UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB


(Mark One)

|X|   Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934 for the quarterly period ended June 30, 2006.

|_|   Transition report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

          For the transition period from ____________ to ______________


                        Commission file number 000-09489

                               SWISS MEDICA, INC.
           (Name of Small Business Issuer as specified in Its Charter)


         Delaware                                         98-0355519
(State or other jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

                             375 Britannia Road East
                                     Unit B
                              Mississauga, Ontario
                                 Canada L4Z 3E2
                    (Address of Principal Executive Offices)

                                 (905) 501-0553
                           (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 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 |_|

As of August 1, 2006 the Company had 101,665,828 shares of its par value $0.001
Class A common stock and 2,000,000 shares of its par value $0.001 Class B common
stock issued and outstanding.

Transitional Small Business Disclosure Format (check one):

         Yes |_|           No |X|

<PAGE>

                               SWISS MEDICA, INC.

                                Table of Contents

PART I.  FINANCIAL INFORMATION

       Item 1.  Financial Statements (Unaudited)

                Condensed Consolidated Balance Sheets:
                June 30, 2006 and December 31, 2005

                Condensed Consolidated Statements of Losses:
                Three and Six Months Ended June 30, 2006 and 2005

                Condensed Consolidated Statements of Cash Flows:
                Six Months Ended June 30, 2006 and 2005

                Notes to Unaudited Condensed Consolidated Financial Information:
                June 30, 2006

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

       Item 3.  Controls and Procedures


PART II.  OTHER INFORMATION

         Item 1.  Legal Proceedings

         Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds

         Item 3.  Defaults Upon Senior Securities

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

         Item 5.  Other Information

         Item 6.  Exhibits

<PAGE>

                               SWISS MEDICA, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              June 30, 2006    December 31,
                                                                              (Unaudited)         2005
ASSETS:                                                                      -------------    -------------
<S>                                                                          <C>              <C>
Cash and cash equivalents                                                    $      37,594    $      45,700
Restricted Cash                                                                    150,000          150,000
Accounts receivable, net of allowance for doubtful accounts of $525,512
and $29,625 at June 30, 2006 and December 31, 2005, respectively                 2,066,021        2,932,893

Inventories (Note B)                                                             1,822,731        2,502,942

Prepaid expenses and deposits (Note H)                                             168,844          144,816
                                                                             -------------    -------------

Total current assets                                                             4,245,190        5,776,351

Property and equipment:  (Note C)

Property and equipment:                                                            329,837          329,837

Less: accumulated depreciation                                                      92,014           59,030
                                                                             -------------    -------------

Total property and equipment                                                       237,823          270,807

Other assets:
Intangible assets, net of accumulated amortization of $517,031 and
$452,307 at  June 30, 2006 and December 31, 2005, respectively (Note C)            242,718          307,442

Prepaid and other (Note H)                                                         264,894          204,480

Goodwill                                                                           500,000          500,000
                                                                             -------------    -------------

Total other assets                                                               1,007,612        1,011,922

Total assets                                                                 $   5,490,625    $   7,059,080
                                                                             =============    =============

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY:
Accounts payable and accrued liabilities                                     $   3,487,082    $   2,653,953

Notes payable, current portion (Note D)                                          2,746,911        2,186,800
                                                                             -------------    -------------
Total current liabilities                                                        6,233,993        4,840,753

Convertible notes payable (Note E)                                                 440,040               --
Fair value of debt derivative and allocated fair value of related warrants
(Note L)                                                                         2,383,984               --

Accrued liabilities, long-term portion                                              13,047           14,463
                                                                             -------------    -------------

Total long term liabilities                                                      2,837,071           14,463

(Deficiency in) Stockholders' Equity:
Preferred stock, par value $.001 per share; 10,000,000 shares authorized;
none issued at June 30, 2006 and December 31, 2005 (Note F)                             --               --
Class A Common stock, par value $ .001 per share; 200,000,000 shares
authorized; 101,665,828 and 98,062,892 shares issued at June 30, 2006 and          101,666           98,063
December 31, 2005, respectively (Note F)
Class B Common stock, par value $.001 per share; 5,000,000 shares
authorized; 2,000,000 shares issued at June 30, 2006 and December 31,                2,000            2,000
2005, respectively (Note F)
Additional paid-in capital                                                      33,416,320       33,893,323

Accumulated deficit                                                            (37,100,425)     (31,789,522)
                                                                             -------------    -------------

Total (deficiency in) stockholders' equity                                      (3,580,439)       2,203,864
Total liabilities and (deficiency in) stockholders' equity                   $   5,490,625    $   7,059,080
                                                                             =============    =============
</TABLE>


  See accompanying footnotes to the unaudited condensed consolidated financial
                                  information


                                       3
<PAGE>

                               SWISS MEDICA, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF LOSSES
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                            For the three months              For the six months
                                               ended June 30,                   ended June 30,
                                           2006             2005             2006             2005
                                      -------------    -------------    -------------    -------------
<S>                                         <C>            <C>              <C>              <C>
Revenues, net                               126,555        1,383,328        1,348,056        2,510,740


Cost of Sales                               272,852          256,137          471,522          459,372
                                      -------------    -------------    -------------    -------------

Gross Profit                               (146,297)       1,127,191          876,534        2,051,368

Operating Expenses:

Research and Development                         --               --               --               --

Selling, General and Administrative       3,652,464        2,619,627        5,896,894        4,488,974
Depreciation and Amortization                48,855           46,459           97,709           96,727
                                      -------------    -------------    -------------    -------------

Total Operating Expenses                  3,701,319        2,666,086        5,994,603        4,585,701


Loss from Operations                     (3,847,616)      (1,538,895)      (5,118,069)      (2,534,333)


Interest Expense, net                      (462,975)         (35,012)        (655,260)         (66,256)
Net Gain on Revaluation of Warrant
Liability                                   462,425               --          462,425               --

Provision for Income Taxes                       --               --               --               --

Net Loss                              $  (3,848,166)   $  (1,573,907)   $  (5,310,904)   $  (2,600,589)
                                      =============    =============    =============    =============

Loss per common share (basic and
assuming dilution)                    $       (0.04)   $       (0.02)   $       (0.05)   $       (0.03)
                                      =============    =============    =============    =============

Weighted average common shares
outstanding                             100,107,998       85,617,793       99,519,212       81,781,930
                                      -------------    -------------    -------------    -------------
</TABLE>


  See accompanying footnotes to the unaudited condensed consolidated financial
                                  information


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                   For the six months June 30,
                                                                                     2006             2005
                                                                                -------------    -------------
<S>                                                                             <C>              <C>
Cash flows from operating activities:
Net loss                                                                        $  (5,310,904)   $  (2,600,589)
Adjustments to reconcile net loss to net cash (used in) operating activities:

Common stock issued in exchange for services rendered                                 284,032          250,350

Common stock issued in exchange for financing costs                                        --           35,900
Cancellation of common stock issued in prior year in connection with
acquisition of research and development costs                                              --         (167,500)

Warrant amortization charged to interest expense                                       45,947               --

Share issuances charged to interest expense                                           102,724               --

Convertible debenture amortization charged to interest expense                        164,142               --

Stock based compensation                                                                5,433               --

Net gain on revaluation of warrant liability                                         (462,425)              --

Depreciation and amortization                                                          97,709           96,727

(Increase) in prepaid expense                                                        (126,436)          74,933

(Increase) decrease in accounts receivable                                            866,872       (1,137,670)

(Increase) decrease in inventories                                                    680,212       (1,170,737)

(Increase) decrease in deposits and other assets                                      145,097         (508,786)

Increase in accounts payable and accrued liabilities                                  849,713          422,908
                                                                                -------------    -------------

Net cash (used in) operating activities                                            (2,657,884)      (4,704,464)

Cash flows from investing activities:

Purchase of property and equipment                                                         --         (162,070)
                                                                                -------------    -------------

Net cash (used in) investing activities                                                    --         (162,070)

Cash flows from financing activities:

Proceeds from notes payable                                                           560,111          852,600

Proceeds from sale of common stock, net of costs                                       89,667        3,410,950

Proceeds from (repayments of) convertible debentures                                2,000,000         (500,000)
                                                                                -------------    -------------

Net cash provided by investing activities                                           2,649,778        3,763,550


Net (decrease) in cash and cash equivalents                                            (8,106)      (1,102,984)

Cash and cash equivalents at the beginning of the period                               45,700        1,630,559
                                                                                -------------    -------------
Cash and cash equivalents at the end of the period                              $      37,594    $     527,575
                                                                                =============    =============

Supplemental Disclosures of Cash Flow Information:
Interest paid in cash                                                           $     506,589    $      66,256

Income taxes paid in cash                                                                  --               --

Issuance of common stock in exchange for services                                     284,032          250,350

Common stock issued in exchange for financing expense                                  82,694           35,900
Cancellation of common stock issued in prior year in connection with
acquisition of research and development costs                                              --          167,500
Issuance of Class A common stock in exchange for previously incurred debt
(Note E)                                                                               18,000        1,043,000

Acquisition of ADBSI (Note C):

  Assets acquired                                                                                      196,637

  Goodwill                                                                                             500,000

  Common stock issued                                                                                 (600,000)
                                                                                                 -------------
  Net cash paid for acquisition                                                 $          --    $      96,637
                                                                                =============    =============
</TABLE>


  See accompanying footnotes to the unaudited condensed consolidated financial
                                  information


                                       5
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements.

In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
results from operations for the three and six--month period ended June 30, 2006
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2006. The unaudited financial statements should be read in
conjunction with the December 31, 2005 financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-KSB.

Business and Basis of Presentation

Swiss Medica, Inc., formerly Global Path Incorporated (the "Company") was
reincorporated under the laws of the State of Delaware in September 2001. The
Company is engaged in the business of marketing and distributing proprietary
bioscience health products, with the focus on chronic ailments.

On March 31, 2005, the Company entered into an Agreement and Plan of Acquisition
(the "Acquisition Agreement") with Anti-Depression BioHealth Solutions, Inc., a
Florida corporation ("ADBSI") and UTEK Corporation, a Delaware corporation
("UTEK"). All outstanding shares of common stock of ADBSI were exchanged for
2,105,263 restricted shares of Class A common stock of the Company in a
transaction accounted for using the purchase method of accounting. As additional
consideration pursuant to the terms of the Acquisition Agreement, the Company
paid UTEK, the sole shareholder of ADBSI, $96,637 in cash. As a result of the
closing under the Acquisition Agreement on March 31, 2005, ADBSI became a
wholly-owned subsidiary of the Company (see Note C).

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, Anti-Depression BioHealth Solutions, Inc. All
significant inter-company transactions and balances have been eliminated in
consolidation.

Revenue Recognition

For revenue from product sales, the Company follows a policy of recognizing
revenues as products are shipped. The Company recognizes revenue in accordance
with Staff Accounting Bulletin No. 104, REVENUE RECOGNITION ("SAB104"), which
superseded Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS ("SAB101"). SAB 101 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectibility of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product has not been delivered or is subject to refund until such time that
the Company and the customer jointly determine that the product has been
delivered or no refund will be required.

SAB 104 incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"),
MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS. EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21 on
the Company's consolidated financial position and results of operations was not
significant.

                                       6
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition (Continued)

The sales contracts the Company entered into with its customers had no price
protection and through the period ended June 30, 2006, the Company recognized
revenues upon title transfer and shipment. The Company has limited operating
history, and the products are innovative. The Company has not accrued for sales
returns in prior periods based on management's evaluation of its product's
positioning in the marketplace and product ranking particularly in the Canadian
marketplace. Retail sell through experienced at all similar retailers, and
product acceptance within the medical and pain management consumer associations
suggested there would be no (or minimal) product returns.

During the second quarter ending June 30, 2006 a major retailer returned one sku
of the Company's Q24 product. Although it was a sell through contract and the
retailer had made payments in connection with this sale, the decision to accept
the return and issue a refund to the retailer was predicated upon maintaining an
ongoing business relationship with this retailer, who is still carrying the main
Q24 sku of the same product and has decided to carry another of the Company's
products. In that the Company's management wishes to maintain a solid
relationship with this retailer and allow for other potential future business
with this valuable customer, the decision was made to accept the product return.

Additionally, during the second quarter ending June 30, 2006 a major retailer
returned two skus of Q24 product which was purchased around August of 2005.
Management did not anticipate a return for this sale and therefore no reserve
was established in prior periods based upon retail sell through experienced at
similar retailers, as well as other evaluation. The Company's management had
determined that in future periods, additional measures will be taken to evaluate
and estimate the potential for product returns. Should a product return be
indicated or predicted, an accrual for product returns will be established.

Advertising

The Company follows the policy of charging the costs of advertising to expenses
as incurred. The Company incurred advertising costs of $853,600 and $506,975 for
the three and six-month period ended June 30, 2006 and 2005, respectively.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and related party receivables. The Company places its cash and temporary cash
investments with credit quality institutions. At times, such investments may be
in excess of the FDIC insurance limit. The Company periodically reviews its
trade receivables in determining its allowance for doubtful accounts. The
allowance for doubtful accounts was $525,512 and $29,625 at June 30, 2006 and
December 31, 2005, respectively.

Stock Based Compensation

Prior to the January 1, 2006 adoption of the Financial Accounting Standards
Board ("FASB") Statement No. 123(R), "Share-Based Payment" ("SFAS 123R"), the
Company accounted for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. Accordingly,
because the stock option grant price equaled the market price on the date of
grant, and any purchase discounts under the Company's stock purchase plans were
within statutory limits, no compensation expense was recognized by the Company
for stock-based compensation. As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), stock-based compensation was included as
a pro forma disclosure in the notes to the consolidated financial statements.

Effective January 1, 2006, the beginning of the Company's first fiscal quarter
of 2006, the Company adopted the fair value recognition provisions of SFAS 123R,
using the modified-prospective transition method. Under this transition method,
stock-based compensation expense was recognized in the consolidated financial
statements for granted, modified, or settled stock options. Compensation expense
recognized included the estimated expense for stock options granted on and
subsequent to January 1, 2006, based on the grant date fair value estimated in
accordance with the provisions of SFAS 123R, and the estimated expense for the
portion vesting in the period for options granted prior to, but not vested as of
January 1, 2006, based on the grant date fair value estimated in accordance with
the original provisions of SFAS 123. Results for prior periods have not been
restated, as provided for under the modified-prospective method.

Total stock-based compensation expense recognized in the consolidated statement
of earnings for the six month period ending June 30, 2006 was $5,433, net of tax
effect.

SFAS 123(R) requires forfeitures to be estimated at the time of grant and
revised, if necessary, in subsequent periods if actual forfeitures differ from
those estimates. In the Company's pro forma information required under SFAS 123
for the periods prior to fiscal 2006, the Company accounted for forfeitures as
they occurred.

Upon adoption of SFAS 123(R), the Company is using the Black-Scholes
option-pricing model as its method of valuation for share-based awards granted
beginning in fiscal 2006, which was also previously used for the Company's pro
forma information required under SFAS 123. The Company's determination of fair
value of share-based payment awards on the date of grant using an option-pricing
model is affected by the Company's stock price as well as assumptions regarding
a number of highly complex and subjective variables. These variables include,
but are not limited to the Company's expected stock price volatility over the
term of the awards, and certain other market variables such as the risk free
interest rate.

                                       7
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Based Compensation (Continued)

The following table shows the effect on net earnings and earnings per share had
compensation cost been recognized based upon the estimated fair value on the
grant date of stock options for the six months ended June 30, 2005, in
accordance with SFAS 123, as amended by SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure:


                                                                 June 30,
                                                                  2005
Net loss                                                      $  (2,600,589)
Deduct: stock-based compensation expense, net of tax                     --
                                                              -------------

Pro forma net loss                                            $  (2,600,589)
                                                              =============


Net loss per common share -- basic (and assuming dilution):
     As reported                                              $       (0.03)
     Deduct: stock-based compensation expense, net of tax                --
                                                              -------------

     Pro forma                                                $       (0.03)
                                                              =============


Disclosure for the period ended June 30, 2006 is not presented because the
amounts are recognized in the consolidated financial statements.

Reclassifications

Certain reclassifications have been made in prior year's financial statements to
conform to classifications used in the current year.

NOTE B - INVENTORIES

Inventories are stated at the lower of cost or market determined by the
first-in, first-out (FIFO) method. Inventories primarily consist of cosmetic
oils and packaging materials. Components of inventories as of June 30, 2006 and
December 31, 2005 are as follows:

                  June 30, 2006   December 31, 2005
Raw Materials    $       859,711   $       854,424
Finished Goods           963,020         1,648,518
                 ---------------   ---------------
                 $     1,822,731   $     2,502,942
                 ===============   ===============


                                       8
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE C - BUSINESS COMBINATIONS

Intangible Assets Acquired

On May 20, 2003 the Company acquired equipment, nine patented bioscience
products and related intangible assets from General Cosmetics Corporation. In
consideration for the acquisition of the tangible and intangible assets, the
Company issued a total of 6,750,000 shares of restricted Class A common stock.
The Company has adopted SFAS No. 142, "Goodwill and Other Intangible Assets",
whereby the Company periodically tests its intangible assets for impairment. On
an annual basis, and when there is reason to suspect that their values have been
diminished or impaired, these assets are tested for impairment, and write-downs
will be included in results from operations.

The intangible assets acquired from General Cosmetics and carrying value at
December 31, 2005 are:

<TABLE>
<CAPTION>
                                     Gross                                                       Weighted Average
                                     Carrying     Accumulated                      Residual      Amortization
                                     Amount       Amortization       Net           Value         Period (Years)
                                 -------------   -------------    -------------   -------------   -------------
Amortizable Intangible Assets:
<S>                              <C>             <C>              <C>             <C>                       <C>
Patents                          $     563,250   $    (295,708)   $     267,542   $          --             5.0
Customer Mailing Lists                  30,000         (15,750)          14,250              --             5.0
Trademarks                              45,000         (23,625)          21,375              --             5.0
Non-compete agreements                 112,500        (112,500)              --              --             2.0
Other                                    9,000          (4,725)              --           4,275             5.0
                                 -------------   -------------    -------------   -------------   -------------

Total                            $     759,750   $    (452,308)   $     307,442   $          --             4.6
                                 =============   =============    =============   =============   =============
</TABLE>

The intangible assets acquired from General Cosmetics and carrying value at June
30, 2006 are:

<TABLE>
<CAPTION>
                                    Gross                                                         Weighted Average
                                    Carrying      Accumulated                     Residual        Amortization
                                    Amount        Amortization        Net         Value           Period (Years)
                                 -------------   -------------    -------------   -------------   -------------
Amortizable Intangible Assets:
<S>                              <C>             <C>              <C>             <C>                       <C>
Patents                          $     563,250   $    (352,031)   $     211,219   $          --             5.0
Customer Mailing Lists                  30,000         (18,750)          11,250              --             5.0
Trademarks                              45,000         (28,125)          16,875              --             5.0
Non-compete agreements                 112,500        (112,500)              --              --             2.0
Other                                    9,000          (5,626)           3,374              --             5.0
                                 -------------   -------------    -------------   -------------   -------------

Total                            $     759,750   $    (517,032)   $     242,718   $          --             4.6
                                 =============   =============    =============   =============   =============
</TABLE>

Total amortization expense charged to operations for the six month periods ended
June 30, 2006 and 2005 were $64,724 and $85,819, respectively. Estimated
amortization expense as of is as follows:

Remaining of fiscal 2006   $        64,727
Fiscal 2007                        129,450
Fiscal 2008
                                    48,541
Total                      $       242,718
                           ===============


                                       9
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

NOTE C - BUSINESS COMBINATIONS (Continued)

Acquisition of Anti-Depression BioHealth Solutions, Inc.

On March 31, 2005, Swiss Medica, Inc., a Delaware corporation (the "Company"),
Anti-Depression BioHealth Solutions, Inc., a Florida corporation ("ADBSI") and
UTEK Corporation, a Delaware corporation ("UTEK") entered into an Agreement and
Plan of Acquisition (the "Acquisition Agreement"). ADBSI was formed in March
2005, owned minimal assets, had no liabilities, and no business activities prior
to this transaction. The acquisition of ADBSI was completed pursuant to the
terms of the Acquisition Agreement and closed on March 31, 2005. All outstanding
shares of common stock of ADBSI were exchanged for 2,105,263 restricted shares
of Class A common stock of the Company in a transaction accounted for using the
purchase method of accounting. As additional consideration pursuant to the terms
of the Acquisition Agreement, the Company paid UTEK, the sole shareholder of
ADBSI, $96,637 in cash. As a result of the closing under the Acquisition
Agreement, ADBSI became a wholly-owned subsidiary of the Company. The main
product of ADBSI is PMS Escape.

The following summarizes the acquisition of ADBSI:

Assets acquired                                $       196,637
Goodwill                                               500,000
                                               ---------------
Total purchase Price                           $       696,637
                                               ===============

Issuance of 2,105,263 shares of common stock   $       600,000
Cash paid                                               96,637
                                               ---------------
Total purchase price                           $       696,637
                                               ---------------
The Company valued the common stock issued to the UTEK at $0.285 per share,
which approximated the fair value of the Company's common stock at the date of
acquisition. The Company has recorded the carryover basis of the net assets
acquired, which did not differ materially from their fair value and its
operating results have been included in the Company's consolidated financial
statements since the date of purchase. The Company believes the acquisition
resulted in the recognition of goodwill primarily because of its industry
position, management strength and potential to serve as a platform for
consolidation.

Option Agreement: On March 31, 2005, in connection with the Acquisition
Agreement, ADBSI obtained a 48-month exclusive option to acquire an exclusive
license to Nutraceutical intellectual property and products developed or
manufactured using the Nutraceutical intellectual property from Back Bay
Scientific, Inc., a Delaware corporation ("Back Bay") pursuant to the terms of
the Option Agreement. ADBSI may exercise this option after receipt of Back Bay's
notice of completion of the development of Nutraceutical intellectual property
or related products, or upon termination of an existing license agreement
relating to the Nutraceutical technology. In consideration for the Option, ADBSI
agreed to pay Back Bay $60,000 in four equal payments of $15,000. The first
payment was made upon the effectiveness of the Option Agreement, and the
remaining three payments are due on the first, second and third anniversary
dates of the Option Agreement. ADBSI paid the first $15,000 installment on March
31, 2005. The second installment was due March 31, 2006 but the Company's
management has decided to let the Option lapse. Pursuant to the terms Option
Agreement, the Option becomes void when the Company fails to make the payment
within 30 days from the payment due date.

License Agreement: ADBSI's assets include an exclusive license to, among other
things, develop and market patented and proprietary PMS Escape product pursuant
to the Patent License Agreement. This royalty-bearing exclusive license gives
ADBSI rights to use, manufacture and distribute the PMS Escape product or any
other product developed from certain patent rights licensed to Back Bay in the
United States and Canada. This agreement also gives ADBSI the rights to use all
intellectual property related to PMS Escape, except the patent rights, in
connection with the marketing, sale and distribution of the product. Upon the
execution of this agreement, ADBSI agrees to pay a one-time, non-refundable fee
of $125,000 to Back Bay and to prepay for Back Bay's finished PMS Escape and
packaging inventory. The $125,000 fee was paid on ADBSI's behalf by UTEK.


                                       10
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE C - BUSINESS COMBINATIONS (CONTINUED)

Acquisition of Anti-Depression BioHealth Solutions, Inc. (Continued)
--------------------------------------------------------------------

Prepaid Expense: ADBSI also entered into a Consulting Agreement with Back Bay
and its principals on March 31, 2005. Pursuant to the terms of the Consulting
Agreement, Back Bay's principals will provide consulting services relating to
PMS Escape and other products to which ADBSI obtains rights under the Patent
License Agreement. The initial term of the Consulting Agreement expires on April
1, 2009 and automatically renews for additional one-year terms. In consideration
for the Consulting Agreement, ADBSI agreed to pay Back Bay $200,000 in four
equal payments of $50,000. The first payment was made upon the effectiveness of
the Consulting Agreement, the remaining installments were due on the first,
second and third anniversary dates of the Consulting Agreement. On March 31,
2006, the Company has re-negotiated the terms of the Consulting Agreement with
Back Bay and its principals, revised consulting fees are $6,000 payable
quarterly.

NOTE D - NOTES PAYABLE

A summary of notes payable at June 30, 2006 and December 31, 2005 is as follows:

<TABLE>
<CAPTION>
                                                         June 30, 2006  December 31, 2005
<S>                                                           <C>            <C>
Notes payable to Strategic Equity Corp.; interest rate             --        554,400
24% per annum; interest only payable monthly, maturity
date is April 28, 2006. (b)
Notes payable to Strategic Equity Corp.; interest rate             --        621,600
24% per annum; interest only payable monthly, maturity
date is June 5, 2006. (a)
Notes payable to Strategic Equity Corp.; interest rate      1,352,321
24% per annum; principal and interest payable monthly,
maturity dates are October 30, 2006 and December 15,
2006. (c)
Notes payable to Double U Master Fund.; interest rate         560,000        560,000
24% per annum; interest only payable monthly, maturity
date is December 20, 2006. (d)
Notes payable to Double U Master Fund.; interest rate         250,000        250,000
24% per annum; interest only payable monthly, maturity
date is December 20, 2006. (e)
Notes payable on demand to Cigam Trust.; interest rate         50,000         50,000
18% per annum; interest only payable monthly. (f)
Notes payable on demand to G. Feldbaum.; interest rate         50,000         50,000
18% per annum; interest only payable monthly. (f)
Notes payable on demand.; interest rate 20% per annum;         87,000         84,000
interest only payable monthly. (g)
Notes payable on demand; interest rate 18% per annum;          17,400         16,800
interest only payable monthly. (h)
Notes payable; fee of $10,000 CAD payable upon renewal,       348,000             --
maturity date is July 28, 2006. (i)
Notes payable to Rubicon Inc. a related party, due upon
demand; non interest bearing(j)                                32,190             --
                                                          -----------    -----------

Total                                                       2,746,911      2,186,800
Less: current portion                                      (2,746,911)    (2,186,800)
                                                          -----------    -----------
Long term portion                                         $        --    $        --
                                                          ===========    ===========
</TABLE>

                                       11
<PAGE>


                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE D - NOTES PAYABLE (Continued)


      a)    Notes Payable: On June 6, 2005, the Company entered into a Security
            Agreement and Security Agreement Amendment (together the
            "Agreement") with Strategic Equity Corp. ("Strategic Equity") for
            the sum of $660,000 Canadian Dollar (CAD) (approximately $534,600
            USD) being delivered to the Company on or before June 6, 2005.
            Pursuant to the Agreement, the Company issued to Strategic Equity
            100,000 shares of the Company's Class A common stock as extra
            financing charges. The Company valued the common shares issued at
            $0.30 per share, and the value of common shares issued was charged
            to operations during the year ended December 31, 2005. The
            promissory note in the amount of $660,000 CAD is interest only
            payable monthly at 24% per annum with the maturity dates on December
            5, 2005. This note was cancelled on December 5, 2005 and replaced
            with a new note for the sum of $740,000 CAD (approximately $621,600
            USD). Pursuant to the Agreement, the Company issued to Strategic
            Equity 70,000 warrants to purchase an aggregate of 70,000 shares of
            the Company's Class A common stock, at $0.20 per share, exercisable
            at any time after the issuance and expiring on the day prior to the
            3rd anniversary of the warrant issue date. The Company valued the
            warrants using the Black-Scholes option pricing model, applying a
            life of three years, a risk free interest rate of 4.5%, a volatility
            of 220% and a deemed fair value of common stock of $0.14 which was
            the closing price of the Company's common stock on December 5, 2005.
            The Company valued the warrants granted in the amount of $9,177, and
            accounted for as a deferred financing cost. During the six months
            ended June 30, 2006, $9,177 of non-cash interest expense was charged
            to operations in connection with the amortization of deferred
            financing cost. This note was cancelled on April 28, 2006 and
            replaced with a new note for the sum of $1,575,000 CAD.

      b)    Notes Payable: On October 28, 2005, the Company entered into a
            Security Agreement and Security Agreement Amendment (together the
            "Agreement") with Strategic Equity Corp. ("Strategic Equity") for
            the sum of $660,000 Canadian Dollar (CAD) (approximately $554,400
            USD) being delivered to the Company on or before October 28, 2005.
            Pursuant to the Agreement, the Company issued to Strategic Equity
            175,000 shares of the Company's Class A common stock as extra
            financing charges. The Company valued the common shares issued at
            $0.129 per share, and the value of common shares issued was charged
            to operations during the year ended December 31, 2005. The Company
            also issued to Strategic Equity 50,000 warrants to purchase an
            aggregate of 50,000 shares of the Company's Class A common stock, at
            $0.20 per share, exercisable at any time after the issuance and
            expiring on the day prior to the 3rd anniversary of the warrant
            issue date. The Company valued the warrants using the Black-Scholes
            option pricing model, applying a life of three years, a risk free
            interest rate of 4.5%, a volatility of 220% and a deemed fair value
            of common stock of $0.12 which was the closing price of the
            Company's common stock on October 28, 2005. The Company valued the
            warrants granted in the amount of $5,590, and accounted for as a
            deferred financing cost. The deferred financing cost is amortized
            and charged to operations over the term of the note. During the six
            months ended June 30, 2006, $5,590 of non-cash interest expense was
            charged to operations in connection with the amortization of
            deferred financing cost. The promissory note in the amount of
            $660,000 CAD is interest only payable monthly at 24% per annum with
            the maturity date of April 28, 2006. The promissory note is secured
            by the Company's trade accounts receivable and a security charge
            over all unsecured assets of the Company. This note was cancelled on
            April 28, 2006 and replaced with a new note for the sum of
            $1,575,000 CAD.

      c)    Notes Payable: On April 28, 2006, the Company entered into a
            Security Agreement and Security Agreement Amendment (together the
            "Agreement") with Strategic Equity Corp. ("Strategic Equity") for
            the sum of $1,575,000 Canadian Dollar (CAD) (approximately
            $1,352,321 USD and $1,370,250 USD at June 30, 2006 and December 31,
            2005 respectively) being delivered to the Company on or before April
            28, 2006. Pursuant to the Agreement, the Company issued to Strategic
            Equity 722,222 shares of the Company's Class A common stock as extra
            financing charges valued at $79,444, and the value of common shares
            issued was charged to operations during the six months ended June
            30, 2006. The promissory note in the amount of $1,575,000 CAD is
            interest only payable monthly at 24% per annum with the maturity
            dates on October 30, 2006 and December 15, 2006. Pursuant to the
            Agreement, the Company issued to Strategic Equity 600,000 warrants
            to purchase an aggregate of 600,000 shares of the Company's Class A
            common stock, at $0.20 per share, exercisable at any time after the
            issuance and expiring on the day prior to the 3rd anniversary of the
            warrant issue date. The Company valued the warrants using the
            Black-Scholes option pricing model, applying a life of three years,
            a risk free interest rate of 4.875%, a volatility of 199% and a
            deemed fair value of common stock of $0.148 which was the average
            closing price of the Company's common stock on June 30, 2006. The
            Company valued the warrants granted in the amount of $83,040, and
            accounted for as a deferred financing cost. The deferred financing
            cost is amortized and charged to operations over the term of the
            note. During the three months ended June 30, 2006, $14,235 of
            non-cash interest expense was charged to operations in connection
            with the amortization of deferred financing cost. The promissory
            note is secured by the Company's trade accounts receivable and a
            security charge over all unsecured assets of the Company.


                                       12
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

NOTE D - NOTES PAYABLE (Continued)

      d)    Notes Payable: On June 21, 2005, the Company entered into a Security
            Agreement and Security Agreement Amendment (together the
            "Agreement") with Double U Master Fund for the sum of $560,000 being
            delivered to the Company on or before June 21, 2005. The promissory
            note in the amount of $560,000 is interest only payable monthly at
            15% per annum with the maturity dates on December 20, 2005. The
            promissory note was secured by the Company's inventory and accounts
            receivable. This note was cancelled on December 20, 2005 and
            replaced with a new note for the sum of $560,000 being delivered to
            the Company on or before December 20, 2005. Pursuant to the
            Agreement, the Company issued to U Master Fund warrants to purchase
            an aggregate of 250,000 shares of the Company's Class A common
            stock, at $0.20 per share, exercisable at any time after the
            issuance and expiring on the day prior to the 5th anniversary of the
            effective date of the Company's next Registration Statement. The
            Company valued the warrants using the Black-Scholes option pricing
            model, applying a life of 5.50 years, a risk free interest rate of
            4.5%, a volatility of 220% and a deemed fair value of common stock
            of $0.12 which was the closing price of the Company's common stock
            on December 20, 2005. The Company valued the warrants granted in the
            amount of $29,650, and accounted for them as a deferred financing
            cost which were amortized and charged to operations over the term of
            the note. During the six months ended June 30, 2006, $14,662 of
            non-cash interest expense was charged to operations in connection
            with the amortization of deferred financing cost. The promissory
            note in the amount of $560,000 is interest only payable monthly at
            24% per annum with the maturity date of June 20, 2006. The
            promissory note is secured by the Company's inventory and accounts
            receivable. This note was cancelled on June 20, 2006 and replaced
            with a new note for the sum of $560,000 being delivered to the
            Company on or before June 20, 2006. Pursuant to the Agreement, the
            Company issued to U Master Fund 600,000 warrants to purchase an
            aggregate of 600,000 shares of the Company's Class A common stock,
            at $0.20 per share, exercisable at any time after the issuance and
            expiring on the day prior to the 5th anniversary of the effective
            date of the Company's next Registration Statement. The Company
            valued the warrants using the Black-Scholes option pricing model,
            applying a life of 5.0 years, a risk free interest rate of 4.875%, a
            volatility of 199% and a deemed fair value of common stock of $0.148
            which was the average closing price of the Company's common stock on
            June 30, 2006. The Company valued the warrants granted in the amount
            of $86,400, and accounted for them as a deferred financing cost
            which were amortized and charged to operations over the term of the
            note. During the six months ended June 30, 2006, $9,748 of non-cash
            interest expense was charged to operations in connection with the
            amortization of deferred financing cost. The promissory note in the
            amount of $560,000 is interest only payable monthly at 24% per annum
            with the maturity date of December 20, 2006. The promissory note is
            secured by the Company's inventory and accounts receivable.


      e)    Notes Payable: On December 20, 2005, the Company entered into a
            Security Agreement and Security Agreement Amendment (together the
            "Agreement") with Double U Master Fund for the sum of $250,000 being
            delivered to the Company on or before December 20, 2005. The
            promissory note in the amount of $250,000 is interest only payable
            monthly at 24% per annum with the maturity date of June 20, 2006.
            The promissory note is secured by the Company's inventory and
            accounts receivable. This note was cancelled on June 20, 2006 and
            replaced with a new note for the sum of $560,000 being delivered to
            the Company on or before June 20, 2006. The promissory note in the
            amount of $250,000 is interest only payable monthly at 24% per annum
            with the maturity date of December 20, 2006. The promissory note is
            secured by the Company's inventory and accounts receivable.

      f)    Notes Payable: On June 10 and June 13, 2005, the Company entered
            into an Agreement with each of Cigham Trust and G. Feldbaum for the
            sum of $50,000 being delivered to the Company on or before June 10
            and June 13, 2005 respectively. Pursuant to the Agreement, the
            Company issued to each of Cigham and Feldbaum, 10,000 shares of the
            Company's Class A common stock at approximately $0.30 per share.
            Interest expense of $4,438 was charged to operations during the
            three month period ended June 30, 2006. Each promissory note in the
            amount of $50,000 is interest only payable monthly at 18% per annum
            and is due upon demand. These notes are unsecured.

      g)    Demand Note: On August 3, 2005, the Company entered into an
            Agreement for the sum of $100,000 Canadian Dollar (CAD)
            (approximately $87,000 USD and $84,000 USD at June 30, 2006 and
            December 31, 2005, respectively) being delivered to the Company on
            or before August 3, 2005. The promissory note in the amount of
            $100,000 (CAD) is interest only payable monthly at 20% per annum and
            is due upon demand. This note is unsecured.

      h)    Demand Note: On July 5, 2005, the Company entered into an Agreement
            for the sum of $20,000 Canadian Dollar (CAD) (approximately $17,400
            USD and $16,800 USD at June 30, 2006 and December 31, 2005,
            respectively) being delivered to the Company on or before July 5,
            2005. The promissory note in the amount of $20,000 (CAD) is interest
            only payable monthly at 18% per annum and is due upon demand. This
            note is unsecured.


                                       13
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

NOTE D - NOTES PAYABLE (Continued)

      i)    Note Payable: On January 4, 2006, the Company entered into an
            Agreement with Reid Partners 1 Inc., for the sum of $400,000
            Canadian Dollar (CAD) (approximately $348,000 USD and $336,000 USD
            at June 30, 2006 and December 31, 2005, respectively) being
            delivered to the Company on or before January 4, 2006. The
            promissory note in the amount of $400,000 (CAD) is non interest
            bearing, with a $25,000 fee payable upon maturity, with a maturity
            date of March 28, 2006. On March 28, 2006, this note was renewed
            upon the same terms for a further three month period, with a
            maturity date of June 28, 2006. On June 28, 2006 this note was
            renewed for a further one month period, with a maturity date of July
            28, 2006. This note is secured by the personal assets of a related
            party.

      j)    Demand Note: On June 1, 2006 the Company entered into an Agreement
            with a related party for the sum of $37,000 Canadian Dollar (CAD)
            (approximately $32,190 USD) being delivered to the Company on or
            before June 8, 2006. The promissory note in the amount of $37,000
            (CAD) is interest free and is due upon demand. This note is
            unsecured.

NOTE E - CONVERTIBLE NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                June 30, 2006         December
                                                                                                      31, 2005
<S>                                                                              <C>                   <C>
Convertible notes payable; interest rate 12% per annum for the first 150 days,   $     344,190              --
                                                                                 -------------
8% thereafter; due December 7, 2007; note holder has the option to convert
unpaid note principal the Company's common stock at the lower of (i) $0.175 or
(ii) 80% of the lowest closing bid price of the Company's common stock during
the five days immediately preceding the conversion date  The Company granted
the note holder a security interest in all of the Company's assets and
registration rights. Net of unamortized debt discount of $955,810

Convertible notes payable; interest rate 12% per annum for the first 150 days,   $      95,850              --
                                                                                -------------
8% thereafter; due February 8, 2008; note holder has the option to convert
unpaid note principal the Company's common stock at the lower of (i) $0.175 or
(ii) 80% of the lowest closing bid price of the Company's common stock during
the five days immediately preceding the conversion date The Company granted
the note holder a security interest in all of the Company's assets and
registration rights. Net of unamortized debt discount of $604,150
                                                                                       440,040              --
                                                                                -------------
Less current maturities                                                                     --              --
Long term portion                                                                $     440,040              --
                                                                                -------------
</TABLE>

The Company entered into a Securities Purchase Agreement with accredited
investors on April 11, 2006 for the issuance of an aggregate of $2,000,000 of
convertible notes ("Convertible Notes"), and attached to the Convertible Notes
were warrants to purchase 2,000,000 shares of the Company's common stock. The
Convertible Notes accrues interest at 12% per annum for the first 150 days, 8%
thereafter, payable and due as described above. The noteholder has the option,
commencing after 150 calendar days, to convert any unpaid note principal to the
Company's common stock at a rate of the lower of (i) $0.175, with certain reset
provisions, or (ii) 80% the lowest price per share in the last reported trade of
the Company's common stock on the OTC - Bulletin Board or on the exchange which
the common stock is then listed, as quoted by Bloomberg, LP, for the five
trading days immediately preceding the conversion date. The Company has certain
early redemption provisions. As of June 30, 2006, the Company issued to the
investors Convertible Notes in a total amount of $2,000,000 in exchange for net
proceeds of $1,782,500. The proceeds that the Company received were net of
related fees and costs of $217,500. Capitalized financing costs were amortized
over the maturity period of the convertible notes.
The Notes include certain features that are considered embedded derivative
financial instruments, such as a variety of conversion options, a variable
interest rate feature, events of default and a reset provision clause.

The initial relative fair value assigned to the embedded derivatives was
$1,403,164.

The warrants are exercisable until three years from April 11, 2006 until April
10, 2009 at a price of $0.20 per share. The Company has the right, but not the
obligation, to call these warrants for based on the following criteria:

                            From date of issuance:    Callable price:
                            ----------------------    ---------------
                            From 1 to 150days         Not callable
                            From 151 to 180 days          $0.075
                            From 181 to 210 days           0.125
                            From 211 to 240 days           0.150
                            From 241days after             0.200

The accounting treatment of the derivatives and warrants requires that the
Company record the warrants at their fair values as of the inception date of the
debt issuance, which totaled $320,938.

                                       14
<PAGE>


                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

The Company recorded the fair value of the derivatives ($1,403,164) and warrants
($320,938) to debt discount, aggregating $1,724,102, which will be amortized to
interest expense over the term of the Notes. Amortization of $164,142 was
recorded for the six months ended June 30, 2006.

The market price of the Company's common stock significantly impacts the extent
to which the Company may be required or may be permitted to convert the
Convertible Notes into shares of the Company's common stock. The lower the
market price of the Company's common stock at the due date, the more shares the
Company will need to issue to convert the principal and interest payments then
due on the Notes.


NOTE F - CAPITAL STOCK

The Company is authorized to issue 10,000,000 shares of preferred stock with par
value $.001 per share, 200,000,000 shares of Class A common stock with par value
of $.001 per share, and 5,000,000 shares of Class B common stock with par value
$.001 per share.

On June 27, 2005, the Company's Board of Directors and Shareholders approved
resolutions to increase the total number of authorized shares of the Company's
capital stock from 160,000,000 shares to 215,000,000 shares as follows: (1)
increase the authorized number of shares of Class A Common Stock from
100,000,000 shares to 200,000,000 shares and (2) to decrease the authorized
number of shares of Class B Common Stock from 50,000,000 shares to 5,000,000
shares. Authorized share for preferred shares were kept unchanged at 10,000,000
shares of preferred stock with par value $.001 per share. On November 27, 2002,
the Company effected a "one-for-one hundred" reverse stock split of its
outstanding shares of Class A common stock. All references in the financial
statements and notes to financial statements, numbers of shares and share
amounts have been retroactively restated to reflect the reverse split.

As of June 30, 2006 and December 31, 2005 the Company has no preferred stock
issued and outstanding. The Company has 101,665,828 and 98,062,892 shares of
Class A common stock issued and outstanding at June 30, 2006 and December 31,
2005, respectively. The Company also has issued and outstanding 2,000,000 shares
of Class B common stock at June 30, 2006 and December 31, 2005

During the six-month period ended June 30, 2006 , the Company issued an
aggregate of 2,098,998 shares of Class A common stock to attorneys and
consultants for services rendered in the amount of $284,032. All valuations of
common stock issued for services were based upon the value of the services
rendered, which did not differ materially from the fair value of the Company's
common stock during the period the services were rendered. The Company issued an
aggregate of 230,000 shares of Class A common stock in exchange for 230,000
stock options exercised at $0.10 per share, and 83,089 shares of common stock in
exchange for 200,000 stock options exercised on a cashless basis (Note F). The
Company issued an aggregate of 747,222 shares of Class A common stock in
exchange for interest expense in the amount of $82,694 and 110,294 shares issued
for previously incurred debt in the amount of $18,000. The Company issued an
aggregate of 333,333 shares of Class A common stock for a private placement
issued at $0.20 per share in the amount of $66,667.

In June 2005, the Company entered into a Class B Common Stock Conversion
Agreement with its Chief Executive Officer who is the only holder of shares of
Company's Class B common stock. The agreement provides that upon the occurrence
of certain events, the Company shall convert shares of its Class B common stock
into shares of its Class A common stock at a ratio of five Class A shares for
every one Class B share. As of June 30, 2006, the conversion has not occurred.


                                       15
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE G - OPTIONS AND WARRANTS

Warrants

In connections with Securities Purchase Agreement the Company entered into on
April 11, 2006 and in accordance with SFAS 133 "Accounting for Derivative
Instruments and Hedging Activities", the Company revalued the warrants as of
June 30, 2006 using the Binomial Lattice option pricing model. The difference
between the fair value of the warrants as of June 30, 2006 and the previous
valuations has been recorded as a gain on revaluation of warrant liability, and
included in the accompanying consolidated financial statements.

The following table summarizes the changes in warrants outstanding and the
related prices for the shares of the Company's common stock. These warrants were
granted in lieu of cash compensation for services performed or in connection
with debt or equity financing, each warrant to purchase one share of the
Company's Class A common stock.

<TABLE>
<CAPTION>
                       Warrants Outstanding                               Warrants Exercisable
                       --------------------                               --------------------
                                    Weighted
                                    Average
                                   Remaining
                    Number        Contractual     Weighted Average      Number     Weighted Average
Exercise Prices   Outstanding     Life (Years)     Exercise Price    Exercisable    Exercise Price
---------------   -----------     ------------     --------------    -----------    --------------

<S>                      <C>               <C>           <C>               <C>         <C>
 $        75.00          8,675             0.51          $   75.00         8,675       $    75.00

           0.42        350,000             3.44               0.42       350,000             0.42

           0.30      5,625,000             0.75               0.30     5,625,000             0.30
           0.20      9,821,000             1.85               0.20     9,821,000             0.20
                   -----------     ------------     --------------    ----------    -------------
                    15,804,675             1.49           $   0.28    15,804,675       $     0.28
                   ===========     ============     ==============    ==========    =============
</TABLE>

Transactions involving warrants issued to non-employees are summarized as
follows:

                                                    Weighted Average
                                Number of Warrants  Price Per Share
Outstanding at December 31, 2003         208,675    $        3.69
   Granted                            31,796,250             0.30
   Exercised                          (4,673,750)            0.24
   Canceled or expired                        --               --
                                   -------------    -------------
Outstanding at December 31, 2004      27,331,175    $        0.34
                                   =============    =============
   Granted                             6,495,000             0.30
   Exercised                         (20,556,500)            0.24
   Canceled or expired
                                        (265,000)            0.25
                                   -------------    -------------
Outstanding at December 31, 2005      13,004,675    $        0.30
                                   =============    =============
   Granted                             3,200,000             0.20
   Exercised                                  --               --
   Canceled or expired                  (400,000)            0.25
                                   -------------    -------------

Outstanding at  June 30, 2006         15,804,675    $        0.28
                                   =============    =============


                                       16
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE G - OPTIONS AND WARRANTS (Continued)

Employee Stock Options

Stock options to purchase the Company's common stock are granted at prices at or
above the fair market value on the date of grant. The fair value of each stock
option granted is estimated on the date of grant using the Black-Scholes option
valuation model. The assumptions used to calculate the fair value of options
granted are evaluated and revised, as necessary, to reflect market conditions
and the Company's experience. Compensation expense is recognized only for those
options expected to vest, with forfeitures estimated at the date of grant based
on the Company's historical experience and future expectations. Prior to the
adoption of SFAS 123R, the effect of forfeitures on the pro forma expense
amounts was recognized as the forfeitures occurred.

The following table summarizes the changes in stock options outstanding and the
related prices for the shares of the Company's common stock issued to employees
and directors.



                Options Outstanding                    Options Exercisable
                -------------------                    -------------------
                                 Weighted
                                  Average
                                 Remaining  Weighted                  Weighted
                                Contractual Average                   Average
 Exercise       Number             Life     Exercise   Number         Exercise
  Prices      Outstanding         (Years)    Price     Exercisable     Price
  ------      -----------     ------------- --------- -----------    ----------
      $0.10      2,356,098         3.28       $0.10    2,320,549       $0.10
      $0.25        168,902         4.34       $0.25       84,451       $0.25
                 ---------         ----      ------    ---------     ------
                 2,525,000         3.35       $0.11    2,405,000      $0.11
                 =========         ====      ======    =========     ======

Transactions involving stock options issued to employees and directors are
summarized as follows:

                                                  Weighted Average
                                 Number of Options  Price Per Share
Outstanding at December 31, 2003              --    $          --
   Granted                             3,431,098             0.10
   Exercised                                  --               --
   Canceled or expired                        --               --
                                   -------------    -------------
Outstanding at December 31, 2004       3,431,098    $        0.10
                                   =============    =============
   Granted                               168,902             0.25
   Exercised                            (280,000)            0.10
   Canceled or expired                  (190,000)            0.10
                                   -------------    -------------
Outstanding at December 31, 2005       3,130,000    $        0.11
                                   =============    =============
   Granted                                    --               --
   Exercised (Note F)                   (313,089)            0.10
   Canceled or expired                  (291,911)            0.10
                                   -------------    -------------
Outstanding at June 30, 2006           2,525,000    $        0.11
                                   =============    =============


                                       17
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:
                                  JUNE 30, 2006
                                   (UNAUDITED)

NOTE G - OPTIONS AND WARRANTS (Continued)

Employee Stock Options (Continued)

There were no employee stock options granted or vested during the three or six
month period ended June 30, 2005. The financial statements for the three-month
period ended June 30, 2005 have not been restated upon adoption of SFAS 123R.
Had compensation expense for employee stock options granted under the plan been
determined based on the fair value at the grant date consistent with SFAS 123R,
the Company's pro forma net loss and loss per share would have been $(2,600,589)
and $(0.03), respectively, for the six month period ended June 30, 2005.

The estimated value of the employee stock options vested during the six month
period ended June 30, 2006 was determined using the Black-Scholes option pricing
model and the following assumptions: expected option life of 5 years, a risk
free interest rate of 3.875%, a dividend yield of 0% and volatility of 115%.
Total stock-based compensation expense recognized in the consolidated statement
of earnings for the six months ended June 30, 2006 was $5,433, net of tax
effect.

NOTE H - PREPAID EXPENSES AND OTHER

Prepaid expenses and other assets at June 30, 2006 and December 31, 2005 are as
follows:
                                      June 30,    December 31,
                                       2006          2005
Prepaid Services Fees             $     73,414   $     71,321
Prepaid Insurance                       95,430         51,065
License Agreement, net (Note C)         93,750        106,250
Deferred financing costs, net          145,457         70,308
Other prepaid expenses                  25,687         50,352
                                  ------------   ------------
                                  $    433,738   $    349,296
                                  ============   ============
Current                               (168,844)      (168,844)
                                  ------------   ------------
Non-current                       $    264,894   $    204,480
                                  ============   ============

NOTE I - COMMITMENTS AND CONTINGENCIES

Commitments

On February 8, 2005 the Company entered into an agreement with UPS Supply Chain
Solutions to handle warehousing and distribution services on behalf of the
Company, for the warehousing and distribution of its products from three
strategically located warehouses in the U.S. On February 8, 2005 the Company
issued an irrevocable letter of credit in the amount of $150,000 in favor of UPS
Supply Chain Solutions as security for these services to be rendered. The
maturity date of the letter of credit is in April 2006. The Company has
accounted for the letter of credit as restricted cash included in the
accompanying financial statements


                                       18
<PAGE>

                               SWISS MEDICA, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION:

                                   (UNAUDITED)

NOTE J - MAJOR CUSTOMERS AND VENDORS

Revenue from three major customers, which accounted for greater than 10% of
total sales, approximated $1,136,000 or 84% of total sales for the six months
ended June 30, 2006. Total accounts receivable due from these three major
customers is approximately $1,422,000 Revenue from three major customers which
accounted for greater than 10% of total sales, approximated $2,027,000 or 81% of
total sales for the corresponding six months ended June 30, 2005.

There were no purchases from major suppliers, that accounted for greater than
10% of total purchases, for the six months ended June 30, 2006 . Total purchases
from two (2) major suppliers, which accounted for more than 10% of total
purchases, approximated $850,000 or 42% of purchases for the six months ended
June 30, 2005. No accounts payable was due to these suppliers as of June 30,
2005.


NOTE K - RELATED PARTY TRANSACTIONS

One of the Company's major customers is an entity controlled by one of the
Company's Directors. There were no related party sales during the quarter ended
June 30, 2006 and sales to this related party for the six months ending June 30,
2006 totaled $612,024. The company's Accounts Receivable from the related party
totaled $936,714 as of June 30, 2006, including sales to this entity before it
became a related party in January 2006.


NOTE L - DEBT DERIVATIVE AND WARRANT LIABILITY

In accordance with SFAS 133 "Accounting for Derivative Instruments and Hedging
Activities and EITF 00-19 "Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company's Own Stock", the Company
accounted for identified embedded derivatives and related detachable warrants to
purchase its common stock that provide for the payment of liquidated damages if
the stipulated registration deadlines were not met as liabilities.

The initial value of both the warrants and the underlying embedded derivatives
was $1,724,102 at issuance of the convertible note (Note E). As of the date of
this filing, the registration statement has not yet been declared effective by
the Security and Exchange Commission. At June 30, 2006, the Company determined
the fair value of the embedded derivatives and valued the related warrants using
the Binomial Lattice option pricing model. Assumptions regarding the life were
two to three years, expected dividend yield of 0%, a risk free rate of 4.9 to
5.06%, and a volatility of 126.4 to 167.6%. The determined value of both the
warrants and the underlying embedded derivatives at June 30, 2006 was
$1,494,862. The net change of $229,240 in the fair value of the derivative and
warrant liability values from the initial fair value determination has been
recorded as a gain from change in debt derivative and warrant liabilities in the
consolidated condensed statement of operations.

Additionally, in accordance with SFAS 133 "Accounting for Derivative Instruments
and Hedging Activities and EITF 00-19 "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
Company accounted for unrelated issued and outstanding non-employee warrants to
purchase its common stock due to the circumstances described above as
liabilities. Assumptions regarding the life were one to five years, expected
dividend yield of 0%, a risk free rate of 4.86 to 4.88%, and a volatility of
160%. The initial determined fair value of the non-employee warrants as of April
11, 2006 was $1,122,306. At June 30, 2006, the determined fair value of the
non-employee warrants was $889,121. The net change of $233,185 in the fair value
of the derivative and warrant liability values from the initial fair value
determination has been recorded as a gain from change in debt derivative and
warrant liabilities in the consolidated condensed statement of operations.


                                       19
<PAGE>

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

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO, INCLUDED ELSEWHERE WITHIN THIS REPORT.

      Management's discussion and analysis of results of operations and
financial condition are based on our financial statements. These statements have
been prepared in accordance with accounting principles generally accepted in the
United States of America. These principles require management to make certain
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates based on
historical experience and various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. References to "we", "our",
"us" or the "Company" are to Swiss Medica, Inc., a Delaware corporation, and its
subsidiaries.

OVERVIEW

      Swiss Medica, Inc. is a specialty pharmaceutical company focused on
over-the-counter, clinically tested, patented, all-natural products that relieve
chronic ailments.

      Swiss Medica's first patented product is an all-natural essential oil
product line called "O24 Pain Neutralizer" ("O24") and has been medically proven
to provide temporary relief for minor pains associated with arthritis, backaches
and other chronic pains. In March, 2005 the Company announced the results of the
randomized double blind clinical trial conducted during the fourth quarter of
2004, comparing the Company's O24 pain reliever against a placebo on patients
suffering from fibromyalgia. Fibromyalgia is a common and chronic disorder
characterized by widespread muscle pain, fatigue, and multiple tender points.
According to the National Fibromyalgia Association it is estimated that
approximately 3-6% of the U.S. population has fibromyalgia. Based upon the
latest expert estimates, fibromyalgia may affect between 8 million and 17
million Americans.

      The study revealed that the group treated with O24 compared to placebo
showed statistically significant improvement when measured on the Visual Analog
Scale for pain, according to Dr. Gordon Ko, the Head of the Fibromyalgia clinic
at the Sunnybrook & Women's Health Sciences Centre at the University of Toronto
and the Medical Director for the Canadian Centre for Integrative Medicine in
Markham, Ontario.

      Based on these results of this medical study the Company has developed,
and successfully launched in August 2005, an O24 product line extension
specifically for the fibromyalgia market, `O24 Fibromyalgia'.

      As part of the launch of `O24 Fibromyalgia', the Company also announced a
strategic partnership with the National Fibromyalgia Association (NFA). As part
of this strategic partnership, the non-profit NFA will receive a percentage of
the proceeds from the sale of O24 Fibromyalgia. This revenue will directly
benefit people with fibromyalgia by supporting the programs and services of the
NFA.

      During 2004 and early 2005, we launched the distribution of O24 Pain
Neutralizer into major retail outlets, regional pharmacies and massage clinics
in both the United States and Canada. Our retail distribution includes national
chains including: Rite Aid Drug Stores, CVS/pharmacy, Shoppers Drug Market and
Wal-Mart Canada. In late 2005 the Company also launched the distribution of O24
Fibromyalgia into retail outlets throughout North America.

      In 2005 introduced its second line of patented natural products for
depression related symptoms. Specifically, on April 12, 2005, the Company
announced the launch of PMS Escape. PMS Escape is an over-the-counter product
for the treatment of mood and appetite symptoms associated with Premenstrual
Syndrome (PMS). Swiss Medica acquired the exclusive US and Canadian rights to
PMS Escape as part of its acquisition of Anti-Depression BioHealth Solutions
Inc., in March of 2005. PMS Escape is available in select retailers in the
United States and Canada.

      It is the Company's intention to expand its product offerings through
either acquisitions, product licenses or product extensions from its current
patent portfolio. All future products that Swiss Medica expects to commercialize
will have the following attributes:

                                       20
<PAGE>

o     Patent and/or trade secret protection;

o     Clinical and/or medical studies demonstrating their efficacy; and,

o     Over-the-counter, all-natural relief products that address chronic
      ailments.

      Our goal is to bring natural, healthy, clinically-proven and proprietary
products that address chronic ailments, into the mainstream food, drug and mass
retail channels and out of their traditional market niche of specialty
retailers.

      We estimate that the global market for chronic ailment products is in
excess of $100 billion and is currently dominated by prescription, chemical
based drugs. We believe that consumers are deeply concerned about the management
and cost of their health care and the expensive, chemical-based prescription
drug approach predominant in modern medicine. We believe that this concern will
increase the demand for bioscience health products since natural products are
considered to be effective against many ailments and are more accessible than
prescription medications.

      The Company intends to support its O24 Pain Neutralizer, O24 Fibromyalgia
and PMS Escape products with point-of-presence marketing, sampling, print and
in-store advertisements, radio spots, and extensive use of public relations,
including testimonials and endorsements from medical professionals and
recognized celebrities.

History

      Swiss Medica, Inc., a Delaware corporation, was, prior to May 16, 2003, a
holding company focused on acquiring, expanding and developing technology
companies and we had no operations. As of May 16, 2003 we began to implement a
new business plan pursuant to which we market and distribute proprietary
bioscience health products, focused on chronic ailments. We retained a new
management team to implement this new business plan. The global market for
natural, herbal and bioscience products is currently estimated to be over $60
billion and growing rapidly.

      On May 16, 2003 we acquired certain assets of General Cosmetics
Corporation, a Delaware corporation based in Munich, Germany. The main product
acquired is 024. The acquisition was made by issuing to General Cosmetics
Corporation 6,750,000 shares of our Class A Common Stock, subject to adjustment
based on the terms of the March 31, 2003 definitive agreement. The assets we
acquired included a patented essential oil bioscience product family that has
been developed for pain relief, menstrual cramps, cold sores and other ailments.
We intend to introduce these products to the market over time and we are
currently marketing and selling the pain relief formulations called "O24 Pain
Neutralizer" and 024 Fibromyalgia in both Canada and the United States. O24 Pain
Neutralizer complies with FDA regulations and can be sold in the United States
pursuant to an FDA monograph. As yet, we have not determined when and if the
remaining products will be introduced. In 2003, the combined U.S.
over-the-counter and prescription-only market for pain relief products was
estimated to be $12 billion.

ADBSI Acquisition

      On March 31, 2005, we acquired Anti-Depression BioHealth Solutions, Inc.
("ADBSI"), a subsidiary of UTEK Corporation, in a cash and stock transaction.
The main product line of ADBSI is PMS Escape. All outstanding shares of common
stock of ADBSI were exchanged for 2,105,263 restricted shares of Class A common
stock of the Company in a transaction accounted for using the purchase method of
accounting. As additional consideration pursuant to the terms of the Acquisition
Agreement, the Company paid UTEK, the sole shareholder of ADBSI, $96,673 in
cash. As result of the closing under the Acquisition Agreement on March 31,
2005, ADBSI became a wholly-owned subsidiary of the Company. Related to the
acquisition, we also developed a business relationship with two Massachusetts
Institute of Technology (MIT) scientists. Swiss Medica has an option to acquire
all over-the-counter products developed by Back Bay Scientific Inc. and the team
of scientists, with certain limited exceptions.

      We will continue to look for quality proprietary, natural consumer
healthcare products to license and/or acquire. We plan to sell our products
through multiple distribution channels including, via retail outlets, the
Internet, and via healthcare professionals.

Markets

      The US joint pain market includes more than 43 million U.S. adults who
suffer from arthritis and chronic pain. Approximately one-half of these
individuals suffer from Osteoarthritis, while 10 million suffer from
Fibromyalgia and 2 million suffer from Rheumatoid Arthritis. Additionally, more
than 65 million Americans suffer from back pains and aches every year. In fact,
four of five adults will suffer back pain at some point in their lifetime. The
increasing number of the aging "baby boomer" population should only increase the
number of arthritic and joint pain related sufferers.

                                       21
<PAGE>

      We believe that safety concerns regarding prescription medications provide
a significant opportunity for our products. The market for Vioxx(TM) and
Celebrex(TM) drugs may have exceeded $5.0 billion last year. In light of these
safety concerns, consumers may hesitate before switching to other related
prescription products such as prescription pain relievers. The efficaciousness
of both O24 Pain Neutralizer and O24 Fibromyalgia in treating pain sufferers
could be at the forefront of these natural alternatives. If awareness of O24
line of products proliferated, it may result in an increase of the Company's
sales and significant market share growth.

      We believe that our second product offering, PMS Escape, has an equally
significant addressable market. There are millions of women in the US who suffer
from the mood/emotional symptoms and experience food cravings associated with
PMS. The Company believes that PMS Escape is the only clinically proven
over-the-counter product focused on addressing the mood or appetite symptoms
associated with PMS.

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE AND SIX
MONTHS ENDED JUNE 30, 2005:

      Swiss Medica gross revenues were $384,927 and $1,383,328 for the second
quarter of 2006 and 2005 respectively, with net revenues (after product returns)
of $126,555 and $1,383,328 for the second quarter of 2006 and 2005 respectively.

Due to a low turnover of the O24, foil pack skus, a decision was made in the
second quarter of 2006 by a U.S. based retailer to return the 'O24' foil pack
skus but to keep 'O24' one ounce bottle sku on their shelves. Another retailer
decided to return all 'O24' product which accounted for the sales returns of
$258,372 during the quarter ended June 30, 2006. Swiss Medica has decided to
re-focus the 'O24' foil pack skus toward the healthcare professional market,
initially in the United States, while keeping the 'O24' one ounce bottle sku as
the main focus of the retailers in North America.

The following is a summary of financial information for the three months ending
June 30, 2006 and 2005 respectively:


                                         THREE MONTHS ENDING JUNE 30
                                            2006            2005
                                        -----------     -----------

Revenue
Gross Sales                             $   384,927     $ 1,383,328
Less: Sales Returns                        (258,372)             --
                                        -----------     -----------

Net Sales                                   126,555       1,383,328
Cost of Sales                               272,852         256,137
                                        -----------     -----------

Gross Profit                               (146,297)      1,127,191
                                                116%             81%

Operating Expenses:
Wage & Salaries                             326,254         364,344
Marketing & Promotions                    1,317,763       1,600,339
Selling, General and Admin                2,008,447         654,944
Depreciation and Amortization                48,855          46,459
                                        -----------     -----------

Total Operating Expenses                  3,701,319       2,666,086

Loss from Operations                     (3,847,616)     (1,538,895)


Interest Expense                           (462,975)        (35,012)
Gain on Revaluation-Warrant Liability       462,425              --
Provision for Income Taxes                       --              --

Net Loss                                $ ( 3,848,166)  $(1,573,907)
                                        ===========     ===========



      SALES

Our gross revenues from operations (before sales returns) for the quarter ended
June 30, 2006 were $384,927, compared to $1,383,328 for the quarter ended June
30, 2005 and were generated predominately by sales to (approximate figures):

                                  Gross sales before sales returns
                                     Three months ending June 30,
                                       2006              2005
                                 ---------------   ---------------

U.S. based retail outlets:       $       208,000   $       944,000
Canadian based retail outlets:           145,000           344,000
Natural Health Retailers:                 26,000            31,000
Other:                                     6,000            64,000




                                        Gross sales before sales returns
                                           Six months ending June 30,
                                           2006              2005
                                      ---------------   ---------------

U.S. based healthcare distributors:   $       624,000   $            --
U.S. based retail outlets:                    547,000         1,709,000
Canadian based retail outlets:                310,000           642,000
Natural Health retailers:                     124,000            66,000
Other:                                          1,000            93,000

      COST OF SALES AND GROSS PROFIT

      Cost of sales for our quarter ending June 30, 2006 were $272,852 compared
to $256,137 for the three months ending June 30, 2005. As a result of the
product returns from a major retailer, a one time charge to cost of sales was
incurred during the quarter ended June 30, 2006. Although it is Management's
belief that it was not bound to accept the product return, it was decided to
accept the returns in order to maintain and ensure ongoing relations with this
retailer, who is still carrying several other skus of our product. It was
decided that not to allow the product return would jeopardize our relationship
and our other product brands in their retail outlets. We anticipate normalized
gross profit percentages to be between 70% and 80%, depending on the
distribution mix of our revenue streams and related discounts. It should also be
noted that the raw materials used in the production process are commodities and
subsequently prices may vary significantly, depending upon prevalent market
conditions.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      A summary of our Selling, General and Administrative costs is as follows:

      Stock-based compensation to consultants and professional advisors totaled
$125,719 for the quarter ending June 30, 2006 compared to $180,000 for the three
months ending June 30, 2005 ($284,032 and $250,350 for the six months ending
June 30, 2006 and 2005 respectively). Stock based compensation was granted to
recruit and compensate legal, marketing, business and development advisors. The
Company also charged $5,433 of employee stock option expense to operations
during the six months ended June 30, 2006, upon the adoption of SFAS 123R on
January 1, 2006.

                                       22
<PAGE>

      Selling, General and Administrative costs totaled approximately $3.7
million and $2.7 million for the quarters ending June 30, 2006 and 2005
respectively ($5.9 million and $4.6 million for the six months ending June 30,
2006 and 2005 respectively) and include primarily:

      o     $1,751,000 on advertising, product marketing, public and investor
            relations ($2,886,000 for the six months ending June 30, 2006)
      o     $326,000 on payroll and related benefits ($666,000 for six months
            ending June 30, 2006)
      o     $79,000 on agent's fees & logistic services ($200,000 for six months
            ending June 30, 2006)
      o     $362,000 on fees and licenses ($479,000 for six months ending June
            30, 2006)
      o     $109,000 on legal fees ($176,000 for the six months ending June 30,
            2006)
      o     $500,000 allowance for bad debt ($525,000 for the six months
            ending June 30, 2006)


      Other selling, general and administrative costs include insurance, rent,
travel, and other office expenses.

      Depreciation and Amortization

      Depreciation and Amortization expenses of $48,855 and $46,459 were
incurred during the quarters ended June 30, 2006 and 2005 respectively ($97,709
and $96,727 for the six months ending June 30, 2006 and 2005 respectively), to
amortize the tangible and intangible assets acquired from the General Cosmetics
Corporation acquisition and office equipment purchases.

      INTEREST EXPENSE

      Interest expenses of $462,975 and $35,012 were incurred during the
quarters ending June 30, 2006 and 2005 respectively ($655,260 and $66,256 for
the six months ending June 30, 2006 and 2005 respectively). This relates to
interest paid on promissory notes and redeemable debentures, including non cash
charges of $188,125 relating to amortize the debt discount on the note payable
and convertible debentures and a further $82,694 non-cash charge relating to
common shares issued in exchange for financing expenses.

      Liquidity and Capital Resources

      As of June 30, 2006 we had $37,594 in usable cash and $150,000 in
restricted cash which is currently not available to us. Our current liabilities
exceed current assets in the amount of $1,988,803. As a result of our operating
losses incurred during the second quarter of 2006, adjusted by $289,465 of
common stock and stock options issued to employees and consultants in exchange
for compensations, $45,947 of amortization of common stock and warrants issued
in prior periods in exchange for deferred financing costs, $97,709 of
depreciation and amortization of fixed assets and intangible assets, $164,142 of
convertible debenture amortization of debt discount charged to interest expense,
$102,724 of share issuance charged to interest expense, $1,565,744 of decrease
in assets, and $849,714 of increases in accrued liabilities, and a $462,425 gain
on the revaluation of warrant liability, we generated a cash flow deficit from
operating activities of $2,657,884 for the six months ending June 30, 2006. We
met our cash requirements primarily through the net proceeds from issuing notes
payable and convertible notes payable of approximately $2,560,111 during the six
months ended June 30, 2006, and a private equity placement from the sale of
common stock in the amount of $89,667.

      On April 11, 2006 (the "First Closing Date"), the Company closed a
financing transaction in which it sold secured convertible redeemable debentures
to Montgomery Equity Partners, Ltd., to raise gross proceeds of $2,000,000. The
Company received $1,300,000 on the First Closing Date, and the balance of
$700,000 on June 12, 2006.

      We will be seeking to continue funding our operations through

      o     debt instruments: we are currently seeking debt financing in order
            to provide the necessary working capital to fund our ongoing
            operations, including an operating line of credit secured by trade
            accounts receivable;
      o     The continued exercise of warrants to purchase common shares;

                                       23
<PAGE>

      o     additional sales of our equity and/or debt securities, if necessary;
      o     and/or shareholder loans.

      There is no guarantee that we will be successful in completing these
contemplated financings, nor can we assure you that we will be successful in
obtaining any additional financing. If we cannot secure additional financing
when needed, we may be required to cease operations.

      By adjusting operations and development to the level of available
resources, management believes it has sufficient capital resources to operate
the business for the next three months. However, if thereafter, we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations liquidity and
financial condition.

      Our independent certified public accountants have stated in their report,
which is included with our audited financial statements in the Form 10-KSB for
the year ended December 31, 2005, that we have incurred operating losses in the
last two years and that we are dependent on management's ability to raise
capital and develop profitable operations. These factors, among others, may
raise substantial doubt about our ability to continue as a going concern.

RISK FACTORS

      An investment in us involves a high degree of risk and should be
undertaken only by persons whose financial resources are sufficient to enable
them to assume such risk and to bear the total loss of their investment. This
section sets forth a brief summary of some of the principal risk factors. If the
Company is unable to address the risks described below or any other risks which
it may face, then its business, operating results and financial condition could
be materially adversely affected, and you could lose all or part of your
investment. For these reasons, prospective investors should carefully consider
the risks described below as well as any other possible risks that could be
important.

WE HAVE A LIMITED OPERATING HISTORY.

      We have been engaged in our current business for approximately two years.
Accordingly, we have a limited operating history and our operations are subject
to all the risks inherent in a business enterprise with such a limited operating
history, including limited capital, possible delays in the development and
implementation of our business plan, uncertain markets, and the absence of an
operating history. The likelihood that we will succeed must be considered in
light of the problems, expenses, and delays frequently encountered in connection
with the development of new businesses, as well as many other factors. There is
no assurance that we will be able to develop successfully the business we are
pursuing. We cannot be certain that our business will be successful or that we
will generate significant revenues.

WE HAVE AN IMMEDIATE NEED FOR CAPITAL.

      We have been dependent primarily on private placements of our equity and
debt securities and shareholder loans to fund our operations. We need additional
funding to continue our operations. In the near term, we intend to focus on
increasing our marketing efforts for our existing products. There can be no
assurance that any such funding will be available to us when needed, on
commercially reasonable terms, or at all. If we are unable to obtain additional
financing if needed, we will likely be required to curtail our marketing and
operating plans and possibly cease our operations. In addition, any additional
equity financing may involve substantial dilution to our then-existing
stockholders.

      Our independent accountants have included an explanatory paragraph in our
financial statements included in our public filings stating that we have
incurred operating losses in the last two years and that we are dependent on our
management's ability to develop profitable operations, and that these factors,
among others, may raise substantial doubt about our ability to continue as a
going concern.

OUR DEBT AGREEMENTS CONTAIN RESTRICTIVE COVENANTS AND OUR DEBT OBLIGATIONS ARE
SUBSTANTIAL IN RELATION TO OUR ASSETS.

      At June 30, 2006, we had approximately $4.8 million of outstanding
indebtedness, including $4.8 million in secured and unsecured notes.

      Some of our debt instruments impose certain restrictions on us, including,
among other things, restrictions on our ability to incur additional
indebtedness, create liens on assets, make loans or investments and pay
dividends. These restrictions limit our operating flexibility, limit our
flexibility in planning for and reacting to changes in our business and make us
more vulnerable to economic downturns and competitive pressures. Our
indebtedness could have significant negative consequences, including:

                                       24
<PAGE>

      o     increasing our vulnerability to general adverse economic and
            industry conditions;
      o     limiting our ability to obtain additional financing;
      o     requiring that a substantial portion of our cash flows from
            operations be applied to pay principal and interest on our
            indebtedness and lease payments under our leases, thereby reducing
            cash flows available for other purposes;
      o     limiting our flexibility in planning for or reacting to changes in
            our business and the industry in which we compete; and
      o     placing us at a possible competitive disadvantage compared to
            competitors with less leverage or better access to capital
            resources.


SUBSTANTIALLY ALL OF OUR ASSETS ARE ENCUMBERED BY LIENS, WHICH IF FORECLOSED BY
OUR SECURED CREDITORS WOULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND OPERATING RESULTS.

      Indebtedness under $4.2 million of our notes is secured by a security
interest in favor of the lender in substantially all of our assets. If we were
unable to pay our secured obligations when due or otherwise default on our
obligations to secured creditors, these creditors could foreclose their security
interests or mortgages in our assets. Any foreclosure action by our secured
creditors could cause us to seek to protection under the federal bankruptcy code
which, in turn, would have a material adverse effect on the market value of our
Common Stock and could result in the loss of your entire investment in the
Company.

WE MAY NOT BE ABLE TO GENERATE SUFFICIENT REVENUES FROM SALES TO MEET OUR
OPERATING AND DEBT SERVICE OBLIGATIONS.

      Since the Company has only operated for two years and issued debt
securities just over one year ago, we have little experience in repaying our
debt. Inadequate cash flows caused in part by delinquent accounts, seasonality
and poor revenues could affect our ability to meet our operating and debt
service requirements, which are significant. Future revenues and expenses of the
Company are subject to conditions that may change to an extent that we cannot
determine at this time. If we are unable to generate sufficient revenues to meet
our operating and debt service obligations, then our business will be materially
and adversely affected, we may go bankrupt and you may lose your entire
investment in the Company.

WE ARE SUBJECT TO GOVERNMENT REGULATIONS WHICH MAY HINDER OUR GROWTH.

      In the United States, governmental agencies and extensive federal
regulations regulate the manufacture, packaging, labeling, advertising,
promotion, distribution and sale of our products. The Food and Drug
Administration (FDA) regulates the safety and effectiveness of our products and
the Federal Trade Commission (FTC) regulates how we advertise and market our
products. O24 and any other products we may manufacture or sell in the future
are also subject to regulation by, among other regulatory entities, the Consumer
Product Safety Commission, the U.S. Department of Agriculture, and the
Environmental Protection Agency. The laws, regulations and enforcement policies
governing our products are relatively new and are still evolving, and we cannot
predict what enforcement positions the FDA or other governmental agencies may
take with respect to our products.


      There are similar regulatory bodies and regulations in Canada, and other
countries in which we may decide to market, sell and distribute our products. We
cannot be certain that we comply or will comply with all laws and regulations in
this area. Enforcement actions by any of these regulatory agencies can result in
civil and criminal penalties, an injunction to stop or modify certain selling
methods, seizure of products, adverse publicity or voluntary recalls and
labeling changes. If any governmental agency were to undertake an enforcement
action against us, this could cause an immediate decrease in our revenues, cause
us to incur significant additional expenses and result in a decrease in our
stock price.

WE MAY NEVER BECOME PROFITABLE.

      We have incurred net operating losses in each fiscal quarter since we have
been in business. We expect to continue to experience losses until the time, if
ever, when we are able to sell products sufficient to generate revenues adequate
to support our operations.

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<PAGE>

WE MAY NOT BE SUCCESSFUL IN ACQUIRING OR LICENSING NEW PRODUCTS.

      We are currently seeking to license or acquire new products or companies
with bioscience products, manufacturing or distribution capabilities consistent
with our commercial objectives. Our recent acquisition of ADBSI notwithstanding,
there can be no assurance that we will be able to acquire such products. We may
not be able to find and acquire additional bioscience products with
demonstrative competitive advantages. We presently do not have the capital to
make acquisitions. Accordingly, in the near term, any such acquisitions would
most likely require that we issue stock to effect acquisitions which would
result in dilution to our shareholders.

WE HAVE RISKS ASSOCIATED WITH OUR DEPENDENCE ON THIRD PARTY MANUFACTURING.

      We depend upon third parties to manufacture our products. The inability of
a manufacturer to ship orders of our products in a timely manner, including as a
result of local financial market disruption which could impair the ability of
such manufacturers to finance their operations, or to meet quality standards,
could cause us to miss the delivery date requirements of our customers for those
items, which could result in cancellation of orders, refusal to accept
deliveries or a reduction in purchase prices, any of which could have a material
adverse effect on our financial condition and results of operations. We have no
long-term formal arrangements with any of our third party manufacturers.
Although we believe we could replace such manufacturers if necessary, without a
material adverse effect on us, there can be no assurance that such manufacturers
could be replaced in a timely manner, and the loss of such manufacturers could
have a material adverse effect on our business, financial condition and results
of operations.

THERE IS NO CERTAINTY AS TO THE POTENTIAL MARKET FOR OUR PRODUCTS.

      We have not undertaken an independent analysis or survey of the market for
our products. We believe that consumers are willing to expend large sums for the
purchase of bioscience and herbal health products; however, there can be no
assurance that our products and services have the commercial potential to
succeed in these target markets.

WE ARE DEPENDENT ON OUR TRADEMARKS AND PATENTS.

      The market for certain of our products will be, in part, dependent upon
the goodwill engendered by our trademarks and trade names. Trademark protection
is therefore material to a portion of our business. The failure to obtain
trademark protection, or illegal use of any trademarks we may obtain, may have
an adverse effect on our business, financial condition and operating results.

      The Company owns United States Patent Number 6,444,238 (issued September
3, 2002) which covers our O24 product. However, there is no assurance we will be
able to obtain patent protection for any derivative uses of O24, PMS Escape, or
for any other products we may later acquire or develop. We also cannot assure
investors that we will be able to obtain foreign patents to protect our
products.

      The failure to protect our patent, trademarks and trade names, may have a
material adverse effect on our business, financial condition and operating
results. Litigation may be required to enforce our intellectual property rights,
protect our trade secrets or determine the validity and scope of proprietary
rights of others. Any action we take to protect our intellectual property rights
could be costly and could absorb significant management time and attention. In
addition, as a result of any such litigation, we could lose any proprietary
rights we have. If any of the foregoing occurs, we may be unable to execute on
our business plan and you could lose your investment.

OUR CHIEF EXECUTIVE OFFICER CONTROLS A LARGE PERCENTAGE OF OUR COMMON STOCK,
WHICH ALLOWS HIM TO CONTROL MATTERS SUBMITTED TO STOCKHOLDERS FOR APPROVAL.

      Our executive officers and directors (and their affiliates), in the
aggregate, own approximately 11% of our outstanding Class A common stock, and a
substantial majority of our outstanding voting stock. There is currently an
aggregate of 103,665,828 shares of Class A and Class B Common Stock outstanding
at August 4, 2006. The holders of the Class A and Class B Common Stock vote
together on all matters submitted to a shareholder vote. Raghunath Kilambi, our
Chief Executive Officer, and a director, owns 2,359,451 shares of our Class A
Common Stock, and 2,000,000 shares of our Class B Common Stock which constitutes
all outstanding shares of our Class B Common Stock. Each share of Class B Common
Stock is entitled to fifty votes of Class A Common stock and may be converted
into five shares of Class A Common Stock. Therefore, Mr. Kilambi has the ability
to decide the outcome of matters submitted to our stockholders for approval
(including the election and removal of directors and any merger, consolidation
or sale of all or substantially all of our assets) and to control our management
and affairs. Accordingly, such concentration of ownership may have the effect of
delaying, deferring or preventing a change in control, impede a merger,
consolidation, takeover or other business combination or discourage a potential
acquirer from making a tender offer or otherwise attempting to obtain control,
which in turn could have an adverse effect on the market price of our common
stock.

                                       26
<PAGE>

WE NEED TO BUILD OUT OUR SALES AND MARKETING ORGANIZATION.

      We are and shall continue marketing our existing products and future
products that we may license or acquire either through the utilization of
contract sales representatives and brokers, the establishment of our own sales
force, strategic alliances and various other methods. We are in the early stages
of developing such sales and marketing channels, and further development of
those channels will require an investment of substantial amounts of capital
which we currently do not possess and which we may never be able to access.
Accordingly, despite our plans, we may be unable to substantially develop our
own marketing channels.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS FOR OUR PRODUCTS.

      Customers may sue us if any of our products sold to them injure the user.
Liability claims could require us to spend significant time and money in
litigation and pay significant damages. As a result, any of these claims,
whether or not valid or successfully prosecuted, could have a substantial,
adverse effect on our business and financial results. In addition, we currently
have product liability insurance, however the amount of damages awarded against
us in such a lawsuit may exceed the policy limits.

WE DEPEND ON KEY PERSONNEL AND WILL REQUIRE ADDITIONAL SKILLED EMPLOYEES TO
EXECUTE OUR GROWTH PLANS.

      Our potential for success depends significantly on our executive officers,
including, Raghunath Kilambi, our Chief Executive Officer. We do not carry
key-man life insurance on any executive. Given the early stage of our
development and our plans for rapid expansion, the loss of the services of any
executive or the services of any other key employees we may hire in the future
would have a substantial, adverse effect on our business. We believe that our
future success will depend in large part on our ability to attract and retain
highly skilled sales, marketing and management personnel. If we are unable to
hire the necessary personnel, the development of our business would likely be
delayed or prevented. Competition for these highly skilled employees is intense.
As a result, we cannot assure you that we will be successful in retaining our
key personnel or in attracting and retaining the personnel we require for
expansion.

WE FACE SIGNIFICANT COMPETITION.

      The market for health-related retail goods and services is characterized
by intense competition. We believe that the principal competitive factors for
companies in the industries in which we compete are:

      o     functionality;
      o     quality of merchandise;
      o     discounts and rewards;
      o     brand recognition;
      o     customer loyalty; and
      o     price.

      Nearly all of our existing and potential competitors have longer operating
histories, greater experience, greater name recognition, larger customer bases
and significantly greater financial, technical and marketing resources than we
do. Because of their greater resources, our competitors are able to undertake
more extensive marketing campaigns for their brands and services, and make more
attractive offers to potential employees, retail affiliates, and others. We
cannot assure you that we will be able to compete successfully against our
current or future competitors or that our business and financial results will
not suffer from competition.

                                       27
<PAGE>

THE MARKET PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED IF TOO MUCH OF IT
IS SOLD AT ONCE.

   Sales of substantial amounts of our common stock in the public market could
adversely affect the market price of the common stock. Such sales also might
make it more difficult for us to sell equity or equity-related securities in the
future at a time and price that we deem appropriate.

      In addition, we often compensate consultants who provide services to the
Company through the issuance to them of shares of our stock. The shares of Class
A Common Stock are often registered under a Form S-8 Registration Statement that
we file with the SEC which allows the consultants to immediately sell such
shares on the open market. The sale of those shares will likely adversely affect
the market price of the Class A Common Stock.

OUR STOCK IS QUOTED ON THE OTC BULLETIN BOARD AND COULD BE SUBJECT TO EXTREME
VOLATILITY.

      Our common stock is currently quoted under the symbol "SWME" on the OTC
Bulletin Board, which is often characterized by low trading volume. A large
volume of stock being sold into the market at any one time could cause the stock
to rapidly decline in price. In addition, we must comply with ongoing
eligibility rules to ensure our common stock is not removed from the OTC
Bulletin Board, which would materially adverse affect the liquidity and
volatility of our common stock.

APPLICABILITY OF "PENNY STOCK RULES" TO BROKER-DEALER SALES OF OUR COMMON STOCK
COULD HAVE A NEGATIVE EFFECT ON THE LIQUIDITY AND MARKET PRICE OF OUR COMMON
STOCK.

      Our common stock is subject to the "penny stock rules" adopted pursuant to
Rule 15g-9 of the Securities Exchange Act of 1934, as amended, which apply to
non-NASDAQ companies whose common stock trades at less than $5.00 per share or
which have a tangible net worth of less than $5,000,000 - or $2,000,000 if they
have been operating for three or more years. The penny stock rules impose
additional sales practice requirements on broker-dealers which sell such
securities to persons other than established customers and institutional
accredited investors. For transactions covered by this rule, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to sale.
Consequently, the penny stock rules affect the ability of broker-dealers to sell
shares of our common stock and may affect the ability of stockholders to sell
their shares in the secondary market if such a market should ever develop, as
compliance with such rules may delay and/or preclude certain trading
transactions. The penny stock rules could have a material adverse effect on the
liquidity and/or market price of our common stock. WE MAY RAISE ADDITIONAL
CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE YOUR OWNERSHIP INTEREST.

      We require substantial working capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the holders of our common stock. The issuance of additional
common stock or securities convertible into common stock by our management will
also have the effect of further diluting the proportionate equity interest and
voting power of holders of our common stock.

      In addition, under our Certificate of Incorporation, the Board is
authorized to issue, without obtaining shareholder approval, shares of preferred
stock having the rights, privileges and designates as determined by the Board.
Therefore, the Board could issue shares of preferred stock that would have
preferential liquidation, distribution, voting, dividend or other rights.

WE HAVE NOT PAID CASH DIVIDENDS AND IT IS UNLIKELY THAT WE WILL PAY CASH
DIVIDENDS IN THE FORESEEABLE FUTURE.

      We plan to use all of our earnings to the extent we have earnings, to fund
our operations. We do not plan to pay any cash dividends in the foreseeable
future. We cannot guarantee that we will, at any time, generate sufficient
surplus cash that would be available for distribution as a dividend to the
holders of our common stock. You should not expect to receive cash dividends on
our common stock.


                                       28
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

      We carried out an evaluation, under the supervision and with the
participation of our management, including our principal executive officer and
principal financial officer of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this report. The evaluation was undertaken in consultation with our accounting
personnel. Based on that evaluation, our principal executive officer and
principal financial officer, concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the 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 the Securities and Exchange Commission's rules and
forms.

      There was no change in our internal control over financial reporting
during our second fiscal quarter of 2006 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      Occasionally we may be named as a party in claims and legal proceedings
arising out of the normal course of our business. These claims and legal
proceedings may relate to contractual rights and obligations, employment
matters, or to other matters relating to our business and operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

      During the three months ended June 30, 2006 we issued 1,042,748 shares of
our common Stock to various individuals and corporations in exchange for
consulting services and services rendered by members of our Board of Directors.
The total value of the services we received in conjunction with the issuance of
the 1,042,748 shares of our Common Stock was $125,719. These transactions were
exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

      In May of 2006 we agreed to issue 333,333 shares of our restricted Common
Stock to an investor in exchange for a total investment of $66,666, or $0.20 per
share. The transaction was exempt from registration pursuant to Regulation S of
the Securities Act of 1933, inasmuch as the offer and sales occurred outside of
the United States.

      During the quarter ending June 30, 2006 we issued 747,222 shares of our
restricted Common Stock to various individuals and corporations in exchange for
interest due on notes payable of $82,694. These transactions were exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.

      In the month of June 2006 we agreed to issue 110,294 shares of our
restricted Common Stock to members of our Board of Directors in exchange for
previously incurred debt. The total value of the services we received in
conjunction with the issuance of the 110,294 shares of our Common Stock was
$18,000. These transactions were exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

   None

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

   None

ITEM 5. OTHER INFORMATION

   None


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<PAGE>

ITEM 6. EXHIBITS

      31.1. Certification of the Principal Executive Officer Pursuant to Rule
13a-14(a)

      31.2. Certification of the Principal Financial Officer Pursuant to Rule
13a-14(a)

      32.1. Certification of the Principal Executive Officer Pursuant to Section
1350 of Title 18 of the United States Code

      32.2. Certification of the Principal Financial Officer Pursuant to Section
1350 of Title 18 of the United States Code

                                   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.

                                     SWISS MEDICA, INC.

                                     /s/ Raghunath Kilambi
                                     -------------------------------------------
Date:  August 21, 2006               Raghunath Kilambi, Chief Executive Officer

                                     /s/ Bruce Fairbairn
                                     -------------------------------------------
Date:  August 21, 2006               Raghunath Kilambi, Chief Financial Officer


                                       30