**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 **June 30, 2008**





**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
            
            (IRS
                Employer Identificationorganization)
            
            No.)





**520
      Broadway, Suite 350**


**Santa
      Monica, CA 90401**


(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 o No x




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. (Check one):


Large
      Accelerated filer o   Non-Accelerated
      Filer o


Accelerated
      Filer o   Smaller
      Reporting Company x





The
      registrant is a shell company (as defined by 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: 24,583,384 issued and outstanding as of August
      15, 2008.








**UKARMA
      CORPORATION**


TABLE
      OF
      CONTENTS


TO
      QUARTERLY REPORT ON FORM 10-Q


FOR
      PERIOD ENDED JUNE 30, 2008




**Page****PART
                I**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements
            3Balance
                Sheets
            3Statements
                of Operations
            4Statements
                of Cash Flows
            5Notes
                to Financial Statements
            6Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            20Item
                4.
            Controls
                and Procedures
            21**PART
                II**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            21Item
                1A.
            Risk
                Factors
            21Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            21Item
                3.
            Defaults
                Upon Senior Securities
            21Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            21Item
                5.
            Other
                Information
            21Item
                6.
            Exhibits
            22**Signatures**
            24**Exhibits**


2


**PART
      I - FINANCIAL INFORMATION**





**ITEM
      1.**  **FINANCIAL
      STATEMENTS**


**UKARMA
        CORPORATION**
 
 **BALANCE
        SHEETS**
 
 
 **June 30,**
              
              December 31,**2008**
              
              2007**(Unaudited)**
              
              (Audited)ASSETSCurrent
                  AssetsCash
              
              **$**
              **447,090**
              
              $
              483,564Inventory
              
              
              **23,273**
              
              
              23,547Payroll
                  tax refund receivable
              
              
              **7,159**
              
              
              -Prepaid
                  expenses
              
              
              **82,086**
              
              
              55,146Total
                  Current Assets
              
              
              **559,608**
              
              
              562,257Property
                        and equipment, net of accumulated depreciation of $2,961
                        for 2008, and
                        $1,929 for 2007
              
              
              **32,472**
              
              
              10,711Other
                  AssetsProduction
                      costs, net of accumulated amortization of $150,139 for 2008,
                      and $99,393
                      for 2007
              
              
              **468,946**
              
              
              594,709Deposit
              
              
              **25,734**
              
              
              3,734Patent
              
              
              **10,358**
              
              
              10,358Total
                  Other Assets
              
              
              **505,038**
              
              
              608,801TOTAL
                  ASSETS
              
              **$**
              **1,097,118**
              
              $
              1,181,769LIABILITIES
                  AND STOCKHOLDERS' EQUITYCurrent
                  LiabilitiesAccounts
                  payable
              
              **$**
              **142,336**
              
              $
              56,987Accrued
                  expenses
              
              
              **31,484**
              
              
              33,288Notes
                  payable to related party
              
              
              **183,631**
              
              
              183,631Total
                  Current Liabilities
              
              
              **357,451**
              
              
              273,906Stockholders'
                  EquityCommon
                  stock, $0.001 par value; 100,000,000shares
                  authorized; 24,662,971 and 20,611,406 shares issuedand
                  outstanding in 2008 and 2007, respectively
              
              
              **24,663**
              
              
              20,611Preferred
                  stock, $0.001 par value; 20,000,000 shares authorized,
              
              
              ****none
                  issued
              
              
              **-**
              
              
              -Paid-in
                  capital
              
              
              **5,696,822**
              
              
              4,152,161Stock
                  subscriptions
              
              
              **-**
              
              
              147,200Accumulated
                  deficit
              
              
              **(4,981,818**
              **)**
              
              (3,412,109
              )Total
                  Stockholders' Equity
              
              
              **739,667**
              
              
              907,863TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY
              
              **$**
              **1,097,118**
              
              $
              1,181,769
 
 **The
          accompanying notes are an integral part of these financial
          statements**
  3
  **UKARMA
        CORPORATION**
 
 **STATEMENTS
        OF OPERATIONS (Unaudited)**
 **For
        the three and six months ended June 30, 2008 and 2007**
 
 
 **For three months**
              
              **For six months****ended June 30,**
              
              **ended June 30,****2008**
              
              2007
              
              **2008**
              
              2007Sales
              
              **$**
              **2,663**
              
              $
              56,023
              
              **$**
              **5,422**
              
              $
              56,023Cost
                  of Sale
              
              
              **130**
              
              
              18,302
              
              
              **274**
              
              
              18,302Gross
                  Profit
              
              
              **2,533**
              
              
              37,721
              
              
              **5,148**
              
              
              37,721Selling,
                  General and Administrative Expenses
              
              
              **1,053,044**
              
              
              318,664
              
              
              **1,567,644**
              
              
              785,608Operating
                  Loss
              
              
              **(1,050,511**
              **)**
              
              (280,943
              )
              
              **(1,562,496**
              **)**
              
              (747,887
              )Other
                  Income (Expenses)Gain
                  on Sale of Securities
              
              
              **-**
              
              
              3,279
              
              
              **-**
              
              
              3,279Interest
                  Expense
              
              
              **(3,205**
              **)**
              
              (8,820
              )
              
              **(6,413**
              **)**
              
              (12,170
              )Total
                  Other Income (Expense)
              
              
              **(3,205**
              **)**
              
              (5,541
              )
              
              **(6,413**
              **)**
              
              (8,891
              )Net
                  Loss before Income Taxes
              
              
              **(1,053,716**
              **)**
              
              (286,484
              )
              
              **(1,568,909**
              **)**
              
              (756,778
              )Provision
                  for Income Taxes
              
              
              **-**
              
              
              -
              
              
              **800**
              
              
              800Net
                  Loss
              
              **$**
              **(1,053,716**
              **)**
              $
              (286,484
              )
              **$**
              **(1,569,709**
              **)**
              $
              (757,578
              )Loss
                  Per Share-Basic and Diluted
              
              **$**
              **(0.05**
              **)**
              $
              (0.02
              )
              **$**
              **(0.07**
              **)**
              $
              (0.05
              )Weighted
                  Average Number of Shares
              
              
              **22,662,462**
              
              
              15,561,322
              
              
              **22,095,602**
              
              
              15,504,224
 **The
          accompanying notes are an integral part of these financial
          statements**
  4
 **UKARMA
          CORPORATION**
 
 **STATEMENTS
          OF CASH FLOWS (Unaudited)**
 **For
          the six months ended June 30, 2008, and 2007**
 
 **For
                    six months ended****June
                    30,****2008**
                
                2007Cash
                    Flow from Operating Activities:Net
                    loss
                
                **$**
                **(1,569,709**
                **)**
                $
                (757,578
                )Adjustment
                      to reconcile net loss to net cash used by operating
                      activities:Depreciation
                    & amortization
                
                
                **51,778**
                
                
                34,638Issuance
                    of stock for services
                
                
                **459,480**
                
                
                30,647Stock
                    option expenses
                
                
                **129,093**
                
                
                95,029Stock
                    warrant expenses
                
                
                **14,440**
                
                
                110,437Gain
                    on sale of investment
                
                
                **-**
                
                
                (3,279
                )(Increase)
                    Decrease in:Payroll
                    tax refund receivable
                
                
                **(7,159**
                **)**
                
                -Inventory
                
                
                **274**
                
                
                (27,940
                )Prepaid
                    expenses
                
                
                **(26,940**
                **)**
                
                35,845Capitalized
                    production costs
                
                
                **75,017**
                
                
                (27,029
                )Deposit
                
                
                **(22,000**
                **)**
                
                -Increase
                    (Decrease) in:Accounts
                    payable
                
                
                **85,352**
                
                
                (61,432
                )Accrued
                    expenses
                
                
                **(1,807**
                **)**
                
                67,275Net
                    Cash Used by Operating Activities
                
                
                **(812,181**
                **)**
                
                (503,387
                )Cash
                    Flow from Investing Activities:Purchase
                    of property and equipment
                
                
                **(22,793**
                **)**
                
                (8,711
                )Sale
                    of investment
                
                
                **-**
                
                
                8,279Patent
                
                
                **-**
                
                
                -Net
                    Cash Used by Investing Activities
                
                
                **(22,793**
                **)**
                
                (432
                )Cash
                    Flow from Financing Activities:Bank
                    overdraft
                
                
                **-**
                
                
                82,338Proceeds
                    from notes payable
                
                
                **-**
                
                
                30,000Proceeds
                    from officer advances
                
                
                **-**
                
                
                288,579Repayments
                    to officer advances
                
                
                **-**
                
                
                -Proceeds
                    from sale of stock
                
                
                **798,500**
                
                
                -Net
                    Cash Provided by Financing Activities
                
                
                **798,500**
                
                
                400,917Net
                    Decrease in Cash
                
                
                **(36,474**
                **)**
                
                (102,902
                )Cash
                    Balance at Beginning of Period
                
                
                **483,564**
                
                
                102,902Cash
                    Balance at End of Period
                
                **$**
                **447,090**
                
                $
                -Supplemental
                    Disclosures:Interest
                    Paid
                
                **$**
                **-**
                
                $
                -Taxes
                    Paid
                
                **$**
                **-**
                
                $
                -
 **The
          accompanying notes are an integral part of these 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 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 are 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 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, 2008 and for the three months
        and six months ended June 30, 2008, and 2007 have been prepared by the Company,
        without audit, pursuant to the rules and regulations of the Securities and
        Exchange Commission. The accompanying financial statements have been prepared
        in
        accordance with accounting principles generally accepted in the United States
        of
        America (GAAP).
 
 The
        balance sheet as of December 31, 2007 has been derived from the audited
        financial statements at that date but does not include all of the information
        and footnotes required by the U.S. GAAP for complete financial
        statements.
 
 In
        the
        opinion of 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, 2008 and for the three months and
        six
        months ended June 30, 2008, and 2007 have been made. The results of operations
        for the three months and six months ended June 30, 2008 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
        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.
 
 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.
 
 6
 **UKARMA
          CORPORATION**
 
 **NOTES
          TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
 
  **NOTE
        1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 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.
 
 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 June 30, 2008 and
        2007
        was $522 and $510, respectively. Depreciation expense for the six months
        ended
        June 30, 2008 and 2007 was $1,032 and $724, 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.
 
 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 June 30, 2008 and 2007 was $115,191 and $48,806, respectively. Advertising
        expense for the six months ended June 30, 2008 and 2007 was $303,546 and
        $187,419, 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 $81,579 and $129,093 for
        the
        three months and six months ended June 30, 2008, respectively.
 
 7
 **UKARMA
            CORPORATION**
 
 **NOTES
            TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
 **NOTE
        1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 New
        Accounting Pronouncements :
        In
        March 2008, Financial Accounting Standards Board {“FASB”) issued Statement of
        Financial Accounting Standards (SFAS) No. 161, *“Disclosures
        about Derivative Instruments and Hedging Activities”* (“SFAS
        161”). SFAS 161 is intended to improve financial reporting about derivative
        instruments and hedging activities by requiring companies to enhance disclosure
        about how these instruments and activities affect their financial position,
        performance and cash flows. SFAS 161 also improves the transparency about
        the
        location and amounts of derivative instruments in a company’s financial
        statements and how they are accounted for under SFAS 133. SFAS 161 is effective
        for financial statements issued for fiscal years beginning after November
        15,
        2008 and interim periods beginning after that date. As such, the Company
        is
        required to adopt these provisions beginning with the quarter ending in February
        2009. Adoption of SFAS 161 is not expected to have a material impact on the
        Company’s financial statements.
 
 In
        February 2007, the FASB issued SFAS No. 159 (“SFAS No. 159”), “ *The
        Fair Value Option For Financial Assets And Financial Liabilities - Including
        An
        Amendment of FASB Statement No. 115.”* SFAS No.
        159 provides an option to report selected financial assets and financial
        liabilities using fair value, and establishes required presentation and
        disclosures to facilitate comparisons with companies that use different
        measurements for similar assets and liabilities. SFAS No. 159 is effective
        for
        the Company’s fiscal year beginning August 1, 2008, with early adoption allowed
        only if SFAS No. 157 is also adopted. The Company is currently evaluating
        the
        potential impact of this standard on the financial statements.
 
 In
        June
        2007, the FASB ratified Emerging Issues Task Force Issue No. 07-3, *“Accounting
        for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
        Research and Development Activities”* (“EITF
        07-3”). EITF 07-3 requires non-refundable advance payments for goods and
        services to be used in future research and development activities to be recorded
        as an asset and the payments to be expensed when the research and development
        activities are performed. EITF 07-1 will be effective for the Company’s fiscal
        year beginning August 1, 2008. Currently, the Company does not anticipate
        that
        this statement will have a significant impact on its financial
        statements.
  In
        December 2007, the FASB issued SFAS No. 141 (revised 2007), *“Business
        Combinations”* (“SFAS
        No.141(R)”). SFAS No. 141(R) will replace SFAS 141, and establishes principles
        and requirements for how the acquirer in a business combination reorganizes
        and
        measures in its financial statements the identifiable assets acquired, the
        liabilities assumed and any noncontrolling interest in the acquiree; recognizes
        and measures the goodwill acquired in the business combination or gain from
        a
        bargain purchase; and determines what information to disclose to enable users
        of
        the financial statements to evaluate the nature and financial effects of
        the
        business combination. SFAS No. 141(R) applies prospectively to business
        combinations for which the acquisition date is on or after the beginning
        of the
        first annual reporting period beginning on or after December 15, 2008.
        Currently, the Company does not anticipate that this Statement will have
        a
        significant impact on its financial statements.
 
 In
        December 2007, the FASB issued SFAS No. 160, *“Non-Controlling
        Interests in Consolidated Financial Statements - an amendment of ARB No.
        51”* (“SFAS
        No. 160”). This statement requires that noncontrolling or minority interests in
        subsidiaries be presented in the consolidated statement of financial position
        within equity, but separate from the parents’ equity, and that the amount of the
        consolidated net income attributable to the parent and to the noncontrolling
        interest be clearly identified and presented on the face of the consolidated
        statement of income. SFAS No. 160 will be effective for the Company’s fiscal
        year beginning August 1, 2009. The adoption of this statement did not have
        a
        material effect on the Company's financial statements.
 
 8
  **UKARMA
            CORPORATION**
 
 **NOTES
            TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
  **NOTE
        1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 In
        December 2007, the FASB ratified the consensus reached on Emerging Issues
        Task
        Force Issue No. 07-1, *“Accounting
        for Collaborative Arrangements Related to the Development and Commercialization
        of Intellectual Property”* (“EITF
        07-1”). EITF 07-1 defines collaborative arrangements and establishes reporting
        requirements for transactions between participants in a collaborative
        arrangement and between participants in the arrangement and third parties.
        EITF
        07-1 will be effective for the Company’s fiscal year beginning August 1, 2009.
        The Company is currently evaluating the potential impact of this standard
        on the
        financial statements.
 
 In
        December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
        110 permits companies to continue to use the simplified method, under certain
        circumstances, in estimating the expected term of “plain vanilla” options beyond
        December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
        stated that the Staff would not expect a company to use the simplified method
        for share option grants after December 31, 2007. Adoption of SAB 110 is not
        expected to have a material impact on the Company’s 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.
 
 Management
        of the Company 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.
 
 **NOTE
        3 – PREPAID EXPENSES**
 
 Prepaid
        expenses were $82,086 and $55,146 as of June 30, 2008 and December 31, 2007,
        respectively.
 
 On
        April
        25, 2008, the Company entered into an agreement with a coauthor for it's
        diet
        and nutrition book that it is self publishing and plans to market direct
        to
        consumers.  Pursuant to this agreement, the Company paid the coauthor a
        $10,000 advance against future royalties.  The Company will pay the
        coauthor a 5% royalty where uKarma acts as the publisher or a 2 1/2% royalty
        if uKarma 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 50,0000 books sold if the Company engages a third party publisher.
        As of June 30, 2008, the Company is still in the preparation stage for the
        book
        publication and total advances in related to the book publication were
        $15,000.
  9
 **UKARMA
            CORPORATION**
 
 **NOTES
            TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
 **NOTE
        3 – PREPAID EXPENSES (continued)**
 
 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
        the
        projects such as classes, interviews and introductions, to participate in
        the
        projects 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 June 30, 2008, there is a
        balance of $54,803 after advancing $75,000 and deducting royalties to the
        2008
        sales. Future royalty obligations will be deducted from the current balance.
 
 On
        June
        30, 2008, the Company also had $2,283 of advance legal retainer.
 
 **NOTE
        4 – PRODUCTION COSTS**
 
 The
        Company capitalized costs incurred for recording seven fitness videos’ master
        copies. As of June 30, 2008, total costs of $619,085 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 $30,954 and $33,913
        for
        the three months ended June 30, 2008 and 2007, respectively. The Company
        recorded an amortization expense of $50,745 and $33,913 for the six months
        ended
        June 30, 2008 and 2007, respectively.
 
 **NOTE
        5 – 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.
 
 **NOTE
        6 – ACCRUED EXPENSES**
 
 Accrued
        expenses consisted of the following:
 
 June 30,
              
              December 31,2008
              
              2007(unaudited)
              
              (Audited)Accrued
                  Professional Fees
              
              $
              6,000
              
              $
              15,000Accrued
                  Interest
              
              
              16,898
              
              
              10,488Employee
                  Reimbursable
              
              
              6,955
              
              
              6,955Accrued
                  Sales Tax
              
              
              31
              
              
              45Accrued
                  Income Tax
              
              
              1,600
              
              
              800Total
                  Accrued Expenses
              
              $
              31,484
              
              $
              33,288
 
 **NOTE
        7 – NOTES PAYABLE**
 
 The
        notes
        payable bear interest at 7% per annum and are due on demand. As of June 30,
        2008, the balance was $183,631 and accrued interest of $16,898. As of December
        31, 2007, the balance was $183,631 and accrued interest of $10,488.
  10
  **UKARMA
            CORPORATION**
 
 **NOTES
            TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
 **NOTE
        8 – STOCKHOLDERS’ EQUITY**
 
 The
        Board
        of Directors of the Company approved the issuance aggregate of 1,349,566
        shares
        of Company’s common stocks to various providers in consideration of their
        services to the Company. The shares were valued and charged to operations
        at a
        price from $0.2326 to $0.35 per share or $459,480 of total. The valuation
        was
        based on the private placement offering in the second quarter of 2008 of
        $0.35
        per share, with discounts, if applicable as per the service agreements.
 
 During
        the six months ended June 30, 2008, the Company received $798,499 and sold
        2,281,428 shares of the Company’s common stock pursuant to the August 6, 2007
        offering at a price of $0.35 per share.
 
 **NOTE
        9 – 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 30,2008
              
              
              2007
              
              
              2008
              
              
              2007Numerator:Net
                  Loss
              
              $
              (1,053,716
              )
              $
              (286,484
              )
              $
              (1,569,709
              )
              $
              (757,578
              )Denominator:Weighted
                  Average of Common Shares
              
              
              22,662,462
              
              
              15,561,322
              
              
              22,095,602
              
              
              15,504,224Basic
                  and Diluted Net Loss per Share
              
              $
              (0.05
              )
              $
              (0.02
              )
              $
              (0.07
              )
              $
              (0.05
              )
 
 As
        the
        Company incurred net losses for the three months and six months ended June
        30,
        2008, the effect of dilutive securities totaling 2,937,143 and 2,925,715
        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 months and six months ended June
        30,
        2007, the effect of dilutive securities totaling 1,550,000, 1,550,000 equivalent
        shares, respectively, has been excluded from the calculation of diluted loss
        per
        share because their effect was anti-dilutive.
 
 There
        were also 5,827,000 and 6,402,000 shares out-of-money stock options and warrants
        excluded from the calculation of diluted net loss per share for the six months
        ended June 30, 2008 and 2007, because their exercise prices were greater
        than
        the average fair market price of the common stock, respectively.
  11
 **UKARMA
              CORPORATION**
 
 **NOTES
              TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
  **NOTE
        10 – STOCK OPTION**
 
 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 ten years. The Plan reserves
        7,500,000 shares of common stock under the Plan and shall be effective through
        December 31, 2015.
 
 A
        summary
        of the status of stock options issued by the Company as of June 30, 2008
        and
        2007 is presented in the following table:
 
 2008
              
              2007Weighted
              
              
              
              WeightedNumber
              
              Average
              
              Number
              
              Averageof
              
              Exercise
              
              of
              
              ExerciseShares
              
              Price
              
              Shares
              
              PriceOutstanding
                  at beginning of year
              
              
              5,250,000
              
              $
              0.20
              
              
              5,250,000
              
              $
              0.20Granted
              
              
              -
              
              
              -
              
              
              -
              
              
              -Exercised/Expired/Cancelled
              
              
              -
              
              
              -
              
              
              -
              
              
              -Outstanding
                  at end of period
              
              
              5,250,000
              
              $
              0.20
              
              
              5,250,000
              
              $
              0.20Exercisable
                  at end of period
              
              
              2,666,667
              
              $
              0.20
              
              
              1,583,334
              
              $
              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.
 
 2008
              
              2007Weighted
                  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
  12
 **UKARMA
          CORPORATION**
 **NOTES
              TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
 **NOTE
        10 – 2008 STOCK OPTION PLAN (continued)**
 
 The
        following table sets forth additional information about stock options
        outstanding at June 30, 2008:
 
 WeightedAverage
              
              WeightedRange
                  of
              
              
              
              Remaining
              
              AverageExercise
              
              Options
              
              Contractual
              
              Exercise
              
              OptionsPrices
              
              Outstanding
              
              Life
              
              Price
              
              Exercisable$
              0.20
              
              
              5,250,000
              
              
              7.21
              
              $
              0.20
              
              
              2,666,6675,250,000
              
              
              7.21
              
              $
              0.20
              
              
              2,666,667
 
 As
        of
        June 30, 2008, there was $390,908 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
        1.97 years.
 
 **NOTE
        11 – STOCK WARRANTS**
 
 On
        January 26, 2007, March 13, 2007, and March 29, 2007, the Company issued
        stock
        purchase warrants to the CEO of the Company for the right to purchase 200,000,
        250,000, and 125,000 shares of the Company, respectively, at the price of
        $0.25
        per share. The warrants shall have a term of five years from the date of
        stocks
        issued. The warrants were valued at $0.19 per share using the Black-Scholes
        option pricing model.
 
 The
        assumptions used in the Black-Scholes option pricing model are as follows:
 
 June
                  30,2008
              
              2007Weighted
                  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
              %
 
 None
        of
        stock warrants expense is recognized for both the three months ended June,
        2008
        and 2007. The Company recognized $110,437 stock warrants expense for the
        six
        months ended June 30, 2007.
 
 **NOTE
        12 - LEASE AGREEMENT**
 
 On
        April
        25, 2008, the Company entered into a lease agreement for a studio space in
        Los
        Angeles, California, which will be used to offer Xflowsion, fitness and yoga
        classes along with retail items and incidental food. The lease calls for
        $22,000
        rent per month for five years commencing on the earlier of either September
        25,
        2008, or the date the Company first opens the studio for business. As of
        June
        30, 2008, the Company has paid a deposit of $25,734 for the lease. As of
        June
        30, 2008, the Company was in process of remodeling the studio.
  13
 **UKARMA
          CORPORATION**
 **NOTES
              TO INTERIM UNAUDITED FINANCIAL STATEMENTS**
  **NOTE
        13 – SUBSEQUENT EVENTS**
 
 On
        July
        10, 2008, the Company signed a letter of intent to acquire Yoga Shelter,
        LLC.
 
 On
        July
        7, 2008, the Board of Directors approved the issuance of an option to an
        employee to purchase 45,000 shares of its common stock at the exercise price
        of
        $0.35 per share. The term of the option is 5 year and subject to a vesting
        schedule of 15,000 shares on each anniversary of the grant date.
 
 Subsequent
        to June 30, 2008, there was a repayment of $25,000 to notes payable to a
        related
        party.


14


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





**Forward
      Looking Statements**





*Statements
      included in this management’s discussion and analysis of financial condition and
      results of operations, and in future filings by the company with the securities
      and exchange commission, in the company’s press releases and in oral statements
      made with the approval of an authorized executive officer which are not
      historical or current facts are “forward-looking statements” and are subject to
      certain risks and uncertainties that could cause actual results to differ
      materially from historical earnings and those presently anticipated or
      projected. You are cautioned not to place undue reliance on any such
      forward-looking statements, which speak only as of the date made. The following
      important factors, among others, in some cases have affected and in the future
      could affect the company’s actual results and could cause the company’s actual
      financial performance to differ materially from that expressed in any
      forward-looking statement: (i) the extremely competitive conditions that
      currently exist in the market for companies similar to the company and
      (ii) lack of resources to maintain the company’s good standing status and
      requisite filings with the securities and exchange commission. The foregoing
      list should not be construed as exhaustive and the company disclaims any
      obligation subsequently to revise any forward-looking statements to reflect
      events or circumstances after the date of such statements or to reflect the
      occurrence of anticipated or unanticipated events. The following discussion
      should be read in conjunction with our financial statements and their
      explanatory notes included as part of this quarterly report.*





**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 during the second
      quarter of 2007. We incurred net losses of approximately $122,488 in 2005
      $1,397,922 in 2006, and $1,849,636 in 2007. As of June 30, 2008, we had an
      accumulated deficit of $4,981,818. 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. **** 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. 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 our Xflowsion infomercial nationally on June 27, 2008.. We were pleased
      with the initial results of our infomercial airing and the revenues generated
      were booked in the third quarter. As is typical with infomercials, we’re
      commencing focus groups, so that we can make edits to elicit the greatest
      possible response. We plan to complete this process and re-air the infomercial
      in September 2008. In the meantime, we engaged an online marketing company
      for
      banner and email marketing, Search Engine Optimization (SEO), affiliate
      marketing, and social media or “word of mouth” marketing. We also plan to
      increase our brand exposure and awareness of Xflowsion and drive sales via
      a
      public relations campaign. Toward that end, we engaged The Rose Group for public
      relations services in May 2008. As a result, we have already gotten press
      coverage for our Xflowsion DVD series in People Magazine, The Washington Post,
      Trend Central, and other publications. We have gotten strong media interest
      and
      expect our products and brand to receive much upcoming press coverage. We are
      very encouraged by the response to our Xflowsion DVD series in the media and
      with consumers and via our marketing efforts. In the week prior to this report,
      we had our best sales week yet, with approximately $40,000 in
      sales.





During
      the third quarter we entered into a letter of intent (LOI) to acquire Yoga
      Shelter, LLC. Yoga
      Shelter currently operates four yoga and fitness studios in Michigan, three
      of
      which are corporately owned and one is jointly owned with an outside party
      pursuant to a licensing agreement. Yoga Shelter offers yoga and fitness classes,
      yoga teacher training programs, and travel and retreats throughout the world.
      In
      addition, Yoga Shelter owns Yoga Medics, LLC which provides customized and
      cost-effective medically based yoga programs to prevent injuries, prepare
      patients for surgery, rehabilitate them after surgery, and treat various
      ailments and conditions. All YogaMedics protocols are evidence-based, consistent
      with traditional clinical treatment models, and delivered by trained and
      certified YogaMedics expert professionals We
      expect
      to use Yoga Shelter as a platform to offer Xflowsion teacher training and
      retreats as well as expand our Xflowsion brand. We expect to complete the
      acquisition of Yoga Shelter sometime in the fourth quarter.


15





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, 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





In
      addition to beginning our marketing campaign for our Xflowsion DVD series,
      we
      signed a lease to open an Xflowsion studio in Los Angeles, California that
      will
      offer Xflowsion, fitness, and yoga classes along with retail items and food
      and
      beverages.. After completing the architectural plans, we obtained a permit
      and
      began construction. We expect our Xflowsion studio to open sometime in late
      2008. On March 26, 2008, we also engaged an author to write a diet, nutrition,
      and lifestyle book that we plan to self-publish and market direct to consumers.
      We expect the book to be completed in the third quarter of 2008 and our
      marketing initiatives for the book to begin in either the third or fourth
      quarter of 2008. We also expect to create an audio CD and downloadable series
      under our Dreams RealizedTM brand name in the third quarter of 2008. The Dreams
      Realized audio series will provide strategies and tools for people to achieve
      better health, achieve better relationships, achieve success, reduce stress,
      and
      other topics related to lifestyle and healthy living. In addition, we engaged
      a
      consultant to assist in the development of our patent-pending proprietary yoga
      mat. We are currently working on a prototype design before going into
      production.




**Critical
      Accounting Policies and Estimates**





Presentation
      of Interim Information.





The
      accompanying financial statements as of June 30, 2008 and for the six months
      ended June 30, 2008 and 2007 have been prepared by the Company, without audit,
      pursuant to the rules and regulations of the Securities and Exchange Commission.
      The accompanying financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America (GAAP).





The
      balance sheet as of December 31, 2007 has been derived from the audited
      financial statements at that date but does not include all of the information
      and footnotes required by the U.S. GAAP for complete financial
      statements.





In
      the
      opinion of 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, 2008 and for the six months ended
      June
      30, 2008 and 2007 have been made. The results of operations for the six months
      ended June 30, 2008 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
      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.





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.


16





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 $129,093 for the six months
      ended June 30, 2008.





New
      Accounting Pronouncements.





In
      March
      2008, Financial Accounting Standards Board {“FASB”) issued Statement of
      Financial Accounting Standards (SFAS) No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities”* (“SFAS
      161”). SFAS 161 is intended to improve financial reporting about derivative
      instruments and hedging activities by requiring companies to enhance disclosure
      about how these instruments and activities affect their financial position,
      performance and cash flows. SFAS 161 also improves the transparency about the
      location and amounts of derivative instruments in a company’s financial
      statements and how they are accounted for under SFAS 133. SFAS 161 is effective
      for financial statements issued for fiscal years beginning after November 15,
      2008 and interim periods beginning after that date. As such, the Company is
      required to adopt these provisions beginning with the quarter ending in February
      2009. Adoption of SFAS 161 is not expected to have a material impact on the
      Company’s financial statements.





In
      February 2007, the FASB issued SFAS No. 159 (“SFAS No. 159”), “ *The
      Fair Value Option For Financial Assets And Financial Liabilities - Including
      An
      Amendment of FASB Statement No. 115.”* SFAS No.
      159 provides an option to report selected financial assets and financial
      liabilities using fair value, and establishes required presentation and
      disclosures to facilitate comparisons with companies that use different
      measurements for similar assets and liabilities. SFAS No. 159 is effective
      for
      the Company’s fiscal year beginning August 1, 2008, with early adoption allowed
      only if SFAS No. 157 is also adopted. The Company is currently evaluating the
      potential impact of this standard on the financial statements.





In
      June
      2007, the FASB ratified Emerging Issues Task Force Issue No. 07-3, *“Accounting
      for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
      Research and Development Activities”* (“EITF
      07-3”). EITF 07-3 requires non-refundable advance payments for goods and
      services to be used in future research and development activities to be recorded
      as an asset and the payments to be expensed when the research and development
      activities are performed. EITF 07-1 will be effective for the Company’s fiscal
      year beginning August 1, 2008. Currently, the Company does not anticipate that
      this statement will have a significant impact on its financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), *“Business
      Combinations”* (“SFAS
      No.141(R)”). SFAS No. 141(R) will replace SFAS 141, and establishes principles
      and requirements for how the acquirer in a business combination reorganizes
      and
      measures in its financial statements the identifiable assets acquired, the
      liabilities assumed and any noncontrolling interest in the acquiree; recognizes
      and measures the goodwill acquired in the business combination or gain from
      a
      bargain purchase; and determines what information to disclose to enable users
      of
      the financial statements to evaluate the nature and financial effects of the
      business combination. SFAS No. 141(R) applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008.
      Currently, the Company does not anticipate that this Statement will have a
      significant impact on its financial statements.


17





In
      December 2007, the FASB issued SFAS No. 160, *“Non-Controlling
      Interests in Consolidated Financial Statements - an amendment of ARB No.
      51”* (“SFAS
      No. 160”). This statement requires that noncontrolling or minority interests in
      subsidiaries be presented in the consolidated statement of financial position
      within equity, but separate from the parents’ equity, and that the amount of the
      consolidated net income attributable to the parent and to the noncontrolling
      interest be clearly identified and presented on the face of the consolidated
      statement of income. SFAS No. 160 will be effective for the Company’s fiscal
      year beginning August 1, 2009. The adoption of this statement did not have
      a
      material effect on the Company's financial statements.





In
      December 2007, the FASB ratified the consensus reached on Emerging Issues Task
      Force Issue No. 07-1, *“Accounting
      for Collaborative Arrangements Related to the Development and Commercialization
      of Intellectual Property”* (“EITF
      07-1”). EITF 07-1 defines collaborative arrangements and establishes reporting
      requirements for transactions between participants in a collaborative
      arrangement and between participants in the arrangement and third parties.
      EITF
      07-1 will be effective for the Company’s fiscal year beginning August 1, 2009.
      The Company is currently evaluating the potential impact of this standard on
      the
      financial statements.





In
      December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
      110 permits companies to continue to use the simplified method, under certain
      circumstances, in estimating the expected term of “plain vanilla” options beyond
      December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
      stated that the Staff would not expect a company to use the simplified method
      for share option grants after December 31, 2007. Adoption of SAB 110 is not
      expected to have a material impact on the Company’s financial
      statements.





**Results
      of Operations**





*Comparison
      of Three Months Ended June 30, 2008 and 2007*





Three Months Ended June
                302008
            
            2007Sales
            
            $
            2,663
            
            $
            56,023Cost
                of Sales
            
            $
            130
            
            $
            18,302Gross
                Profit
            
            $
            2,533
            
            $
            37,721Operating
                Expense
            
            $
            1,053,044
            
            $
            318,664Operating
                Profit (Loss)
            
            $
            (1,053,511
            )
            $
            (280,943
            )Other
                Income (Expense)
            
            $
            (3,205
            )
            $
            (5,541
            )Income
                (Loss) Before Income Tax Expenses
            
            $
            (1,053,716
            )
            $
            (286,484
            )Income
                Tax Expenses
            
            $
            —
            
            $
            —Net
                Income (Loss)
            
            $
            (1,053,716
            )
            $
            (286,484
            )




*Sales.* Sales
      decreased from $56,023 for the three months ended June 30, 2007 to $2,663 for
      the three months ended June 30, 2008. Sales decreased because we were producing
      and editing an infomercial and not actively marketing our products during the
      quarter..




*Cost
      of Sales.* Cost
      of
      sales decreased from $18,302 for the three months ended June 30, 2007 to $130
      for the three months ended June 30, 2008. This decrease is attributable to
      the
      fact that we were producing and editing an infomercial and not actively
      marketing our products during the quarter .




*Gross
      Profit.* Gross
      profit for the three months ended June 30, 2008 was $2,533 as compared to gross
      profit of $37,721 for the three months ended June 30, 2007.




*Selling,
      General and Administrative Expenses.* Total
      selling, general and administrative expenses for the three months ended June
      30,
      2008 was $1,053,044 compared to $318,664 for the three months ended June 30,
      2007, representing a 230% increase. The increase is attributable to approximately
      $608,000 of non-cash expenses including option expense, stock issued for
      services and finder fees, amortization and depreciation, and a charitable
      donation. We also incurred $45,000 of finders fees related to our IPO along
      with
      other IPO related expenses.


18




*Operating
      Profit/Loss.* Loss
      from
      operations increased by 274% from losses of $280,943 in the three months ended
      Jun 30, 2007 to losses of $1,050,511 in the three months ended June 30, 2008
      as
      a result of g reater
      non-cash expenses and expenses related to our IPO.





*Other
      Income (Expenses).* Other
      income consisted solely of gain on the sale of securities of $3,279 for the
      three months ended June 30, 2007 compared to none for the three months ended
      June 30, 2008. The decrease was due to no ownership or sale of other securities.
      Other expenses consisted solely of interest expense during the three months
      ended June 30, 2008 and 2007. Interest expense was $8,820 in the three months
      ended June 30, 2007 compared to $3,205 in the three months ended June 30, 2008.
      This decrease was due to a reduction in the amount of a loan made by an officer
      of the Company.





*Income
      Tax Expenses.* There
      was
      no income tax expense for the three months ended June 30, 2007 and
      2008.




*Net
      Income/Loss.* Net
      loss
      for the three months ended June 30, 2008 was $1,053,716 as compared to a net
      loss for the three months ended June 30, 2007 of $286,484, representing a 268%
      increase in net loss. The increase is a result of greater
      non-cash expenses and expenses related to our IPO.




*Comparison
      of Six Months Ended June 30, 2008 and 2007*





Six Months Ended June
                302008
            
            2007Sales
            
            $
            5,422
            
            $
            56,023Cost
                of Sales
            
            $
            274
            
            $
            18,302Gross
                Profit
            
            $
            5,148
            
            $
            37,721Operating
                Expense
            
            $
            1,567,644
            
            $
            785,608Operating
                Profit (Loss)
            
            $
            (1,562,496
            )
            $
            (747,887
            )Other
                Income (Expense)
            
            $
            (6,413
            )
            $
            (8,891
            )Income
                Before Income Tax Expenses
            
            $
            (1,568,909
            )
            $
            (756,778
            )Income
                Tax Expenses
            
            $
            800
            
            $
            800Net
                Income (Loss)
            
            $
            (1,569,709
            )
            $
            (757,578
            )




*Sales.* Sales
      decreased from $56,023 for the six months ended June 30, 2007 to $5,422 for
      the
      six months ended June 30, 2008. Sales decreased because we were producing and
      editing an infomercial and not actively marketing our products during the
      quarter .




*Cost
      of Sales.* Cost
      of
      sales decreased from $18,302 for the six months ended June 30, 2007 to $274
      for
      the six months ended June 30, 2008. This decrease is attributable to the fact
      that we were producing and editing an infomercial and not actively marketing
      our
      products during the quarter .




*Gross
      Profit.* Gross
      profit for the six months ended June 30, 2008 was $5,148 as compared to gross
      profit of $37,721 for the six months ended June 30, 2007.




*Selling,
      General and Administrative Expenses.* Total
      selling, general and administrative expenses for the six months ended June
      30,
      2008 was 1,567,644 compared to $785,608 for the six months ended June 30, 2007,
      representing a 100% increase. The increase is attributable to greater
      non-cash expenses and expenses related to our IPO, along with production and
      marketing expenses related to our infomercial.




*Operating
      Profit/Loss.* Loss
      from
      operations increased by 109% from losses of $747,887 in the six months ended
      Jun
      30, 2007 to losses of $1,562,496 in the six months ended June 30, 2008 as a
      result of greater
      non-cash expenses and expenses related to our IPO, along with production and
      marketing expenses related to our infomercial.





*Other
      Income (Expenses).* Other
      income consisted solely of gain on the sale of securities of $3,279 for the
      six
      months ended June 30, 2007 compared to none for the six months ended June 30,
      2008. The decrease was due to no ownership or sale of other securities . Other
      expenses consisted solely of interest expense during the six months ended June
      30, 2008 and 2007. Interest expense was $12,170 in the six months ended June
      30,
      2007 compared to $6,413 in the six months ended June 30, 2008. This decrease
      was
      due to a reduction in the amount of a loan made by an officer of the Company.


19





*Income
      Tax Expenses.* There
      was
      $800 in income tax expense for the six months ended June 30, 2007 and
      2008.





*Net
      Income/Loss.* Net
      loss
      for the six months ended June 30, 2008 was $1,569,709 as compared to a net
      loss
      for the six months ended June 30, 2007 of $757,578, representing a 107% increase
      in net loss. The increase is a result of greater
      non-cash expenses and expenses related to our IPO, along with production and
      marketing expenses related to our infomercial.





**Liquidity
      and Capital Resources**





As
      of **** June
      30,
      2008, we had working capital of $202,157. We have fully incurred the production
      cost of our Xflowsion DVD series and the production costs of our infomercial,
      and plan to make financial investments primarily in marketing for the next
      six
      months along with other product development related expenses. While we have
      satisfied our capital needs via the sale of our common along with loans and
      stock purchases from our Chief Executive Officer, Bill Glaser, there is no
      guarantee that we will be able to meet current working capital needs if we
      do
      not raise additional funds or generate positive cash flow from sales. We expect
      to incur substantial losses over the next two years.





We
      estimate that our expenses over the next 12 months beginning on July 1, 2008
      will be approximately $1,040,000 as follows:





General
                and Administrative
            
            $
            350,000Inventory
            
            
            50,000Media
                (Airtime)
            
            
            75,000Marketing/Publicity
            
            
            100,000Legal
            
            
            75,000DVD/CD
                Production
            
            
            50,000Accounting
            
            
            40,000Product
                Development
            
            
            50,000Retail
                Studio Development
            
            
            250,000





As
      of
      June 30, 2008, we had cash equivalents of $447,090, which will meet our capital
      requirements for approximately the next six months. We believe that we need
      approximately an additional $595,000 to meet our capital requirements over
      the
      next 12 months. Our intention is to obtain this money through debt/equity
      financings as well as cash flow from sales. 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, and infomercial production costs.





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 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 or other products and
      services.





**Off-Balance
      Sheet Arrangements**





We
      have
      not entered into any 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
      stockholder’s 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.


20





**ITEM
      4.**  **CONTROLS
      AND PROCEDURES.**





**Disclosure
      Controls and Procedures**





As
      of the
      end of the period covered by this quarterly report, we carried out an
      evaluation, under the supervision of, and with the participation of our
      management, including our Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of the Company’s disclosure controls and procedures (as
      defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
      of 1934, as amended) as of the end of the period covered by this report. Based
      on that evaluation, our Chief Executive Officer and Chief Financial Officer
      has
      concluded that, as of the end of the period covered by this report, our
      disclosure controls and procedures were effective to enable us to record,
      process, summarize and report information required to be included in our reports
      that we file or submit under the Exchange Act within the time periods required.





**Changes
      in Internal Control over Financial Reporting**





There
      were no changes in our internal control over financial reporting (as defined
      in
      Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as
      amended) during the quarter ended June 30, 2008 that have materially affected,
      or are reasonably likely to materially affect our internal control over
      financial reporting.





**PART
      II - OTHER INFORMATION**





**ITEM
      1.**   **LEGAL
      PROCEEDINGS**





We
      know
      of no material, existing or pending legal proceedings against us, nor are we
      involved as a plaintiff in any material proceeding or pending litigation. There
      are no proceedings in which any of our directors, officers or affiliates, or
      any
      registered or beneficial stockholder, is an adverse party or has a material
      interest adverse to our company.





**ITEM
      1A.**  **RISK
      FACTORS**





Not
      applicable.





**ITEM
      2.**   **UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**





None.





**ITEM
      3.**   **DEFAULTS
      UPON SENIOR SECURITIES**





None.





**ITEM
      4.**   **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**ITEM
      5.**   **OTHER
      INFORMATION**




(a)
            On
                  April 25, 2008, we entered into separate book agreements with Eric
                  Paskel,
                  the host of our Xflowsion DVD series, and Bill Glaser, our Chief
                  Executive
                  Officer, to collaborate with Dina Aronson to write a book related
                  to the
                  Xflowsion DVD series regarding diet and nutrition for marketing
                  to the
                  general public. Mr. Paskel will complete a minimum of two complete
                  chapters in the book and will receive royalties of 5% of the Publisher’s
                  Price where uKarma acts as the Publisher. If uKarma engages a third
                  party
                  publisher, the royalty will be negotiated in good faith based on
                  the
                  royalty uKarma receives in order to maintain a fair distribution
                  of the
                  royalty to all involved parties but no more than 2.5%. Mr. Glaser
                  will
                  write content throughout the book, including the introduction and
                  full and
                  partial chapters, and will review, edit and rewrite content as
                  he deems
                  appropriate. Mr. Glaser will receive royalties of 5% of the Publisher’s
                  Price where uKarma acts as the Publisher. If uKarma engages a third
                  party
                  publisher, the royalty will be negotiated in good faith based on
                  the
                  royalty uKarma receives in order to maintain a fair distribution
                  of the
                  royalty to all involved parties.
                
                On
                  March 26, 2008, we entered into a book agreement with Dina Aronson
                  to
                  write a book related to the Xflowsion DVD series regarding diet
                  and
                  nutrition for marketing to the general public. Ms. Aronson will
                  be paid
                  $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. Ms. Aronson
                  will
                  receive a 5% royalty on sales above 50,000 books sold where uKarma
                  acts as
                  the publisher and 2.5% royalty on sales above 50,000 books sold
                  if uKarma
                  engages a third party
                  publisher.




(b)
            There
                were no changes to the procedures by which security holders may recommend
                nominees to our board of
                directors.


21





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





3.1
            
            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
            
            2006
                Stock Plan (1)10.2
            
            Employment
                Agreement between uKarma Corporation and Bill Glaser dated January
                1, 2006
                (1)10.3
            
            Consulting
                Agreement between uKarma Corporation and Eric Paskel dated April
                19, 2006
                (1)10.4
            
            Consulting
                Agreement between uKarma Corporation and Craig Kulman dated February
                13,
                2006 (1)10.5
            
            Consulting
                Agreement between uKarma Corporation and Len Panzer dated February
                28,
                2006 (1)10.6
            
            Consulting
                Agreement between uKarma Corporation and Jeremy Koff dated May 5,
                2006
                (1)10.7
            
            Production
                Agreement between uKarma Corporation and The Tribal Vision Group,
                LLC
                d/b/a Yoga Tribe and Culture Productions dated June 15, 2006
                (1)10.8
            
            Marketing
                Agreement between uKarma Corporation and Synthesis Marketing dated
                October
                11, 2006 (1)10.9
            
            Marketing
                Agreement between uKarma Corporation and Much and House Public Relations
                dated October 11, 2006 (1)10.10
            
            Production
                Agreement between uKarma Corporation 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)


22





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 uKarma Corporation and Bill Glaser dated August
                14, 2007
                (4)10.26
            
            Video
                Distribution Agreement dated September 25, 2007 (5)10.27
            
            Abdou
                Conversion Agreement dated August 27, 2007 (6)10.28
            
            McDonald
                Conversion Agreement dated August 27, 2007 (6)10.29
            
            Lease
                dated April 25, 2008 (7)10.30
            
            Paskel
                Book Agreement dated April 25, 2008 *10.31
            
            Glaser
                Book Agreement dated April 25, 2008 *10.32
            
            Aronson
              Book Agreement dated March 26, 2008 *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.(4)
            Incorporated
                herein by reference to Form 10-QSB filed with the SEC on August 20,
                2007.(5)
            Incorporated
                herein by reference to Form 8-K filed with the SEC on October 4,
                2007.(6)
            Incorporated
                herein by reference to Form 10-QSB filed with the SEC on November
                19,
                2007.(7)
            Incorporated
                herein by reference to Form 8-K filed with the SEC on May 1,
                2008.


23


**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:
                August 19, 2008
            By:
            /s/
                Bill GlaserBill
                GlaserChief
                Executive Officer and Chief Financial
                Officer


24