Puramed Bioscience Inc. - FORM 10-Q

Attached files

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EX-31.2 - CERTIFICATION 31.2 - Puramed Bioscience Inc.	pmbs_312.htm
EX-31.1 - CERTIFICATION 31.1 - Puramed Bioscience Inc.	pmbs_311.htm
EX-32.1 - CERTIFICATE 32 - Puramed Bioscience Inc.	pmbs_321.htm

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 DECEMBER 31, 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 Incorporation or organization)		(IRS Employer ID Number)

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

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

Indicate by checkmark whether registrant is a shell company. o

There were 13,281,839 shares of Common Stock outstanding as of February 9, 2010.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

I tem 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	8

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16

Item 4.	Controls and Procedures	16

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Condensed Balance Sheets

	December 31,			June 30,
	2009			2009
	(Unaudited)			(Audited)
ASSETS
Current assets
Cash	$	387,026		$	38,670
Accounts receivable		130			-
Payroll tax receivable		145			-
Inventory		29,976			378
Prepaid expenses		6,136			5,480
Total current assets		423,413			44,528

Property and equipment
Computer software		2,125			1,217
Computer hardware		1,102			580
Equipment		665			-
Accumulated depreciation		(1,273	)		(920	)
Net property and equipment		2,619			877

Other assets
PuraMed Bioscience products, net of accumulated
amortization of $130,401 and $106,399, respectively		205,630			229,632
Trademarks		9,387			7,910
Patent		17,759			17,048
Total other assets		232,776			254,590

Total assets	$	658,808		$	299,995

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	9,555		$	8,754
Accrued wages - officers'		15,779			109,698
Accrued expenses		7,780			10,336
Total current liabilities		33,114			128,788

Long-term liabilities
Convertible bond payable		500,000			-
Discount on convertible bond		(392,156	)		-
Total long-term liabilities		107,844			-

Total liabilities		140,958			128,788

Stockholders' equity
Undesignated shares, 5,000,000 shares authorized, none issued		-			-
Common stock, $.001 par value, 45,000,000 shares
authorized, 13,281,839 shares and 11,597,839 shares issued
and outstanding, respectively		13,282			11,597
Additional paid in capital		2,084,295			1,254,981
Deficit accumulated during the development stage		(1,579,727	)		(1,095,371	)

Total stockholders' equity		517,850			171,207

Total liabilities & stockholders' equity	$	658,808		$	299,995

See notes to unaudited condensed financial statements.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Unaudited Condensed Statements of Operations

				Three months ended						Six months ended			Period from May 9, 2006 (inception) to
	December 31, 2009			December 31, 2008			December 31, 2009			December 31, 2008			December 31, 2009
Revenues	$	2,567		$	-		$	2,567		$	-		$	2,567

Total revenues		2,567			-			2,567			-			2,567


Cost of sales		289			-			289			-			289

Total cost of sales		289			-			289			-			289

Gross profit		2,278			-			2,278			-			2,278


Operating expenses
Selling, general and administrative expenses		53,647			14,146			76,938			29,505			228,107
Amortization and depreciation expense		12,207			12,103			24,355			24,206			131,675
Audit fees		2,500			862			20,218			16,498			45,528
Consulting fees		20,500			242			20,500			39,525			312,672
Marketing and advertising expense		78,289			-			169,539			-			227,933
Directors' fees		-			-			-			-			60,000
Research and development		28,157			-			38,003			172			110,947
Salaries		12,505			10,092			20,003			27,831			107,930
Officers' salaries		48,000			48,000			96,000			96,000			336,000
Total operating expenses		255,805			85,445			465,556			233,737			1,560,792

Loss from operations		(253,527	)		(85,445	)		(463,278	)		(233,737	)		(1,558,514	)

Other income / (expense)
Interest income		98			1,925			98			886			(37	)
Interest expense		(21,176	)		-			(21,176	)		-			(21,176	)

Total other expense		(21,078	)		1,925			(21,078	)		886			(21,213	)

Net loss	$	(274,605	)	$	(83,520	)	$	(484,356	)	$	(232,851	)	$	(1,579,727	)

Loss per common share - basic
and diluted	$	(0.02	)	$	(0.01	)	$	(0.04	)	$	(0.04	)

Average number of common shares
outstanding basic and diluted		12,857,056			6,850,827			12,403,861			6,442,053

See notes to unaudited condensed financial statements.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Unaudited Condensed Statements of Cash Flows

	Six months ended						Period from May 9,
	December 31, 2009			December 31, 2008			2006 (inception) to December 31, 2009
Cash flows from operating activities
Net loss	$	(484,356	)	$	(232,851	)	$	(1,579,727	)

Changes on non cash working capital items:
Stock issued for services		150,000			33,000			225,000
Non-cash consulting expense		-			-			92,000
Stock issued for directors' fees		-			-			60,000
Depreciation		353			203			1,273
Amortization		24,002			24,002			130,401
Accretion on discount on convertible bond		17,843			-			17,843
Changes in operating assets and liabilities:
Accounts receivable		(130	)		0			(130	)
Payroll tax receivable		(145	)		0			(145	)
Inventory		(29,598	)		0			(29,976	)
Prepaid expenses		(656	)		205			(6,136	)
Accounts payable		801			13,351			9,555
Accounts payable - related party		-			(233	)		-
Accrued wages - officers		(93,919	)		116,343			156,779
Accrued expenses		(2,556	)		(2,261	)		7,780
Net cash used for operating activities		(418,361	)		(48,241	)		(915,483	)

Cash flows from investing activities
Patent acquisition costs		(711	)		(12,499	)		(17,759	)
Purchase of property and equipment		(2,095	)		-			(3,892	)
Trademark acquisition costs		(1,477	)		(1,282	)		(9,387	)
Net cash used for investing activities		(4,283	)		(13,781	)		(31,038	)

Cash Flows from financing activities
Convertible bond proceeds		500,000			-			500,000
Loans from officers		-			61,000			148,685
Repayments to officers for related party loans		-			-			(15,000	)
Proceeds from sale of stock		271,000			-			451,000
Proceeds from spin off		-			-			174,393
Proceeds from equity investee		-			-			74,469
Net cash provided by financing activities		771,000			61,000			1,333,547

Net (decrease) increase in cash		348,356			(1,022	)		387,026
Cash at beginning of period		38,670			1,278			-

Cash at end of period	$	387,026		$	256		$	387,026

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
Beneficial conversion feature on convertible debt	$	305,000		$	-		$	305,000
Stock warrants issued with convertible debt	$	104,999		$	-		$	104,999
Interest paid	$	3,333		$	-		$	3,468

See notes to unaudited condensed financial statements.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes to Condensed Unaudited Financial Statements

For the Six Month Periods Ended December 31, 2009 and 2008

A. Basis of Presentation

The condensed balance sheet as of December 31, 2009, the condensed statements of operations for the three and six month periods ended December 31, 2009 and 2008 and the condensed statements of cash flows for the six month periods ended December 31, 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 December 31, 2009 and the results of operations and cash flows for the three and six month periods ended December 31, 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 25, 2009.

B. Going Concern

At December 31, 2009, the Company had working capital of $390,299, and requires additional funds 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.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes Condensed to Unaudited Financial Statements

For the Six Month Periods Ended December 31, 2009 and 2008

D. Related Party Transactions

From November 2007 through June 2009, Russell Mitchell, a principal shareholder, loaned the Company a 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 a 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

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 at $0.03 per share or a total value of $12,000.

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 for a total value of $33,000.

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 common stock at a rate of $0.06 per share. This resulted 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.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes Condensed to Unaudited Financial Statements

For the Six Month Periods Ended December 31, 2009 and 2008

E. Stockholder’s Equity (Continued)

On May 21, 2009, the Company issued 600,000 shares of common stock valued at $0.10 per share (total value of $60,000) to be divided equally among its board of directors in consideration for their serving on the Board of Directors.

From July 2009 to November 2009 the Company issued 120,000 shares of restricted common stock to three persons for the promotion of the Company to independent investors. These shares were valued at $0.25 per share for a total value of $30,000.

On September 11, 2009, the Company issued 30,000 shares of restricted common stock for partial payment of services related to the creation of the Company’s direct response television commercial. These shares were valued at $0.25 per share for a total value of $7,500.

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

During the three months from October 2009 through December 2009, the Company sold 566,000 shares of restricted common stock to eighteen private individual investors at a rate of $0.25 per share.

On October 29, 2009, the Company issued 400,000 shares of restricted common stock that was divided between Russell Mitchell and James Higgins for recognition of past extensive work and accomplishments on behalf of the company. These shares were valued at $0.25 per shares for a total value of $100,000.

On October 29, 2009, the Company issued 50,000 shares of restricted common stock to an attorney for legal services rendered to the company. These shares were valued at $0.25 per shares for a total value of $12,500.

On November 13, 2009, the Company issued a convertible bond payable for $500,000. The bond has an interest rate of 8% due monthly and matures in three years (11/13/2012). The note was also issued with 75,000 warrants to purchase a share of common stock per warrant at $0.75.

The note is convertible immediately through maturity at $1.00 per share or 500,000 shares of common stock, which created a beneficial conversion feature. The amount of the beneficial conversion feature was recorded as a discount (see valuation below) and will be accredited over the life of the debt.

The warrants issued in conjunction with this note have a three year term, includes a cashless exercise option and are exercisable at $0.75 per share. The Company performed a valuation of these warrants using the Black-Scholes model, which resulted in a valuation of $104,999. The following assumptions were used: market price of $1.40, exercise price of $0.75, term of 3 years, interest rate of 1.02%, a dividend rate of 0% and volatility of 510.49%.

PURAMED BIOSCIENCE, INC.

(A Development Stage Company)

Notes Condensed to Unaudited Financial Statements

For the Six Month Periods Ended December 31, 2009 and 2008

E. Stockholder’s Equity (Continued)

The value of the beneficial conversion feature is calculated as follows:

Allocation of Proceeds:
Total Proceeds received from the Convertible Debt Instrument	$	500,000
Value of these proceeds assigned to the warrants	$	(104,999	)
Proceeds assigned to the convertible debt		395,001

Effective Conversion Price of the Convertible Debt
Value of Proceeds assigned to the Convertible Debt	$	395,001
Shares that the Convertible Debt can be converted into	$	500,000
Effective Conversion Price per Share	$	0.79


Beneficial Conversion Feature Valuation
Fair Value per Share on Date of Agreement - 11/13/09	$	1.40
Less: Effective Conversion Price per Share		(0.79	)
Beneficial Conversion Feature per Share	$	0.61
Shares that the Convertible Debt can be converted into		500,000
Beneficial Conversion Feature	$	305,000

Discount on Convertible Debt Instrument
Value assigned to Warrants	$	104,999
Value of Beneficial Conversion Feature		305,000
Total Discount on Convertible Debt Instrument		409,999
Accumulated Accretion at 12/31/09		(17,843	)
Balance of Discount on Convertible Debt Instrument at 12/31/09	$	392,156

F. Subsequent Events

On February 2, 2010 the company entered into a Private Equity Credit Agreement with Southridge Partners II, LP, a limited partnership.

Pursuant to this Equity Credit Agreement, Southridge Partners II shall commit to purchase up to $7,500,000 of the Company’s common stock over the course of 24 months.

Complete details of this agreement can be found in the Company’s 8-K filing that was published on 2/8/2010.

The Company has evaluated subsequent events from the balance sheet date through February 10, 2010, and no other significant events have occurred

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 completed all product development and design packaging for its initial three products, LipiGesic™ M (Migraine), LipiGesic™ PM (Insomnia), and LipiGesic™ H (Tension Headache), and commenced commercial introduction of the LipiGesic™ M (Migraine) product to the marketplace in 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 recently entered the OTC healthcare products marketplace by employing “direct to consumer” marketing via a 2-minute Direct Response television commercial. This initial effort will be followed by broad retail distribution through mainstream mass merchandisers, drug stores and food chains which is scheduled to begin in the third quarter of 2010. PuraMed is currently undergoing substantial activities directed toward its initial commercial launch of Lipigesic™M migraine product.

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 positive results from its initial research and management, which we expect will assist us in the future development of a new generation of botanically derived anti-inflammatory and pain management products with broad applications.

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.

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 three products commercially through the following three-phase process:

Phase One Rollout: Direct Response. In December 2009 Puramed began running its two-minute direct response television commercials via selected national cable television stations. The media spend over the initial ninety day test phase will be modest in an effort to optimize the television campaign. The media spend is scheduled to increase substantially once the commercial begins to perform in the marketplace.

PuraMed will also employ website and toll-free telephone access in conjunction with its TV direct response campaigns. A Social Media Campaign conducted on the internet via popular internet networking sites will also be implemented to drive customers to our eCommerce websites. PuraMed has begun 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 third quarter of 2010. It will then begin marketing through approximately 25,000 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.

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

Revenues consist of website and telephone sales of the LipiGesic M migraine product.

Cost of Sales

Cost of sales consists of material, packaging and freight costs for the units sold.

Operating Expenses

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 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.

Comparison of Operations for Three Months Ended December 31, 2009 and 2008

Revenue

Revenue for the three months ended December 31, 2009 were $2,567 compared to $0 for the three months ended December 31, 2008. Revenue of consists of web and telephone sales of LipiGesic M migraine product.

Cost of Sales

Cost of sales for the three months ended December 31, 2009 were $289, compared to $0 for the three months ended December 31, 2008. Cost of sales consists of material, packaging and freight costs for the units of LipiGesic M migraine product sold.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended December 31, 2009 were $53,647 compared to $14,146 for the three months ended December 31, 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 commercial rollout of our LipiGesic M migraine product.

Amortization and Depreciation

Amortization and depreciation expenses for the three months ended December 31, 2009 and 2008 were similar at $12,207 compared to $12,103.

Audit Fees

Audit fees for the three months ended December 31, 2009 were similar at $2,500 compared to $862 for the three months ended December 31, 2008.

Consulting Fees

Consulting fees for the three months ended December 31, 2009 were $20,500 compared to $242 for the three months ended December 31, 2008 which increase was due to our initial commercial product launch in 2009.

Marketing and Advertising Expense

Marketing and advertising expense for the three months ended December 31, 2009 were $78,289 compared to $0 for the three months ended December 31, 2008, which was due to our initial commercial product launch in 2009.

Research and Development Expenses

Research and development expenses for the three months ended December 31, 2009 were $28,157 compared to $0 for the three months ended December 31, 2008. Increased research and development expenses were due to increased product development activity in 2009.

Salaries

Salaries for the three months ended December 31, 2009 were $12,505 compared to $10,092 for the three months ended December 31, 2008, which is attributed to the fluctuation of hours worked by administrative personal in the previous period.

Officers’ Salaries

Officer salaries for the three months ended December 31, 2009 and 2008 were the same being $48,000 for each period.

Net Losses

Net losses for the three months ended December 31, 2009 were $274,605 compared to $83,520 for the three months ended December 31, 2008. These increased losses in 2009 were due to increased operational expenses related to the commercial rollout of our LipiGesic M migraine product.

Comparison of Operations for Six Months Ended December 31, 2009 and 2008

Revenue

Revenue for the six months ended December 31, 2009 were $2,567 compared to $0 for the six months ended December 31, 2008. Revenue consists of web and telephone sales of LipiGesic M migraine product.

Cost of Sales

Cost of sales for the six months ended December 31, 2009 were $289, compared to $0 for the six months ended December 31, 2008. Cost of sales consists of material, packaging and freight costs for the units of LipiGesic M migraine product sold.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the six months ended December 31, 2009 were $76,938 compared to $29,505 for the six months ended December 31, 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 commercial rollout of our LipiGesic M migraine product.

Amortization and Depreciation

Amortization and depreciation expenses for the six months ended December 31, 2009 and 2008 were similar at $24,355 compared to $24,206.

Audit Fees

Audit fees for the six months ended December 31, 2009 were $20,218 compared to $16,498 for the six months ended December 31, 2008, which increase was due to the expanded activities in 2009.

Consulting Fees

Consulting fees for the six months ended December 31, 2009 were $20,500 compared to $39,525 for the six months ended December 31, 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 six months ended December 31, 2009 were $169,539 compared to $0 for the six months ended December 31, 2008, which was due to our initial commercial product launch in 2009.

Research and Development Expenses

Research and development expenses for the six months ended December 31, 2009 were $38,003 compared to $172 for the six months ended December 31, 2008. Increased research and development expenses were due to increased product development activity in 2009.

Salaries

Salaries for the six months ended December 31, 2009 were $20,003 compared to $27,831 for the six months ended December 31, 2008, which is attributed to the fluctuation of hours worked by administrative personal in the previous period.

Officers’ Salaries

Officer salaries for the six months ended December 31, 2009 and 2008 were the same being $96,000 for each period.

Net Losses

Net losses for the six months ended December 31, 2009 were $484,356 compared to $232,851 for the six months ended December 31, 2008. These increased losses in 2009 were due to increased operational expenses related to the commercial rollout of our LipiGesic M migraine product.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2009, the Company had cash of $387,026 and working capital of $390,299.

In the near term, we intend to raise the funds needed to implement our plan of operation through both private sales of debt and equity securities and revenue from the sales of our products. There is no assurance, however, that we will be successful in raising or generating the necessary capital to implement our business plan, either through debt or equity sources or product sales.

PuraMed’s current business strategy is to promote our LipiGesic™ M (migraine) product via our direct response marketing campaigns to as many consumers in the U.S. market as possible. Once a significant level of branding has been achieved the company will commence their commercial retail introduction by third quarter of calendar year 2010. 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 first and second quarters of calendar year 2010 will be to continue to test and run our direct response television commercial via nationally available cable television stations featuring our migraine product marketed under our LipiGesic™M brand name. In addition our eCommerce website www.lipigesic.com will continue to be promoted via the Direct Response TV commercial and an internet based Social Media Marketing program designed to attract potential customers to our website to purchase our products. 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 employing “direct to consumer” media advertising for its planned product sales, as well as promoting and building Lipigesic™ brand awareness. Marketing activities designed to promote our nationwide retail launch will also be conducted including retailer specific advertising and in store promotional programs. PuraMed will continue to 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 to eighteen months regardless of any amounts of revenues we generate 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 December 31, 2009.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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.

PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During October through December 31, 2009, the Company, through private transactions, offered and sold 566,000 shares of common stock to eighteen individual investors for a total of $141,500 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. The proceeds from the sales of this stock were used to increase working capital for on-going commercial operations.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

See Exhibit Index below

Exhibit Index

Quarterly report on Form 10-Q

For the quarter ended December 31, 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

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.

February 9, 2010	By:	/s/ Russell W. Mitchell
		Russell W. Mitchell,
		Chief Executive Officer

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.



February 9, 2010	By:	/s/ Russell W. Mitchell
		Russell W. Mitchell, Director (principal executive officer)


February 9, 2010	By:	/s/ James W. Higgins
		James W. Higgins, Director (principal financial officer)

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