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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


———————

FORM 10-Q

———————


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTER ENDED SEPTEMBER 30, 2009


Commission File No. 000-52771


———————

PURAMED BIOSCIENCE, INC.

(Exact name of registrant as specified in its charter)

———————


Minnesota

20-5510104

(State or other jurisdiction of

(IRS Employer ID Number)

Incorporation or organization)

 

 

 

1326 Schofield Avenue

 

Schofield, WI

54476

(Address of principal executive offices)

(Zip Code)


(715) 359-6373

(Registrant’s telephone number)


Check whether the Issuer (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 þ NO ¨


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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act. (Check one):


Large accelerated filer ¨   Accelerated filer ¨   Non-accelerated filer ¨   Smaller reporting company þ


Indicate by checkmark whether registrant is a shell company. ¨


There were 12,621,839 shares of Common Stock outstanding as of November 1, 2009.

 

 








TABLE OF CONTENTS



PART I – FINANCIAL INFORMATION

Item 1.      Condensed Financial Statements

1

Condensed Balance Sheets

1

Unaudited Condensed Statements Of Operations

2

Unaudited Condensed Statements Of Cash Flows

3

Notes To Condensed Unaudited Financial Statements

4

Item 2.      Managements Discussion and Analysis of Financial Condition and Results of Operations

7

Item 3.      Quantitative and Qualitative Disclosures about Market Risk

12

Item 4.      Controls and Procedures

13

Part II. Other Information

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

14

Item 5.      Other Information

14

Item 6.      Exhibits

14





i



PART I – FINANCIAL INFORMATION

Item 1.

Condensed Financial Statements

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Condensed Balance Sheets

  

 

September 30,

 

 

June 30,

 

  

 

2009

 

 

2009

 

  

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash

 

$

28,190

 

 

$

38,670

 

Inventory

 

 

896

 

 

 

378

 

Prepaid expenses

 

 

6,062

 

 

 

5,480

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

35,148

 

 

 

44,528

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

 

 

 

 

 

Computer software

 

 

1,218

 

 

 

1,217

 

Computer hardware

 

 

1,102

 

 

 

580

 

Equipment

 

 

665

 

 

 

––

 

Accumulated depreciation

 

 

(1,067

)

 

 

(920

)

 

 

 

 

 

 

 

 

 

Net property and equipment

 

 

1,918

 

 

 

877

 

 

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

 

PuraMed Bioscience products, net of accumulated
amortization of $118,399 and $106,399, respectively

 

 

217,632

 

 

 

229,632

 

Trademarks

 

 

8,615

 

 

 

7,910

 

Patent

 

 

17,192

 

 

 

17,048

 

 

 

 

 

 

 

 

 

 

Total other assets

 

 

243,439

 

 

 

254,590

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

280,505

 

 

$

299,995

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

34,180

 

 

$

8,754

 

Accrued wages - officers'

 

 

118,008

 

 

 

109,698

 

Accrued expenses

 

 

17,361

 

 

 

10,336

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

169,549

 

 

 

128,788

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

169,549

 

 

 

128,788

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Undesignated shares, 5,000,000 shares authorized, none issued

 

 

––

 

 

 

––

 

Common stock, $.001 par value, 45,000,000 shares authorized,
12,195,839 shares and 11,597,839 shares issued and outstanding, respectively

 

 

12,195

 

 

 

11,597

 

Additional paid in capital

 

 

1,403,883

 

 

 

1,254,981

 

Deficit accumulated during the development stage

 

 

(1,305,122

)

 

 

(1,095,371

)

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

 

110,956

 

 

 

171,207

 

Total liabilities & stockholders' equity

 

$

280,505

 

 

$

299,995

 




See notes to unaudited condensed financial statements.

1



PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Unaudited Condensed Statements of Operations

  

 

 

 

 

 

 

 

Period from

 

  

 

Three months ended

 

 

May 9, 2006

(inception) to

 

  

 

September 30,

2009

 

 

September 30,

2008

 

 

September 30,

2009

 

Revenues

 

 

 

 

 

 

 

 

 

Total revenues

 

$

––

 

 

$

––

 

 

$

––

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Total cost of sales

 

 

––

 

 

 

––

 

 

 

––

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

––

 

 

 

––

 

 

 

––

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

23,292

 

 

 

15,117

 

 

 

174,462

 

Amortization and depreciation expense

 

 

12,147

 

 

 

12,103

 

 

 

119,466

 

Audit fees

 

 

17,718

 

 

 

13,636

 

 

 

43,028

 

Consulting fees

 

 

––

 

 

 

39,525

 

 

 

292,172

 

Marketing and advertising expense

 

 

91,250

 

 

 

––

 

 

 

149,644

 

Directors' fees

 

 

––

 

 

 

––

 

 

 

60,000

 

Research and development

 

 

9,846

 

 

 

172

 

 

 

82,790

 

Salaries

 

 

7,498

 

 

 

17,739

 

 

 

95,425

 

Officers' salaries

 

 

48,000

 

 

 

48,000

 

 

 

288,000

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

209,751

 

 

 

146,292

 

 

 

1,304,987

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(209,751

)

 

 

(146,292

)

 

 

(1,304,987

)

  

 

 

 

 

 

 

 

 

 

 

 

 

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

––

 

 

 

(1,039

)

 

 

(135

)

  

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

 

––

 

 

 

(1,039

)

 

 

(135

)

  

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(209,751

)

 

$

(147,331

)

 

$

(1,305,122

)

  

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share - basic and diluted

 

$

(0.02

)

 

$

(0.02

)

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

Average number of  common shares outstanding basic and diluted

 

 

11,950,665

 

 

 

6,033,539

 

 

 

 

 




See notes to unaudited condensed financial statements.

2



PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Unaudited Condensed Statements of Cash Flows

  

 

 

 

 

 

 

 

Period from

 

  

 

Three months ended

 

 

May 9, 2006

(inception) to

 

  

 

September 30,

2009

 

 

September 30,

2008

 

 

September 30,

2009

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net loss

 

$

(209,751

)

 

$

(147,331

)

 

$

(1,305,122

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes on non cash working capital items:

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for services

 

 

20,000

 

 

 

33,000

 

 

 

95,000

 

Non cash consulting expense

 

 

––

 

 

 

––

 

 

 

92,000

 

Stock issued for directors' fees

 

 

––

 

 

 

––

 

 

 

60,000

 

Depreciation

 

 

147

 

 

 

102

 

 

 

1,067

 

Amortization

 

 

12,000

 

 

 

12,001

 

 

 

118,399

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Work in progress

 

 

(518

)

 

 

0

 

 

 

(896

)

Prepaid expenses

 

 

(582

)

 

 

100

 

 

 

(6,062

)

Accounts payable

 

 

25,426

 

 

 

20,500

 

 

 

34,180

 

Accrued wages - officers

 

 

8,310

 

 

 

51,672

 

 

 

259,009

 

Accrued expenses

 

 

7,025

 

 

 

(243

)

 

 

17,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used for operating activities

 

 

(137,943

)

 

 

(30,199

)

 

 

(635,064

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Patent acquisition costs

 

 

(144

)

 

 

(10,234

)

 

 

(17,192

)

Purchase of property and equipment

 

 

(1,188

)

 

 

––

 

 

 

(2,986

)

Trademark acquisition costs

 

 

(705

)

 

 

(1,282

)

 

 

(8,615

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used for investing activities

 

 

(2,037

)

 

 

(11,516

)

 

 

(28,793

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Loans from officers

 

 

––

 

 

 

44,000

 

 

 

148,685

 

Repayments to officers for related party loans

 

 

––

 

 

 

––

 

 

 

(15,000

)

Proceeds from sale of stock

 

 

129,500

 

 

 

––

 

 

 

309,500

 

Proceeds from spin off

 

 

––

 

 

 

––

 

 

 

174,393

 

Proceeds from equity investee

 

 

––

 

 

 

––

 

 

 

74,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

129,500

 

 

 

44,000

 

 

 

692,047

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash

 

 

(10,480

)

 

 

2,285

 

 

 

28,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash at beginning of period

 

 

38,670

 

 

 

1,278

 

 

 

––

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash at end of period

 

$

28,190

 

 

$

3,563

 

 

$

28,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of noncash investing
and financing activities and other cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

Assets acquired in connection with spin off

 

$

––

 

 

$

––

 

 

$

217,687

 

Stock issued for acquisition of assets

 

$

––

 

 

$

––

 

 

$

174,393

 

Interest paid

 

$

––

 

 

$

––

 

 

$

135

 




See notes to unaudited condensed financial statements.

3



PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes to Condensed Unaudited Financial Statements

A. Basis of Presentation

The condensed balance sheet as of September 30, 2009, the condensed statements of operations for the three month periods ended September 30, 2009 and 2008 and the condensed statements of cash flows for the three month periods ended September 30, 2009 and 2008 have been prepared by PuraMed Bioscience, Inc. (the "Company") without audit. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of September 30, 2009 and the results of operations and cash flows for the three month period ended September 30, 2009 and 2008 presented herein have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These financial statements should be read in conjunction with the Company's financial statements and notes thereto for the fiscal year ended June 30, 2009 included in the Annual Report on Form 10-K of the Company filed with the SEC on September 5, 2009.

B. Going Concern

At September 30, 2009, the Company had negative working capital of $134,401, and minimal funds needed to accomplish its planned business strategy or support its projected expenses. The Company plans to obtain the needed working capital primarily through sales of both equity and debt securities, which there is no assurance it will be able to accomplish. If the Company cannot obtain substantial working capital through common stock sales or other sources (if any), it will be forced to curtail its planned business operations. If the Company is unable to obtain additional financing, its ability to continue as a going concern is doubtful.

C. Accounting Policies

Loss per common share - Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted loss per common share assumes the exercise of stock options and warrants using the treasury stock method, if dilutive.

Recently Enacted Accounting Standards

In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Statement of Financial Accounting Standards ("SFAS") SFAS No. 165 (ASC Topic 855), "Subsequent Events", SFAS No. 166 (ASC Topic 810), "Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140", SFAS No. 167 (ASC Topic 810), "Amendments to FASB Interpretation No. 46(R)", and SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles-a replacement of FASB Statement No. 162" were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.

Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU's No. 2009-2 through ASU No. 2009-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.



4



PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes to Condensed Unaudited Financial Statements

D. Related Party Transactions

From November 2007 through June 2009, Russell Mitchell, a principal shareholder, loaned the Company of total of $69,685 for working capital purposes, for which he received a promissory note bearing an interest rate of 4% and is payable on demand. As of June 30, 2009, $62,685 was converted to common stock and $7,000 was repaid. Mr. Mitchell elected to waive the 4% interest.

From January 2008 through June 2009, James Higgins, a principal shareholder, loaned the Company of total of $92,000 for working capital purposes, for which he received a promissory note bearing an interest rate of 4% and is payable on demand. As of June 30, 2009, $84,000 was converted to common stock and $8,000 was repaid. Mr. Higgins elected to waive the 4% interest.

E. Stockholder’s Equity

Effective November 15, 2007, the Company issued 600,000 shares to Messrs. Mitchell and Higgins (300,000 each) in consideration for their past services.

On November 19, 2007 the Articles of Incorporation were amended to change the amount of authorized common shares to 45,000,000 as well as authorizing 5,000,000 shares as undesignated. In addition, the par value of common stock was changed from no par value per share to $0.001 par value per share, which was retroactively accounted for since inception.

In May 2008, the Company issued common stock for services to its employees and certain contractors. There were a total of 400,000 common shares issued valued at $12,000.

The result of the conversion of accrued wages and promissory notes by Messrs. Mitchell and Higgins into the Company’s common stock at $0.15 per share was the following shares issued:

Russell Mitchell (CEO):

817,235 shares

James Higgins (CFO; COO):

986,667 shares

 

 

In September 2008, the Company issued 110,000 shares of common stock at a rate of $0.30 per share for services related to establishing a trading market for our common stock.

On November 24, 2008, the Board of Directors authorized the conversion of notes payable in the amount of $58,585 to Mr. Mitchell and $84,000 to Mr. Higgins into PuraMed common stock at a rate of $0.15 per share. This results in an issuance of 390,567 and 560,000 common stock shares, respectively.

On the same day, the Board of Directors authorized the conversion of accrued wages in the amount of $64,000 each to Messrs. Mitchell and Higgins at a rate of $0.15 per share. This resulted in an issuance of 426,667 shares (each) of common stock.

On February 25, 2009, the Board of Directors authorized the sale of 2,000,000 shares of restricted common stock to a private individual at a price of $0.06 per share.

On March 9, 2009, the Board of Directors authorized the conversion of notes payable in the amount of $4,100 to Mr. Mitchell into PuraMed common stock at a rate of $0.06 per share. This results in an issuance of 68,334 shares of common stock.

On March 20, 2009, the Board of Directors authorized the sale of 1,000,000 shares of restricted common stock to a private individual at a price of $0.06 per share.

On May 21, 2009, the Company issued 600,000 shares of PuraMed common stock based on $0.10 per share to be divided equally among its board of directors in consideration for their serving on the Board of Directors.



5



PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes to Condensed Unaudited Financial Statements

E. Stockholder’s Equity (Continued)

On July 27, 2009 the Company issued 50,000 shares of restricted common stock at a rate of $0.25 per share to Investor Awareness for the promotion of the Company to independent investors.

On September 11, 2009, the company issued 30,000 shares of restricted common stock to Avalanche Creative Services and Neil Brownlee for partial payment of services related to the creation of the Company’s direct response television commercial at a rate of $0.25 per share.

During the three months from July 2009 through September 2009, PuraMed BioScience sold 518,000 shares of restricted common stock to seven private individual investors at a rate of $0.25 per share.

F. Subsequent Events

As of October 27, 2009, the Company issued 426,000 shares of restricted common stock at a rate of $0.25 per share to twelve private individual investors since September 30, 2009.



6



Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read and considered along with our condensed financial statements and related notes included in this 10-Q. These financial statements were prepared in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in these forward-looking statements as a result of various factors including those set forth in the “Risk Factors” section of our Form 10-K filing for fiscal year ending June 30, 2009 filed with the SEC on September 25, 2009.

Background

PuraMed BioScience, Inc. (“PuraMed” or the “Company”) was incorporated in Minnesota on May 9, 2006 as a wholly-owned subsidiary of Wind Energy America, Inc. (formerly “Dotronix, Inc.”) for the purpose of engaging in the business of developing and marketing non-prescription over-the-counter healthcare products to remedy various ailments.

In late 2006, PuraMed’s former parent company decided to spin off its PuraMed subsidiary and related healthcare products business. Accordingly, on April 12, 2007, Wind Energy America, Inc. affected a spin-off of PuraMed to shareholders of Wind Energy America, Inc. on a pro rata dividend basis of one common share of PuraMed for each five common shares of Wind Energy America, Inc. Since the April 12, 2007 effective date of the spin-off, PuraMed and Wind Energy America, Inc. have operated separately, with their respective managements, businesses, assets and capital structures being completely independent from each other.

Detailed information regarding this spin-off of PuraMed from Wind Energy America, Inc. (formerly Dotronix, Inc.) is contained in a Form 8-K and exhibit thereto which were filed with the SEC April 10, 2007, and can be readily accessed at the SEC website www.sec.gov.

Overview of Business

The Company is engaged in the business of developing and marketing a line of non-prescription medicinal or healthcare products to be marketed through various retail channels under the Lipigesic™ brand and trademark. In an effort to add continuity to all of the PuraMed Bioscience™ products the Company trademarked the brand name Lipigesic™. The Company has recently completed all product development and design packaging for its initial two products, LipiGesic™ M (Migraine) and LipiGesic™ PM (Insomnia), and expects to begin their commercial introduction to the marketplace by the fourth quarter of calendar 2009.

Product development and design packaging of all PuraMed products have been conducted entirely by the Company’s two principal officers, Russell Mitchell and James Higgins: Messrs. Mitchell and Higgins have extensive and lengthy experience in new product development and marketing of non-prescription medical products and nutritional supplements and the many varied promotional activities involved in their marketing rollouts. For example, Mitchell Health Technologies served as the master broker for the launch of Quigley Corp’s “Cold-Eeze” treatment for common colds, which within 18 months exceeded $70 million in annual wholesale revenues. The Company considers the long and successful professional involvement of its management team in our industry to be a valuable asset to draw upon to achieve the future growth and profitability anticipated by the Company.

The Company intends to enter the OTC healthcare products marketplace by employing “direct to consumer” marketing via print and television commercials followed by broad retail distribution through mainstream mass merchandisers, drug stores and food chains. PuraMed is currently undergoing substantial activities directed toward its initial commercial launch of Lipigesic™ brand products.

The Company also intends to continue to develop and grow its intellectual property portfolio which is expected to substantially enhance shareholder value. Our scientific team has gained significant and exciting evidence from its initial research and management, which we expect will assist us in the development of a new generation of botanically derived anti-inflammatory and pain management products with broad applications.



7



LipiGesic™ M

LipiGesic™ M provides acute relief from migraine headaches, and contains the herbs feverfew and ginger as principal ingredients. PuraMed believes that its specific formulation of these herbs for its migraine remedy is unique and proprietary, providing relief from these severe headaches in minutes. The Company believes it will capture a material segment of the huge migraine headache remedy market. We believe that Americans spend in excess of $6 billion annually on headache pain relievers, and that over half of sufferers of migraine headaches rely exclusively on non-prescription medications.

We believe that at least 30 million Americans suffer from chronic migraine headaches with over 20 million of them having “severe” migraine conditions. Thus migraine headaches constitute a severe and disabling condition for millions of people. We further believe that the economic burden alone to the U.S. economy is in excess of $20 billion annually.

LipiGesic™ M is effective, available as a non-prescription remedy, without any known side effects, and affordable compared to more expensive migraine drugs based on prescription chemical formulations.

LipiGesic™ PM

LipiGesic™ PM is a new class of non-prescription sleep aid without any known side effects, and contains a proprietary blend of natural ingredients including Valerian, St. John’s Wort, and Chamomile. We believe that the proprietary blend of these ingredients provides an effective remedy for insomnia and other sleep disorders. The sleep aid market features products based primarily on chemical antihistamines.

Accordingly, the LipiGesic™ PM product provides a wide open market opportunity for an effective, natural alternative to prescription medications, which are somewhat addictive and often cause withdrawal symptoms and other side effects. We have priced LipiGesic™ PM as a premium sleep aid product, which provides us with a projected gross margin of approximately 80%. This large margin should leave us substantial room for ample introductory promotion, product allowances and other incentives conducive to achieving rapid market penetration.

Similar to the migraine remedy market, the market for sleep aid products represents a very large segment of the overall healthcare products marketplace. We believe that over half of all adults in the U.S. suffer from sleep disorders, and that many of them experience persistent insomnia. The National Center on Sleep Disorders has reported that there are as many as 70 million problem sleepers in the U.S. with many of them suffering from chronic sleep disorders. We believe that insomnia is second only to pain as a healthcare complaint.

Future LipiGesic™ Products

We have completed development of additional non-prescription products, which we intend to launch commercially over the next couple years after establishing a solid market for our initial two products. These other PuraMed products include:

LipiGesic™ H – provides relief for common tension headaches which afflict a majority of American adults from time to time. This remedy provides headache relief features a unique proprietary formulation of St. John’s Wort and common aspirin.

LipiGesic™ Smoker’s Pal – provides relief from the symptoms associated with nicotine withdrawal with the added benefit of an appetite suppressant.

LipiGesic™ RLS – provides relief of problematic leg cramps associated with Restless Leg Syndrome affecting a large segment of the population in the U.S.

LipiGesic™ GI – provides relief of symptoms associated with nighttime reflux disorders.

LipiGesic™ CS – provides fast relief for canker sore outbreaks.

When introduced commercially, these other products will be packaged and branded much like the initial LipiGesic™ products, since we intend to devote substantial efforts and resources toward gaining a favorable and consistent brand and packaging for all PuraMed products to attempt to make them instantly recognizable on retail store shelves.



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Sublingual Delivery System

The LipiGesic™ M, LipiGesic™ PM and LipiGesic™ H are non-prescription, liquid medications that will be absorbed under-the tongue known as “sublingual.” The use of sublingual delivery provides fast relief for whatever ailment or condition is being treated. Unlike the majority of pills and medications absorbed through the stomach directly, PuraMed products are placed and absorbed directly under the tongue. Advantages of sublingual dispensing of drugs and medications include faster acting absorption for quick relief, improved efficacy, less stomach upset, and fewer side effects.

PuraMed has secured reliable contract manufacturers to produce and package PuraMed products in easy-to-use, sublingual dispensers. These selected contractors are experienced in the production and packaging of this type of dispenser. PuraMed believes that its benchmark use of sublingual dispensers will distinguish its products favorably in comparison to most competing OTC products now in the marketplace.

Regulation of PuraMed Products

Unlike prescription drugs or medications, non-prescription healthcare remedies such as PuraMed products do not require FDA approval prior to entering the market. They are nonetheless subject to substantial FDA and other federal regulations governing their use, labeling, advertising, manufacturing and ingredients. PuraMed believes that its current and proposed development, formulation, marketing and other practices and procedures will comply fully with all governmental regulations applicable to PuraMed Products.

Business Structure

PuraMed will function primarily as a research and development, marketing and sales organization. Product manufacturing, packaging, product fulfillment and other operations will be outsourced to experienced and reliable third parties through contracts controlled by PuraMed. PuraMed believes this structure will reduce significantly the development stage costs and development time related to launching each PuraMed product commercially.

Product Manufacturing

Production and packaging of PuraMed products will be outsourced to various contract manufacturers known by PuraMed’s management from prior substantial business and contract dealings. Due to the business and contacts developed by PuraMed management over the past years with leading contract manufacturers, PuraMed is convinced it can obtain professional and timely production, packaging and delivery of all PuraMed products.

Sales and Marketing

PuraMed intends to launch its initial two products commercially through the following three-phase process:

Phase One Rollout: Direct Response. A series of print advertisements will be published nationally in secondary market newspapers, which initial ads will allow PuraMed to test and refine our advertising message. After refining this initial advertising and identifying primary customer bases, PuraMed will create and have broadcasted television infomercials as well as standard TV commercials. PuraMed will also employ website and toll-free telephone access in conjunction with its print and TV direct response campaigns. PuraMed anticipates beginning its Phase One Rollout during the fourth quarter of calendar year 2009.

Phase Two Rollout: Retail Drugstores. PuraMed expects to develop substantial product sales and a defined customer base from its direct response marketing phase by the first quarter of 2010. It will then begin marketing through approximately 18,000 retail drugstores already targeted by PuraMed, including Walgreens, Rite Aid, CVS and others. Due to PuraMed’s management having extensive and good relationships with targeted retail outlets for PuraMed products, PuraMed believes it has the ability to place its products on the shelf in all its targeted retail outlets.

Phase Three Rollout: Further Retail Outlets. A few months after beginning the Phase Two Rollout, PuraMed will launch Phase Three which will consist of placing PuraMed products in a further approximately 21,000 targeted retail outlets including mass merchandisers such as Wal-Mart and Target, food store chains such as SuperValu, Kroger and Safeway, and additional well-known regional drugstores.

PuraMed has selected its targeted retailers according to various material criteria, including cost of entry, geography, demographics and consumer preference.



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After achieving initial distribution for PuraMed products, PuraMed will initiate a comprehensive and ongoing promotional campaign directed toward consumer groups it has identified from its product rollouts.

Results of Operations

Revenues

Since our 2006 inception, we have generated no revenues.

Operating Expenses

From our inception in May 2006, through September 30, 2009, we have incurred total operating expenses of $1,304,987 including $174,460 of selling, general and administrative expenses, $119,468 of amortization and depreciation expenses, $43,028 of audit fees, $292,172 of consulting expenses, $149,644 of marketing and advertising expenses, $60,000 in directors’ fees, $82,790 of research and development expenses, $95,425 of salaries and $288,000 of officers’ salaries.

Selling, general and administrative expenses consist primarily of payroll taxes, health insurance, facility rent and administrative overhead costs.

Amortization and depreciation expenses consist primarily of depreciation of fixed assets and amortization of our intellectual property received during our spin-off from our parent company in April 2007.

Audit fees consist of three quarterly reviews and our annual audit required for our SEC filings.

Consulting fees include fees paid to consultants and brokers for services related to being a public company.

Marketing and advertising expense include payments for public relations, stock promotion and advertising consistent with the commercialization of products.

Research and development expenses consist primarily of product and packaging development and marketing strategy costs.

Salaries include payments to our office manager and corporate controller as of January 1, 2008.

Officers’ salaries include payroll to our Chief Executive Officer and our Chief Financial Officer as of January 1, 2008.

Comparison of Operations for Three Months Ended September 30, 2009 and 2008

Revenue

There were no revenues for the three months ended September 30, 2009 and 2008.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2009 were $23,291 compared to $15,117 for the three months ended September 30, 2008. Increased selling, general and administrative expenses for the 2009 period compared to 2008 were due primarily to postage, convention and supplies paid for the preparation for the rollout of our LipiGesic M migraine product into the United States market.

Amortization and Depreciation

Amortization and depreciation expenses for the three months ended September 30, 2009 and 2008 were $12,148 compared to $12,103.

Audit Fees

Audit fees for the three months ended September 30, 2009 were $17,718 compared to $13,636 for the three months ended September 30, 2008.



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Consulting Fees

Consulting fees for the three months ended September 30, 2009 were $0 compared to $39,525 for the three months ended September 30, 2008 which decrease was due to the Company terminating its consulting agreements with its two officers and reclassifying their monthly salaries.

Marketing and Advertising Expense

Marketing and advertising expense for the three months ended September 30, 2009 were $91,250 compared to $0 for the three months ended September 30, 2008. The expense includes payments for public relations, stock promotion and advertising consistent with the commercialization of products.

Research and Development Expenses

Research and development expenses for the three months ended September 30, 2009 were $9,846 compared to $172 for the three months ended September 30, 2008. Increased research and development expenses were due to the preparation for the rollout of our LipiGesic M migraine product into the United States market.

Salaries

Salaries for the three months ended September 30, 2009 were $7,498 compared to $17,739 for the three months ended September 30, 2008. Decreased salaries are due to the limited funds of the Company.

Officers’ Salaries

Officer salaries for the three months ended September 30, 2009 and 2008 were $48,000. Officers are paid $8,000 monthly.

Net Losses

Net losses for the three months ended September 30, 2009 were $197,251 compared to $147,331 for the three months ended September 30, 2008. These increased losses were due to the preparation for the rollout of our LipiGesic M migraine product into the United States market.

Financial Condition, Liquidity and Capital Resources

As of September 30, 2009, the Company had limited cash of $28,190 and a working capital deficit of $134,401 of which $118,008 is attributed to accrued executive salaries.

As in the past, we intend to raise the funds needed to implement our plan of operation through both private sales of debt and equity securities. There is no assurance, however, that we will be successful in raising the necessary capital to implement our business plan, either through debt or equity sources.

PuraMed’s current business strategy is to complete development and promotion of its initial non-prescription consumer healthcare products in order to commence their commercial retail introduction by 4th quarter of calendar year 2009. PuraMed’s primary goal is to achieve continual material growth of Lipigesic™ product sales through mainstream food, drug, and mass merchandiser retail channels while at the same time promoting Lipigesic™ brand awareness to realize substantial profitability as soon as possible. To implement this strategy, PuraMed intends to execute the following activities during the next twelve months:

Commercialize PuraMed Products – PuraMed’s primary focus for the remainder of calendar year 2009 will be to complete, test and nationally roll-out our direct response commercial featuring our migraine product marketed under our LipiGesic™M brand name. In addition our website will be enhanced to include an eCommerce component for ordering our products on-line and an Investors tab which will detail investment information to shareholders. PuraMed has obtained all vendors, suppliers and subcontract third parties needed for its planned production, packaging and raw material, and will continue to identify and obtain alternate sources for PuraMed product inventories.

Expansion of Sales and Marketing Activities – PuraMed will continue to expand upon its marketing activities which have been focused toward obtaining a nationwide network of retail outlets and employing “direct to consumer” media advertising for its planned product sales, as well as promoting and building Lipigesic™ brand awareness.



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PuraMed will participate in industry trade shows and similar events, and also will engage in substantial media advertising and direct sales media campaigns to attract and secure consumers for PuraMed products.

Continuation of Product Development – Besides its already developed products, PuraMed will complete development and testing of additional non-prescription drugs and nutritional supplements to be commercially launched in the future as additional Lipigesic™ products.

Assuming the company raises the capital, we anticipate spending approximately $2.5 million over the next twelve months regardless of any amounts of revenues it generates from product sales during this period:

Sales and marketing expenses

 

$

1,280,000

 

Purchase of product inventory, packaging and raw materials

 

 

600,000

 

Research and development activities

 

 

175,000

 

General and administrative expenses including rent, fixed overhead and management compensation

 

 

445,000

 

 

 

$

2,500,000

 


Critical Accounting Policies

The discussion in this Plan of Operation should be considered in conjunction with our unaudited condensed financial statements and related notes included in this quarterly report. These financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP).

The preparation of our financial statements requires us to make estimates and judgments affecting our reported amounts of assets, liabilities, revenues and expenses and related disclosures. On an ongoing basis, we will evaluate these estimates which are based on historical experience and certain assumptions we believe to be reasonable under the circumstances. Actual results may differ materially from our estimates under different assumptions or conditions.

LipiGesic™ Products:

PuraMed Bioscience™ products consist primarily of the cost of trade secrets, formulas, scientific and manufacturing know-how, trade names, marketing material and other intellectual property and are amortized on a straight-line basis over an estimated useful life of seven years.

Stock-Based Compensation – We intend to expense any stock-based compensation issued to our employees, contractors, consultants or others providing goods and services to us. The fair market value of any common stock issued for goods or services will be expensed over the period in which we receive them. Most likely, any equity securities issued by us for goods and services will consist of common shares or common stock purchase warrants, which will be fully vested, non-forfeitable, and fully paid or exercisable at the date of grant. Regarding any future stock option or warrant grants, we intend to determine their fair value by using the Black-Scholes model of valuation.

Impairment – Soon after the end of each fiscal year and each interim period, we will conduct an impairment valuation of any material intangible assets owned by us. If the results of any such impairment analysis indicate our recorded values for any such assets have declined materially, we will adjust our recorded asset valuations in all of our financial statements to reflect any such decline in value.

The carrying value is reviewed periodically or when factors indicating impairment are present. The impairment loss is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets. The Company believes that no impairment exists at September 30, 2009.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

This item is not applicable to PuraMed Bioscience™, Inc.



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Item 4.

Controls and Procedures

Evaluation of disclosure controls and procedures.

As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Changes in internal controls.

There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



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Part II. Other Information

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

During July through September 30, 2009, the Company, through private transactions, offered and sold 518,000 shares of common stock to seven individual investors for a total of $129,500 net of offering expenses. Sale of these common shares was deemed exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was involved and these shares were offered only to the individual purchasers who are accredited investors. Moreover, the stock certificates for these shares are legended to prevent further transfer, resale or other disposition unless registered under applicable securities laws or exempt from such registration.

Item 5.

Other Information

None

Item 6.

Exhibits

See Exhibit Index below



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Exhibit Index

Quarterly report on Form 10-Q

For the quarter ended September 30, 2009

31.1*

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*Filed herewith



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


 

 

 

 

 

 

 

 

 

 

PURAMED BIOSCIENCE, INC.

 

 

 

Date:  November 13, 2009

By

/s/ RUSSELL W. MITCHELL

 

 

Russell W. Mitchell, CEO


Pursuant to requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date:

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

November 13, 2009

By

/s/ RUSSELL W. MITCHELL

 

 

Russell W. Mitchell, Director

 

 

(principal executive officer)

 

 

 

November 13, 2009

By

/s/ JAMES W. HIGGINS

 

 

James W. Higgins, Director

 

 

(principal financial officer)




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