Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R3.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R8.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R9.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R1.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R6.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R4.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R5.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R2.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R11.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R10.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R12.htm
EX-31.2 - CERTIFICATION - Puramed Bioscience Inc.pmbs_ex312.htm
EX-31.1 - CERTIFICATION - Puramed Bioscience Inc.pmbs_ex311.htm
EX-32.1 - CERTIFICATION - Puramed Bioscience Inc.pmbs_ex321.htm
XML - IDEA: XBRL DOCUMENT - Puramed Bioscience Inc.R7.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 SEPTEMBER 30, 2011

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 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 20,738,009 shares of Common Stock outstanding as of October 18, 2011.
 


 
 

 

TABLE OF CONTENTS
 
      PAGE  
PART I – FINANCIAL INFORMATION
         
Item 1.  CONDENSED FINANCIAL STATEMENTS      
         
  Condensed Balance Sheets     3  
           
  Unaudited Condensed Statements of Operations     4  
           
  Unaudited Condensed Statements of Cash Flows     5  
           
  Notes to Condensed Unaudited Financial Statements     6-10  
           
Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     11  
           
Item 3. Quantitative and Qualitative Disclosures about Market Risk     19  
           
Item 4. Controls and Procedures     19  
           
PART II.  OTHER INFORMATION
           
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     19  
           
Item 5.   Other Information     19  
           
Item 6.  Exhibits     20  
 
 
2

 
 
PART I – FINANCIAL INFORMATION

ITEM 1.  CONDENSED FINANCIAL STATEMENTS
PURAMED BIOSCIENCE, INC.
Condensed Balance Sheets

   
September 30,
   
June 30,
 
   
2011
   
2011
 
   
(Unaudited)
       
ASSETS
Current assets
           
Cash
  $ 54,664     $ 93,879  
Accounts receivable
    255       316  
Inventory
    114,430       93,468  
Prepaid expenses
    19,920       4,513  
                 
Total current assets
    189,269       192,176  
                 
Property and equipment
               
Computer software
    3,760       3,760  
Computer hardware
    5,259       5,259  
Equipment
    2,136       2,136  
Accumulated depreciation
    (2,910 )     (2,326 )
                 
Net property and equipment
    8,245       8,829  
                 
Other assets
               
PuraMed Bioscience products, net of accumulated
               
amortization of $214,410 and $166,404, respectively
    121,622       133,623  
Trademarks, net of accumulated amortization of
               
$133 and $0, respectively
    15,607       15,543  
Patent
    55,864       53,491  
                 
Total other assets
    193,093       202,657  
                 
Total assets
  $ 390,607     $ 403,662  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
               
Accounts payable
  $ 180,482     $ 116,064  
Accrued wages - officers'
    141,522       122,505  
Accrued expenses
    18,632       17,769  
Short-term debt
    155,000       180,000  
                 
Total current liabilities
    495,636       436,338  
                 
Long-term liabilities
               
Convertible bond payable, net
    347,010       312,843  
Derivative liability
    475,197       318,355  
                 
Total Long-term liabilities
    822,207       631,198  
                 
Total liabilities
    1,317,843       1,067,536  
                 
Stockholders' equity (deficit)
               
Undesignated shares, 5,000,000 shares authorized, none issued
    -       -  
Common stock, $.001 par value, 45,000,000 shares
               
   authorized, 20,387,563 shares and 19,288,643 shares issued
               
   and outstanding, respectively
    20,388       19,289  
Additional paid in capital
    3,535,072       3,400,671  
Accumulated deficit
    (4,482,696 )     (4,083,834 )
                 
Total stockholders' equity (deficit)
    (927,236 )     (663,874 )
                 
Total liabilities and stockholders' equity (deficit)
  $ 390,607     $ 403,662  
 
See notes to unaudited condensed financial statements.
 
 
3

 
 
PURAMED BIOSCIENCE, INC.
Unaudited Condensed Statements of Operations
 
    Three months ended  
   
September 30,
2011
   
September 30,
2010
 
             
Total Net Revenue
  $ 5,256     $ 3,603  
                 
Total Cost of Sales
    3,216       2,754  
                 
Gross profit
    2,040       849  
                 
                 
Operating expenses
               
Selling, general and administrative expenses
    23,298       15,733  
Amortization and depreciation expense
    12,719       12,157  
Marketing and advertising expense
    103,702       88,089  
Professional fees
    33,842       45,561  
Research and development
    2,130       750  
Salaries
    18,268       14,304  
Officers' salaries
    48,000       48,000  
                 
Total operating expenses
    241,959       224,594  
                 
Loss from operations
    (239,919 )     (223,745 )
                 
Other expense
               
Interest income
    -       1  
Interest expense
    (97,101 )     (112,369 )
Loss on derivative liability
    (69,754 )     -  
Day-one gain on derivative liability
    7,912       -  
                 
Total other expense
    (158,943 )     (112,368 )
                 
Net loss
  $ (398,862 )   $ (336,113 )
                 
Loss per common share - basic
               
   and diluted
  $ (0.02 )   $ (0.02 )
                 
Average number of  common shares
               
   outstanding basic and diluted
    19,827,469       13,942,557  

See notes to unaudited condensed financial statements.
 
 
4

 
 
PURAMED BIOSCIENCE, INC.
Unaudited Condensed Statements of Cash Flows
 
    Three months ended  
   
September 30,
2011
   
September 30,
2010
 
             
Cash flows from operating activities
           
Net loss
  $ (398,862 )   $ (336,113 )
                 
Changes on non cash working capital items:
               
Stock issued for services
    7,500       46,178  
Depreciation
    584       156  
Amortization
    12,134       12,001  
Accretion on discount on convertible bonds
    34,167       34,167  
Beneficial conversion feature
    50,000       65,000  
(Gain)/loss on derivative liability
    61,842       -  
Changes in operating assets and liabilities:
               
    Accounts receivable
    61       101  
    Inventory
    (20,962 )     57  
Prepaid expenses
    (15,407 )     (2,874 )
Accounts payable
    64,418       37,856  
Accrued wages - officers
    19,017       24,759  
Accrued expenses
    3,863       (2,318 )
                 
Net cash used for operating activities
    (181,645 )     (121,030 )
                 
Cash flows from investing activities
               
Patent acquisition costs
    (2,373 )     (5,880 )
Purchase of property and equipment
    -       -  
Trademark acquisition costs
    (197 )     (1,095 )
                 
Net cash used for investing activities
    (2,570 )     (6,975 )
                 
Cash Flows from financing activities
               
Convertible note borrowings
    50,000       65,000  
Proceeds from sale of stock
    95,000       65,000  
                 
Net cash provided by financing activities
    145,000       130,000  
                 
Net (decrease) increase in cash
    (39,215 )     1,995  
                 
Cash at beginning of period
    93,879       13,831  
                 
Cash at end of period
  $ 54,664     $ 15,826  
                 
Supplemental disclosures of noncash investing
               
  and financing activities and other cash flow
               
  information:
               
     Short-term debt converted to common stock
  $ 78,000     $ -  
Interest paid with cash
  $ 10,250     $ 10,000  

See notes to unaudited condensed financial statements.
 
 
5

 
 
PURAMED BIOSCIENCE, INC.
Notes to Condensed Unaudited Financial Statements
For the Three Month Periods Ended September 30, 2011 and 2010

A.  Basis of Presentation

The condensed balance sheet as of September 30, 2011, the condensed statements of operations for the three month periods ended September 30, 2011 and 2010 and the condensed statements of cash flows for the three month periods ended September 30, 2011 and 2010 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, 2011 and the results of operations and cash flows for the three month periods ended September 30, 2011 and 2010 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, 2011 included in the Annual Report on Form 10-K of the Company filed with the SEC on September 28, 2011.

B.  Going Concern

At September 30, 2011, the Company had a negative working capital of $306,367, 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 or cease 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.

Product AmortizationPuraMed 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.

Recently Enacted Accounting Standards

In December 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-28—Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force). In August of 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-22, Accounting for Various Topics, Technical Corrections to SEC Paragraphs, and Update No. 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies (SEC Update). We have looked at the most current updates and believe that none are applicable.  Adoption of any of these Updates will have no impact on the Company’s financial reporting.  Should any of these updates pertain to the Company, it will comply with its requirements for reporting.
 
 
6

 

PURAMED BIOSCIENCE, INC.
Notes to Condensed Unaudited Financial Statements
For the Three Month Periods Ended September 30, 2011 and 2010

D.  Inventory

Inventory consists of raw materials and finished goods.  Raw materials are the components, including boxes, inserts, liquid medicine and packaging materials that have not been combined into the final product, ready for sale.  Finished goods are the final product, available for sale.  The raw materials inventory will be assembled and placed in finished goods inventory when completed. Due to the lack of degradation of the material, no adjustment for obsolescence is necessary.  The following is inventory as of September 30, 2011 and June 30, 2011:

   
September 30,
2011
   
June 30,
2011
 
Raw Materials
  $ 127,865     $ 87,215  
Finished Goods
    4,476       6,253  
Total Inventory
  $ 132,341     $ 93,468  
 
E.  Notes Payable Transactions

On September 14, 2010, the Company issued a convertible note payable for $35,000.  The note has an annual interest rate of 8% which accrues monthly and matures on June 14, 2011.  Using the stated conversion rate, a beneficial conversion feature of $35,000 was calculated and recorded immediately because the note was convertible at anytime.  The following assumptions were used:  market price of $0.60, conversion rate of $0.28, term of nine months and an annual interest rate of 8%.  During the year ended June 30, 2011, the note was fully converted to 456,641 shares of common stock.

On January 18, 2011, the Company issued a convertible note payable for $75,000.  The note has an annual interest rate of 8% which accrues monthly and matures on September 18, 2011.  Using the stated conversion rate, a beneficial conversion feature of $75,000 was calculated and recorded immediately because the note was convertible at any time.  The following assumptions were used:  market price of $0.22, conversion rate of $0.10, term of nine months and an annual interest rate of 8%.  During the quarter ended September 30, 2011, the note was fully converted to 688,920 shares of common stock.

On April 4, 2011, the Company issued a convertible note payable for $40,000.  The note has an annual interest rate of 8% which accrues monthly and matures on January 4, 2012.  Using the stated conversion rate, a beneficial conversion feature of $40,000 was calculated and recorded immediately because the note was convertible at any time.  The following assumptions were used:  market price of $0.20 conversion rate of $0.10, term of nine months and an annual interest rate of 8%.

On April 13, 2011, the Company issued a convertible note payable for $30,000.  The note has an annual interest rate of 8% which accrues monthly and matures on January 13, 2012.  Using the stated conversion rate, a beneficial conversion feature of $30,000 was calculated and recorded immediately because the note was convertible at any time.  The following assumptions were used:  market price of $0.38, conversion rate of $0.09, term of nine months and an annual interest rate of 8%.

On May 17, 2011, the Company issued a convertible note payable for $35,000.  The note has an annual interest rate of 8% which accrues monthly and matures on February 17, 2012.  Using the stated conversion rate, a beneficial conversion feature of $35,000 was calculated and recorded immediately because the note was convertible at any time.  The following assumptions were used:  market price of $0.485, conversion rate of $0.22, term of nine months and an annual interest rate of 8%.
 
 
7

 
 
PURAMED BIOSCIENCE, INC.
Notes to Condensed Unaudited Financial Statements
For the Three Month Periods Ended September 30, 2011 and 2010
 
E.  Notes Payable Transactions (Continued)

On September 6, 2011, the Company issued a convertible note payable for $35,000.  The note has an annual interest rate of 8% which accrues monthly and matures on May 6, 2012.  Using the stated conversion rate, a beneficial conversion feature of $50,000 was calculated and recorded immediately because the note was convertible at any time.  The following assumptions were used:  market price of $0.36, conversion rate of $0.14, term of nine months and an annual interest rate of 8%.
 
F.  Stockholder’s Equity

On July 12, 2010, the Company agreed to issue 30,000 total shares of PuraMed common stock based on $0.50 per share to an independent consultant.  The terms of the agreement call for 10,000 shares per month for three months.  On August 24, 2010, the Company issued 10,000 of the 30,000 shares.  The remaining 20,000 shares were issued on October 6, 2010.

During August to October 2010, pursuant to the S-1 Registration, the Company sold a total of 174,760 shares of common stock at prices ranging from $0.41 to $0.74 per share, for total proceeds of $90,000 to Lincoln Park Capital, LLC.  In addition 2,754 shares, in the amount of $1,492, were provided to Lincoln Park Capital, LLC as financing commitment shares. This leaves 1,475,240 registered shares available for future sales pursuant to the effective S-1 Registration Statement.

On July 14, 2010 and August 26, 2010 the Company issued Media4Equity 20,000 shares of restricted common stock, a total of 40,000 shares, at a rate of $1.00 per share, as compensation for the second and third months of our consulting contract with Media4Equity.

In December 2010, the Company issued 45,000 shares of common stock to three independent consultants for services, valued at $0.15 per share.

During the quarter ended December 31, 2010, the Company sold 70,000 shares of restricted common stock with warrants for $10,500, $7,000 for stock and $3,500 for the warrants, to a private investor at a rate of $0.30 per unit, of which there are two shares and one warrant per unit.

During the quarter ended December 31, 2010, the Company sold 66,667 shares of restricted common stock for $10,000, to a private investor at a rate of $0.15 per share.

On May 3, 2010, the Company issued a convertible note payable for $70,000.  During the quarter ended December 31, 2010, the note was fully converted for 811,467 shares of common stock.

On June 21, 2010, the Company issued a convertible note payable for $30,000.  During January 2011, the note was fully converted for 356,181 shares of common stock.

On September 14, 2010, the Company issued a convertible note payable for $35,000.  Between March and April 2011, the note was fully converted for 456,641 shares of common stock.

During the quarter ended March 31, 2011, the Company issued 170,000 shares of common stock for $25,500 to three independent consultants for services, valued at $0.15 per share.

During the quarter ended March 31, 2011, the Company sold 174,000 shares of restricted common stock with warrants for $26,100, $17,400 for stock and $8,700 for the warrants, to two private investors at a rate of $0.30 per unit, of which there are two shares and one warrant per unit.
 
 
8

 

PURAMED BIOSCIENCE, INC.
Notes to Condensed Unaudited Financial Statements
For the Three Months Ended September 30, 2011 and 2010

F.  Stockholder’s Equity (Continued)

During the quarter ended March 31, 2011, the Company sold 20,000 shares of common stock for $3,000 to a private investor at a rate of $0.15 per share.
 
During the quarter ended March 31, 2011, the Company issued 150,000 shares of restricted common stock for a total of $22,500 to its employees for services at a rate of $0.15 per share.

On March 25, 2011, the Company issued 800,000 shares of PuraMed common stock based on $0.15 per share to be divided equally among its two board of director members, Messrs. Mitchell and Higgins in consideration for their serving on the Board of Directors for the current year.

On March 25, 2011, the Company issued 33,334 shares of restricted common stock to an attorney for legal services rendered to the company.  These shares were valued at $0.15 per shares for a total value of $5,000.

During the quarter ended June 30, 2011, the Company issued 65,000 shares of common stock for $9,750 to two independent consultants for services, valued at $0.15 per share.

During the quarter ended June 30, 2011, the Company issued 130,000 shares of common stock for $32,500 to three independent consultants for services, valued at $0.25 per share.

On April 4, 2011, the Company issued 500,000 shares of restricted common stock to Mr. Russell Mitchell, for the successful completion and publication of the clinical study.  The stock was valued at $0.15 per share.

During the quarter ended June 30, 2011, the Company sold 1,321,000 shares of restricted common stock with warrants for $330,250, to thirty-three private investors at a rate of $0.50 per unit, of which there are two shares and one warrant per unit.  In accordance with guidance in ASC 815-40-25-1 and ASC 815-40-25-8, the Company has determined the warrants issued have net cash settlement provisions that require classification as derivative liabilities rather than permanent equity. In accordance with such accounting rules, derivative instruments are recorded at fair value and marked-to-market each period until they are exercised or expire, with any change in the fair value charged or credited to income each period. Because these warrants do not trade in an active securities market, their fair value was estimated using the Black Scholes model.

The Company recognized a net gain of $11,895 from the combination of a day one loss and a gain from the change in fair value of these warrants from the date of issuance to the year ended June 30, 2011.
 
During the quarter ended September 30, 2011, the Company issued 30,000 shares of common stock for $7,500 to an independent contractor for services, valued at $0.25 per share.

On January 18, 2011, the Company issued a convertible bond payable for $75,000.  During the quarter ended September 2011, the note was fully converted for 688,920 shares of common stock, which also included $3,000 in interest.
 
 
9

 
 
PURAMED BIOSCIENCE, INC.
Notes to Condensed Unaudited Financial Statements
For the Three Months Ended September 30, 2011 and 2010

F.  Stockholder’s Equity (Continued)

During the quarter ended September 30, 2011, the Company sold 380,000 shares of restricted common stock with warrants for $103,000, to four private investors at a rate of $0.50 per unit, of which there are two shares and one warrant per unit.  In accordance with guidance in ASC 815-40-25-1 and ASC 815-40-25-8, the Company has determined the warrants issued have net cash settlement provisions that require classification as derivative liabilities rather than permanent equity. In accordance with such accounting rules, derivative instruments are recorded at fair value and marked-to-market each period until they are exercised or expire, with any change in the fair value charged or credited to income each period. Because these warrants do not trade in an active securities market, their fair value was estimated using the Black Scholes model.  This results in a derivative liability of $72,900.

Together with the adjustment for the derivative liability marked to market from the quarter ended June 30, 2011, the Company recognized a net loss of $61,842 from the combination of a day one loss and a gain from the change in fair value of these warrants from the date of issuance to the quarter end.
 
G.  Subsequent Events

In October 2011, the Company issued 125,000 shares of restricted common stock in the amount of $31,250 to four consultants for services.  The shares are valued at $0.25 per share.

In October 2011, the Company sold 18,000 shares of restricted common stock with warrants for $4,500, $2,143 for stock and $2,357 for the warrants, to a private investor at a rate of $0.50 per unit, of which there are two shares and one warrant per unit.

On October 13, 2011, the Company issued a convertible note payable for $40,000.
 
On April 4, 2011, the Company issued a convertible note payable for $40,000.  During October 2011, the note was fully converted to 207,446 shares of common stock.
 
 
10

 
 
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, 2011 filed with the SEC on September 28, 2011.

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 three products, LipiGesic® M (Migraine), LipiGesic® PM (Insomnia), and LipiGesic® H (Tension Headache).
 
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 entered the Over-The-Counter healthcare products marketplace in December 2009 by employing “direct to consumer” marketing for its migraine remedy via television commercials and print articles.   The Company is currently undergoing substantial activities to gain broad retail distribution through mainstream drug store chains, mass merchandisers, and food chains directed toward its initial commercial launch of LipiGesic®M Migraine Headache product.  In addition to the direct response advertising campaign, PuraMed is now implementing its marketing campaign utilizing its successful clinical study.  The Company is executing our marketing campaign utilizing our Clinical Trials to overcome consumer and retailer skepticism and provide third party validation of our migraine products efficacy.  The Company’s marketing effort will have a strong consumer emphasis including a Social Marketing Campaign, Medical community detailing and sampling, Continuing Medical Education (CME) program for doctors and pharmacists, Medical conference participation and Celebrity endorsements.
 
 
11

 
 
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.
 
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 50 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, provides a side effect profile similar to placebo, and at a significantly lower cost compared to more expensive prescription migraine drugs.
 
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 non-prescription sleep aid market features products based on antihistamines which are designed to treat allergies.
 
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.
 
LipiGesic® H
 
LipiGesic® H provides relief for tension-type headaches which affect up to 90% of Americans at some point in their lives. LipiGesic® H is a unique sublingually delivered formulation utilizing acetylsalicylic acid and St. John’s Wort.

The combination of these two ingredients provides for not only pain relief but, also relief from the anxiety that often exacerbates that pain. Current nonprescription tension headache pills often take up to an hour to begin working and they often exhibit unwanted and dangerous side effects including stomach damage, liver damage and rebound headaches. Prescription formulations often list even more dangerous side effects and are significantly more expensive.
 
 
12

 

Due to the use of sublingual delivery, the LipiGesic® H formulation can provide a safer, faster acting alternative while also dramatically reducing the potential for harmful side effects. LipiGesic® H will offer the hundreds of millions of Americans who suffer from tension type headaches relief that is superior while also lowering their cost and risks of harmful side effects.
 
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 three products. These other PuraMed products include:
 
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 (RLS) 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.
 
 
13

 

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 production costs and manufacturing time related to making the product commercially available.
 
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.
 
Successful Outcome of Clinical Trial
 
 The outcome of our clinical study coupled with the publication of the manuscript in the peer reviewed-medical journal Headache, The Journal of Head and Face Pain has proved to be very successful.  It has and is expected to continue to provide us with numerous marketing and promotion opportunities that could significantly help with the retail launch of our LipiGesic® M migraine product.
 
Sales and Marketing
 
PuraMed intends to launch its initial three products commercially through the following three-phase process:
 
Phase One Rollout: Direct Response. PuraMed has utilized a 60- and 120-second Direct Response Television commercial to introduce its migraine product marketed under our LipiGesic® M brand name to the American consumer. After refining the initial message during 2010 we anticipate a nationwide roll-out of the commercial will follow. To that end PuraMed has engaged Consumer Marketing Directives (CMD) as our strategic advisor.  CMD offers a broad range of campaign management services that encompasses all aspects of direct to consumer advertising. PuraMed will also employ website and toll-free telephone access in conjunction with its TV direct response campaigns. PuraMed began a nationwide direct response print campaign that started in Mid-September 2010.  PuraMed has commenced and completed its Phase One Rollout on its migraine headache remedy.
 
Phase Two Rollout: Retail Drugstores. The Company is currently undergoing substantial activities to gain broad retail distribution for its migraine remedy through mainstream drug store chains, mass merchandisers, and food chains.  It has begun negotiations with national retail chains Walgreens and CVS.  The company’s Phase Two retail rollout for its migraine remedy will include approximately 18,000 retail drugstores already targeted by PuraMed, including Walgreens, CVS, Rite Aid 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 for its migraine remedy, PuraMed will launch Phase Three which will consist of expanding the retail placement of its migraine product in an additional 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 material 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.
 
 
14

 
 
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 merchant fees, 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.

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

Professional fees consist of audit, legal, transfer agent, consulting and directors fees.

Salaries include payments to our office manager and corporate controller.

Officers’ salaries include payroll to our Chief Executive Officer and our Chief Financial Officer.

Comparison of Operations for Three Months Ended September 30, 2011 and 2010

Revenue

Revenue for the three months ended September 30, 2011 was $5,256 compared to $3,603 for the three months ended September 30, 2010.  Revenue increased due to eCommerce sales because of an increased public awareness of our product.
 
Cost of Sales

Cost of sales for the three months ended September 30, 2011 was $3,216, compared to $2,754 for the three months ended September 30, 2010.  The cost of sales increased slightly due to increased merchant fees and shipping costs in the prior comparison period.

Gross profit

The gross profit for the three months ended September 30, 2011 was $2,040, compared to $849 for the three months ended September 30, 2010.  The increase in gross profit is due to the increase in revenue and reduction of merchant fees and shipping costs.  The slight increase is attributed to increases in bank fees, IT costs, and payroll taxes.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were similar at $23,298 and $15,733 for the three months ended September 30, 2011 and 2010, respectively.
 
 
15

 
 
Amortization and Depreciation

Amortization and depreciation expenses for the three months ended September 30, 2011 and 2010 were similar at $12,719 compared to $12,157.

Marketing and Advertising Expense

Marketing and advertising expense for the three months ended September 30, 2011 were $85,791 compared to $88,089 for the three months ended September 30, 2010.  The amounts were similar and related to marketing, public relations efforts, trade shows, and production costs of samples of our product.

Professional Fees

Professional fees for the three months ended September 30, 2011 were $33,842 compared to $45,561 for the three months ended September 30, 2010.  The decrease was due primarily to the decrease in professional fees attributed to the commercialization of our LipiGesic M migraine product.

Research and Development Expenses

Research and development expenses for the three months ended September 30, 2011 were $2,130 compared to $750 for the three months ended September 30, 2010.  The expense was attributed to testing of the migraine product.

Salaries

Salaries for the three months ended September 30, 2011 were $18,268 compared to $14,304 for the three months ended September 30, 2010, which is attributed to the increase of hours worked by administrative personnel compared to the previous period.

Officers’ Salaries

Officer salaries for the three months ended September 30, 2011 and 2010 were the same being $48,000 for each period.

Interest Expense

Interest expense for the three months ended September 30, 2011 and 2010 were $97,101 and $112,369, respectively.  The decrease in the expense is attributed to the reduction of notes used to finance the Company.

Gain/(Loss) on Derivative Liability
 
The gain on derivative liability is the difference in value using the Black-Scholes formula for the warrants between the date issued and the quarter ended September 30, 2011 and 2010.  The amount for September 30, 2011 was $69,754, there were no derivative liabilities recorded for the quarter ended September 30, 2010.
 
Day One Gain in Derivative Liability
 
The difference between the proceeds received and the value of the warrants issued resulted in a gain.  The amount for the quarter ended September 30, 2011 was $7,912, there were no derivative liabilities recorded for the quarter ended September 30, 2010.
 
 
16

 
 
Net Losses

Net losses for the three months ended September 30, 2011 were $367,762 compared to $336,113 for the three months ended September 30, 2010.  These increased losses in 2011 were due to increased operational expenses related to the commercialization of our LipiGesic M migraine product.

Financial Condition, Liquidity and Capital Resources

As of September 30, 2011, the Company had cash of $54,664 and negative working capital of $288,456.

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 continue development and promotion of its initial non-prescription consumer healthcare products in order to commence their commercial retail drug chain introduction by the end of the 4th quarter of calendar year 2011 with product expected on the initial retailer shelves in the fourth quarter of 2011. PuraMed’s primary goal is to achieve continual material growth of LipiGesic® product sales through mainstream drug, mass merchandiser and food 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:
 
The Successful Outcome of the Clinical Trial - The outcome of our clinical study coupled with the publication of the manuscript in the peer reviewed-medical journal “Headache, The Journal of Head and Face Pain” has proved to be very successful.  It has and is expected to continue to provide us with numerous marketing and promotion opportunities that could significantly help with the retail launch of our LipiGesic® M migraine product.  PuraMed is in the process of executing a detailed marketing plan that focuses on the medical community since the successful outcome of our clinical study trial supports such actions.  Medical marketing efforts geared toward doctors, physician’s assistants, pharmacists, etc. has and is expected to continue to be very lucrative as a component in our overall marketing strategy.
 
Commercialize PuraMed Products – PuraMed’s primary focus for the remainder of calendar year 2011 will be to gain distribution with one or more national chain drug stores.  In addition, the Company will be implementing a marketing campaign utilizing its successful clinical study.  The Company has begun the execution of our marketing campaign utilizing our Clinical Trials to overcome consumer and retailer skepticism and provide third party validation of our migraine products efficacy.  The Company’s marketing efforts will have a strong consumer emphasis including a Social Marketing campaign, medial community detailing and sampling, Continuing Medical Education (CME) program for doctors and pharmacists, Medical conference participation and Celebrity endorsements.   In addition our website and eCommerce efforts will be enhanced to optimize our internet sales as a result of our new marketing campaign.  PuraMed also has plans to test direct response radio advertising and upgrade its Social Marketing efforts that include Facebook, Twitter, and YouTube.
 
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. 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.
 
 
17

 
 
Assuming the company raises the capital, we anticipate spending approximately $3.0 million over the next twelve months on the marketing of our migraine headache remedy along with the introduction of our second product offering regardless of any amounts of revenues we generate from product sales during this period:

Sales and marketing expenses
 
$
2,000,000
 
Purchase of product inventory, packaging and raw materials
   
600,000
 
Research and development activities
   
100,000
 
General and administrative expenses including rent, fixed overhead and management compensation
   
300,000
 
   
$
3,000,000
 

Critical Accounting Policies

The discussion in this Plan of Operation should be considered in conjunction with our audited financial statements and related notes included in this filing. 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.
 
Product Amortization: – 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.  Amortization expense is expected to be $48,536 each year through 2013 and $36,402 for 2014.
 
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 Company believes that no impairment exists at June 30, 2011.
 
Derivative financial instruments – warrants - In accordance with guidance in ASC 815-40-25-1 and ASC 815-40-25-8, the Company has determined the warrants issued during 2011 have net cash settlement provisions that require classification as derivative liabilities rather than permanent equity. In accordance with such accounting rules, derivative instruments are recorded at fair value and marked-to-market each period until they are exercised or expire, with any change in the fair value charged or credited to income each period. Because these warrants do not trade in an active securities market, their fair value was estimated using the Black Scholes formula.
 
 
18

 

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 July through September 30, 2011, the Company, through private transactions, offered and sold 380,000 shares of common stock to four individual investors for a total of $95,000 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
 
 
19

 
 
ITEM 6.  EXHIBITS

See Exhibit Index below
Exhibit Index
Quarterly report on Form 10-Q
For the quarter ended September 30, 2011

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

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

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

101.INS
XBRL Instance Document

101.SCH
Taxonomy Extension Schema Document

101.CAL
Taxonomy Extension Calculation Linkbase Document

101.DEF
Taxonomy Extension Definition Linkbase Document

101.LAB
Taxonomy Extension Label Linkbase Document

101.PRE
Taxonomy Extension Presentation Linkbase Document
_____
* Filed herewith
 
 
20

 
 
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 7, 2011
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 7, 2011  By: /s/ Russell W. Mitchell  
    Russell W. Mitchell, Director  
    (principal executive officer)  
       
November 7, 2011  By: /s/ James W. Higgins  
    James W. Higgins, Director  
    (principal financial officer)  
 
 
21