U.
S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-QSB








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




For
the quarterly period ended March 31, 2008





[  ]
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from ___________ to _____________








Commission
File Number: 000-29735





DAVI
SKIN, INC.




Nevada
            
            
            
            86-0907471(State
      or other jurisdiction
            
            
            
            (IRS
      Employerof
      Incorporation)
            
            
            
            Identification
      Number)4223
      Glencoe Ave., Suite B130Marina
      Del Rey, California 90292(Address
      of principal executive offices)(310)  824-0800(Issuer’s
      Telephone Number)





Check
whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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 by Rule
12b-2 or the Exchange Act).


Yes                NoX




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





24,265,708common
shares outstanding as of May 14, 2008





Transitional
Small Business Disclosure Format:   No
























TABLE OF CONTENTSPART I – FINANCIAL INFORMATIONItem
      1.
            Financial
      StatementsItem
      2.
            Management’s
      Discussion and Analysis or Plan of OperationItem
      3.
            Controls
      and ProceduresPART II – OTHER INFORMATIONItem
      1.
            Legal
      ProceedingsItem
      2.
            Unregistered
      Sales of Equity Securities and Use of ProceedsItem
      3.
            Defaults
      Upon Senior SecuritiesItem
      4.
            Submission
      of Matters to a Vote of Security HoldersItem
      5.
            Other
      InformationItem
      6.
            Exhibits














































PART
I - FINANCIAL INFORMATION
 
 Item
1.                           Financial
Statements
 
 Our
      unaudited financial statements included in this Form 10-QSB are as
      follows:Balance
      Sheet as of  March 31, 2008 and December 31,
    2007;Statements
      of Operations for the three months ended March 31, 2008 and 2007 and for
      the period from inception (March 21, 2004) through March 31,
      2008;Statements
      of Cash Flows for the three months ended March, 2008 and 2007 and for the
      period from inception (March 21, 2004) through March 31,
    2008;Notes
      to Financial Statements;
 
 
 These
unaudited financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and the SEC instructions to Form 10-QSB.  In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included.  Operating results for the interim
period ended March 31, 2008 are not necessarily indicative of the results that
can be expected for the full year.





DAVI
      SKIN, Inc.(formerly
      MW Medical, Inc.)(A
      Developmental Stage Company)BALANCE
      SHEETSAs
      of
              March
      31, 2008
            As
      of
              December
      31, 2007(Unaudited)
            (Audited)ASSETSCURRENT ASSETSCash
      and cash equivalents
            $                        
      12,944
            $                          
            46,558Certificates
      of deposit
            7,342
            7,342Accounts
      receivables, net of allowance for doubtful accounts
            5,721
            2,580of
      $0 for March 31, 2008 and December 31, 2007Inventory
            565,744
            593,913Prepaid
      expenses
            8,425
            10,849TOTAL
      CURRENT ASSETS
            600,176
            661,242Fixed
      Assets, net of accumulated depreciation of $12,234and
      $10,264 at March 31, 2008 and December 31, 2007,
    respectively
            26,518
            28,488Deposit
            21,505
            24,570TOTAL
      ASSETS
            648,199
            714,300LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts
      payable and accrued expenses
            501,924
            395,842Accrued
      interest payable
            22,637
            18,230Notes
      payable, current
            200,000
            200,000Unissued
      shares
            19,800
            19,800TOTAL
      CURRENT LIABILITIES
            744,361
            633,872LONG-TERM LIABILITIESNotes
      payable, net of discount
            452,958
            447,958TOTAL
      LIABILITIES
            1,197,319
            1,081,830STOCKHOLDERS'
      EQUITYPreferred
      stock; $.001 par value; 10,000,000 sharesauthorized
      and no shares issued and outstanding
            -
            -Common
      stock; $.001 par value; 90,000,000 shares authorized,24,265,708
      and 17,061,208 shares issued and outstanding, respectively
            24,266
            17,061Additional
      paid in capital
            12,255,484
            11,504,694Accumulated
      deficit during developmental stage
            (11,889,285)
            (8,944,327)Net
      loss
            (939,585)
            (2,944,958)TOTAL
      STOCKHOLDERS' EQUITY
            (549,120)
            (367,530)TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
            $                    
      648,199
            $                               
      714,300

























DAVI
      SKIN, Inc.(formerly
      MW Medical, Inc.)(A
      Developmental Stage Company)STATEMENTS
      OF OPERATIONS(Unaudited)Three
      Months Ended
            From
      inceptionMarch
      31, 2008
            (March
      21, 2004)through2008
            2007
            March
      31,2008Sales
            $                
      12,474
            $                  
      27,219
            $                           
      103,530Cost
      of goods sold, includes write-down of inventory of$23,000,
      $0, and $47,000, respectively
            (23,863)
            (2,188)
            (59,582)Gross
      profit
            (11,389)
            25,031
            43,948Operating
      expensesSelling,
      general and administrative
            97,737
            325,334
            4,001,670Depreciation
            1,970
            1,750
            41,662Consulting
      fees
            787,635
            155,117
            2,814,543Employee
      stock options
            -
            702,486
            4,809,215Professional
      fees
            43,055
            257,823
            1,238,893Total
      operating expenses
            930,397
            1,442,510
            12,905,983Loss
      from operations
            (941,786)
            (1,417,479)
            (12,862,035)Other
      income (expenses)Royalty
      income
            25,245
            27,056
            126,784Interest
      income
            -
            3,443
            116,973Interest
      expense
            (23,044)
            (6,405)
            (151,279)Loss
      on disposal of assets
            -
            -
            (38,700)Other
      income (expenses)
            -
            7,039
            (20,613)Total
      other income (expense)
            2,201
            31,133
            33,165Net
      Loss
            $            
      (939,585)
            $            
      (1,386,346)
            $                
      (12,828,870)Basic
      loss per common share
            (0.04)
            (0.11)Diluted
      loss per common share
            (0.04)
            (0.11)Basic
      and diluted weighted averagecommon
      share outstanding
            21,963,076
            12,226,720




































DAVI
      SKIN, Inc(formerly
      MW Medical, Inc.)(A
      Development Stage Company)STATEMENTS
      OF CASH FLOWS(Unaudited)From
      inceptionThree
      Months Ended
            (March
      21, 2004)March
      31, 2008
            through2008
            2007
            March
      31, 2008OPERATING
      ACTIVITIESNet
      loss
            (939,585)
            (1,386,346)
            (12,828,870)Adjustments
      to reconcile net loss tonet
      cash used in operating activities:Prepaid
      consulting expense
            -
            34,376
            114,584Stock
      based compensation & expenses
            24,360
            702,486
            6,092,466Non
      cash consulting fee
            733,635
            30,000
            1,055,218Depreciation
      and amortization
            1,970
            1,750
            41,662Loss
      on sale of fixed assets
            -
            -
            38,700Loan
      discount - interest expense
            5,000
            -
            15,000Changes
      in operating assets and liabilities:Accounts
      receivable
            (3,141)
            (15,648)
            (32,104)Inventory
            28,169
            9,800
            (565,745)Prepaid
      expenses
            2,424
            27
            (8,425)Deposits
            3,065
            -
            (21,505)Contingent
      liabilities
            -
            -
            26,383Accounts
      payable and accrued liabilities
            106,082
            162,354
            501,968Accrued
      interest
            4,407
            6,304
            109,560Net
      cash used in operating activities
            (33,614)
            (454,897)
            (5,461,108)INVESTING
      ACTIVITIESCash
      flow from investing activities:Change
      in certificates of deposit
            -
            579,362
            (7,342)Sale
      of fixed assets
            -
            -
            2,739Purchase
      of fixed assets
            -
            -
            (121,035)Net
      cash provided by (used in) investing activities
            -
            579,362
            (125,638)FINANCING
      ACTIVITIESCash
      flows from financing activities:Bank
      overdraft
            -
            (124,465)
            -Proceeds
      from stock transactions
            -
            -
            4,679,890Advance
      on future issuance of stock
            -
            -
            19,800Proceeds
      from notes payable
            -
            -
            700,000Proceeds
      from notes payable-related party
            -
            -
            200,000Net
      cash provided by (used in) financing activities
            -
            (124,465)
            5,599,690Net
      change in cash and cash equivalents
            (33,614)
            -
            12,944Cash
      at beginning of period
            46,558
            -
            -Cash
      at end of period
            12,944
            -
            12,944SUPPLEMENTAL
      DISCLOSURESInterest
      paid
            13,637
            0
            52,789Taxes
      paid
            900
            0
            900NON-CASH
      ACTIVITIESFrom
      inception on March 21, 2004 through March 31, 2008, the Company issued
      2,295,388 shares ofcommon stock fortheir
      outstanding balance of the related party note payable and accrued interest
      of $286,923.





















DAVI
SKIN, INC


(Formerly
MW Medical, Inc)


(A
Development Stage Company)


March
31, 2008


NOTES
TO FINANCIAL STATEMENTS





1. 
BASIS OF
PRESENTATION





The
accompanying unaudited financial statements have been prepared in accordance
with the rules and regulations of the Securities and Exchange Commission for
interim financial statements. The interim financial statements present the
balance sheet, statement of operations, and cash flows of the Company. The
financial statements should be read in conjunction with the Form 10-KSB of the
Company for the year ended December 31, 2007. In the opinion of management, all
normally recurring adjustments necessary to present fairly the financial
position as of March 31, 2008, have been included in the financial statements.
Interim results are not necessarily indicative of operations for the full year.
Therefore, they do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete
financial statements.





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 period.
Actual results could differ from those estimates.




Going
concern:




The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The Company has incurred net losses of $730,027 for
the three month period ended March 31, 2008, and has incurred cumulative net
losses of $12,579,491 since its inception and will require additional capital
for its operational activities. The Company has successfully developed and
established a line of men’s and women’s skin care products. The Company has and
is aggressively launching its products with several luxury retailers. While the
Company has already invested substantial funds in developing, promoting, and
marketing activities, additional funds will be required to continue these
efforts to establish market presence and gain market shares. Additionally, the
Company is in the process of finalizing the development of additional product
lines. The Company believes that these endeavours will result in increased
sales. However, as of March 31, 2008, the Company has insufficient cash to
operate its business for the next twelve months. The Company has experienced
revenues since the fourth quarter of 2006 and believes that while revenues will
increase, they will not be sufficient to absorb expenses to maintain the Company
as a going concern. As such, the Company must raise additional capital to
achieve its business goals and to continue operations. The Company’s ability to
raise additional capital through the future issuances of the common stock is
unknown. The ability to successfully resolve these factors raise substantial
doubt about the Company’s ability to continue as a going concern. The financial
statements of the Company do not include any adjustments that may result from
the outcome of these aforementioned uncertainties. The Company has not
established a stabilized source of revenues sufficient to cover operating costs
over an extended period of time.





Management
anticipates that the Company will be dependent, for the near future, on
additional investment capital to fund operating expenses before achieving
operating profitability. The Company intends to further position itself so that
it may be able to raise additional funds through the capital markets. While to
date the Company has demonstrated the ability to do so, there are no assurances
that it will succeed in raising additional capital. Management is currently
pursuing several alternatives to raise additional capital. While the management
believes it will be successful in raising the necessary funds for its immediate
needs, there are no assurances that in the future the Company will be successful
in this or any of its endeavours or become financially viable and continue as a
going concern.




2. DESCRIPTION OF BUSINESS,
HISTORY AND SUMMARY OF SIGNIFICANT POLICIES





Description
of business - Davi Skin, Inc., formerly MW Medical, Inc., (referred to as the
“Company”) is involved in the establishment and development of an all
natural grape-based skin care line. The Company launched the sale of its
products, which are currently being sold in New York, during the year ended
December 31, 2006.





History - On June 21,
2004, the Company completed and closed a Plan of Merger and Reorganization
Agreement (“Merger Transaction”) with Davi Skin, Inc. (“Davi”), a privately
owned company, whereby both parties agreed that a subsidiary of the Company
would merge into and with Davi and become a wholly-owned subsidiary of the
Company. As consideration for this merger transaction, the Company issued
9,768,327 shares of its common stock in exchange for all the outstanding common
stock of Davi on a one-for-one share exchange basis. The Agreement further
provided for the Company’s officers and directors were to resign and the
board of directors of Davi would become the board of directors for the Company.
This transaction has been accounted for as a recapitalization or reverse merger
whereby Davi would be considered the accounting acquirer, and the accounting
history of the acquirer would be carried forward as the history for the Company
and no goodwill would be recorded. Accordingly, the accompanying financial
statements reflect the history of Davi from its date incorporation of March 21,
2004 (incorporated in the State of Nevada). Prior to the merger transaction, the
Company had 645,033 shares of its common stock outstanding, $1,922 in accounts
payable, $200,000 in a note payable to a related party and no
assets.





3. SIGNIFICANT ACCOUNTING
POLICIES





Development stage
company. The accompanying financial statements have been prepared in
accordance with the Statement of Financial Accounting Standards No. 7
“Accounting and Reporting by Development-Stage Enterprises”. A development-stage
enterprise is one in which planned principal operations have not commenced or if
its operations have commenced, there has been no significant revenue there
from.





Definition of fiscal
year. The Company’s fiscal year end is December 31.





Use of estimates. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.




Revenue
recognition.  Revenues are recognized when services are
rendered and/or products are delivered. Costs and expenses are recognized during
the period in which they are incurred.




Cash and cash
equivalents.  We consider all highly liquid short-term
investments, with original maturities of three months or less, to be cash
equivalents. Such cash equivalents generally are part of its cash management
activities rather than part of its operating, investing, and financing
activities. Changes in the market value of cash equivalents result in gains or
losses that are recognized in the income statement in the period in which they
occur.





Receivables. The
Company’s accounts receivables represent financial instruments with a potential
risk. We offer, and reserve the right to deny credit terms with credit limits to
customers based on their creditworthiness. We retain the right to place approved
accounts on credit hold should these accounts become delinquent. We will
maintain an allowance for doubtful accounts for estimated losses should
customers fail to make required payments. In addition, we monitor the accounts
for aging, historical account balances, payment patterns, history of
collectibility, and customer creditworthiness when determining the
collectibility of bad debt. Accounts receivables are written off when all
collection attempts have failed. Allowance for doubtful accounts may increase if
circumstances warrant. We believe that our current account receivables are
collectible.




Credit and concentration
risk. The Company maintains deposit accounts in a single financial
institution. From time to time, cash deposits may exceed Federal Deposit
Insurance Corporation limits. The Company currently does not maintain
certificates of deposit in excess of federal deposit insurance
limits.




Inventory. The
Company’s inventory consists of finished goods and raw materials, is stated at
the lower of cost or market and cost is determined by the first-in, first-out
method. The Company regularly monitors inventory quantities on hand and records
write-downs for excess and obsolete inventories based primarily on the Company’s
estimated forecast of product demand and production requirements. Such write
downs establish a new cost basis of accounting for the related inventory. Actual
inventory losses may differ from management’s estimates, and such differences
could be material to the Company’s financial position, results of operations and
cash flows.





Fixed assets.
Property and equipment are depreciated over the estimated useful lives of the
related assets, generally 3-5 years. Leasehold improvements are amortized over
the lesser of the lease term or the estimated life of the asset. Depreciation
and amortization is computed on the straight-line method. Repairs and
maintenance are expensed as incurred.




Fair value of financial
instruments.  Statement of Financial Accounting Standards
(“SFAS”) No. 107, “Disclosure About Fair Value of Financial Instruments,”
requires us to disclose, when reasonably attainable, the fair market values of
its assets and liabilities, which are deemed to be financial instruments. The
carrying amounts and estimated fair values of our financial instruments
approximate their fair value due to their short-term nature.




Earnings (loss) per
share.  Basic earnings (loss) per share exclude any dilutive
effects of options, warrants and convertible securities. Basic earnings (loss)
per share are computed using the weighted-average number of outstanding common
shares during the applicable period. Diluted earnings (loss) per share are
computed using the weighted-average number of common and common stock equivalent
shares outstanding during the period. Common stock equivalent shares are
excluded from the computation if their effect is anti-dilutive. Stock options
are anti-dilutive when the results from operations are a net loss, as is the
case for the for the three months ended March 31, 2008 and 2007 or when the
exercise price of the options is greater than the average market price of the
common stock for the period.





Income taxes. The
Company accounts for its income taxes in accordance with Statement of Financial
Accounting Standards No. 109 “Accounting for Income Taxes”, which requires
recognition of deferred tax assets and liabilities for future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and tax credit
carry-forwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. We established a
valuation allowance for the full tax benefit of the operating loss carryforward
due to the uncertainty regarding realization.





Comprehensive income
(loss) . The Company has no components of other comprehensive income.
Accordingly, net loss equals comprehensive loss for all periods.





Stock-based
compensation - The Company accounts for its stock options under SFAS
123(R).




In order
to determine compensation on options issued to consultants, and employees’
options, the fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model. The Company estimates the
requisite service period used in the Black-Scholes calculation based on an
analysis of vesting and exercisability conditions, explicit, implicit, and/or
derived service periods, and the probability of the satisfaction of any
performance or service conditions. The





Company
also considers whether the requisite service has been rendered when recognizing
compensation costs. The Company does not consider market conditions to be
vesting conditions and an award is not deemed to be forfeited solely because a
market condition is not satisfied.





4. RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS





In
September 2006, the FASB issued FAS 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements.  This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007. The
Company does not anticipate that the adoption of this accounting pronouncement
will have a material effect 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 provides companies with an
option to report selected financial assets and liabilities at fair
value.  SFAS 159's objective is to reduce both complexity in
accounting for financial instruments and the volatility in earnings caused by
measuring related assets and liabilities differently.  SFAS 159 is
effective as of the beginning of an entity's first fiscal year beginning after
November 15, 2007.   The Company is currently evaluating the
potential impact, if any, that the adoption of SFAS 159 will have on its
financial statements.





In
December 2007, the FASB issued SFAS No. 141(R), Business
Combinations(SFAS
141(R)), which replaces SFAS 141, Business Combinations, requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree at the acquisition date, measured at their fair values
as of that date, with limited exceptions. This Statement also requires the
acquirer in a business combination achieved in stages to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquiree, at the full amounts of their fair values. SFAS 141(R) makes
various other amendments to authoritative literature intended to provide
additional guidance or to confirm the guidance in that literature to that
provided in this Statement. This Statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  SFAS 141 (R) will be effective for the Company on January 1,
2009.  We do not expect adoption of SFAS 141(R) to have a significant
impact on our consolidated financial statements.





In
December 2007, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on Issue No. 07-1, Accounting for Collaborative Arrangements
(EITF 07-1). The EITF concluded on the definition of a collaborative arrangement
and that revenues and costs incurred with third parties in connection with
collaborative arrangements would be presented gross or net based on the criteria
in EITF 99-19 and other accounting literature. Based on the nature of the
arrangement, payments to or from collaborators would be evaluated and its terms,
the nature of the entity’s business, and whether those payments are within the
scope of other accounting literature would be presented. Companies are also
required to disclose the nature and purpose of collaborative arrangements along
with the accounting policies and the classification and amounts of significant
financial-statement amounts related to the arrangements. Activities in the
arrangement conducted in a separate legal entity should be accounted for under
other accounting literature; however required disclosure under EITF 07-1 applies
to the entire collaborative agreement. This Issue is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years, and is to be applied retrospectively
to all periods presented for all collaborative arrangements existing as of the
effective date. EITF 07-1 will be effective for the Company on January 1,
2009.  We do not expect Adoption of EITF 17-1 to have a significant
impact on our consolidated financial statements.





In
December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (SFAS 160), which amends Accounting Research
Bulletin No. 51, Consolidated Financial Statements, to improve the
relevance, comparability, and transparency of the financial information that a
reporting entity provides in its consolidated financial statements. SFAS 160
establishes accounting and reporting standards that require the ownership
interests in subsidiaries not held by the parent to be clearly identified,
labelled and presented in the consolidated statement of financial position
within equity, but separate from the parent’s equity. This statement also
requires the amount of consolidated net income attributable to the parent and to
the non-controlling interest to be clearly identified and presented on the face
of the consolidated statement of income. Changes in a parent’s ownership
interest while the parent retains its controlling financial interest must be
accounted for consistently, and when a subsidiary is deconsolidated, any
retained non-controlling equity investment in the former subsidiary must be
initially measured at fair value. The gain or loss on the deconsolidation of the
subsidiary is measured using the fair value of any non-controlling equity
investment. The Statement also requires entities to provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. This Statement applies
prospectively to all entities that prepare consolidated financial statements and
applies prospectively for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. SFAS 160
will be effective for the Company on January 1, 2009.  We do not
expect adoption of SFAS 160 to have a significant impact on our consolidated
financial statements.





In
June 2007, the EITF of the FASB reached a consensus on Issue No. 07-3,
Accounting for Non-refundable Advance Payments for Goods or Services Received
for Use in Future Research and Development Activities(EITF 07-3). EITF 07-3
requires that non-refundable advance payments for goods or services that will be
used or rendered for future research and development activities should be
deferred and capitalized. As the related goods are delivered or the services are
performed, or when the goods or services are no longer expected to be provided,
the deferred amounts would be recognized as an expense. This Issue is effective
for financial statements issued for fiscal years beginning after
December 15, 2007 and earlier application is not permitted. This consensus
is to be applied prospectively for new contracts entered into on or after the
effective date.  EITF 07-03 will be effective for the Company on
January 1, 2008.  The pronouncement is not expected to have a material
effect on our consolidated financial statements.





In
March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures about Derivative
Instruments and Hedging Activities – An Amendment of FASB Statement No. 133
(SFAS 133). This statement is intended to improve financial
reporting of derivative instruments and hedging activities by requiring enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance and
cash flows. The provisions of SFAS 161 are effective for fiscal years beginning
after November 15, 2008.  SFAS 161 will be effective for us
on January 1, 2009.  The pronouncement did not have a material effect
on our consolidated financial statements.





5. RELATED PARTY
TRANSACTIONS





We
outsource a portion of our operational activities to companies with greater
expertise in certain areas in order to keep our overhead expenditures to a
minimum. Currently our payroll function is outsourced to an accounting firm with
one of its partners being both a member of our Executive Advisory Board and a
relative of an officer who is also a member of our Board of
Directors.





6. NOTES
PAYABLE





The
Company and an unrelated third party have entered into an agreement whereby the
third party is willing to provide, subject to the terms and conditions of the
agreement; certain financing for the Company’s ongoing and proposed business
operations and activities. The agreement provides for a 9% Senior Secured
Convertible Note in the stated amount of $2,200,000. The initial advance
($500,000) is to be secured by a certain license agreement by and between the
Company, Constellation Wines U.S., and Robert Mondavi Corporation. The agreement
provides an invitation to join the Board of Directors and receiving options to
purchase 125,000 shares of the Company’s stock, and if the full amount is
funded, will receive stock purchase warrants up to 4,000,000 shares or a
proportional number of shares if funded less than $2,200,000. As of March 31,
2008, the Company has received $500,000 (the initial advance).  The
agreement has been terminated and the Company will not receive any more funding
from this note.  The balance of this loan is due May
2010.  Accrued interest is due quarterly.  The loan is
convertible at the option of the holder at $0.55 per share.





On
November 16, 2007, the Company and an existing shareholder (less than 1%
shareholder) entered into an agreement whereby the shareholder was willing to
provide financing for the Company’s proposed business operations and activities.
The agreement provides for a six-month note for $200,000 at an annual interest
rate of 13 percent payable quarterly.  The note is due May 2008 and
may be converted at the option of the holder, to common shares of the Company at
a price of $0.55 per share. The shareholder also received warrants to purchase
125,000 common shares at a price of $0.85.  The Company has pledged
its future revenues from a three year exclusivity agreement and inventory in the
amount of the loan plus accrued accrued interest as collateral for the
loan.





At March
31, 2008, maturities of notes payable are as follows:





Year
      ended December 31
            Amount2008
            $200,0002009
            -2010
            500,000$700,000





7.  FIXED
ASSETS





Fixed
assets consist of the following as of March 31, 2008:





Furniture
      and fixtures
            
            $
            6,972Computer
      equipment
            
            
            9,932Printer
            
            
            4,848Leasehold
      improvements
            
            
            17,00038,752Less:
      accumulated depreciation
            
            
            (12,234
            )Fixed
      assets, net
            
            $
            26,518




8. COMMITMENTS AND
CONTINGENCIES




Lease agreements. On
May 18, 2006, the Company entered into a 3-year lease agreement with Marina
Glencoe, LLC, a California limited liability company, to lease approximately
1,980 square feet of office space located at 4223 Glencoe Ave, Suite B130 Marina
Del Rey, CA 90292. The lease provides for monthly rental payments, including
parking and utilities of $ 4,643 for the first 12 months, $ 4,775.54 for months
13 - 24 and $4,912.05 for months 24 - 36. The Company provided a letter of
credit in the amount of $49,896 as a security deposit.





Future
minimum annual lease payments and principal payments under existing agreements
are as follows:




12
      months ending March 31,2008
            
            $
            63,7982009
            
            
            43,303Total
            
            $
            107,101




Total
rental expenses under non-cancellable lease terms in excess of one year was
$15,047, $13,929, and $166,997 for the three month period ended March 31, 2008
and 2007, and the period from inception (March 21, 2004) through March 31, 2008,
respectively.





9. CONCENTRATIONS





The
Company’s sales to four customers during the three month period ended March 31,
2008 accounted for 70.6% of total sales for the period.





10. CAPITAL STOCK
TRANSACTIONS





Preferred stock- The
authorized preferred stock is 10,000,000 shares at $0.001 par value. As of March
31, 2008 there were no preferred shares issued or outstanding.




Common Stock- The
authorized common stock is 90,000,000 shares at $0.001 par value. As of March
31, 2008, there were 24,265,708shares of common stock outstanding.





During
the quarter ended March 31, 2008, the Company issued 6,900,000 shares of common
stock to its director and officers.  The Company expensed $724,500for
the 6,900,000 shares issued at a price of $0.105per share.





11. COMMON STOCK
OPTIONS




The
following is a summary of the stock option activity for the three months ended
March 31, 2008:





Number
              of
      Shares
            
            Weighted
              Average
              Exercise
      PriceOutstanding
      at January 1, 2008
            
            
            835,000
            
            $
            0.28Options
      Granted
            
            
            -
            
            $
            -Options
      Cancelled
            
            
            -
            
            $
            -Options
      Exercised
            
            
            -
            
            $
            -Outstanding
      at March 31, 2008
            
            
            835,000
            
            $
            0.28Exercisable
      at March 31, 2008
            
            
            835,000
            
            $
            0.28







The
details of the vested stock options outstanding as of March 31, 2008 are as
follows:





Options
      Outstanding
            
            Options
      ExercisableRange
      of
              Exercisable
      Prices
            
            Number
              Outstanding
            
            Weighted
      Average
              Remaining
              Contractual
              Life
      (in years)
            
            Weighted
              Average
              Exercise
      Price
            
            Number
              Exercisable
            
            Weighted
              Average
              Exercise
      Price$0.25
      - $1.00
            
            
            835,000
            
            
            
            
            
            1.55
            
            $
            0.28
            
            
            835,000
            
            $
            0.28








12. LEGAL
PROCEEDINGS





On or
about August 2, 2006, a lawsuit entitled Artist House Holdings, Inc. vs. Davi
Skin, Inc. et. al., United States District Court, District of Nevada, Case No.
2:06-CV-893-RLH-LRL, was filed in federal district court in Nevada against the
Company, its directors, and other individuals. The plaintiff, Artist House
Holdings, Inc., is a shareholder in the Company. The complaint alleged
violations of federal securities law and Nevada securities law, breach of
contract, and related claims arising from the plaintiff's investment in Company.
A First Amended Complaint was filed on July 31, 2006, and a Second Amended
Complaint on January 8, 2007. On December 22, 2006, the plaintiffs filed an
emergency motion for a preliminary injunction, which the District Court denied
on January 12, 2007. On January 26, 2007, the Company and its directors filed a
motion to dismiss the federal securities law claim. That motion was granted on
March 27, 2007. The Court gave the plaintiff leave to amend, and plaintiff
subsequently filed an amended complaint to restate the claims not dismissed and
to add a party defendant.  We filed an answer to the amended complaint on
May 17, 2007.





On
January 16, 2008, Davi Skin, Carlo Mondavi, Joshua LeVine and Joseph Spellman
(hereinafter “Davi”), entered into a Settlement Agreement with Artist House
Holdings, Inc. to resolve litigation in the matter of Artist House Holdings,Inc. v. Davi
Skin, Inc., et al., (Case No. 2:06-CV-893-RLH-LRL) in the United States
District Court for the District of Nevada.





The
settlement agreement was conditioned upon a judgment and bar order that
indicates that the settlement is in good faith, and that a bar order is
necessary to ensure that defendants in the case are not subject to “claims over”
for contribution, indemnification, or any other claim predicated on another
party’s liability or potential liability to Artist House. On January 28, 2008,
motion for Entry Of Judgment and Bar Order and the Proposed Judgment and Bar
Order filed with the United States District Court for the District of Nevada. On
March 18, 2008 the Motion was denied without prejudice and the Parties are now
attempting a global settlement.  The settlement amounts are covered by
the insurance carrier.





13.
SUBSEQUENT
EVENT


On
or about April 1, 2008, the Company entered into a First Amended and Restated
Agreement for Convertible Note with Amin S. Lakha (“Lakha”). The basic terms of
the agreement are: The Parties entered into an Amended and Restated Secured
Convertible Promissory Note in the amount of $536,163 due and payable on May 15,
2010 ; The Parties entered into an Amended and Restated Security Agreement,
whereby all sums due under the Letter Agreement between the Company and
Constellation Wines, U.S., Inc. shall be assigned directly to Lakha until the
Restated Convertible Note is fully extinguished and such funds shall be applied
directly to the principal sum owe; In addition Ten Thousand Dollars ($10,000)
shall be payable to Lakha as a full and complete release of any and all payments
that may have been due to Lakha pursuant to the terms of the original Assignment
Agreement; The Parties have entered into a restatement and replacement of the
Stock Option Agreement and Stock Purchase Warrant Agreement, Company shall issue
to Lakha 600,000 warrants to purchase shares of Common Stock at an exercise
price of $0.20 with an expiration date of   May 14, 2012 and 125,000
warrants to purchase shares of Common Stock at an exercise price of $0.25 with
an expiration date of May 14, 2012 and the Parties entered into a Rescission of
Assignment and Security Agreement for the Gilchrist & Soames
Agreement.








On or
about April 14, 2008 the Company entered into a First Amended and Restated Loan
Agreement with Gisela Brinkhaus (“Brinkhaus”) the terms of which are: The
Parties entered into an Amended and Restated Convertible Promissory Note in the
principal amount of $100,000 and interest of 13% per annum, due and payable on
January 14, 2009 ; The Parties entered into a restatement and complete
replacement of the Original Warrants, Company shall issue Restated Warrants up
to 300,000 shares of common stock at an exercise price of $.35 per share which
shall expire on November 14, 2010 . As consideration for the difference between
the Debt and the principal amount of the Restated Convertible Note the Company
shall issue Brinkhaus 2, 207,960 shares of common stock. Brinkhaus has released
any and all collateral rights to Company’s Inventory Collateral and the right to
file any UCC-1 Financing Statement in connection with the Inventory Collateral.
In the Original Agreement, the Company pledged as a security against default all
payments that may become due and owing to the Company under the Memorandum of
Understanding between the Company and deSter N.V., Brinkhaus shall retain these
collateral rights and under acknowledges that at this time no final agreement
has been executed between deSter and the Company.





On or
about April 17, 2008 the Company entered into a Securities Purchase Agreement
with Noctua Fund, LP ("Noctua").  Noctua purchased 250,000 shares of Series
A Preferred Stock par value $.001 per share of the Company's Preferred Stock at
a purchase price of $1.00 per share and Series A-1 Warrants to purchase common
stock, par value $0.001 of the Company at an exercise price of $.15 per share.
Company as part of the transaction delivered a Registration of Rights Agreement,
Stock Escrow Agreement and a Certificate of Designation. The Company's
management issued Irrevocable Voting Proxy and Trust Agreements. 
Noctua has the right but not the obligation to acquire an additional 350,000
shares of Preferred Stock at the Purchase Price listed above. Company granted a
right of first offer and registration rights to Noctua with respect to all
transactions consummated within 12 months of the Initial Closing of the sale of
Preferred Stock.

















Item
2.     Management’s Discussion and Analysis or Plan of
Operation
 
 Forward-Looking
Statements
  Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of
1934.   These forward-looking statements generally are identified
by the words “believes,” “project,” “expects,” “anticipates,” “estimates,”
“intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will
continue,” “will likely result,” and similar expressions.  We intend
such forward-looking statements to be covered by the safe-harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and are including this statement for purposes of complying with
those safe-harbor provisions.  Forward-looking statements are based on
current expectations and assumptions that are subject to risks and uncertainties
which may cause actual results to differ materially from the forward-looking
statements. Our ability to predict results or the actual effect of future plans
or strategies is inherently uncertain.  Factors which could have a
material adverse affect on our operations and future prospects on a consolidated
basis include, but are not limited to: changes in economic conditions,
legislative/regulatory changes, availability of capital, interest rates,
competition, and generally accepted accounting principles. These risks and
uncertainties should also be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements.  We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.  Additional information concerning our business, including
additional factors that could materially affect our financial results, is
included herein and in our other filings with the SEC.
  Overview
 
 We are
principally engaged in the development, manufacturing and distribution of Davi
luxury branded products including the Davi luxury line of skincare for men and
women that encompass the anti-oxidant rich by-products of the winemaking process
coupled with the latest innovations in modern technology. We also function as a
licensor and licensing agent to entities interested in associating their
products with our luxury brand names.
 
 Skin
Care Products
 
 The
development of the Davi Skin luxury branded skincare product line is now
complete. We are selling the initial nine (9) SKUs, four (4) products in the
women’s line and five (5) products in the men’s line, which are described in
more detail below. All the products are available since to our retail launch in
October 2006. The products are now available through Bliss World Catalogs and
their corresponding website; the luxury hotel and spa, Meadow Wood, located in
the Napa Valley; the Living Beauty section of Selfridges department store in
London, England: and Lane Crawford in Hong Kong. We are finalizing distribution
agreements with several retailers located throughout Europe, Asia, the United
States and Canada. We anticipate that our products will be available through
these retailers by year end 2008. These select upscale retailers submit purchase
orders for quantities of our branded products, which we fulfil from our
distribution center. Planned distribution will continue to expand into 2008
through the utilization of select distribution companies throughout the world to
help oversee the growth and development of the brand.
 
 The
initial nine (9) SKUs include four (4) products for women and five (5) for men
are described in detail below.
 
 Women’s
Line:
 
 §
              Le
      Grand Cru for Women — An ultra-luxurious cream designed for women to
      provide a unique, long lasting, slow released infusion of anti-oxidants
      and moisture to the skin in order to make it smoother, softer and more
      supple;
 
 §
              Vine
      Fresh SPF 30 Lotion — Oil free everyday moisturizer with UVB/UVA
      protection of an SPF 30. Formulated as a light, non-greasy formula, which
      is perfect for any type of skin, to moisturize and protect against
      oxidative damage such as pollution and
stress;
 
 §
              Moscato
      Purifying Cleanser — A gentle, luxurious, creamy product designed to
      cleanse and condition at the same
time;
 
 §
              Harvest
      Mist Toner — A super hydrating mist, formulated to tone, hydrate and
      refresh dull complexion.
 
 Men’s
Line:
 
 §
              Le
      Grand Cru for Men — An ultra-luxurious cream designed for men to provide a
      unique, long lasting, slow released infusion of anti-oxidants and moisture
      to the skin in order to make it smoother, softer and more
      supple;
 
 §
              Vine
      Fresh SPF 15 Lotion — Oil free everyday moisturizer with UVB/UVA
      protection of an SPF 15. Formulated as a light, non-greasy formula, which
      is perfect for any type of skin, to moisturize and protect against
      oxidative damage such as pollution and
stress;
 
 §
              Reserve
      Shave Cream — A luxurious shave cream designed to provide an
      extraordinarily close yet comfortable
shave;
 
 §
              Coastal
      Vine After Shave — An aftershave elixir /tonic used to soothe freshly
      shaved skin, reduce irritation, and provide moisturizing
      properties;
 
 §
              Crushed
      Grape Seed Exfoliating Cleanser —Infused with crushed grape seeds this
      product is designed to cleanse, exfoliate, and condition at the same
      time.
 
 At the
core of all our products is a proprietary microencapsulated anti-aging
antioxidant complex called Meritage that was created in collaboration with
laboratories in Lyon, France. Meritage is a blend of grape and fermented wine
extracts, green tea, raspberry, blackcurrant, and bilberry extracts amongst
other select key ingredients. The Meritage complex is created through a unique
double fermentation process, which allows for the select high-level antioxidants
to remain active on the skin longer than conventionally created
products.
 
 Licensing
Agent
 
 In order
to further our success and to leverage the highly visible and well-respected
Mondavi name into other market categories, we entered into an agreement with
Constellation Brands Group (“CBG”), the parent entity of The Robert Mondavi
Corporation (“RMC”). RMC has retained us to act as their licensing agent in
agreements with Waterford Wedgewood USA, Inc. (“Waterford”) on the development
of a Robert Mondavi stemware line. CBG owns certain intellectual property rights
held in RMC, including the valued Robert-Mondavi licensed marks (the
“Intellectual Property”), and we have been engaged to: (1) negotiate
opportunities with Waterford to license the Intellectual Property with
Waterford’s stemware products, (2) develop and implement strategic plans for
branding Waterford’s products, and (3) facilitate the terms and conditions of
any agreements with Waterford. In exchange, CBG has agreed to compensate us with
a revenue share of thirty three and one-third percent (33 -1/3%) of the gross
revenues collected in any agreement we establish with Waterford. Gross revenues
means the gross receipts actually received from any agreement with Waterford,
including without limitation advance payments, minimum guarantees, royalty
payments and other license fees.
 
 Since we
received a one-time $25,000 signing bonus during the first quarter of 2007 for
the successful negotiation and execution of the Constellation licensing
arrangement, we have received $96,212 in royalty payments.
 
 Licensor
 
 We
entered into a relationship with Gilchrist and Soames, an industry leader in
fine toiletries manufacturing, on the development of a Davi branded line of
hotel amenity kits. The initial line of amenity products consists of shampoo,
conditioner, bath gel, body lotion and soaps, with additional products to be
developed in the future. The range of Davi amenity products will feature the
same Meritage complex of antioxidants that is found in the Davi men and women's
retail product lines.
 
 Plan
of Operation in the Next Twelve Months
 
 Skin
Care Line
 
 The
initial nine (9) SKUs include four (4) products for women and five (5) for men.
All the products are now available pursuant to our retail launch in October 2006
with luxury retailer Bergdorf Goodman in New York City. Subsequent to the
launch, the products have now also become available at Bliss World Catalogs and
their corresponding website; the luxury hotel and spa, Meadow Wood, located in
the Napa Valley; and the Living Beauty section of Selfridges department store in
London, England. We are also finalizing distribution agreements with several
select retailers located throughout Europe, Asia, and across the United States
and Canada. We expect to have agreements finalized and to be able to make our
products available for purchase through these retailers commencing in the 3rd
quarter of this year. These select upscale retailers submit purchase orders for
quantities of our branded products, which we fulfil from our distribution
center. Planned distribution will continue to expand into 2010 through the
utilization of select Distribution Companies throughout the world to help
oversee the growth and development of the brand.
 
 Product
Development
 
 We have
developed a hotel amenity line of products for distribution into luxury hotel
rooms worldwide in conjunction with Gilchrist & Soames, an industry leader
in fine toiletries manufacturing. The initial line of amenity products will
consist of shampoo, conditioner, bath gel, body lotion and soaps, with
additional products to be developed in the future.
 
 These
amenity products feature the same Meritage complex of antioxidants that is found
in our men’s and women’s retail line. Meritage is a microencapsulated blend of
select antioxidants, including fermented grape extracts, which remain pure
within the formula until application. Meritage's sustained time-release
technology provides a slow infusion of antioxidant health benefits to the
skin.
 
 Manufacturer
 
 Prior to
our product launch in October 2006, we completed the research and development
necessary to finalize the product designs and technical aspects needed to
commence production of our products with our contract manufacturer. We completed
the process of choosing all peripheral items involved in the manufacturing and
marketing process, including:
 
 §
              the
      final shape and size of the product
containers;
 
 §
              the
      final selection of caps;
 
 §
              the
      final packaging design;
 
 §
              the
      logo and label designs; and
 
 §
              the
      final unit carton design and
construction.
 
 Upon
final selection of the packaging directions and the completion of technical
drawings of the packaging itself, production of our initial nine (9) SKUs
commenced. Upon the completion of production, finished goods were then shipped
to our distribution warehouse to await distribution to our retail channels. We
intend to continue working with our contract manufacturer to ensure that our
product orders are responsive to the needs of our customers.
 
 Luxury
Branding and Acquisitions
 
 During
the normal course of business, our management team has been searching for other
business opportunities that would allow us to diversify our sources of
revenue.
 
 In order
to accomplish this new portion of our business plan, our board of directors will
focus more on becoming a luxury brands headquarters. It is our intent to
leverage our founder’s highly visible and well-respected Mondavi name into other
market categories as well as to acquire new brands and intellectual properties
to own, develop and license in the luxury category, while continuing to develop
our original luxury skin care products.
 
 It is our
intent that our company will become a holding company that will maintain the
intellectual properties, trademarks, copyrights and licenses of the various
operating businesses we are able to acquire or partner with. We plan to own
anywhere from 0% to 100% of these operational companies. Depending on the
circumstances surrounding each opportunity, management anticipates it will
choose to fund these operational companies or enter into joint ventures with
them. The holding companies will generate revenues from all licenses it issues
to use the Mondavi and Davi names.
 
 New
product development will commence as we further expand the Davi portfolio of
branded products. It is our intent to create an international lifestyle brand
consisting of several lifestyle products bearing the Davi name. These products
will be made available through our developing network of retail
distributors.
 
 As our
first step to further our new objective, we entered into an agreement with
Constellation Brands Group, the parent entity of The Robert Mondavi Corporation.
RMC has retained us to act as their licensing agent in agreements with Waterford
Wedgewood USA, Inc. on the development of a Robert Mondavi stemware line. CBG
owns certain intellectual property rights held in RMC, including the valued
Robert-Mondavi licensed marks, and we have been engaged to (1) negotiate
opportunities with Waterford to license the Intellectual Property with
Waterford’s stemware products, (2) develop and implement strategic plans for
branding Waterford’s products, and (3) facilitate the terms and conditions of
any agreements with Waterford. In exchange, CBG has agreed to compensate us with
a revenue share of thirty three and one-third percent (33 - 1/3%) of the gross
revenues collected in any agreement we establish with Waterford. Gross revenues
means the gross receipts actually received from any agreement with Waterford,
including without limitation advance payments, minimum guarantees, royalty
payments and other license fees.
 
 On
February 7, 2006, we successfully established the first license agreement (the
“License Agreement”) with Waterford. RMC granted to Waterford the exclusive
right to use the Intellectual Property in connection with the manufacture and
worldwide distribution of Waterford’s stemware, barware, decanters, and other
related products (the “Licensed Products”). Pursuant to the terms of the License
Agreement, we have been retained to facilitate promotional efforts of the
Licensed Products. Specifically, we have been retained to provide Waterford the
services of Carlo Mondavi, our Chairman and Founder, to act as spokesman for the
Licensed Products and to make personal appearances at scheduled promotional
events. In exchange, Waterford agreed to provide percentage royalties to RMC on
net sales of the Licensed Products. Since we negotiated the terms and conditions
of the License Agreement with Waterford and will provide promotional services to
Waterford, we will share thirty three and one-third percent (33 -1/3%) in any
proceeds received from the License Agreement.
 
 Results
of Operations for the three months ended March 31, 2008 and 2007
 
 Assets.
Our total assets as of March 31, 2008 were $648,199.  Our total assets
largely consist of inventory in the amount of $565,744. Our total assets as of
March 31, 2007, were $1,040,011, consisting primarily of a certificate of
deposit in the amount of $255,332, and inventory in the amount of $669,468. The
decrease in cash and investments, our primary assets, are attributable to our
administrative costs and our cost of promoting and developing our product lines,
which were launched in October 2006.
 
 Our total
liabilities as of March 31, 2008 were $1,197,319, consisting primarily of
accounts payable and accrued expenses in the amount of $501,924, and $700,000 in
notes payable compared to total liabilities of $605,084 as of March 31, 2007
consisting primarily of accounts payable of $305,190 and $286,923 in a note
payable-related party.
 
 Sales.  Sales
consist of revenues from the sale of products from our skin care line. We
reported sales of $12,474 for the three month period ended March 31, 2008,
compared with revenue of $27,219 for the same period ended March 31,
2007.  Our cost of goods sold for the three month ended March 31, 2008
totalled $23,863 resulting in gross profits of $(11,389). The cost of goods for
the same period in 2007 was $2,188 resulting in a gross profit of
$25,031.
 
 Operating
Expenses.  Our operating expenses decreased by $512,113to
$930,397for the three months ended March 31, 2008, compared to $1,442,510 for
the same reporting period in the prior year. The decrease in expenses was
largely attributable to a decrease in stock based compensation paid to our
executive officers, administrative expenses, and professional fees. Our
operating expenses for the three months ended March 31, 2008 consisted of
selling, general and administrative expenses of $97,737, depreciation of $1,970,
consulting fees of $787,635and professional fees of $43,055. In comparison, our
operating expenses for the three months ended March 31, 2007 consisted of
selling, general and administrative expenses of $325,334, depreciation of
$1,750, consulting fees of $155,117, employee stock options of $702,486, and
professional fees of $257,823.
 
 Other Income
(Expenses).  Other income (expenses) consists mainly of royalty
income from our licensing agreements and interest and interest expense on the
notes payable.  We reported Royalty income of $25,245 for the three
month period ended March 31, 2008, compared to $27,056 for the same period ended
March 31, 2007.  Interest expense for the three month period ended
March 31, 2008, totalled $23,044 compared to $6,405 for the same period in
2007.  The increase in interest expense was attributable to additional
note payable agreements entered into during 2007.
 
 Net Loss.
We reported a net loss of $939,585or $0.04per share for three months ended March
31, 2008, compared to a net loss of $1,386,346 or $0.11 per share for three
months ended March 31, 2007.
 
 Liquidity
and Capital Resources
 
 As of
March 31, 2008, our total current assets of $600,176 consisted of $7,342 of
certificates of deposit, $565,744 of inventory, $5,721 of accounts receivable,
and $8,425 of prepaid expenses. As of March 31, 2008, our total current
liabilities of $744,361 consisted of $501,924 in accounts payable and accrued
expenses, interest payable of $22,637, and a note payable of $200,000. We thus
had negative working capital of $144,185 at March 31, 2008.
 
 Net cash
used in operating activities was $33,614 for the three months ended March 31,
2008 compared to net cash used in operating activities of $454,897 for the three
months ended March 31, 2007. Net cash flow provided by investing activities
amounted to $-0- for the three months ended March 31, 2008 compared to net cash
provided by investing activities of $579,362 for the three months ended March
31, 2007. Net cash flow used in financing activities amounted to $-0- for the
three month period ended March 31, 2008,  compared to net cash used in
financing activities of $124,465 for the three month period ended March 31,
2007.
 
 We will
be dependent, for the immediate future, upon additional investment capital to
fund operating expenses.
 
 In
connection with our need for additional financing, we entered into an Agreement
for Convertible Note with an unrelated third party, Mr. Amin S. Lakha, whereby
Mr. Lakha is willing to provide, subject to the terms and conditions of the
Agreement for Convertible Note and accompanying documents (the “Agreement”),
certain financing for our ongoing and proposed business operations and
activities. The Agreement provides for a 9% Senior Secured Convertible Note (the
“Note”) in the stated amount of $2,200,000. Interest is payable in six month
intervals and the note matures on May 15, 2010. The Note allows Mr. Lakha to
convert a part or all of the outstanding balance under the Note into shares of
our common stock at a conversion price of $0.55 per share, which is subject to
adjustment in the event of certain dilutive issuances, including stock dividends
and reorganizations.  As part of this agreement the Company received
$500,000 during 2007.
 
 On
or about April 1, 2008, the Company entered into a First Amended and Restated
Agreement for Convertible Note with Amin S. Lakha (“Lakha”). The basic terms of
the agreement are: The Parties entered into an Amended and Restated Secured
Convertible Promissory Note in the amount of $536,163 due and payable on May 15,
2010 ; The Parties entered into an Amended and Restated Security Agreement,
whereby all sums due under the Letter Agreement between the Company and
Constellation Wines, U.S., Inc. shall be assigned directly to Lakha until the
Restated Convertible Note is fully extinguished and such funds shall be applied
directly to the principal sum owed; In addition Ten Thousand Dollars ($10,000)
shall be payable to Lakha as a full and complete release of any and all payments
that may have been due to Lakha pursuant to the terms of the original Assignment
Agreement; The Parties have entered into a restatement and replacement of the
Stock Option Agreement and Stock Purchase Warrant Agreement, Company shall issue
to Lakha 600,000 warrants to purchase shares of Common Stock at an exercise
price of $0.20 with an expiration date of   May 14, 2012 and 125,000
warrants to purchase shares of Common Stock at an exercise price of $0.25 with
an expiration date of May 14, 2012 and the Parties entered into a Rescission of
Assignment and Security Agreement for the Gilchrist & Soames
Agreement.
 
 On
November 16, 2007, the Company and an existing shareholder (less than 1%
shareholder) entered into an agreement whereby the shareholder was willing to
provide financing for the Company’s proposed business operations and activities.
The agreement provides for a six-month note for $200,000 at an annual interest
rate of 13 percent payable quarterly.  The note is due May 2008 and
may be converted at the option of the holder, to common shares of the Company at
a price of $0.55 per share. The shareholder also received warrants to purchase
125,000 common shares at a price of $0.85.  The Company has pledged
its future revenues from a three year exclusivity agreement and inventory in the
amount of the loan plus accrued interest as collateral for the
loan.
 
 On or
about April 14, 2008 the Company entered into a First Amended and Restated Loan
Agreement with Gisela Brinkhaus (“Brinkhaus”) the terms of which are: The
Parties entered into an Amended and Restated Convertible Promissory Note in the
principal amount of $100,000 and interest of 13% per annum, due and payable on
January 14, 2009 ; The Parties entered into a restatement and complete
replacement of the Original Warrants, Company shall issue Restated Warrants up
to 300,000 shares of common stock at an exercise price of $.35 per share which
shall expire on November 14, 2010 . As consideration for the difference between
the Debt and the principal amount of the Restated Convertible Note the Company
shall issue Brinkhaus 2, 207,960 shares of common stock. Brinkhaus has released
any and all collateral rights to Company’s Inventory Collateral and the right to
file any UCC-1 Financing Statement in connection with the Inventory Collateral.
In the Original Agreement, the Company pledged as a security against default all
payments that may become due and owing to the Company under the Memorandum of
Understanding between the Company and deSter N.V., Brinkhaus shall retain these
collateral rights and under acknowledges that at this time no final agreement
has been executed between deSter and the Company.
 
 Off
Balance Sheet Arrangements
 
 As of
March 31, 2008, there were no off balance sheet arrangements.
 
 Going
Concern
  The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of our
company as a going concern. We have incurred net losses of $939,585 for the
three month period ended March 31, 2008, and has incurred cumulative net losses
of $12,828,870 since our inception and will require additional capital for our
operational activities. We have successfully developed and established a line of
men’s and women’s skin care products. We have and are aggressively launching our
products with several luxury retailers. While we have already invested
substantial funds in developing, promoting, and marketing activities, additional
funds will be required to continue these efforts to establish market presence
and gain market shares.  Additionally, we are in the process of
finalizing the development of additional product lines. We believe that these
endeavours will result in increased sales. However, as of March 31, 2008, we
have insufficient cash to operate our business for the next twelve months. We
have experienced revenues since the fourth quarter of 2006 and believe that
while revenues will increase, they will not be sufficient to absorb expenses to
maintain us as a going concern. As such, we must raise additional capital to
achieve our business goals and to continue operations. Our ability to raise
additional capital through the future issuances of the common stock is unknown.
The ability to successfully resolve these factors raise substantial doubt about
our ability to continue as a going concern. The financial statements do not
include any adjustments that may result from the outcome of these aforementioned
uncertainties. We have not established a stabilized source of revenues
sufficient to cover operating costs over an extended period of
time.
 
 Management
anticipates that we will be dependent, for the near future, on additional
investment capital to fund operating expenses before achieving operating
profitability. We intend to further position the company so that we may be able
to raise additional funds through the capital markets. While to date we have
demonstrated the ability to do so there are no assurances that we will succeed
in raising additional capital. Management is currently pursuing several
alternatives to raise additional capital. While the management believes it will
be successful in raising the necessary funds for its immediate needs, there are
no assurances that in the future we will be successful in this or any of our
endeavours or become financially viable and continue as a going
concern.
 
 Critical
Accounting Policies
 
 In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis. The SEC indicated
that a “critical accounting policy” is one which is both important to the
portrayal of a company’s financial condition and results, and requires
management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. We believe that the following accounting policies fit this
definition.
 
 Revenue
recognition. We recognize revenues when services are rendered and/or
products are delivered. Costs and expenses are recognized during the period in
which they are incurred.
 
 Receivables.
Our accounts receivables represent financial instruments with a potential risk.
We offer, and reserve the right to deny, credit terms with credit limits to
customers based on their creditworthiness. We retain the right to place approved
accounts on credit hold should these accounts become delinquent. We will
maintain an allowance for doubtful accounts for estimated losses should
customers fail to make required payments. In addition, we monitor the accounts
for aging, historical account balances, payment patterns, history of
collectibility, and customer creditworthiness when determining the
collectibility of bad debt. Accounts receivables are written off when all
collection attempts have failed. Allowance for doubtful accounts may increase if
circumstances warrant.
 
 Inventory.
Our inventory consists of finished goods and raw materials, is stated at the
lower of cost or market and cost is determined by the first-in, first-out
method. We regularly monitor inventory quantities on hand and records
write-downs for excess and obsolete inventories based primarily on our estimated
forecast of product demand and production requirements. Such writedowns
establish a new cost basis of accounting for the related inventory. Actual
inventory losses may differ from management’s estimates, and such differences
could be material to our financial position, results of operations and cash
flows.
 
 Stock-based
compensation. We account for stock options under SFAS
123(R).
 
 In order
to determine compensation on options issued to consultants, and employees’
options, the fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model. We estimate the requisite service
period used in the Black-Scholes calculation based on an analysis of vesting and
exercisability conditions, explicit, implicit, and/or derived service periods,
and the probability of the satisfaction of any performance or service
conditions. We also consider whether the requisite service has been rendered
when recognizing compensation costs. We do not consider market conditions to be
vesting conditions and an award is not deemed to be forfeited solely because a
market condition is not satisfied.
 
 Recently
Issued Accounting Pronouncements
 
 In
September 2006, the FASB issued FAS 157, “Fair Value Measurements.” This
standard defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements.  This statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007. The
Company does not anticipate that the adoption of this accounting pronouncement
will have a material effect 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 provides companies with an
option to report selected financial assets and liabilities at fair
value.  SFAS 159's objective is to reduce both complexity in
accounting for financial instruments and the volatility in earnings caused by
measuring related assets and liabilities differently.  SFAS 159 is
effective as of the beginning of an entity's first fiscal year beginning after
November 15, 2007.   The Company is currently evaluating the
potential impact, if any, that the adoption of SFAS 159 will have on its
financial statements.
 
 In
December 2007, the FASB issued SFAS No. 141(R), Business
Combinations(SFAS
141(R)), which replaces SFAS 141, Business Combinations, requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree at the acquisition date, measured at their fair values
as of that date, with limited exceptions. This Statement also requires the
acquirer in a business combination achieved in stages to recognize the
identifiable assets and liabilities, as well as the non-controlling interest in
the acquiree, at the full amounts of their fair values. SFAS 141(R) makes
various other amendments to authoritative literature intended to provide
additional guidance or to confirm the guidance in that literature to that
provided in this Statement. This Statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15,
2008.  SFAS 141 (R) will be effective for the Company on January 1,
2009.  We do not expect adoption of SFAS 141(R) to have a significant
impact on our consolidated financial statements.
 
 In
December 2007, the Emerging Issues Task Force (EITF) of the FASB reached a
consensus on Issue No. 07-1, Accounting for Collaborative Arrangements
(EITF 07-1). The EITF concluded on the definition of a collaborative arrangement
and that revenues and costs incurred with third parties in connection with
collaborative arrangements would be presented gross or net based on the criteria
in EITF 99-19 and other accounting literature. Based on the nature of the
arrangement, payments to or from collaborators would be evaluated and its terms,
the nature of the entity’s business, and whether those payments are within the
scope of other accounting literature would be presented. Companies are also
required to disclose the nature and purpose of collaborative arrangements along
with the accounting policies and the classification and amounts of significant
financial-statement amounts related to the arrangements. Activities in the
arrangement conducted in a separate legal entity should be accounted for under
other accounting literature; however required disclosure under EITF 07-1 applies
to the entire collaborative agreement. This Issue is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years, and is to be applied retrospectively
to all periods presented for all collaborative arrangements existing as of the
effective date. EITF 07-1 will be effective for the Company on January 1,
2009.  We do not expect Adoption of EITF 17-1 to have a significant
impact on our consolidated financial statements.
 
 In
December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (SFAS 160), which amends Accounting Research
Bulletin No. 51, Consolidated Financial Statements, to improve the
relevance, comparability, and transparency of the financial information that a
reporting entity provides in its consolidated financial statements. SFAS 160
establishes accounting and reporting standards that require the ownership
interests in subsidiaries not held by the parent to be clearly identified,
labelled and presented in the consolidated statement of financial position
within equity, but separate from the parent’s equity. This statement also
requires the amount of consolidated net income attributable to the parent and to
the non-controlling interest to be clearly identified and presented on the face
of the consolidated statement of income. Changes in a parent’s ownership
interest while the parent retains its controlling financial interest must be
accounted for consistently, and when a subsidiary is deconsolidated, any
retained non-controlling equity investment in the former subsidiary must be
initially measured at fair value. The gain or loss on the deconsolidation of the
subsidiary is measured using the fair value of any non-controlling equity
investment. The Statement also requires entities to provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. This Statement applies
prospectively to all entities that prepare consolidated financial statements and
applies prospectively for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008.
 
 SFAS 160
will be effective for the Company on January 1, 2009.  We do not
expect adoption of SFAS 160 to have a significant impact on our consolidated
financial statements.
 
 In
June 2007, the EITF of the FASB reached a consensus on Issue No. 07-3,
Accounting for Non-refundable Advance Payments for Goods or Services Received
for Use in Future Research and Development Activities(EITF 07-3). EITF 07-3
requires that non-refundable advance payments for goods or services that will be
used or rendered for future research and development activities should be
deferred and capitalized. As the related goods are delivered or the services are
performed, or when the goods or services are no longer expected to be provided,
the deferred amounts would be recognized as an expense. This Issue is effective
for financial statements issued for fiscal years beginning after
December 15, 2007 and earlier application is not permitted. This consensus
is to be applied prospectively for new contracts entered into on or after the
effective date.  EITF 07-03 will be effective for the Company on
January 1, 2008.  The pronouncement is not expected to have a material
effect on our consolidated financial statements.
 
 In
March 2008, the FASB issued SFAS No. 161 (SFAS 161), Disclosures about Derivative
Instruments and Hedging Activities – An Amendment of FASB Statement No. 133
(SFAS 133). This statement is intended to improve financial
reporting of derivative instruments and hedging activities by requiring enhanced
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under SFAS 133
and its related interpretations and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance and
cash flows. The provisions of SFAS 161 are effective for fiscal years beginning
after November 15, 2008.  SFAS 161 will be effective for us
on January 1, 2009.  The pronouncement did not have a material effect
on our consolidated financial statements.
 
 Item
3.     Controls and Procedures
 
 We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of March 31, 2008.  This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer, Ms. Jan Wallace, and our Chief Financial Officer, Mr. Munjit
Johal.  Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of March 31, 2008, our disclosure
controls and procedures are effective.  There have been no changes in
our internal controls over financial reporting during the quarter ended March
31, 2008.
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
 
 Limitations on the
Effectiveness of Internal Controls
 
 Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level.  Further,
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. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company 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.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
internal control. The design of any system of controls also is based in part
upon 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. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate.
   
 
 
   
 PART
II – OTHER INFORMATION
 
 Item
1.     Legal Proceedings
 
 A
complete discussion of our ongoing legal proceedings is discussed in our annual
report on Form 10-KSB for the year ended December 31, 2007. There have been no
material developments in the ongoing legal proceedings previously reported in
which we are a party except as follows:
 
 On or
about August 2, 2006, a lawsuit entitled Artist House Holdings, Inc. vs. Davi
Skin, Inc. et. al., United States District Court, District of Nevada, Case No.
2:06-CV-893-RLH-LRL, was filed in federal district court in Nevada against the
Company, its directors, and other individuals. The plaintiff, Artist House
Holdings, Inc., is a shareholder in the Company. The complaint alleged
violations of federal securities law and Nevada securities law, breach of
contract, and related claims arising from the plaintiff's investment in Company.
A First Amended Complaint was filed on July 31, 2006, and a Second Amended
Complaint on January 8, 2007. On December 22, 2006, the plaintiffs filed an
emergency motion for a preliminary injunction, which the District Court denied
on January 12, 2007. On January 26, 2007, the Company and its directors filed a
motion to dismiss the federal securities law claim. That motion was granted on
March 27, 2007. The Court gave the plaintiff leave to amend, and plaintiff
subsequently filed an amended complaint to restate the claims not dismissed and
to add a party defendant.  We filed an answer to the amended complaint on
May 17, 2007.
 
 On
January 16, 2008, Davi Skin, Carlo Mondavi, Joshua LeVine and Joseph Spellman
(hereinafter “Davi”), entered into a Settlement Agreement with Artist House
Holdings, Inc. to resolve litigation in the matter of Artist House Holdings,Inc. v. Davi
Skin, Inc., et al., (Case No. 2:06-CV-893-RLH-LRL) in the United States
District Court for the District of Nevada.
 
 The
settlement agreement was conditioned upon a judgment and bar order that
indicates that the settlement is in good faith, and that a bar order is
necessary to ensure that defendants in the case are not subject to “claims over”
for contribution, indemnification, or any other claim predicated on another
party’s liability or potential liability to Artist House. On January 28, 2008,
motion for Entry Of Judgment and Bar Order and the Proposed Judgment and Bar
Order filed with the United States District Court for the District of Nevada. On
March 18, 2008 the Motion was denied without prejudice and the Parties are now
attempting a global settlement.  The settlement amounts are covered by
the insurance carrier.
 
 Item
2.     Unregistered Sales of Equity Securities and Use
of Proceeds
 
 None
 
 Item
3.     Defaults upon Senior Securities
 
 None
 
 Item
4.     Submission of Matters to a Vote of Security
Holders
 
 No
matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarterly period ended March
31, 2008.
 
 Item
5.     Other Information
 
 None
 
 Item
6.      Exhibits
  
 Exhibit
                Number
              Description
      of Exhibit31.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  200231.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  200232.1
              Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  200232.2
              Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 SIGNATURES
 
 In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
 Davi
      Skin, Inc.Date:
              May
      20, 2008/s/ Jan WallaceBy:Jan
      Wallace
                Title:Chief
      Executive Officer and
Director