of related party loans cannot be determined due to lack of similar
      instruments available to the Company.




*Income
      Taxes*




Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases and operating
      loss and tax credit carryforwards. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment date.
      At
      March 31, 2006, the Company had a full valuation allowance against its deferred
      tax assets.




*Stock
      Options*




The Company has elected to adopt the intrinsic-value method of accounting for
      liability awards and the fair value (calculated) method for equity awards issued
      to employees under SFAS No. 123 (R), “Share Based Payment” that were granted
      prior to the Company becoming a public company. The Company uses the fair value
      method for all liability and equity awards after it became a public
      company.




*Derivative
      Instruments*





In
      accordance with the Emerging Issues Task Force (EITF) 00-19, Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in a
      Company’s Own Stock, the Company records a liability for the derivative
      instrument that results due to the number of potential common stock shares
      plus
      outstanding shares that exceed the number of authorized common stock shares.
      At
      each balance sheet date, the liability for these potential excess shares is
      adjusted to fair value with the change being recorded as a gain or loss on
      the
      statement of operations. At December 31, 2005, the Company had 1,000 common
      authorized shares and has 515,725 of outstanding shares plus potential shares
      from the exercise of options that have vested granted. The 514,625 excess
      potential shares were attributed to the option grants that have vested. The
      Company calculated the fair value of these potential shares using the
      Black-Scholes model and recorded a derivative liability of $22,191 at December
      31, 2005. The liability booked was net of the derivative recorded for the
      options granted to non-employees where services were provided (Note 9) because
      the options used in that calculation are also part of the derivative calculation
      for the shares and potential shares over the authorized share amount. On
      March 16, 2006 the Company increased its authorization of common stock and
      cured this liability. At March 16, 2006, the Company reversed out the
      liability through a charge to unrealized gains on derivative
      instruments.





In
      accordance with EITF 00-19, the Company recorded a liability for the derivative
      instruments that result from the liquidated damages provision it has with
      stockholders who also hold warrants to purchase common stock in accordance
      with
      the Share Exchange Agreement. At each balance sheet date after the
      March 20, 2006 Share Exchange Close, a liability is calculated for
      3,000,000 warrants subject to the liquidated damages provision. On March 20,
      2006 2,821,428 of the 3,000,000 warrants were granted upon the close of the
      private placement which occurred immediately prior to the close of the share
      exchange transaction (Note 8). The Company assumed a derivative liability of
      $553,846 which was reflected in the net assets assumed on the Company’s
      Statement of Shareholder Equity (Deficit). The change in the value of the
      derivative liability from March 20, 2006 was recorded in the Statement of
      Operations for the three months ended March 31, 2006. The remaining 178,572
      warrants were granted in conjunction with the conversion of the convertible
      debenture. The Company calculated a fair value of $30,000 for the 178,572
      warrant upon conversion of the convertible debenture in accordance with EITF
      00-27 and treated these warrants as a liability in accordance with EITF 00-19.
      The change in fair value of the derivative liability from the conversion date,
      March 20, 2006, to March 31, 2006 was recorded in the Statement of Operations
      for the three months ended March 31, 2006.





The
      Company calculated the fair value of the warrants using a Black-Scholes model
      and recorded a liability of $586,800 at March 31, 2006. The provision requires
      the Company to have its Registration Statement declared effective (to register
      the common stock and common stock equivalents issued in relation to the Share
      Exchange Agreement (Note 8)) to be effective by the middle of August 2006.
      If
      the Registration Statement is not declared effective before the effectiveness
      date, the Company will be required to pay liquidated damages to each Share
      Exchange Common Stock holder equal to 0.025% for each day after the
      effectiveness date until the Registration Statement is declared effective by
      the
      United States Securities and Exchange Commission.




The
      fair
      value of the derivative liability at March 31, 2006 was calculated using the
      Black-Scholes valuation model with the following assumptions:




**March
                31,****2006**Expected
                volatility
            
            
            17.18
            %Expected
                dividends
            
            
            NoneExpected
                term (in years)
            
            
            2.9Risk-free
                interest rate
            
            
            4.46
            %








*Net
      Loss per Common Share*




Basic
      net
      loss per share is computed by dividing net loss by the weighted average number
      of common shares outstanding during the period. For the year ended December
      31,
      2005, the period May 18, 2004 (inception date) to December 31, 2004 and the
      three-month periods ended March 31, 2006 and 2005, the Company had 1,404,000,
      1,304,416, 1,404,000 and 1,304,416 common shares held in escrow, respectively.
      The escrow amounts for all periods prior the to March 20, 2006 transaction
      are
      shown retroactively based on the recapitalization of the Company (Note 1).
      The
      shares held in escrow are excluded from the weighted average common share
      calculation at each date because all the necessary conditions for the release
      of
      the escrow shares have not been satisfied (Note 8).




7




**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**





Diluted
      net loss per share is computed by dividing the net loss by the weighted average
      number of common and common equivalent shares outstanding during the period.
      Because the Company had a loss from operations for the three month period ended
      March 31, 2006, inclusion of the Company’s 2,109,375 outstanding options and
      3,000,000 outstanding warrants at March 31, 2006 have an anti-dilutive effect
      on
      loss per share.





The
      following table sets forth the computation of basic and diluted loss per
      share:




**March
                31,****2006**
            
            **2005**(Unaudited)
            
            (Unaudited)Numerator:Net
                loss - basic and diluted
            
            $
            (458,411
            )
            $
            (80,172
            )Denominator:Weighted
                average shares - basic
            
            
            19,853,933
            
            
            16,723,277Effect
                of dilutive stock options and warrants
            
            
            -
            
            
            -Denominator
                for diluted earnings per share
            
            
            19,853,933
            
            
            16,723,277Loss
                per shareBasic
            
            $
            (0.02
            )
            $
            (0.01
            )Diluted
            
            $
            (0.02
            )
            $
            (0.01
            )







**NOTE 3: PROPERTY
      AND EQUIPMENT**




Property and equipment consist of the following:


**March
                31,**
              **2006**(unaudited)Sewing
                equipment
            
            $
            1,882Office
                equipment
            
            
            1,183Computer
                equipment
            
            
            2,4115,476Less
                accumulated depreciation
            
            
            (2,294
            )$
            3,182




Depreciation
      expense related to property and equipment was $371 for the three months ended
      March 31, 2006 and March 31, 2005.






8


**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




**NOTE
      4: PATENT COSTS**




The
      Company has applied for several patents. The Company has not been granted any
      patents. The Company periodically evaluates the recoverability of unamortized
      patents and will write off the unamortized value if it is determined they no
      longer have value.




**March
                31**
              **2006**(unaudited)Patent
                costs
            
            $
            64,682Less
                accumulated amortization
            
            
            (4,275
            )$
            60,407




Amortization
      expense related to patents was $817 and $592 for the three months ended March
      31, 2006 and March 31, 2005, respectively. The estimated aggregate amortization
      expense for the next five years ending December 31 is estimated to be
      approximately $3,200 for each year.




**NOTE 5: RELATED
      PARTY PAYABLES**




As
      of
      March 31, 2006, there is a loan payable to a stockholder of the Company totaling
      $2,080 and accrued interest on this loan of $3,121. The proceeds from this
      loan
      were used to pay various operating expenses. Interest has been accrued at a
      rate
      of 5%. Interest expense for the three months ended March 31, 2006 on this loan
      was $147.




As
      of
      March 31, 2006 there are accrued expenses totaling $15,000 relating to
      consulting services provided by Mage, LLC, a stockholder in the Company. For
      the
      three months ended March 31, 2006 and 2005 consulting expenses incurred to
      Mage,
      LLC were $25,368 and $0, respectively. A director of the Company is a principal
      of Mage, LLC.




As
      of
      March 31, 2006 the Company had outstanding 843,750 options previously granted
      to
      two members of the Board of Directors of the Company. The options are
      exercisable at $.80 cents per share.




**NOTE
      6: COMMITMENTS AND CONTINGENCIES**




The
      Company has entered into a buying agency and sourcing agreement dated December
      7, 2005 and amended February 27, 2006 with Atsco Footwear, LLC in which Atsco
      will be responsible for sourcing, commercialization, and line review. The term
      of the agreement is for one year, beginning March 1, 2006, with an option to
      extend the agreement for an additional year under the same terms and conditions.
      It is agreed the Company will pay Atsco an 8% commission fee on all merchandise
      shipped to the Company under any order placed for the Company by Atsco or
      subsequently placed directly with a factory as a reorder unless the agreement
      is
      terminated. According to the agreement, the Company, beginning March 1, 2006,
      started paying commissions of $6,000 per month, to be adjusted to actual at
      the
      end of the first year of business on March 1, 2007.




The
      Company also entered into a design services agreement dated March 2, 2006,
      with
      an effective date of December 1, 2005, with Studio Dror, Inc. for a period
      of
      four months from the effective date. According to the agreement the Company
      agreed to pay Studio Dror a $5,000 monthly retainer, totaling $20,000 over
      the
      four month period, plus a fee of $1,000 for each and every deliverable the
      Company elected to use. Additionally, the Company agreed to pay a royalty of
      $0.50 cents on each and every licensed product that was sold in excess of 10,000
      units, payable on a quarterly basis and continue to be paid after expiration
      or
      termination of the agreement. The Company has not realized any revenues to
      date
      therefore no royalty expenses or fees have been incurred. The agreement expired
      on March 31, 2006. The Company is using Studio Dror, Inc. on an as needed basis
      since the expiration of the agreement.





**NOTE
      7: SHARE EXCHANGE AGREEMENT**




On
      March
      20, 2006, the Company completed the transactions contemplated by the Share
      Exchange Agreement dated November 2, 2005 and amended February 1, 2006 with
      all
      of the stockholders of Skins Footwear whereby the Company:





·
            Repurchased
                all of the common shares of the Company owned by a shareholder for
                the sum
                of $100,000 (the shareholder owned 7,418,182 common shares of the
                Company);




9


**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




·
            Issued
                to the stockholders of Skins Footwear, at the closing of the share
                exchange transaction, 19,404,000 common shares of the Company in
                exchange
                for all of the issued and outstanding shares of Skin Shoes Inc.,
                (of these
                19,404,000 common shares, 1,404,000 shares are held in escrow by
                the
                Company and are subject to partial and full return to the Company
                contingent upon the number of share purchase warrants exercised by
                investors in the Company within a period of 30 months following the
                closing of private placements and the share exchange transaction
                on March
                20, 2006);




·
            Assumed,
                at the closing of the share exchange transaction, Skins Footwear’s
                Incentive Plan and certain stock option agreements entered into between
                Skins Footwear and certain persons who have already received stock
                options
                from the Skins Footwear pursuant to its 2005 Incentive
                Plan;




·
            Entered
                into an employment agreement with the new President of the Company
                for a
                term of 3 years and a base salary of $150,000. An incentive bonus
                plan
                will also be implemented. The Company will also pay up to $20,000
                to cover
                moving and relocation expenses of the President and his
                family.




On
      March
      20, 2006, immediately prior to the closing of the share exchange transaction,
      the Company closed a private placement of units to purchase its common stock
      and
      warrants pursuant to a subscription agreement. Each unit consisted of one share
      of common stock of the Company and one share purchase warrant convertible at
      an
      exercise price of $1.00 per share at any time upon election of the holder during
      the 30 month period following the date of issue. A total of 2,821,428 units
      were
      sold in the private placement for an aggregate of $2,370,000. The proceeds
      from
      this private placement offering were included in the net asset assumed by the
      Company.





On
      November 2, 2005, the Company sold one convertible debenture in connection
      to
      the share exchange agreement in the amount of $150,000 to one offshore investor.
      The convertible debenture was convertible into 178,572 units at a conversion
      price of $0.84 per unit, with each unit consisting of one share of common stock
      of our company and one share purchase warrant. Pursuant to the terms of the
      convertible debenture, the conversion of the debenture into units occurred
      automatically upon the completion of our share exchange transaction on March
      20,
      2006. Upon conversion the fair value of the common stock and warrants were
      accounted for in the March 31, 2006 financial statements based on the relative
      value on the day of issuance in accordance with EITF 00-27. The share
      purchase warrants are exercisable for a period of thirty months from the date
      of
      issue at an exercise price of $1.00 per share.





On
      March
      31, 2006 the Company had 34,404,006 outstanding shares of common stock, options
      to purchase 2,109,375 shares of common stock and warrants to purchase 3,000,000
      shares of common stock.





**NOTE
      8: STOCK OPTIONS**




In
      October 2005, Skins Footwear’s Board of Directors approved the 2005 Incentive
      Plan (the “2005 Plan”). The 2005 Plan provides that the following types of
      awards may be granted under the 2005 Plan: stock appreciation rights (“SARs”);
      incentive stock options (“ISOs”); non-qualified stock options (“NQSOs”);
      restricted stock awards; unrestricted stock awards; and performance share awards
      which entitle recipients to acquire shares upon the attainment of specified
      performance goals, stock units and other stock-based awards, short-term cash
      incentive awards or any other award. Under the 2005 Plan, awards may be granted
      with respect to a maximum of 3,375,000 shares of Skins Footwear’s common
      stock, subject to adjustment in connection with certain events such as a stock
      split, merger or other recapitalization of the Company.





On
      October 24, 2005 Skins Footwear granted the following individuals options under
      the 2005 Plan:





·
            Two
                board members were granted 421,875 options each at an exercise price
                of
                $0.80 that vest ratably over a 36-month period.




·
            Two
                consultants were granted 421,875 options each at an exercise price
                of
                $0.80 a share that vests ratably over a 36-month period.




·
            One
                consultant was granted 421,875 options at an exercise price of $0.80
                that
                vested immediately for finder fee
                services.




As
      part
      of the Share Exchange Agreement, the Company assumed Skins Footwear’s 2005
      Incentive Plan.





The
      awards granted to the two board members were treated as liability awards upon
      the grant on October 24, 2005. The treatment of the awards as liability was
      due
      to insufficient number of authorized shares at the time of issuance. The Company
      used the intrinsic value method to determine compensation on these liability
      awards. For the three months ended March 31, 2006, the Company recorded
      compensation expense related to these grants of $1,876.





March
      16, 2006 Replacement Option Grants





On
      March 16, 2006 as a result of the granting of options in excess of the
      authorized shares allowed, Skins Footwear canceled and re-adopted its 2005
      Incentive Stock Plan. In connection thereof Skins Footwear increased its
      authorized shares to 4,000,000. Additionally, all options granted under the
      original plan were canceled and re-granted in accordance with the terms of
      the
      re-adopted 2005 Incentive Stock Option Plan.




10


**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




The
      replacement options to the two board members were treated as replacement equity
      awards. On the date of replacement the Company calculated the fair value
      (calculated method) of the replacement options using a Black-Scholes option
      valuation model that uses the assumptions noted in the following table. At
      the
      time of the replacement of the options the Company was non-public and calculated
      its expected volatility based on the calculated method using the Dow Jones
      US
      Footwear Index. The Company elected to use the calculated method because it
      did
      not have a trading history for his its stock and it was a development stage
      company. The Company chose the Dow Jones US Footwear Index because its
      represented the industry index closest to which the Company operates. The
      Company estimates option exercise and employee termination within the valuation
      model; separate groups of employees that have similar historical exercise
      behavior are considered separately for valuation purposes. The expected term
      of
      options granted is derived from the output of the option valuation model and
      represents the period of time that options granted are expected to be
      outstanding. The risk-free rate for periods within the contractual life of
      the
      option is based on the U.S. Treasury yield curve in effect at the time of
      grant.




Expected
                volatility
            17.30%Expected
                dividends
            0Expected
                Term (Years)
            3Risk
                free interest rate
            4.70%




The
      total
      incremental compensation expense from the cancellation and replacement of the
      awards was $196,763, which is expected to be recognized over a period of 32
      months from March 16, 2006. The total compensation expense related to the
      non-vested replacement options at March 31, 2006 was $190,614. For the three
      months ended March 31, 2006 the Company recorded compensation expense related
      the replacement option grants to the board members of $6,150.





The
      421,875 options granted to two-consultants that vest over a 36-month period
      were
      granted for services not yet occurred. The Company used the provisions of FAS
      123(R) and EITF 96-18, *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* to
      account for the compensation expense associated with these grants. The Company
      measured the compensation associated with these grants based on the fair value
      of the equity instruments issued. There is no measurement date to calculate
      the
      fair value of the options at the date of grant because the performance
      commitment had not yet occurred (there are no sufficiently large disincentives
      for non-performance) and the performance by the two consultants was not
      complete. The Company calculated the expense at each reporting period based
      upon
      fair value of the options that vested during the reporting period using the
      fair
      value on the reporting date. Fair value was calculated using the Black-Scholes
      model. The options were treated as liability awards upon the original grant
      because the Company did not have sufficient number of authorized shares. The
      options became equity awards on the date they were cancelled and re-granted.
      For
      the three months ended March 31, 2006, the Company recorded compensation expense
      of $26,993.





The
      remaining 421,875 options were granted to a non-employee for services that
      had
      already been provided. The Company used the provisions of EITF 00-19 to account
      for these options. On October 24, 2005 the Company did not have enough
      authorized shares to settle the contract in equity. Therefore, these options
      were recorded at fair value as a liability at December 31, 2005. The fair value
      of the options was calculated using the Black-Scholes model at December 31,
      2005. On March 16, 2006 the Company increased its authorization of Common Stock
      therefore alleviating the potential liability. The Company recorded the fair
      value of the options using a Black-Scholes model as of March 16, 2006 and
      reclassified the total remaining liability from these awards to additional
      paid
      in capital. For the period January 1 to March 16, 2006, the Company
      recorded compensation expense of $98,381.





The
      fair
      value of the options granted to consultants and the replacement option grant
      transactions were calculated using the Black-Scholes option valuation model
      with
      the following assumptions at the applicable dates noted:





March
                16,
            
            March
                31,2006
            
            2006Expected
                volatility
            
            
            17.30
            %
            
            17.18
            %Expected
                dividends
            
            
            None
            
            
            NoneExpected
                term (in years)
            
            
            4.6
            
            
            4.6Risk-free
                interest rate
            
            
            4.70
            %
            
            4.46
            %








A
      summary
      of option activity under the Plan as of March 31, 2006, and changes during
      the
      three months ended is presented below:




**Options**
            
            **Shares**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            **Weighted
                -**
              **Average**
              **Remaining**
              **Contractual**
              **Term**
            
            **Aggregate**
              **Intrinsic**
              **Value**Outstanding,
                January 1, 2006
            
            
            2,109,375
            
            $
            0.80Outstanding,
                March 31, 2006
            
            
            2,109,375
            
            $
            0.80
            
            
            4.6
            
            $
            -Exercisable,
                March 31, 2006
            
            
            656,250
            
            $
            0.80
            
            
            4.6
            
            $
            -




11


**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




A
      summary
      of the status of the Company’s non-vested shares as of March 31, 2006, and
      changes during the three months ended March 31, 2006, is presented
      below:




**Non-vested
                Shares**
            
            **Shares**
            
            **Weighted-**
              **Average**
              **Grant-Date**
              **Fair
                Value**Non-vested,
                January 1, 2006
            
            
            1,593,750
            
            $
            0.23Granted
            
            
            -
            
            $
            -Vested
            
            
            140,625
            
            $
            0.23Non-vested,
                March 31, 2006
            
            
            1,453,125
            
            $
            0.23




The
      weighted average grant date fair value is based upon the fair value of the
      options on March 16, 2006, the date they were cancelled and replaced. The
      Company has a policy of using authorized shares not previously issued to satisfy
      stock option exercises.





**NOTE
      9: SUBSEQUENT EVENT**




On
      April
      3, 2006, the Company entered into consulting agreements with two shareholders
      pursuant to which the Company agreed to issue 122,000 shares of its common
      stock
      in exchange for consulting services to be provided by the two shareholders
      over a two year term. The total consulting services are valued at $145,180
      based
      upon the closing price of the Company's common stock of $1.19 per share on
      the
      date of the agreement.




**NOTE
      10: RESTATEMENT**





The
      Company has restated its financial statements for the year ended December 31,
      2005 and the three months ended March 31, 2006.





On
      August
      11, 2006, the Company determined that it misapplied accounting principles
      generally accepted in the United States of America in relation to options
      granted on October 24, 2005 that were cancelled and replaced on March 16, 2006.
      The following outlines the changes relative to this misapplication:


1.
            Liability
                awards to employees were computed using the intrinsic value method.
                As a
                result of the application of the intrinsic value method the Company
                recorded an expense of $1,876 for the year ended December 31, 2005
                and for
                the three months ended March 31, 2006, respectively. The Company
                originally did not book any expense related to these awards for the
                year
                ended December 31, 2005 and the three months ended March 31,
                2006.2.
            Equity
                awards to employees were computed using the fair value method (calculated
                method) at the date of replacement and will be expensed over the
                requisite
                service period. The Company recorded an expense of $6,150 for the
                three
                months ended March 31, 2006. The Company originally did not book
                any
                expense related to the replacement awards for the three months ended
                March
                31, 2006.3.
            Options
                granted to non-employees where services have not been provided were
                accounted for using the provisions of FAS 123(R) and EITF 96-18.
                There was
                no measurement date at the date of grant to calculate the fair value
                of
                these options because the performance commitment had not yet occurred
                and
                the performance by the two consultants was not complete. The Company
                calculated the expense at each reporting period based upon fair value
                of
                the options that vested during the reporting period using the fair
                value
                on the reporting date. The options were treated as liability awards
                upon
                the original grant but became equity awards on the date they were
                cancelled and re-granted. For the year ended December 31, 2005 and
                the
                three months ended March 31, 2006 the Company recorded $11,203 and
                $26,993
                of expense related to these options. The Company originally booked
                $37,500
                and $56,258 for the year ended December 31, 2005 and the three months
                ended March 31, 2006, respectively, based on the fair value of Company’s
                common stock.4.
            Options
                granted to non-employees where services had been provided were accounted
                for using the provisions of EITF 00-19. On October 24, 2005 the Company
                treated these awards as liability awards because it did not have
                enough
                authorized shares to settle the contract in equity. Therefore, these
                options were recorded at fair value as a liability at December 31,
                2005.
                On March 16, 2006 the Company increased its authorization of Common
                Stock
                therefore alleviating the potential liability. On March 16, 2006
                the
                Company reclassified the total remaining liability from these awards
                to
                additional paid in capital. For the year ended December 31, 2005
                and the
                three months ended March 31, 2006 the Company recorded $100,828 and
                $98,381, respectively, relating to these options. The Company originally
                booked $337,500 and $0 in expense on these options for the year ended
                December 31, 2005 and the three months ended March 31, 2006, respectively,
                based upon the fair value of the Company’s common stock at the date of
                grant.





12





**Skins
      Inc. and Subsidiary**


**Notes
      to Financial Statements**




On
      August
      11, 2006, the Company determined that it misapplied accounting principles
      generally accepted in the United States of America in relation to derivative
      instruments that existed at December 31, 2005 and March 31, 2006. The following
      outlines the changes relative to this misapplication:





1.
            The
                Company recorded a liability for the derivative instrument that resulted
                due to the number of potential common stock shares plus outstanding
                shares
                that exceeded the number of authorized common stock shares. At December
                31, 2005, the Company had 1,000 common authorized shares and has
                515,725
                of outstanding shares plus potential shares from the exercise of
                options
                that have vested granted. The 514,625 excess potential shares were
                attributed to the option grants that have vested. The Company calculated
                the fair value of these potential shares and recorded a derivative
                liability of $22,191 at December 31, 2005. The liability booked was
                net of
                the derivative recorded for the options granted to non-employees
                where
                services where provided because the options used in that calculation
                are
                also part of the derivative calculation for the shares and potential
                shares over the authorized share amount. Upon completion of the
                recapitalization on March 20, 2006, the Company cured this liability
                as
                the authorized common shares now exceed all outstanding common shares
                and
                potential common shares. The Company originally booked a derivative
                liability based on the fair value of the Company’s common stock on October
                24, 2005 with an offset to additional paid in capital. At December
                31,
                2005 the liability was increased through a charge to the statement
                of
                operations. On March 16, 2006 the liability was cured and the Company
                reversed the original entries on October 24, 2005 and December 31,
                2005.2.
            The
                Company recorded a liability for the derivative instruments that
                results
                from the liquidating damages provision it has with certain stockholders
                who also hold warrants to purchase common stock. At March 31, 2006
                the
                Company recorded a liability for $586,800 with an offsetting expense
                related to the liquidating damages provision. The Company originally
                did
                not book an entry for the derivative created by the liquidated damages
                provision at March 31, 2006.




On
      September 27, 2006, the Company determined it misapplied accounting principles
      generally accepted in the United States of America in relation to common stock
      purchased and retired and warrants granted in conjunction with the close of
      two
      private placements outlined in the share exchange agreement (Note 8). The
      following outlines the changes relative to this misapplication:





1.
            The
                repurchase and retirement of 7,418,182 shares of the Company’s common
                stock for $100,000 was included in the net assets assumed from Skins
                Inc.
                on March 20, 2006 on its Statement of Stockholders’ Equity (Deficiency)
                for the three months ended March 31, 2006 since the transaction occurred
                prior to the close of the Share Exchange Agreement. The Company originally
                presented this transaction as a post share exchange agreement transaction
                on its Statement of Stockholders’ Equity
                (Deficiency).





2.
            Upon
                conversion of the $150,000 convertible debt on March 20, 2006 the
                Company
                allocated the proceeds to the common stock and warrants granted based
                on
                the ratio of the fair value of each equity instrument on the commitment
                date divided by the total fair value of all equity instruments on
                the
                commitment date in accordance with EITF 00-27, Issue 15. Based on
                this
                calculation the Company allocated $120,000 and $30,000 of the proceeds
                to
                common stock and warrants. The $120,000 allocated to the common stock
                was
                shown on the Company’s Statement of Stockholders’ Equity (Deficiency) for
                the three months ended March 31, 2006. The $30,000 allocated to the
                warrants was initially classified as a liability in accordance with
                EITF
                00-19 due to liquidating damages provision associated with such warrants
                as outlined in Note 2, Summary of Significant Accounting Policies,
                Derivative Instruments. The Company originally allocated the total
                proceeds to the common stock and presented the $150,000 in the Company’s
                Statement of Stockholders’ Equity
                (Deficiency).





3.
            2,821,428
                warrants were granted on the private placement, which occurred immediately
                prior to the close of the share exchange agreement (Note 8). The
                Company
                has a liquidated damages provision with its stockholders who hold
                these
                warrants that creates a derivative liability in accordance with EITF
                00-19. Therefore, the Company assumed a derivative liability of $553,846
                upon the completion of the share exchange agreement based on the
                2,821,428
                warrants granted in conjunction with the private placement that occurred
                immediately prior to the close of the share exchange agreement. The
                Company originally showed that it incurred the derivative liability
                post
                the share exchange agreement with the offset of the liability shown
                on its
                Statement of Operations for the three months ended March 31,
                2006.





4.
            The
                178,572 warrants that were granted in conjunction with the conversion
                of
                the convertible debenture were originally valued at $30,000 on the
                conversion date and treated as a liability in accordance with EITF
                00-19.
                The change in fair value of the derivative liability for these warrants
                was shown as the difference in the fair value at March 31, 2006 and
                the
                original $30,000 value. The Company originally recorded the total
                offset
                of the liability in its Statement of Operations for the three months
                ended
                March 31, 2006.








The
      impact of these adjustments of the Company’s financial results as originally
      reported is summarized below:







**Three
                Months Ended March 31, 2006****As
                Reported**
            
            **As
                Restated**Current
                liabilities
            
            $
            442,536
            
            $
            1,029,336Total
                Stockholders’ deficiency
            
            $
            1,676,076
            
            $
            1,089,276Net
                Loss
            
            $
            (379,917
            )
            $
            (458,411
            )Net
                Loss per Common Share
            
            $
            (0.02
            )
            $
            (0.02
            )




13




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION**





*The
      following discussion of our financial condition and plan of operation should
      be
      read in conjunction with our financial statements and the related notes, and
      the
      other financial information included in this report. This Management’s
      Discussion and Analysis or Plan of Operation describes the matters Skins
      considers to be important to understanding Skins’ history, technology, current
      position, financial condition and future plans. Our fiscal year begins on
      January 1 and ends on December 31.*





*The
      following discussion includes forward looking statements and uncertainties,
      including plans, objectives, goals, strategies, financial projections as well
      as
      known and unknown uncertainties. The actual results of our future performance
      may differ materially from the results anticipated in these forward-looking
      statements. Although we believe that the expectations reflected in the
      forward-looking statements are reasonable, we can not guarantee future results,
      levels of activity, performance or achievement.*





**HISTORY
      AND OVERVIEW**





Skins
      Inc., the registrant, was incorporated in the state of Nevada on January 23,
      2004. We had planned to develop, market and support a voice interface software
      platform for the Chinese languages to serve as a standard set of software that
      would allow other software programmers and engineers to develop voice interface
      applications for the Chinese languages based on the software platform. Our
      chief
      software engineer resigned in July 2005 and we determined that we were not
      likely to be successful in the software industry unless we were able to find
      a
      replacement. We began both to search for a replacement and to assess other
      business opportunities. We became aware of a business opportunity presented
      by
      an unrelated private company, Skins Footwear Inc., and we began to consider
      and
      discuss the possibility of a business combination between our company and the
      shareholders of Skins Footwear Inc.





On
      November 2, 2005, we entered into a Share Exchange Agreement with all of the
      stockholders of Skins Footwear Inc., a Delaware corporation, pursuant to which
      we agreed to acquire all of the issued and outstanding share capital of Skins
      Footwear in exchange for shares of our common stock. The exchange of the shares
      pursuant to the Share Exchange Agreement is herein referred to as the Share
      Exchange Transaction. The Share Exchange Agreement was amended on February
      1,
      2006. On March 20, 2006, the Share Exchange Transaction was completed, Skins
      Footwear became our wholly-owned subsidiary and our sole business operations
      became that of Skins Footwear.





In
      April
      2006, we changed our corporate name from “Logicom Inc.” to “Skins Inc.” and we
      changed the name of our operating subsidiary from Skins Shoes, Inc. to Skins
      Footwear Inc. Skins Footwear Inc. was originally organized in May 2004 as a
      New
      Jersey limited liability company under the name Skin Shoes, LLC and, in 2005,
      merged with Skins Footwear Inc., a Delaware corporation, whereby the corporation
      was the surviving entity.





**PRINCIPAL
      TERMS OF THE SHARE EXCHANGE**





Pursuant
      to the terms of the Share Exchange Agreement, Skins:





·
            provided
                a loan to Skins Footwear in the sum of $150,000 evidenced by a promissory
                note with an annual interest rate of 5% and secured by a general
                security
                agreement pledging all of the assets of Skins Footwear as security
                for the
                loan;




·
            repurchased
                and canceled 7,418,182 shares of common stock of Skins owned by a
                major
                shareholder, Wayne Weaver, for the sum of
                $100,000;




·
            effected
                a 1 for 8.727273 forward stock split on December 16, 2005 that resulted
                in
                the shareholders of Skins, after adjustment for the repurchase of
                Mr.
                Weaver’s shares, holding an aggregate of 12,000,006 common shares prior
                to
                the closing of the Share Exchange
                Transaction;




·
            issued
                to the stockholders of Skins Footwear, at the closing of the Share
                Exchange Transaction, 19,404,000 common shares of Skins in exchange
                for
                all of the issued and outstanding shares of Skins Footwear (of these
                19,404,000 common shares, 1,404,000 shares are held in escrow by
                Skins and
                are subject to partial and full return to Skins contingent upon the
                number
                of share purchase warrants exercised by investors in Skins within
                a period
                of 30 months following the closing of private placements and the
                Share
                Exchange Transaction on March 20,
                2006);




·
            assumed,
                at the closing of the Share Exchange Transaction, Skins Footwear’s 2005
                Incentive Plan and stock option agreements entered into between Skins
                Footwear and certain persons who have received stock options from
                Skins
                Footwear pursuant to its 2005 Incentive
                Plan;




14




·
            appointed
                Mark Klein, the President of Skins Footwear, to the office of President
                and Chief Executive Officer of Skins and accepted the resignation
                of Gary
                Musil, Skins’ former President, from that office, effective at the closing
                of the Share Exchange Transaction;
                and




·
            increased
                the number of directors of Skins to five and elected as directors
                of Skins
                at the completion of the Share Exchange Transaction all four of the
                current directors of Skins Footwear (i.e., Mark Klein, Michael J.
                Rosenthal, Stephen Hochberg and Steve
                Reimer).




The
      Share
      Exchange Transaction was completed on March 20, 2006. Immediately after the
      closing of the Share Exchange Transaction, and taking into account the 1 for
      8.727273 forward stock split, the repurchase of Mr. Weaver’s shares and the
      private placements (as described below), Skins had 34,404,006 outstanding shares
      of common stock, options to purchase 2,109,375 shares of common stock and
      warrants to purchase 3,000,000 shares of common stock. At the close of the
      Share
      Exchange Transaction, the former shareholders of Skins Footwear owned
      approximately 56% of the issued and outstanding shares of Skins, the previous
      shareholders of Skins owned approximately 9% of the outstanding shares and
      the
      investors in the private placements owned approximately 35% of the outstanding
      shares. The forward stock split and the repurchase of Mr. Weaver’s shares were
      effected to reach the foregoing ownership percentages.





**THE
      PRIVATE PLACEMENTS**





Skins,
      pursuant to the Share Exchange Agreement, effected two private placement
      transactions in which we sold a total of 3,000,000 units and raised an aggregate
      of $2,520,000. In the first private placement, which occurred on November 2,
      2005, Skins sold one convertible debenture in the amount of $150,000 to one
      offshore investor. The convertible debenture was convertible into 178,572 units
      at a conversion price of $0.84 per unit, with each unit consisting of one share
      of common stock of our company and one share purchase warrant. Pursuant to
      the
      terms of the convertible debenture, the conversion of the debenture into units
      occurred automatically upon the completion of our Share Exchange Transaction
      on
      March 20, 2006. The share purchase warrants are exercisable for a period of
      thirty months from the date of issue at an exercise price of $1.00 per share.
      Skins used the funds received for the convertible note to provide a loan to
      Skins Footwear in the sum of $150,000 evidenced by a promissory note with an
      annual interest rate of 5% and secured by a general security agreement pledging
      all of the assets of Skins Footwear as security for the loan.





In
      the
      second private placement, which occurred immediately prior to the closing of
      the
      Share Exchange Transaction on March 20, 2006, Skins closed a private placement
      of units to purchase its common stock and warrants pursuant to a subscription
      agreement. Each unit consisted of one share of common stock of Skins and one
      share purchase warrant convertible at an exercise price of $1.00 per share
      at
      any time upon election of the holder during the 30 month period following the
      date of issue. A total of 2,821,428 units were sold in the second private
      placement for an aggregate of $2,370,000. We agreed to register all of the
      securities issued pursuant to the first and second private
      placements.





**DESCRIPTION
      OF THE COMPANY POST SHARE EXCHANGE**





We
      are a
      development stage company. We have not yet realized any revenues from our
      planned operations. We intend to initially design, manufacture and market high
      quality men’s and women’s footwear. Our primary activities have been conducting
      research and development, performing business, strategic and financial planning,
      and raising capital.





We
      have
      designed and continue to develop an innovative footwear product - a two-part
      footwear structure consisting of an outer collapsible “Skin” and an inner
      orthopedic support section called the “Bone.” This structure enables consumers
      to purchase one inner section and multiple outer skins - resulting in multiple
      style variations from the same pair of inner section, with the same feel and
      fit
      despite the type of Skin being worn. The Skins product concept is patent
      pending.





We
      anticipate marketing our products via traditional footwear channels,
      non-traditional apparel channels, the Internet and other retail locations that
      traditionally do not have a footwear department. Due to the interchangeability
      of a Skin and a Bone, a consumer will know how the product will fit and feel
      once they own a Bone, allowing the customer to purchase a Skin from various
      venues without having to try on the product.





Our
      objective is to create a new attire concept that allows and encourages consumers
      to more frequently change their footwear - positioning the Skins concept between
      footwear and apparel. Our footwear will initially be designed with an active,
      youthful lifestyle in mind. We will initially design most of our styles to
      be
      fashionable and marketable to the 18- to 35-year old consumer, with
      consideration in the future to lines that will appeal to the broad cross-section
      of the population.





As
      of
      March 31, 2006, we had no established source of revenues and had accumulated
      losses of $1,143,431 since inception. Our ability to continue as a going concern
      is dependent upon achieving production, sales, profitability and our ability
      to
      obtain the necessary financing to meet our obligations and pay our liabilities
      arising from normal business operations when they come due. The outcome of
      these
      matters cannot be predicted with any certainty at this time and raise
      substantial doubt that we will be able to continue as a going concern. The
      financial statements contained in this prospectus do not include any adjustments
      to the amounts and classification of assets and liabilities that may be
      necessary should we be unable to continue as a going concern. We anticipate
      that
      additional funding may be both in the form of equity financing from the sale
      of
      common shares and asset based financing or factoring.





15




**Product
      and Technology**





Management
      believes that the Skins concept has advantages that eliminate a large part
      of
      traditional footwear manufacturing - including the stretching, shaping and
      stiffening normally found in footwear construction. The engineering of the
      Bone
      and Skin allows for a pressure fit attachment, removing the need for any type
      of
      fasteners, like hooks, Velcro, or buttons. The Bone is an exact fit to its
      corresponding Skin in the same size, meaning that despite the type of Skin
      the
      consumer purchases, no matter the shape or style, the Skin will fit as long
      as
      it is the same size as the Bone.





The
      Skin
      by itself is a shapeless, thin material upper made from traditional materials
      found in shoemaking that has been stitched and glued to a hollowed-out from
      the
      inside outsole. The outsole is part of the actual Skin and changes accordingly
      with each new Skin design. The Skin cannot be worn on its own. Without the
      Bone,
      the Skin is fully collapsible, and offers no shape or support. As a result,
      traveling with multiple skins and a single Bone may be less difficult than
      packing multiple pairs of shoes.





The
      Bone
      represents the inner structure and support of the product. It is made up of
      an
      orthopedic midsole, a shock absorbent heel, a supporting heel counter and a
      protective toe box. The Bone was designed to be as minimalist and timeless
      as
      possible. It is designed to provide the consumer with fit and comfort, and
      such
      fit and comfort may be felt no matter which Skin is being worn. The Bone is
      designed such that it can only be worn once it is inside the Skin and not on
      its
      own.





These
      two
      components of Skin and Bones, when combined, create a full shoe. Management
      believes that the key characteristics of the Skin and Bones are as
      follows:





·
            Fully
                collapsible Skins, allowing for minimal room to store and pack numerous
                pairs;




·
            The
                same fit and feel for every Skin purchased in the same size, no matter
                the
                style or function of the Skin; and




·
            Interchangeable
                uppers, which allow the consumer to constantly switch Skins to match
                and
                correspond with their apparel and
                activity.




**Patent
      Applications**




We
      do not
      currently hold any patents. We have applied for a U.S. patent relating to its
      Modular Shoe System. We also filed international (PCT) Patent App. No.
      PCT/US04/33446 for its Modular Shoe System on October 7, 2004, for which we
      have
      filed national and regional entry applications in Canada, Australia, China
      (PRC), Japan, New Zealand, South Korea, the European Patent Office, the Russian
      Federation and Israel.





**PLANNED
      OPERATIONS**





**Product
      Development**





We
      will
      concentrate on our core design and development of the Skin and Bone product,
      while outsourcing the production requirements to third parties. Production
      requirements are currently being handled by the Atsco Footwear, LLC, our
      exclusive sourcing agent.





A
      fully
      developed men’s and women’s production Bone and Skins is estimated to be
      completed by August 2006. The focus is on creating a high-end line of Skins
      priced at a manufacturer's suggested retail price of approximately $150. This
      first collection will have approximately eight Skins patterns per gender, with
      an average of four to five color and material selections per pattern for a
      total
      amount of 64 to 70 stock keeping units, and will be designed for the Fall/Winter
      season.





Our
      Skins
      are being designed by outsourced design firms we work with. They collaboratively
      put together the collection for men’s and women’s Skins, the packaging and
      retail displays, and help in refining the creative identity of the
      brand.


Our
      products will then be sourced and commercialized by Atsco on our behalf, such
      as
      the design and material implementation and development for the Skins, Bones,
      packaging, and displays.




**Sourcing**





We
      have
      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. Our agreement
      with Atsco Footwear has a term of one year through February 2007 and may be
      extended at the option of either party for an additional year.





16




**Planned
      Distribution**





We
      plan
      to act as a wholesaler and market our products to specialty, department and
      Internet retail locations via our marketing and branding efforts.





We
      will
      consider the children’s market and more mainstream middle-market retailers once
      our brand is more established. We may also consider licensing our technology
      in
      the future.





Our
      current plan is to conduct a test distribution by mid-September in approximately
      ten nationwide retail stores. The test distribution will coincide with our
      commercial brand launch that will consist of marketing and promotional
      activities. This is to be followed by a modest rollout into a total of 40 retail
      stores by November for the 2006 holiday season and then 80 retail stores by
      March 2007 for the Spring/Summer 2007 collection. Our long-term anticipation
      is
      to be in 270 stores by August 2007.





We
      believe that the initial purchase order amount we can expect per retailer will
      be 96 pairs per gender at an average wholesale amount of $60 to $65 per pair
      of
      Skins.





**Additional
      Projects**





We
      recently hired Dennis Walker as our Vice President of Sales and Jake Kamuonka
      as
      Vice President of Finance. These individuals will assist in executing our
      product launches.





Product
      distribution, fulfillment and warehousing will be outsourced initially in an
      effort to keep our fixed overhead down.





We
      plan
      to launch a commercial website by the middle of September 2006 and have set
      up a
      temporary web site featuring corporate information.





**Results
      of Operations**





**Three
      Months Ended March 31, 2006 Compared with Three Months Ended March 31, 2005
      and
      the Period from Inception (May 2004) to March 31, 2006**





Net
      revenues during the quarters ended March 31, 2006 and 2005 were nil.





Our
      design and development expenses decreased $8,135 to $34,289 for the three months
      ended March 31, 2006, as compared to $42,424 for the same period in 2005. The
      primary reason for the decrease was because our primary focus for the three
      months ended March 31, 2006 was on capital raising and completion of the share
      exchange transaction. We have incurred a total of $173,080 in design and
      development expenses since our inception in May 2004.





Our
      selling, general and administrative expenses increased $406,615 to $443,696
      for
      the three months ended March 31, 2006, as compared to $37,081 for the same
      period in 2005. The increase was primarily due to the legal, accounting and
      other expenses that we incurred in connection with the share exchange
      transaction that was completed on March 20, 2006, in addition to commencement
      of
      compensation to its chief executive officer and chairman of the board and
      compensation expense related to our stock option grants. We have incurred a
      total of $963,399 in selling, general and administrative expenses since our
      inception in May 2004.





The
      unrealized gain on derivative instruments of $19,237 for the three months ended
      March 31, 2006 represents mainly the fair value change in our derivative
      liability that resulted from the liquidated damages provision we have with
      our
      stockholders who also hold warrants to purchase common stock in accordance
      with
      the share exchange agreement.





Our
      net
      losses during the quarter ended March 31, 2006 were $458,411, or $0.02 per
      share, as compared to a net loss of $80,172, or $0.01 per share, during the
      quarter ended March 31, 2005. The increase in net loss is attributable primarily
      to the expense incurred in connection with the completion of the share exchange
      transaction. We have recorded net losses of $1,143,431 since our inception
      in
      May 2004.







**Liquidity
      and Capital Resources**





At
      March
      31, 2006, we had $2,019,139 in cash and cash equivalents. Generally, we have
      primarily financed operations to date through the proceeds of the private
      placement of equity securities. We received net proceeds of $2,261,243 from
      the
      private placements that were conducted in connection with the share exchange
      transaction during the fiscal quarter ended March 31, 2006.





17




Net
      cash
      used in operating activities during the quarter ended March 31, 2006 was
      $200,585. We have had no revenues since our inception in May 2004. Operating
      expenditures in the current quarter primarily consisted of design and
      development, legal and accounting fees and salaries.





At
      March
      31, 2006, we had 2,109,375 stock options and 3,000,000 share purchase warrants
      outstanding. The outstanding stock options have a weighted average exercise
      price of $0.80 per share. The outstanding warrants have a weighted average
      exercise price of $1.00 per share. Accordingly, as at March 31, 2006, the
      outstanding options and warrants represented a total of 5,109,375 shares
      issuable for a maximum of approximately $4,687,500 if these options and warrants
      were exercised in full. The exercise of these options and warrants is completely
      at the discretion of the holders. There is no assurance that any of these
      options or warrants will be exercised.





As
      of
      March 31, 2006, we anticipate that we will need financing to enable us to meet
      our anticipated expenditures for the next 12 months.





We
      anticipate raising additional funds through public or private financing,
      strategic relationships or other arrangements in the future to support our
      business operations, however we currently do not have commitments from third
      parties for additional capital. We cannot be certain that any such financing
      will be available on acceptable terms, or at all, and our failure to raise
      capital when needed could limit our ability to continue as a going concern
      and
      expand our business. We plan to overcome the circumstances that impact our
      ability to remain a going concern through a combination of beginning to generate
      revenues and decreasing costs, as necessary, with interim cash flow deficiencies
      being addressed through additional equity financing. Our ability to obtain
      additional funding in year 2006 and thereafter will determine our ability to
      continue as a going concern. There can be no assurances that these plans for
      additional financing will be successful. Failure to secure additional financing
      in a timely manner and on favorable terms if and when needed in the future
      could
      have a material adverse effect on our financial performance, results of
      operations and stock price and require us to implement cost reduction
      initiatives and curtail operations. Furthermore, additional equity financing
      may
      be dilutive to the holders of our common stock, and debt financing, if
      available, may involve restrictive covenants, and strategic relationships,
      if
      necessary to raise additional funds, may require that we relinquish valuable
      rights.





**Off
      Balance Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements.





**RISK
      FACTORS**





In
      addition to the other information in this Quarterly Report on Form 10-QSB/A,
      the
      following factors should be considered in evaluating us and our business. Our
      business, financial condition or results of operations could be materially
      adversely affected by these risks if any of them actually occur. Some of these
      factors have affected our financial condition and operating results in the
      past
      or are currently affecting us. This Quarterly Report on Form 10-QSB/A also
      contains forward-looking statements that involve risks and uncertainties. Our
      actual results could differ materially from those anticipated in these
      forward-looking statements as a result of certain factors, including the risks
      faced by us described below and elsewhere in this Quarterly Report on Form
      10-QSB/A. The discussion below refers to the registrant, Skins Inc., and its
      wholly-owned subsidiary, Skins Footwear Inc, which are referred to as in the
      discussion below as Skins, the Company, we, us, and our.




**RISKS
      RELATED TO OUR BUSINESS**





**We
      are a development stage company with a limited operating history on which to
      evaluate our business.**




Our
      business prospects are difficult to predict because of our limited operating
      history, early stage of development, unproven business strategy and unproven
      product. We are a development stage company that has yet to generate any revenue
      since our inception. Since our inception in May 2004, it has been our business
      plan is to design, develop, manufacture and distribute our sole product
      type—footwear with an interchangeable outer skin. Our Skins shoe product has yet
      to be introduced to the market and there is no guarantee that our product will
      be able to generate any significant revenues. To the extent that we are able
      to
      implement our business plan, our business will be subject to all of the problems
      that typically affect a business with a limited operating history, such as
      unanticipated expenses, capital shortfalls, delays in design and manufacturing
      and possible cost overruns.





**We
      have a history of losses and we anticipate that our expenses will dramatically
      increase as we execute our business plan. Thus, we will likely experience
      continued losses in the near future and may not ever achieve or maintain
      profitability.**





Skins
      Footwear has yet to initiate sales or demonstrate that it can generate
      sufficient sales to become profitable. Skins Footwear incurred significant
      net
      losses since its inception in May 2004, including a net loss of $532,314 and
      $152,706 for the years ended December 31, 2005 and 2004, respectively and a
      net
      loss of $458,411 for the three months ended March 31, 2006. As of March 31,
      2006, Skins Footwear had an accumulated deficit of approximately $767,573 (net
      of a transfer of deficit to additional paid in capital of $137,290 due to the
      merger of Skin Shoes, LLC into Skin Shoes, Inc.). Pursuant to our share exchange
      transaction in March 2006, our sole operations became that of Skins Footwear.
      We
      expect to continue to incur operating losses in the future. Further, we expect
      operating expenses to increase as we seek to finalize our designs, build
      relationships with manufacturers and a distribution channel for product
      introductions, continue design and development projects, and increase
      administrative activities to support our planned growth. The extent of our
      future operating losses and the timing of our profitability are highly
      uncertain, and we may never generate sufficient revenues to achieve or sustain
      profitability.





18




**We
      will need to raise additional funds in the future to continue our operations
      and
      these funds may not be available on acceptable terms or at
      all.**





We
      anticipate raising additional funds through public or private financing,
      strategic relationships or other arrangements in the near future to support
      our
      business operations, however we currently do not have commitments from
      third parties for additional capital. We cannot be certain that any such
      financing will be available on acceptable terms, or at all, and our failure
      to
      raise capital when needed could limit our ability to continue and expand our
      business. We intend to overcome the circumstances that impact our ability to
      remain a going concern through a combination of the commencement of revenues,
      with interim cash flow deficiencies being addressed through additional equity
      and debt financing. Our ability to obtain additional funding in year 2006 and
      thereafter will determine our ability to continue as a going concern. There
      can
      be no assurances that these plans for additional financing will be successful.
      Failure to secure additional financing in a timely manner and on favorable
      terms
      if and when needed in the future could have a material adverse effect on our
      financial performance, results of operations and stock price and require us
      to
      implement cost reduction initiatives and curtail operations. Furthermore,
      additional equity financing may be dilutive to the holders of our common stock,
      and debt financing, if available, may involve restrictive covenants, and
      strategic relationships, if necessary to raise additional funds, may require
      that we relinquish valuable rights.





**Our
      independent registered public accountants indicate that they have substantial
      doubts that we can continue as a going concern, which may negatively affect
      our
      ability to raise additional funds and otherwise operate our business. If we
      fail
      to raise sufficient capital, we will not be able to implement our business
      plan,
      we may have to liquidate our business, and you may lose your
      investment.**




Mahoney
      Cohen & Company, CPA, P.C., our independent registered public accountants,
      has added an explanatory paragraph to their audit opinion issued in connection
      with the financial statements for the year ended December 31, 2005 indicating
      that it has substantial doubt about our ability to continue as a going concern
      given our recurring losses from operations and deficiencies in working capital
      and equity. This opinion could materially limit our ability to raise additional
      funds by issuing new debt or equity securities or otherwise. If we fail to
      raise
      sufficient capital, we will not be able to implement our business plan, we
      may
      have to liquidate our business and you may lose your investment. You should
      consider our independent registered public accountants’ comments when
      determining if an investment in us is suitable.





**Our
      business is based on a single unproven and undeveloped product, and we may
      not
      be able to generate significant revenue if our product
      fails.**





We
      are a
      development stage company with no current line of products. Our business and
      ability to generate revenue will depend on our ability to successfully develop
      and commercialize our only product type—the Skins and Bone shoe—which is
      currently in development and testing stages. We have conducted various wear,
      fit
      and abrasion testing on our product, but there is no guarantee that the product
      will ever be fully and successfully developed. We may experience unforeseen
      difficulties during our testing and development of our product, which may
      require us to expend a significant amount of resources in an attempt to address
      any faults that are discovered. Such faults may be related to comfort,
      durability, appearance and any other characteristics that would affect the
      commercial viability of the product.





Further,
      even if we are able to develop and release our product, there can be no
      assurance that it will be well-received by the market or that it will generate
      any substantial revenue. Accordingly, our failure to generate revenue from
      our
      sole product type will have a significant negative impact on our business and
      results of operation, and shareholders in our company may lose all or part
      of
      their investment.





**Our
      management has no senior management experience in manufacturing and design
      in
      the footwear and apparel industry.**





Our
      company is a new footwear manufacturer and our management team has limited
      experience managing in the manufacturing industry and our management and
      employees have limited experience designing footwear. The lack of experience
      in
      footwear management and design may make it difficult to compete against
      companies that have more senior management and design experience. We expect
      to
      add additional key personnel in the near future. Our failure to attract and
      fully integrate our new employees into our operations or successfully manage
      such employees could have a material adverse effect on our business, financial
      condition and results of operations.





19






**Our
      future success depends on our ability to respond to changing consumer demands,
      identify and interpret fashion trends and successfully market new
      products.**





The
      footwear industry is subject to rapidly changing consumer demands and fashion
      trends, particularly in the “high fashion” market that we intend to market our
      product. Accordingly, we must identify and interpret fashion trends and respond
      in a timely manner. Demand for and market acceptance of new products are
      uncertain and achieving market acceptance for new products generally requires
      substantial product development and marketing efforts and expenditures. If
      we do
      not meet changing consumer demands or are unable to continually develop styles
      that appeal to current consumer demands, our results of operations will be
      negatively impacted. In addition, we will have to make decisions about product
      designs and marketing expenditures several months in advance of the time when
      consumer acceptance can be determined, which makes it more difficult to appeal
      to current demands. If we fail to anticipate, identify or react appropriately
      to
      changes in styles and trends or are not successful in marketing our products,
      we
      could experience excess inventories, higher than normal markdowns or an
      inability to sell our products once and if the products are available.





**Our
      business and the success of our products could be harmed if we are unable to
      establish and maintain a brand image.**





We
      believe that establishing the Skins brand is critical to achieving acceptance
      of
      our footwear products and to establishing key strategic relationships. As a
      new
      company with a new brand, we believe that we have little to no brand recognition
      with the public. We may experience difficulty in establishing a brand name
      that
      is well-known and regarded, and any brand image that we may be able to create
      may be quickly impaired. The importance of brand recognition will increase
      when
      and if our competitors create products that are similar to our products. Even
      if
      we are able to establish a brand image and react appropriately to changes in
      consumer preferences, consumers may consider our brand image to be outdated
      or
      associate our brand with styles of footwear that are no longer popular. In
      the
      past, footwear companies have experienced fluctuations in revenues and sales
      due, at least in part, to changes in the companies’ brand image. Our results of
      operations may be similarly affected in the future should our products even
      be
      successfully launched.





**We
      may fail in introducing and promoting our new products to the footwear market,
      which will have an adverse effect on our ability to generate
      revenues.**




Demand
      for and market acceptance of new products such as the Skin and Bones product
      type is inherently uncertain. We expect that our revenue, if and when generated,
      will come from the sale of our products, and our ability to sell our products
      will depend on various factors, including the eventual strength, if any, of
      our
      brand name, competitive conditions and our access to necessary capital. If
      we
      fail to introduce and promote our products, we may not be able to generate
      any
      significant revenues. In addition, as part of our growth strategy, we intend
      to
      expand our product offerings to introduce products in multiple categories.
      This
      strategy may however prove unsuccessful and our association with failed products
      could impair our brand image. Introducing and achieving market acceptance for
      these products will require, among other things:





·
            the
                establishment of our brand;




·
            the
                development and application of advanced performance technologies
                to our
                planned product introductions;




·
            the
                establishment of key relationships with designers of and customers
                for our
                apparel products; and




·
            substantial
                marketing and product development efforts and expenditures to create
                and
                sustain consumer demand.




**When
      and if our products are introduced and commercially available, we expect to
      rely
      on licensees for sales outside the U.S., and our dependence on licensees may
      adversely impact our business and results of operations.**





We
      expect
      that our sales outside the U.S., if any, will be conducted through licensees.
      Any dependence on licensees will subject us to a number of risks,
      including:




·
            Our
                brand image will be dependent, in part, on the marketing efforts
                of our
                licensees and on the quality of the products that licensees distribute.
                If
                licensees or their sponsors or endorsers do not maintain our brand
                image
                or our licensees fail to adhere to our quality control standards,
                our
                brand image could suffer.




·
            We
                expect that our licensees will likely have the exclusive right to
                distribute products in a particular country or region. Licensees
                may
                engage in the trans-shipment, or gray marketing, of goods to countries
                where they are not licensed to sell
                products.




·
            Licensees
                may use manufacturers who fail to meet our human rights or product
                quality
                standards, which could harm our brand image and
                reputation.




·
            Licensees
                may fail to timely and accurately report sales and licensing income
                to
                us.




20




·
            Our
                reserve for unpaid licensee revenue may be insufficient.




Revenue
      we may receive from international licensees will subject us to the risks of
      doing business abroad, including, political risks, foreign currency risks,
      funds
      transfer restrictions and exposure to different legal standards, particularly
      with respect to intellectual property.




**Our
      business could be harmed if we fail to maintain proper inventory levels once
      our
      product is available.**





We
      may
      have difficulty in determining and maintaining the proper inventory levels
      for
      our Skins shoe product and styles, and if our inventory levels are too high
      or
      low, our results of operations will suffer. We plan to market our Skins shoe
      product as a “high level” style and fashion product, and, as a result, we will
      be subject to a higher risk of having an overstocked inventory because such
      styles and fashions change quickly and past styles can be rapidly considered
      obsolete. We expect to place orders with manufacturers for most of our products
      prior to the time we receive customer orders. Our inventory levels that are
      in
      excess of any customer demand, if any, that may develop for our products, once
      available, may result in an inventory of unfashionable product styles, inventory
      write-downs, and the sale of excess inventory at discounted prices could
      significantly impair our brand image as it is built and have a material adverse
      effect on our operating results and financial condition. Conversely, if we
      underestimate any consumer demand for our products that may develop or if our
      manufacturers, which will likely be located in China, fail to supply the quality
      products that we require at the time we need them, we may experience inventory
      shortages. Inventory shortages might delay shipments to customers, negatively
      impact retailer and distributor relationships, and diminish any brand loyalty
      that we may be able to foster.





**Our
      company will acquire all of our saleable inventory from through one sourcing
      agent, Atsco Footwear, LLC, and any disruption in our relationships with this
      sourcing agent or any disruption in the sourcing agent’s business, could have a
      material adverse effect on us.**





Our
      company has entered into an exclusive sourcing and buying agent agreement with
      Atsco Footwear, LLC pursuant to which Atsco Footwear will be responsible for
      sourcing, commercialization, product line review and be our exclusive sourcing
      and development agent for us. Because we must obtain our product through Atsco
      solely, any disruption in our relationship with this sourcing agent or any
      disruption in the sourcing agent’s business could have a material effect on us.
      Furthermore, a change in sourcing agent or a dispute regarding our exclusive
      sourcing agent agreement could cause a delay in distribution and a possible
      loss
      of sales, which could affect operating results adversely.





**We
      expect to rely on independent contract manufacturers and, as a result, will
      be
      exposed to potential disruptions in product supply.**





Our
      footwear products will likely be manufactured by independent contract
      manufacturers. We will not have long-term contracts with manufacturers and
      will
      compete with other footwear companies for production facilities. We could
      experience difficulties with these manufacturers, including reductions in the
      availability of production capacity, failure to meet our quality control
      standards, failure to meet production deadlines or increased manufacturing
      costs. This could result in future customers, if any, canceling orders, refusing
      to accept deliveries or demanding reductions in purchase prices, any of which
      could have a negative impact on our cash flow and harm our
      business.




**Nearly
      all of our products will enter the United States through a limited number of
      ports and we will probably choose to rely on third parties to store and ship
      a
      portion or all of our inventory. Labor unrest at these ports or other product
      delivery difficulties could interfere with our eventual distribution plans
      and
      reduce any future revenue.**




When
      and
      if our products are available for commercial shipment and we are able to
      establish manufacturing relationships, we may suffer delays in distributing
      our
      products due to work stoppages strikes or lockouts at the ports where our
      products may be expected to arrive once commercially available. These kinds
      of
      actions have been threatened and have occurred over the past several years
      to
      footwear companies. Likewise, we will probably rely on trucking carriers to
      deliver products from the port of arrival to our any distribution facilities
      that we may establish once, and if, we are more firmly established and from
      distribution facilities to any retailers that may elect to order our product.
      Additionally, in some cases, third parties will likely be retained to sort,
      store and direct-ship products to our future customers. Labor disruptions could
      result in product shortages and delays in distributing our products to
      retailers.





**We
      are likely to depend upon a relatively small group of customers for a large
      portion of our sales.**





Our
      customers are not likely to have a contractual obligation to purchase our
      products once they are available and we cannot be certain that we will be able
      to retain major customers. We are likely to rely at all stages of our business
      on certain significant customers. Furthermore, the retail industry regularly
      experiences consolidation, contractions and closings. If there are further
      consolidations, contractions or closings in the future, we may lose future
      customers or be unable to collect accounts receivable of major customers in
      excess of amounts that we may insure. If we lose a major customer in the future,
      experience a significant decrease in sales to a major customer or are unable
      to
      collect the accounts receivable of a major customer in excess of amounts
      insured, our business could be harmed.





21




**Any
      international sales and manufacturing operations we are able to develop will
      be
      subject to the risks of doing business abroad, which could affect our ability
      to
      sell or manufacture our products in international markets, obtain products
      from
      foreign suppliers or control the costs of our products.**





Substantially
      all of any net sales we may be able to develop are likely to be derived from
      sales of footwear manufactured in foreign countries, which will most likely
      be
      China. We also expect to sell our footwear products in foreign countries and
      plan to establish international sales efforts over time as part of our growth
      strategy. Foreign manufacturing and sales will be subject to a number of risks,
      including:





·
            work
                stoppages;




·
            natural
                disasters and outbreaks pandemic diseases (such as the Avian
                Flu);




·
            political
                and social unrest, including U.S. military presence in
                Iraq;




·
            changing
                domestic and foreign economic
                conditions;




·
            currency
                exchange rate fluctuations;




·
            electrical
                shortages;




·
            transportation
                delays or damage to products in
                transit;




·
            the
                imposition of tariffs and trade duties both international and
                domestically;




·
            import
                and export controls and other non-tariff
                barriers;




·
            exposure
                to different legal standards (particularly with respect to intellectual
                property);




·
            compliance
                with foreign laws; and




·
            changes
                in domestic and foreign governmental
                policies.




The
      effects of these factors could restrict our ability to manufacture or sell
      our
      shoe products in a particular country and have a negative impact on our
      operating results.





**Our
      business could be harmed if our future contract manufacturers, suppliers or
      licensees violate labor or other laws.**





Once
      we
      are able to retain them, our independent contract manufacturers, suppliers
      and
      licensees may not operate in compliance with applicable United States and
      foreign laws and regulations, including labor practices. If one of any of our
      possible future independent contract manufacturers, suppliers or licensees
      violates labor or other laws or diverges from those labor practices generally
      accepted as ethical in the United States, we could result in adverse publicity
      for us, damage our reputation in the United States or render our conduct of
      business in a particular foreign country undesirable or impractical, any of
      which could harm our business.





**We
      expect that once our products are introduced and when, and if, we are able
      to
      generate revenue on our products, our quarterly revenues and operating results
      will fluctuate as a result of a variety of factors, including seasonal
      fluctuations in demand for footwear, delivery date delays and potential
      fluctuations in our annualized tax rate, which may result in volatility of
      our
      stock price.**





Once
      and
      if established, our quarterly revenues and operating results can be expected
      to
      fluctuate due to a number of factors, many of which are beyond our control.
      For
      example, sales of footwear products have historically been seasonal in nature
      with the strongest sales generally occurring in the second and third quarters.
      Delays in scheduling or pickup of purchased products by domestic customers
      could
      negatively impact our net sales and results of operations for any given quarter.
      In addition, a number of companies in the footwear industry specifically, and
      others in the fashion and apparel industry in general, have experienced periods
      of growth in revenues and earnings and thereafter periods of declining sales
      and
      losses, based on the market reception of their collection of products for a
      particular season. Also, our annualized tax rate will be based on projections
      of
      our domestic and international operating results for the year, which we will
      review and revise as necessary at the end of each quarter, and we will be highly
      sensitive to fluctuations in projected international earnings. Any quarterly
      fluctuations in our annualized tax rate that may occur could have a material
      impact on our quarterly operating results. As a result of these specific and
      other general factors, our operating results will likely vary from quarter
      to
      quarter and the results for any particular quarter may not be necessarily
      indicative of results for the full year.





22




**We
      will face intense competition, including competition from companies with
      significantly greater resources than ours, and if we are unable to compete
      effectively with these companies, our business could be
      harmed.**





We
      will
      face intense competition in the footwear industry from other established
      companies. We have no product sales, introductions, manufacturing or brand
      equity. All of our competitors have significantly greater financial,
      technological, engineering, manufacturing, marketing and distribution resources
      than we do. Their greater capabilities in these areas will enable them to better
      withstand periodic downturns in the footwear industry, compete more effectively
      on the basis of price and production and more quickly develop new products.
      In
      addition, new companies may enter the markets in which we expect to compete,
      further increasing competition in the footwear industry.





We
      believe that our ability to compete successfully will depend on a number of
      factors, including the style and quality of our products once marketed and
      the
      strength of our brand, once established, as well as many factors beyond our
      control. We may not be able to compete successfully in the future, and increased
      competition may result in price reductions, reduced profit margins, loss of
      market share and an inability to generate cash flows that are sufficient to
      maintain or expand our development and marketing of new products.





**We
      depend on key personnel to manage our business effectively in a rapidly changing
      market, and if we are unable to retain existing personnel, our business could
      be
      harmed.**





Our
      future success depends upon the continued services of Mark Klein, President
      and
      Chief Executive Officer. The loss of the services of Mr. Klein or any other
      key
      employee could harm us. Our future success also depends on our ability to
      identify, attract and retain additional qualified personnel. Competition for
      employees in our industry is intense and we may not be successful in attracting
      and retaining such personnel.





**The
      disruption, expense and potential liability associated with unanticipated future
      litigation against us could have a material adverse effect on our business,
      results of operations and financial condition.**





We
      expect
      to be subject to various legal proceedings and threatened legal proceedings
      from
      time to time as part of our ordinary business. We are not currently a party
      to
      any legal proceedings. However, any unanticipated litigation in the future,
      regardless of our merits, could significantly divert management’s attention from
      our operations and result in substantial legal fees to it. Further, there can
      be
      no assurance that any actions that have been or will be brought against us
      will
      be resolved in our favor or, if significant monetary judgments are rendered
      against us, that we will have the ability to pay such judgments. Such
      disruptions, legal fees and any losses resulting from these claims could have
      a
      material adverse effect on our business, results of operations and financial
      condition.




**Our
      ability to compete will be jeopardized if we are unable to protect our
      intellectual property rights or if we are sued for intellectual property
      infringement.**





We
      hope
      to use trademarks on most or all of our products and believe that having
      distinctive marks that are readily identifiable will be an important factor
      in
      creating a market for our goods, in identifying our and in distinguishing our
      products from the products of others.





We
      do not
      currently own any patents. We have applied for a U.S. patent relating to its
      Modular Shoe System. We also filed international (PCT) Patent App. No.
      PCT/US04/33446 for its Modular Shoe System on October 7, 2004, for which we
      have
      filed national and regional entry applications in Canada, Australia, China
      (PRC), Japan, New Zealand, South Korea, the European Patent Office, the Russian
      Federation and Israel.





We
      believe that our ability to achieve success will depend primarily upon our
      ability to be effective in design, research and development, production and
      marketing rather than upon our patent position, should this patent be issued
      to
      us. However, we expect to establish a policy of filing applications for United
      States and foreign patents on designs and technologies that we deem valuable.
      If
      we fail to protect or maintain our trademarks, we may lose or damage our
      intellectual property rights and impair our ability to generate revenue in
      the
      future.





**Our
      failure to secure, maintain and protect our existing intellectual property
      rights could adversely affect our business operations and future growth.**





We
      believe that our ability to successfully market and sell our products will
      depend on our ability to protect our intellectual property rights, such as
      the
      rights to the design and brand name of our Skin and Bones product. We expect
      to
      protect our intellectual property through a combination of patent, trademark,
      copyright and trade secret laws. We have applied numerous patent and trademark
      applications with respect to our product; however, we have yet receive a grant
      of any such application, and there is no guarantee that the we will ever be
      granted any such patent or trademark. If we are unable to obtain a patent and
      trademark on our product and brand, it will be more difficult for us to protect
      our intellectual property and could significantly impair our capacity to develop
      and sell our product.





23




**We
      may incur significant litigation expenses protecting our intellectual property
      or defending our use of intellectual property, which may have a material adverse
      effect on our cash flow and results of operations.**





If
      our
      efforts to protect our intellectual property rights are inadequate to prevent
      imitation of our products by others or to prevent others from seeking to block
      sales of our products as a violation of the intellectual property rights of
      others, we could incur substantial significant legal expenses in resolving
      such
      disputes.





**Our
      competitors may develop similar, non-infringing products that adversely affect
      our ability to generate revenues.**





Our
      competitors may be able to produce a footwear product that is similar to our
      product without infringing on our intellectual property rights. Since we have
      yet to establish any significant brand recognition for our product , we could
      lose a substantial amount of business due to competitors developing products
      similar to our Skin and Bones footwear product. As a result, our future growth
      and ability to generate revenues from the sale of our product could suffer
      a
      material adverse effect.





**Our
      business may be negatively impacted as a result of changes in the economy and
      consumer spending.**





Our
      business will depend on the general economic environment and levels of consumer
      spending that affect not only the ultimate consumer, but also retailers, our
      likely primary direct customers. Purchases of footwear tend to decline in
      periods of recession or uncertainty regarding future economic prospects, when
      consumer spending, particularly on discretionary items, declines. During periods
      of recession or economic uncertainty, we may not be able to maintain or increase
      our sales to customers, maintain sales levels, establish international
      operations on a profitable basis or create earnings from operations as a
      percentage of net sales. As a result, our operating results may be adversely
      and
      materially affected by downward trends in the economy or the occurrence of
      events that adversely affect the economy in general. Our operating results
      and
      margins will be adversely impacted if we do not grow as anticipated.





**We
      may be unable to scale our operations successfully.**




Our
      plan
      is to grow our business rapidly. Our growth, if it occurs as planned, will
      place
      significant demands on our management, as well as our financial, administrative
      and other resources. We have only just hired a Vice President of Sales and
      Finance and our success will be heavily dependent on our ability to integrate
      these employees and to locate and hire a Vice President Design and Development.
      There is no guarantee that we will be able to locate and retain qualified
      personnel for such positions, which would likely hinder our ability to manage
      operations. Furthermore, we cannot guarantee that any of the systems, procedures
      and controls we put in place will be adequate to support the commercialization
      of our products or other operations. Our operating results will depend
      substantially on the ability of our officers and key employees to manage
      changing business conditions and to implement and improve our financial,
      administrative and other resources. If we are unable to respond to and manage
      changing business conditions, or the scale of our products, services and
      operations, then the quality of our services, our ability to retain key
      personnel and our business could be harmed.





**RISKS
      RELATED TO OUR CAPITAL STRUCTURE**




**There
      is no assurance of an established public trading market, which would adversely
      affect the ability of our investors to sell their securities in the public
      market.**




Although
      our common stock is listed on the OTC Bulletin Board, a regular trading market
      for the securities does not yet exist and may not exist or be sustained in
      the
      future. The NASD has enacted changes that limit quotations on the OTC Bulletin
      Board to securities of issuers that are current in their reports filed with
      the
      Securities and Exchange Commission. The effect on the OTC Bulletin Board of
      these rule changes and other proposed changes cannot be determined at this
      time.
      The OTC Bulletin Board is an inter-dealer, over-the-counter market that provides
      significantly less liquidity than the NASD’s automated quotation system, or the
      NASDAQ Stock Market. Quotes for stocks included on the OTC Bulletin Board are
      not listed in the financial sections of newspapers as are those for the NASDAQ
      Stock Market. Therefore, prices for securities traded solely on the OTC Bulletin
      Board may be difficult to obtain and holders of common stock may be unable
      to
      resell their securities at or near their original offering price or at any
      price. Market prices for our common stock will be influenced by a number of
      factors, including:





·
            the
                issuance of new equity securities pursuant to the share exchange
                transaction, or a future offering;




·
            changes
                in interest rates;




·
            competitive
                developments, including announcements by competitors of new products
                or
                services or significant contracts, acquisitions, strategic partnerships,
                joint ventures or capital
                commitments;




·
            variations
                in quarterly operating results;




·
            change
                in financial estimates by securities
                analysts;




24




·
            the
                depth and liquidity of the market for our common
                stock;




·
            investor
                perceptions of our company and the footwear industry generally;
                and




·
            general
                economic and other national
                conditions.




**Shares
      eligible for future sale may adversely affect the market price of our common
      stock, as the future sale of a substantial amount of outstanding stock in the
      public marketplace could reduce the price of our common
      stock.** **




Shares
      eligible for future sale may have an adverse effect on the market price of
      our
      common stock by creating an excessive supply. Pursuant to the terms of the
      Share
      Exchange Transaction that we conducted with Skins Footwear Inc., we are filing
      a
      registration statement with the Securities and Exchange Commission to register
      the securities issued in two equity financings that that were conducted in
      connection with the Share Exchange Transaction in March 2006. The registration
      statement will cover the subsequent resale by investors of 6,000,000 shares
      of
      common stock or shares of common stock underlying warrants. Additionally,
      following the Share Exchange Transaction, former stockholders of Skins Footwear
      Inc., who received shares of our common stock in the Share Exchange Transaction,
      may be eligible to sell all or some of their shares of common stock by means
      of
      ordinary brokerage transactions in the open market pursuant to Rule 144,
      promulgated under the Securities Act, or Rule 144, subject to certain
      limitations. In general, pursuant to Rule 144, a stockholder (or stockholders
      whose shares are aggregated) who has satisfied a one-year holding period may,
      under certain circumstances, sell within any three-month period a number of
      securities which does not exceed the greater of 1% of the then outstanding
      shares of common stock or the average weekly trading volume of the class during
      the four calendar weeks prior to such sale. As of the closing of the Share
      Exchange Transaction, 1% of our issued and outstanding shares of common stock
      was approximately 344,041 shares. Rule 144 also permits, under certain
      circumstances, the sale of securities, without any limitations, by a
      non-affiliate that has satisfied a two-year holding period. Any substantial
      sale
      of common stock pursuant to any resale prospectus or Rule 144 may have an
      adverse effect on the market price of our common stock by creating an excessive
      supply.




**Following
      the Share Exchange Transaction, the former principal stockholders of Skins
      Footwear Inc. have significant influence over our company.**




Mark
      Klein, Michael J. Rosenthal, Stephen Hochberg, Geoffrey Dubey and Joshua
      Hermelin, each of whom were principal stockholders of Skins Footwear prior
      to
      the Share Exchange Transactions, beneficially own, in the aggregate, a majority
      of our outstanding voting stock following the Share Exchange Transaction. Mr.
      Klein became our President and Chief Executive Officer and Messrs. Rosenthal
      and
      Hochberg became directors of our company upon the closing of the Share Exchange
      Transaction. The former principal stockholders of Skins Footwear Inc. possess
      significant influence over our company, giving them the ability, among other
      things, to elect a majority of the Board of Directors and to approve significant
      corporate transactions. Such stock ownership and control may also have the
      effect of delaying or preventing a future change in control, impeding a merger,
      consolidation, takeover or other business combination or discourage a potential
      acquirer from making a tender offer or otherwise attempting to obtain control
      of
      our company.





**We
      may not be able to achieve the benefits we expect to result from the Share
      Exchange Transaction.**




On
      March
      20, 2006, the Share Exchange Transaction closed, Skins Footwear Inc. became
      our
      wholly-owned subsidiary and our sole business operations became that of Skins
      Footwear Inc. Also, the management and directors of Skins Footwear Inc. became
      the management and directors of our company.




The
      Share
      Exchange Transaction was conducted for various reasons, but there is no
      guarantee that we will ever obtain the anticipated benefits, as
      follows:





·
            the
                increased market liquidity expected to result from exchanging stock
                in a
                private company for publicly traded
                securities;




·
            the
                ability to use registered securities to make acquisition of assets
                or
                businesses;




·
            increased
                visibility in the financial
                community;




·
            enhanced
                access to the capital markets;




·
            improved
                transparency of operations; and




·
            perceived
                credibility and enhanced corporate image of being a publicly traded
                company.




There
      can
      be no assurance that any of the anticipated benefits of the Share Exchange
      Transaction will be realized in respect to our new business operations. In
      addition, the attention and effort devoted to achieving the benefits of the
      Share Exchange Transaction and attending to the obligations of being a public
      company, such as reporting requirements and securities regulations, could
      significantly divert our management's attention from other important issues,
      which could materially and adversely affect our operating results or stock
      price
      in the future.





25




**If
      we fail to maintain effective internal controls over financial reporting, the
      price of our common stock may be adversely affected.**





Our
      internal control over financial reporting may have weaknesses and conditions
      that need to be addressed, the disclosure of which may have an adverse impact
      on
      the price of our common stock. We are required to establish and maintain
      appropriate internal controls over financial reporting. Failure to establish
      those controls, or any failure of those controls once established, could
      adversely impact our public disclosures regarding our business, financial
      condition or results of operations. In addition, management’s assessment of
      internal controls over financial reporting may identify weaknesses and
      conditions that need to be addressed in our internal controls over financial
      reporting or other matters that may raise concerns for investors. Any actual
      or
      perceived weaknesses and conditions may have an adverse impact on the price
      of
      our common stock.





**Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses.**




Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC
      regulations, have created uncertainty for public companies and significantly
      increased the costs and risks associated with accessing the public markets
      and
      public reporting. Our management team will need to invest significant management
      time and financial resources to comply with both existing and evolving standards
      for public companies, which will lead to increased general and administrative
      expenses and a diversion of management time and attention from revenue
      generating activities to compliance activities.





**Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act of 2002 are uncertain,
      and if we fail to comply in a timely manner, our business could be harmed and
      our stock price could decline.**




Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
      require annual assessment of our internal control over financial reporting,
      and
      attestation of this assessment by our company’s independent registered public
      accountants. The SEC extended the compliance dates for non-accelerated filers,
      as defined by the SEC. Accordingly, we believe that this requirement will first
      apply to our annual report for fiscal 2007. The standards that must be met
      for management to assess the internal control over financial reporting as
      effective are new and complex, and require significant documentation, testing
      and possible remediation to meet the detailed standards. We may encounter
      problems or delays in completing activities necessary to make an assessment
      of
      our internal control over financial reporting. In addition, the attestation
      process by our independent registered public accountants is new and we may
      encounter problems or delays in completing the implementation of any requested
      improvements and receiving an attestation of our assessment by our independent
      registered public accountants. If we cannot assess our internal control over
      financial reporting as effective, or our independent registered public
      accountants are unable to provide an unqualified attestation report on such
      assessment, investor confidence and share value may be negatively impacted.




**Our
      common stock is considered a “penny stock,” and is subject to additional sale
      and trading regulations that may make it more difficult to
      sell.**




Our
      common stock is considered to be a “penny stock” since it does not qualify for
      one of the exemptions from the definition of “penny stock” under Section 3a51-1
      of the Securities Exchange Act for 1934, as amended, or the Exchange Act. Our
      common stock is a “penny stock” because it meets one or more of the following
      conditions (i) the stock trades at a price less than $5.00 per share; (ii)
      it is
      NOT traded on a “recognized” national exchange; (iii) it is NOT quoted on the
      Nasdaq Stock Market, or even if so, has a price less than $5.00 per share;
      or
      (iv) is issued by a company that has been in business less than three years
      with
      net tangible assets less than $5 million.




The
      principal result or effect of being designated a “penny stock” is that
      securities broker-dealers participating in sales of our common stock will be
      subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9
      promulgated under the Exchange Act. For example, Rule 15g-2 requires
      broker-dealers dealing in penny stocks to provide potential investors with
      a
      document disclosing the risks of penny stocks and to obtain a manually signed
      and dated written receipt of the document at least two business days before
      effecting any transaction in a penny stock for the investor's account. Moreover,
      Rule 15g-9 requires broker-dealers in penny stocks to approve the account of
      any
      investor for transactions in such stocks before selling any penny stock to
      that
      investor. This procedure requires the broker-dealer to (i) obtain from the
      investor information concerning his or her financial situation, investment
      experience and investment objectives; (ii) reasonably determine, based on that
      information, that transactions in penny stocks are suitable for the investor
      and
      that the investor has sufficient knowledge and experience as to be reasonably
      capable of evaluating the risks of penny stock transactions; (iii) provide
      the
      investor with a written statement setting forth the basis on which the
      broker-dealer made the determination in (ii) above; and (iv) receive a signed
      and dated copy of such statement from the investor, confirming that it
      accurately reflects the investor's financial situation, investment experience
      and investment objectives. Compliance with these requirements may make it more
      difficult and time consuming for holders of our common stock to resell their
      shares to third parties or to otherwise dispose of them in the market or
      otherwise.





26





**We
      do not foresee paying cash dividends in the foreseeable
      future.**




To
      date,
      we have not declared or paid any cash dividends on our shares of common stock
      and currently intend to retain any future earnings for funding growth. We do
      not
      anticipate paying any dividends in the foreseeable future. As a result, you
      should not rely on an investment in our securities if you require dividend
      income. Capital appreciation, if any, of our shares may be your sole source
      of
      gain for the foreseeable future. Moreover, you may not be able to resell your
      shares in our company at or above the price you paid for them.





**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




In
      addition to historical information, this report contains statements relating
      to
      our future business and/or results, including, without limitation, the
      statements under the captions “Risk Factors,” “Management’s Discussion and
      Analysis or Plan of Operation”. These statements include certain projections and
      business trends that are “forward-looking.” These statements include certain
      projections and business trends that are “forward-looking”. Forward-looking
      statements can include statements containing a projection of revenues, income
      (including income loss) , earnings (including earnings loss) per share, capital
      expenditures, dividends, capital structure, or other financial items; a
      statement of the plans and objectives of management for future operations,
      including plans or objectives relating to the products or services of the
      issuer; a statement of future economic performance, including any such statement
      contained in a discussion and analysis of financial condition by the management
      or in the results of operations included pursuant to the rules and regulations
      of the SEC; any report issued by an outside reviewer retained by an issuer,
      to
      the extent that the report assesses a forward-looking statement made by the
      issuer; or a statement containing a projection or estimate of such other items
      as may be specified by rule or regulation of the SEC. You can identify these
      statements by the use of words like “may,” “will,” “could,” “should,” “project,”
“believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,”
“intend,” “continue” and variations of these words or comparable words.
      Forward-looking statements do not guarantee future performance and involve
      risks
      and uncertainties. Actual results will differ, and may differ materially, from
      projected results as a result of certain risks and uncertainties. These risks
      and uncertainties include, without limitation, those described under “Risk
      Factors” and those detailed from time to time in our filings with the SEC, and
      include, among others, the following:




·
            Our
                limited operating history;





·
            Our
                lack of profits from operations;





·
            Our
                ability to raise additional funds on acceptable terms or at
                all;





·
            Our
                ability to successfully design, manufacture and commercialize our
                proposed
                product;





·
            Our
                reliance on one unproven and undeveloped product
                type;





·
            Rapidly
                changing consumer demands for footwear
                products;





·
            Our
                unestablished brand;





·
            The
                degree and nature of our
                competition;





·
            Our
                ability to employ and retain qualified
                employees;





·
            The
                limited trading market for our common stock;
                and





·
            The
                other factors referenced in this report, including, without limitation,
                under the sections entitled “Risk Factors” and “Management’s Discussion
                and Analysis or Plan of Operation.”




The
      assumptions used for purposes of the forward-looking statements specified in
      the
      following information represent estimates of future events and are subject
      to
      uncertainty as to possible changes in economic, legislative, industry, and
      other
      circumstances. As a result, the identification and interpretation of data and
      other information and their use in developing and selecting assumptions from
      and
      among reasonable alternatives require the exercise of judgment. To the extent
      that the assumed events do not occur, the outcome may vary substantially from
      anticipated or projected results, and, accordingly, no opinion is expressed
      on
      the achievability of those forward-looking statements. We cannot guarantee
      that
      any of the assumptions relating to the forward-looking statements specified
      in
      the following information are accurate, and we assume no obligation to update
      any such forward-looking statements.





27





**ITEM
      6.**  **EXHIBITS**





(a)
      Exhibits





2.1
            Share
                Exchange Agreement, dated as of November 2, 2005, by and among Skin
                Shoes,
                Inc., Logicom Inc. and all of the stockholders of Skin Shoes, Inc.
                (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K
                filed with the Securities and Exchange Commission on November 7,
                2005).





2.1(a)
            Amendment
                No. 1 to the Share Exchange Agreement dated February 1, 2006 by and
                among
                Skin Shoes, Inc., Logicom Inc. and all of the stockholders of Skin
                Shoes,
                Inc. (incorporated by reference to Exhibit 2.1(a) of the Registrant’s Form
                8-K filed with the Securities and Exchange Commission on March 24,
                2006).





4.1
            Form
                of Stock Purchase Warrant (incorporated by reference to Exhibit 4.1
                of the
                Registrant’s Form 8-K filed with the Securities and Exchange Commission on
                March 24, 2006).





10.1
            Form
                of Subscription Agreement (incorporated by reference to Exhibit 10.1
                of
                the Registrant’s Form 8-K filed with the Securities and Exchange
                Commission on March 24, 2006).





10.2
            Skin
                Shoes, Inc. 2005 Incentive Plan (incorporated by reference to Exhibit
                10.2
                of the Registrant’s Form 8-K filed with the Securities and Exchange
                Commission on March 24, 2006).





10.2(a)
            Form
                of Skin Shoes, Inc. Incentive Plan Option Agreement (incorporated
                by
                reference to Exhibit 10.2(a) of the Registrant’s Form 8-K filed with the
                Securities and Exchange Commission on March 24,
                2006).





10.3
            Employment
                Agreement by Mark Klein and the Logicom, Inc. dated March 20, 2006
                (incorporated by reference to Exhibit 10.3 of the Registrant’s Form 8-K
                filed with the Securities and Exchange Commission on March 24,
                2006).





31.1
            Certification
                of Chief Executive Officer pursuant to Section 302(a) of the
                Sarbanes-Oxley Act of 2002.





32.1
            Certification
                of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.*







*
      This
      exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities
      Exchange Act of 1934 or otherwise subject to the liabilities of that section,
      nor shall it be deemed incorporated by reference in any filing under the
      Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
      before or after the date hereof and irrespective of any general incorporation
      language in any filings.





28




**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)October
                3, 2006
            By:
            /s/ Mark
                KleinMark
                KleinChief
                Executive Officer, President and Director
              (Principal
                Executive Officer and Principal Financial and
              Accounting
                Officer)




29