UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q




(Mark
One)





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


For the
quarterly period ended March
31, 2009





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





Commission File No. 333-140633





UKARMA
CORPORATION





(Exact
name of registrant as specified in it charter)





Nevada
                  
                  68-048-2472(State
      or other jurisdiction of incorporation or organization)
                  
                  (IRS
      Employer Identification
No.)





499
North Canon Drive, Suite 308


Beverly
Hills, CA 90210


(Address
of principal executive offices)





(310)
998-8909





(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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period than the
registrant was required to submit and post such files).  Yes oNo  o





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





Large
      Accelerated filer  o
                
                Non-Accelerated
      Filer oAccelerated
      Filer o
                
                Smaller
      Reporting Company x





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




APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each issuer's classes of common stock, as of
the latest practicable date:  33,121,961 issued and outstanding as of June
8, 2009.







UKARMA
CORPORATION


TABLE OF
CONTENTS


TO
QUARTERLY REPORT ON FORM 10-Q


FOR
QUARTER ENDED MARCH 31, 2009




PagePART I
                FINANCIAL INFORMATION
                
                3Item
      1.
                Financial
      Statements
                
                3Item
      2.
                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                
                4Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                
                8Item
      4.
                Controls
      and Procedures
                
                9PART
      II
                OTHER
      INFORMATION
                
                10Item
      1.
                Legal
      Proceedings
                
                10Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                
                10Item
      3.
                Defaults
      Upon Senior Securities
                
                10Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                
                10Item
      5.
                Other
      Information
                
                10Item
      6.
                Exhibits
                
                11Signatures
                
                12


2





PART
I - FINANCIAL INFORMATION





ITEM
      1.
            FINANCIAL
      STATEMENTS





Our
financial statements start on the following page, beginning with page
F-1.


3





UKARMA
CORPORATION





BALANCE
SHEETS





As ofMarch
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008(Unaudited)
                  
                  
                  (Audited)ASSETSCurrent
      AssetsCash
                  
                  $
                  973
                  
                  
                  $
                  1,781Accounts
      receivable
                  
                  
                  -
                  
                  
                  
                  309Other
      receivable
                  
                  
                  7,159
                  
                  
                  
                  26,691Prepaid
      expenses
                  
                  
                  67,809
                  
                  
                  
                  70,863Inventory
                  
                  
                  18,932
                  
                  
                  
                  22,327Total
      Current Assets
                  
                  
                  94,873
                  
                  
                  
                  121,971Property
      and equipment, net of accumulated depreciation of $5,909 for 2009, and
      $4,689 for 2008
                  
                  
                  501,401
                  
                  
                  
                  391,514Other
      AssetsProduction
      costs, net of accumulated amortization of $243,001 for 2009, and $212,047
      for 2008
                  
                  
                  376,084
                  
                  
                  
                  407,038Deposit
                  
                  
                  22,000
                  
                  
                  
                  28,380Patent
                  
                  
                  10,358
                  
                  
                  
                  10,358Total
      Other Assets
                  
                  
                  408,442
                  
                  
                  
                  445,776TOTAL
      ASSETS
                  
                  $
                  1,004,716
                  
                  
                  $
                  959,261LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                  
                  $
                  249,453
                  
                  
                  
                  196,161Accrued
      expenses
                  
                  
                  126,140
                  
                  
                  
                  66,677Notes
      payable to related party, including accrued interest of $25,462 for 2009
      and $22,637 for 2008
                  
                  
                  195,993
                  
                  
                  
                  207,768Total
      Current Liabilities
                  
                  
                  571,586
                  
                  
                  
                  470,606Stockholders'
      EquityCommon
      stock, $0.001 par value; 100,000,000 shares authorized; 33,481,961 and
      29,768,292  shares issued and outstanding in 2009 and 2008,
      respectively
                  
                  
                  33,482
                  
                  
                  
                  29,768Preferred
      stock, $0.001 par value; 20,000,000 shares authorized, none
      issued
                  
                  
                  -
                  
                  
                  
                  -Paid-in
      capital
                  
                  
                  7,015,391
                  
                  
                  
                  6,548,088Accumulated
      deficit
                  
                  
                  (6,615,743
                  )
                  
                  
                  (6,089,201
                  )Total
      Stockholders' Equity
                  
                  
                  433,130
                  
                  
                  
                  488,655TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                  
                  $
                  1,004,716
                  
                  
                  $
                  959,261


F-1





UKARMA
CORPORATION





STATEMENTS
OF OPERATIONS (UNAUDITED)


For
the three months ended March 31, 2009 and 2008





For
      three months endedMarch 31,2009
                  
                  
                  2008Sales
                  
                  $
                  13,431
                  
                  
                  $
                  2,759Cost
      of  Sale
                  
                  
                  773
                  
                  
                  
                  144Gross
      Profit
                  
                  
                  12,658
                  
                  
                  
                  2,615Selling,
      General and Administrative Expenses
                  
                  
                  530,901
                  
                  
                  
                  514,600Operating
      Loss
                  
                  
                  (518,243
                  )
                  
                  
                  (511,985
                  )Other
      Income (Expenses)Interest
      Expense
                  
                  
                  (7,499
                  )
                  
                  
                  (3,208
                  )Total
      Other Income (Expense)
                  
                  
                  (7,499
                  )
                  
                  
                  (3,208
                  )Net
      Loss before Income Taxes
                  
                  
                  (525,742
                  )
                  
                  
                  (515,193
                  )Provision
      for Income Taxes
                  
                  
                  800
                  
                  
                  
                  800Net
      Loss
                  
                  $
                  (526,542
                  )
                  
                  $
                  (515,993
                  )Loss
      Per Share-Basic and Diluted
                  
                  $
                  (0.02
                  )
                  
                  $
                  (0.02
                  )Weighted
      Average Number of Shares
                  
                  
                  31,764,984
                  
                  
                  
                  21,522,444


F-2


UKARMA
CORPORATION





STATEMENT
OF CASH FLOWS (UNAUDITED)


For
the three months ended March 31, 2009, and 2008





For
      three months endedMarch 31,2009
                  
                  
                  2008Cash
      Flow from Operating Activities:Net
      loss
                  
                  $
                  (526,542
                  )
                  
                  $
                  (515,993
                  )Adjustment
      to reconcile net loss to net cash used by operating
      activities:Depreciation
                  
                  
                  1,220
                  
                  
                  
                  510Amortization
      of production costs
                  
                  
                  30,954
                  
                  
                  
                  19,791Issuance
      of stock for services
                  
                  
                  280,506
                  
                  
                  
                  -Stock
      option expenses
                  
                  
                  51,511
                  
                  
                  
                  47,514Stock
      warrant expenses
                  
                  
                  -
                  
                  
                  
                  14,440(Increase)
      Decrease in:Trade
      accounts receivable
                  
                  
                  309
                  
                  
                  
                  -Other
      receivables
                  
                  
                  19,532
                  
                  
                  
                  -Prepaid
      expenses
                  
                  
                  3,054
                  
                  
                  
                  (14,837
                  )Inventory
                  
                  
                  3,395
                  
                  
                  
                  144Capitalized
      production costs
                  
                  
                  -
                  
                  
                  
                  75,017Deposit
                  
                  
                  6,380
                  
                  
                  
                  -Increase
      (Decrease) in:Accounts
      payable
                  
                  
                  53,292
                  
                  
                  
                  24,785Accrued
      expenses
                  
                  
                  62,288
                  
                  
                  
                  3,965Net
      Cash Used by Operating Activities
                  
                  
                  (14,101
                  )
                  
                  
                  (344,664
                  )Cash
      Flow from Investing Activities:Purchase
      of property and equipment
                  
                  
                  (111,107
                  )
                  
                  
                  -Net
      Cash Used by Investing Activities
                  
                  
                  (111,107
                  )
                  
                  
                  -Cash
      Flow from Financing Activities:Proceeds
      from notes payable to related party
                  
                  
                  15,000
                  
                  
                  
                  -Repayments
      to note payable to related party
                  
                  
                  (29,600
                  )
                  
                  
                  -Proceeds
      from sale of stock
                  
                  
                  139,000
                  
                  
                  
                  351,751Net
      Cash Provided by Financing Activities
                  
                  
                  124,400
                  
                  
                  
                  351,751Net
      Increase (Decrease) in Cash
                  
                  
                  (808
                  )
                  
                  
                  7,087Cash
      Balance at Beginning of Year
                  
                  
                  1,781
                  
                  
                  
                  483,564Cash
      Balance at End of Year
                  
                  $
                  973
                  
                  
                  $
                  490,651Supplemental
      Disclosures:Interest
      Paid
                  
                  $
                  -
                  
                  
                  $
                  -Taxes
      Paid
                  
                  $
                  -
                  
                  
                  $
                  -


F-3


UKARMA
CORPORATION





NOTES
TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
1 – NATURE OF OPERATIONS





uKarma
Corporation (“the Company”) was incorporated under the name of OM Capital
Corporation in the State of Nevada on June 26, 2001.  On April 30, 2004,
the Company changed its name to uKarma Corporation.  In 2006, the Company
relocated its headquarter to the State of California and became a California
foreign corporation.





The
Company develops and markets proprietary branded personal health and wellness
products, including fitness DVDs, nutraceuticals, and mind, body, and spirit
goods and services, for fitness and health-conscious consumers.  The
Company’s product lines target the rapidly growing tens of millions that are
seeking to enrich their physical, spiritual, and mental wellness.





Through
infomercials and other marketing initiatives, the Company launched its initial
products.  The goal of the infomercials is to generate initial working
capital and build a community of loyal customers.  From there, the Company
will expand its product offerings into proprietary branded products primarily
within the fitness/wellbeing multimedia and nutraceutical markets.  As the
brand image builds, the Company intends to extend its brand systematically to
other complementary consumer products that meet its stringent product guidelines
and are consistent with its message of “total health and happiness for oneself
and others.”





The
Company is currently constructing a studio that will offer Xflowsion, fitness,
and yoga classes along with retail items, retreats and teacher training, and
food and beverages. The construction is expected to be completed in the second
quarter of 2009.  Additionally, the Company is working on a prototype of a
patent-pending proprietary yoga mat.





The
Company began to generate revenue in the second quarter of 2007; accordingly,
the Company ceased its development stage status commencing April 1,
2007.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
(GAAP).





Presentation Of Interim
Information: The financial information at March 31, 2009 and for the
three months ended March 31, 2009 and 2008 is unaudited but includes all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of the financial information set
forth herein, in accordance with accounting principles generally accepted in the
United States of America ("GAAP") for interim financial information.
Accordingly, such information does not include all of the information and
footnotes required by GAAP for annual financial statements. For further
information refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31,
2008.





The
balance sheet as of December 31, 2008 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by U.S. GAAP for complete financial
statements.





The
results for the three months ended March 31, 2009 may not be indicative of
results for the year ending December 31, 2009 or any future
periods.


F-4


UKARMA
CORPORATION





NOTES
TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Use of estimates: The
preparation of the accompanying financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make certain estimates and assumptions that directly affect the
results of reported assets, liabilities, revenue, and expenses. Actual results
may differ from these estimates.





Revenue recognition:
The Company generally recognizes product revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectability is probable. In instances where the final acceptance of the
product is specified by the customer, revenue is deferred until all acceptance
criteria have been met. Customers’ prepayments are deferred until products are
shipped and accepted by the customers. No provisions were established for
estimated product returns and allowances based on the Company’s historical
experience.





Cash Equivalents: For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.





Concentration of
Cash: The Company places its cash and cash equivalents with high quality
financial institutions. At times, cash balances may be in excess of the FDIC
insurance limits. Management considers the risk to be minimal.





Inventories:
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.





Property and
Equipment: Property and equipment are valued at cost. Maintenance and
repair costs are charged to expenses as incurred. Depreciation is computed on
the straight-line method based on the estimated useful lives of the assets,
generally 5 to 7 years. Depreciation expense for the three months ended March
31, 2009 and 2008 was $1,220 and $510, respectively.





Patents: The Company
capitalizes patent costs as incurred, excluding costs associated with Company
personnel, relating to patenting its technology. The majority of capitalized
costs represent legal fees related to a patent application. If the Company
elects to stop pursuing a particular patent application or determines that a
patent application is not likely to be awarded or elects to discontinue payment
of required maintenance fees for a particular patent, the Company, at that time,
records as expense the capitalized amount of such patent application or patent.
Awarded patents will be amortized over the shorter of the economic or legal life
of the patent.





Fair value of financial
instruments: All financial instruments are carried at amounts that
approximate estimated fair value.





Income Taxes: Income
tax expense is based on pretax financial accounting income. Deferred tax assets
and liabilities are recognized for the expected tax consequences of temporary
differences between the tax bases of assets and liabilities and their reported
amounts.





Advertising Costs:
All costs associated with advertising and promoting the Company’s products and
services are expensed as incurred. Advertising expense for the three months
ended March 31, 2009 and 2008 was $9,035 and $188,355,
respectively.





Net Loss Per Share:
Basic net loss per share includes no dilution and is computed by dividing net
loss available to common stockholders by the weighted average number of common
stock outstanding for the period.  Diluted net loss per share does not
differ from basic net loss per share since potential shares of common stock are
anti-dilutive for all periods presented.  Potential shares consist of
restricted common stock, stock warrants, and stock options.


F-5


UKARMA
CORPORATION





NOTES
TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Stock Based
Compensation:  Effective January 1, 2006, the Company adopted the
fair value recognition provisions of FASB Statement No. 123(R), “Shares-Based
Payment” (SFAS 123R), using the modified-prospective-transition method. 
Under that transition method, compensation cost recognized in 2006 includes: (a)
compensation cost for all share-based payments granted prior to, but not yet
vested as of, January 1, 2006, based of the grant date fair value calculated in
accordance with the original provisions of SFAS 123, and (b) compensation cost
for all share-based payments granted subsequent to December 31, 2005, based on
the grant-date fair value estimated in accordance with the provisions of SFAS
123(R).  As a result of adopting SFAS 123(R) on January 1, 2006, the
Company reorganized pre-tax compensation expense related to stock options of
$51,511 and $47,514 for three months ended March 31, 2009 and 2008,
respectively.





The
Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123R and the EITF Issue No. 00-18, “Accounting For Equity Instruments
That Are Issued To Other Than Employees for Acquiring, Or In Conjunction With
Selling, Goods Or Services.” SFAS No. 123R states that equity instruments
that are issued in exchange for the receipt of goods or services should be
measured at the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measurable. Under the
guidance in Issue 00-18, the measurement date occurs as of the earlier of (a)
the date at which a performance commitment is reached, or (b) absent a
performance commitment, the date at which the performance necessary to earn the
equity instruments is complete (that is, the vesting date).





New Accounting
Pronouncements: In April 2009, the FASB issued three Staff Positions
(FSPs): (i) FSP FAS 157-4, “Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly”, (ii) FSP FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Statements,” and (iii) FSP FAS 115-2
and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments.” The pronouncements intended to provide additional application
guidance and enhance disclosures regarding fair value measurements and
impairments of securities, but they will not be applicable to the current
operations of the Company. Therefore a description and the impact on the
Company’s operations and financial position for each of the pronouncements above
have not been disclosed.





NOTE
3 – GOING CONCERN





The
Company's financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business.  In the near term, the
Company expects operating costs to continue to exceed funds generated from
operations.  As a result, the Company expects to continue to incur
operating losses, and the operations in the near future are expected to continue
to use working capital.





The
Company’s management is actively increasing marketing efforts to increase
revenues. The ability of the Company to continue as a going concern is dependent
on its ability to meet its financing arrangement and the success of its future
operations. The financial statements do not include any adjustments that might
be necessary if the Company is unable to continue as a going
concern.


F-6


UKARMA
CORPORATION





NOTES
TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
4 – PREPAID EXPENSES





Prepaid
expenses consisted of the following:





March
      31,
                    
                    
                    December
      31,2009
                    
                    
                    2008Prepaid
      Royalty
                    
                    $
                    67,809
                    
                    
                    $
                    68,581Prepaid
      Legal
                    
                    
                    -
                    
                    
                    
                    2,282Total
      Prepaid Expenses
                    
                    $
                    67,809
                    
                    
                    $
                    70,863





On April
25, 2008, the Company entered into an agreement with a co-author for its diet
and nutrition book that it is self-publishing and plans to market direct to
customers.  Pursuant to this agreement, the Company paid the co-author a
$10,000 advance against future royalties.  The Company will pay the
coauthor a 5% royalty if the Company acts as the publisher or a 2 1⁄2% royalty if
the Company engages a third-party publisher after the $10,000 advance is
recouped.





On March
26, 2008, the Company entered into an agreement with an author to write a book
related to diet and nutrition that the Company plans to self-publish and market
directly to consumers. Pursuant to the agreement, the author will be paid a
$40,000 advance on royalties with the following arrangement: $15,000 payable
upon execution of the agreement; $15,000 payable on or before the completion and
delivery of the first 50% of the book; and $10,000 on full completion, delivery,
and acceptance of the book.  The $40,000 advance on royalties is based on
the first 50,000 books sold. The author will receive a 5% royalty on sales above
50,000 books sold where the Company acts as the publisher and 2 1/2% royalty on
sales above 50,000 books sold if the Company engages a third-party
publisher.  As of March 31, 2009, no advance payment has been
paid.





On April
19, 2006, the Company entered into an agreement with a consultant to provide
consulting and advisory services for the Company, to appear in the Company’s
yoga, health, and wellness film productions, to assist in scriptwriting for
projects such as classes, interviews, and introductions, to participate in
project rehearsals, and to assist in marketing and promoting the projects.
Accordingly, the Company shall pay a royalty of 8% on the first $300,000 and 10%
on above $300,000 on all gross revenue, net of returns, refunds, chargebacks,
taxes, and shipping and handling charges. As of March 31, 2009, there is a
balance of $57,809 after advancing $70,000 and deducting royalties to the 2009
sales. Future royalty obligations will be deducted from the current
balance.





NOTE
5 – PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following:





March
      31,
                          
                          
                          December
      31,2009
                          
                          
                          2008Furniture
      & Fixtures
                          
                          $
                          15,459
                          
                          
                          $
                          13,721Machinery
      & Equipment
                          
                          
                          12,524
                          
                          
                          
                          12,525Studio
      Leasehold Improvements
                          
                          
                          479,327
                          
                          
                          
                          369,957507,310
                          
                          
                          
                          396,203Accumulated
      Depreciation
                          
                          
                          (5,909
                          )
                          
                          
                          (4,689
                          )Property
      and Equipment, net
                          
                          $
                          501,401
                          
                          
                          $
                          391,514


F-7


UKARMA
CORPORATION





NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
6 – PRODUCTION COSTS





The
Company capitalized costs incurred for recording seven fitness videos’ master
copies.  As of March 31, 2009, total costs of $619,085 were
capitalized.  All costs consisted of in-production costs only.





Beginning
in the second quarter of 2007, the costs were amortized on a straight-line
method over the estimated life of the recorded performances, which is five
years.  The Company recorded an amortization expense of $30,954 and $19,791
for the three months ended March 31, 2009 and 2008, respectively.





NOTE
7 – PATENT





The
Company filed for a patent for three proprietary yoga mats, which it believes
provide unique functions and benefits compared to yoga mats currently in the
market.  This patent is currently pending for approval.





NOTE
8 – ACCRUED EXPENSES





Accrued
expenses consisted of the following:





March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008Accrued
      Professional Fees
                  
                  $
                  21,000
                  
                  
                  $
                  15,000Accrued
      Salaries
                  
                  
                  103,510
                  
                  
                  
                  41,404Employee
      Reimbursable
                  
                  
                  -
                  
                  
                  
                  6,955Accrued
      Sales Tax
                  
                  
                  30
                  
                  
                  
                  18Accrued
      Income Tax
                  
                  
                  1,600
                  
                  
                  
                  800Others
                  
                  
                  -
                  
                  
                  
                  2,500Total
      Accrued Expenses
                  
                  $
                  126,140
                  
                  
                  $
                  66,677





NOTE
9 – NOTES PAYABLE TO RELATED PARTY





The notes
payable to related party bear interest at 7% per annum and are due on demand. As
of March 31, 2009, the balance was $195,993, including accrued interest of
$25,462. As of December 31, 2008, the balance was $207,768, including accrued
interest of $22,637.





NOTE
10 – STOCKHOLDERS’ EQUITY





During
the three months ended March 31, 2009, the Company received $139,000 and sold
1,288,266 shares of the Company’s common stock at a price of $0.06 to $0.15 per
share in a self-private placement offering.  The Board of Directors of the
Company also approved the issuance aggregate of 2,425,403 shares of Company’s
common stock to various providers in consideration of their services to the
Company.  The shares were valued and charged to operations based on the
closing trading price on the grant date, or $280,506 in the
aggregate.





During
the three months ended March 31, 2008, the Company received $351,750 and sold
1,005,000 shares of the Company’s common stock pursuant to the August 6, 2007
offering.  In addition, during the first three months ended March 31, 2008,
the Company issued 420,571 shares of the Company’s stock for its $147,200 stock
subscriptions pursuant to a August 6, 2007 offering.


F-8


UKARMA
CORPORATION





NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
11 – NET LOSS PER SHARE





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





For
      three months endedMarch
      31,2009
                              
                              
                              2008Numerator:Net
      Loss
                              
                              $
                              (526,542
                              )
                              
                              $
                              (515,993
                              )Denominator:Weighted
      Average of Common Shares
                              
                              
                              31,764,984
                              
                              
                              
                              21,522,444Basic
      and Diluted Net Loss per Share
                              
                              $
                              (0.02
                              )
                              
                              $
                              (0.02
                              )





As the
Company incurred net losses for the three months ended March 31, 2008, the
effect of dilutive securities totaling 2,914,286 equivalent shares has been
excluded from the calculation of diluted loss per share because their effect was
anti-dilutive.  There were no dilutive securities for the three months
ended March 31, 2009.





There
were also 11,777,000 and 5,827,000 shares out-of-money stock options and
warrants excluded from the calculation of diluted net loss per share for the
three months ended March 31, 2009 and 2008, respectively, because their exercise
prices were greater than the average fair market price of the common
stock.





NOTE
12 – 2006 STOCK OPTION PLAN





On
January 1, 2006, the Board of Directors approved and adopted the 2006 Stock
Option, Deferred Stock and Restricted Stock Plan (the “Plan”) to provide the
issuance of non-qualified and/or incentive stock options to employees, officers,
directors, and consultants and other service providers.  Generally, all
options granted expire ten years from the date of grant.  All options have
an exercise price equal to or higher than the fair market value of the Company’s
stock on the date the options were granted.  It is the policy of the
Company to issue new shares for stock option exercised and restricted stock,
rather than issued treasury shares.  Options generally vest over three
years.  The Plan reserves 7,500,000 shares of common stock under the Plan
and is effective through December 31, 2015.





A summary
of the status of stock options issued by the Company as of March 31, 2009 and
2008 is presented in the following table:





2009
                            
                            
                            2008Weighted
                            
                            
                            
                            
                            
                            WeightedNumber
                            
                            
                            Average
                            
                            
                            Number
                            
                            
                            Averageof
                            
                            
                            Exercise
                            
                            
                            of
                            
                            
                            ExerciseShares
                            
                            
                            Price
                            
                            
                            Shares
                            
                            
                            PriceOutstanding
      at beginning of year
                            
                            
                            5,295,000
                            
                            
                            $
                            0.20
                            
                            
                            
                            5,250,000
                            
                            
                            $
                            0.20Granted
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Exercised/Expired/Cancelled
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Outstanding
      at end of period
                            
                            
                            5,295,000
                            
                            
                            $
                            0.20
                            
                            
                            
                            5,250,000
                            
                            
                            $
                            0.20Exercisable
      at end of period
                            
                            
                            3,708,334
                            
                            
                            $
                            0.20
                            
                            
                            
                            2,625,000
                            
                            
                            $
                            0.20


F-9


UKARMA
CORPORATION





NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS





NOTE
12 – 2006 STOCK OPTION PLAN (continued)





The fair
value of the stock option granted is estimated on the date of grant using the
Black-Scholes option valuation model. This model uses the assumptions listed in
the table below. Expected volatilities are based on the estimated volatility of
the Company’s stock. The risk-free rate for periods within the expected life of
the option is based on the U.S. Treasury yield curve in effect at the time of
grant.





2009
                        
                        
                        2008Weighted
      average fair value per option granted
                        
                        
                        N/A
                        
                        
                        
                        N/ARisk-free
      interest rate
                        
                        
                        N/A
                        
                        
                        
                        N/AExpected
      dividend yield
                        
                        
                        N/A
                        
                        
                        
                        N/AExpected
      lives
                        
                        
                        N/A
                        
                        
                        
                        N/AExpected
      volatility
                        
                        
                        N/A
                        
                        
                        
                        N/A





The
following table sets forth additional information about stock options
outstanding at March 31, 2009:





WeightedAverage
                    
                    
                    WeightedRange
      of
                    
                    
                    
                    
                    Remaining
                    
                    
                    AverageExercise
                    
                    Options
                    
                    
                    Contractual
                    
                    
                    Exercise
                    
                    
                    OptionsPrices
                    
                    Outstanding
                    
                    
                    Life
                    
                    
                    Price
                    
                    
                    Exercisable$0.20-$0.35
                    
                    
                    5,295,000
                    
                    
                    
                    6.51
                    
                    
                    $
                    0.20
                    
                    
                    
                    3,708,3345,295,000
                    
                    
                    
                    6.51
                    
                    
                    $
                    0.20
                    
                    
                    
                    3,708,334





As of
March 31, 2009, there was $241,415 in total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under the
Plan.  That cost is expected to be recognized over a weighted average
period of 1.24 years.





As of
March 31, 2008, there was $472,487 in total unrecognized compensation cost
related to non-vested share-based compensation arrangements granted under the
Plan.  That cost is expected to be recognized over a weighted average
period of 2.71 years.





NOTE
13 – RELATED PARTY TRANSACTION





During
the three months ended March 31, 2008, the Company paid $8,500 to a director for
his consulting services to the Company. No such payments were made in
2009.




NOTE
14 – SUBSEQUENT EVENTS
 
 On June
11, 2009, the Company’s Board of Directors approved the following issuances of
stock:
  ·
              An
      aggregate 17,348,271 restricted shares of common stock to its Chief
      Executive Officer in consideration for cancellation of debt and deferred
      and accrued compensation owed by the Company to the CEO pursuant to a
      Conversion Agreement entered into between the Company and the CEO on June
      8, 2009.
 
 ·
              An
      aggregate 714,250 restricted shares of common stock to a director in
      consideration for services unrelated to his duties as a
      director.
 
 ·
              An
      aggregate 500,000 restricted shares of common stock to a provider in
      consideration for legal services
rendered.
 
 ·
              An
      aggregate 300,000 restricted shares of common stock to an individual in
      connection with a loan made by him to the
  Company.


F-10


ITEM 2.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.
  Forward
Looking Statements
 
 Certain
statements in this Management’s Discussion and Analysis (“MD&A”), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating results, and
the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934.  These forward-looking statements
generally are identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and similar
expressions.  Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties which
may cause actual results to differ materially from the forward-looking
statements.   We undertake no obligation to update or revise
publicly any forward-looking statements, whether as a result of new information,
future events, or otherwise.
  As
used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or
the “Company” or “uKarma” means uKarma Corporation, a Nevada
corporation.
  Overview
 
 We are an
early stage company that develops and markets proprietary branded personal
health and wellness products, including yoga and fitness DVDs, books and CDs,
nutraceuticals, and other products targeting the mass market and MBS
(Mind/Body/Spirit) consumers. We generated no revenues since inception through
the first quarter of 2007. We began to generate revenue in the second quarter of
2007.  Accordingly, we are no longer a development stage since April
1, 2007.
 
 Since
April 2004, we have dedicated our resources to developing our business plan and
producing items that will appeal to the “wellness” conscious consumer, such as
yoga and fitness DVDs. In May 2007, we began to
market and sell our initial Xflowsion products.We believe that our
success depends upon our ability to successfully produce, market, and distribute
such products along with having the necessary capital to operate and grow our
business. After test-marketing the initial version of our infomercial, we
recognized the need to shoot additional footage and to reedit it before airing
it again. Due to capital constraints, we had to wait until our registration
statement was declared effective by the Securities and Exchange Commission in
order to raise capital. Our registration statement was declared effective
on August 9, 2007, and we focused the remainder of 2007 raising capital and
preparing to update our infomercial and implement our marketing strategy in
2008.
 
 We began
airing the reedited version of our Xflowsion infomercial nationally on June 27,
2008.  Infomercials typically go through a period of on-air testing
and other means such as focus groups to obtain feedback that can be used to make
edits designed to elicit the greatest consumer response.  We have been
going through such a process and conducted a focus group during the 3rd quarter
of 2008.  We had a very high percentage (approximately 80%) of
participants who were interested in buying our Xflowsion DVD
series.  Overall, the focus group feedback revealed a strong interest
in the Xflowsion workout and instructor Eric Paskel and confirmed our potential
for Xflowsion to be a big seller.  We have been using the feedback we
received from the focus group and on-air infomercial testing to tweak our
branding and edit our infomercial to maximize the potential response and sales
by consumers.  With the economic downturn and the fall season
typically not being the best time to sell fitness-oriented products, we did not
air our infomercial again during 2008 and have yet to do so in 2009 due to
capital constraints.   In addition to our infomercial, our
Xflowsion DVD series has been approved for sale on QVC, the home shopping
television network, and we have finalized the economic terms of our relationship
with QVC.  While we expected that the first air date on QVC would be
sometime in January 2009, that airing has not yet occurred.  It was
indicated to us that the delay was due to economic conditions and because our
product would be less known to the QVC audience since our infomercial was not
airing on television.  We do expect at some point that QVC will begin
selling our Xflowsion DVD series.
  We will
be utilizing online marketing for banner and email marketing, Search Engine
Optimization (SEO), affiliate marketing, and social media or “word of mouth”
marketing. Currently, we are in the process of finalizing agreements with a
direct response marketing company on a revenue sharing basis in which the
marketing company will incur the expense of marketing, and we would pay them a
percentage of the sales they generate.  We have already set up landing
pages for such campaigns at www.xflowsion22.com,
www.xflowsion23.com,
and www.xflowsion24.com.  We
also plan to increase our brand exposure and awareness of Xflowsion and drive
sales via a public relations campaign. Toward that end, Xflowsion has been
profiled in People Magazine, People.com, Fitness Magazine, TMZ, The National
Enquirer, and many other publications.  We have received strong media
interest and expect our products and brand to receive much upcoming press
coverage, including on the Extra TV show which has already shot a segment
featuring Xflowsion and a transformation story of an actress who used Xflowsion
to lose weight and get in shape.  We are encouraged by the response to
our Xflowsion DVD series in the media and with consumers and via our marketing
efforts.  It has also been indicated to us by executives of our
competitors and other industry contacts that most successful fitness DVD
infomercials take many incarnations and in some cases 2-3 years before they
elicit a national consumer response.
  4
  We are
also exploring many opportunities for a reality TV show that would exploit the
Xflowsion brand. We had an offer for Eric Paskel to appear in the “Biggest
Loser” television program airing on the NBC television network, but declined due
to NBC’s insistence on controlling Mr. Paskel’s name and likeness. The “Biggest
Loser” opportunity has created other potential television opportunities that we
are currently pursuing.  During the third quarter of 2008, we signed
with a talent agency to represent our reality TV show concept.  We
then met with several TV production companies and generated much
interest.  We are currently negotiating with a TV production company
to produce and shop our show to TV networks.  While there is no
guarantee that we will be successful in producing and airing a TV show
consistent with our products and brands, we believe that such a TV show would
expose our products to potentially millions of viewers
 
 We
continue to seek capital so we can complete tenant improvements to our yoga and
fitness studio in Sherman Oaks, California and open the studio while also
continuing to have dialog with the landlord in an effort to seek better lease
terms of lesser monthly rent and a certain number of free rent months after our
opening. There is no guarantee that we will be successful in having the
necessary capital or that our landlord will agree to a reduction of rent and
free rent. If we are able to raise the needed capital soon, we expect that our
studio can be opened within two weeks thereafter.
 
 Along
with loaning additional funds to the Company, our CEO, Bill Glaser, has deferred
approximately $35,000 of his 2008 salary and will continue to defer his salary
in 2009 until the Company can better afford to pay it.  In the
meantime, he has agreed to convert his loans to the Company along with his
deferred compensation to date into shares of our common stock.
 
 Critical
Accounting Policies and Estimates
  Our
MD&A is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United
States.  The preparation of these financial statements requires us 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 as well as the reported net sales and expenses
during the reporting periods.  On an ongoing basis, we evaluate our
estimates and assumptions.  We base our estimates on historical
experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these estimates under
different assumptions or conditions.
 
 The
following accounting policies, which are also described in Note 2 to our
financial statements, are critical to aid the reader in fully understanding and
evaluating this discussion and analysis:
 
 Use of estimates: The
preparation of the accompanying financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make certain estimates and assumptions that directly affect the
results of reported assets, liabilities, revenue, and expenses. Actual results
may differ from these estimates.
 
 Revenue recognition:
The Company generally recognizes product revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectability is probable. In instances where the final acceptance of the
product is specified by the customer, revenue is deferred until all acceptance
criteria have been met. Customers’ prepayments are deferred until products are
shipped and accepted by the customers. No provisions were established for
estimated product returns and allowances based on the Company’s historical
experience.
 
 Cash Equivalents: For
purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with an original maturity of three months or less to be
cash equivalents.
 
 Concentration of
Cash: The Company places its cash and cash equivalents with high quality
financial institutions. At times, cash balances may be in excess of the FDIC
insurance limits. Management considers the risk to be minimal.
  5
  Inventories:
Inventories consist of finished goods and are stated at the lower of cost or
market, using the first-in, first-out method.
  Property and
Equipment: Property and equipment are valued at cost. Maintenance and
repair costs are charged to expenses as incurred. Depreciation is computed on
the straight-line method based on the estimated useful lives of the assets,
generally 5 to 7 years. Depreciation expense for the three months ended March
31, 2009 and 2008 was $1,220 and $510, respectively.
 
 Patents: The Company
capitalizes patent costs as incurred, excluding costs associated with Company
personnel, relating to patenting its technology. The majority of capitalized
costs represent legal fees related to a patent application. If the Company
elects to stop pursuing a particular patent application or determines that a
patent application is not likely to be awarded or elects to discontinue payment
of required maintenance fees for a particular patent, the Company, at that time,
records as expense the capitalized amount of such patent application or patent.
Awarded patents will be amortized over the shorter of the economic or legal life
of the patent.
 
 Fair value of financial
instruments: All financial instruments are carried at amounts that
approximate estimated fair value.
 
 Income Taxes: Income
tax expense is based on pretax financial accounting income. Deferred tax assets
and liabilities are recognized for the expected tax consequences of temporary
differences between the tax bases of assets and liabilities and their reported
amounts.
 
 Advertising Costs:
All costs associated with advertising and promoting the Company’s products and
services are expensed as incurred. Advertising expense for the three months
ended March 31, 2009 and 2008 was $9,035 and $188,355,
respectively.
 
 Net Loss Per Share:
Basic net loss per share includes no dilution and is computed by dividing net
loss available to common stockholders by the weighted average number of common
stock outstanding for the period.  Diluted net loss per share does not
differ from basic net loss per share since potential shares of common stock are
anti-dilutive for all periods presented.  Potential shares consist of
restricted common stock, stock warrants, and stock options.
 
 Stock Based
Compensation:  Effective January 1, 2006, the Company adopted
the fair value recognition provisions of FASB Statement No. 123(R),
“Shares-Based Payment” (SFAS 123R), using the modified-prospective-transition
method.  Under that transition method, compensation cost recognized in
2006 includes: (a) compensation cost for all share-based payments granted prior
to, but not yet vested as of, January 1, 2006, based of the grant date fair
value calculated in accordance with the original provisions of SFAS 123, and (b)
compensation cost for all share-based payments granted subsequent to December
31, 2005, based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123(R).  As a result of adopting SFAS 123(R) on
January 1, 2006, the Company reorganized pre-tax compensation expense related to
stock options of $51,511 and $47,514 for three months ended March 31, 2009 and
2008, respectively.
 
 The
Company accounts for stock issued to non-employees in accordance with the
provisions of SFAS No. 123R and the EITF Issue No. 00-18, “Accounting For Equity Instruments
That Are Issued To Other Than Employees for Acquiring, Or In Conjunction With
Selling, Goods Or Services.” SFAS No. 123R states that equity instruments
that are issued in exchange for the receipt of goods or services should be
measured at the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measurable. Under the
guidance in Issue 00-18, the measurement date occurs as of the earlier of (a)
the date at which a performance commitment is reached, or (b) absent a
performance commitment, the date at which the performance necessary to earn the
equity instruments is complete (that is, the vesting date).
 
 New Accounting
Pronouncements: In April 2009, the FASB issued three Staff Positions
(FSPs): (i) FSP FAS 157-4, “Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly”, (ii) FSP FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Statements,” and (iii) FSP FAS 115-2
and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments.” The pronouncements intended to provide additional application
guidance and enhance disclosures regarding fair value measurements and
impairments of securities, but they will not be applicable to the current
operations of the Company. Therefore a description and the impact on the
Company’s operations and financial position for each of the pronouncements
above have not been disclosed.
  6
  Results
of Operations
 
 Net sales.
For the three
months ended March 31, 2009, net sales increased 487% relative to the three
months ended March 31, 2008, from $2,759 to $13,431.  The increase
from the first quarter of 2008 to the first quarter of 2009 is primarily
attributable to increased press exposure of our Xflowsion product.
  Cost of
sales. Cost
of sales for the three months ended March 31, 2009 was $773 as compared to $144
for the three months ended March 31, 2008, an increase of approximately
537%.   The increase in our cost of sales is attributable to an
approximately proportionate increase in sales.
 
 Gross
profit.  Gross profit for the three months ended March 31, 2009 was
$12,658 as compared to a gross profit of $2,615 for the three months ended March
31, 2008, representing gross margins of approximately 94% and 94%,
respectively.   Gross profit percent remained consistent between the
two periods.
 
 Operating
expenses.Our operating expenses
consisted primarily of expenses related to marketing our product, G&A, and
construction of our studio.  For the three months ended March 31,
2009, total operating expenses were $530,901, while total operating expenses for
the three months ended March 31, 2008 were $514,600, representing an increase of
approximately 3%.   The increase in operating expenses is due to
higher costs related to tenant improvements for our studio relative to
production costs in the prior period.
  Net income
(loss).  We had a net loss of $526,542 for the three months ended
March 31, 2009 as compared to a net loss of $515,993 for the three months ended
March 31, 2008.
 
 LIQUIDITY
 
 Cash
Flows
 
 Net cash
flow used in operating activities was ($14,101) for the three months ended March
31, 2009, while net cash flow used in operating activities was ($344,664) for
the three months ended March 31, 2008.  The decrease in net cash flow
from operating activities between the two quarters was mainly due to an increase
in stock for services, accounts payable, accrued expenses, and other
receivables.
 
 Net cash
flow used in investing activities was $111,107 for the three months ended
March 31, 2009, while we had no net cash flow from investing activities during
the three months ended March 31, 2008.   The negative cash from
investing activities between the periods was due to costs related to tenant
improvements to our studio space in Sherman Oaks, California.
 
 Net cash
flow provided by financing activities was $124,400 for the three months
ended March 31, 2009, while net cash flow provided by financing activities was
$351,751 for the three months ended March 31, 2008.  The decrease in
net cash flow from financing activities was mainly due to less capital
being raised during the first quarter of 2009, while in the first quarter of
2008, our IPO was effective and we were raising capital pursuant to that
registered offering.
  Material
Impact of Known Events on Liquidity
  Our
obligation to perform tenant improvements of our yoga and fitness studio and
then begin operations is a cause of a decrease in our liquidity.  We
estimate that the completed construction costs for our studio will be
approximately $500,000 and then require approximately $55,000 per month to
operate once we open for business.  Due to our current liquidity, we
must raise additional capital in order to meet the aforementioned
obligations.
 
 CAPITAL
RESOURCES
 
 As
ofMarch 31, 2009,
we had working capital of $(476,713).  To satisfy current working
capital needs, our CEO, Bill Glaser, loaned funds to the Company along with
raising capital via the sale of common stock.  Until we raise
sufficient capital via the sale of our common stock, there is no guarantee that
we will be able to meet current working capital needs if we do not receive
additional loans from either our CEO or other individuals.  We have
fully incurred the production cost of our Xflowsion DVD series and last version
of our infomercial, and have incurred approximately $400,000 worth of costs
related to the construction of our yoga and fitness studio.  We plan
to make financial investments in completing and opening our yoga and fitness
studio and in marketing of our Xflowsion DVD series for the next six
months.  We expect to incur substantial losses over the next two
years.
  7
  We
estimate that our expenses over the next 12 months beginning on January 1, 2009
will be approximately $1,025,000 as follows:
 
 General
      and Administrative
                    
                    $
                    300,000Infomercial
      Production
                    
                    
                    150,000Inventory
                    
                    
                    50,000Media
      (Airtime)
                    
                    
                    50,000Marketing/Publicity
                    
                    
                    150,000Legal
                    
                    
                    75,000DVD/CD
      Production
                    
                    
                    50,000Accounting
                    
                    
                    50,000Studio
      Construction/Start-up
                    
                    
                    150,000
 
 As of
March 31, 2009, we had cash equivalents of $8,132, which will meet our capital
requirements for approximately the next month.  We believe that we
need approximately an additional $900,000 to meet our capital requirements over
the next 12 months.  Our intention is to obtain this money through
debt and/or equity financings.
 
 We plan
to engage outside contractors and consultants who are willing to be paid in
stock rather than cash or a combination of stock and cash.  Expenses
incurred that cannot be paid in stock, such as auditors' fees, will be paid in
cash.  There are no assurances that we will be able to meet our
capital requirements or that our capital requirements will not
increase.  If we are unable to raise necessary capital to meet our
capital requirements, we may not be able to successfully market and sell our
Xflowsion DVDs and open and operate our yoga and fitness studio.
  CONTRACTUAL
OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
 
 Contractual
Obligations
 
 We have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.
  The
following table summarizes our contractual obligations as of March 31, 2009, and
the effect these obligations are expected to have on our liquidity and cash
flows in future periods.
 
 Payments
      Due by PeriodTotal
                            
                            
                            Less
      than
                              1
      year
                            
                            
                            1-3
      Years
                            
                            
                            3-5
      Years
                            
                            
                            5
      years +Contractual Obligations:Bank
      Indebtedness
                            
                            $
                            ―
                            
                            
                            $
                            ―
                            
                            
                            $
                            ―
                            
                            
                            $
                            ―
                            
                            
                            $
                            ―Other
      Indebtedness
                            
                            
                            195,993
                            
                            
                            
                            195,993
                            
                            
                            
                            ―
                            
                            
                            
                            ―
                            
                            
                            
                            ―Operating
      Leases
                            
                            
                            1,584,000
                            
                            
                            
                            132,000
                            
                            
                            
                            792,000
                            
                            
                            
                            660,000
                            
                            
                            
                            ―Totals:
                            
                            $
                            1,779,993
                            
                            
                            $
                            327,993
                            
                            
                            $
                            792,000
                            
                            
                            $
                            660,000
                            
                            
                            $
                            ―
 
 Off-Balance
Sheet Arrangements
 
 We have
not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties.  We have not
entered into any derivative contracts that are indexed to our shares and
classified as stockholders’ equity or that are not reflected in our financial
statements.  Furthermore, we do not have any retained or contingent
interest in assets transferred to an unconsolidated entity that serves as
credit, liquidity or market risk support to such entity.  We do not
have any variable interest in any unconsolidated entity that provides financing,
liquidity, market risk or credit support to us or engages in leasing, hedging or
research and development services with us.
  ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable.
  8
 
 ITEM
      4.
              CONTROLS
      AND PROCEDURES
  Disclosure
Controls and Procedures
 
 As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).  Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of the end of the applicable period to
ensure that the information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act (i) is recorded, processed,
summarized, and reported within the time periods specified in Securities and
Exchange Commission rules and forms and (ii) is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required
disclosures.
 
 Changes
in Internal Control over Financial Reporting
 
 There was
no change in our internal control over financial reporting during our most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.
  9
   PART
II - OTHER INFORMATION
 
 ITEM
      1.
              LEGAL
      PROCEEDINGS
 
 There
have been no material developments during the quarter ended March 31, 2009 in
any material pending legal proceedings to which the Company is a party or of
which any of our property is the subject.
  ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
 
 From
January 13, 2009 to March 18, 2009, we sold an aggregate 1,288,266 shares of our
common stock in exchange for gross proceeds of $139,000.  The price
per share ranged from $0.06 to $0.15.  These sales were made in a
private placement offering.  We relied on the exemption from
registration as set forth in Section 4(2) of the Securities Act of 1933, as
amended (the “Act”), for the issuance of these shares.  The
shareholders took the shares for investment purposes without a view to
distribution and had access to information concerning the Company and our
business prospects, as required by the Act.  In addition, there was no
general solicitation or advertising for the issuance of the
shares.  The shareholders were permitted access to our management for
the purpose of acquiring investment information.  Due to the
shareholders’ dealings with companies similar to ours, we deem the shareholders
sophisticated for the purposes of Section 4(2) of the Act.
  ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES
 
 None.
  ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 None.
  ITEM
      5.
              OTHER
      INFORMATION
  (a)
              On
      June 8, 2009, we entered into a Conversion Agreement with Bill Glaser, our
      Chief Executive Officer.  Mr. Glaser previously made loans to
      the Company evidenced by several promissory notes (the “Notes”) with an
      aggregate principal balance of $202,734.72 as of the date of the agreement
      (“Loan Balance”).  We also owed Mr. Glaser $144,230.70 in
      accrued deferred compensation as of the date of the agreement (“Deferred
      Compensation”).  Pursuant to the agreement, Mr. Glaser agreed to
      convert the total of the Loan Balance and Deferred Compensation into an
      aggregate 17,348,271 restricted shares of our common stock at a conversion
      price of $0.02 per share, which was the closing bid price of our common
      stock on the date of the agreement.  In consideration for the
      converted shares, the Notes were cancelled and the Deferred Compensation
      was eliminated.  The foregoing description of the Conversion
      Agreement does not purpose to be complete and is qualified in its entirety
      by reference to the full text of such agreement, which is filed as an
      exhibit to this report.
 
 (b)
              There
      were no changes to the procedures by which security holders may recommend
      nominees to our board of
directors.
  10
  ITEM
      6.
              EXHIBITS
 
 Exhibit
                        Number
                      
                      Description3.1
                      
                      Amended
      and Restated Certificate of Incorporation, as currently in effect
      (1)3.2
                      
                      Bylaws,
      as currently in effect (1)4.1
                      
                      Form
      of Warrant (1)10.1
                      
                      Conversion
      Agreement between the Registrant and Bill Glaser, dated June 8, 2009
      *31.1
                      
                      Section 302
      Certification by the Corporation’s Chief Executive Officer
    *31.2
                      
                      Section 302
      Certification by the Corporation’s Chief Financial Officer
    *32.1
                      
                      Section 906
      Certification by the Corporation’s Chief Executive Officer
    *32.2
                      
                      Section 906
      Certification by the Corporation’s Chief Financial Officer
    *
 _________________
  *
              Filed
      herewith.
 
 (1)
              Incorporated
      herein by reference to our Form SB-2 filed with the SEC on February 12,
      2007.
 
 11
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
  UKARMA
      CORPORATION(Registrant)Date:
      June 12, 2009
              By:
              /s/ Bill GlaserBill
      GlaserChief
      Executive Officer and President (Principal Executive
                Officer)
      and Interim Chief Financial Officer (Principal
                Financial
      and Accounting Officer)
  12