**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10QSB**








**(Mark
      One)**


**[X]**
            **Quarterly report under Section 13 or 15(d) of the Securities Exchange
                Act
                of 1934 for the quarterly period ended March 31,
                2007**


**[ 
              ]**
            **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 in Its Charter)**








**Delaware**
            **98-0355519****(State
                of
                Incorporation)**
            **(IRS
                Employer Identification
                No.)**







375
      Britannia Road East, Unit B


Mississauga,
      Ontario, Canada L4Z 3E2


**(Address
      of Principal Executive Offices)**





**(905)
      501-0118**


**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** **June
      7, 2007 the Company had 146,991,491 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]**





SWISS
      MEDICA, INC.





Table
      of
      Contents





PART
      I.
      FINANCIAL INFORMATION





**Item
      1. Financial Statements (Unaudited)**





**Condensed
      Consolidated Balance Sheets:**


**March
      31, 2007**





**Condensed
      Consolidated Statements of Losses:**


**Three
      Months Ended March 31, 2007 and 2006 (as restated)**





**Condensed
      Consolidated Statements of Cash Flows:**


**Three
      Months Ended March 31, 2007 and 2006 (as restated)**




**Notes
      to Unaudited Condensed Consolidated Financial Information:**


**March
      31, 2007**


****


**Item
      2. Management’s Discussion and Analysis of Results of Operation and Financial
      Condition**





**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**





1


**SWISS
      MEDICA, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**(UNAUDITED)**







March
                31, 2007**ASSETS:**Cash
                and cash equivalents
            
            $
            -Accounts
                receivable, net of allowance for discounts of $337,340
            
            
            42,266Inventories
                (Note B)
            
            
            777,629Prepaid
                expenses and deposits
            
            
            9,837Total
                current assets
            
            
            829,732Property
                and equipment: (Note D)Property
                and equipment:
            
            
            329,837Less:
                accumulated depreciation
            
            
            141,489Total
                property and equipment
            
            
            188,348Other
                assets:Intangible
                assets, net of accumulated amortization of $614,119(Note C)
            
            
            145,631Prepaid
                and other
            
            
            98,234Total
                other assets
            
            
            243,865Total
                assets
            
            **$**
            **1,261,945****LIABILITIES
                AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY:**Cash
                disbursed in excess of available funds
            
            $
            11,827Accounts
                payable and accrued liabilities (Note E)
            
            
            4,942,923Notes
                payable, current portion (Note F)
            
            
            2,769,847Convertible
                notes payable, current maturities (Note G)
            
            
            1,674,460Total
                current liabilities
            
            
            9,399,057Fair
                value of debt derivative and allocated fair value of related warrants
            
            
            641,954Accrued
                liabilities, long-term portion
            
            
            9,341Total
                long term liabilities
            
            
            651,295Commitments
                and contingencies (Note K)
            
            
            -(Deficiency
                in) Stockholders' Equity:Preferred
                stock, par value $.001 per share; 10,000,000 shares authorized; none
                issued and outstanding (Note H)
            
            
            -Class
                A Common stock, par value $ .001 per share; 200,000,000 shares authorized;
                136,961,491 shares issued and outstanding (Note H)
            
            
            136,962Class
                B Common stock, par value $.001 per share; 5,000,000 shares authorized;
                2,000,000 shares issued and outstanding (Note H)
            
            
            2,000Additional
                paid-in capital
            
            
            33,834,088Accumulated
                deficit
            
            
            (42,761,457
            )Total
                (deficiency in) stockholders' equity
            
            
            **(8,788,407**
            **)**Total
                liabilities and (deficiency in) stockholders' equity
            
            **$**
            **1,261,945**






See
      accompanying notes to unaudited condensed consolidated financial
      statements




2


**SWISS
      MEDICA, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF LOSSES**


**(UNAUDITED)**






**For
                the three months ended March 31,****2007**
            
            
            **2006****(As
                restated - Note N)**Revenues,
                net
            
            **$**
            **214,024**
            
            **$**
            **604,605**Cost
                of Sales
            
            
            46,574
            
            
            158,638**Gross
                Profit**
            
            
            **167,450**
            
            
            **445,967**Operating
                Expenses:Selling,
                General and Administrative
            
            
            635,109
            
            
            2,244,430Depreciation
                and Amortization (Note C and D)
            
            
            48,854
            
            
            48,854Total
                Operating Expenses
            
            
            683,963
            
            
            2,293,284**Loss
                from Operations**
            
            
            **(516,513**
            **)**
            
            **(1,847,317**
            **)**Interest
                Expense, net
            
            
            (470,193
            )
            
            (192,285
            )Net
                Gain on Revaluation of Warrant Liability (Note G)
            
            
            269,295
            
            
            -Provision
                for Income Taxes
            
            
            -
            
            
            -**Net
                Loss**
            
            **$**
            **(717,411**
            **)**
            **$**
            **(2,039,602**
            **)**Loss
                per common share (basic and assuming dilution)
            
            $
            (0.01
            )
            $
            (0.02
            )Weighted
                average common shares outstanding
            
            
            118,279,964
            
            
            98,692,471







See
      accompanying notes to unaudited condensed consolidated financial
      statements




3


**SWISS
      MEDICA, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**




**For
                the three months March
                31,****2007**
            
            **2006**(As
                restated- Note N)Cash
                flows from operating activities:Net
                loss
            
            $
            (717,411
            )
            $
            (2,039,602
            )Adjustments
                to reconcile net loss to net cash (used in) operating
                activities:Common
                stock issued in exchange for services rendered
            
            
            23,500
            
            
            158,313Warrant
                amortization charged to interest expense
            
            
            -
            
            
            21,964Share
                issuances charged to interest expense
            
            
            -
            
            
            20,030Stock
                based compensation (Note I)
            
            
            -
            
            
            5,433Convertible
                debenture amortization charged to interest expense (Note
                G)
            
            
            259,642
            
            
            -Net
                gain on revaluation of warrant liability (Note G)
            
            
            (269,295
            )
            
            -Depreciation
                and amortization (Note C and D)
            
            
            48,854
            
            
            48,854(Increase)
                decrease in prepaid expense and other assets
            
            
            37,036
            
            
            (18,275
            )Decrease
                in accounts receivable
            
            
            22,489
            
            
            488,728Decrease
                in inventories
            
            
            48,169
            
            
            270,717Increase
                in cash disbursed in excess of available funds
            
            
            11,827
            
            
            -Increase
                in accounts payable and accrued liabilities
            
            
            515,883
            
            
            644,999Net
                cash (used in) operating activities
            
            
            (19,306
            )
            
            (398,840
            )Cash
                flows from financing activities:Proceeds
                from notes payable, net of repayments
            
            
            4,860
            
            
            378,000Proceeds
                from sale of common stock and exercise of stock options, net of costs
                and
                fees
            
            
            -
            
            
            8,000Net
                cash provided by financing activities
            
            
            4,860
            
            
            386,000Net
                (decrease) in cash and cash equivalents
            
            
            (14,446
            )
            
            (12,840
            )Cash
                and cash equivalents at the beginning of the period
            
            
            14,446
            
            
            45,700Cash
                and cash equivalents at the end of the period
            
            $
            -
            
            $
            32,860





Supplemental
                Disclosures of Cash Flow Information:Interest
                paid in cash
            
            $
            210,551
            
            $
            150,290Income
                taxes paid in cash
            
            
            -
            
            
            -Issuance
                of common stock in exchange for services
            
            
            23,500
            
            
            158,313Issuance
                of common stock in exchange for previously incurred debt (Note
                F)
            
            
            141,654
            
            
            -Issuance
                of common stock in exchange for convertible debenture (Note
                F)
            
            
            63,750
            
            
            -




See
      accompanying notes to unaudited condensed consolidated financial
      statements




4


**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





General




The
      accompanying unaudited condensed consolidated 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 month period ended March 31, 2007 are not
      necessarily indicative of the results that may be expected for the year ended
      December 31, 2007. The unaudited financial statements should be read in
      conjunction with the December 31, 2006 financial statements and footnotes
      thereto included in the Company's Annual Report on Form 10-KSB.





Business
      Operations





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.





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.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect certain reported amounts and disclosures. Accordingly, actual results
      could differ from those estimates.





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.




5










**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**





Revenue
      Recognition (Continued)





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      the price to the customer is fixed, collectibility is reasonably assured and
      title and risk of ownership is passed to the customer, which is usually upon
      delivery. However, in limited circumstances, certain customers requested to
      take
      title and risk of ownership prior to shipment. Revenue for these transactions
      is
      recognized only when:





(1)
      Title
      and risk of ownership have passed to the customer;


(2)
      The
      Company has obtained a written fixed purchase commitment;


(3)
      The
      customer has requested in writing the transaction be on a bill and hold
      basis;


(4)
      The
      customer has provided a delivery schedule;


(5)
      All
      performance obligations related to the sale have been completed;


(6)
      The
      product has been processed to the customer’s specifications, accepted by the
      customer and made ready for shipment; and


(7)
      The
      product is segregated and is not available to fill other orders.





The
      Company records any payment received in advance from customer not meeting
      revenue recognition criteria as deferred revenue in liability section of the
      balance sheet. At March 31, 2007, deferred revenue balance (included in accounts
      payable) was $50,000.




Advertising





In
      accordance with American Institute of Certified Public Accountants (“AICPA”)
      Statement of Position (“SOP”) No. 93-7, “Reporting on Advertising Costs”,
      advertising costs, including the costs to produce advertising, are expensed
      when
      the advertisement is first exhibited. In accordance with EITF Issue No. 01-09,
      “Accounting for Consideration Given by a Vendor to a Customer or a Reseller
      of
      the Vendor’s Products”, costs of out-of-store advertising paid to wholesale
      customers under cooperative advertising programs are expensed as an advertising
      cost if both identified advertising benefit is sufficiently separable from
      the
      purchase of the Company’s products by customers and the fair value of such
      benefit is measurable. Otherwise, such costs are reflected as a reduction of
      revenue. Costs of in-store advertising paid to wholesale customers under
      cooperative advertising programs are not included in advertising costs, but
      are
      reflected as a reduction in revenues since the benefits are not sufficiently
      separable from the purchases of the Company’s products by customers. For
      certain customers the Company also receives in return, invoices for advertising
      and marketing expenses which are offset to any amounts receivable from the
      Customer.





The
      Company incurred advertising expenses of $98,413 and $853,600 for the three
      month period ended March 31, 2007 and 2006, respectively.





Research
      and Development





The
      Company accounts for research and development costs in accordance with the
      Financial Accounting Standards Board’s Statement of Financial Accounting
      Standards No. 2 (“SFAS 2”), “Accounting for Research and Development Costs.”
Under SFAS 2, all research and development costs must be charged to expense
      as
      incurred. Accordingly, internal research and development costs are expensed
      as
      incurred. Third-party research and developments costs are expensed when the
      contracted work has been performed or as milestone results have been achieved.
      Company-sponsored research and development costs related to both present and
      future products are expensed in the period incurred. During the
      three
      month period ended March 31, 2007 and 2006, the
      Company’s expenditures on research and product development were immaterial.




6





**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**




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 $337,340 as at March 31, 2007.




New
      Accounting Pronouncements





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” SFAS 159 permits entities to choose
      to measure many financial instruments, and certain other items, at fair value.
      SFAS 159 applies to reporting periods beginning after November 15, 2007. The
      adoption of SFAS 159 is not expected to have a material impact on the Company’s
      financial condition or results of operations.





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 March 31, 2007 are as
      follows:





Raw
                Materials
            
            $
            302,296Finished
                Goods
            
            
            475,333$
            777,629




**NOTE
      C - ACQUIRED INTANGIBLE ASSETS**




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.




7




**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      C - ACQUIRED INTANGIBLE ASSETS (Continued)**





The
      intangible assets and related accumulated amortization balance at March 31,
      2007
      are:





Gross
                Carrying Amount
            
            Accumulated
                Amortization
            
            Net
            
            Residual
                Value
            
            Weighted
                Average Amortization Period (Years)Amortizable
                Intangible Assets:Patents
            
            $
            563,250
            
            $
            (436,519
            )
            $
            126,731
            
            $
            -
            
            
            5.0Customer
                mailing Lists
            
            
            30,000
            
            
            (23,250
            )
            
            6,750
            
            
            -
            
            
            5.0Trademarks
            
            
            45,000
            
            
            (34,875
            )
            
            10,125
            
            
            -
            
            
            5.0Non-compete
                agreements
            
            
            112,500
            
            
            (112,500
            )
            
            -
            
            
            -
            
            
            2.0Other
            
            
            9,000
            
            
            (6,975
            )
            
            2,025
            
            
            -
            
            
            5.0Total
            
            $
            759,750
            
            $
            (614,119
            )
            $
            145,631
            
            $
            -
            
            
            4.6





Total
      amortization expense charged to operations for the three month periods ended
      March 31, 2007 and 2006 were $48,854 and $48,854. Estimated amortization expense
      as of March 31, 2007 is as follows:





Twelve
                months ended March 31,2008
            
            $
            129,4502009
            
            
            16,181Total
            
            $
            145,631





**NOTE
      D - PROPERTY AND EQUIPMENT**





Property
      and equipment are depreciated over their estimated useful life of 5 years.
      Property and equipment at March 31, 2007 consists of the following:





Office
                furniture and equipment
            
            $
            329,837Accumulated
                depreciation
            
            
            (141,489
            )Net
            
            $
            188,348





Depreciation
      expense included as a charge to operations amounted to $16,492 and $16,492
      for
      the three month periods ended March 31, 2007 and 2006,
      respectively.





**NOTE
      E - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**




Accounts
      payable and accrued liabilities at March 31, 2007are as follows:




Accounts
                payable
            
            $
            4,178,973Other
                accrued expenses
            
            
            763,950Total
            
            $
            4,942,923




8







**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      F - NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE**





A
      summary
      of notes payable and convertible promissory notes payable at March 31, 2007
      is
      as follows:





Notes
                payable to Strategic Equity Corp.; interest rate 24% per annum; principal
                and interest payable monthly, maturity dates are October 30, 2006
                and
                December 15, 2006. The promissory note is secured by the Company’s trade
                accounts receivable and a security charge over all unsecured assets
                of the
                Company. The Company is currently in default under the terms of the
                note
                agreement.
            
            $
            1,345,102Notes
                payable to Double U Master Fund.; interest rate 24% per annum; interest
                only payable monthly, maturity date is December 20, 2006. The promissory
                note is secured by the Company’s inventory and accounts receivable. The
                Company is currently in default under the terms of the note agreement.
            
            
            560,000Notes
                payable to Double U Master Fund.; interest rate 24% per annum; interest
                only payable monthly, maturity date is December 20, 2006. The promissory
                note is secured by the Company’s inventory and accounts receivable. The
                Company is currently in default under the terms of the note
                agreement.
            
            
            250,000





Notes
                payable to Cigam Trust.; interest rate 18% per annum; interest only
                payable monthly, maturity date is in June 2006. This note is unsecured.
                The Company is currently in default under the terms of the note
                agreement.
            
            
            50,000Notes
                payable to G. Feldbaum.; interest rate 18% per annum; interest only
                payable monthly, maturity date is in June 2006. This note is unsecured.
                The Company is currently in default under the terms of the note
                agreement
            
            
            50,000Notes
                payable to Goulet.; interest rate 20% per annum; interest only payable
                monthly, maturity date is in February 2006. This note is unsecured.
                The
                Company is currently in default under the terms of the note
                agreement.
            
            
            84,000Notes
                payable on demand; interest rate 18% per annum; interest only payable
                monthly. This note is unsecured. The Company is currently in default
                under
                the terms of the note agreement.
            
            
            16,800Notes
                payable to a related party, due upon demand; non interest bearing.
                This
                note is unsecured.
            
            
            218,115Notes
                payable to an individual, due August 11, 2006, with an $8,000 fee
                payable
                upon maturity. This unsecured note is guaranteed by a related party.
                The
                Company is currently in default under the terms of the note
                agreement.
            
            
            174,000Notes
                payable on demand, non interest bearing. This note is unsecured.
            
            
            21,830Total
            
            
            2,769,847Less:
                current portion
            
            
            (2,769,847
            )Long
                term portion
            
            $
            -




9







**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      G - CONVERTIBLE NOTES PAYABLE** **AND
      DERIVATIVE LIABILITY**




March
                31, 2007Convertible
                notes payable dated April 11, 2006; interest rate 12% per annum for
                the
                first 150 days, 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 $385,221.
            
            $
            701,029Convertible
                notes payable dated June 12, 2006; interest rate 12% per annum for
                the
                first 150 days, 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 $320,569.
            
            
            379,431




Convertible
                notes payable dated August 24, 2006; effective interest rate 23%
                per
                annum; originally due December 29, 2006; note holder has the option
                to
                convert unpaid note principal the Company’s common stock at 75% of the
                average closing bid price of the Company’s common stock for 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 $-0-. The note is currently
                in
                default.
            
            
            594,0001,674,460Less
                current maturities
            
            
            (1,674,460
            )Long
                term portion
            
            $
            -0-





Convertible
      Notes dated April 11, 2006 and June 12, 2006:





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 note holder 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 March 31, 2007, 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.






10


**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      G - CONVERTIBLE NOTES PAYABLE** **AND
      DERIVATIVE LIABILITY (CONTINUED)**





The
      warrants are exercisable until three years from April 11, 2006 until April
      10,
      2009 at a price of $0.20 per share. Pursuant
      to the note and warrant agreement, if the Company subsequently issues any common
      stock, options, or convertible securities at below $0.20 per share, the exercise
      price of these warrants shall be adjusted to match the lowest price of the
      common stock, options or convertible securities issued. As of March 31, 2007,
      the exercise price of these warrants had been adjusted down to $0.006 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 150 days
            
            
            Not
                callableFrom
                151 to 180 days
            
            $
            0.075From
                181 to 210 days
            
            
            0.125From
                211 to 240 days
            
            
            0.150From
                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.





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 $259,642 was
      recorded for the three months ended March 31, 2007.





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
      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 one to two years, expected dividend yield of 0%, a
      risk
      free rate of 4.54% to 4.71% and a volatility of 250.07% to 320.45%. The
      determined value of both the warrants and the underlying embedded derivatives
      as
      of March 31, 2007 was $567,233. The net change of $39,492 in the fair value
      of
      the derivative and warrant liability values from the fair value At December
      31,
      2006 had been recorded as a gain from change in debt derivative and warrant
      liabilities in the consolidated condensed statement of operations.





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.




11













**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      G - CONVERTIBLE NOTES PAYABLE** **AND
      DERIVATIVE LIABILITY (CONTINUED)**





Convertible
      Note dated August 24, 2006:





The
      Company entered into a Securities Purchase Agreement with an accredited investor
      on August 24, 2006 for the issuance of a $594,000 convertible note (“Convertible
      Note”) and attached to the Convertible Note were warrants to purchase 5,500,000
      shares of the Company’s common stock. The net proceeds of the Convertible Note
      were discounted to an effective interest rate of 23% per annum. The noteholder
      has the option, commencing at the maturity date of December 29, 2006, to convert
      any unpaid note principal to the Company’s common stock at a rate of 75% of the
      average closing bid price per share for the five days immediately preceding
      the
      conversion date. As of December 31, 2006, the Company issued to the investor
      a
      Convertible Note in a totaling $594,000 in exchange for net proceeds of 550,000.
      The proceeds that the Company received were net of related fees, interest and
      costs of $44,000.





The
      Notes
      include certain features that are considered embedded derivative financial
      instruments.





The
      initial relative fair value assigned to the embedded derivatives was $392,874.
      The warrants are exercisable for five years from August 23, 2006 at a price
      of
      $0.20 per share. The accounting treatment of the derivatives and warrants
      requires the Company record the warrants at their fair values as of the
      inception date of the debt issuance up to the allocated net proceeds of the
      debt, which totaled $252,182





The
      Company recorded the fair value of the derivatives ($341,818) and warrants
      ($252,182) to debt discount, aggregating $594,000, which will be amortized
      to
      interest expense over the term of the Note. The debt discount has been amortized
      in full as of December 31, 2006.





The
      Company determined the fair value of the embedded derivatives and valued the
      related warrants using the Black Scholes option pricing model. Assumptions
      regarding the life for the embedded derivatives were 1 day, expected dividend
      yield of 0%, a risk free rate of 5.07%, and a volatility of 105.94%. Assumptions
      regarding the life for the warrants were 1,606 days, expected dividend yield
      of
      0%, a risk free interest rate of 4.54%, and a volatility of 105.94% The
      determined value of both the warrants and the underlying embedded derivatives
      as
      of March 31, 2007 was $73,541. The net change of $209,620 in the fair value
      of
      the derivative and warrant liability values from December 31, 2006 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 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
      4.54
      to 4.58%, and a volatility of 105.94%. The determined fair value of the warrants
      and options as of March 31, 2007 was $1,180. The net change of $20,183 in the
      fair value of the derivative and warrant liability values from December 31,
      2006
      has been recorded as a gain from change in debt derivative and warrant
      liabilities in the consolidated condensed statement of operations.





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
      H - 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.







12


**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      H - CAPITAL STOCK (Continued)**





As
      of
      March 31, 2007, the Company has no preferred stock issued and outstanding.
      The
      Company has 136,961,491 shares of Class A common stock issued and outstanding
      at
      March 31, 2007. The Company also has issued and outstanding 2,000,000 shares
      of
      Class B common stock at March 31, 2007.




For
      the
      three month period ended March 31, 2007, the Company issued an aggregate of
      3,083,333 shares of Class A common stock to attorneys and consultants for
      services rendered in the amount of $23,500. 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
      14,416,667 shares of Class A common stock to various employees and directors
      in
      exchange for $141,654 of liabilities accrued as of December 31, 2006. The
      Company issued an aggregate of 8,239,518 shares of common stock in exchange
      for
      conversion of its convertible debenture in the amount of $63,750.




In
      June
      2005, the Company entered into a Class B Common Stock Conversion Agreement
      (the
      "Agreement") with its Chief Executive Officer ("Holder"). Holder 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
      (5) Class A shares for every one Class B share. As of March 31, 2007, the
      conversion has not occurred.




In
      2006
      our Board of Directors approved the Swiss Medica, Inc. 2006 Equity Incentive
      Plan which permits the Company to grant, for a ten year period, stock awards,
      stock bonuses and stock options. . We had originally reserved 15,000,000 shares
      of our Class A common stock for issuance to our directors, employees and
      consultants under the Plan. As of March 31, 2007, there were no stock awards
      and
      bonuses under the Plan.





**NOTE
      I - OPTIONS AND WARRANTS**





Warrants





In
      accordance with SFAS 133 “Accounting for Derivative Instruments and Hedging
      Activities”, the Company revalued the warrants as of March 31, 2007 using the
      Black-Scholes option pricing model. The difference between the fair value of
      the
      warrants as of March 31, 2007 and the previous valuation as of December 31,
      2006
      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.





Warrants
                Outstanding
            
            Warrants
                ExercisableExercise
                Prices
            
            Number
                Outstanding
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable
            
            Weighted
                Average Exercise Price0.42
            
            
            350,000
            
            
            2.68
            
            
            0.42
            
            
            350,000
            
            
            0.420.006
            
            
            2,000,000
            
            
            2.03
            
            
            0.006
            
            
            2,000,000
            
            
            0.0060.20
            
            
            7,570,000
            
            
            4.11
            
            
            0.20
            
            
            7,570,000
            
            
            0.209,920,000
            
            
            3.64
            
            $
            0.17
            
            
            9,920,000
            
            $
            0.17






13




**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      I - OPTIONS AND WARRANTS (Continued)**





Warrants
      (Continued)





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





Number
                of Warrants
            
            Weighted
                Average Price Per ShareOutstanding
                at January 1, 2005
            
            
            27,331,175
            
            $
            0.34Granted
            
            
            6,495,000
            
            
            0.30Exercised
            
            
            (20,556,500
            )
            
            0.24Canceled
                or expired
            
            
            (265,000
            )
            
            0.25Outstanding
                at December 31, 2005
            
            
            13,004,675
            
            $
            0.30Granted
                (*)
            
            
            8,700,000
            
            
            0.20Exercised
            
            
            -
            
            
            -Canceled
                or expired
            
            
            (900,000
            )
            
            0.20Outstanding
                at December 31, 2006
            
            
            20,804,675
            
            $
            0.26Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Canceled
                or expired
            
            
            (10,884,675
            )
            
            0.31Outstanding
                at March 31, 2007
            
            
            9,920,000
            
            $
            0.17





(*)
      Included in the warrants issued during the year ended December 31, 2006 were
      an
      aggregate of 2,000,000 warrants granted to a noteholder in connection with
      issuance of convertible note (Note G). These warrants have an original exercise
      price of $0.20. Pursuant to the note and warrant agreement, if the Company
      subsequently issues any common stock, options, or convertible securities at
      below $0.20 per share, the exercise price of these warrants shall be adjusted
      to
      match the lowest price of the common stock, options or convertible securities
      issued. As of March 31, 2007, the exercise price of these warrants had been
      adjusted down to $0.006 per share.





The
      Company did not grant any warrants to shareholders during the three month period
      ended March 31, 200 and 2006.





Employee
      Stock Options




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
                ExercisableExercise
                Prices
            
            Number
                Outstanding
            
            Weighted
                Average Remaining Contractual Life (Years
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable
            
            Weighted
                Average Exercise Price$0.10
            
            
            1,986,098
            
            
            2.53
            
            $
            0.10
            
            
            1,986,098
            
            $
            0.10$0.25
            
            
            168,902
            
            
            3.59
            
            $
            0.25
            
            
            118,902
            
            $
            0.252,155,000
            
            
            2.61
            
            $
            0.11
            
            
            2,105,000
            
            $
            0.11






14


**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      I - OPTIONS AND WARRANTS (Continued)**





Employee
      Stock Options (Continued)





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




Number
                of Options
            
            Weighted
                Average Price Per ShareOutstanding
                at January 1, 2005
            
            
            3,431,098
            
            $
            0.10Granted
            
            
            168,902
            
            
            0.25Exercised
            
            
            (280,000
            )
            
            0.10Canceled
                or expired
            
            
            (190,000
            )
            
            0.10Outstanding
                at December 31, 2005
            
            
            3,130,000
            
            $
            0.11Granted
            
            
            -
            
            
            -Exercised
            
            
            (530,000
            )
            
            0.10Canceled
                or expired
            
            
            (175,000
            )
            
            0.10Outstanding
                at December 31, 2006
            
            
            2,425,000
            
            $
            0.11Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Canceled
                or expired
            
            
            (270,000
            )
            
            0.10Outstanding
                at March 31, 2007
            
            
            2,155,000
            
            $
            0.11





There
      were no employee stock options granted and no employee stock options vested
      during the three month period ended March 31, 2007. There were 84,451 employee
      stock options vested during the three month period ended March 31, 2006,
      compensation expense of $5,433 was charged to operations during the three months
      ended March 31, 2006.





**NOTE
      J - RELATED PARTY TRANSACTIONS**





One
      of
      the Company’s Officers and Directors has short-term loans to the Company of
      $218,115 as at March 31, 2007. These loans are non-interest bearing and due
      upon
      demand. One
      of
      the Company’s major customers is an entity controlled by one of the Company’s
      Directors. Sales to this related party for the three month period ended March
      31, 2007 totaled $90,720 and no sales for the three month period ended March
      31,
      2006. There was no Accounts Receivable due to the Company from the related
      party
      as of March 31, 2007.





**NOTE
      K - COMMITMENTS AND CONTINGENCIES**





Lease
      Commitments





The
      Company leases office and warehouse facilities on a four year lease basis in
      Richardson, Texas, expiring April 1, 2009. Monthly rents under the lease are
      $1,694. The Company leases office and warehouse facilities on a five year basis
      in Mississauga, Ontario, Canada, expiring May 31, 2011. Gross monthly rents
      under the lease are $11,558, CAD. Rental expenses charged to operations during
      the three month period ended March 31, 2007 and 2006 were $36,008 and $31,167,
      respectively. The Company is in default relating to both lease commitments.
      Commitments for minimum rentals under non cancelable leases at March 31, 2007
      are as follows:






15







**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      K - COMMITMENTS AND CONTINGENCIES (Continued)**





Lease
      Commitments (Continued)





Twelve
                months ended March 31,2008
            
            $
            141,0062009
            
            
            130,7882010
            
            
            127,0292011
            
            
            77,015Total
            
            $
            475,838





Commitments





License
      Agreement : Assets
      of the Company’s wholly-owned subsidiary, ADBSI, 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. The Company is currently in default of its obligation of its License
      Agreement with Back Bay.





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. The
      Company is currently in default of this revised Consulting
      Agreement.





On
      July
      15, 2005 the Company entered into a license agreement with the National
      Fibromyalgia Association ("NFA") for the right to use NFA's Seal of Approval.
      Swiss Medica shall pay to NFA a licensing contribution equal to $0.25 for each
      package of 'one ounce' or 'twenty pack' 'O24 Fibromyalgia' product sold and
      for
      which Swiss Medica collects payment. The minimum monthly payment shall be
      $10,000 under the agreement (starting October 2005) with a minimum annual fee
      of
      $200,000. This agreement was terminated in August 2006.




In
      August
      2006, our Board of Directors and stockholders owning an aggregate of 2,000,000
      shares of Class B common stock and 10,498,609 shares of Class A common stock
      outstanding as of the Record Date (or 54.8% of the outstanding stockholder
      votes) have consented to authorize the Company to effect a reverse stock split
      of the Company's common stock at a ratio to be later determined by the Board
      of
      Directors of at least 1-for-2 but no greater than 1-for-10. As of March 31,
      2007. there were no further development regarding this matter.






16







**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      K - COMMITMENTS AND CONTINGENCIES (Continued)**





Litigation





During
      the year ended December 31, 2006, Westwood One, Inc. filed a complaint against
      the Company and for unpaid advertising invoices totaling $217,383. During the
      year ended December 31, 2006, the Company has paid approximately $75,000
      pursuant to a settlement agreement. As of May 18, 2007 Westwood One has caused
      certain accounts held in the Company’s name at various financial and other
      institutions to be garnished pursuant to a judgment received. During the quarter
      ended March 31, 2007, the Company has paid an additional $19,000 towards
      settlement of this debt.





During
      the year ended December 31, 2006, Garden State Nutritionals filed a complaint
      against the Company for breach of contract and unpaid book accounts. On
      September 19, 2006 the Company made counter claim for breach of contract and
      failure to manufacture and deliver product pursuant to terms of the contract.
      Both parties have agreed to settle the matter and a joint stipulation to dismiss
      the entire action was submitted to the Court in April 2007.





During
      the year ended December 31, 2006 American Carton Company (“ACC”) filed a
      complaint against the Company for unpaid invoices. Default judgment was entered
      against the Company on May 19, 2006 in the principal amount of $141,108. In
      March 2007 the Company entered into a settlement agreement to resolve the matter
      and the Company agreed to pay ACC approximately $18,000.





During
      the year ended December 31, 2006 Salem Radio Network (“Salem”) filed a complaint
      against the Company for unpaid invoices. A default judgment was entered against
      the Company and in May 2007. The Company and Salem entered into a settlement
      agreement for approximately $63,000 to resolve the matter.





The
      Company is subject to other legal proceedings and claims, which arise in the
      ordinary course of its business. Although occasional adverse decisions or
      settlements may occur, the Company believes that the final disposition of such
      matters should not have a material adverse effect on its financial position,
      results of operations or liquidity.





**NOTE
      L - MAJOR CUSTOMERS AND VENDORS**





Revenue
      from two (2) major customers, which accounted for greater than 10% of total
      sales, approximated $166,984 or 83% of sales for the three month period ended
      March 31, 2007. One of
      the major customers is an entity controlled by one of the Company’s Directors.
      Sales to this related party for the three month period ended March 31, 2007
      totaled $90,720. There was no Accounts Receivable due to the Company from the
      related party as of March 31, 2007.





Revenues
      from three (3) major customers which accounted for greater than 10% of total
      sales, approximated $243,448 or 40% of sales for the three month period ended
      March 31, 2005.





There
      were no purchases from major suppliers that accounted for greater than 10%
      of
      total purchases for the three month periods ended March 31, 2007 and 2006
      respectively.





**NOTE
      M - GOING CONCERN MATTERS**





The
      accompanying condensed consolidated financial statements have been prepared
      on a
      going concern basis, which contemplates the realization of assets and the
      satisfaction of liabilities in the normal course of business. As shown in the
      accompanying financial statements during the three month periods ended March
      31,
      2007 and 2006, the Company incurred losses of $717,411 and $2,039,602,
      respectively. The Company’s current liabilities exceeded its current assets by
      $8,569,325 and the accumulated deficit amounted to $42,761,457 as of March
      31,
      2007. These factors among others may indicate that the Company will be unable
      to
      continue as a going concern for a reasonable period of time.






17




**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      M - GOING CONCERN MATTERS (Continued)**





The
      Company's existence is dependent upon management's ability to develop profitable
      operations and resolve its liquidity problems. Management anticipates the
      Company will attain profitable status and improve its liquidity through
      continued growth, distribution and sale of its products, and additional equity
      investment in the Company. The accompanying consolidated financial statements
      do
      not include any adjustments that might result should the Company be unable
      to
      continue as a going concern.





In
      order
      to improve the Company’s liquidity, the Company is actively pursuing additional
      debt and equity financing through discussions with investment bankers and
      private investors. There can be no assurance the Company will be successful
      in
      its effort to secure additional equity financing.





If
      operations and cash flows continue to improve through these efforts, management
      believes that the Company can continue to operate. However, no assurance can
      be
      given that management’s actions will result in profitable operations or the
      resolution of its liquidity problems.




**NOTE
      N - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS**





The
      Company concluded that a class of sales transactions that were recorded in
      the
      first quarter of 2006 did not meet the criteria as described in Staff Accounting
      Bulletin no. 104 - Revenue Recognition which superseded Staff Accounting
      Bulletin no. 101 - Revenue Recognition in Financial Statements.





Accordingly
      the accompanying condensed consolidated financial statements for the three
      month
      period ended March 31, 2006 have been restated to reverse sales recorded in
      error. The adjustments are: reversal of recorded sales resulting in a decrease
      in accounts receivable and sales of $616,896 and related inventory increase
      of
      $40,032.




The
      net
      effect of these adjustments is an increase in net loss from $1,462,738 to
      $2,039,602 or $576,864 increase for the three month period ended March 31,
      2006
      with no net effect on cash flows. The loss per common share increased from
      $.01
      to $0.02 per share.





The
      following tables summarizes the effects of these adjustments on the Company’s
      condensed consolidated statement of losses and statement of cash flow for the
      three month period ended March 31, 2006:






18





**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      N - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**





Condensed
      Consolidated Statement of Losses


Three
      month period ending March 31, 2006





As
                  Previously
                  Reported
            
            Adjustment
            
            Reference
            
            As
                RestatedRevenues,
                net
            
            
            
            
            $
            1,221,501
            
            
            
            
            $
            (616,896
            )
            
            (a
            )
            
            
            
            $
            604,605Cost
                of sales
            
            
            
            
            
            198,670
            
            
            
            
            
            (40,032
            )
            
            (a
            )
            
            
            
            
            158,638Gross
                profit
            
            
            
            
            
            1,022,831
            
            
            
            
            
            (576,864
            )
            
            (a
            )
            
            
            
            
            445,967Operating
                expenses:Selling,
                general and administrative
            
            
            
            
            
            2,244,430
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            2,244,430Depreciation
                and amortization
            
            
            
            
            
            48,854
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            48,854Total
                operating expenses
            
            
            
            
            
            2,293,284
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            2,293,284Loss
                from operations
            
            
            
            
            
            (1,270,453
            )
            
            
            
            
            (576,864
            )
            
            (a
            )
            
            
            
            
            (1,847,317
            )Interest
                expense, net
            
            
            
            
            
            (192,285
            )
            
            
            
            
            -
            
            
            
            
            
            
            
            
            (192,285
            )Provision
                for income taxes
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            -Net
                loss
            
            
            
            
            $
            (1,462,738
            )
            
            
            
            $
            (576,864
            )
            
            (a
            )
            
            
            
            $
            (2,039,602
            )Loss
                per common share (basic and assuming dilution)
            
            
            
            
            $
            (0.01
            )
            
            
            
            $
            (0.01
            )
            
            (a
            )
            
            
            
            $
            (0.02
            )






19







**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      N - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**





Condensed
      Consolidated Statement of Cash Flows


Three
      months ended March 31, 2006





As
                PreviouslyReported
            
            Adjustment
            
            Reference
            
            As
                RestatedCash
                flows from operating activities:Net
                loss
            
            
            
            
            $
            (1,462,738
            )
            
            
            
            $
            (576,864
            )
            
            (a)
            
            
            
            
            $
            (2,039,602
            )Adjustments
                to reconcile net loss to netcash
                (used in) operating activities:Common
                stock issued in exchange for services rendered
            
            
            
            
            
            158,313
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            158,313Common
                stock issued in exchange for financing costs
            
            
            
            
            
            -
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            ,Warrant
                amortization charged to interest expense
            
            
            
            
            
            21,964
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            21,964Share
                issuances charged to interest expense
            
            
            
            
            
            20,030
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            20,030Stock
                based compensation
            
            
            
            
            
            5,433
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,433Depreciation
                and amortization
            
            
            
            
            
            48,854
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            48,854(Increase)
                in prepaid expense
            
            
            
            
            
            (18,275
            )
            
            
            
            
            -
            
            
            
            
            
            
            
            
            (18,275
            )(Increase)
                in accounts receivable
            
            
            
            
            
            (28,169
            )
            
            
            
            
            516,896
            
            
            (a,
                b)
            
            
            
            
            
            488,727Decrease
                in inventories
            
            
            
            
            
            310,749
            
            
            
            
            
            (40,032
            )
            
            (a)
            
            
            
            
            
            270,717Increase
                in accounts payable
              and
                accrued liabilities
            
            
            
            
            
            544,999
            
            
            
            
            
            100,000
            
            
            (b)
            
            
            
            
            
            644,999Net
                cash (used in ) operating activities
            
            
            
            
            
            (398,840
            )
            
            
            
            
            -
            
            
            
            
            
            
            
            
            (398,840
            )Net
                cash provided by financing activities:Proceeds
                from notes payable, net of repayments
            
            
            
            
            
            378,000
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            378,000Proceeds
                from sale of common stock andexercise
                of stock options, net of costs
              and
                fees
            
            
            
            
            
            8,000
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            8,000Net
                cash provided by financing activities:
            
            
            
            
            
            386,000
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            386,000Net
                (decrease) in cash and cash equivalents
            
            
            
            
            
            (12,840
            )
            
            
            
            
            -
            
            
            
            
            
            
            
            
            (12,840
            )Cash
                and cash equivalents at beginning of period
            
            
            
            
            
            45,700
            
            
            
            
            
            -
            
            
            
            
            
            
            
            
            45,700Cash
                and cash equivalents at end of period
            
            
            
            
            $
            32,860
            
            
            
            
            $
            -
            
            
            
            
            
            
            
            $
            32,860





(a)
            The
                Company concluded that certain sales that were recorded in the three
                month
                period ended March 31, 2006 did not meet the criteria as described
                in
                Staff Accounting Bulletin no. 104 - Revenue Recognition which superseded
                Staff Accounting Bulletin no. 101 - Revenue Recognition in Financial
                Statements. Therefore, the Company reversed $616,896 of previously
                recorded sales and reclassified the related inventory of $40,032.
                The net
                effect to operations was $576,864.


(b)
            The
                Company concluded that certain cash received during the three months
                ended
                March 31, 2006 related to the sales reversed in the three month period
                ended March 31, 2006 and during the year ended December 31, 2005
                be
                reclassified as deferred revenue, and were included in accrued
                liabilities. The net effect was $100,000 being reclassified from
                a
                reduction of Accounts Receivable to Accounts Payable and Accrued
                Liabilities.








20


**SWISS
      MEDICA, INC.**


**NOTES
      TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**March
      31, 2007**





**NOTE
      O - SUBSEQUENT EVENTS**





On
      May
      10, 2007 the Company closed a financing transaction in which it sold unsecured
      convertible notes (the "Notes") to certain investors pursuant to a Subscription
      Agreement dated May 10, 2007. The Company received aggregate gross proceeds
      of
      $600,000 on the Closing. The net proceeds, after legal and banking fees, have
      been reserved in a legal restructuring bank account for secured and unsecured
      debt restructuring settlement payments including payments to unsecured creditors
      who have signed releases to write off a significant portion of their receivables
      from the Company.





The
      Company granted the Investors the Notes in the aggregate principal amount of
      $672,000, each dated May 10, 2007 or 1.12 times the Aggregate Purchase Price.
      The Notes mature on November 10, 2007 (the "Maturity Date"). The Investors
      cannot convert the Notes into shares of the Company's $0.001 par value common
      stock (the "Common Stock"), in whole or in part, prior to November 10, 2007.





Subsequent
      to the three month period ended March 31, 2007 the Company issued 10,000,000
      Class A common shares to Montgomery Equity Partners as $38,000 principal payment
      towards its convertible debenture with Montgomery.





The
      Company filed Form 8-K on May 30, 2007 which included report relating to error
      in recording sales in first quarter of 2006 and error in second and third
      quarter of 2006 relating to accounting for the contractually re-pricing of
      the
      stated exercise price of the warrants to acquire the Company’s common stock
      issued to the holders of the Company’s debentures. Interim financials issued
      throughout 2006 have not been reissued. The necessary corrections to apply
      the
      accounting principles on the aforementioned transactions have been reflected
      in
      the reported 2006 annual financial information, and first quarter restated
      2006
      interim financials are reflected in this current interim financial information
      and the second and third quarter restated 2006 interim financials will be
      reflected in the 2007 interim financial information to be issued.





**Item
      2. Management's Discussion and Analysis of Results of Operations and Financial
      Condition**





**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.





**BUSINESS
      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.




21




**Recent
      Developments**





*May
      2007 Debt Financing*




On
      May
      10, 2007 (the “Closing Date”), the Company closed a financing transaction in
      which it sold convertible notes (the “Notes”) to certain investors (each, an
“Investor” and collectively, the “Investors”) to raise up to an aggregate of
      $2,240,000 pursuant to a Subscription Agreement dated May 10, 2007 (the
“Subscription Agreement”). The Company received aggregate gross proceeds of
      $600,000 on the Closing Date (the “Aggregate Purchase Price”).




The
      Company granted the Investors the Notes in the aggregate principal amount of
      $672,000, each dated May 10, 2007 or 1.12 times the Aggregate Purchase Price.
      The Notes mature on November 10, 2007 (the “Maturity Date”). The Investors
      cannot convert the Notes into shares of the Company’s $0.001 par value common
      stock (the “Common Stock”), in whole or in part, November 10, 2007 (the
“Conversion Date”). If converted, the price per share shall equal seventy-five
      percent (75%) of the average of the closing bid prices of the Common Stock
      during the five (5) trading days immediately preceding the Conversion Date
      as
      reported by Bloomberg L.P. None of the Investors may, however, convert the
      Notes
      nor may the Finder exercise the Finder Warrant (as defined below) if such
      conversion or exercise would result in the Investor or Finder (as defined
      below), together with any affiliate thereof, beneficially owning (as determined
      in accordance with Section 13(d) of the Securities Exchange Act of 1933 and
      the
      rules promulgated there under) in excess of 4.99% of the then issued and
      outstanding shares of Common Stock.




The
      Company agreed to reserve for issuance not less than an amount of Common Stock
      equal to 150% of the amount of shares of Common Stock issuable upon the full
      conversion of the Notes (“Reserved Shares”) within 14 days of the closing and
      reserve such shares until such time as all obligations under the Notes have
      been
      satisfied. The Reserved Shares have been reserved but have not actually been
      issued and such shares will not be issued if the Company pays all amounts it
      owes under, and makes such payment in accordance with the terms of, the
      Notes.




Pursuant
      to the Subscription Agreement, the Company agreed to pay Inglewood Holdings
      Ltd.
      (“Finder”) a due diligence fee in the form of (i) a cash payment of ten percent
      (10%) of the Aggregate Purchase Price, and (ii) a three (3) year warrant to
      purchase 10,000,000 shares of Common Stock at an exercise price of $0.02 per
      share (the “Finder Warrant”). The Company paid Finder $60,000 in cash and issued
      Finder the Finder Warrant on the Closing Date upon the funding of $600,000
      of
      the Notes. The Finder Warrant expires on May 10, 2010 and may be exercised
      on a
“cashless” basis if the shares underlying the Finder Warrant have not been
      registered.




*Restructuring
      Double U Master Fund Notes and Warrant*




The
      Company and Double U Master Fund L.P. (“Double U”) are parties to Subscription
      Agreements dated June 20, 2005, December 29, 2005, as amended pursuant to a
      Modified Agreement dated June 8, 2006, and August 24, 2006 relating to aggregate
      investments by Double U of $560,000, $250,000, and $594,000, respectively,
      of
      principal amount of promissory notes of the Company convertible into shares
      of
      the Company’s Common Stock (each, a “Double U Note” and collectively, the
“Double U Notes”). On May 9, 2007, the Company and Double U entered into a
      Second Modification and Amendment Agreement (the “Amendment”) whereby the
      Company restructured the terms of the Double U Notes, and Double U waived
      certain defaults. Pursuant to the Amendment, the annual simple interest payable
      on each Double U Note is twelve percent (12%) and is payable monthly commencing
      May 31, 2007 and on March 31, 2008 (the “Maturity Date”) when the principal and
      remaining accrued but unpaid interest is due and payable. From May 1, 2007
      to
      October 31, 2007, the Company must pay three percent (3%) of the outstanding
      principal amount due under each Double U Note at the end of each three (3)
      month
      period starting May 1, 2007. From November 1, 2007 to March 31, 2008, the
      Company must pay one percent (1%) of the outstanding principal amount due under
      each Double U Note at the end of each monthly period starting November 31,
      2007.




Pursuant
      to the Amendment, the Company paid to Double U $115,000 in accrued interest
      with
      proceeds from the May 10, 2007 financing described above. The Company agreed
      to
      pay $60,000 in accrued interest and $10,000 for the extension of the maturity
      date of the Double U Notes with proceeds from a future debt
      financing.




On
      May 8,
      2007, pursuant to the Amendment, the Company issued a three (3) year warrant
      to
      purchase up to 1,500,000 shares of Common Stock at an exercise price of $0.02
      per share (the “Double U Warrant”). The Double U Warrant expires on May 9, 2010.




The
      issuance of the Double U Warrant is exempt from registration under federal
      securities laws pursuant to Section 4(2) of the Securities Act of 1933, as
      amended (the “Act”). This announcement is not an offer to sell securities of the
      Company.




22







**Critical
      Accounting Policies and Estimates**





The
      preparation of our financial statements in conformity with accounting principles
      generally accepted in the United States requires us to make estimates and
      judgments that affect our reported assets, liabilities, revenues, and expenses,
      and the disclosure of contingent assets and liabilities. We base our estimates
      and judgments on historical experience and on various other assumptions we
      believe to be reasonable under the circumstances. Future events, however, may
      differ markedly from our current expectations and assumptions. While there
      are a
      number of significant accounting policies affecting our consolidated financial
      statements; we believe the following critical accounting policies involve the
      most complex, difficult and subjective estimates and judgments:





·
            Intangible
                assets; and





·
            Revenue
                Recognition





Acquired
      Intangible Assets





Acquisitions
      of intangible assets are accounted for under Statement of Financial Accounting
      Standard No. 142, *Goodwill
      and Other Intangible Assets* .
      These
      standards require that certain identifiable assets be amortized over their
      expected useful lives. Intangible assets that have indefinite useful lives
      are
      not subject to amortization, but rather will be tested at least annually for
      impairment.





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.





The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      the price to the customer is fixed, collectibility is reasonably assured and
      title and risk of ownership is passed to the customer, which is usually upon
      delivery. However, in limited circumstances, certain customers requested to
      take
      title and risk of ownership prior to shipment. Revenue for these transactions
      is
      recognized only when:





(1)
      Title
      and risk of ownership have passed to the customer;


(2)
      The
      Company has obtained a written fixed purchase commitment;


(3)
      The
      customer has requested in writing the transaction be on a bill and hold
      basis;


(4)
      The
      customer has provided a delivery schedule;


(5)
      All
      performance obligations related to the sale have been completed;


(6)
      The
      product has been processed to the customer’s specifications, accepted by the
      customer and made ready for shipment; and


(7)
      The
      product is segregated and is not available to fill other orders.






23





The
      Company records any payment received in advance from customer not meeting
      revenue recognition criteria as deferred revenue in liability section of the
      balance sheet. At March 31, 2007, deferred revenue balance (included in accounts
      payable) was $50,000.





**Overview**


Swiss
      Medica commercializes patented, clinically tested, all-natural, over-the-counter
      (“OTC”) products that relieve chronic ailments, including pain and premenstrual
      syndrome.





Swiss
      Medica's flagship product, the O24 Pain Neutralizer (“O24”), holds US Patent
      #6,444,238B1 and has been medically and clinically tested in Europe. The O24
      pain relief solution has been recommended and praised for its fast-acting and
      long-lasting benefits by healthcare professionals and athletes in the United
      States, Canada and Europe. Swiss Medica also launched patented O24 Fibromyalgia
      pain reliever (US Patent #6,444,238B1). O24 Fibromyalgia is the first product
      specifically for Fibromyalgia that is available in national
      pharmacies.





It
      is the
      Company's intention to expand its product offerings through 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:








·
            Patented
                and/or intellectual property,





·
            Clinical
                and/or medical studies,





·
            Over-the-counter,
                natural solutions for 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.




Swiss
      Medica’s products are available in over 15,000 pharmacies in United States and
      Canada including CVS, Rite-Aid, Shoppers Drug Mart and Wal-Mart Canada.





O24
      Essential Oil Pain Neutralizer and O24 Fibromyalgia comply with FDA regulations
      and can be sold in the United States pursuant to an FDA monograph.





We
      may
      also seek to acquire additional consumer healthcare products or companies that
      address other chronic health markets





**Results
      for the three months ended March 31, 2007 compared to the three months ended
      March 31, 2006 (as restated):**




The
      following is a summary of financial information for the three months ending
      March 31, 2007 and 2006 respectively:





**Three
                months ending March 31****2007**
            
            **2006**(as
                restated)Revenue:
            
            $
            214,024
            
            $
            604,605Cost
                of Sales
            
            
            46,574
            
            
            158,638**Gross
                Profit**
            
            
            **167,450**
            
            
            **445,967**Gross
                Profit as % of Sales
            
            
            78
            %
            
            74
            %Operating
                Expenses:Wages
                & Salaries
            
            
            163,000
            
            
            339,879Marketing
                & Promotions
            
            
            48,000
            
            
            1,112,733Selling,
                General and Admin.
            
            
            424,109
            
            
            791,818Depreciation
                and Amortization
            
            
            48,854
            
            
            48,854**Total
                Operating Expenses**
            
            
            **683,963**
            
            
            **2,293,284****Loss
                from Operations**
            
            **$**
            **(516,513**
            **)**
            **$**
            **(1,847,317**
            **)**Interest
                Expense
            
            
            **(470,193**
            **)**
            
            **(192,285**
            **)**Net
                gain on revaluation of warrant liability
            
            
            269,295
            
            
            -Provision
                for Income Taxes
            
            
            -
            
            
            -**Net
                Loss**
            
            **$**
            **(717,411**
            **)**
            **$**
            **(2,039,602**
            **)**




24




**Revenue**





Our
      revenues from operations for the quarter ended March 31, 2007 were $214,024,
      compared to $604,605 for the quarter ended March 31, 2006 and were generated
      predominately by sales to (approximate figures):


Three
                  months ending March 31,**2007**
              
              
              **2006**Professional
                  Distribution
              
              $
              90,000
              
              $
              -U.S.
                based pharmaceutical outlets:
              
              $
              8,000
              
              $
              343,000Canadian
                based pharmaceutical outlets:
              
              $
              83,000
              
              $
              146,000Health
                products:
              
              $
              19,000
              
              $
              105,000Grocery
                chains & other
              
              $
              14,000
              
              $
              10,000


**Cost
      of Sales and Gross Profit**





Cost
      of
      sales for our quarter ending March 31, 2007 were $46,574, generating a gross
      margin on sales of 78% compared to $158,638 and 74% gross margin for the three
      months ending March 31, 2006. We
      anticipate normalized gross profit percentages to be between 60% 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 & professional advisors totaled $23,500 for the
      quarter ending March 31, 2007 compared to $163,746 for the three months ending
      March 31, 2005. Stock based compensation was granted to recruit and compensate
      legal, marketing, business and development advisors.





Selling,
      General and Administrative costs totaled approximately $635,000 for the three
      month period ended March 31, 2007 compared to $2.2 million for the three month
      period ending March 31, 2006 and includes approximately:





·
            $84,000
                on advertising and product marketing ($1,031,000 for three months
                ending
                March 31, 2006)


·
            $186,000
                on payroll and related benefits ($340,000 for three months ending
                March
                31, 2006)


·
            $50,000
                on Agent’s fees & Logistic Services ($121,000 for three months ending
                March 31, 2006)


·
            $84,000
                on Fees and Licenses ($117,000 for three months ending March 31,
                2006)


·
            $15,000
                on Public and Investor relations ($35,000 for three months ending
                March
                31, 2006)


·
            $26,000
                on Legal fees ($67,000 for three months ending March 31,
                2006)


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






25





**Depreciation
      and Amortization**





Depreciation
      & Amortization expenses of $48,854 were incurred during the three month
      period ended March 31, 2007 to amortize the tangible and intangible assets
      acquired from the General Cosmetics Corporation acquisition and office equipment
      purchases. Depreciation & Amortization expenses for the three month period
      ending March 31, 2006 totaled $48,854.




**Interest
      Expense**





Interest
      expenses of $470,193 were incurred during the three month period ending March
      31, 2007, of which $210,551 is a cash charge relating to interest paid on
      promissory notes and redeemable debentures, and $259,642 relates to non-cash
      convertible debenture amortization charged to interest expense. For the three
      month period ended March 31, 2006 $192,285 was charged to interest expense.
      This
      relates to interest paid on promissory notes and redeemable debentures.





**Liquidity
      and Capital Resources**





As
      of
      March 31, 2007 we had no usable cash available to us. Our current liabilities
      exceeded current assets in the amount of $8,569,325. As a result of our
      operating losses incurred during the quarter ended March 31, 2007, adjusted
      by
      $23,500 of common stock issued to employees and consultants in exchange for
      compensations, $48,854 of depreciation and amortization of fixed assets and
      intangible assets, $107,694 of decrease in assets, $11,827 increase in cash
      disbursed in excess of available funds, and $515,883 of increases in accrued
      liabilities, $259,642 Convertible debenture amortization charged to interest
      expense, $269,295 net gain on revaluation of warrant liability, we generated
      a
      cash flow deficit from operating activities of $19,306 for the three months
      ending March 31, 2007. We met our cash requirements primarily through the net
      proceeds from issuing notes payable to a related party of approximately $4,860
      during the three month period ended March 31, 2007.





On
      May
      10, 2007 (the “Closing Date”), the Company closed a financing transaction in
      which it sold convertible notes (the “Notes”) to certain investors (each, an
“Investor” and collectively, the “Investors”) to raise up to an aggregate of
      $2,240,000 pursuant to a Subscription Agreement dated May 10, 2007 (the
“Subscription Agreement”). The Company received aggregate gross proceeds of
      $600,000 on the first Closing Date (the “Aggregate Purchase Price”).




The
      Company granted the Investors the Notes in the aggregate principal amount of
      $672,000, each dated May 10, 2007 or 1.12 times the Aggregate Purchase Price.
      The Notes mature on November 10, 2007 (the “Maturity Date”). The Investors
      cannot convert the Notes into shares of the Company’s $0.001 par value common
      stock (the “Common Stock”), in whole or in part, November 10, 2007 (the
“Conversion Date”).





We
      will
      be seeking to continue funding our operations through





**·**
            debt
                instruments: we are currently seeking debt financing in order to
                provide
                the necessary working capital to fund our ongoing
                operations;


**·**
            The
                continued exercise of warrants to purchase common
                shares;


**·**
            additional
                sales of our equity and/or debt securities, if
                necessary;


**·**
            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 **.**





If
      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. In light of our cash situation, we believe we do not have
      adequate cash to maintain our operations for at least the next 12 months without
      additional debt or equity financing.




26








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, 2006, 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. .
      In
      addition, as of March 31, 2007 we had no usable cash. We have since received a
      debt financing of $600,000 in May 2007; however, we believe we will require
      additional financing in the near term.





**Risk
      Factors**





THERE
      IS
      SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN





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.





We
      have
      been dependent primarily on private placements of our equity securities and
      shareholder loans to fund our operations. In the near term, we intend to focus
      on increasing our marketing efforts for our existing products. Such funding
      may
      not 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.





WE
      MAY
      NEVER BECOME PROFITABLE AND IF WE DO NOT BECOME PROFITABLE WE MAY HAVE TO CEASE
      OUR OPERATIONS





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. If we fail to become profitable, we may be forced to
      cease operations.





RAISING
      ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING, CONVERTING OR EXERCISING
      OUTSTANDING DEBT OR WARRANTS INTO COMMON STOCK 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. The issuance of shares of common stock
      upon conversion of secured convertible notes or upon exercise of outstanding
      warrants and/or stock options also may cause immediate and substantial dilution
      to our existing stockholders.





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, which would be
      superior to the rights of common stockholders.





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.





WE
      ARE A
      DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY AND WE MAY BE
      UNSUCCESSFUL




27





We
      have
      been engaged in our current business for approximately less than three 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. We may
      not be able to successfully develop the business we are pursuing. We cannot
      be
      certain that our business will be successful or that we will generate
      significant revenues.





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 publicly traded Class A Common Stock
      and other securities. We also issue our employees options to purchase common
      stock at fair market value that we have registered under a Form S-8 Registration
      Statement. The sale of any of those shares will likely adversely affect the
      market price of the Class A Common Stock. Your ability to sell shares of our
      common stock may be prevented, or the price adversely affected as a result
      of
      this increased selling pressure.





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. These factors may limit your ability to sell shares of our common
      stock.





THERE
      IS
      A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK AND OUR STOCKHOLDERS MAY BE UNABLE
      TO LIQUIDATE THEIR SHARES





Our
      common stock is listed on the Over-the-Counter Bulletin Board, and there is
      a
      limited volume of sales, thus providing a limited liquidity into the market
      for
      our shares. As a result of the foregoing, stockholders may be unable to
      liquidate their shares.





OUR
      EXECUTIVE OFFICERS AND DIRECTORS CONTROL A LARGE PERCENTAGE OF OUR COMMON STOCK,
      WHICH ALLOW THEM TO CONTROL MATTERS SUBMITTED TO STOCKHOLDERS FOR
      APPROVAL





Our
      executive officers and directors (and their affiliates), in the aggregate,
      own
      approximately 13% of our outstanding Class A common stock, and a majority
      (approximately 76%) of our outstanding voting stock.  There is currently an
      aggregate of 156,961,491shares of Class A and Class B Common Stock outstanding.
      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 director, owns 5,459,451 shares of our Class A Common Stock, and 2,000,000
      shares of our Class B Common Stock which constitute 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. Therefore our executive officers and
      directors have 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, take over 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.




28




WE
      MAY BE
      SUBJECT TO PRODUCT LIABILITY CLAIMS FOR OUR PRODUCTS WHICH COULD HAVE A
      SUBSTANTIAL, ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL RESULTS





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. We currently have product liability insurance,
      however the amount of damages awarded against us in such a lawsuit may exceed
      the policy limits.





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
      NOT BE SUCCESSFUL IN ACQUIRING OR LICENSING NEW PRODUCTS WHICH COULD HAVE A
      MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





We
      are
      currently seeking to license or acquire new products or companies with
      bioscience products, manufacturing or distribution capabilities consistent
      with
      our commercial objectives. We may not 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 in our Company to effect acquisitions
      which would result in dilution to our shareholders.




WE
      HAVE
      RISKS ASSOCIATED WITH OUR DEPENDENCE ON THIRD PARTY MANUFACTURING WHICH COULD
      HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS





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, these manufacturers may not 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.




29





WE
      ARE
      DEPENDENT ON OUR TRADEMARKS AND PATENTS AND THE FAILURE TO OBTAIN TRADEMARK
      PROTECTION COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS





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 products. However, we may not be able to obtain patent
      protection for any derivative uses of O24 or for any other products we may
      later
      acquire or develop. We also cannot assure you 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.





WE
      NEED
      TO BUILD OUT OUR SALES AND MARKETING ORGANIZATION OTHERWISE OUR BUSINESS WILL
      BE
      EFFECTED ADVERSELY





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
      DEPEND
      ON KEY PERSONNEL AND WILL REQUIRE ADDITIONAL SKILLED EMPLOYEES TO EXECUTE OUR
      GROWTH PLANS OTHERWISE THE DEVELOPMENT OF OUR BUSINESS COULD BE DELAYED OR
      PREVENTED





Our
      potential for success depends significantly on our executive officers,
      including, Raghunath Kilambi, our Chief Executive Officer and Chief Financial
      Officer. This individual does not have an employment agreement with the Company.
      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 will
      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 AND OUR BUSINESS AND FINANCIAL RESULTS COULD SUFFER
      FROM
      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:





·
            functionality;





·
            quality
                of merchandise;




30





·
            discounts
                and rewards;





·
            brand
                recognition;





·
            customer
                loyalty; and





·
            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
      may
      not be able to compete successfully against our current or future competitors
      and our business and financial results could suffer from such
      competition.




FUTURE
      SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY
      TO RAISE FUNDS IN NEW STOCK OFFERINGS





Sales
      of
      shares of our Class A common stock in the public market could lower the market
      price of our common stock. Sales may also make it more difficult for us to
      sell
      equity securities or equity-related securities in the future at a time and
      price
      that our management deems acceptable or at all. Of the 146,961,491 shares of
      Class A common stock outstanding as of June 14, 120,575,600 shares are, or
      will
      be, freely tradable without restriction, unless held by our "affiliates." The
      remaining 26,385,891 shares of Class A common stock which will be held by
      existing stockholders, including the officers and directors, are "restricted
      securities" and may be resold in the public market only if registered or
      pursuant to an exemption from registration. Some of these shares may currently
      be resold under Rule 144.





OUR
      COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
      FOR
      INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS





Our
      common stock is deemed to be "penny stock" as that term is defined in Rule
      3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks
      are
      stocks:





·
            With
                a price of less than $5.00 per
                share;





·
            That
                are not traded on a "recognized" national
                exchange;





·
            Whose
                prices are not quoted on the Nasdaq automated quotation
                system;





·
            Nasdaq
                stocks that trade below $5.00 per share are deemed a "penny stock"
                for
                purposes of Section 15(b)(6) of the Exchange Act;





·
            In
                issuers with net tangible assets less than $2.0 million (if the issuer
                has
                been in continuous operation for at least three years) or $5.0 million
                (if
                in continuous operation for less than three years), or with average
                revenues of less than $6.0 million for the last three
                years.




Broker/dealers,
      dealing in penny stocks are required to provide potential investors with a
      document disclosing the risks of penny stocks. Moreover, broker/dealers are
      required to determine whether an investment in a penny stock is a suitable
      investment for a prospective investor. These requirements may reduce the
      potential market for our common stock by reducing the number of potential
      investors. This may make it more difficult for investors in our common stock
      to
      sell shares to third parties or to otherwise dispose of them. This could cause
      our stock price to decline.




31








ITEM
      3.
      CONTROLS AND PROCEDURES





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed in our reports filed under the Exchange Act is
      accumulated and communicated to management, including the Chief Executive
      Officer and Chief Financial Officer as appropriate, to allow timely decisions
      regarding required disclosure. Management recognizes that any controls and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving their objectives, and management necessarily
      applies its judgment in evaluating the cost-benefit relationship of possible
      controls and procedures.





Based
      on
      the evaluation of our disclosure controls and procedures as of December 31,
      2006, our Chief Executive Officer and Chief Financial Officer concluded that,
      as
      of such date, our disclosure controls and procedures were not effective due
      to
      the material weakness discussed below.  A material weakness is a control
      deficiency, or combination of control deficiencies, that results in more than
      a
      remote likelihood that a material misstatement of the annual or interim
      financial statements will not be prevented or detected.





As
      previously disclosed in a Current Report on Form 8-K , which we filed on May
      30,
      2007, our Board of Directors authorized us to amend and restate the financial
      statements contained in the previously-filed Annual Report on Form 10-KSB for
      the fiscal year ended December 31, 2005 and Quarterly Reports on Form 10-QSB
      or
      Form 10-QSB for the quarterly periods ended March 31, 2006, June 30, 2006,
      September 30, 2006, (collectively, the “Financial Statements”). During the
      Company’s review of its prior sales, the Company concluded that certain sales
      that were recorded in the year ended December 31, 2005 did not meet the criteria
      as described in Staff Accounting Bulletin no. 104 Revenue Recognition which
      superseded Staff Accounting Bulletin no. 101 Revenue Recognition in Financial
      Statements.  In addition the Company concluded that it did not properly
      account for derivatives related to a convertible security for the Quarterly
      Reports on 10QSB for the quarterly periods ended June 30, 2006, and September
      30, 2006.





In
      connection with the restatement, our Chief Executive Officer and our Chief
      Financial Officer considered the effect of the errors on the adequacy of our
      disclosure controls and procedures as of the end of the period covered by this
      Quarterly Report on Form 10-QSB for the year ended March 31, 2007. Due to the
      restatement, the certifying officer determined that a material weakness had
      occurred in relation to our reporting at December 31, 2005 through March 31,
      2006 and that the disclosure controls and procedures relating to this subject
      matter were therefore not effective.





There
      were no changes in our internal controls or in other factors that could
      significantly affect internal controls subsequent to the date of their
      evaluation.





**PART
      II: OTHER INFORMATION**





ITEM
      1.  LEGAL
      PROCEEDINGS




**Westwood
      One, Inc. v. Swiss Medica, Inc. (Case No. 06-114192).**





In
      or
      about the early part of 2006, certain disputes arose between Westwood One
      and the Company in connection with certain agreements for advertising and
      promotional services.  Westwood One alleged that the Company had
      breached certain advertising agreements by failing to pay certain
      invoices.  The Company alleged that Westwood One had breached an
      advertising agreement by misrepresenting certain terms.  On March 20, 2006,
      the Company entered into an Affidavit of Confession of Judgment. On or about
      October 3, 2006, after the Company failed to make settlement payments to
      Westwood One, Westwood One entered judgment against the Company in the Supreme
      Court for the County of New York in the state of New York (Index No. 06-114192)
      in the amount of $217,383. The Company has paid $75,000 of this judgment and
      has
      entered into a subsequent settlement agreement in which it agreed to pay the
      balance of $142,381 by April 10, 2007. The Company has paid approximately
      $19,000 of this amount, but did not pay the entire balance by April 10,
      2007.





As
      of May
      18, 2007, Westwood One has caused certain accounts held in the Company’s name,
      at various financial and other institutions, to be attached, garnished and/or
      frozen pursuant to the judgment.




32





**Garden
      State Nutritionals v. Swiss Medica, Inc. (Case No.:
      L-2758-06)**





Garden
      State Nutritionals filed this action in the Superior Court of New Jersey Law
      Division Essex County on March 28, 2006. Garden alleged causes of action for
      breach of contract, quantum meruit and book account arising out of payments
      allegedly due under contract. On or about, September 19, 2006, the Company
      filed
      an answer to Garden’s complaint, counter-claim and demand for jury trial. The
      Company alleges causes of action for breach of contract, breach of express
      warranty, breach of implied warranty of merchantability, fraud and negligent
      misrepresentation for failure to manufacture and deliver Garden’s product
      pursuant to the same contract. During the initial discovery stages of this
      matter, the parties agreed to settle the matter. A joint stipulation to dismiss
      the entire action with prejudice was submitted to the Court in April
      2007.





**American
      Carton Company v. Swiss Medica, Inc. (Case No.
      352-216751-06)**





American
      Carton Company (“ACC”) filed this action in the District Court of Tarrant
      County, Texas, 352nd Judicial District on or about February 24, 2006. ACC
      asserted claims for certain unpaid invoices against the Company. The Company
      maintains it was never properly served with the summons and complaint. A default
      judgment was entered against the Company in the principal amount of $141,107.54
      along with pre-judgment interest of $1,081.92 and attorneys’ fees of $800 on May
      19, 2006. The Company and ACC subsequently entered into a settlement agreement
      to resolve the matter in March 2007 and the Company agreed to pay ACC
      approximately $18,000.





**Salem
      Radio Network v. Swiss Medica, Inc. (Case No.
      06-10177-D)**





Salem
      Radio Network (“Salem”) filed this action in the County Court of Law, No. 4, in
      Dallas County, Texas in 2006. Salem asserted claims for certain unpaid invoices
      against the Company. The Company maintains it was never properly served with
      the
      summons and complaint. A default judgment was entered against the Company in
      the
      principal amount of $77,807.50 along with pre-judgment interest of $8,169.00
      and
      attorneys’ fees of $25,000 on August 16, 2006. The Company and Salem
      subsequently entered into a settlement agreement to resolve the matter in May
      2007 for approximately $63,000.





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 quarter ended March 31, 2007 we issued an aggregate of 3,500,000 shares
      of
      our Common Stock to various individuals and corporations in exchange for
      consulting services and accrued liabilities. The total value of the 3,500,000
      shares issued was approximately $21,000. These transactions were exempt from
      registration pursuant to Section 4(2) of the Securities Act of 1933.





ITEM
      3.   DEFAULTS
      UPON SENIOR SECURITIES





Strategic
      Equity Notes





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
      $1,357,758 USD) 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 nine months ended September 30, 2006. The promissory note in the amount
      of
      $1,575,000 CAD is interest and principal payable monthly at 24% per annum with
      the maturity dates on October 30, 2006 ($739,910 CAD) and December 15, 2006
      ($835,090 CAD).





The
      promissory note is secured by the Company’s trade accounts receivable and a
      security charge over all unsecured assets of the Company. During the year ended
      December, 2006, the Company paid down $28,906CAD in principal. The balance
      of
      the note at December 31, 2006 amounted $1,546,094 CAD (approximately $1,345,102
      USD). The Company is currently in default under the terms of the note agreement,
      as it has not paid the amounts due by the maturity date. The Company has
      executed a letter of intent to restructure the terms of this note with Strategic
      Equity.




33





Montgomery
      Equity Partners Notes





On
      April
      11, 2006 and June 12, 2006, the Company issued a secured convertible debenture
      in the principal amount of $1,300,000 and $7,000,000, respectively, to
      Montgomery Equity Partners, Ltd. (“Montgomery”). On May 22, 2007, Montgomery
      notified the Company that it was in default under the terms of both notes as
      a
      result of its failure to maintain effectiveness of the Registration Statement
      covering the shares issuable upon conversion of such debentures.





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





None





ITEM 5.
              OTHER
                  INFORMATION




**Termination
      of certain officers; resignation or removal of directors, other than as a result
      of disagreement or removal for cause.**





On
      November 14, 2006, Mr. Charles Orr resigned as director of the Company for
      personal reasons. On November 28, 2006, Mr. Bruce Fairbairn resigned as the
      Chief Financial Officer of the Company for personal reasons. Mr. Fairbairn
      has
      agreed to serve as a consultant to the Company following his resignation.











ITEM 6.
            EXHIBITS2.1
            Agreement
                for Purchase and Sale of Stock between Goldcrown Holdings
                Ltd. and Oxford Capital Group dated as of January 10, 2000
                (1)2.2
            Agreement
                for Purchase and Sale of Stock between Bodet Ltd. and
                Oxford Capital Group dated as of January 10, 2000 (1)2.3
            Agreement
                and Plan of Merger of Yournet, Inc. with and into Global
                Path Incorporated dated June 25, 2001 (2)3.1
            Articles
                of Incorporation, as amended (3)3.2
            Bylaws
                (3)31.1.
            Certification
                of the Chief Executive Officer Pursuant to Rule 13a-14(a) and
                15d-14(a)(4)31.2.
            Certification
                of the Chief Financial Officer Pursuant to Rule
                13a-14(a) and 15d-14(a)(4)32.1.
            Certification
                of the Chief Executive Officer Pursuant to Section
                1350 of Title 18 of the United States Code (4)32.2.
            Certification
                of the Chief Financial Officer Pursuant to Section 1350 of Title
                18 of the
                United States Code (4)




-----------------------------------------------------------------------------------------


(1)
      Incorporated by reference from a Form 8-K filed with the Securities and Exchange
      Commission on March 28, 2000.





(2)
      Incorporated by reference from a Definitive Information Statement filed with
      the
      Securities and Exchange Commission on July 6, 2001.





(3)
      Previously filed.





(4)
      Filed
      herewith.





(5)
      Incorporated by reference from a Form 8-K filed with the Securities and Exchange
      Commission on March 31, 2005.




34





SWISS
              MEDICA, INC.By: RAGHUNATH KILAMBIDate: June
              15, 2007
            By:
            /s/ Raghunath
              KilambiRaghunath
              Kilambi, Chief Executive Officer





SUBSIDIARIES








Subsidiary
            State
              of Incorporation








1. Anti-Depression Biohealth Solutions,
              Inc.
            Florida





35