TORONTO, Aug. 22, 2006 (PRIMEZONE) -- Swiss Medica, Inc. (OTCBB:SWME) announces gross revenues were US$384,927 for the second quarter ending June 30, 2006 compared with gross/net revenues of US$1,383,328 for the quarter ended June 30, 2005 and gross/net revenues US$1,221,501 for the quarter ended March 31, 2006. Net revenues, after product returns, for the quarter ended June 30, 2006 were US$126,555.
A U.S. retailer decided to return all O24 products due to sales levels that did not meet acceptable levels, which accounted for the sales returns of $258,372 during the quarter ended June 30, 2006. Swiss Medica has commenced a collection action against this retailer to pay its accounts payable to Swiss Medica.
In addition, the cost of sales for our quarter ending June 30, 2006 were $272,852 compared to $256,137 for the three months ending June 30, 2005. As a result of the return of the O24 20 foil pouch pack skus from a major retailer, a charge to cost of sales was incurred during the quarter ended June 30, 2006, totaling $300,647. Although it is Management's belief that it was not bound to accept this product return, it was decided to accept the return in order to maintain and ensure ongoing good relations with this retailer, who is still carrying several other skus of our products. Swiss Medica anticipates normalized gross profit percentages on revenues to be between 70% and 80%, depending on the distribution mix of our revenue streams.
Swiss Medica has decided to re-focus the O24 20 foil pouch pack skus toward the healthcare professional market in the United States, which favors the O24 foil pouches due to their unique portability, hygiene control and dosage control attributes.
The O24 one ounce spray bottle sku continues to be the main focus of the retailers in the United States due to retailer and consumer familiarity with the spray bottle delivery system.
"We are greatly disappointed with our results, which occurred despite growing international interest in our O24 products, and continued accolades for our products from consumers and leading consumer pain associations including the National Fibromyalgia Association and large regional arthritis foundations." said Chief Executive Officer Raghu Kilambi. "Our senior team firmly believes in our long term business model of commercializing patented, clinically tested, elite all natural products for chronic ailments. However, it is clear that building new categories takes time and perseverance. We have learned a lot about the U.S.A. marketplace in the past 18 months and recognize that strategies that may have delivered significant results in Canada may not be appropriate in the United States and vice versa.
"Despite this weak quarter, I continue to be convinced that Swiss Medica's world class products will gain mainstream acceptance in the United States and other markets. I am very committed to Swiss Medica's success and my personal confidence is shown in recent insider buying and loans to Swiss Medica to lower our cost of capital. I am confident that recent initiatives that the Company has launched will lead to much stronger results in the near future," continued Raghu Kilambi.
Full second quarter results, for the period ending June 30, 2006, are included in the Company's 10-Q. which has been filed with the U.S. Securities and Exchange Commission and also available on the Swiss Medica website at www.swissmedica.com.
Swiss Medica will separately announce a conference call in the next several weeks to discuss the second quarter and further developments in the third quarter.
About Swiss Medica, Inc.
Swiss Medica commercializes proprietary bioscience products that relieve chronic ailments. We increase our market share through focused distribution strategies in multiple sales channels. Swiss Medica's mission is to be a world leader in the commercialization of life enhancing bioscience products that improve quality of lives. Please visit our websites at www.swissmedica.com, www.O24zone.com and www.pmsescape.com.
Swiss Medica's flagship product, the O24(tm) Pain Neutralizer, holds U.S .Patent No. 6,444,238B1. The O24(tm) pain relief solution has been used, recommended and praised for its fast-acting and long-lasting benefits by healthcare professionals and athletes in the United States, Canada and in Europe. O24(tm) is widely available throughout the United States and Canada in leading pharmacies and other retailers. Customers can also visit www.O24zone.com, for ordering details and store locators for the nearest pharmacy.
Swiss Medica launched the patented O24 Fibromyalgia(tm) pain reliever (U.S. Patent No. 6,444,238B1) over-the-counter in North American retailers in the fall of 2005. The National Fibromyalgia Association (NFA) recently awarded O24 Fibromyalgia(tm) their first NFA Seal of Approval. Upwards of 11 million Americans suffer from the long-term pain associated with fibromyalgia. In a randomized, double blind clinical trial, more than 90 per cent of the patients who used O24 Fibromyalgia(tm) reported mild to markedly better improvement, versus only 7 per cent who used the placebo. Customers can visit www.O24zone.com for information on O24 Fibromyalgia(tm) and to order the product online.
Swiss Medica also manufactures PMS Escape(r) which holds U.S. Patent Nos. 5760014 and 5612320. PMS Escape(r) is a specially formulated group of carbohydrates, vitamins and minerals, clinically proven to reduce changes in mood and appetite that women experience during the premenstrual period. Customers can also visit: www.pmsescape.com for additional information and ordering details.
Forward-looking statements in this news release are made pursuant to the "Safe Harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, risks relating to the ability to close transactions being contemplated, risks related to international sales and potential foreign currency exchange fluctuations, continued acceptance of Swiss Medica's products, increased levels of competition, technological changes, dependence on intellectual property rights and other risks detailed from time to time in Swiss Medica's periodic reports filed with the United States Securities and Exchange Commission and other regulatory authorities.