Davi Skin 10QSB 2005 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, 2005
[ ]	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.)

301 North Canon Drive, Suite 207, Beverly Hills, California 90210

(Address of principal executive offices)

310-205-9907

(Issuer’s telephone number)

301 North Canon Drive, Suite 328,

Beverly Hills, California 90210

(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 [ ] No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] 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: 11,512,618 common shares as of November 9, 2005

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

	TABLE OF CONTENTS	Page
PART I - FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Plan of Operation	4
Item 3:	Controls and Procedures	9
PART II - OTHER INFORMATION
Item 1:	Legal Proceedings	10
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3:	Defaults Upon Senior Securities	10
Item 4:	Submission of Matters to a Vote of Security Holders	10
Item 5:	Other Information	10
Item 6:	Exhibits	10

2

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements

Our unaudited financial statements included in this Form 10-QSB are as follows:

(a)   Balance Sheet as of September 30, 2005.

(b)   Statements of Operations for the three and nine month periods ended September 30, 2005 and 2004, and from inception;

(c)   Statements of Cash Flow for the nine month periods ended September 30, 2005 and 2004, and from inception;

(d)   Notes to Consolidated 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, 2005 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)
CONSOLIDATED BALANCE SHEET
ASSETS		As Of
		Sept 30,
Current Assets		2005
Cash	$	34,145
Certificate of Deposit		1,831,086
Prepaid Expenses		3,162
TOTAL CURRENT ASSETS	$	1,868,393
Fixed Assets, net of accumulated depreciation of $12,785		47,627
Other Assets
Deposits		11,505
TOTAL ASSETS	$	1,927,525
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		45,727
Short term notes payable		-
Notes payable- related parties		225,000
TOTAL CURRENT LIABILITIES	$	270,727
Stockholders' Equity
Preferred stock; $.001 par value; 10,000,000 shares authorized,
and no shares issued and outstanding		-
Common stock; $.001 par value; 90,000,000 shares authorized,
11,512,618 shares issued and outstanding		11,512
Additional paid-in capital		4,382,490
Accumulated deficit during developmental stage		(2,656,996)
Prepaid consulting expense		(80,208)
Stock subscriptions receivable		-
TOTAL STOCKHOLDERS' EQUITY	$	1,656,798
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,927,525

F-1

DAVI SKIN, INC.
(formerly MW Medical, Inc.)
(A Developmental Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
										From the Date of
	Three months ended Sept. 30,					Nine months ended Sept. 30,				inception March 21, 2004
		2005		2004		2005		2004		through Sept. 30, 2005
Revenues		-		-		-		-		-
Cost of revenues		-		-		-		-		-
Gross Profit (Loss)		-		-		-		-		-
Operating Expenses
Selling, general and administrative		208,392		52,126		490,763		227,882		1,312,017
Depreciation		4,288		1,229		10,303		2,228		13,712
Consulting Fees		19,173		716,848		246,275		716,848		952,115
Professional Fees		55,949		524,784		130,026		524,784		180,458
Total oper. Expenses		287,802		1,294,987		877,367		1,471,742		2,458,302
(Loss) From operations		(287,802)		(1,294,987)		(877,367)		(1,471,742)		(2,458,302)
Other Income (expenses)
Interest expenses		(5,000)		(5,000)		(15,005)		(5,000)		(25,005)
Interest income		6,374		2,519		16,701		3,393		21,898
Loss on sale of assets		(534)				(534)				(534)
Sublease rent		3,000				3,000				3,000
Total other income (expense)		3,840		(2,481)		4,162		(1,607)		(641)
NET (LOSS)	$	(283,962)	$	(1,297,468)	$	(873,205)	$	(1,473,349)	$	(2,458,943)
Basic (loss) per common share	$	(0.02)	$	(0.02)	$	(0.09)	$	(0.02)
Diluted loss per common share	$	(0.02)	$	(0.02)	$	(0.09)	$	(0.02)
Basic and diluted weighted average common shares outstanding		11,368,716		9,606,527		9,216,205		9,606,527

F-2

 

DAVI SKIN, INC.
(formerly MW Medical, Inc.)
(A Developmental Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS  (UNAUDITED)
		For the nine months ended September 30, 2005		For the nine months ended September 30, 2004		From the Date of inception March 21, 2004 through September 30, 2005
OPERATING ACTIVITIES
Net (loss)	$	(873,205)	$	(1,473,349)	$	(2,458,943)
Adjustments to reconcile net (loss) to net
cash used in operating activities:
Prepaid consulting expense		34,376		0		(80,208)
Stock based compensation & expenses		0		1,246,005		1,160,026
Depreciation and amortization		10,303		2,229		12,785
Accrued interest		15,000		5,000		25,000
Changes in operating assets and liabilities:
Prepaid Expenses		6,213		(12,450)		(3,162)
Deposits		(7,805)		0		(11,505)
Accounts Payable		6,567		26,820		45,727
Net Cash used by
Operating Activities	$	(808,551)	$	(205,745)	$	(1,310,286)
INVESTING ACTIVITIES
Cash flow from investing activities:
Change in certificate of deposit		(1,518,134)		(500,875)		(1,831,086)
Sale of fixed assets		2,273		-		2,273
Purchase of fixed assets		(24,500)		(25,520)		(62,685)
Net cash used by
investing activities	$	(1,540,361)	$	(526,395)	$	(1,891,498)
FINANCING ACTIVITIES
Cash flows from financing activities
Proceeds from stock transactions		1,887,426		765,348		3,035,929
Short term notes payable		(10,500)		-		0
Notes payable- related party		-		-		200,000
Net cash provided by
financing activities	$	1,876,926	$	765,348	$	3,235,929
Net change in cash and cash equivalents		(471,986)		33,208		34,145
Cash beginning of period		506,131		0		-
Cash end of period	$	34,145	$	33,208	$	34,145

F-3

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.         BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Davi Skin, Inc. ("Company") have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. 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 financial statements should be read in conjunction with the Form 10-KSB of the Company for the year ended December 31, 2004.

The interim financial statements present the balance sheet, statements of operations, stockholders' equity and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

 The interim financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of September 30, 2005 and the results of operations, stockholders' equity and cash flows presented herein have been included in the financial statements. Interim results are not necessarily indicative of results of operations for the full year.

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 reporting period. Actual results could differ from those estimates.

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 inthe establishment and development of an all-natural grape-based skin care line.

History. On June 21, 2004, the Companycompleted and closed a Plan of Merger and Reorganization Agreement (“Merger Transaction”) with Davi Skin, Inc. (“Davi”), aprivately 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 forCompany’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.

F-4

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(continued)

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

            (continued)

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.

Going concern.  The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $2,458,943 since its inception and may require additional capital for its operational activities.  The Company’s ability to raise additional capital through the future issuances of the common stock is unknown.  Obtaining additional financing and attainingprofitable operations are necessary for the Company to continue operations.  The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern.  The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

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

Use of estimates. The preparation of consolidated 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 delivered.  Costs and expenses are recognized during the period in which they are incurred.

Cash and Cash Equivalents. The Company considers all highly liquid short-term investments, with original maturities of three months or less, to be cash equivalents.  Such cash equivalents generally are part of the Company’s 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.

Fixed assets. Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

F-5

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(continued)

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

            (continued)

Fixed Assets (continued)

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related un-discounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Fair value of financial instruments. Statement of Financial Accounting Standards (“SFAS”) No. 107, “Disclosure About Fair Value of Financial Instruments”, requires the Company 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 the Company’s financial instruments approximate their fair value due to theirshort-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 is computed using the weighted-average number of outstanding common shares during the applicable period. Diluted earnings (loss) per share is 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 antidilutive.  Stock options representing 398,800 common shares were excluded from the computation because the effect was antidilutive.  Stock option are antidilutive when the results from operations are a net loss, as is the case for the for the period ended September 30, 2005 and from inception to September 30, 2005, 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.

As of December 31, 2004, the Company has available net operating loss carryovers of approximately $4,000,000 that will expire in various periods through 2024.  Such losses may not be fully deductible due to the significant amounts of non-cash service costs.  The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization.

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

F-6

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

Advertising costs. Advertising costs incurred in the normal course of operations are expensed as incurred.  No advertising costs have been incurred from March 21, 2004 (date of inception) through September 30, 2005.

F-7

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(continued)

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

            (continued)

Stock-based compensation - The Company applies Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees, and Related Interpretations,” in accounting for stock options issued to employees.  Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of the grant exceeds the exercise price of the stock option.  For stock options and warrants issued to non-employees, the Company applies SFAS No. 123, “Accounting for Stock-Based Compensation,” which requires the recognition of compensation cost based upon the fair value of stock options at the grant date using the Black-Scholes option pricing model.  For theperiod from March 21, 2004 (date of inception) through September 30, 2005, there were no stock options and/or warrants granted to employees.

In order to determine compensation on options issued to consultants, as well as fair value disclosures for employee’s options, the fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model.

In December 2003, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." SFAS No. 148 amends the transition and disclosure provisions of SFAS No. 123. The Company is currently evaluating SFAS No. 148 to determine if it will adopt SFAS No. 123 to account for employee stock options using the fair value method and, if so, when to begin transition to that method.

3.         RELATED PARTY TRANSACTIONS

The Company owes $200,000 to the former President of MW Medical.  The note was originally due December 31, 2004 and carries an interest rate of 10% per annum.  Accordingly, interest of $25,000 has been recorded.  The creditor has agreed to extend the due date of the note until December 31, 2005.

4.         STOCK ACTIVITY

During the quarter, the Company sold no equity securities without registration under the Securities Act of 1933.  All of the stock purchased prior to June 30, 2005 was issued in July 2005 and the liability of $105,500 was reversed.

F-8

DAVISKIN, INC.

(formerly MW Medical, Inc.)

(A Development State Company)

5.         EQUITY SECURITIES OFFERINGS

On January 1, 2005, the Company commenced two separate equity securities offerings.  The first offering (“offering one”) is targeted to Non-United States investors and the second offering (“offering two”) is targeted to domestic investors.  Both offerings allow the investor to purchase one unit, consisting of two shares of common stock and one warrant to purchase one share of common stock at $4.50, exercisable for 24 months.  The purchase price of each unit is $6.00.  The market price of the Company’s common stock on the date of offering was $5.25.  There is no vesting period for the warrants; however, they are only exercisable for 24 months after the date of purchase.  During the quarter ended September 30, 2005, no units were sold from offering one and no units were sold from offering two.  As of September 30, 2005, a total of 198,947 and 199,451 units have been sold from offering one and offering two, respectively.

F-9

Item 2.      Plan of Operation

Forward-Looking Statements

Historical results and trends should not be taken as indicative of future operations. Management’s statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ materially from those included in the forward-looking statements. 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 is including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,”“expect,”“intend,”“anticipate,”“estimate,”“project,”“prospects,” or similar expressions. 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 the operations and our 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 be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning our business, including additional factors that could materially affect our financial results, are included in this discussion as well as in our other filings with the Securities and Exchange Commission.

Plan of Operation

Our current plan of operation is to aggressively pursue the development, manufacture, distribution and sale of our planned skin care line of products. We are currently in the process of developing our skin crème product line. Once the development of these products is complete, we plan to start manufacturing and marketing them to consumers through high-end retailers and distributors.

1.   Development

We are currently in the development process, which we see as involving two basic phases: (1) creating the products with a formulator; and (2) testing the formulations as they are developed.

In the first quarter of 2004, we entered into a Consulting Agreement with Barlo Labs to create a series of skin crème products. Each product was considered a separate project and the agreement called for the payment of $7,500 per project to Barlo Labs, one-third payable on initiation, one-third on the approval of the formulation and one-third on the completion of the project. There was an additional payment of $500 due per project if packaging compatibility is required. We were also required to pay for travel and other expenses for safety testing and manufacturing of test batches made for submissions and product evaluation.

In August 2005, Barlo had completed and billed us for four projects, including the creation of an:

1.   Eye Cream;

2.   Revitalizing Moisturizer;

3.   Daily Moisturizer with an SPF rating for sun protection;

4.   Intensive treatment serum; and

4

In July 2005, we entered into a Technical Assistance Agreement with Raffaello Research Laboratories, Inc. for the formulation, testing and evaluation of the following five products:

1. Cleanser

2. Toner

3. Lip Treatment

4. Face Clay Mask

5. Face Scrub Exfoliant

In addition, Raffaello will be providing us with assistance in the selection of outside manufacturers and raw material suppliers and a review of label copy and promotional materials. Raffaello is paid on a monthly basis at a rate of $4,000 per month beginning July 18, 2005 through July 17, 2006, plus reasonable out of pocket expenses. This payment can be renegotiated at any time with 30 days written notice from Raffaello based on excessive or unreasonable requests on Raffaello’s time during the contract term. No products have been developed as a result of this agreement at this time.

We have developed these formulations with a proprietary bio complex blend of 10 different raw materials, which we intend to be consistent across all of the products we develop. The key items will be the materials containing the anti-oxidant properties that are believed to help fight free radical damage caused by sunlight, stress and other environmental factors. Other key ingredients used in these formulas have been selected for their efficacy in helping to correct existing damage and thereby also supporting our anti-aging goals.

We have entered into a Pomace Requirements Agreement with two wineries for the purchase of all our requirements of Pomace in the manufacture of our products. We have agreed to pay one cent ($0.01) per ton of Pomace delivered and the cost of shipping. We estimate that we will be able to fulfill all of our requirements for Pomace through these two agreements. Other raw materials necessary for the production of our products will ultimately be sourced and obtained by our manufacturer when we have entered into a manufacturing agreement. We currently do not have a complete list of raw materials, but believe that the anticipated raw materials for our products will be readily available from various sources at reasonable costs for the production of our products.

We have provided the formulator with our product profile for each of these products which involve a desired list of ingredients along with product features and benefits. We are currently in the process of evaluating and making adjustments to the formulations. Our goal is to create an end product that provides consumers with a pleasurable sensory experience, most particularly smell and touch, along with the anti-aging cosmetic results we plan to promote.

We consider these formulations as they are being developed and tested to be proprietary, and thus have been and will remain on guard to protect the details of our developing product mix.

We hope to be through the formulation portion of the development process within the first quarter of 2006 so that we can commence testing of the products before manufacturing. Our testing will be conducted by the company we hire to manufacture our products. We intend to test all of the products for stability and compliance with the Cosmetic Toiletry Fragrance Association (“CTFA”) standards, a self-regulatory organization for the cosmetic industry. This will include various types of tests, including product safety, preservative efficacy, package stability, and assay testing for all products, including over the counter ingredients. Testing stability involves a three month period where analysts are looking for changes in viscosity (thickness), appearance and odor at various temperatures to help determine shelf life, expiry dates, and other things.

5

As the products are expected to be sold over the counter, we do not anticipate needing or obtaining any Federal Food and Drug Administration approvals and we do not plan on doing any clinical testing of any kind. The products containing SPF or any other over the counter ingredients, however, will need to meet FDA testing regulations and the global standards for sales in countries other than the United States.

2.   Manufacture

We are in the process of choosing a manufacturer for our product line, and expect to complete our review and enter into a manufacturing agreement by the first quarter 2006. Once engaged, the manufacturer will be expected to further test our initial product formulations during a four to six week period. During this testing, we expect to be making further adjustments to our formulations, requiring that new batches of each product be produced following each change.

Once the formula is fixed for each product, the manufacturer will create a commercial batch of each product, bottle and package the products for us. We are also in the process of choosing all the peripheral items involved in the manufacturing and marketing process, including:

a.   the shape and size of the product containers;

b.   the types of caps;

c.   the packaging;

d.   the logo and label designs; and

e.   unit cartons.

3.   Marketing and Distribution

Currently, we have no distribution agreements; however, management is in discussions with several skin care companies regarding a joint venture or license agreement, as well as talks with major retailers for distribution arrangements. Management anticipates entering into a retail distribution agreement and to develop an international partnership for distribution of our new products before the end of this fiscal year.

4. Planned Purchases of Equipment

We do not anticipate purchasing any real property or significant equipment during the next twelve (12) months.

5. Change in President and CEO

On October 31, 2005, Mr. Parrish Medley resigned as our President and Chief Executive Officer and was subsequently appointed as Vice President. There was no known disagreement with Mr. Medley on any matter relating to our operations, policies or practices.

On the same date, the board of directors appointed Mr. Joseph Spellman as President, Chief Executive Officer and to serve as a member of the board of directors until the next annual meeting of the shareholders or until removed by other action as allowed by the corporate bylaws.

During the last five years, Mr. Spellman has been acting president of Mac Cosmetics and a senior advisor to the Estee Lauder Company. He is also Chairman of Spellman and Company and the Clarecastle Group, a management group whose clients include the Estee Lauder Companies.  The Clarecastle Group is a holding company for companies such as Steinway & Sons Furniture Care.  Prior to

6

that, Mr. Spellman was Vice President at Elizabeth Arden, a division of Unilever, and served on the board of directors. During his eleven year tenure, he directed the creative development and strategic marketing of many of the company’s most successful brands and helped reposition the company for aggressive growth. He developed new products for Karl Lagerfeld, Fendi, Valentino, Chloe, Nino Cerruti, Elizabeth Taylor and the Elizabeth Arden brand. From 1978 to 1989, Mr. Spellman was Chief Executive Officer of Spellman and Company. The client list included: Estee Lauder, QVC, Bloomingdales, La Prairie, Revlon, Saks Fifth Avenue, Avon, Unilever, IMG, Tiger Woods and Yves St. Laurent. He served as Vice President of Marketing for Estee Lauder, Inc. from 1975 to 1978. Mr. Spellman was Director of Marketing, as well as Vice President for Revlon, Inc. from 1970 to 1975. He served as Senior Account Executive for Grey Advertising, Inc. from 1965 to 1970.

There are no family relationships between Mr. Spellman and any of our directors or executive officers.

Mr. Spellman has not had any material direct or indirect interest in any of our transactions or proposed transactions over the last two years. He is also a member of our Advisory Board.

6. Executive Advisory Board

Our board of directors has created an Executive Advisory Board, assembled to assist our officers in making certain high level planning decisions. While the members of the Executive Advisory Board have no authority over our business operations or any fiduciary or other legal responsibility to us or our shareholders, the board anticipates that their input will provide value to our executives in their decision making processes. This advisory board includes:

Robert G. Mondavi   Founder/Chairman of Robert Mondavi Winery

Timothy J. Mondavi Vice Chairman of Robert Mondavi Winery

R. Michael Mondavi          Former President and CEO of Robert Mondavi Winery

Michael Johnson     Olympic Gold Medalist and World Record Holder

Jean-Marc Benet      General Manager for Darphin USA, owned by Estee Lauder

Joseph Spellman               President of Mac Cosmetics and Senior Advisor to Estee Lauder Company

Assets

Our total assets as of September 30, 2005 were $1,927,525. Our assets largely consist of cash in the amount of $34,145 and a certificate of deposit in the amount of $1831086. Our assets as of December 31, 2004, were $867,861, including cash and certificates of deposit in the combined amount of $819,083. The increase in our assets from the period ending September 30, 2005, is a result of our sales of additional common stock through the private placements.

Liabilities and Stockholders Equity

Our total liabilities as of September 30, 2005 were $270.727, consisting of $45,727 in accounts payable and $225,000 in notes payable to a related party, namely the former President of the Company. The accrued interest on the note payable to the related party is $25,000, including $5,000 accrued in this reporting period. The principle and interest were previously due December 31, 2004. However, the creditor agreed to extend the due date to December 31, 2005.

As of September 30, 2005, the Stockholders’ Equity was $1,656,798. As of December 31, 2004, Stockholder’s Equity was $608,201. The increase of $1,048,597 during the reporting period is mainly attributable to sales of our common stock.

7

Liquidity and Capital Resources

On September 30, 2005, we had current assets consisting of cash, certificates of deposit, and prepaid expenses in the combined amount of $1,868,393. As of December 31, 2004, we had current assets consisting of cash, certificates of deposit, and prepaid expenses in the combined amount of $828,458. The increase in our cash position from the period ending December 31, 2004, is primarily attributable to the sales of common stock in our private equity offering.

We expect that our current cash on hand will be sufficient to fund our operations for approximately the next twelve (12) months and meet our requirements for completing our product, packaging, and marketing.

Off Balance Sheet Arrangements

As of September 30, 2005, there were no off balance sheet arrangements.

Going Concern

We may require additional capital for our operational activities and our ability to raise capital through future issuances of common stock is unknown. Obtaining additional financing and attaining profitable operations are necessary for us to continue operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

Revenue Recognition

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

Non-Reliance on Previously Issued Financial Statements

Our board of directors, upon the advice and recommendation of our accountants, determined that we should reclassify certain pre-paid consulting expenses incurred in 2004 from an expense to equity. This action will result in a decrease in our net loss and an increase to prepaid consulting fees. The net effect on stockholder’s equity as reported in our form 10KSB for the year end 2004 and our interim quarterly reports for the quarters ended March 31, 2005 and June 30, 2005 was nil. The issue arose from a bookkeeping error which inadvertently identified the pre-paid consulting as an expense.

We have also reclassified the deficit that arose from the operations of MW Medical. The reclassification resulted in an increase to additional paid in capital and an increase to accumulated deficit. The net effect was nil.

We have also reclassified notes payable as shown in our Statement of Cash Flows for these periods from Operating Activities to Financing Activities.

These matters were discussed and agreed upon with our auditors.

8

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 September 30, 2005. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer Mr. Joseph Spellman and Chief Financial Officer, Ms. Margaret Robley. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2005, our disclosure controls and procedures are effective. There have been no significant changes in our internal controls over financial reporting during the quarter ended September 30, 2005 that have materially affected or are reasonably likely to materially affect such controls.

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. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 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 our operations 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 our 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.

9

PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

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

During the nine month period ended September 30, 2005, we sold additional equity securities through two separate offerings which were exempt from registration under Regulation S and Regulation D of the Securities Act of 1933.  No additional equity was sold in the quarter ended September 30, 2005.

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, 2005.

Item 5.     Other Information

None

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

10

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.

	Joseph Spellman
Date:	November 21, 2005
	By:       /s/ Joseph Spellman Joseph Spellman Title:    Chief Executive Officer