SWISSINSO HOLDING INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - SWISSINSO HOLDING INC.	Financial_Report.xls
EX-31.1 - CERTIFICATION - SWISSINSO HOLDING INC.	f10q0312ex31i_swissinso.htm
EX-32.2 - CERTIFICATION - SWISSINSO HOLDING INC.	f10q0312ex32ii_swissinso.htm
EX-31.2 - CERTIFICATION - SWISSINSO HOLDING INC.	f10q0312ex31ii_swissinso.htm
EX-32.1 - CERTIFICATION - SWISSINSO HOLDING INC.	f10q0312ex32i_swissinso.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 333-151909

SWISSINSO HOLDING INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

90-0620127

(I.R.S. Employer ID Number)

PSE – Parc Scientifique de l’EPFL

Route J.D. Colladon

Building D – 3rd Floor

1015 Lausanne, Switzerland

(Address of Principal Executive Offices)

(011) 41 21 693 8640

(Registrant’s Telephone Number, Including Area Code)

________________________________________________________________

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o		Smaller reporting company x

(Do not check if a smaller reporting company)

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

As of May 21, 2012, there were outstanding 78,599,287 shares of Common Stock, par value $0.0001 per share.

TABLE OF CONTENTS

	Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	17
Item 4. Controls and Procedures.	17
PART II OTHER INFORMATION
Item 1. Legal Proceedings.	18
Item 1A. Risk Factors.	18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	18
Item 3. Defaults Upon Senior Securities.	18
Item 4. Mine Safety Disclosures.	18
Item 5. Other Information.	18
Item 6. Exhibits.	18
	18

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

SWISSINSO HOLDING INC.
(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS
As of March 31, 2012 (unaudited) and December 31, 2011



	2012			2011
	March 31			December 31
	UNAUDITED
ASSETS

CURRENT ASSETS
Cash	$	8,917		$	8,163
Prepaid assets and other receivables		64,058			53,818
Deposit		221			-
Inventory		566,440			544,436
Total current assets		639,636			606,417

NON-CURRENT ASSETS
Property and equipment, net		95,234			109,784
Deferred debt issuance cost, net		-			134,713
Total non-current assets		95,234			244,497


TOTAL ASSETS	$	734,870		$	850,914



LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,509,108		$	1,638,566
Accrued payroll and benefits		891,009			904,822
Promissory notes		750,000			750,000
Loans		784,474			411,600
Total current liabilities		3,934,591			3,704,988

NON-CURRENT LIABILITIES
Accrued interest on notes payable		909,427			801,796
Convertible notes payable		4,850,000			4,850,000
Stock warrants liability		668,098			215,642
Total non-current liabilities		6,427,525			5,867,438


TOTAL LIABILITIES		10,362,116			9,572,426

STOCKHOLDERS' DEFICIT
Stockholders' deficit :
10,000,000 preferred shares, $0.0001 par value		-			-
Issued and outstanding shares : 0
Authorized :
200,000,000 common shares, $0.0001 par value
Issued and outstanding shares : 78,599,287 and 78,599,287		7,860			7,860

Additional paid in capital		2,571,221			2,571,221
Deficit accumulated during development stage		(12,234,743	)		(11,409,380	)
Accumulated other comprehensive income		28,416			108,787
Total stockholders' deficit		(9,627,246	)		(8,721,512	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	734,870		$	850,914

The accompanying notes are an integral part of these consolidated financial statements.

SWISSINSO HOLDING INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
AND FOR THE PERIOD SINCE INCEPTION, JUNE 1, 2006 TO MARCH 31, 2012
UNAUDITED



	For The Three Months Ended						Inception
	March 31,						6/1/2006
	2012			2011			to 03/31/2012

REVENUES	$	-		$	-		$	-

OPERATING EXPENSES
General and administrative		125,018			961,667			7,750,941
Stock warrants expense		452,456			(548,243	)		668,098
Debt issuance expense		134,713			211,920			1,695,362
Research and development		-			-			1,117,952
		712,187			625,344			11,232,353
OTHER INCOME
Interest income		2			15			276
Gain on vehicle		-			-			6,816
		2			15			7,092

OTHER EXPENSES
Interest on debt		113,178			116,356			1,001,499
Taxes		-			-			(327	)
Commission on debt		-			-			8,310
		113,178			116,356			1,009,482

NET INCOME (LOSS)	$	(825,363	)	$	(741,685	)	$	(12,234,743	)

Foreign currency adjustment		(80,371	)		(14,284	)		28,416

COMPREHENSIVE INCOME (LOSS)		(905,734	)		(755,969	)		(12,206,327	)

Basic and diluted net income (loss) per share	$	(0.01	)	$	(0.01	)	$	(0.19	)

Weighted average shares outstanding - basic and diluted		78,599,287			78,599,287			63,365,909

The accompanying notes are an integral part of these consolidated financial statements.

SWISSINSO HOLDING INC.
(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
AND FOR THE PERIOD SINCE INCEPTION, JUNE 1, 2006 TO MARCH 31, 2012
UNAUDITED

							From
	For The Three Months Ended						Inception
	March 31,						6/1/2006
	2012			2011			to 3/31/2012

NET INCOME (LOSS)	$	(825,363	)	$	(741,685	)	$	(12,234,743	)

OPERATING ACTIVITIES
Depreciation		14,550			13,992			96,686
Amortization of deferred debt issuance cost		134,713			211,920			1,213,062
Interest contributed by shareholder		-			-			2,809
Gain on sale of asset		-			-			(6,816	)
Interest accrued on converted notes		-			-			16,071

Changes in Operating Assets and Liabilities:
(Increase) inventory "Krystall"		(22,004	)		(11,388	)		(566,440	)
Increase (decrease) in accounts payable and accrueds		(35,640	)		651,349			3,266,577
(Increase) / decrease in prepaids and other receivables		(10,240	)		(91,158	)		(64,058	)
(Increase) in security deposit		(221	)					(221	)
Increase (decrease) in stock warrants liability		452,456			(548,243	)		668,098

Net cash used in operating activities		(291,749	)		(515,213	)		(7,608,975	)


INVESTING ACTIVITIES
Property and equipment acquisition		-			(2,944	)		(219,928	)
Cash received in acquisition of shell		-			-			670,357
Proceeds from sale of asset		-			-			34,080
Net cash provided by (used in) investing activities		-			(2,944	)		484,509


FINANCING ACTIVITIES
Proceeds from convertible notes		-			-			6,035,000
Proceeds from issuance of shares		-			-			85,698
Repayment of borrowings		-			-			(521,500	)
Loan		-			253,500			500,000
Debt due to shareholders		372,874			-			1,004,766
Net cash provided by financing activities		372,874			253,500			7,103,964

Effect of exchange rate on cash		(80,371	)		(14,284	)		29,419

INCREASE (DECREASE) IN CASH		754			(278,941	)		8,917

CASH AT BEGINNING OF PERIOD		8,163			339,567			-

CASH AT END OF PERIOD	$	8,917		$	60,626		$	8,917

The accompanying notes are an integral part of these consolidated financial statements.

SWISSINSO HOLDING INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
FOR THE PERIOD SINCE INCEPTION, JUNE 1, 2006 TO MARCH 31, 2012


														Deficit
											Accumulated			Accumulated
					Additional						other			During the			Total
	Common Stock				Paid-In			Subscription			comprehensive			Development			Stockholders'
	Shares		Amount		Capital			receivable			income			Stage			Deficit

Balance - June 1, 2006			$	-	$	-		$	-		$	-		$	-		$	-

Common Stock issued in recapitalization of SwissINSO SA into SwissINSO Holding Inc. (par value $0.0001)		50,000,000		5,000		75,644			(40,322	)								40,322

Net loss from inception to December 31, 2006															(50,833	)		(50,833	)

Interest contributed by shareholder						26												26

Foreign currency exchange adjustment												(171	)					(171	)

Balance at December 31, 2006		50,000,000		5,000		75,670			(40,322	)		(171	)		(50,833	)		(10,656	)


Net loss for the year ended December 31, 2007															(28,003	)		(28,003	)

Interest contributed by shareholder						234												234

Foreign currency exchange adjustment												(2,569	)					(2,569	)

Balance at December 31, 2007		50,000,000		5,000		75,904			(40,322	)		(2,740	)		(78,836	)		(40,994	)

Net loss for the year ended December 31, 2008															(118,788	)		(118,788	)

Interest contributed by shareholder						1,033												1,033

Foreign currency exchange adjustment												(4,929	)					(4,929	)

Balance at December 31, 2008		50,000,000		5,000		76,937			(40,322	)		(7,669	)		(197,624	)		(163,678	)


Common Stock issued to acquire the shell company at $0.001 per share (par value $0.0001) (1)		25,100,000		2,510		(141,307	)											(138,797	)

Subscription on share capital of SwissINSO SA									40,322									40,322

Common Stock issued pursuant to conversion of shareholder loan to SwissINSO SA		1,097,145		110		220,182												220,292

Net loss for the year ended December 31, 2009															(4,532,266	)		(4,532,266	)

Interest contributed by shareholder						1,516												1,516

Foreign currency exchange adjustment												(25,190	)					(25,190	)

Balance at December 31, 2009		76,197,145	$	7,620	$	157,328		$	-		$	(32,859	)	$	(4,729,890	)	$	(4,597,801	)


Deferred debt issuance						1,213,062												1,213,062

Shares issued on conversion of notes		2,402,142		240		1,200,831												1,201,071

Net loss for the period ended December 31, 2010															(5,980,379	)		(5,980,379	)

Foreign currency exchange adjustment												4,352						4,352

Balance at December 31, 2010		78,599,287	$	7,860	$	2,571,221		$	-		$	(28,507	)	$	10,710,269		$	(8,159,695	)


Net loss for the period ended December 31, 2011															(699,111	)		(699,111	)

Foreign currency exchange adjustment												137,294						137,294

Balance at December 31, 2011		78,599,287	$	7,860	$	2,571,221		$	-		$	108,787		$	11,409,380		$	(8,721,512	)


Net loss for the period ended March 31, 2012															(825,363	)		(825,363	)

Foreign currency exchange adjustment												(80,371	)					(80,371	)

Balance at March 31, 2012		78,599,287	$	7,860	$	2,571,221		$	-		$	28,416		$	12,234,743		$	(9,627,246	)

The accompanying notes are an integral part of these consolidated financial statements.

SWISSINSO HOLDING INC.(A Development Stage Company)

UNAUDITED

NOTES TO FINANCIAL STATEMENTS

March 31, 2012

NOTE 1 - Organization and Business

SwissINSO Holding Inc., (the “Company”) was incorporated in the state of Florida on November 13, 2007 under the name “Pashminadepot.com, Inc.” Until May 31, 2009, it focused on the business of developing a website to sell Pashmina and other accessories. Due to the state of the economy, virtually no business was conducted and this business plan was abandoned. Management then sought an operating company with which to merge or to acquire.

On September 10, 2009 the Company entered into a Stock Purchase Agreement with SwissINSO SA, a Swiss company (“SwissINSO”), and its shareholders pursuant to which the Company agreed to purchase all of the shares of SwissINSO to develop new business opportunities. The transaction was consummated on October 19, 2009, and SwissINSO became a wholly-owned subsidiary of the Company and the shareholders of SwissINSO received in exchange for their shares an aggregate of 50,000,000 shares of the Company’s common stock, or 65.62% of the then issued and outstanding share capital of the Company. At the same time, the Company issued 1,097,145 shares of its common stock to the principal shareholder of SwissINSO, Michel Gruering, upon conversion of his existing shareholder loan to SwissINSO.

On October 28, 2009, the state of incorporation was changed from Florida to Delaware by the merger of Pashminadepot.com, Inc. with and into its wholly-owned subsidiary, SwissINSO Holding Inc., a Delaware corporation, which had been formed for such purpose. In connection with such merger, the Company’s name changed from “Pashminadepot.com, Inc.” to “SwissINSO Holding Inc.” Each issued share of the common stock of Pashminadepot.com, Inc. from and after the effective time of such merger was converted into one share of the common stock of SwissINSO Holding Inc.

Prior to the acquisition of SwissINSO, the Company was in the development stage and had no revenues or business operations. Following the acquisition of SwissINSO, the Company’s business became exclusively the business of SwissINSO described below.

SwissINSO was incorporated in Switzerland on May 30, 2006. SwissINSO utilizes its intellectual property assets to provide environmentally friendly, innovative solar energy solutions and related technology to meet growing global needs. SwissINSO’s goal is to become a world leader in turn-key solutions using renewable energy for the purification and desalination of water and the air cooling and heating of buildings.

SwissINSO’s product strategy is to provide complete solutions to the marketplace that drive key customer value immediately, are sustainable and contribute to global energy saving. Critical to this strategy is how SwissINSO’s proprietary embedded technologies provide clear competitive advantage while offering efficient “green” solutions.

Since its inception, SwissINSO has devoted a substantial part of its efforts to planning, raising capital, research and development, determining market needs, obtaining the rights to the technologies to be used in its business, developing markets for its products and identifying sources for the manufacture of its products. SwissINSO has not generated any revenues to date. In the quarter ended March 31, 2010, SwissINSO assembled its first unit for water purification application.

On April 22, 2010, SwissINSO officially launched its first completely solar powered industrial size water purification unit, trade named KRYSTALL™.

KRYSTALL™ is housed in two 49ft containers and comes in several configurations capable of purifying in excess of 100,000 liters of brackish water and desalinating 50,000 liters of seawater per day into high-quality drinking water. High tech photovoltaic panels are used to capture the solar energy necessary to power each unit and charge batteries which provide a continuous source of power during non daylight hours.

The consolidated financial statements of the Company included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-K.

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted.

NOTE 2 - Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on raising additional capital to fund its business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. The Company has funded its initial operations by way of entering into a private placement offering. From inception through March 31, 2012, subscriptions of $6,035,000 had been received under the terms of the private placement documents.

The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 - Significant Accounting Policies

Accounting Basis

These consolidated financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Principles of Consolidation

The consolidated financial statements include the historical financial information of SwissINSO SA from inception to March 31, 2012. Intercompany transactions and balances have been eliminated.

Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The financial statements of the Company’s international subsidiary have been translated into United States dollars by translating balance sheet accounts at year end and period end exchange rates except for non-current assets which are translated at historical exchange rates, and statement of operations accounts at average exchange rates for the periods. Foreign currency transaction gains and losses are reflected in the equity section of the Company’s consolidated balance sheet in Accumulated other comprehensive income. The balance of the foreign currency translation adjustment, included in Accumulated other comprehensive income, was ($80,371) and ($14,284) for the three months ended March 31, 2012 and March 31, 2011, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of 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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of current bank balances. The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

Inventory

The Company values its inventory at the lower of cost and market. The Company’s inventory is comprised of one unit of industrial equipment for reverse osmosis water purification unit valued at actual cost.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation of furniture and equipment is provided using the straight-line method based on the estimated useful lives of assets, which range from four to ten years. Computer equipment is amortized using the straight-line method over the useful life of three years. Upon the disposition of property and equipment, the accumulated depreciation is deducted from the original cost and any gain or loss is reflected in current earnings.

Financial Instruments

The Company's financial instruments consist of notes payable to third parties and subscriptions to convertible debt at $0.50 per share issued under the terms of a private placement offering. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments and that their fair values approximate their carrying values except where separately disclosed.

Derivative Financial Instruments

The Company’s objectives in using derivative financial instruments are to obtain the lowest cash cost-source of funds. Derivative liabilities are recognized in the consolidated balance sheets at fair value based on the criteria specified in FASB ASC topic 815-40 "Derivatives and Hedging – Contracts in Entity’s own Equity". The estimated fair value of the derivative liabilities is calculated using the Black-Scholes-Merton method where applicable and such estimates are revalued at each balance sheet date, with changes in the value recorded as stock warrant expense in the consolidated statements of operations.

General and Administrative Expenses

General and administrative expenses consist primarily of salary and related employee benefit costs, professional and consultants’ fees, marketing and promotional expenses, and various other general corporate expenses.

Employee Benefits

Mandatory contributions are made under Government retirement benefit and unemployment schemes at the minimum statutory rates in force during the period, based on gross salary payments. The costs of these payments are charged to the statement of income in the same period as the related salary costs.

Research and Development

Costs incurred in acquiring technological expertise and corresponding research and development, are charged to expense when incurred.

Other Expenses

Other expenses are comprised of fees for negotiating Company financing.

Net Loss Per Share

Basic net loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. The Company has issued convertible notes with warrants which are potentially dilutive common shares. For the periods presented, this calculation proved to be anti-dilutive. As a result, the basic net loss per share is the same as diluted net loss per share for the three month period ended March 31, 2012.

Income Taxes

The Company and its subsidiary provide for income taxes in accordance with FASB ASC 740-10 (Prior authoritative literature: FASB Statement No. 109, “Accounting for Income Taxes.”) FASB ASC 740-10 requires the use of an asset and liability approach in accounting for income taxes.

FASB ASC 740-10 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company and its subsidiary to utilize the loss carry-forward.

Operating Leases

Rent expense on operating leases arises on a straight line basis and is charged to general and administrative expenses as it occurs.

Debt Issuance Costs

Debt issuance costs (i.e. placement agent costs) are capitalized when the expense is incurred and are amortized equally over a 24 month period.

NOTE 4 – Inventory

The Company produced its first Water Purification unit in March, 2010. This unit was deployed in Switzerland for the product launch which took place on April 22, 2010.

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company’s policy is to regularly assesses slow-moving, excess and obsolete inventory and establish a reserve against any amounts determined to have such characteristics. No slow-moving, obsolete or excess inventory was determined necessary as of March 31, 2012.

The following table presents the classification of inventory on-hand as of March 31, 2012 and December 31, 2011:

	Inventory at		Inventory at
	March 31, 2012		December 31, 2011
Raw Materials	$	-	$	-
Work-in-process		-		-
Finished Goods		566,440		544,436

Total Inventory	$	566,440	$	544,436

NOTE 5 - Property and Equipment

Property and equipment at March 31, 2012 and December 31, 2011 at cost, consisted of the following:

	March 31, 2012		December 31, 2011
Furniture	$	106,062	$	106,062
Computer equipment		78,530		78,530
		184,592		184,592
Less accumulated depreciation		89,358		74,808
	$	95,234	$	109,784

Depreciation expense on property and equipment for the three months ended March 31, 2012 and 2011 was $14,450 and $13,992, respectively.

NOTE 6 - Notes Payable

The Company has issued promissory notes or loan acknowledgements to independent third parties as follows: (a) $250,000 bearing interest at 9% per annum repayable once the Company raised $6,000,000 through the sale of securities; and (b) $500,000 without interest repayable on or before May 11, 2011. These amounts remain outstanding.

During the first quarter of 2012, the Company’s subsidiary borrowed $372,874 from its Chief Executive Officer to meet the working capital needs of the Company and its subsidiary. At March 31, 2012, the Company’s subsidiary had borrowed an aggregate of $784,474 from current and former executive officers and directors and a shareholder of the Company to meet the working capital needs of the Company and its subsidiary. Loans aggregating $244,655 bear interest at 9% per annum, and the other loans are non-interest bearing. These amounts remain outstanding.

NOTE 7 - Convertible Notes with Warrants

In 2009 and 2010, the Company received subscriptions of $6,035,000 from the sale of 9% Secured Convertible Notes with Warrants issued in a private placement. The notes are secured by all of the assets of SwissINSO and are convertible into shares of common stock at a conversion price of $0.50 per share. Conversion may be exercised by the holder at any time prior to the maturity date which is 24 months from the date of issue. The warrants are exercisable for an equivalent number of shares at an exercise price of $1.00 per share within five years of issuance date.

Notes totaling $1,185,000 plus accrued interest were converted into 2,402,142 shares of common stock during the year ended December 31, 2010. No notes were converted during 2011 or the first quarter of 2012.

The fair value of each warrant is estimated on the date of grant using Black-Scholes-Merton option-pricing model that uses the assumptions noted in the following table.

Number of Warrants	% of Warrants Issued	Initial Vesting Date
2,000,000	100%	December 16, 2009
	Dividend Yield	0.00%
	Expected Volatility	322.62%
	Risk-Free Interest Rate	0.25%
	Contractual term	5 years
	Estimated Remaining term	1.71 years
	Stock Price at Date of Grant	$1.89
	Exercise Price	$1.00

900,000	100%	December 22, 2009

	Dividend Yield	0.00%
	Expected Volatility	322.62%
	Risk-Free Interest Rate	0.25%
	Contractual term	5 years
	Estimated Remaining term	1.73 years
	Stock Price at Date of Grant	$1.80
	Exercise Price	$1.00

8,270,000	100%	February 24, 2010

	Dividend Yield	0.00%
	Expected Volatility	322.62%
	Risk-Free Interest Rate	0.26%
	Contractual term	5 years
	Estimated Remaining term	1.90 years
	Stock Price at Date of Grant	$1.25
	Exercise Price	$1.00

500,000	100%	September 15, 2010
	Dividend Yield	0.00%
	Expected Volatility	322.62%
	Risk-Free Interest Rate	0.31%
	Contractual term	5 years
	Estimated Remaining term	2.54 years
	Stock Price at Date of Grant	$1.18
	Exercise Price	$1.00

400,000	100%	December 8, 2010
	Dividend Yield	0.00%
	Expected Volatility	322.62%
	Risk-Free Interest Rate	0.34%
	Contractual term	5 years
	Estimated Remaining term	2.94 years
	Stock Price at Date of Grant	$0.59
	Exercise Price	$1.00

The total derivative charge for the three months ended March 31, 2012 was $452,456, representing the change in fair value between the outstanding warrants as of March 31, 2012 and December 31, 2011.

The Company will issue common stock from authorized shares to those subscribers who exercise the warrants upon the exercise of the warrants. As of March 31, 2012, no warrants have been exercised.

As of March 31, 2012, certain convertible notes have come due. The Company is in discussions with the holders of such notes to extend the maturity date of their notes for an additional two years. The Company has not received any indication that any holder is looking to satisfy the amount due through collection of assets securing the Company’s obligations under the notes.

NOTE 8 - Debt Issuance Costs

Debt issuance costs (i.e. placement agent costs) are capitalized when the expense is incurred and are amortized equally over a 24 month period. In connection with the issuance of convertible debt on February 24, 2010, the Company paid its placement agent fees through the issuance of 1,117,000 stock warrants and cash of $403,500.

On February 24, 2010, the Company determined the fair value of these warrants to be $1,213,062. The fair value was determined by using the Black-Scholes-Merton option-pricing model based on the following assumptions:

Number of Warrants	% of Warrants Issued	Initial Vesting Date
1,117,000	100%	February 24, 2010
	Dividend Yield	0.00%
	Expected Volatility	270.21%
	Risk-Free Interest Rate	2.69%
	Contractual term	5 years
	Estimated term	1.875 years
	Stock Price at Date of Grant	$1.25
	Exercise Price	$1.00

Debt issuance costs as of March 31, 2012 and December 31, 2011 were as follows:

	March 31, 2012			December 31, 2011
Debt issuance cost	$	1,695,362		$	1,695,362
Accumulated amortization		(1,695,362	)		(1,560,649	)
Debt issuance, end of period	$	-		$	134,713

Amortization of debt issuance expense for the three month periods ended March 31, 2012 and 2011 was $134,713 and $211,920, respectively.

NOTE 9 - Capital Stock

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock, par value $0.0001 per share, none of which are issued and outstanding as of March 31, 2012.

Common Stock

The Company has authorized 200,000,000 shares of common stock, par value $0.0001 per share, of which 78,599,287 shares were issued and outstanding as of March 31, 2012.

NOTE 10 – Related Party Transactions

The Company is indebted to its Chief Executive Officer for $372,874 of loans made by such individual to the Company’s subsidiary during the first quarter of 2012 to meet the working capital needs of the Company and its subsidiary. At March 31, 2012, the Company owes its Chief Executive Officer an aggregate of $515,001 for loans made during 2011 and the first quarter of 2012 to meet the working capital needs of the Company and its subsidiary.

NOTE 11 – Lease

SwissINSO rents office space pursuant to a monthly property rental agreement with Fondation Scientifique EPFL Lausanne, Switzerland that can be renewed monthly. The monthly office rental payment to EPFL (excluding TVA) is $2,425. The rental cost for the period ended March 31, 2012 totaled $7,275.

NOTE 12 - Concentrations of Risks

Cash Balances

The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (FDIC). Up to March 31, 2012 all non-interest bearing transaction deposit accounts at an FDIC-insured institution, including all personal and business checking deposit accounts that do not earn interest, are fully insured for the entire amount in the deposit account.

All other deposit accounts at FDIC-insured institutions are insured up to at least $100,000 per depositor. Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, will remain at $250,000 per depositor.

SwissINSO maintains its cash with sound international banking institutions.

NOTE 13 - Commitments

Under agreements for the acquisition of industrial technology, the Company through its subsidiary was committed at March 31, 2012 as follows:

- Payments for acquisition of technology over a 4 year period		$	180,610
- Minimum royalties over a 5 year period Euro 120,000		$	171,200

During the first quarter of 2012, the Company’s subsidiary made payments aggregating $139,341 to EPFL as required under the agreement between SwissINSO and EPFL for the acquisition of technology.

NOTE 14 – Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

NOTE 15 – Equity Compensation Plans

The Company has adopted the SwissINSO Holding Inc. 2009 Stock Incentive Plan, which provides for the grant of stock options and other rights to purchase an aggregate of 10,000,000 shares of the Company’s Common Stock to employees, officers, directors and service providers of the Company and its subsidiaries and affiliates. At March 31, 2012, no stock options or other rights had been granted under such plan.

NOTE 16 – Subsequent Events

During the second quarter of 2012, the Company’s subsidiary borrowed an additional $132,033 from the Company’s Chief Executive Officer to meet the working capital needs of the Company and its subsidiary. The loans do not bear interest and are repayable on a to be agreed future date.

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

As used in this Form 10-Q, references to the “Company,” “we,” “our” or “us” refer to the Registrant and our subsidiary, SwissINSO SA, unless the context otherwise indicates.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking information. Forward-looking information includes statements relating to future actions, future performance, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management and other such matters of the Company. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. Forward-looking information may be included in this Quarterly Report on Form 10-Q or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the “SEC”) by us. You can find many of these statements by looking for words including, for example, “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Quarterly Report on Form 10-Q or in documents incorporated by reference in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

We have based the forward-looking statements relating to our operations on management's current expectations, estimates, and projections about us and the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors.

The following discussion highlights the principal factors that have affected our financial condition and results of operations as well as our liquidity and capital resources for the periods described. This discussion contains forward-looking statements, as discussed above. Please see the section entitled “Forward-Looking Statements” for a discussion of the assumptions associated with these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations are based on the unaudited financial statements as of March 31, 2012 and 2011, all of which were prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). You should read the discussion and analysis together with such financial statements and the related notes thereto.

Results of Operations – Three months ended March 31, 2012 compared to three months ended March 31, 2011

We are in the development stage and did not generate any revenues for the three month periods ended March 31, 2012 or 2011. During the quarter ended March 31, 2012, we incurred $125,018 of general and administrative expenses as we continued the development of the business of SwissINSO, albeit with substantially reduced personnel and sharply curtailed business operations, and $134,713 of debt issuance expense. In addition, we incurred $113,178 in interest charges related to bridge loans received in September 2009, convertible notes and warrants sold in a private placement from December 2009 through December 2010 and short-term loans received during 2011. In comparison, during the quarter ended March 31, 2011, we incurred $961,667 of general and administrative expenses as we continued to develop the business of SwissINSO and $211,920 of debt issuance expense. In addition, we incurred $116,356 in interest charges related to bridge loans received in September 2009 and convertible notes sold in the private placement from December 2009 through December 2010. Our net loss before foreign currency translation adjustments during the quarter ended March 31, 2012 was $825,363, including a non-cash charge of $452,456, representing the change from December 31, 2011 to March 31, 2012 in fair value for accounting purposes of the outstanding warrants issued in connection with the sale of our convertible notes and warrants in the private placement, as compared to a net loss before foreign currency translation adjustments during the quarter ended March 31, 2011 of $741,685, including a non-cash gain of $548,243, representing the change from December 31, 2010 to March 31, 2011 in fair value for accounting purposes of the outstanding warrants issued in connection with the sale of our convertible notes and warrants in the private placement.

Liquidity and Capital Resources

As of March 31, 2012, we had a working capital deficit of $3,294,955 as compared with a working capital deficit at December 31, 2011 of $3,098,571. During the past twelve (12) months, we have incurred significant operating expenses, and we expect to incur additional significant operating expenses for manufacturing, research and development, marketing, sales channel development, general and administrative expenses and debt payments during the next twelve (12) months, contingent upon raising capital.

During the three months ended March 31, 2012, we did not sell any additional convertible notes and warrants in the private placement. We did, however, receive short-term loans aggregating $372,874 from our Chief Executive Officer to meet the working capital needs of SwissINSO. We have not received any other cash infusions, are unable to meet our current obligations to employees, suppliers, vendors, service providers and lenders and are negotiating extended payment terms with some of our creditors.

We do not have any other available credit, bank financing or other external sources of liquidity and will need to obtain substantial additional capital in order to continue SwissINSO’s business operations. In order to obtain such capital, we will need to sell additional notes and warrants in the private placement, sell other securities to purchasers and/or borrow additional funds from lenders. There can be no assurance that we will be successful in obtaining such additional funding. We will also need to sell KRYSTALL units and commercialize our KLYMMA business. Despite initial progress in building our distribution network following the launch of KRYSTALL in April 2010, a longer than expected sales cycle, political and economic upheaval in the Middle East and Northern Africa and the Company’s lack of available funds have prevented us from reaching some of our initial sales milestones for KRYSTALL and from further developing our business generally. If we are not successful in raising sufficient capital, either from the sale of additional notes and warrants in the private placement, from the sale of other securities, from additional borrowings, from revenues generated by sales of KRYSTALL units or the KLYMMA business, from the sale of all or parts of the SwissINSO business or from the entry into a joint venture with a partner for all or parts of the SwissINSO business, this would have a material adverse effect on our business, results of operations, liquidity and financial condition, and we would be forced to liquidate the business of SwissINSO.

Going Concern Consideration

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in the notes to the financial statements, we have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow us to continue as a going concern. Our ability to continue as a going concern and ultimately to attain profitable operations is dependent on (a) raising capital to meet our past due, current and future obligations to employees, suppliers, vendors, landlords, service providers and lenders and to fund SwissINSO’s business plan, (b) making sales of KRYSTALL units, (c) expanding our distribution network for KRYSTALL around the world and (d) developing the KLYMMA business. We incurred a net loss before foreign currency translation adjustments during the three months ended March 31, 2012 of $825,363, including a non-cash charge of $452,456, representing the change from December 31, 2011 to March 31, 2012 in fair value for accounting purposes of the outstanding warrants issued in connection with the sale of our convertible notes and warrants in the private placement. We have an accumulated deficit since inception of $12,234,743, primarily comprised of $8,868,893 in general and administrative expenses and research and development expenses incurred to create the Company, develop the business of SwissINSO and maintain the Company’s existence as a public company and $1,001,499 in interest charges incurred on the bridge loans, convertible debt and short-term loans used to finance the Company and the business of SwissINSO. These factors continue to raise substantial doubt about our ability to continue as a going concern. As discussed above, management plans include attempting to obtain additional capital from the sale of securities, from bank and private borrowings, from sales of KRYSTALL units, from the commercialization of the KLYMMA business and from attempting to find a buyer or partner for all or part of SwissINSO’s business. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Exchange Act. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures is also 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.

Our management, including our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective:

• to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and

• to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended March 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the quarter ended March 31, 2012, the Company’s subsidiary borrowed $372,874 from the Company’s Chief Executive Officer to meet the working capital needs of the Company and its subsidiary. The loans do not bear interest and are repayable on a to be agreed future date.

Item 6. Exhibits

Exhibit Number		Description
31.1 and 31.2		Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.1 and 32.2		Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SWISSINSO HOLDING INC.

Dated: May 21, 2012	By:	/s/ Rafic Hanbali
	Name:	Rafic Hanbali
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Dated: May 21, 2012	By:	/s/ Clive D. Harbutt
	Name:	Clive D. Harbutt
	Title:	Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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