Davi Skin 10QSB 2007 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

x	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended September 30, 2007
o	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period __________ to __________
	Commission File Number: 001-14297

Davi Skin, Inc.

(Exact name of small business issuer as specified in its charter)

Nevada	86-0907471
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

4223 Glencoe Ave Suite B130, Marina Del Rey, California 90292

(Address of principal executive offices)

310-827-0800

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days x Yes o No

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 17,061,208 common shares as of November 19, 2007.

Transitional Small Business Disclosure Format (check one): Yes o No x

	TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis or Plan of Operation	4
Item 3.	Controls and Procedures	16
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits	18

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

Our unaudited financial statements included in this Form 10-QSB are as follows:
F-1	Balance Sheet as of September 30, 2007;
F-2	Statements of Operations for the three and nine months ended September 30, 2007 and 2006 and for the period from inception (March 21, 2004) through September 30, 2007;
F-3	Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 and for the period from inception (March 21, 2004) through September 30, 2007;
F-4	Notes to Financial Statements;

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-QSB. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2007 are not necessarily indicative of the results that can be expected for the full year.

3

DAVI SKIN, Inc.

(formerly MW Medical, Inc.)

(A Developmental Stage Company)

BALANCE SHEET

(Unaudited)

as of September 30, 2007

ASSETS
Current Assets
Cash	8,915
Restricted cash	8,485
Certificate of deposit	7,233
Accounts receivable	29,717
Inventory	631,716
Prepaid expenses	9,609
Total Current Assets	695,675
Fixed assets net of accumulated depreciation of $8,294	30,458
Deposits	24,570
TOTAL ASSETS	750,703
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable & accrued expenses	501,733
Accrued interest payable	13,019
Total Current Liabilities	514,752
Note payable	500,000
Loan discount, net of accumulated amortization	(57,042	)
TOTAL LIABILITIES	957,710
Stockholders' Equity
Preferred stock; $0.001 par value; 10,000,000 shares
authorized and no shares issued and outstanding	0
Common stock: $0.001 par value; 90,000,000 shares
authorized, 17,061,208 shares issued and outstanding	17,062
Additional paid in capital	11,488,853
Accumulated deficit during development stage	(8,944,328	)
Net Loss	(2,768,594	)
Total Stockholders' Equity	(207,007	)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	750,703

F-1

DAVI SKIN, Inc.

(formerly MW Medical, Inc.)

(A Developmental Stage Company)

STATEMENT OF OPERATIONS

(Unaudited)

	Nine Months ended September 30						Three Months ended September 30						From inception (March 21, 2004) through
	2007			2006			2007			2006			September 30, 2007
Sales		62,347			0			16,466			0			85,156
Cost of goods sold		(7,552	)		0			(2,811	)		0			(9,346	)
Gross profit		54,795			0			13,655			0			75,810
Operating Expenses
Selling, general and administrative		965,064			885,494			246,950			449,424			3,894,114
Depreciation		5,470			11,430			1,970			460			37,722
Consulting fees		594,295			193,352			201,666			71,076			1,864,430
Employee stock options		747,342			2,099,949			0			0			4,809,215
Professional fees		534,885			286,868			4,764			120,051			1,205,078
Total operating expenses		2,847,056			3,477,093			455,350			641,011			11,810,559
Loss from operations		(2,792,261	)		(3,477,093	)		(441,695	)		(641,011	)		(11,734,749	)
Other income (expenses)
Royalty income		46,933			25,000			19,877			0			71,933
Interest income		7,540			56,420			1,245			18,742			116,865
Interest expense		(26,800	)		(15,013	)		(18,668	)		(5,013	)		(107,658	)
Other income (expenses)		(3,915	)		0			0						(42,524	)
Loss on disposal of assets		(91	)		(38,075	)		(91	)		0			(16,789	)
Total other income		23,667			28,332			2,363			13,729			21,827
Net Loss		(2,768,594	)		(3,448,761	)		(439,332	)		(627,282	)		(11,719,922	)
Basic loss per common share		(0.18	)		(0.29	)		(0.03	)		(0.05	)
Diluted loss per common share		(0.18	)		(0.29	)		(0.03	)		(0.05	)
Basic and diluted weighted average
common share outstanding		15,126,564			11,952,116			16,280,438			12,115,820

F-2

DAVI SKIN, Inc

(formerly MW Medical, Inc.)

(A Development Stage Company)

STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months ended September 30						From inception (March 21, 2004) through September 30,
	2007			2006			2007
OPERATING ACTIVITIES
Net Loss		(2,768,594	)		(3,448,761	)		(11,712,922	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Prepaid consulting expense		34,376			0			114,584
Stock based compensation & expenses		747,342			2,134,323			5,947,661
Depreciation and amortization		10,470			11,429			42,722
Accrued interest		6,304			15,000			6,304
Loss on sale of fixed assets		91			38,075			38,700
Non cash consulting fees and directors' fee		376,493			0			426,188
Changes in operating assets and liabilities:
Accounts Receivable		(7,078	)		6,000			(56,100	)
Inventory		47,552			(765,800	)		(631,717	)
Prepaid expenses		(7,584	)		5,000			(9,609	)
Deposits		19,935			(33,025	)		(24,570	)
Contingent liabilities		0			0			26,383
Accounts payable and accrued liabilities		358,897			48,389			501,777
Accrued interest		13,019						93,638
Net cash used in operating activities		(1,168,777	)		(1,989,370	)		(5,241,961	)
INVESTING ACTIVITIES
Cash flow from investing activities:
Change in certificates of deposit		827,461			873,468			(7,233	)
Sale of fixed assets		1,000			0			2,739
Purchase of fixed assets		(4,848	)		(27,853	)		(121,035	)
Net cash provided by (used in) investing activities		823,613			845,615			(125,529	)
FINANCING ACTIVITIES
Cash flows from financing activities:
Bank overdraft		(137,436	)		0			0
Proceeds from stock transactions		0			1,496,000			4,679,890
Notes payable		500,000			0			500,000
Notes payable-related party		0			0			200,000
Net cash provided by financing activities		362,564			1,496,000			5,379,890
Net change in cash and cash equivalents		17,400			352,245			17,400
Cash at beginning of period		0			3,617			0
Cash at end of period		17,400			355,862			17,400

Non-cash activity: During the nine months ended September 30, 2007, 2,295,388 shares of common stock were issued as repayment for the related party note in the amount of $200,000 and the related accrued interest of $86,923.

F-3

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for interim financial statements. The interim financial statements present the balance sheet, statement of operations, and cash flows of the Company. The financial statements should be read in conjunction with the Form 10-KSB of the Company for the year ended December 31, 2006. In the opinion of management all normally recurring adjustments necessary to present fairly the financial position as of September 30, 2007 have been included in the financial statements. Interim results are not necessarily indicative of operations for the full year. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Going concern:

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. The Company has incurred net losses of $2,768,594 for the nine month period ended September 30, 2007, and has incurred cumulative net losses of $11,712,922 since its inception and will require additional capital for its operational activities. The Company has successfully developed and established a line of men’s and women’s skin care products. The Company has and is aggressively launching its products with several luxury retailers. While the Company has already invested substantial funds in developing, promoting, and marketing activities, additional funds will be required to continue these efforts to establish market presence and gain market shares. Additionally, the Company is in the process of finalizing the development of additional product lines. The Company believes that these endeavors will result in increased sales. However, as of September 30, 2007, the Company has insufficient cash to operate its business for the next twelve months. The Company experienced revenues during the current quarter and believes that while revenues will increase, they will not be sufficient to absorb expenses to maintain the Company as a going concern. As such, the Company must raise additional capital to achieve its business goals and to continue operations. The Company’s ability to raise additional capital through the future issuances of the common stock is unknown. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties. The Company has not established a stabilized source of revenues sufficient to cover operating costs over an extended period of time. Additionally, the Company is involved in litigation. While the Company is attempting to settle this litigation the outcome may adversely affect the Company and its ability to raise additional funds.

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

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

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

F-4

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

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

3. SIGNIFICANT ACCOUNTING POLICIES

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

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

Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

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

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

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

Credit and concentration risk. The Company maintains deposit accounts in a single financial institution. From time to time, cash deposits may exceed Federal Deposit Insurance Corporation limits. The Company maintains certificates of deposit in excess of federal deposit insurance limits and, the Company’s general operating account will exceed federal deposit insurance limits.

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

F-5

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

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

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

Earnings (loss) per share.  Basic earnings (loss) per share exclude any dilutive effects of options, warrants and convertible securities. Basic earnings (loss) per share are computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings (loss) per share are computed using the weighted-average number of common and common stock equivalent shares outstanding during the period. Common stock equivalent shares are excluded from the computation if their effect is anti-dilutive. Stock options are anti-dilutive when the results from operations are a net loss, as is the case for the for the nine months ended September 30, 2007 and 2006 or when the exercise price of the options is greater than the average market price of the common stock for the period.

Income taxes. The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We established a valuation allowance for the full tax benefit of the operating loss carryforward due to the uncertainty regarding realization. As of September 30, 2007, the Company has cumulative net losses of $11,712,922. The available net operating loss carryforwards are still being determined. Such losses may not be fully deductible due to the significant amounts of non-cash service costs.

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

Advertising costs. Advertising costs incurred in the normal course of operations are expensed as incurred. Advertising costs incurred for the nine months ended September 30, 2007 and 2006, and for the period from inception (March 21, 2004) through September 30, 2007 was $44,975, and $0, and $44,975, respectively.

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

In order to determine compensation on options issued to consultants, and employees’ options, the fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the requisite service period used in the Black-Scholes calculation based on an analysis of vesting and exercisability conditions, explicit, implicit, and/or derived service periods, and the probability of the satisfaction of any performance or service conditions. The Company also considers whether the requisite service has been rendered when recognizing compensation costs. The Company does not consider market conditions to be vesting conditions and an award is not deemed to be forfeited solely because a market condition is not satisfied.

F-6

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2006, the FASB issued SFAS No. 155 entitled “Accountingfor Certain Hybrid Financial Instruments ,” an amendment of SFAS No. 133 (“Accountingfor Derivative Instruments and Hedging Activities”) and SFAS No. 140 (“Accountingfor Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”). In this context, a hybrid financial instrument refers to certain derivatives embedded in other financial instruments. SFAS No. 155 permits fair value re-measurement of any hybrid financial instrument which contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133. SFAS No. 155 also establishes a requirement to evaluate interests in securitized financial assets in order to identify interests that are either freestanding derivatives or “hybrids” which contain an embedded derivative requiring bifurcation. In addition, SFAS No. 155 clarifies which interest/principal strips are subject to SFAS No. 133, and provides that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS No. 155 amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative. Any difference between the total carrying amount of the components of a bifurcated hybrid financial instrument and the fair value of the combined “hybrid” must be recognized as a cumulative-effect adjustment of beginning deficit/retained earnings.

SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted only as of the beginning of a fiscal year, provided that the entity has not yet issued any annual or interim financial statements for such year. Restatement of prior periods is prohibited.

In March 2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:

1.   Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2.   Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3.   Permits an entity to choose ‘amortization method’ or ‘fair value measurement method’ for each class of separately recognized servicing assets and servicing liabilities.

4.   At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity’s exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.

5.   Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.

This Statement is effective as of the beginning of the Company’s first fiscal year that begins after September 15, 2006.

Management does not believe that SFAS No. 155 and No. 156 will have an impact on our financial statements. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on our present or future financial statements included elsewhere herein.

In September 2006, the FASB issued FAS 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its financial statements.

F-7

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 provides interpretive guidance on the SEC's views regarding the process of quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115” (“SFAS 159”).  SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value.  SFAS 159's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently.  SFAS 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007.   The Company is currently evaluating the potential impact, if any, that the adoption of SFAS 159 will have on its financial statements.

5. RELATED PARTY TRANSACTIONS

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

6. CONVERTIBLE DEBENTURE

The Company and an unrelated third party have entered into an agreement whereby the third party is willing to provide, subject to the terms and conditions of the agreement; certain financing for the Company’s ongoing and proposed business operations and activities. The agreement provides for a 9% Senior Secured Convertible Note in the stated amount of $2,200,000. The initial advance ($500,000) is to be secured by a certain license agreement by and between the Company, Constellation Wines U.S., and Robert Mondavi Corporation. The agreement provides an invitation to join the Board of Directors and receiving options to purchase 125,000 shares of the Company’s stock, and if the full amount is funded will receive stock purchase warrants up to 4,000,000 shares or a proportional number of shares if funded less than $2,200,000. As of September 30, 2007, the Company has received $500,000. The amount of accrued interest is $13,019, the agreement is being terminated (See footnote -12).

7. FIXED ASSETS

Fixed assets consist of the following as of September 30, 2007:

Furniture and fixtures	$	6,972
Computer equipment		9,932
Printer		4,848
Leasehold improvements		17,000
		38,752
Less: accumulated depreciation		(8,294	)
Fixed assets, net	$	30,458

F-8

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

8. DEPOSIT

The Company has booked $24,570 in deposits.

9. COMMITMENTS AND CONTINGENCIES

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

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

12 months ending September 30,
2008	$	63,798
2009		43,303
Total	$	107,101

Total rental expenses under non-cancelable lease terms in excess of one year was $43,660, $46,421, and $136,700 for the nine month period ended September 30, 2007 and 2006, and the period from inception (March 21, 2004) through September 30, 2007, respectively.

10. CONCENTRATIONS

The Company’s sales during the nine month period ended September 30, 2007 were to several customers and all purchases of inventory were from one supplier.

At September 30, 2007, the Company did not maintain certificates of deposit at any one major financial institution in excess of the federally insured limits pursuant to Federal Deposit Insurance Corporation. The Company had certificates of deposit in the amount $7,233.

11. CAPITAL STOCK TRANSACTIONS

Preferred stock- The authorized preferred stock is 10,000,000 shares at $0.001 par value. As of September 30, 2007 there were no preferred shares issued or outstanding.

Common Stock- The authorized common stock is 90,000,000 shares at $0.001 par value. As of September 30, 2007, there were 17,061,208 shares of common stock outstanding.

During the quarter ended September 30, 2007, the Company issued 150,000 shares of common stock to its new director and 1,000,000 shares to its Chief Executive Officer. The Company expensed $149,500 for the 1,150,000 shares issued at a price of $0.13 per share.

F-9

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

12. WARRANTS

On March 27, 2006, we closed a Stock Purchase Agreement (“SPA”) with Artist House Holdings, Inc. (“Artist House.”) Under the Stock Purchase Agreement, Artist House agreed to purchase 283,333 of our Securities Units (“Securities Units,”) consisting of 566,667 shares of common stock and a warrant to purchase an additional 283,333 shares of common stock at $4.50 per share exercisable in 24 months, in exchange for gross proceeds of $1,700,000 (less $204,000 in fees) for net proceeds of $1,496,000, an effective price of $2.65 per share. We filed the Registration Statement, however did not pursue the registration process due to legal proceedings. The warrants issued in accordance with the above mentioned SPA were valued at $275,737 using the Black-Scholes option pricing model. The following table summarizes the assumptions used in arriving at the valuation:

Number of warrants issued		283,333
Market price at grant date	$	1.50
Exercise price	$	4.50
Term		24 months
Volitility		66	%
Annual rate of quarterly dividends		0.00	%
Discount Rate-Bond Equivalent Yield		4.61	%

On May 14, 2007, the Company and an unrelated third party entered into an agreement whereby the third party is willing to provide, subject to the terms and conditions of the agreement; certain financing for the Company’s ongoing and proposed business operations and activities (see footnote 6 - Convertible Debenture). On July 3, 2007, the Company received $500,000. Because the investor has not provided any further funding the Company has terminated the funding agreement. However, based on funding to date, the investor is entitled to a warrant to purchase 908,000 shares of the Company’s common stock. The warrants issued in accordance with the above mentioned SPA were valued at $50,607 using the Black-Scholes option pricing model. The following table summarizes the assumptions used in arriving at the valuation:

Number of warrants issued		908,000
Market price at grant date	$	0.16
Exercise price	$	0.75
Term		60 months
Volitility		77	%
Annual rate of quarterly dividends		0.00	%
Discount Rate-Bond Equivalent Yield		5.05	%

13. COMMON STOCK OPTIONS

In order to determine compensation on options issued to consultants, as well as fair value disclosures for employees’ options, the fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates the requisite service period used in the Black-Scholes calculation based on an analysis of vesting and exercisability conditions, explicit, implicit, and/or derived service periods, and the probability of the satisfaction of any performance or service conditions. The Company also considers whether the requisite service has been rendered when recognizing compensation costs. The Company does not consider market conditions to be vesting conditions and an award is not deemed to be forfeited solely because a market condition is not satisfied.

F-10

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

On November 1, 2005, we entered into an employment agreement (“Agreement”) with our President. The term of the Agreement is for two years with an annual salary of $120,000. The Agreement provides for bonuses to our President based upon our financial performance to be determined at the sole discretion of our Board of Directors after consultation with our President. The Agreement also provides for equity based compensation to purchase up to 1,250,000 shares of our common stock (“Stock Options”) at a purchase price of $0.25 per share. The Stock Options vest as follows: 250,000 shares upon execution of the Agreement; 500,000 shares on March 1, 2006; and 500,000 shares on March 1, 2007. During the three months ended March 31, 2007, the President agreed to forfeit options to purchase 750,000 shares of the Company’s common stock. The estimated fair value of the Stock Options has been determined using Black-Scholes option pricing model using the following assumptions:

exercise price of	$	0.25
closing stock price on date of the Agreement of	$	3.50
historical stock price volatility of		77	%
risk free interest rate of		3.50	%
dividend yield of		0% and 3 year term.

The estimated fair value of the Stock Options was expensed over the vesting period. During the nine months ended September 30, 2007, 2006, and during the period from inception (March 21, 2004) through September 30, 2007 we recorded an expense related to the Stock Options of $702,486, $1,582,407, and $4,764,157, respectively. The Company recorded no expense for the three month period ended September 30, 2007.

In February 2006, we employed Patrick Pflipsen and the Company agreed to provide equity based compensation to purchase up to 50,000 shares of our common stock (“Stock Options”) at a purchase price of $0.26 per share.  The estimated fair value of the Stock Options has been determined using Black-Scholes option pricing model using the following assumptions:

exercise price of	$	0.26
closing stock price on date of the Agreement of	$	0.26
historical stock price volatility of		66	%
risk free interest rate of		4.56	%
dividend yield of		0% and 1 year term.

The estimated fair value of the Stock Options totaled $6,166, which was expensed over the vesting period. During the nine months ended September 30, 2007 and 2006 and during the inception period from inception (March 21, 2004) through September 30, 2007, we recorded an expense related to the Stock Options of $0, $0, $6,166, respectively. There was no related expense for the three month period ended September 30, 2007.

On June 8, 2006, we entered into an employment agreement (“Agreement”) with our Chief Financial Officer. The term of the Agreement is for two years with an annual salary of $120,000. The Agreement provides for bonuses to our Chief Financial Officer based upon our financial performance to be determined at the sole discretion of our Board of Directors, and quarterly bonuses tied to the accurate and timely filing of all required SEC filings. The Agreement also provides for equity based compensation to purchase up to 370,000 shares of our common stock (“Stock Options”) at a purchase price of $1.00 per share. The Stock Options vest as follows: 10,000 shares upon execution of the Agreement; 30,000 shares at the end of each quarter during the term that the Executive remains employed. This executive resigned on September 15, 2006, and accordingly, the options to purchase 360,000 shares were forfeited during the year ended December 31, 2006. The estimated fair value of the Stock Options has been determined using Black-Scholes option pricing model using the following assumptions:

exercise price of	$	1.00
closing stock price on date of the Agreement of	$	1.01
historical stock price volatility of		107	%
risk free interest rate of		4.99	%
dividend yield of		0% and 3 year term.

The estimated fair value of the Stock Options totaled $8,696, which was expensed over the vesting period. During the nine months ended September 30, 2007 and 2006 and during the period from inception (March 21, 2004) through September 30, 2007, we recorded an expense related to the Stock Options of $0, $0, $8,696, respectively. There was no related expense for the three month period ended September 30, 2007.

F-11

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

On November 28, 2006, Davi Skin, Inc. (the “Company”) executed and delivered a severance agreement with Patrick Pflipsen (“Pflipsen”) by which the Company terminated Pflipsen’s employment with the Company.  In consideration for Pflipsen’s obligations under the agreement, the agreement provides that the Company shall issue 50,000 options to purchase common stock of the Company with an exercise price of $0.50 per share.  Under the agreement, the Company also retained the option to engage Pflipsen as a consultant to assist in various projects, including capital raises for the Company. The estimated fair value of the Stock Options has been determined using Black-Scholes option pricing model using the following assumptions:

exercise price of	$	0.49
closing stock price on date of the Agreement of	$	0.25
historical stock price volatility of		152	%
risk free interest rate of		4.56	%
dividend yield of		0% and 6 mth term.

The estimated fair value of the Stock Options totaled $9,740, which was expensed over the vesting period., During the nine months ended September 30, 2007 and 2006, and during the period from inception (March 21, 2004) through September 30, 2007, we recorded an expense related to the Stock Options totaling $0, $0, and $9,740 respectively.

 On May 14, 2007, the Company and an unrelated third party entered into an agreement whereby the third party is willing to provide, subject to the terms and conditions of the agreement; certain financing for the Company’s ongoing and proposed business operations and activities (see footnote 6 - Convertible Debenture). On July 3, 2007, the Company received $500,000. Because the investor has not provided any further funding the Company has terminated the funding agreement. However, based on funding to date, the investor is entitled to options to purchase 125,000 shares of the Company’s common stock. The estimated fair value of the Stock Options has been determined using Black-Scholes option pricing model using the following assumptions: The following table summarizes the assumptions used in arriving at the valuation:

exercise price of	$	0.25
closing stock price on date of the Agreement of	$	0.16
historical stock price volatility of		77	%
risk free interest rate of		5.05	%
dividend yield of		0% and 60 mth term.

The estimated fair value of the Stock Options totaled $11,435, which was expensed over the vesting period., During the nine months ended September 30, 2007 and 2006, and during the period from inception (March 21, 2004) through September 30, 2007, we recorded an expense related to the Stock Options totaling $11,435, $0, and $11,435 respectively.

The following is a summary of the stock option activity:

	Number of Shares			Weighted Average Exercise Price
Outstanding at January 1, 2007		1,360,000		$	0.26
Options Granted		125,000		$	0.25
Options Canceled		(750,000	)	$	(0.25	)
Options Exercised		-		$	-
Outstanding at September 30, 2007		735,000		$	0.26
Exercisable at September 30, 2007		735,000		$	0.26

F-12

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

The details of the vested stock options outstanding as of September 30, 2007 are as follows:

	Options Outstanding						Options Exercisable
Range of Exercisable Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.25 - $1.00		735,000		1.55	$	0.26		735,000	$	0.26

	Options Outstanding & Unvested at September 30, 2007
	Number Outstanding			Weighted Average Exercise Price
Non Vested at January 1, 2007		500,000		$	0.25
Granted		-		$	-
Forfeited		-		$	-
Vested		(500,000	)	$	0.25
Non Vested at September 30, 2007		-		$	-

14. EQUITY SECURITIES OFFERINGS

On January 3, 2007, the Company entered into an agreement with Donald B. Schwall, Jr. (“Mr. Schwall”).  Pursuant to the agreement, Mr. Schwall is obligated to act as a consultant and advisor to the Company on various promotional and marketing campaigns, including developing online promotional concepts, events and materials to increase website awareness, service membership, and eCommerce product sales.  Mr. Schwall will also provide consulting services relating to endorsements, co-operative promotions, and other forms of strategic alliances.  The agreement provides that the Company shall compensate Mr. Schwall for his services with 400,000 shares of Company common stock issued under the Company’s stock compensation plan as follows:  200,000 shares upon execution of the Agreement, and 200,000 shares on April 1, 2007 so long as the agreement is in effect on such date.  The agreement shall terminate on January 3, 2008.

The Company filed a Registration Statement on Form S-8 relating to 200,000 shares of its common stock, par value $0.001 per share (the “Common Stock”) issued to Donald B. Schwall, Jr. (“Consultant”), an eligible consultant to the Corporation under that certain Consulting Agreement between the Company and Consultant dated as of January 3, 2007. Subsequent to March 31, 2007, the consulting agreement was cancelled and 150,000 shares of common stock were returned. During the three month period ended March 31, 2007, non cash consulting fees of $30,000 were recorded relating to this agreement.

15. LEGAL PROCEEDINGS

An action entitled Rowe D. Nelson, et al. vs. Davi Skin, Inc., et al., Los Angeles Superior Court Case No. SC091146 (the “Complaint”) was filed on September 20, 2006. The plaintiffs filed an amended complaint on or about October 6, 2006, to which the defendants filed a demurrer, which was sustained in part. The plaintiffs filed a second amended complaint (“SAC”) on or about February 23, 2007, and defendants have demurred in part to that pleading. On July 24, 2007, the Company issued to its shareholders of record as June 21, 2007, a Notice of Proposed Settlement of Derivative Action in the matter of Rowe D. Nelson, et al vs. Davi Skin, Inc., et al., Los Angeles Superior Court Case No. SC091146. The matter was settled on September 17, 2007. The Company was responsible for its legal fees and any amounts over and above this were covered by the insurance carrier.

F-13

DAVI SKIN, INC

(Formerly MW Medical, Inc.)

A Development Stage Company

September 30, 2007

NOTES TO FINANCIAL STATEMENTS

On May 4, 2006 we received a letter from legal counsel representing Artist House in which Artist House purportedly terminated the SPA dated March 27, 2006, and demanded the unconditional return of $1,700,000 million, representing Artist House’s purchase price under the SPA for 566,667 shares of our common stock plus warrants exercisable into 283,333 shares of our common stock. In this demand letter, Artist House alleged that we failed to timely perform certain conditions and obligations under the SPA, including (a) appointing certain individuals affiliated with Artist House to our board of directors, (b) obtaining directors and officers liability insurance, (c) modifying rights related to stock options issued to our CEO, Joe Spellman, (d) appointing Artist House as our licensing agent in Japan, and (e) requiring board approval for any salary increases to our officers. On July 6, 2006, counsel for the Company received written notice from another attorney representing Artist House, demanding rescission of the SPA, based on the similar claims and allegations of breach and non-performance by the Company and allegations that the alleged “finder” of the investment was acting as an unlicensed broker and therefore the transaction is subject to rescission. The Company denies the allegations.

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

During April, 2006, we received a letter from a third party requesting the exercise of a conversion right attached to a $200,000 note originally due to Ms. Jan Wallace, the former CEO of MW Medical. The company is in negotiations presently with Ms. Wallace to convert the note from debt to equity. At the year end, the note was still a debt on the books of the company accruing interest.  Since then, the debt has been converted to equity in the names of third party holders.

The financial statements do not reflect any adjustments that could result from an unfavorable outcome with respect to any of the above legal proceedings. At this juncture we cannot determine the outcome or range of any such loss. We do believe, however, that the above litigation is without merit, and are currently evaluating strategic and legal options best suited for our future growth.

16. SUBSEQUENT EVENT

On November 16, 2007, the Company and an existing shareholder entered into an agreement whereby the shareholder was willing to provide financing for the Company’s proposed business operations and activities. The agreement provides for a six-month note for $200,000 at an annual interest rate of 13 percent. The note may be converted to common shares of the Company at a price of $0.55. The shareholder also received options to purchase a 125,000 common shares at a price of $0.55.

F-14

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

We are principally engaged in the development, manufacturing and distribution of Davi luxury branded products including the Davi luxury line of skincare for men and women that encompass the anti-oxidant rich by-products of the winemaking process coupled with the latest innovations in modern technology. We also function as a licensor and licensing agent to entities interested in associating their products with our luxury brand names.

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Skin Care Products

The development of the Davi Skin luxury branded skincare product line is now complete. We are selling the initial nine (9) SKUs, four (4) products in the women’s line and five (5) products in the men’s line, which are described in more detail below. All the products are available since to our retail launch in October 2006 with luxury retailer Bergdorf Goodman in New York City. The products are now also available through Bliss World Catalogs and their corresponding website; the luxury hotel and spa, Meadow Wood, located in the Napa Valley; and the Living Beauty section of Selfridges department store in London, England. We are finalizing distribution agreements with several retailers located throughout Europe, Asia, the United States and Canada. We anticipate that our products will be available through these retailers by the 1^st quarter of 2008. These select upscale retailers submit purchase orders for quantities of our branded products, which we fulfill from our distribution center. Planned distribution will continue to expand into 2008 through the utilization of select distribution companies throughout the world to help oversee the growth and development of the brand.

The initial nine (9) SKUs include four (4) products for women and five (5) for men are described in detail below.

Women’s Line:

§   Le Grand Cru for Women — An ultra-luxurious cream designed for women to provide a unique, long lasting, slow released infusion of anti-oxidants and moisture to the skin in order to make it smoother, softer and more supple;

§   Vine Fresh SPF 30 Lotion — Oil free everyday moisturizer with UVB/UVA protection of an SPF 30. Formulated as a light, non-greasy formula, which is perfect for any type of skin, to moisturize and protect against oxidative damage such as pollution and stress;

§   Moscato Purifying Cleanser — A gentle, luxurious, creamy product designed to cleanse and condition at the same time;

§   Harvest Mist Toner — A super hydrating mist, formulated to tone, hydrate and refresh dull complexion.

Men’s Line:

§   Le Grand Cru for Men — An ultra-luxurious cream designed for men to provide a unique, long lasting, slow released infusion of anti-oxidants and moisture to the skin in order to make it smoother, softer and more supple;

§   Vine Fresh SPF 15 Lotion — Oil free everyday moisturizer with UVB/UVA protection of an SPF 15. Formulated as a light, non-greasy formula, which is perfect for any type of skin, to moisturize and protect against oxidative damage such as pollution and stress;

§   Reserve Shave Cream — A luxurious shave cream designed to provide an extraordinarily close yet comfortable shave;

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§   Coastal Vine After Shave — An aftershave elixir /tonic used to soothe freshly shaved skin, reduce irritation, and provide moisturizing properties;

§   Crushed Grape Seed Exfoliating Cleanser —Infused with crushed grape seeds this product is designed to cleanse, exfoliate, and condition at the same time.

At the core of all our products is a proprietary microencapsulated anti-aging antioxidant complex called Meritage that was created in collaboration with laboratories in Lyon, France. Meritage is a blend of grape and fermented wine extracts, green tea, raspberry, blackcurrant, and bilberry extracts amongst other select key ingredients. The Meritage complex is created through a unique double fermentation process, which allows for the select high-level antioxidants to remain active on the skin longer than conventionally created products.

Licensing Agent

In order to further our success and to leverage the highly visible and well-respected Mondavi name into other market categories, we entered into an agreement with Constellation Brands Group (“CBG”), the parent entity of The Robert Mondavi Corporation (“RMC”). RMC has retained us to act as their licensing agent in agreements with Waterford Wedgewood USA, Inc. (“Waterford”) on the development of a Robert Mondavi stemware line. CBG owns certain intellectual property rights held in RMC, including the valued Robert-Mondavi licensed marks (the “Intellectual Property”), and we have been engaged to: (1) negotiate opportunities with Waterford to license the Intellectual Property with Waterford’s stemware products, (2) develop and implement strategic plans for branding Waterford’s products, and (3) facilitate the terms and conditions of any agreements with Waterford. In exchange, CBG has agreed to compensate us with a revenue share of thirty three and one-third percent (33 -1/3%) of the gross revenues collected in any agreement we establish with Waterford. Gross revenues means the gross receipts actually received from any agreement with Waterford, including without limitation advance payments, minimum guarantees, royalty payments and other license fees.

Since we received a one-time $25,000 signing bonus during the first quarter of 2007 for the successful negotiation and execution of the Constellation licensing arrangement, we have received $46,933.99 in royalty payments.

Licensor

We entered into a relationship with Gilchrist and Soames, an industry leader in fine toiletries manufacturing, on the development of a Davi branded line of hotel amenity kits. The initial line of amenity products consists of shampoo, conditioner, bath gel, body lotion and soaps, with additional products to be developed in the future. The range of Davi amenity products will feature the same Meritage complex of antioxidants that is found in the Davi men and women's retail product lines.

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Plan of Operation in the Next Twelve Months

Skin Care Line

The initial nine (9) SKUs include four (4) products for women and five (5) for men. All the products are now available pursuant to our retail launch in October 2006 with luxury retailer Bergdorf Goodman in New York City. Subsequent to the launch, the products have now also become available at Bliss World Catalogs and their corresponding website; the luxury hotel and spa, Meadow Wood, located in the Napa Valley; and the Living Beauty section of Selfridges department store in London, England. We are also finalizing distribution agreements with several select retailers located throughout Europe, Asia, and across the United States and Canada. We expect to have agreements finalized and to be able to make our products available for purchase through these retailers commencing in the 4^th quarter of this year and 1^st quarter of 2008. These select upscale retailers submit purchase orders for quantities of our branded products, which we fulfill from our distribution center. Planned distribution will continue to expand into 2008 through the utilization of select Distribution Companies throughout the world to help oversee the growth and development of the brand.

Product Development

We have developed of a hotel amenity line of products for distribution into luxury hotel rooms worldwide in conjunction with Gilchrist & Soames, an industry leader in fine toiletries manufacturing. The initial line of amenity products will consist of shampoo, conditioner, bath gel, body lotion and soaps, with additional products to be developed in the future.

These amenity products feature the same Meritage complex of antioxidants that is found in our men’s and women’s retail line. Meritage is a microencapsulated blend of select antioxidants, including fermented grape extracts, which remain pure within the formula until application. Meritage's sustained time-release technology provides a slow infusion of antioxidant health benefits to the skin.

Manufacturer

Prior to our product launch in October 2006, we completed the research and development necessary to finalize the product designs and technical aspects needed to commence production of our products with our contract manufacturer. We completed the process of choosing all peripheral items involved in the manufacturing and marketing process, including:

§   the final shape and size of the product containers;

§   the final selection of caps;

§   the final packaging design;

§   the logo and label designs; and

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§   the final unit carton design and construction.

Upon final selection of the packaging directions and the completion of technical drawings of the packaging itself, production of our initial nine (9) SKUs commenced. Upon the completion of production, finished goods were then shipped to our distribution warehouse to await distribution to our retail channels. We intend to continue working with our contract manufacturer to ensure that our product orders are responsive to the needs of our customers.

Luxury Branding and Acquisitions

During the normal course of business, our management team has been searching for other business opportunities that would allow us to diversify our sources of revenue.

In order to accomplish this new portion of our business plan, our board of directors will focus more on becoming a luxury brands headquarters. It is our intent to leverage our founder’s highly visible and well-respected Mondavi name into other market categories as well as to acquire new brands and intellectual properties to own, develop and license in the luxury category, while continuing to develop our original luxury skin care products.

It is our intent that our company will become a holding company that will maintain the intellectual properties, trademarks, copyrights and licenses of the various operating businesses we are able to acquire or partner with. We plan to own anywhere from 0% to 100% of these operational companies. Depending on the circumstances surrounding each opportunity, management anticipates it will choose to fund these operational companies or enter into joint ventures with them. The holding companies will generate revenues from all licenses it issues to use the Mondavi and Davi names.

New product development will commence as we further expand the Davi portfolio of branded products. It is our intent to create an international lifestyle brand consisting of several lifestyle products bearing the Davi name. These products will be made available through our developing network of retail distributors.

As our first step to further our new objective, we entered into an agreement with Constellation Brands Group, the parent entity of The Robert Mondavi Corporation. RMC has retained us to act as their licensing agent in agreements with Waterford Wedgewood USA, Inc. on the development of a Robert Mondavi stemware line. CBG owns certain intellectual property rights held in RMC, including the valued Robert-Mondavi licensed marks, and we have been engaged to (1) negotiate opportunities with Waterford to license the Intellectual Property with Waterford’s stemware products, (2) develop and implement strategic plans for branding Waterford’s products, and (3) facilitate the terms and conditions of any agreements with Waterford. In exchange, CBG has agreed to compensate us with a revenue share of thirty three and one-third percent (33 - 1/3%) of the gross revenues collected in any agreement we establish with Waterford. Gross revenues means the gross receipts actually received from any agreement with Waterford, including without limitation advance payments, minimum guarantees, royalty payments and other license fees.

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On February 7, 2006, we successfully established the first license agreement (the “License Agreement”) with Waterford. RMC granted to Waterford the exclusive right to use the Intellectual Property in connection with the manufacture and worldwide distribution of Waterford’s stemware, barware, decanters, and other related products (the “Licensed Products”). Pursuant to the terms of the License Agreement, we have been retained to facilitate promotional efforts of the Licensed Products. Specifically, we have been retained to provide Waterford the services of Carlo Mondavi, our Chairman and Founder, to act as spokesman for the Licensed Products and to make personal appearances at scheduled promotional events. In exchange, Waterford agreed to provide percentage royalties to RMC on net sales of the Licensed Products. Since we negotiated the terms and conditions of the License Agreement with Waterford and will provide promotional services to Waterford, we will share thirty three and one-third percent (33 -1/3%) in any proceeds received from the License Agreement.

Results of Operations for the three months ended September 30, 2007 and 2007

Assets. Our total assets as of September 30, 2007 were $750,703. Our total assets largely consist of inventory in the amount of $631,716. Our total assets as of September 30, 2006, were $2,030,176, consisting primarily of cash in the amount of $355,863, a certificate of deposit in the amount of $825,488, and inventory in the amount of $765,800. The decrease in cash and investments, our primary assets, are attributable to our administrative costs as our company has been promoting and developing our product lines, which were launched in October 2006.

Our total liabilities as of September 30, 2007 were $957,710, consisting primarily of accounts payable and accrued expenses in the amount of $501,733, and $500,000 in a convertible debenture compared to total liabilities of $371,195 as of September 30, 2006, consisting primarily of accounts payable of $114,621 and $245,000 in a note payable-related party.

Sales. Sales consist of revenues from the sale of products from our skin care line. We reported sales of $62,347 for the nine months period ended September 30, 2007, compared with revenue of $0 for the same period ended September 30, 2006. This increase is a result of the skin care line launch in October 2006. Our cost of goods sold for the nine months ended September 30, 2007 was $7,552 resulting in gross profits of $54,795. We did not have any cost of revenues for the nine months ended September 30, 2006.

For the three months ended September 30, 2007, sales amounted to $16,466 compared to sales of $0 for the same period ended September 30, 2006. Our cost of goods for the three month period ended September 30, 2007 was $2,811 resulting in a gross profit $13,655.

Operating Expenses. Our operating expenses decreased by $630,037 to $2,847,056 for the nine months ended September 30, 2007, compared to $3,477,093 for the same reporting period in the prior year. The decrease in expenses was largely attributable to a decrease in stock based compensation paid to our executive officers offset by increased expenses for the nine months ended September 30, 2007 for consulting and professional fees. Our operating expenses for the nine months ended September 30, 2007 consisted of selling, general and administrative expenses of $965,064, depreciation of $5,470, consulting fees of $594,295, employee stock options of $747,342, and professional fees of $534,885. In comparison, our operating expenses for the nine months ended September 30, 2006 consisted of selling, general and administrative expenses of $885,494, depreciation of $11,430, consulting fees of $193,352, employee stock options of $2,099,949, and professional fees of $286,868.

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Our operating expenses decreased by $185,661 to $455,350 for the three months ended September 30, 2007, compared to $641,011 for the same reporting period in the prior year. The decrease was attributable to professional fees; marketing and promotional expenses, and travel expenses. Our operating expenses for the three months ended September 30, 2007 consisted of selling, general and administrative expenses of $246,950, depreciation of $1,970, consulting fees of $201,666, and professional fees of $4,764. In comparison, our operating expenses for the three months ended September 30, 2006 consisted of selling, general and administrative expenses of $449,424, depreciation of $460, consulting fees of $71,076, and professional fees of $120,051.

Other Income (Expenses). Other income consists of royalty income from our licensing agreement and interest income from our certificate of deposit. We reported other income of $23,667 and $2,363 for the nine month and three month periods ended September 30, 2007, respectively, compared to $28,332 and $13,729 for the same periods ended September 30, 2006, respectively. For the nine months ended September 30, 2007, other income largely consisted of royalty income of $46,933 as opposed to interest income of $56,420 for the same period ended September 30, 2007. For the three months ended September 30, 2007, other income largely consisted of royalty income of $19,877 as opposed to interest income of $18,742 for the same period ended September 30, 2007.

Net Loss. We reported a net loss of $2,768,594 or $0.18 per share and a net loss of $439,332 or $0.03 for the nine and three months ended September 30, 2007, respectively, compared to a net loss of $3,448,761 or $0.29 per share and $627,282 or $0.29 per share for the nine and three months ended September 30, 2006, respectively.

Liquidity and Capital Resources

As of September 30, 2007, our total current assets of $695,675 consisted of $7,233 of certificates of deposit, $631,716 of inventory, $29,717 of accounts receivable, and $9,609 of prepaid expenses. As of September 30, 2007, our total current liabilities of $514,752 consisted of $501,733 in accounts payable and accrued expenses and $13,019 in interest payable. We thus had working capital of $180,923 at September 30, 2007.

Net cash used in operating activities was $1,168,777 for the nine months ended September 30, 2007 compared to net cash used in operating activities of $1,989,370 for the nine months ended September 30, 2006. Net cash flow provided by investing activities amounted to $823,613 for the nine months ended September 30, 2007 compared to net cash used in investing activities of $845,615 for the nine months ended September 30, 2006. Net cash flow used in financing activities amounted to $362,564 for the nine month period ended September 30, 2007, compared to net cash provided by financing activities of $1,496,000 for the nine month period ended June 30, 2006.

We anticipate that we will be dependent, for the immediate future, upon additional investment capital to fund operating expenses.

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In connection with our need for additional financing, we entered into an Agreement for Convertible Note with an unrelated third party, Mr. Amin S. Lakha, whereby Mr. Lakha is willing to provide, subject to the terms and conditions of the Agreement for Convertible Note and accompanying documents (the “Agreement”), certain financing for our ongoing and proposed business operations and activities. The Agreement provides for a 9% Senior Secured Convertible Note (the “Note”) in the stated amount of $2,200,000. Interest is payable in six month intervals and the note matures on May 15, 2010. The Note allows Mr. Lakha to convert a part or all of the outstanding balance under the Note into shares of our common stock at a conversion price of $0.55 per share, which is subject to adjustment in the event of certain dilutive issuances, including stock dividends and reorganizations.

Under the Agreement and the accompanying Assignment and Security Agreement, the “Initial Advance,” defined as a $200,000 preliminary advance and an additional advance of $300,000, is to be secured by funds received in connection with a certain license agreement by and between the Company, Constellation Wines U.S., and Robert Mondavi Corporation. As of the date of this filing, we received the entire Initial Advance of $500,000 from Mr. Lakha. As such, under the Agreement and accompanying documents, we are bound to provide each of the following to Mr. Lakha:

1.   Invite Mr. Lakha to serve on our board of directors;

2.   Grant Mr. Lakka options to purchase 125,000 shares of our common stock with an exercise price of $0.25 per share;

3.   Grant Mr. Lakha warrants to purchase up to 4,000,000 shares of our common stock proportionate to the amount of funds advanced by Mr. Lakha; and

4.   Upon receipt and exercise of all derivative securities, provide Mr. Lakha a constant equity position of at least 32.9% of the total outstanding equity in our company.

We have facilitated a transfer of shares to Mr. Lakha by existing shareholders.

Mr. Lakha is not required to advance additional funds under the Note beyond the $500,000 that we already received. If we call upon Mr. Lakha to advance additional funds up to a total of $2,200,000 and Mr. Lakha refuses to do so, the Note will be amended to reflect the amounts actually advanced to us. As of the date of this report, Mr. Lakha has determined by economic reasons to decline our request for additional funding. We are therefore amending the agreement to reflect the actual amount advanced by Mr. Lakha and other consideration to be paid pursuant to the agreement.

Off Balance Sheet Arrangements

As of September 30, 2007, there were no off balance sheet arrangements.

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Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of our company as a going concern. We have incurred net losses of $2,768,594 for the nine month period ended September 30, 2007, and has incurred cumulative net losses of $11,712,922 since our inception and will require additional capital for our operational activities. We have successfully developed and established a line of men’s and women’s skin care products. We have and are aggressively launching our products with several luxury retailers. While we have already invested substantial funds in developing, promoting, and marketing activities, additional funds will be required to continue these efforts to establish market presence and gain market shares. Additionally, we are in the process of finalizing the development of additional product lines. We believe that these endeavors will result in increased sales. However, as of September 30, 2007, we have insufficient cash to operate our business for the next twelve months. We experienced revenues during the current quarter and believes that while revenues will increase, they will not be sufficient to absorb expenses to maintain us as a going concern. As such, we must raise additional capital to achieve our business goals and to continue operations. Our ability to raise additional capital through the future issuances of the common stock is unknown. The ability to successfully resolve these factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties. We have not established a stabilized source of revenues sufficient to cover operating costs over an extended period of time. Additionally, we are involved in litigation. While we are attempting to settle this litigation the outcome may adversely affect the Company and its ability to raise additional funds.

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

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition.

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

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

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

Stock-based compensation. We account for stock options under SFAS 123(R).

In order to determine compensation on options issued to consultants, and employees’ options, the fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. We estimate the requisite service period used in the Black-Scholes calculation based on an analysis of vesting and exercisability conditions, explicit, implicit, and/or derived service periods, and the probability of the satisfaction of any performance or service conditions. We also consider whether the requisite service has been rendered when recognizing compensation costs. We do not consider market conditions to be vesting conditions and an award is not deemed to be forfeited solely because a market condition is not satisfied.

Recently Issued Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155 entitled “Accounting for Certain Hybrid Financial Instruments,” an amendment of SFAS No. 133 (“Accounting for Derivative Instruments and Hedging Activities”) and SFAS No. 140 (“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”). In this context, a hybrid financial instrument refers to certain derivatives embedded in other financial instruments. SFAS No. 155 permits fair value re-measurement of any hybrid financial instrument which contains an embedded derivative that otherwise would require bifurcation under SFAS No. 133. SFAS No. 155 also establishes a requirement to evaluate interests in securitized financial assets in order to identify interests that are either freestanding derivatives or “hybrids” which contain an embedded derivative requiring bifurcation. In addition, SFAS No. 155 clarifies which interest/principal strips are subject to SFAS No. 133, and provides that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS No. 155 amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative. When SFAS No. 155 is adopted, any difference between the total carrying amount of the components of a bifurcated hybrid financial instrument and the fair value of the combined “hybrid” must be recognized as a cumulative-effect adjustment of beginning deficit/retained earnings.

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SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted only as of the beginning of a fiscal year, provided that the entity has not yet issued any annual or interim financial statements for such year. Restatement of prior periods is prohibited.

In March 2006 FASB issued SFAS 156 ‘Accounting for Servicing of Financial Assets’ this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:

1.   Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2.   Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3.   Permits an entity to choose ‘amortization method’ or ‘fair value measurement method’ for each class of separately recognized servicing assets and servicing liabilities.

4.   At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entity’s exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.

5.   Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.

This Statement is effective as of the beginning of the Company’s first fiscal year that begins after September 15, 2006.

Management does not believe that SFAS No. 155 and No. 156 will have an impact on our consolidated financial statements. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on our present or future consolidated financial statements included elsewhere herein.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN No. 48). This interpretation requires recognition and measurement of uncertain income tax positions using a "more-likely-than-not" approach. The provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its consolidated financial statements.

In September 2006, the FASB issued FAS 157, “Fair Value Measurements.” This standard defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its consolidated financial statements.

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In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 provides interpretive guidance on the SEC's views regarding the process of quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not anticipate that the adoption of this accounting pronouncement will have a material effect on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115 ("SFAS 159"). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value. SFAS 159's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007. The Company is currently evaluating the potential impact, if any, that the adoption of SFAS 159 will have on its condensed consolidated financial statements.

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Item 3.     Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of Sseptember 30, 2006. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Ms. Jan Wallace, and our Chief Financial Officer, Mr. Munjit Johal. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2007, our disclosure controls and procedures are effective. There have been no changes in our internal controls over financial reporting during the quarter ended September 30, 2007.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

A complete discussion of our ongoing legal proceedings is discussed in our annual report on Form 10-KSB for the year ended December 31, 2006. There have been no material developments in the ongoing legal proceedings previously reported in which we are a party except as follows:

On July 24, 2007, the Company issued to its shareholders of record as June 21, 2007, a Notice of Proposed Settlement of Derivative Action in the matter of Rowe D. Nelson, et al vs. Davi Skin, Inc., et al., Los Angeles Superior Court Case No. SC091146. A settlement hearing was held on September 17, 2007 and the matter was settled. The Company will be responsible for its own legal fees and the Company's insurance carrier covered the settlement amount of $250,000.

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

The information set forth below relates to our issuances of securities without registration under the Securities Act during the reporting period which were not previously included in a Current Report on Form 8-K.

On November 16, 2007, the company and an existing shareholder entered into an agreement whereby the shareholder was willing to provide financing for the Company's proposed business operations and activities. The agreement provides for a six-month note for $200,000 at an annual interest rate of 13 percent. The note may be converted to common shares of the Company at a price of $0.55 per share. The shareholder also received options to purchase 125,000 common shares at a price of $0.55 per share. These securities were issued pursuant to Section 4(2) of the Securities Act of 1933. We did not engage in any general solicitation or advertising.

Item 3.     Defaults upon Senior Securities

None

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

No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended September 30, 2007.

Item 5.     Other Information

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Item 6.      Exhibits

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Davi Skin, Inc.
Date: November 16, 2007
By:	/s/ Jan Wallace
	Jan Wallace
Title:	Chief Executive Officer and Director

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