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, 2010





Commission File No. 000-52771





PURAMED BIOSCIENCE, INC.


(Exact name of registrant as specified in its charter)




Minnesota

20-5510104(State or other jurisdiction ofIncorporation 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 þNO 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 14,119,353 shares of Common Stock outstanding as of November 4, 2010.















TABLE OF CONTENTS





PART I – FINANCIAL INFORMATIONItem 1.
CONSENSED FINANCIAL STATEMENTS


3Consolidated Balance Sheets


3Unaudited Condensed Statements of Operations


4Unaudited Condensed Statements of Cash Flows


5Notes to Condensed Unaudited Financial Statements


6Item 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


11Item 3.
Quantitative and Qualitative Disclosures about Market Risk


18Item 4.
Controls and Procedures


18PART II.  –  OTHERINFORMATION


19Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds


19Item 5.
Other Information


19Item 6.
Exhibits


19





2


PART I – FINANCIAL INFORMATION





ITEM 1.  CONDENSED FINANCIAL STATEMENTS





PURAMED BIOSCIENCE, INC.


Condensed Balance Sheets




September 30,


June 30,2010


2010(Unaudited)ASSETSCurrent assetsCash

$
15,826


$
13,831Accounts receivable


-



101Inventory


25,774



25,831Prepaid expenses


7,896



5,022Total current assets


49,496



44,785Property and equipmentComputer software


2,125



2,125Computer hardware


1,102



1,102Equipment


665



665Accumulated depreciation


(1,851
)


(1,695
)Net property and equipment


2,041



2,197Other assetsPuraMed Bioscience products, net of accumulatedamortization of $166,404 and $154,403, respectively


169,627



181,628Trademarks


12,195



11,100Patent


43,266



37,386Total other assets


225,088



230,114Total assets

$
276,625


$
277,096LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilitiesAccounts payable

$
53,895


$
16,039Accrued wages - officers'


57,762



33,003Accrued expenses


5,142



10,626Short-term debt


138,166



70,000Total current liabilities


254,965



129,668Long-term LiabilitiesConvertible Bond Payable, net


210,344



176,177Total Liabilities


465,309



305,845Stockholders' Equity (Deficit)Undesignated shares, 5,000,000 shares authorized, none issued


-



-Common stock, $.001 par value, 45,000,000 sharesauthorized, 14,037,612 shares and 13,871,839 shares issuedand outstanding, respectively


14,038



13,872Additional paid in capital


2,709,717



2,533,705Accumulated Deficit


(2,912,439
)


(2,576,326
)Total stockholders' equity (Deficit)


(188,684
)


(28,749
)Total liabilities & stockholders' equity (Deficit)

$
276,625


$
277,096


See notes to unaudited condensed financial statements.


3


PURAMED BIOSCIENCE, INC.


Unaudited Condensed Statements of Operations




Three months endedSeptember 30, 2010


September 30, 2009Total Net Revenue

$
3,603


$
-Total Cost of Sales


2,754



-Gross profit


849



-Operating expensesSelling, general and administrative expenses


15,733



12,134Amortization and depreciation expense


12,157



12,147Marketing and advertising expense


88,089



101,498Professional fees


45,561



18,628Research and development


750



9,846Salaries


14,304



7,498Officers' salaries


48,000



48,000Total operating expenses


224,594



209,751Loss from operations


(223,745
)


(209,751
)Other expenseInterest income


1



-Interest expense


(112,369
)


-Total other expense


(112,368
)


-Net loss

$
(336,113
)

$
(209,751
)Loss per common share - basic and diluted

$
(0.02
)

$
(0.02
)Average number of  common sharesoutstanding basic and diluted


13,942,557



11,950,665





See notes to unaudited condensed financial statements.


4


PURAMED BIOSCIENCE, INC.


Unaudited Condensed Statements of Cash Flows




Three months endedSeptember 30, 2010


September 30, 2009Cash flows from operating activitiesNet loss

$
(336,113
)

$
(209,751
)Changes on non cash working capital items:Stock issued for services


46,178



20,000Depreciation


156



147Amortization


12,001



12,000Accretion on discount on convertible bonds


34,167



-Beneficial conversion feature


65,000



-Changes in operating assets and liabilities:Accounts receivable


101



-Inventory


57



(518
)Prepaid expenses


(2,874
)


(582
)Accounts payable


37,856



25,426Accrued wages - officers


24,759



8,310Accrued expenses


(2,318
)


7,025Net cash used for operating activities


(121,030
)


(137,943
)Cash flows from investing activitiesPatent acquisition costs


(5,880
)


(144
)Purchase of property and equipment


-



(1,188
)Trademark acquisition costs


(1,095
)


(705
)Net cash used for investing activities


(6,975
)


(2,037
)Cash Flows from financing activitiesConvertible bond proceeds


65,000



-Proceeds from sale of stock


65,000



129,500Net cash provided by financing activities


130,000



129,500Net (decrease) increase in cash


1,995



(10,480
)Cash at beginning of period


13,831



38,670Cash at end of period

$
15,826


$
28,190Supplemental disclosures of noncash investingand financing activities and other cash flowinformation:Interest paid with cash

$
10,000


$
-




See notes to unaudited condensed financial statements.


5


PURAMED BIOSCIENCE, INC.


Notes to Condensed Unaudited Financial Statements


For the Three Months Ended September 30, 2010 and 2009





A.  Basis of Presentation





The condensed balance sheet as of September 30, 2010, the condensed statements of operations and cash flows for the three month periods ended September 30, 2010 and 2009 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, 2010 and the results of operations and cash flows for the three month periods ended September 30, 2010 and 2009 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, 2010 included in the Annual Report on Form 10-K of the Company filed with the SEC on September 28, 2010.





B.  Going Concern





At September 30, 2010, the Company had negative working capital of $205,469, and minimal funds needed to accomplish its planned business strategy or support its projected expenses.  The Company plans to obtain the needed working capital primarily through sales of both equity and debt securities, for 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 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).  In April of 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-12, Income Taxes (Topic 740): Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts (SEC Update). 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 Months Ended September 30, 2010 and 2009





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 following is inventory as of September 30, 2010 and June 30, 2010:





September 30,

2010


June 30,

2010Raw Materials

$
18,659


$
18,659Finished Goods


7,115



7,172Total Inventory

$
25,774


$
25,831




E.  Notes Payable Transactions





On November 13, 2009, the Company issued a convertible bond payable for $500,000.  The bond has an annual interest rate of 8% paid 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, $305,000, was recorded as a discount and will be accreted 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%.





On May 3, 2010, the Company issued a convertible bond payable for $70,000.  The bond has an annual interest rate of 8% which accrues monthly and matures in nine months (February 3, 2011).  Using the stated conversion rate, a beneficial conversion feature of $70,000 was calculated and recorded immediately because the note was convertible at anytime.  The following assumptions were used:  market price of $0.99, conversion rate of $0.45, term of nine months and an annual interest rate of 8%.





On June 21, 2010, the Company issued a convertible bond payable for $30,000.  The bond has an annual interest rate of 8% which accrues monthly and matures in nine months (March 21, 2011).  Using the stated conversion rate, a beneficial conversion feature of $30,000 was calculated and recorded immediately because the note was convertible at anytime.  The following assumptions were used:  market price of $0.70, conversion rate of $0.34, term of nine months and an annual interest rate of 8%.





On September 14, 2010, the Company issued a convertible bond payable for $35,000.  The bond has an annual interest rate of 8% which accrues monthly and matures in nine months (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 $0.51, conversion rate of $0.32, term of nine months and an annual interest rate of 8%.








7


PURAMED BIOSCIENCE, INC.


Notes to Condensed Unaudited Financial Statements


For the Three Months Ended September 30, 2010 and 2009





F.  Related Party Transactions





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





From January 2008 through June 2009, James Higgins, a principal shareholder, loaned the Company 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.





G.  Stockholder’s Equity





From July 1, 2009 to December 31, 2009, the Company issued 600,000 shares of restricted common stock to four individuals and three companies for services at a rate of $0.25 per share.





During the year ended June 30, 2010, the Company sold 1,084,000 shares of restricted common stock to twenty-five private individual investors at a rate of $0.25 per share.





The Company issued common stock for services to employees and certain contractors valued at $430,000 for the year ending June 30, 2010.





On April 2, 2010, the Company issued 25,000 shares of restricted common stock to two investment groups to terminate an agreement.  Each group was issued 12,500 shares at a rate of $0.50 per share.





On May 7, 2010 the Company issued 15,000 shares of PuraMed common stock based on $0.50 per share to Lincoln Park Capital Fund, LLC.  This stock was paid to Lincoln Park to cover legal expenses associated with completing the documentation necessary for an S-1 stock registration.





On May 7, 2010, the Company issued 30,000 shares of PuraMed common stock based on $0.50 per share to an independent consultant.  The 30,000 shares represent a one time payment to engage the consultant in the areas of providing market awareness services, business advisory, shareholder information and public relations.





On May 24, 2010, the Company signed a $5 million purchase agreement with Lincoln Park Capital Fund, LLC (LPC).  PuraMed received $100,000 under the $5 million dollar commitment in exchange for 200,000 shares of our restricted common stock and Warrants to purchase 100,000 shares of our common stock at an exercise price of $1.25 per share and warrants to purchase 100,000 shares of our common stock at $1.75.  We also entered into a registration rights agreement with LPC whereby we agreed to file a registration statement related to the transaction with the U.S. Securities & Exchange Commission ("SEC") covering the shares that have been issued or may be issued to LPC under the purchase agreement. Pursuant to this registration statement which was effective with the SEC on June 24, we have the right over a 30-month period to sell our shares of common stock to LPC in amounts up to $500,000 per sale, depending on certain conditions as set forth in the purchase agreement, up to the aggregate commitment of $5 million.  In consideration for entering into the $5 million agreement which provides for an additional $4.9 million of future funding, we issued to LPC 150,000 shares of our common stock as a commitment fee and shall issue an equivalent amount of shares pro rata as LPC purchases the additional $4.9 million.  Additional information is contained in the Company’s 8-K filing with the Securities and Exchange Commission dated May 28, 2010.




8


PURAMED BIOSCIENCE, INC.


Notes to Condensed Unaudited Financial Statements


For the Three Months Ended September 30, 2010 and 2009





G.  Stockholder’s Equity (Continued)





The following table summarizes our warrant activities as of September 30, 2010:




Shares


Weighted Average Exercise PriceOutstanding at July 1, 2009


0


$
0.00Issued


275,000


$
1.36Exercised


0


$
0.00Cancelled or expired


0


$
0.00Outstanding at September 30, 2010


275,000


$
1.36





On June 10, 2010, the Company issued 170,000 shares of common stock to Media4Equity.  The initial 150,000 shares, priced at $1.00 per share, were compensation shares due initially at the beginning of the contract.  The additional 20,000 shares represent the cost for the monthly execution fee starting on June 15, 2010, and continuing through the term of the agreement. This fee can be paid in cash, stock or a combination thereof.  For the purposes of the agreement the minimum stock price is $1.00 per share and the maximum stock price is based on a calculation using the closing market price of the stock.  Media4Equity promotes companies by writing and placing newspaper articles in major newspapers across the nation.  The agreement has a term of twelve (12) months and it calls for $2 million in advertising based on the placement of the news articles in conjunction with the papers standard rate card.





On July 12, 2010, the Company agreed to provide 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.





On August 2, 2010, pursuant to the S-1 Registration, the Company sold 33,784 shares of common stock at a price of $0.74 each, for total proceeds of $25,000 to Lincoln Park Capital, LLC.  In addition 765 shares were provided to Lincoln Park Capital, LLC as financing commitment shares. This leaves 1,616,216 registered shares available for future sales pursuant to the effective S-1 Registration Statement.





On August 24, 2010, pursuant to the S-1 Registration, the Company sold an additional 30,000 shares of common stock at a price of $0.50 each, for total proceeds of $15,000 to Lincoln Park Capital, LLC.  In addition 459 shares were provided to Lincoln Park Capital, LLC as financing commitment shares. This leaves 1,586,216 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, as compensation for the second and third months of our consulting contract with Media4Equity.





On September 16, 2010, pursuant to the S-1 Registration, the Company sold 50,000 shares of common stock at a price of $0.50 each, for total proceeds of $25,000 to Lincoln Park Capital, LLC.  In addition 765 shares were provided to Lincoln Park Capital, LLC as financing commitment shares. This leaves 1,536,216 registered shares available for future sales pursuant to the effective S-1 Registration Statement.











9


PURAMED BIOSCIENCE, INC.


Notes to Condensed Unaudited Financial Statements


For the Three Months Ended September 30, 2010 and 2009





H.  Subsequent Events





On October 6, 2010, the Company issued 20,000 shares of common stock to an independent consultant, pursuant to the agreement signed on July 12, 2010.  A total of 30,000 shares have been paid.





On October 6, 2010, pursuant to the S-1 Registration, the Company sold 60,741 shares of common stock at a price of $0.41 each, for total proceeds of $25,000 to Lincoln Park Capital, LLC.  In addition, 765 shares were provided to Lincoln Park Capital, LLC as financing commitment shares. This leaves 1,475,475 registered shares available for future sales pursuant to the effective S-1 Registration Statement.





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, 2010 filed with the SEC on September 28, 2010.





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 LipigesicTM brand and trademark.  In an effort to add continuity to all of the PuraMed BioscienceTM products, the Company trademarked the brand name LipigesicTM.  The Company has recently completed all product development and design packaging for its initial two products, LipiGesicTM M (Migraine) and LipiGesicTM PM (Insomnia), and began their commercial introduction to the marketplace by the fourth quarter of calendar 2009.





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





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


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.





LipiGesicTM M




LipigesicTM 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.




LipigesicTM M is effective, available as a non-prescription remedy, without any known side effects, and at a significantly lower cost compared to more expensive prescription migraine drugs.




LipigesicTM PM




LipigesicTM 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 LipigesicTM 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 LipigesicTM 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.




LipigesicTM H




LipiGesicTM H provides relief for tension-type headaches which affect up to 90% of Americans at some point in their lives. LipiGesicTM 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 non prescription 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.





Due to the use of sublingual delivery, the LipiGesicTM H formulation can provide a safer, faster acting alternative while also dramatically reducing the potential for harmful side effects. LipiGesicTM 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.


12


Future LipigesicTM 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:




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




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




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




LipigesicTM CS – provides fast relief for canker sore outbreaks.




When introduced commercially, these other products will be packaged and branded much like the initial LipigesicTM 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 LipigesicTM M, LipigesicTM PM and LipigesicTM 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 medications 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.





13


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.





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 production costs and manufacturing time related to making the product commercially available.  The second quarter of calendar year 2010 (June 30, 2010) marks the first quarter that PuraMed stopped reporting as a Developmental Stage Company.  With the commercial launch of our LipiGesicTM M migraine product we are now reporting as a Smaller Reporting Company.




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. PuraMed utilized a 60- and 120-second Direct Response Television commercial to introduce its migraine product marketed under our LipiGesicTM M brand name to the American consumer. PuraMed started the testing phase of the commercial in December 2009. After refining the initial message we anticipate a nationwide roll-out of the commercial will follow. To that end PuraMed has engaged Consumer Marketing Directive 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 will also begin a nationwide direct response print campaign that will begin Mid-September 2010.  PuraMed has commenced its Phase One Rollout.




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




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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





Comparison of Operations for Three Months Ended September 30, 2010 and 2009





Revenues




Revenues were $3,603 and $0 for the three months ended September 30, 2010 and 2009, respectively.  The increase in revenue is due to the commercialization of our LipigesicTM M migraine product.  Product sales began in December 2009.




Cost of Sales




Cost of sales was $2,754 and $0 for the three months ended September 30, 2010 and 2009, respectively.  The increase in cost of sales is due to the activities associated with the commercialization of our LipigesicTM M migraine product.




Selling, General and Administrative Expenses




Selling, general and administrative expenses for the three months ended September 30, 2010 and 2009 were $15,733 and $12,134, respectively. Selling, general and administrative expenses for fiscal 2010 increased compared to fiscal 2009 due to the commercial rollout of the LipigesicTM M product in December 2009.




Amortization and Depreciation




Amortization and depreciation expenses for the three months ended September 30, 2010 and 2009 were $12,156 and $12,147, respectively, which are similar.




Marketing and Advertising Expense




Marketing and advertising expense for the three months ended September 30, 2010 and 2009 were $88,089 and $101,498, respectively. Expenses for 2009 were higher due to one-time payments for the development of a two-minute television commercial and establishment of ecommerce websites.




Professional Fees




Professional fees for the three months ended September 30, 2010 and 2009 were $45,561 and $18,628, respectively, which increase was due primarily to increased audit expenses.  Professional fees consist of consulting, audit, legal, directors and transfer agent fees.




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Research and Development Expenses




Research and development expenses for the three months ended September 30, 2010 and 2009 were $750 and $9,846, respectively.  The reduction in research and development expenses was due to a reduction in expenses regarding a clinical study and product testing.




Salaries




Salaries for the three months ended September 30, 2010 and 2009 were $14,304 and $7,498, respectively.  Increased salaries are due primarily to additional hourly staff requirements.




Officer Salaries




Officer salaries for the three months ended September 30, 2010 and 2009 were $48,000.




Interest Expense




Interest expense for the three months ended September 30, 2010 and 2009 was $112,369 and $0, respectively.  The increase in interest expense was due to the actual interest paid on the convertible notes obtained in fiscal year 2010, the accretion of debt discount and beneficial conversion features contained therein.




Net Losses




Net losses for the three months ended September 30, 2010 and 2009 were $336,113 and $209,751, respectively. These increased losses were due primarily to commencement of commercial operations to market our developed products and noncash interest expense.





Financial Condition, Liquidity and Capital Resources





As of September 30, 2010, the Company had limited cash of $15,826 and a working capital deficit of $205,469 of which $138,166 is attributed to short-term convertible debt.





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 2010 with product expected on the initial retailer shelves in the first quarter of 2011. PuraMed’s primary goal is to achieve continual material growth of LipigesicTM product sales through mainstream drug, mass merchandiser and food retail channels while at the same time promoting LipigesicTM 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:




Plan for the Successful Outcome of the Clinical Trial -Should our anticipated outcome of our clinical study coupled with the publication of the manuscript in a peer reviewed-medial journal prove to be successful, it would provide us with numerous marketing and promotion opportunities that could significantly help with the launch of our LipigesicTM M migraine product.  PuraMed is in the process of developing a detailed marketing plan that focuses on the medical community in the anticipated event the clinical trials support such action.  Medical marketing efforts geared toward doctors, physician’s assistants, pharmacists, etc could prove 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 2010 will be to complete, test and nationally roll-out our direct response advertising print campaign featuring our migraine product marketed under our LipiGesicTMM brand name. In addition our website and eCommerce efforts will be enhanced to optimize our internet sales as a result of our new print campaign.  PuraMed also has plans to test direct response radio advertising and upgrade its Social Marketing efforts that include Facebook, Twitter, and YouTube.




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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 LipigesicTM 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 LipigesicTM products.




Assuming the company raises the capital, we anticipate spending approximately $2.1 million over the next twelve months regardless of any amounts of revenues we generate from product sales during this period:





Sales and marketing expenses

$
1,100,000Purchase of product inventory, packaging and raw materials


600,000Research and development activities


100,000General and administrative expenses including rent, fixed overhead and management compensation


350,000$
2,150,000





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.





PuraMed BioscienceTM 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.


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The carrying value is reviewed periodically or when factors indicating impairment are present.  The impairment loss is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets.  The Company believes that no impairment exists at September 30, 2010.





ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





This item is not applicable to PuraMed BioscienceTM, 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.






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PART II. – OTHER INFORMATION





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





During July through September 30, 2010, the Company, through private transactions, offered and sold 165,773 shares of common stock to unrelated private investors for a total of $176,178 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.  Moreover, the stock certificates for these shares are legended to prevent further transfer, resale or other disposition unless registered under applicable securities laws or exempt from such registration.





ITEM 5.  OTHER INFORMATION





None





ITEM 6.  EXHIBITS




See Exhibit Index below





Exhibit Index


Quarterly report on Form 10-Q


For the quarter ended September 30, 2010





31.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.





31.2*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.





32.1*
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





*Filed herewith





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SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 PURAMED BIOSCIENCE, INC.Date: November 10, 2010
By:
/s/ Russell W. MitchellRussell W. MitchellCEO
 
 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.
 
 
 SignatureDate: November 10, 2010By:
/s/ Russell W. MitchellRussell W. Mitchell, Director(principal executive officer)
 
 Date: November 10, 2010By:
/s/ James W. HigginsJames W. Higgins, Director(principal financial officer)
 
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