`UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      OF 1934

              For the quarterly period ended September 30, 2007

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

   For the transition period from __________________ to __________________

                       Commission file number: 333-130586

                                   SWMX, INC.
--------------------------------------------------------------------------------
       (Exact Name of Small Business Issuer as Specified in Its Charter)

                 Delaware                                20-5296949
-------------------------------------------  -----------------------------------
     (State or Other Jurisdiction of           (I.R.S. Employer Identification
      Incorporation or Organization)                        No.)

                    1 Bridge St., Irvington, New York 10533
--------------------------------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (914) 406-8400
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

--------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)


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

      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

      As of November 13, 2007, there were 205,925,000 shares of the issuer's
common equity outstanding.

      Transitional Small Business Disclosure Format (Check one): Yes |_|  No |X|



                                Table of Contents
                                -----------------

                                                                            Page
                                                                            -----
Part I    FINANCIAL INFORMATION

   Item 1.  Statements (Unaudited).......................................      2

            Condensed Consolidated Balance Sheets - September 30,
            2007 and December 31, 2006

            Condensed Consolidated Statements of Operations for
            the three and nine months ended September 30, 2007
            and 2006

            Condensed Consolidated Statements of Cash Flows for
            the nine months ended September 30, 2007 and 2006

            Condensed Consolidated Statements of Changes in
            Stockholders' (Deficit) Equity for the nine months
            ended September 30, 2007

            Notes to Unaudited Condensed Consolidated Financial
            Statements

   Item 2.  Discussion and Analysis or Plan of Operation.................     16

   Item 3.  Controls and Procedures......................................     22

Part II   OTHER INFORMATION

   Item 4.  Submission of Matters to a Vote of Security Holders..........     23
   Item 6.  Exhibits.....................................................     23


                                        i


                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                             SWMX, INC.
                                CONDENSED CONSOLIDATED BALANCE SHEETS

                                                         September 30, 2007        December 31, 2006
                                                            (Unaudited)
                                                         ------------------        -----------------
                            ASSETS

CURRENT ASSETS

Cash and cash equivalents                                  $     86,277              $  2,619,713
Restricted cash                                                  70,000                    70,000
Accounts receivable, net                                      1,949,479                 3,099,378
Prepaid expense and other current assets                        224,716                   284,040
Note receivable related party                                      --                     169,941
                                                           ------------              ------------

TOTAL CURRENT ASSETS                                          2,330,472                 6,243,072

Property and equipment, net                                   3,074,502                 3,152,749
Deferred financing costs                                        280,665                      --
Security deposit                                                 91,168                   151,893
                                                           ------------              ------------

TOTAL ASSETS                                               $  5,776,807              $  9,547,714
                                                           ============              ============


        LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
Accounts payable                                           $  5,926,786              $  3,924,798
Accrued expenses                                              1,015,394                   532,890
Term loan                                                     3,000,000                      --
Customer advances                                               144,002                 1,439,855
Deferred revenue                                                198,776                   214,407
Obligation under capital lease                                  508,181                   593,740
                                                           ------------              ------------

TOTAL CURRENT LIABILITIES                                    10,793,139                 6,705,690
                                                           ------------              ------------

LONG TERM LIABILITIES
Non-current capital lease obligation                            239,974                   437,700
Other long term liabilities                                      37,216                   193,000
                                                           ------------              ------------

TOTAL LONG TERM LIABILITIES                                     277,190                   630,700
                                                           ------------              ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' (DEFICIT) EQUITY

Common Stock, 205,925,000 and 160,000,000
  shares, respectively, at a par value of
  $.01 per share (see note 1)                                 2,059,250                 2,059,250
Additional paid in capital                                   13,124,704                12,317,962
Accumulated deficit                                         (20,477,476)              (12,165,888)
                                                           ------------              ------------

TOTAL STOCKHOLDERS' (DEFICIT) EQUITY                         (5,293,522)                2,211,324
                                                           ------------              ------------

TOTAL LIABILITIES AND STOCKHOLDERS'
  (DEFICIT) EQUITY                                         $  5,776,807              $  9,547,714
                                                           ============              ============


                             See notes to unaudited financial statements
                                                  2


                                                     SWMX, INC.
                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                     (UNAUDITED)

                                                    Three months     Three months     Nine Months      Nine Months
                                                       ended            ended            Ended            Ended
                                                   September 30,    September 30,    September 30,    September 30,
                                                        2007             2006             2007              2006
                                                   --------------   -------------    -------------    -------------

Net Revenues                                       $     321,930    $     632,579    $   2,237,829        1,546,059

Costs and expenses:

    Cost of revenues                                     666,505          336,850        1,807,464          785,131
    Selling, general and administrative expenses       2,859,799        3,117,341        8,015,204        6,973,536
                                                   -------------    -------------    -------------    -------------

Total costs and expenses                               3,526,304        3,454,191        9,822,668        7,758,667
                                                   -------------    -------------    -------------    -------------

Operating loss                                        (3,204,374)      (2,821,612)      (7,584,839)      (6,212,608)

Interest expense, net                                    184,502            1,434          726,749          235,812
                                                   -------------    -------------    -------------    -------------

Net loss                                           $  (3,388,876)   $  (2,823,046)   $  (8,311,588)   $  (6,448,420)
                                                   =============    =============    =============    =============


Net loss per common share - basic and diluted      $       (0.02)   $       (0.01)   $       (0.04)   $       (0.03)

Weighted average number of shares outstanding -
   basic and diluted                                 205,925,000      204,250,543      205,925,000      198,790,625


                                     See notes to unaudited financial statements
                                                          3


                                   SWMX, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                     Nine months     Nine months
                                                        ended           ended
                                                    September 30,   September 30,
                                                         2007           2006
                                                    -------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net  loss                                         $ (8,311,588)   $ (6,448,420)
  Adjustments to reconcile net loss to net cash
  used in operating activities:

  Depreciation and amortization                        1,036,107         378,813
  Provision for doubtful accounts                      1,378,000       1,282,000
  Amortization and write-off of deferred
  financing costs                                        465,764            --
  Stock-based compensation                               548,742         642,000
    Amortization and write-off of debt discount             --            48,889
  Changes in operating assets and liabilities:
  Accounts receivable                                   (228,100)     (3,982,718)
  Prepaid expenses and other current assets               59,323        (194,532)
  Other assets                                           (47,702)       (151,893)
  Accounts payable                                     2,001,988       1,799,034
  Accrued expenses                                      (984,764)        610,062
  Due to related parties                                    --          (262,461)
                                                    ------------    ------------
    Net Cash Used in Operating Activities             (4,082,230)     (6,279,226)
                                                    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                    (700,610)       (472,546)
    Restricted cash                                         --           (70,000)
    Note receivable from related party                      --          (500,000)
  Repayment of note receivable from related party        169,941         300,000
                                                    ------------    ------------
    Net Cash used in Investing Activities               (530,669)     (1,244,604)
                                                    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock, net of expenses                 --        10,655,212
  Increase in notes payable to related parties              --           158,000
  Repayment of notes payable to related parties             --        (1,400,000)
  Repayment of capital lease obligations                (540,472)           --
  Borrowings under credit facility                     3,000,000       1,500,000
  Repayments under credit facility                          --        (1,500,000)
  Deferred financing costs                              (380,065)           --
                                                    ------------    ------------
    Net Cash Provided by Financing Activities          2,079,463       9,413,212
                                                    ------------    ------------

Net increase (decrease) in cash                       (2,533,436)      1,889,382

Cash and cash equivalents at beginning of period       2,619,713          79,820
                                                    ------------    ------------

Cash and cash equivalents at end of period          $     86,277    $  1,969,202
                                                    ============    ============

            SUPPLEMENTAL INFORMATION
Cash interest paid                                  $    161,228    $     31,677
Non-cash transactions -

In January 2006 the Company issued common stock of $200,000 for cash received in
the prior period which was reflected as a liability in the December 31, 2005
balance sheet.

In February 2007 the Company entered into a capital lease, acquiring certain
computer equipment at a cost of approximately $257,000.

In connection with the debt financing entered into on March 23, 2007, the
Company issued a warrant to purchase shares of common stock (see Note 7), the
fair value of the warrant of $258,000 has been included as deferred financing
costs and will be amortized to interest expense over the life of the credit
facility.


                   See notes to unaudited financial statements
                                        4


                                                   SWMX, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
                                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
                                                  (UNAUDITED)

                                            Common Stock            Additional
                                    ---------------------------      Paid-in       Accumulated
                                       Shares          Amount        Capital         Deficit          Total
                                    -----------    ------------    -------------  -------------   -------------

Balance, January 1, 2007            205,925,000    $  2,059,250    $ 12,317,962   $(12,165,888)   $  2,211,324

Stock-based compensation expense                                        548,742                        548,742
Issuance of warrants                                                    258,000                        258,000

Net loss                                                                            (8,311,588)     (8,311,588)

                                    -----------    ------------    ------------   ------------    ------------
Balance, September 30, 2007         205,925,000    $  2,059,250    $ 13,124,704   $(20,477,476)   $ (5,293,522)
                                    ===========    ============    ============   ============    ============


                                  See notes to unaudited financial statements
                                                       5


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE -1-    SUMMARY OF BUSINESS AND BASIS FOR PRESENTATION

      BUSINESS DESCRIPTION

      SWMX, Inc. ("SWMX" or the "Company") operates the SWMX Marketplace, an
      electronic open marketplace for the purchase, sale, management and
      distribution of advertising media time. The Company operates in one
      segment.

      BASIS OF PRESENTATION

      The accompanying consolidated financial statements include the accounts of
      SWMX, Inc. and its wholly-owned subsidiary SoftWave Media Exchange, Inc.
      Intercompany balances and transactions have been eliminated.

      HISTORY

      On July 26,  2006,  Edgemont  Resources,  Inc.  created  a  wholly-owned
      subsidiary,  SWMX Acquisition,  Inc., to acquire and merge with and into
      SoftWave Media  Exchange,  Inc.,  pursuant to a merger  agreement.  Upon
      conclusion of the merger,  Edgemont Resources,  Inc. changed its name to
      SWMX,  Inc.  and the  subsidiary  changed  its  name to  SoftWave  Media
      Exchange, Inc.

      The merger of a private operating company, SoftWave Media Exchange, Inc.
      into a non-operating public shell corporation, Edgemont Resources, Inc.,
      with nominal assets or liabilities resulted in the shareholders of
      SoftWave Media Exchange, Inc. having actual operating control of the
      merged company after the transaction. The transaction is considered to be
      a capital transaction in substance, rather than a business combination.
      That is, the transaction is the equivalent to the issuance of stock by the
      private company for the net monetary assets of the shell company,
      accompanied by a recapitalization. Accordingly, the outstanding shares of
      SoftWave Media Exchange, Inc. were restated in the balance sheets and
      statement of changes in stockholders' (deficit) equity to give effect to
      the merger. Pursuant to the merger agreement the common stock exchange
      ratio was one to one. The restated shares were used in the computation of
      loss per share. The merger resulted in SoftWave Media Exchange, Inc.
      issuing 1,900,000 shares of common stock to Edgemont Resources, Inc. for
      net assets of no value and the payment of $400,000 to the shareholders of
      Edgemont Resources, Inc. which was included in Selling, General and
      Administrative expenses in the third quarter of 2006.

      All information presented reflects the recapitalization of SWMX, Inc. and
      the operations of SoftWave Media Exchange, Inc. and not Edgemont
      Resources, Inc. Any references to predecessor companies are predecessors
      to SoftWave Media Exchange, Inc. and not Edgemont Resources, Inc. The
      "Company" shall refer to SWMX, Inc. and or SoftWave Media Exchange, Inc.

      On January 19, 2006, SoftWave Media Exchange, Inc. entered into a
      contribution agreement with Soft Wave Media, LLC and its members, Alowex,
      LLC ("Alowex") and Remnant Media, LLC, whereby Soft Wave Media, LLC (the
      "Predecessor") contributed all of its assets and all of its liabilities to
      SoftWave Media Exchange, Inc. These assets included but were not limited
      to software, intellectual property, domain name and website content. This
      transaction effectively merged the Predecessor into SoftWave Media
      Exchange, Inc. and did not result in any change in ownership or control.
      As such the assets and liabilities of SoftWave Media Exchange, Inc., as of
      the contribution date, were reflected at the carryover basis of the
      Predecessor.

      LIQUIDITY

      The Company has incurred substantial losses from its inception through
      September 30, 2007, has a stockholders deficit of $5,293,522, a working
      capital deficit of $8,462,667 and was in default under its credit
      facility, which is due January 31, 2008 (see Note 7), all of which raise
      substantial doubt about its ability to continue as a going concern. Such
      losses resulted from the Company's lack of significant revenue and costs


                                       6


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      incurred in the establishment of its infrastructure. The Company expects
      to continue to incur significant operating expenses in order to execute
      its current business plan. In March 2007, the Company entered into a
      credit facility, which was amended on October 3, 2007 (see note 7), and
      believes that it has access to sources of working capital that are
      sufficient to fund its operations for the year ending December 31, 2007,
      however, there can be no assurances that sufficient funds will be
      available. The Company also believes that additional capital requirements
      associated with its development can be met by raising debt or equity when
      needed, though there can be no assurances that the Company will be able to
      raise any such capital or upon what terms. The accompanying financial
      statements do not include any adjustments that might result from this
      uncertainty.

NOTE -2-    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      UNAUDITED INTERIM FINANCIAL INFORMATION

      The accompanying condensed consolidated balance sheet as of September 30,
      2007, the condensed consolidated statements of operations for the three
      and nine months ended September 30, 2007 and 2006, and the condensed
      consolidated statements of cash flows for the nine months ended September
      30, 2007 and 2006 and the condensed consolidated statement of changes in
      stockholders' (deficit) equity for the nine months ended September 30,
      2007 are unaudited. These unaudited interim financial statements have been
      prepared in accordance with accounting principles generally accepted in
      the United States of America. In the opinion of management, the unaudited
      interim financial statements include all adjustments of a normal recurring
      nature necessary for the fair presentation of our financial position as of
      September 30, 2007, our results of operations for the three and nine
      months ended September 30, 2007 and 2006 and our cash flows for the nine
      months ended September 30, 2007 and 2006. The results of operations for
      the three and nine months ended September 30, 2007 are not necessarily
      indicative of the results to be expected for the year ending December 31,
      2007. These unaudited interim financial statements should be read in
      conjunction with the December 31, 2006 audited financial statements and
      the related notes.

      USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. The
      Company's most significant estimates and assumptions made in the
      preparation of the financial statements relate to revenue recognition,
      allowance for doubtful accounts and capitalized software. Actual results
      could differ from those estimates.

      CASH AND CASH EQUIVALENTS

      The Company considers all highly liquid investments purchased with an
      original maturity of three months or less to be cash equivalents. Cash and
      cash equivalents, which primarily consist of cash on deposit with banks
      and money market funds, are stated at cost, which approximates fair value.

      RESTRICTED CASH

      The Company's restricted cash balance of $70,000 at September 30, 2007 and
      December 31, 2006 consists of a certificate of deposit that serves as
      collateral for the Company's merchant credit card account. The term of the
      certificate of deposit is one year and expires on August 8, 2008.

      ACCOUNTS RECEIVABLE

      Accounts receivable are recorded at the gross amount billed and reported
      at the amount outstanding, net of any allowances for amounts that the
      Company believes are not collectible. In addition to billed receivables


                                       7


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      the Company also has unbilled receivables. These unbilled receivables
      result from the timing delay between the time the Company recognizes
      revenue, on the date an advertisement is aired, and the date on which the
      invoice is generated. (See Note 4)

      In certain instances the Company requests its customers to pay for the
      services rendered by the Company in advance of the services being
      provided. These customer advances received prior to year or period end for
      which the services were not provided until after year or period end are
      classified as customer advances in the accompanying balance sheets.

      DEFERRED FINANCING COSTS

      The Company capitalizes costs incurred in connection with borrowings or
      establishment of credit facilities. These costs are amortized as an
      adjustment to interest expense over the life of the borrowing or life of
      the credit facility. See also Note 7.

      CAPITALIZED SOFTWARE

      In accordance with Statement of Position 98-1, Accounting for the Costs of
      Computer Software Developed or Obtained for Internal Use ("SOP 98-1"),
      certain direct development costs associated with internal-use software are
      capitalized. These costs include external direct costs of service and
      payroll costs for employees devoting time to software projects principally
      related to software coding, designing system interfaces and installation
      and testing of the software. These costs are recorded as fixed assets and
      are amortized over a period not to exceed three years beginning when the
      asset is substantially ready for use. Costs incurred during the
      preliminary project stage, as well as maintenance and training costs are
      expensed as incurred. Based on the criteria of SOP 98-1 the Company did
      not capitalize any software development costs for the three months ended
      September 30, 2007 or 2006. For the nine months ended September 30, 2007
      and 2006, the Company capitalized $455,000 and $0, respectively. As of
      September 30, 2007 and December 31, 2006, capitalized software development
      costs included in Property and equipment in the accompanying balance sheet
      was $888,000 and $789,000, respectively. These capitalized software
      development cost amounts also include the software purchased from Alowex
      (see Note 6).

      PROPERTY AND EQUIPMENT

      Property and equipment is stated at cost less accumulated depreciation.
      The Company provides for depreciation and amortization on property and
      equipment used by applying the straight-line method over the following
      estimated useful lives:

                                                           Estimated
      Assets                                             Useful Lives
      ------                                             ------------

      Capitalized software                                 3 years
      Computer equipment                                   3 years
      Furniture and fixtures                               3 years
      Leasehold improvements                 Shorter of 5 years or life of lease

      REVENUE RECOGNITION AND PRESENTATION

      The Company recognizes revenue when all of the following criteria have
      been met: persuasive evidence of an arrangement exists; services have been
      rendered; the price to the customer is fixed and determinable and
      collectibility from the customer is reasonably assured. In most instances,
      these criteria are met when the customer's advertisement is aired, and it
      is at this point that the Company recognizes revenue.

      The Company has an agreement with a customer, whereby the customer paid
      the Company $75,000 in December 2005 and $150,000 in January 2006. Based
      on the achievement of certain milestones within the agreement the Company


                                       8


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      has the ability to earn up to the $225,000. If at the end of the term of
      the agreement, December 2007, the milestones in the agreement have not
      been met, the unearned portion of the $225,000 is to be repaid to the
      customer. The unearned amount under this agreement is classified as
      deferred revenue in the accompanying balance sheets and was $198,000 and
      $214,407 at September 30, 2007 and December 31, 2006, respectively.

      In compliance with Emerging Issues Task Force ("EITF") Issue No. 99-19,
      Reporting Revenue Gross as a Principal versus Net as an Agent, the Company
      assesses whether the Company or the third party broadcaster is the primary
      obligor. In addition, the Company gives appropriate consideration to other
      key indicators such as latitude in establishing price, discretion in
      broadcaster selection and who has credit risk. Considering that the
      Company operates broadly as a network exchange along with the industry
      practice to generally record revenue on a net versus gross basis, the
      Company believes that there must be strong evidence in place to overcome
      the presumption of net revenue accounting. Accordingly, to date the
      Company has recorded revenue net of pass-through charges, based on the
      Company's assessment of the key indicators. Should the Company enter into
      transactions where the key indicators suggest they are acting as a
      principal, then the Company will record the gross amount billed as
      revenue.

      For the nine months ended September 30, 2007 and 2006, approximately 52%
      and 52% of the Company's revenues came from four and three customers,
      respectively. These four and three customers accounted for 16% and 53% of
      accounts receivable as of September 30, 2007 and 2006, respectively.

      COST OF REVENUES

      Cost of revenues consists of the expenses associated with the operation of
      the Company's data centers including depreciation, labor and bandwidth
      costs. Cost of revenues also include expenses related to the amortization
      of capitalized software development costs, acquired technologies as well
      as other software development costs that are expensed in accordance with
      SOP 98-1.

      INCOME TAXES

      The Company applies the asset and liability approach to financial
      accounting and reporting for income taxes. Deferred income tax assets and
      liabilities are computed for differences between the financial statement
      and tax bases of assets and liabilities that will result in future taxable
      or deductible amounts, based on enacted tax laws and rates for the periods
      in which the differences are expected to affect taxable income. Valuation
      allowances are established, when necessary, to reduce deferred tax assets
      to the amount expected to be realized.

      Effective January 1, 2007, the Company adopted Financial Interpretation
      ("FIN") No. 48, Accounting for Uncertainty in Income Taxes-An
      interpretation of Financial Accounting Standards Board ("FASB") Statement
      No. 109. This interpretation prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax
      return. The interpretation contains a two-step approach to recognizing and
      measuring uncertain tax positions accounted for in accordance with FASB
      Statement No. 109. The first step is to evaluate the tax position for
      recognition by determining if the weight of available evidence indicates
      that it is more likely than not that the position will be sustained on
      audit, including resolution of related appeals or litigation processes, if
      any. The second step is to measure the tax benefit as the largest amount
      which is more than fifty percent likely of being realized upon ultimate
      settlement. The interpretation also provides guidance on recognition,
      classification, interest and penalties, and other matters. Tax years 2005
      to 2006 remain open to examination by Federal and state jurisdictions. The
      adoption did not have an effect on the Company's financial statements.

      STOCK - BASED COMPENSATION

      In December 2004, the FASB issued Statement of Financial Accounting
      Standards ("SFAS") No. 123 (revised), "Share-Based Payment" ("SFAS
      123(R)"). SFAS 123(R) eliminates the alternative to use the intrinsic
      value method of accounting, which generally resulted in no compensation
      expense recorded in the financial statements related to the issuance of
      equity awards to employees. SFAS 123(R) requires that the cost resulting
      from all share based payment transactions be recognized in the financial
      statements.


                                       9


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      SFAS 123(R) establishes fair value as the measurement objective in
      accounting for share based payment arrangements and requires all companies
      to apply a fair value based measurement method in accounting for generally
      all share based payment transactions with employees. The Company adopted
      SFAS No. 123(R) in connection with its issuance of stock options during
      the three months ended March 31, 2006. During the year ended December 31,
      2006, the Company issued options to purchase 2,370,000 shares of common
      stock at various exercise prices. No options have been granted during the
      nine months ended September 30, 2007. In accordance with SFAS 123(R) the
      Company recorded an expense relating to the options granted of
      approximately $549,000 and $642,000 for the nine months ended September
      30, 2007 and 2006, respectively, included in selling, general and
      administrative expenses in the accompanying statement of operations.

      The following tables summarize information about the Company's stock
      options outstanding at September 30, 2007:


                                              Weighted
                                               Average
                                              Exercise
                                              Price of
                                  Shares       Shares
                                -----------------------
Balance at December 31, 2006     2,370,000    $   0.61

Granted                               --           --

Exercised                             --           --

Cancelled                       (1,185,000)   $   0.28
                                -----------------------
Balance at September 30, 2007    1,185,000    $   0.95
                                =======================


                                   Options Outstanding                                   Options Exercisable
         ----------------------------------------------------------------------   --------------------------------
                                 Number           Weighted          Weighted          Number           Weighted
         Range of Exercise     Outstanding        Average           Average       Exercisable as       Average
               Prices          at 9/30/07      Remaining Life    Exercise Price     of 9/30/07      Exercise Price
         -----------------     -----------     --------------    --------------   --------------    --------------
             $0.50                150,000          3.54               $0.50           150,000           $0.50
             $1.00              1,010,000          5.59               $1.00           885,000           $1.00
             $1.50                 25,000          3.84               $1.50            25,000           $1.50
                                ---------                                           ---------
                                1,185,000                                           1,060,000
                                ---------                                           ---------


                                                                                           Weighted
                                                                             Weighted       Average
                                                                              Average      Remaining     Aggregate
                                                                             Exercise     Contractual    Intrinsic
                                                                 Shares        Price          Term         Value
                                                               ---------     --------     -----------    ---------

         Stock options outstanding at September 30, 2007       1,185,000       $0.95      5.29 years        $ --

         Stock options exercisable at September 30, 2007       1,060,000       $0.94      4.90 years        $ --


      On July 26, 2006, the Company's Board of Directors adopted the 2006 Stock
      Option Plan (the "Plan"). 630,000 shares of the Company's common stock has
      been reserved for issuance under the Plan. As of September 30, 2007, no
      stock options have been granted under this Plan.


                                       10


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      RECENT ACCOUNTING PRONOUNCEMENTS

      In September 2006, the FASB issued SFAS No. 157, "Fair Value
      Measurements". This Statement defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles, and
      expands disclosures about fair value measurements. This Statement applies
      under other accounting pronouncements that require or permit fair value
      measurements, the FASB having previously concluded in those accounting
      pronouncements that fair value is the relevant measurement attribute.
      Accordingly, this Statement does not require any new fair value
      measurements. However, for some entities, the application of this
      Statement will change current practice. This Statement is effective for
      financial statements issued for fiscal years beginning after November 15,
      2007, and interim periods within those fiscal years. The Company is
      currently evaluating the impact of this Statement on its financial
      statements.

      In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities -- Including an Amendment of
      FASB Statement No. 115" ("SFAS 159"). SFAS 159 permits all entities the
      option to measure many financial instruments and certain other items at
      fair value. If a company elects the fair value option for an eligible
      item, then it will report unrealized gains and losses on those items at
      each subsequent reporting date. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007, which for the Company is our fiscal
      year beginning January 1, 2008. We are currently determining whether fair
      value accounting is appropriate for any of our eligible items and cannot
      estimate the impact, if any, which SFAS 159 may have on our consolidated
      financial statements.

NOTE -3-    LOSS PER SHARE

      Net loss per share has been presented pursuant to SFAS No. 128, "Earnings
      per Share". Basic net loss per share is computed by dividing reported net
      loss available to common shareholders by the weighted average shares
      outstanding for the period. Diluted net loss per share is computed by
      dividing reported net loss available to common shareholders by weighted
      average shares outstanding for the period, adjusted for the dilutive
      effects of common stock equivalents, which consist of stock options, using
      the treasury stock method.

      All stock options have been excluded from the computation of earnings per
      share due to their anti-dilutive effect as well as their weighted average
      exercise price exceeding the market price of the stock at September 30,
      2007.

NOTE -4-    ACCOUNTS RECEIVABLE, NET

       The Company's Accounts receivable, net consists of the following:

                                           September 30, 2007   December 31, 2006
                                           ------------------   -----------------
      Billed accounts receivable              $ 4,952,756          $ 3,448,290
      Unbilled accounts receivable                 16,723            1,293,088
                                              -----------          -----------
                                                4,969,479            4,741,378

      Less: Allowance for doubtful accounts    (3,020,000)          (1,642,000)

                                              -----------          -----------
      Accounts receivable, net                $ 1,949,479          $ 3,099,378
                                              ===========          ===========


                                       11


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE -5-    PROPERTY AND EQUIPMENT

      Property and equipment consists of:

                                                          September 30, 2007    December 31, 2006
                                                          ------------------    -----------------
      Capitalized software                                    $ 1,818,500          $ 1,327,449
      Computer equipment                                        2,425,482            2,017,591
      Furniture and fixtures                                       91,537               91,537
      Leasehold improvements                                      467,710              408,792
                                                              -----------          -----------
                                                                4,803,229            3,845,369
      Less: Accumulated depreciation and amortization          (1,728,727)            (692,620)
                                                              -----------          -----------
      Property and equipment, net                             $ 3,074,502          $ 3,152,749
                                                              ===========          ===========

      Depreciation and amortization expense was approximately $390,000 and
      $1,036,000 for the three and nine months ended September 30, 2007,
      respectively.

NOTE -6-    NOTE PAYABLE TO RELATED PARTY

      On August 23, 2005, the Predecessor entered into an Agreement of Sale with
      Alowex, an entity that is wholly-owned by two shareholders and founders of
      the Predecessor whereby Alowex agreed to sell to the Predecessor the
      software and any intellectual property related to the Remnant Radio
      Software Platform, which is the predecessor to the SoftWave Radio Software
      Platform. As consideration, the Predecessor issued to Alowex a promissory
      note ("Original Alowex Promissory Note") in the original amount of
      $1,242,000, representing an amount mutually agreed to by the co-founders
      as fair value. The note provided for interest at a rate of 4% per annum,
      with monthly payments of principal and interest commencing on September 1,
      2005 through August 31, 2008 and is subject to a security agreement
      consisting of substantially all of the assets of the Company. However, no
      amounts were paid during 2005 or 2006, and the Original Alowex Promissory
      Note was canceled with a new note entered into on January 19, 2006, as
      noted below.

      As the Original Alowex Promissory Note was issued at a below market
      interest rate, the Company imputed interest at a market rate resulting in
      a debt discount of approximately $55,000.

      On January 19, 2006, SoftWave Media Exchange, Inc. canceled the Original
      Alowex Promissory Note and issued to Alowex a new promissory note in the
      amount of $1.4 million ("Alowex, LLC Promissory Note"). The Alowex, LLC
      Promissory Note provides for monthly payments of interest at the rate of
      7% per annum commencing February 19, 2006 and monthly principal and
      interest payments of $33,524 commencing February 19, 2007 until January
      19, 2011 on which date all outstanding principal and accrued interest
      shall be due and payable. This agreement is subject to a security
      agreement consisting of substantially all assets of the Company. In the
      event the Company receives proceeds from the sale of equity securities in
      any single or a series of related transactions in which the amount raised
      equals or exceeds $10 million, the entire note, including accrued
      interest, is due and payable. In connection with entering into the Alowex,
      LLC Promissory Note and canceling the Original Alowex Promissory Note, the
      Company wrote off the remaining debt discount, the Original Alowex
      Promissory Note and the accrued interest payable resulting in an interest
      expense charge of approximately $195,000 in 2006 related to this
      transaction

      In connection with the private placement transaction that was completed on
      July 26, 2006 (see note 10), this liability, $1,400,000, was repaid in
      full.


                                       12


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE -7-    CREDIT FACILITY

      In March 2007, the Company entered into a credit facility with BlueCrest
      Capital Finance, L.P. ("BlueCrest"). The credit facility consisted of a $3
      million term loan ("Term Loan") and a $6 million revolving loan
      ("Revolving Loan"). The Term Loan bore interest at the sum of (i) 600
      basis points plus (ii) the greater of (a) 4.84% or (b) the yield on
      Three-Year U.S. Treasury Notes on the date of such loan. The Term Loan was
      to be repaid in forty (40) monthly scheduled installments as follows: (i)
      commencing on the first business day of first month after the date of the
      Term Loan, three (3) months of interest only (paid in arrears); (ii)
      commencing on the first business day of the fourth month after the date of
      the Term Loan, twelve (12) equal monthly payments, each consisting of
      1.6667% of the original principal amount of the Term Loan, plus interest
      thereon (paid in arrears); then (iii) commencing on the first business day
      of the sixteenth month after the date of the Term Loan, twenty four (24)
      equal monthly payments, each consisting of 3.3333% of the original
      principal amount of the relevant Loan, plus interest thereon (paid in
      arrears); and finally (iv) on the first business day of the fortieth month
      after the date of the Term Loan, $150,000. The Revolving Loan had a term
      of two years. Each advance under the Revolving Loan was to bear interest
      at a rate equal to the Prime Rate plus 1.65% per annum. The Revolving Loan
      provided for advances based on a formula of 80% of eligible receivables,
      as defined. In connection with this transaction the Company incurred
      financing fees of approximately $380,000. In addition, the Company issued
      a warrant to purchase 850,340 shares of common stock at $.88 per share,
      the average trading price for the five days prior to closing, subject to
      adjustment based on future equity offerings. The warrant was to expire in
      2010, with the fair value of the warrant, $258,000, included in deferred
      financing fees as well as additional paid-in-capital, and being charged to
      interest expense over the life of the credit facility.

      On July 1, 2007, the Company was in default under the credit facility as
      it had not raised $10 million in equity as required under the agreement.
      As of July 2, 2007 the Company entered into a forbearance agreement
      whereby BlueCrest canceled the Revolving Loan, increased the interest rate
      on the Term Loan by 2% and gave the Company until August 1, 2007 to cure
      the event of default. The Company did not cure the event of default by
      August 1, 2007. In connection with the termination of the Revolving Loan,
      the Company wrote off the deferred financing costs associated with the
      Revolving Loan, approximately $354,000 to interest expense, in the quarter
      ended June 30, 2007. The remaining deferred financing fees, relating to
      the Term Loan of approximately $187,000 as of June 30, 2007, were being
      amortized over the remaining life of the Term Loan.

      As of September 30, 2007, the Company had borrowings of $3,000,000 under
      the Term Loan.

      SUBSEQUENT TO QUARTER END

      On October 3, 2007, the Company entered into an amendment to the credit
      facility with BlueCrest. Under the terms of the amendment, BlueCrest will
      provide a Revolving Loan up to $3.5 million, that will bear interest at
      the prime rate plus 5% per annum. The interest rate on the Term loan was
      amended to 12.84%. The maturity date of both Term Loan and the Revolving
      Loan is January 31, 2008. The Company is also subject to a Revolving Loan
      termination fee, starting at $130,000 if the Revolving Loan is paid on or
      prior to December 31, 2007 and escalates to $750,000 if the Revolving Loan
      is paid on or after March 31, 2008. In addition, the Company issued a
      warrant to BlueCrest to purchase 48,750,000 shares of common stock at an
      exercise price of $0.06 per share, as well a warrant to purchase
      12,500,000 shares of common stock at $0.06 per share, replacing the
      warrant issued in March 2007.

      In accordance with Emerging Issues Task Force ("EITF") Issue No. 96-19
      "Debtor's Accounting for a Modification or Exchange of Debt Instruments",
      the Company will be accounting for the amendment referred to above as an
      early extinguishment of debt and a new debt instrument being issued.
      Accordingly, the unamortized deferred financing costs associated with the
      credit facility entered into in March 2007, which as of October 3, 2007 is
      $172,000, will be written off as a charge to interest in October 2007.

      In connection with the amendment, the Company incurred approximately
      $1,450,000 of costs, including $1,263,000 representing the fair value of
      the warrants issued, which will be amortized over the four month period
      beginning in October 2007 and ending January 31, 2008. As of September 30,
      2007, approximately $108,000 of this cost was included in Deferred
      financing costs in the accompanying September 30, 2007 balance sheet. The
      balance of the cost will be recorded in October 2007.


                                       13


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


      The Company has classified the outstanding balance of the Term Loan as a
      current liability in the accompanying balance sheets.

NOTE -8-    ALOWEX AND REMNANT LETTER AGREEMENTS

      On January 19, 2006, in consideration for services provided by Alowex and
      Remnant Media, LLC to the Predecessor and the contributions that each had
      made to the development of the Predecessor, its software and its website,
      the Company agreed to pay each party $1.3 million. If the Company receives
      proceeds from the sale of equity securities in any single or a series of
      related transactions in which the amount raised equals or exceeds $10
      million, under the terms of these letter agreements all amounts are due
      and payable, otherwise these amounts are due on demand at an interest rate
      of 6%.

      In connection with the private placement transaction that was completed on
      July 26, 2006 (see note 10), this liability of $2.6 million was converted
      into equity for an aggregate 866,667 shares of the Company's common stock,
      based on current market value.

NOTE -9-    COMMITMENTS AND CONTINGENCIES

      At September 30, 2007, future minimum payments under non-cancelable
      operating leases and capital leases are as follows over the next five
      years and thereafter:

            Year      Operating Leases    Capitalized Leases
                      --------------------------------------
            2007         $   95,000           $  140,000
            2008            383,000              561,000
            2009            398,000               99,000
            2010            413,000               12,000
            2011            282,000                 --
            2012               --                   --
                         -------------------------------
                         $1,571,000           $  812,000
                         ===============================

Less: Amount representing interest (at a
rate of 10.45%)                                  (64,000)
                                              ----------
Present value of net minimum lease payments   $  748,000
                                              ==========

      In August 2006, the Company terminated the employment of one its officers.
      This former officer commenced an arbitration proceeding, alleging that he
      is due compensation and benefits in connection with his termination
      pursuant to his employment agreement with the Company. Despite the Company
      believing it has meritorious defenses in such proceeding it agreed to
      settle this matter in March 2007. In the settlement the Company agreed to
      pay this former officer $500,000, with $75,000 paid in March 2007 and
      $25,000 to be paid each month thereafter through August 2008. The Company
      failed to make certain payments under this agreement in July and August.
      The Company and the former officer agreed to extend the payment term
      through November 2008 to compensate for the payments not made. The present
      value of the amount due within one year has been included in accrued
      expenses with the amount due beyond one year reflected as other long term
      liabilities in the accompanying balance sheets.


                                       14


                                      SWMX
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE -10-   STOCKHOLDERS' EQUITY

      On April 20, 2006, certain shareholders of the Company collectively sold
      2,078,479 shares of their own common stock of SoftWave Media Exchange,
      Inc. in a private placement to 65 purchasers at a price of $1.50 per
      share.

      On July 26, 2006, the Company completed a private placement pursuant to
      which it sold 4.0 million shares of common stock for gross proceeds of
      $12.0 million, including through the conversion of the $2.6 million owed
      to Alowex and Remnant Media, LLC (as discussed further in Note 8). In
      addition, the Company used $1.4 million of the net proceeds to repay a
      loan due to Alowex (see Note 6) and $1.5 million to repay the balance
      outstanding at that time under the `revolving credit facility (see Note
      7).

NOTE -11-   INCOME TAXES

      The Company has no provision for income taxes for any period as a result
      of its operating losses. Deferred income taxes reflect the net effects of
      temporary differences between the carrying amounts of assets and
      liabilities for financial reporting purposes and the amounts used for
      income tax purposes. Significant components of the Company's deferred tax
      assets and liabilities at September 30, 2007 are as follows:

      Deferred tax asset:
        Current:
          Allowance for doubtful accounts       $ 1,204,376
        Long-term:
          Stock based compensation                  586,532
          Net operating loss carryforward         5,126,928
                                                -----------
      Total deferred tax asset                    6,917,836

      Deferred tax liability:
        Long-term:
          Depreciation                              (59,820)

                                                -----------
      Net deferred tax asset                      6,858,016
      Valuation allowance                        (6,858,016)
                                                -----------
      Net deferred tax asset                    $     --
                                                ===========

      As of September 30, 2007, the Company has approximately $12,850,000 of
      federal net operating loss carryforwards, expiring in 2021. These loss
      carryforwards are subject to annual limitations under Internal Revenue
      Code Section 382 and some may be subject to further limitations. The
      Company has recognized a full valuation allowance against deferred tax
      assets as, at this point in the Company's history, it is more likely than
      not that sufficient taxable income will not be generated during the
      carryforward period available under tax law to utilize these deferred tax
      assets.


                                       15


ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

This Quarterly Report on Form 10-QSB contains statements which constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The following discussion may contain forward-looking statements
regarding us, our business, prospects and our results of operations that are
subject to certain risks and uncertainties posed by many factors and events that
could cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those described in the "Risk Factors" section of section
6 of our Annual Report on Form 10-KSB, for the year ended December 31, 2006, as
filed with the Securities and Exchange Commission on March 30, 2007. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report. We undertake no obligation to revise
any forward-looking statements in order to reflect events or circumstances that
may subsequently arise. Readers are urged to carefully review and consider the
various disclosures made by us in this report and in our other reports filed
with the Securities and Exchange Commission that advise interested parties of
the risks and factors that may affect our business. This discussion should be
read in conjunction with the audited financial statements of SWMX, Inc. for the
year ended December 31, 2006.

The following discussion reflects management's analysis of the financial
condition, results of operations and the operating history of SoftWave Media
Exchange, Inc. and its predecessor entity, Soft Wave Media, LLC. As such, the
discussion only represents management's current assessment of the operations of
the business.

On July 26, 2006, Edgemont Resources, Inc. created a wholly-owned subsidiary,
SWMX Acquisition, Inc., to acquire and merge with and into SoftWave Media
Exchange, Inc., pursuant to a merger agreement. Upon conclusion of the merger,
Edgemont Resources, Inc. changed its name to SWMX, Inc. and the subsidiary
changed its name to SoftWave Media Exchange, Inc.

The merger of a private operating company, SoftWave Media Exchange, Inc. into a
non-operating public shell corporation, Edgemont Resources, Inc., with nominal
assets or liabilities resulted in the shareholders of SoftWave Media Exchange,
Inc. having actual operating control of the merged company after the
transaction. The transaction is considered to be a capital transaction in
substance, rather than a business combination. That is, the transaction is the
equivalent to the issuance of stock by the private company for the net monetary
assets of the shell company, accompanied by a recapitalization. Accordingly, the
outstanding shares of SoftWave Media Exchange, Inc. were restated in balance
sheets and statement of changes in stockholders' equity (deficit) to give effect
to the merger. Pursuant to the merger agreement the common stock exchange ratio
was one to one. The restated shares were used in the computation of loss per
share.

On January 19, 2006, SoftWave Media Exchange, Inc. entered into a contribution
agreement with Soft Wave Media, LLC and its members, Alowex, LLC ("Alowex") and
Remnant Media, LLC, whereby Soft Wave Media, LLC (the "Predecessor") contributed
all of its assets and all of its liabilities to SoftWave Media Exchange, Inc.
These assets included but were not limited to software, intellectual property,
domain name and website content. This transaction effectively merged the
Predecessor into SoftWave Media Exchange, Inc. and did not result in any change
in ownership or control. As such the assets and liabilities of SoftWave Media
Exchange, Inc., as of the contribution date, were reflected at the carryover
basis of the Predecessor.

RECENT DEVELOPMENTS

Over the past quarter the delinquency of our accounts payable to media
organizations has increased significantly. This increase has adversely affected
our business and relationships. Certain media organizations have referred us to
collection agencies. Others have refused to accept orders from our customers
placed through our marketplace. In addition, some of our customers have refused
to pay outstanding receivables. We have been and continue to attempt to
remediate this situation through the following steps:


                                       16


   1. On October 3, 2007, we restructured our credit facility with BlueCrest,
      providing us with the ability to borrow up to $3.5 million to fund
      operations, through January 31, 2008.

   2. We have begun to repay amounts owed to media organizations.

   3. We are communicating with our media vendors to keep them informed of our
      progress and the steps we are taking to remedy the situation.

   4. We are seeking to complete a financing transaction, which would satisfy
      the requirement to repay BlueCrest by January 31, 2008, properly fund our
      company and allow us to satisfy our payables that are in arrears.

Although we believe these steps are helping to remediate the situation and
reduce our risk, there can be no assurance that we will be successful in
executing these steps or that if successfully executed these steps will improve
the adverse affects that may have already been caused.

OVERVIEW

We operate as an intermediary in implementing the buying and selling of media
time. Our long-term goal is to establish and operate a broad-based electronic
media marketplace and to develop the clientele and systems to support that
marketplace. We are in our early stage of implementing this strategy. In August
2005, we were organized as a limited liability company after acquiring the right
to operate a platform for the sale of radio advertising that had been developed
and tested by several affiliated companies during the previous several years.
After adding additional personnel and securing additional investors, the
business entity was merged into a corporation in January 2006.

Since inception, we have considered that the ability to achieve rapid growth in
the number of entities that participate in our marketplace and to quickly expand
the marketplace to include additional segments of the media market will be
essential to our long run competitiveness and success. This policy has dictated
that the support systems that have been designed for the marketplace be
sufficiently robust to accommodate large, rapid increases in volume and be
inherently scalable so that the marketplace can be expanded to incorporate
additional market segments without the need for fundamental redesign of our
underlying systems. Consequently, the level of expenses has been high relative
to revenues and significant losses have been incurred through September 30,
2007.

The policy of pursuing rapid growth is based on the assessment that one of the
primary risks we face is the relatively low cost of simulating our business
model through the creation and marketing of web sites that appear to offer a
product similar to the SWMX Marketplace, but without the underlying support
systems and productivity features that we provide. To the extent that such low
cost competitors fail to fully deliver on the promise of an electronic media
exchange, the resulting confusion and disappointment could inhibit the
acceptance of the SWMX Marketplace. In addition, our management believes that,
to the extent that we are successful in our efforts to achieve dramatic,
industry-wide efficiencies in as large a market as global advertising media
sales, we will and already are attracting large, well-funded competitors that
may be successful in capturing a significant share of the market. Although we
consider such competition to be to some extent inevitable and perhaps even
beneficial, we believe that a key component of success for any such marketplace
will be the ability to achieve a large volume of participants in its system
early in the trend.

A related risk is the risk that we will not be able to raise sufficient capital
to sustain the level of growth that management considers optimal.

Other major risks that management has been addressing since inception are risks
associated with developing the human, physical, technological and management
resources necessary to sustain such a high level of growth in our system, the
risk of unanticipated equipment or other systems failures, the risk of
unforeseen legal or regulatory problems and the need to develop robust control
systems for a rapidly growing enterprise.


                                       17


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussions of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in
accordance with accounting policies generally accepted in the United States of
America, or GAAP. The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the period. On an ongoing
basis, we evaluate our estimates and assumptions, including those related to
revenue recognition, bad debts, fixed assets, stock-based compensation and
certain accruals. Actual results could differ from those estimates. The critical
accounting policies discussed herein are not intended to be a comprehensive list
of all of our accounting policies. In many cases, the accounting treatment of a
particular transaction is specifically dictated by GAAP and does not result in
significant management judgment in the application of such principles. There are
also areas in which management's judgment in selecting any available alternative
would not produce a materially different result from the result derived from the
application of our critical accounting policies. We believe that the following
accounting policies are most critical to us in that they represent the primary
areas where financial information is subject to the application of management's
estimates, assumptions and judgment in the preparation of our consolidated
financial statements.

CAPITALIZED SOFTWARE

In accordance with Statement of Position 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use ("SOP 98-1"), certain
direct development costs associated with internal-use software are capitalized.
These costs include external direct costs of service and payroll costs for
employees devoting time to software projects principally related to software
coding, designing system interfaces and installation and testing of the
software. These costs are recorded as fixed assets and are amortized over a
period not to exceed three years beginning when the asset is substantially ready
for use. Certain other costs incurred during the preliminary project stage, as
well as maintenance and training costs, are expensed as incurred. Included in
capitalized software costs in the accompanying balance sheets is the cost of the
software purchased from Alowex, a related party, as well as development costs
associated with our market place applications including SWMX Radio and SWMX
Television.

REVENUE RECOGNITION AND PRESENTATION

We recognize revenue when all of the following criteria have been met:
persuasive evidence of an arrangement exists; services have been rendered; the
price to the customer is fixed and determinable and collectibility from the
customer is reasonably assured. Generally, these criteria are met when the
customer's advertisement is aired, and it is at this point that we recognize
revenue. In compliance with Emerging Issues Task Force ("EITF") Issue No. 99-19,
Reporting Revenue Gross as a Principal versus Net as an Agent, we assess whether
we or the third party broadcaster is the primary obligor. In addition, we give
appropriate consideration to other key indicators such as latitude in
establishing price, discretion in broadcaster selection and who has credit risk.
As we operate broadly as a network exchange and the advertising industry
practice is to generally record revenue on a net versus gross basis, we believe
that there must be strong evidence in place to overcome the presumption of net
revenue accounting. Accordingly, we have historically recorded revenue net of
pass-through charges, based on our assessment of the key indicators, resulting
in our net transaction fees as revenue. Should we enter into transactions where
the key indicators suggest it is acting as a principal, then we will record the
gross amount billed as revenue.

ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS

Based on experience and judgment, we establish an allowance for uncollectible
accounts. Our judgment includes evaluating the willingness and the ability of
the customer to satisfy his obligation to us. Although we believe that our
reserves are adequate, if the financial condition of our customers deteriorates,
resulting in an impairment of their ability to make payments, or if we
underestimate the allowance required, additional allowances may be necessary,
which will result in increased selling, general and administrative expenses in
the period such determination is made. As noted above our revenue is recorded
net, yet our receivables reflect the gross amount of the transaction thus
exposing us to credit risk greater than our net revenue.


                                       18


EFFECT OF INFLATION

Inflation has not had a material effect on our operations.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements". This Statement defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
This Statement applies under other accounting pronouncements that require or
permit fair value measurements, the FASB having previously concluded in those
accounting pronouncements that fair value is the relevant measurement attribute.
Accordingly, this Statement does not require any new fair value measurements.
However, for some entities, the application of this Statement will change
current practice. This Statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. We do not expect there to be any impact of this Statement on
our financial statements.

In February 2007, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities -- Including an Amendment
of FASB Statement No. 115" ("SFAS 159"). SFAS 159 permits all entities the
option to measure many financial instruments and certain other items at fair
value. If a company elects the fair value option for an eligible item, then it
will report unrealized gains and losses on those items at each subsequent
reporting date. SFAS 159 is effective for fiscal years beginning after November
15, 2007, which for the Company is our fiscal year beginning January 1, 2008. We
are currently determining whether fair value accounting is appropriate for any
of our eligible items and cannot estimate the impact, if any, which SFAS 159 may
have on our consolidated financial statements.

RESULTS OF OPERATIONS

The following table sets forth selected consolidated statements of operations
data for each of the periods indicated:

                                          Three months ended  Three months ended  Nine Months Ended   Nine Months Ended
                                          September 30, 2007  September 30, 2006  September 30, 2007  September 30, 2006
                                          ------------------  ------------------  ------------------  ------------------

Net revenues                                 $   321,930         $   632,579         $ 2,237,829         $ 1,546,059

Costs and expenses:
   Cost of revenues                              666,505             336,850           1,807,464             785,131
   Selling, general and administrative         2,859,799           3,117,341           8,015,204           6,973,536
                                             -----------         -----------         -----------         -----------
Total costs and expenses                       3,526,304           3,454,191           9,822,668           7,758,667
                                             -----------         -----------         -----------         -----------
Operating loss                                (3,204,374)         (2,821,612)         (7,584,839)         (6,212,608)

Interest expense, net                            184,502               1,434             726,749             235,812

                                             -----------         -----------         -----------         -----------
Net Loss                                     $(3,388,876)        $(2,823,046)        $(8,311,588)        $(6,448,420)
                                             ===========         ===========         ===========         ===========

REVENUES. Revenues generated by our marketplace are largely determined by the
transaction volume or gross advertising dollars and the transaction fees we earn
on that transaction volume. Our transaction fees vary per transaction due too
many factors including, the type of spot (remnant or flighted), seasonal and
other factors, such as the impact of political campaigns, as well as the
participants in the transaction.


                                       19


Our net revenues for the three months ended September 30, 2007 and 2006 was
$322,000 and $633,000, respectively. Our net revenues for the nine months ended
September 30, 2007 and 2006 were $2,237,000 and $1,546,000, respectively. Our
decrease in net revenues for the three months ended September 30, 2007 is the
result of a shift in sales strategy that occurred at the end of the second
quarter, in which the Company made a decision to pursue licensing agreements to
deliver private label solutions as well as software as a service (SAAS)
application functionality to advertisers, agencies and media owners on an
enterprise basis as opposed to acting as a principal in the media transaction.
For the nine months ended September 30, 2007, approximately 52% of our net
revenues came from four customers, each contributing in excess of 10% of net
revenues. For the nine months ended September 30, 2006, approximately 52% of our
net revenues came from three customers, each contributing in excess of 10% of
net revenues.

COST OF REVENUES. Our cost of revenues for the three months ended September 30,
2007 and 2006 were $666,505 and $337,000, respectively, and $1,807,000 and
$785,000 for the nine months ended September 30, 2007 and 2006, respectively.
Cost of revenues consists of the expenses associated with the operation of the
Company's data centers including depreciation, labor and bandwidth costs. Cost
of revenues also include expenses related to the amortization of capitalized
software development costs, acquired technologies as well as other software
development costs that are expensed in accordance with SOP 98-1.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Our selling, general and
administrative expenses for the three months ended September 30, 2007 and 2006
were $2,860,000 and $3,117,000, respectively, and $8,015,000 and $6,974,000 for
the nine months ended September 30, 2007 and 2006, respectively. Our personnel
related costs for the three months ended September 30, 2007 and 2006, accounted
for approximately 26% and 37%, respectively, of our total selling, general and
administrative expenses, and 43% and 35% for the nine months ended September 30,
2007 and 2006, respectively. Included in selling, general and administrative
expenses for the three months ended September 30, 2007 and 2006 was stock based
compensation expense, of $87,000 and $306,000, respectively, and $549,000 and
$642,000 for the nine months ended September 30, 2007 and 2006, respectively. In
addition, we provided $1,263,000 of additional allowance for doubtful accounts
in the three months ended September 30, 2007. The largest component of this
additional allowance relates to one customer, for whom we have provided for the
full receivable owed to us. In determining to establish a reserve for this one
customer the Company evaluated the willingness and the ability of this customer
to satisfy its obligations. Information has come to light in September 2007,
that we believe raises substantial doubt about the collectibility of this
receivable and accordingly we have established a reserve for the balance owed by
this customer. Also, during the quarter ended September 30, 2007 and beyond
several customers have paid the media organization directly or have communicated
their intent to do so. In these situations we have evaluated the likelihood of
collecting our profit that was built into our receivable and where necessary
have provided allowances for those amounts we do not believe are collectible.

INTEREST EXPENSE, NET. Our interest expense, net for the three months ended
September 30, 2007 and 2006, was $184,500 and $1,400, respectively. Included in
the three months ended September 30, 2007 are the amortization of deferred
financing fees, and interest associated with the Term Loan, as well as interest
associated with our capital leases. Our interest expense, net for the nine
months ended September 30, 2007 and 2006, was $727,000 and $236,000,
respectively. Included in the nine months ended September 30, 2007 is
approximately $354,000 representing the write-off of deferred financing fees
associated with the Revolving Loan that was terminated in July 2007. Included in
interest expense for the nine months ended September 30, 2006 was the write-off
of unamortized debt discount costs of $195,000.


                                       20


INCOME TAXES. We have incurred losses since inception, and such losses create a
deferred tax asset. We have approximately $12,500,000 of net operating loss
carryforwards. In addition to the deferred tax asset generated by our net
operating losses, we have additional deferred tax assets relating to the
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Our gross
deferred tax asset as of September 30, 2007 was approximately $6,858,000. We
have established a valuation reserve equal to the full value of this asset as it
is more likely than not that this benefit will not be realized.

LIQUIDITY AND CAPITAL RESOURCES

We have historically met our cash requirements and financed our growth through
private placement transactions in which we raised gross proceeds of $14 million,
including the conversion of $2.6 million, owed to founders of our company into
equity. We also had a $1.5 million revolving credit facility with an entity
owned by shareholders of our company from January 2006 through July 2006, with
an interest rate of 8%. The revolving credit facility expired in accordance with
its terms upon the completion of the private placement transaction in July 2006.
Cash flows are summarized in the table below.

                                              Nine Months
                                                 Ended
                                            ---------------      Nine Months
                                             September 30,          Ended
                                                  2007        September 30, 2006
                                            ---------------   ------------------
Net cash used in operating activities         (4,082,230)        (6,279,226)
Net cash used in investing activities           (530,669)        (1,244,604)
Net cash provided by financing activities      2,079,463          9,413,212

As a result of the operating losses as well as the growth of activity in the
SWMX marketplace, which resulted in an increase in accounts receivable,
$4,082,230 and $6,279,226 has been used in operating activities for the nine
months ended September 30, 2007 and 2006, respectively. During the nine months
ended September 30, 2007 we acquired $957,000 of equipment, of which $257,000 is
subject to a capital lease. In addition, $170,000 owed to the Company was repaid
during the nine months ended September 30, 2007.

In March 2007, we entered into a credit facility with BlueCrest Capital Finance,
L.P.("BlueCrest"). The credit facility provided for a revolving line of credit
as well as a term loan. The revolving line of credit had a term of two years,
bore interest at the prime rate plus 1.65%, and had a maximum borrowing amount
of $6 million, based on an advance rate of 80% of eligible receivables as
defined. Under the term loan we borrowed $3 million at an annual interest rate
of 10.84%, subject to the following repayment schedule: (i) three (3) months of
interest only, (ii) 12 equal monthly payments of 1.6667% of the original
principal amount of the term loan, plus interest; (iii) twenty-four (24) equal
monthly payments , each consisting of 3.3333% of the original principal amount
of the term loan, plus interest; (iv) a final payment equal to $150,000. In
addition, we issued BlueCrest a warrant to purchase 850,340 shares of common
stock at $.88 per share, the average trading price for the five days prior to
closing, subject to adjustment based on future equity offerings.

On July 1, 2007, we were in default under the credit facility as we had not
raised $10 million in equity as required under the agreement. As of July 2,
2007, we entered into a forbearance agreement whereby BlueCrest canceled the
Revolving Loan, increased the interest rate on the Term Loan by 2% and gave us
until August 1, 2007 to cure the event of default.

On October 3, 2007, we entered into an amendment to the credit facility with
BlueCrest. Under the terms of the amendment, BlueCrest will provide a Revolving
Loan up to $3.5 million, that will bear interest at the prime rate plus 5% per
annum. The interest rate on the Term loan was amended to 12.84%. The maturity
date of both the Term Loan and the Revolving Loan is January 31, 2008. We are
also subject to a Revolving Loan Termination fee, starting at $130,000 if the


                                       21


Revolving Loan is paid on or prior to December 31, 2007 and escalating to
$750,000 if the Revolving Loan is paid on or after March 31, 2008. In addition,
we issued a warrant to BlueCrest to purchase 48,750,000 shares of common stock
at an exercise price of $0.06 per share (the "Warrant"), as well a warrant to
purchase 12,500,000 shares of common stock at $0.06 per share, replacing the
warrant issued in March 2007 (the "Replacement Warrant").

In accordance with Emerging Issues Task Force ("EITF") Issue No. 96-19 "Debtor's
Accounting for a Modification or Exchange of Debt Instruments", we are
accounting for the amendment referred to above as an early extinguishment of
debt and a new debt instrument being issued. Accordingly, the unamortized
deferred financing costs associated with the credit facility entered into in
March 2007, $172,000 as of September 30, 2007, will be written off as an
extraordinary item in October 2007. In addition, in connection with the
amendment, we incurred approximately $1,450,000 of costs, including $1,263,000
representing the fair value of the Warrant and Replacement Warrant, which will
be amortized over the four month period beginning in October 2007 and ending
January 31, 2008 as interest expense. As of September 30, 2007, approximately
$108,000 of this cost was included in Deferred financing costs in the
accompanying balance sheet. The balance of the cost will be recorded in October
2007.

We have incurred substantial losses from our inception through September 30,
2007, have a stockholders deficit of $5,293,522, a working capital deficit of
$8,462,667 and recently signed an amendment to our credit facility requiring us
to repay the credit facility in full by January 31, 2008, which raise
substantial doubt about our ability to continue as a going concern. Such losses
resulted from our lack of significant revenue and costs incurred in the
establishment of our infrastructure. We believe we will continue to incur
significant operating expenses in order to execute our current business plan.
While we believe that we have access to sources of working capital that are
sufficient to fund our operations for the year ending December 31, 2007, there
can be no assurance that such amounts will be sufficient to meet our business
objectives.

ITEM 3.     CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer have evaluated
the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended,
as of the end of the period covered by this report. Based on such evaluation,
they have concluded that as of such date, our disclosure controls and procedures
are effective and designed to ensure that information required to be disclosed
by us in reports that we file or submit under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in applicable Securities and Exchange Commission rules
and forms.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of
evaluation by our principal executive officer and principal financial officer.

INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS

We, including our principal executive officer and principal financial officer,
do not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all error and all fraud.
A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system's objectives will be
met. The design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Further, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Controls can also be
circumvented by the individual acts of some persons, by collusion of two or more
people, or by management override of the controls. The design of any system of


                                       22


controls is based in part on certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Projections of any
evaluation of controls effectiveness to future periods are subject to risks.
Over time, controls may become inadequate because of changes in conditions or
deterioration in the degree of compliance with policies or procedures.

                                     PART II
                                OTHER INFORMATION

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

      On July 19, 2007, we held our annual stockholders' meeting in New York,
New York;

      The following directors were elected based upon the following tabulations
of votes:

                                            FOR        WITHHELD
                                        -----------  -----------
                  Joshua Wexler         119,928,586   11,570,661
                  Stavros Aloizos       119,948,587   11,550,660
                  Bruce J. Fogel        119,958,587   11,540,660
                  Edward T. Karlick     119,958,587   11,540,660
                  Jerry Shereshewsky     85,905,158            0

      The second order of business was to consider and vote upon a proposal to
amend our Certificate of Incorporation to allow us to issue up to 10,000,000
shares of preferred stock upon terms established by the board of directors,
which passed based upon the following tabulations of votes.

                            FOR            AGAINST      WITHHELD
                        -----------        -------      --------
                        131,394,247         80,000       25,000

ITEM 6.     EXHIBITS

Exhibit
Number       Description
-------      -----------
  3.1        Certificate of Incorporation dated July 18, 2006 (1)
  3.2        Certificate of Amendment to Certificate of incorporation dated July
             24, 2006 (1)
  3.3        Certificate of Amendment to Certificate of incorporation dated July
             26, 2006 (1)
  3.4        Certificate of Amendment to Certificate of incorporation dated July
             19, 2007 (2)
  3.5        Certificate of Amendment to Certificate of incorporation dated
             November 1, 2007 (3)
 31.1*       Section 302 Certification of Principal Executive Officer
 31.2*       Section 302 Certification of Principal Financial Officer
 32.1*       Section 906 Certification of Principal Executive Officer
 32.2*       Section 906 Certification of Principal Financial Officer

-----------------
* Filed herewith.

(1) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
    with the Securities and Exchange Commission on July 27, 2006.

(2) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
    with the Securities and Exchange Commission on July 23, 2007.

(3) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
    with the Securities and Exchange Commission on November 2, 2007.


                                       23


                                   SIGNATURES

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

                                         SWMX, Inc.

Dated: November 14, 2007                 By: /s/ Joshua Wexler
                                             -----------------------------------
                                             Joshua Wexler
                                             Chief Executive Officer
                                             (Principal Executive Officer)


Dated: November 14, 2007                 By: /s/ James Caci
                                             -----------------------------------
                                             James Caci
                                             Chief Financial Officer
                                             (Principal Financial Officer and
                                             Principal Accounting Officer)


                                       24


                                  EXHIBIT INDEX

Exhibit
Number       Description
-------      -----------
  3.1        Certificate of Incorporation dated July 18, 2006 (1)
  3.2        Certificate of Amendment to Certificate of incorporation dated July
             24, 2006 (1)
  3.3        Certificate of Amendment to Certificate of incorporation dated July
             26, 2006 (1)
  3.4        Certificate of Amendment to Certificate of incorporation dated July
             19, 2007 (2)
  3.5        Certificate of Amendment to Certificate of incorporation dated
             November 1, 2007 (3)
 31.1*       Section 302 Certification of Principal Executive Officer
 31.2*       Section 302 Certification of Principal Financial Officer
 32.1*       Section 906 Certification of Principal Executive Officer
 32.2*       Section 906 Certification of Principal Financial Officer
-----------------
* Filed herewith.

(1) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
   with the Securities and Exchange Commission on July 27, 2006.

(2) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
   with the Securities and Exchange Commission on July 23, 2007.

(3) Incorporated by reference to SWMX, Inc.'s Current Report on Form 8-K, filed
   with the Securities and Exchange Commission on November 2, 2007.


                                       25`