**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-QSB**





**QUARTERLY
      REPORT PURSUANT SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**




For
      the quarterly period ended June 30, 2007





Commission
      File Number: 333-140633





**UKARMA
      CORPORATION**


(Name
      of
      small business issuer in its charter)





**NEVADA**
            **68-048-2472**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)





**520
      Broadway, Suite 350**


**Santa
      Monica, CA 90401**


**(310)
      998-8909**


(Address,
      including zip code, and telephone number, including area code, of


registrant’s
      principal executive offices)





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




Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act)


Yes
o No x




**APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**


**PROCEEDINGS
      DURING THE PRECEDING FIVE YEARS**





Check
      whether the issuer has filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.        Yes
o No
      o




**APPLICABLE
      ONLY TO CORPORATE ISSUERS**





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





16,397,914 shares
      of
      common stock as of August 16, 2007





Transitional
      Small Business Disclosure
      Format          Yes o No x







**UKARMA
      CORPORATION**





**FORM
      10-QSB**




**INDEX**





**Page
                No.****PART
                I.**
            **Financial
                Information**
            3Item
                1.
            Condensed
                Financial Statements (unaudited) :
            3Condensed
                Balance Sheet as of June 30, 2007
            3Condensed
                Statements of Operations for the Three and Six Months Ended June
                30, 2007
                and 2006
            4Condensed
                Statements of Cash Flows for the Six Months Ended June 30, 2007 and
                2006
            5Notes
                to Condensed Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis or Plan of Operation
            15Item
                3.
            Controls
                and Procedures
            16**PART
                II.**
            **Other
                Information**
            17Item
                1.
            Legal
                Proceedings
            17Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            17Item
                3.
            Defaults
                Upon Senior Securities
            17Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            17Item
                5.
            Other
                Information
            17Item
                6.
            Exhibits
            17SIGNATURES
            
            20








2




**PART
      I.**  **FINANCIAL
      INFORMATION**





**Item
      1.**  **Financial
      Statements**





**UKARMA
      CORPORATION**





**BALANCE
      SHEETS**


As
                  of**June
                  30,**
              
              December
                  31,**2007**
              
              2006**(Unaudited)**
              
              (Audited)ASSETSCurrent
                  AssetsCash
              
              **$**
              **-**
              
              $
              102,902Prepaid
                  expenses
              
              
              **61,668**
              
              
              97,513Inventory
              
              
              **27,940**
              
              
              -Available-for-sale
                  securities
              
              
              **-**
              
              
              17,000Total
                  Current Assets
              
              
              **89,608**
              
              
              217,415Property
                  and equipment, net of accumulated depreciationof
                  $818 for 2007, and $94 for 2006
              
              
              **11,822**
              
              
              3,836Other
                  AssetsProduction
                  costs, net of accumulated amortization ofof
                  $33,913 for 2007, and none for 2006
              
              
              **644,344**
              
              
              651,228Deposit
              
              
              **3,136**
              
              
              3,136Patent
              
              
              **10,358**
              
              
              10,358Total
                  Other Assets
              
              
              **657,838**
              
              
              664,722TOTAL
                  ASSETS
              
              **$**
              **759,268**
              
              $
              885,973LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  LiabilitiesBank
                  overdraft
              
              **$**
              **82,338**
              
              $
              -Accounts
                  payable
              
              
              **146,988**
              
              
              208,419Accrued
                  expenses
              
              
              **79,053**
              
              
              11,778Notes
                  payable
              
              
              **30,000**
              
              
              -Notes
                  payable to related party
              
              
              **388,579**
              
              
              100,000Total
                  Current Liabilities
              
              
              **726,958**
              
              
              320,197Stockholders'
                  EquityCommon
                  stock, $0.001 par value; 100,000,000shares
                  authorized; 15,561,322 and 15,218,734 shares issuedand
                  outstanding in 2007 and 2006, respectively
              
              
              **15,561**
              
              
              15,219Paid-in
                  capital
              
              
              **2,336,800**
              
              
              2,046,030Accumulated
                  other comprehensive income
              
              
              **-**
              
              
              12,000Stock
                  subscriptions
              
              
              **-**
              
              
              55,000Accumulated
                  deficit
              
              
              **(2,320,051**
              **)**
              
              (1,562,473
              )Total
                  Stockholders' Equity
              
              
              **32,310**
              
              
              565,776TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              **$**
              **759,268**
              
              $
              885,973




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




3




**UKARMA
      CORPORATION**




**STATEMENTS
      OF OPERATIONS (Unaudited)**


**For
      the three and six months ended June 30, 2007, and 2006**


**For
                    three months**
                
                **For
                    six months****ended
                    June 30,**
                
                **ended
                    June 30,****2007**
                
                2006
                
                **2007**
                
                2006Sales
                
                **$**
                **56,023**
                
                $
                -
                
                **$**
                **56,023**
                
                $
                -Cost
                    of Sale
                
                
                **18,302**
                
                
                
                
                
                **18,302**Gross
                    Profit
                
                
                **37,721**
                
                
                **-**
                
                
                **37,721**
                
                
                **-**Selling,
                    General and Administrative Expenses
                
                
                **318,664**
                
                
                246,557
                
                
                **785,608**
                
                
                438,415Operating
                    Loss
                
                
                **(280,943**
                **)**
                
                (246,557
                )
                
                **(747,887**
                **)**
                
                (438,415
                )Other
                    Income (Expenses)Interest
                    Income
                
                
                **-**
                
                
                6,194
                
                
                **-**
                
                
                7,599Gain
                    on Sale of Securities
                
                
                **3,279**
                
                
                
                
                
                **3,279**Interest
                    Expense
                
                
                **(8,820**
                **)**
                
                (271
                )
                
                **(12,170**
                **)**
                
                (271
                )Total
                    Other Income (Expense)
                
                
                **(5,541**
                **)**
                
                5,923
                
                
                **(8,891**
                **)**
                
                7,328Net
                    Loss before Income Taxes
                
                
                **(286,484**
                **)**
                
                (240,634
                )
                
                **(756,778**
                **)**
                
                (431,087
                )Provision
                    for Income Taxes
                
                
                **-**
                
                
                -
                
                
                **800**
                
                
                -Net
                    Loss
                
                **$**
                **(286,484**
                **)**
                $
                (240,634
                )
                **$**
                **(757,578**
                **)**
                $
                (431,087
                )Net
                    Loss Per Share-Basic and Diluted
                
                **$**
                **(0.02**
                **)**
                $
                (0.02
                )
                **$**
                **(0.05**
                **)**
                $
                (0.03
                )Weighted
                    Average Number of Shares
                
                
                **15,561,322**
                
                
                13,612,569
                
                
                **15,504,224**
                
                
                13,156,389


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





4




**UKARMA
      CORPORATION**





**STATEMENTS
      OF CASH FLOWS (Unaudited)**


**For
      the six months ended June 30, 2007, and 2006**


**For
                  six months ended****June
                  30,****2007**
              
              2006Cash
                  Flow from Operating Activities:Net
                  loss
              
              **$**
              **(757,578**
              **)**
              $
              (264,437
              )Adjustment
                  to reconcile net loss tonet
                  cash used by operating activities:Depreciation
                  and amortization
              
              
              **34,638**
              
              
              -Issuance
                  of stock for services
              
              
              **30,647**
              
              
              97,563Stock
                  option expenses
              
              
              **95,029**
              
              
              45,454Stock
                  warrant expenses
              
              
              **110,437**
              
              
              26,387Gain
                  on sale of investment
              
              
              **(3,279**
              **)**
              
              -(Increase)
                  Decrease in:Prepaid
                  expenses
              
              
              **35,845**
              
              
              2,144Inventory
              
              
              **(27,940**
              **)**
              
              -Capitalized
                  production costs
              
              
              **(27,029**
              **)**
              
              -Increase
                  (Decrease) in:Accounts
                  payable
              
              
              **(61,432**
              **)**
              
              -Accrued
                  expenses
              
              
              **67,275**
              
              
              12,664Net
                  Cash Used by Operating Activities
              
              
              **(503,387**
              **)**
              
              (80,225
              )Cash
                  Flow from Investing Activities:Purchase
                  of property and equipment
              
              
              **(8,711**
              **)**
              
              -Sale
                  of investment
              
              
              **8,279**
              
              
              -Net
                  Cash Used by Investing Activities
              
              
              **(432**
              **)**
              
              -Cash
                  Flow from Financing Activities:Bank
                  overdraft
              
              
              **82,338**
              
              
              -Proceeds
                  from notes payable
              
              
              **30,000**
              
              
              -Proceeds
                  from officer advances
              
              
              **288,579**
              
              
              -Net
                  Cash Provided by Financing Activities
              
              
              **400,917**
              
              
              -Net
                  Decrease in Cash
              
              
              **(102,902**
              **)**
              
              (80,225
              )Cash
                  Balance at Beginning of Period
              
              
              **102,902**
              
              
              739,843Cash
                  Balance at End of Period
              
              **$**
              **-**
              
              $
              659,618Supplemental
                  Disclosures:Interest
                  Paid
              
              **$**
              **-**
              
              $
              -Taxes
                  Paid
              
              **$**
              **-**
              
              $
              -Noncash
                  Investment and Financing Activities:Unrealized
                  gain (loss) on marketable securities
              
              **$**
              **-**
              
              $
              6,000





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





5


**UKARMA
      CORPORATION**





**NOTES
      TO INTERIM UNAUDITED FINANCIAL STATEMENTS**





**NOTE
      1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





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.





uKarma
      Corporation 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 of people
      that are seeking to enrich their physical, spiritual, and mental wellness.





Through
      infomercials and other marketing initiatives, uKarma 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/well-being 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 began to generate revenue in the second quarter of 2007; accordingly,
      the Company ceased its development stage status commencing April 1,
      2007.





Presentation
      of Interim Information :
      The
      accompanying financial statements as of June 30, 2007 and for the three and
      six
      months ended June 30, 2007, and 2006 have been prepared by the Company, without
      audit, pursuant to the rules and regulations of the Securities and Exchange
      Commission (the “SEC”). Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with generally accepted
      accounting principles have been condensed or omitted pursuant to such rules
      and
      regulations. However, the Company believes that the disclosures are adequate
      to
      make the information presented not misleading. These financial statements should
      be read in conjunction with the audited financial statements and the notes
      thereto included in the Company’s Registration Statement on Amendment No. 4 to
      Form SB-2 filed with the SEC on August 6, 2007.





The
      balance sheet as of December 31, 2006 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.





In
      the
      opinion of the Company's management, all adjustments (which include only normal
      recurring adjustments) necessary to present fairly the financial position,
      results of operations, and cash flows as of June 30, 2007 and for the three
      and
      six months ended June 30, 2007, and 2006 have been made. The results of
      operations for the three and six months ended June 30, 2007 are not necessarily
      indicative of the operating results for the full year.





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
      collectibility 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.




6





**NOTE
      1 - NATURE OF OPERATIONS AND 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 (U.S. GAAP)
      requires management to make certain estimates and assumptions that affect the
      reported amounts of assets and liabilities and 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.





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 $95,029 and $45,454 for six
      months ended June 30, 2007 and 2006, respectively.





New
      Accounting Pronouncements :
      In May
      2007, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
      Position No. FIN 48-1 (“FSP 48-1”), *Definition
      of Settlement in FASB Interpretation No. 48* .  FSP
      48-1 amended FIN 48 to provide guidance on how an enterprise should determine
      whether a tax position is effectively settled for the purpose of recognizing
      previously unrecognized tax benefits.  FSP 48-1 required application
      upon the initial adoption of FIN 48.  The adoption of FSP 48-1 did not
      affect the Company’s financial statements.





In
      February 2007, the FASB issued Financial Accounting Standards (“FAS”) No.
      159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      amendment of FASB Statement No. 115* ,
      which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value at specified election dates. A business entity is
      required to report unrealized gains and losses on items for which the fair
      value
      option has been elected in earnings at each subsequent reporting date. This
      statement is expected to expand the use of fair value measurement. FAS No.159
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years.





In
      September 2006, the FASB issued FAS No.
      157, *Fair
      Value Measurements* .
      FAS No.
      157 defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. This statement addresses how to calculate fair value
      measurements required or permitted under other accounting pronouncements.
      Accordingly, this statement does not require any new fair value measurements.
      However, for some entities, the application of the statement will change current
      practice. FAS No. 157 is effective for the Company beginning January 1, 2008.
      The Company is currently evaluating the impact of this standard.





7




**NOTE
      1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (continued)**





In
      September 2006, the SEC staff issued Staff Accounting Bulletin No. 108 ("SAB
      108"), *Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements.* The
      stated purpose of SAB 108 is to provide consistency between how registrants
      quantify financial statement misstatements.





Prior
      to
      the issuance of SAB 108, there have been two widely-used methods, known as
      the
      "roll-over" and "iron curtain" methods, of quantifying the effects of financial
      statement misstatements. The roll-over method quantifies the amount by which
      the
      current year income statement is misstated while the iron curtain method
      quantifies the error as the cumulative amount by which the current year balance
      sheet is misstated. Neither of these methods considers the impact of
      misstatements on the financial statements as a whole.





SAB
      108
      established an approach that requires quantification of financial statement
      misstatements based on the effects of the misstatement on each of the Company's
      financial statements and the related financial statement disclosures. This
      approach is referred to as the "dual approach" as it requires quantification
      of
      errors under both the roll-over and iron curtain methods.





SAB
      108
      allows registrants to initially apply the dual approach by either retroactively
      adjusting prior financial statements as if the dual approach had always been
      used, or by recording the cumulative effect of initially applying the dual
      approach as adjustments to the carrying values of assets and liabilities as
      of
      January 1, 2006 with an offsetting adjustment recorded to the opening balance
      of
      retained earnings.





The
      Company initially applied SAB 108 using the cumulative effect transition
      method in connection with the preparation of the annual financial statements
      for
      the year ending December 31, 2006. The Company does not believe the adoption
      of
      SAB 108 will have a significant effect on its financial statements.




**NOTE
      2 - 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
      Company's ability 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.





8




**NOTE
      3 - AVAILABLE-FOR-SALE SECURITIES**





In
      June
      2007, the Company sold its minority equity investment in a publicly traded
      company and recognized a gain of $3,279.





The
      aggregate fair market value of the securities was $17,000 as of December 31,
      2006. The gross unrealized holding gains related to the investment as of
      December 31, 2006 was $12,000.





**NOTE
      4 - PREPAID EXPENSES**





Prepaid
      expenses consisted of the following:


June
                  30,
              
              December
                  31,2007
              
              2006(Unaudited)
              
              (Audited)Legal
                  Retainer
              
              $
              35,144
              
              $
              67,513Prepaid
                  Royalties
              
              
              26,524
              
              
              30,000$
              61,668
              
              $
              97,513




**NOTE
      5 - PRODUCTION COSTS**





The
      Company capitalized costs incurred for recording seven fitness videos’ master
      copies. As of June 30, 2007, total costs of $678,257 were capitalized. All
      costs
      consisted of in-production costs only.





Commenced
      on 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 $33,913 for the six
      months ended June 30, 2007.




**NOTE
      6 - 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. Through to date, the patent is still pending for approval.





9




**NOTE
      7 - ACCRUED EXPENSES**





Accrued
      expenses consisted of the following:


June
                  30,
              
              December
                  31,2007
              
              2006(Unaudited)
              
              (Audited)Accrued
                  Compensation
              
              $
              39,500
              
              $
              -Accrued
                  Professional Fees
              
              
              21,600
              
              
              10,000Accrued
                  Interest
              
              
              11,429
              
              
              978Employee
                  Reimbursable
              
              
              4,924
              
              
              -Accrued
                  Income Tax
              
              
              1,600
              
              
              800Total
                  Accrued Expenses
              
              $
              79,053
              
              $
              11,778





**NOTE
      8 - NOTES PAYABLE**





During
      the second quarter of 2007, **** the
      Company entered into a debt agreement with an unrelated party and received
      a
      loan for $30,000 at an interest rate of 7% per annum payable on demand. As
      of
      June 30, 2007, the accrued interest related to the note was $460.




**NOTE
      9 - OTHER COMPREHENSIVE INCOME (LOSS)**





The
      Company’s accumulated other comprehensive income (loss) consists of the
      unrealized gain on available-for-sale securities only. The components of
      comprehensive loss were as follows:


For
                  three months ended
              
              For
                  six months endedJune
                  30,
              
              June
                  30,2007
              
              2006
              
              2007
              
              2006Net
                  Loss
              
              $
              (286,484
              )
              $
              (240,634
              )
              $
              (757,578
              )
              $
              (431,087
              )Other
                  Comprehensive Income (Loss):Unrealized
                  gain on available-for-sale securities
              
              
              -
              
              
              -
              
              
              -
              
              
              6,000Comprehensive
                  Loss
              
              $
              (286,484
              )
              $
              (240,634
              )
              $
              (757,578
              )
              $
              (425,087
              )





**NOTE
      10 - STOCKHOLDERS’ EQUITY**





During
      the six months ended June 30, 2007, the Board of Directors of the Company
      approved the issuance of an aggregate of 122,588 shares of the Company’s common
      stock to various providers in consideration for their services to the Company.
      The shares were valued and charged to operations at a price of $0.25 per share
      or $30,647 total. The valuation was based on the 2006 private placement
      offering price of $0.25 per share.





10




**NOTE
      11 - NET LOSS PER SHARE**





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


For
                  three months ended
              
              For
                  six months endedJune
                  30,
              
              June
                  30,2007
              
              2006
              
              2007
              
              2006Numerator:Net
                  Loss
              
              $
              (286,484
              )
              $
              (240,634
              )
              $
              (757,578
              )
              $
              (431,087
              )Denominator:Weighted
                  Average of Common Shares
              
              
              15,561,322
              
              
              13,612,569
              
              
              15,504,224
              
              
              13,156,389Basic
                  and Diluted Net Loss per Share
              
              $
              (0.02
              )
              $
              (0.02
              )
              $
              (0.05
              )
              $
              (0.03
              )




As
      the
      Company incurred net losses for the three and six months ended June 30, 2007,
      the effect of dilutive securities totaling 1,550,000 and 1,550,000 equivalent
      shares, respectively, has been excluded from the calculation of diluted loss
      per
      share because their effect was anti-dilutive.





As
      the
      Company incurred net losses for the three and six months ended June 30, 2006,
      the effect of dilutive securities totaling 500,000 and 500,000 equivalent
      shares, respectively, has been excluded from the calculation of diluted loss
      per
      share because their effect was anti-dilutive.





The
      Company also excluded 6,402,000 and 9,875,000 shares
      under out-of-money stock options and warrants from the calculation of
      diluted net loss per share for the six months ended June 30, 2007 and 2006,
      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, 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 Company's policy to issue
      new shares for stock options that are exercised and restricted stock, rather
      than to issue treasury shares. Options generally vest over ten years. The
      Plan reserves 7,500,000 shares of common stock under the Plan and is
      effective through December 31, 2015.





11




**NOTE
      12 - 2006 STOCK OPTION PLAN (continued)**





A
      summary
      of the status of stock options issued by the Company as of June 30, 2007 and
      2006 is presented in the following table:


2007
              
              2006Weighted
              
              
              
              WeightedNumber
              
              Average
              
              Number
              
              Averageof
              
              Exercise
              
              of
              
              ExerciseShares
              
              Price
              
              Shares
              
              PriceOutstanding
                  at beginning of year
              
              
              5,250,000
              
              $
              0.20
              
              
              -
              
              $
              -Granted
              
              
              -
              
              
              -
              
              
              5,250,000
              
              
              0.20Exercised/Expired/Cancelled
              
              
              -
              
              
              -
              
              
              -
              
              
              -Outstanding
                  at end of period
              
              
              5,250,000
              
              $
              0.20
              
              
              5,250,000
              
              $
              0.20Exercisable
                  at end of period
              
              
              1,583,334
              
              $
              0.20
              
              
              -
              
              $
              0.20




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.


2007
              
              2006Weighted
                  average fair value per option granted
              
              
              N/A
              
              $
              0.17Risk-free
                  interest rate
              
              
              N/A
              
              
              4.37
              %Expected
                  dividend yield
              
              
              N/A
              
              
              0.00
              %Expected
                  lives
              
              
              N/A
              
              
              10.00Expected
                  volatility
              
              
              N/A
              
              
              100.00
              %




The
      following table sets forth additional information about stock options
      outstanding at June 30, 2007:


WeightedAverage
              
              WeightedRange
                  of
              
              
              
              Remaining
              
              AverageExercise
              
              Options
              
              Contractual
              
              Exercise
              
              OptionsPrices
              
              Outstanding
              
              Life
              
              Price
              
              Exercisable$
                  0.20
              
              
              5,250,000
              
              
              8.29
              
              $
              0.20
              
              
              1,583,3345,250,000
              
              
              8.29
              
              $
              0.20
              
              
              1,583,334




As
      of June
      30 ,
      2007,
      there was $613,616 of 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 3.45
      years.





12




**NOTE
      13 - STOCK WARRANTS**





On
      January 26, 2007, March 13, 2007, and March 29, 2007, the Company issued
      warrants to the CEO of the Company for the right to purchase 200,000, 250,000,
      and 125,000 shares of the Company's common stock, respectively, at the price
      of
      $0.25 per share. The warrants have a term of five years from the date of
      issuance. The warrants were valued at $0.19 per share using the Black-Scholes
      option pricing model.





On
      March
      1, 2006, the Company issued warrants to a service provider for the right to
      purchase 250,000 shares of the Company’s common stock at the price of $1 per
      share. The warrants have a term of five years from the date of issuance.
      The warrants were valued at $0.11 per share using the Black-Scholes option
      pricing model.





On
      April
      14, 2006, the Company issued warrants to each of the investors who participated
      in the Company’s 2004 private offering for the right to purchase an equal number
      of shares at the price of $1 per share with a mandatory exercise provision
      when the Company’s stock trades at $1.50 or higher for five consecutive days.
      The warrants have a term of five years from the date of issuance. The warrants
      were valued at $0.11 per share using the Black-Scholes option pricing
      model.





The
      assumptions used in the Black-Scholes option pricing model are as follows:


June
                  30,2007
              
              2006Weighted
                  average fair value per option granted
              
              $
              0.19
              
              $
              0.11Risk-free
                  interest rate
              
              
              4.60
              %
              
              4.63
              %Expected
                  dividend yield
              
              
              0.00
              %
              
              0.00
              %Expected
                  lives
              
              
              5.00
              
              
              5.00Expected
                  volatility
              
              
              100.00
              %
              
              100.00
              %





The
      Company recognized $110,437 and $26,387 stock warrants expense for the six
      months ended June 30, 2007 and 2006, respectively.




**NOTE
      14 - RELATED PARTY TRANSACTIONS**





During
      the six months ended June 30, 2007, the Company entered into various debt
      agreements with the CEO of the Company, and received loans from its CEO for
      an
      aggregate amount of $323,503 at an interest rate of 7% per annum payable on
      demand. As of June 30, 2007, the Company has loans payable to the CEO of the
      Company of $388,579 and accrued interest payable for the related loans of
      $10,967.





On
      January 17, 2005, an option agreement was signed between the CEO and a director
      of the Company to purchase up to 3,000,000 shares of the Company’s common stock
      from the director at $0.20 per share. The duration of the option agreement
      is
      for ten years commencing on January 17, 2005.





On
      July
      9, 2007, the CEO and the Director exercised the option agreement whereby the
      CEO
      acquired 3,000,000 shares of the Company’s common stock from the
      director.





13




**NOTE
      15 - SUBSEQUENT EVENTS**





Subsequent
      to June 30, 2007, the Company entered into two additional debt agreements with
      the CEO of the Company and another party, and received loans for an aggregate
      amount of $40,051 at an interest rate of 7% per annum payable on
      demand.





On
      August
      14, 2007, the CEO agreed to convert $209,148 worth of his loans to the Company
      ($200,000 principal plus $9,148 accrued interest) into 836,592 shares of the
      Company’s Common Stock. The Board of Directors of the Company approved such
      conversion on August 16, 2007.





14


**Item
      2.**  **Management’s
      Discussion and Analysis or Plan of Operation**





The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our financial statements and the notes to those
      statements included elsewhere in this Report. In addition to the historical
      financial information, the following discussion and analysis contains
      forward-looking statements that involve risks and uncertainties. Actual results
      may differ from these estimates under different assumptions or conditions.
      References to “we”, “our”, “us”, or the “Company” are to 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,
      nutraceuticals, and other products targeting the MBS (Mind/Body/Spirit)
      consumer. We have generated no revenues since inception through the first
      quarter of 2007. We began to generate revenue during the second quarter of
      2007
      and have generated approximately $56,000 in revenues to date. We incurred net
      losses of approximately $33,535 in 2004, $122,488 in 2005, and $1,397,922 in
      2006. As of June 30, 2007, we had an accumulated deficit of $2,320,051. As
      a
      company in the early stage of development, our limited history of operations
      makes prediction of future operating results difficult. We believe that period
      to period comparisons of our operating results should not be relied on as
      predictive of our future results.




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. **** The
      brand
      of our initial DVD series is called Xflowsion. In
      May
      2007, we began to market and sell our initial Xflowsion DVDs. **** We
      believe that our success depends upon our ability to successful produce, market,
      and distribute such products.





**Plan
      of Operation**





As
      of **** June
      30,
      2007, we had working capital of $0. To satisfy current working capital needs,
      our CEO Bill Glaser loaned funds to the Company. 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.




Our
      future cash requirements and the adequacy of available funds will depend on
      many
      factors, including the pace at which we are able to market and distribute our
      Xflowsion DVDs, whether or not a market develops for our products and, if a
      market develops, the pace at which we are able to sell our products. It will
      also depend on our ability to raise capital through debt or equity
      financings.





We
      have
      fully incurred the production cost of our Xflowsion DVD series, have incurred
      approximately three-quarters of the production costs of our infomercial,
      and plan to make financial investments in marketing for the next six months.
      We
      expect to incur substantial losses over the next two years.




We
      estimate that our expenses over the next 12 months beginning on January 1,
      2007
      will be approximately $685,000 as follows:




·
            $60,000
                in auditor and legal fees;




·
            $75,000
                for the production costs of three DVDs for use in continuity
                plans;




·
            $150,000
                for the production of our infomercial and short-form TV
                commercials;




·
            $100,000
                initial media buying expenses; and




·
            $300,000
                general and administrative costs.





As
      of
      June 30, 2007, we had cash equivalents of $89,608. We believe that we need
      approximately an additional $587,000 to meet our capital requirements over
      the
      next 12 months. Our intention is to obtain this money through the sale of our
      common stock pursuant to our SB-2 registration statement and/or other
      debt/equity financings. As of the date of this Report, we have fully paid for
      our initial product inventory for 10,000 Xflowsion DVD units as well as all
      branding, web development, DVD production, editing, and DVD authoring
      costs.




15





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
      which cannot be paid in stock, such as auditors' fees, will be paid through
      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.




Our
      ultimate existence is dependent upon management's ability to develop profitable
      operations. We are in the process of marketing our first DVD series. We have
      negotiated an infomercial production arrangement with Caudill and Associates
      to
      produce a 30 minute infomercial along with 60 second and 120 second TV
      commercials. The first version of such infomercial was completed in May 2007.
      We
      aired the infomercial for one week during May 2007 on TV stations throughout
      the
      United States. We plan to re-air the infomercial after various edits are made.
      Such edits will be completed by Caudill after we pay an outstanding balance
      of
      $75,017.50 which is currently due to Caudill. We plan to test-market the
      infomercial during the 2-3 months following Caudill’s editing. During the
      test-marketing of the infomercial, we will test different pricing (the May
      airing of our infomercial had a pricing for the Xflowsion DVD series of three
      payments of $19.95 or $59.85 plus $12.95 shipping and handling), as well as
      continue to edit the infomercial in an effort to elicit the greatest response
      We
      also engaged Synthesis Marketing to develop logo and brand identities for uKarma
      and Xflowsion, develop websites for uKarma and Xflowsion, author our Xflowsion
      DVD series, and design packaging for our Xflowsion DVDs. All of these activities
      by Synthesis, with the exception of completing the uKarma website, were
      completed in June 2007. The uKarma website is expected to be completed and
      operational during August 2007.





During
      the next 12 months, we intend to raise capital through an offering of our
      securities or from additional loans. We cannot guarantee that financing will
      be
      available to us, on acceptable terms or at all. If we do not earn revenues
      sufficient to support our business and we fail to obtain other financing, either
      through an offering of our securities or by obtaining additional loans, we
      may
      be unable to maintain our operations.




We
      intend
      to spend approximately $500,000 over the course of the next year, mainly in
      the
      areas of media air time costs, administration, legal, accounting, and marketing.
      However, if we are successful in raising more than $500,000 pursuant to this
      public offering or by financing the cost of media buying expenses, we intend
      to
      increase our spending in the areas of production and marketing, and introduce
      other multimedia products.





We
      intend
      to enter into agreements with fitness and wellness instructors to perform on
      screen for DVDs we intend to produce. In some instances, we may be required
      to
      offer these fitness instructors a royalty percentage of future sales. Because
      we
      are trying to keep our production and marketing costs at a minimum, we may
      offer
      royalty percentages of sales to such instructors as well as to other service
      providers such as telemarketing, fulfillment, and infomercial production. We
      anticipate that we may owe as much as 10% or more of our gross revenues in
      royalties to performers in our DVDs and other service providers involved in
      marketing our products.





**Off-Balance
      Sheet Arrangements**




We
      do not
      have any off-balance sheet transactions.





**Item
      3.** ****  **Controls
      and Procedures**





Based
      on
      an evaluation of the effectiveness of the Company’s disclosure controls and
      procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities
      Exchange Act of 1934 (the “Exchange Act”)) as of June 30, 2007, the Company’s
      Chief Executive Officer, who is also our acting Chief Financial Officer,
      believes that the Company’s disclosure controls and procedures (as defined in
      Rule 13a-15(e) or 15d-15(e) of the Exchange Act) are effective to ensure that
      information required to be disclosed by the Company in this report is
      accumulated and communicated to the Company’s management, including its
      principal executive officer and principal financial officer, as appropriate,
      to
      allow timely decisions regarding required disclosure.




16





**Changes
      in Internal Control over Financial Reporting**





There
      have been no changes in the Company’s internal control over financial reporting
      identified in connection with the evaluation described above that occurred
      during our last fiscal quarter ended June 30, 2007, that has materially
      affected, or is reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





**PART
      II.**  **OTHER
      INFORMATION**




**Item
      1.**  **Legal
      Proceedings**





We
      are
      not a party to any material legal proceeding, nor to the knowledge of
      management, are any legal proceedings threatened against us. From time to time,
      we may be involved in litigation relating to claims arising out of operations
      in
      the normal course of business.





**Item
      2.**  **Unregistered**  **Sales
      of Equity Securities and Use of Proceeds**





On
      June
      26, 2007, we issued a warrant to purchase up to 80,000 shares of our common
      stock exercisable at $0.25 per share to Mark Abdou, a shareholder of the
      Company, in connection with a $20,000 loan made by Mr. Abdou to the Company.
      This issuance was exempt from registration requirements in reliance on section
      4(2) of the Securities Act.





**Item
      3.**  **Defaults
      upon Senior Securities**





Not
      Applicable





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





Not
      Applicable





**Item
      5.**  **Other
      Information**





Not
      Applicable





**Item
      6.** ****  **Exhibits**





3.1
            
            Amended
                and Restated Certificate of Incorporation, as currently in effect
                (1)3.2
            
            Bylaws
                of the registrant, as currently in effect (1)4.1
            
            Form
                of Warrant (1)10.1
            
            2006
                Stock Plan (1)10.2
            
            Employment
                Agreement between the Registrant and Bill Glaser dated January 1,
                2006
                (1)10.3
            
            Consulting
                Agreement between the Registrant and Eric Paskel dated April 19,
                2006 (1)10.4
            
            Consulting
                Agreement between the Registrant and Craig Kulman dated February
                13, 2006
                (1)






17






10.5
            
            Consulting
                Agreement between the Registrant and Len Panzer dated February 28,
                2006
                (1)10.6
            
            Consulting
                Agreement between the Registrant and Jeremy Koff dated May 5, 2006
                (1)10.7
            
            Production
                Agreement between the Registrant and The Tribal Vision Group, LLC
                d/b/a
                Yoga Tribe and Culture Productions dated June 15, 2006
                (1)10.8
            
            Marketing
                Agreement between the Registrant and Synthesis Marketing dated October
                11,
                2006 (1)10.9
            
            Marketing
                Agreement between the Registrant and Much and House Public Relations
                dated
                October 11, 2006 (1)10.10
            
            Production
                Agreement between the Registrant and Caudill and Associates dated
                November
                __, 2006 (1)10.11
            
            Option
                Agreement between Fred Tannous and Bill Glaser dated January 17,
                2005
                (1)10.12
            
            Promissory
                Note issued to Bill Glaser dated November 10, 2006 (1)10.13
            
            Promissory
                Note issued to Bill Glaser dated January 26, 2007 (1)10.14
            
            Warrant
                issued to Bill Glaser dated January 26, 2007 (1)10.15
            
            Promissory
                Note issued to Bill Glaser dated March 13, 2007 (2)10.16
            
            Common
                Stock Warrant issued to Bill Glaser dated March 13, 2007
                (2)10.17
            
            Demand
                Promissory Note issued to Bill Glaser dated March 29, 2007
                (2)




10.18
            
            Common
                Stock Warrant issued to Bill Glaser dated March 29, 2007
                (2)10.19
            
            Demand
                Promissory Note issued to Bill Glaser dated April 30, 2007
                (2)10.20
            
            Promissory
                Note issued to Mark Abdou dated June 26, 2007 (2)10.21
            
            Common
                Stock Purchase Warrant issued to Mark Abdou dated June 26, 2007
                (2)10.22
            
            Amendment
                to Option Agreement dated July 9, 2007 (3)10.23
            
            Notice
                of Exercise of Option dated July 9, 2007 (3)10.24
            
            Demand
                Promissory Note issued to Bill Glaser dated July 23,
                2007(3)10.25
            
            Conversion
                Agreement between the registrant and Bill Glaser dated August 14,
                2007
                *






18






31.1
            
            Rule
                13a-14(a) / 15d-14(a)(4) Certification by the Company’s Chief Executive
                Officer *31.2
            
            Rule
                13a-14(a) / 15d-14(a)(4) Certification by the Company’s Chief Financial
                Officer *32.1
            
            Section
                1350 Certification by the Company’s Chief Executive Officer and Chief
                Financial Officer *




*
            Filed
                herewith.(1)
            Incorporated
                herein by reference to Form SB-2 filed with the SEC on February 12,
                2007.(2)
            Incorporated
                herein by reference to Form SB-2 Amendment No. 1 filed with the SEC
                on
                June 28, 2007.(3)
            Incorporated
                herein by reference to Form SB-2 Amendment No. 4 filed with the SEC
                on
                August 6, 2007.








19


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**UKARMA
                CORPORATION**Dated 
                 August 20, 2007
            By:
            /s/ Bill
                GlaserName: Bill
                GlaserTitle: Chief
                Executive Officer (Principal Executive Officer); Chief Financial
                Officer (Principal Financial Officer); and Chairman of the
                Board




20