UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549










FORM
10-Q







(MARK
      ONE)x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended March 31, 2009ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from  ______________ to
      ______________





COMMISSION
FILE NUMBER: 000-52876




THOMAS
PHARMACEUTICALS, LTD.


(Exact
name of registrant as specified in its charter)




New Jersey
              20-3954826(State
      or Other Jurisdiction of Incorporation or Organization)
              (I.R.S.
      Employer Identification No.)




750 Highway 34, Matawan, NJ
07747


(Address
of Principal Executive Offices)(Zip Code)




Registrant’s
Telephone Number, Including Area Code:    (732)
441-7700




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes xNoo




Indicate by check mark
whether the registrant has submitted electronically and posted on its Web site,
if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files). Yes oNox




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated files, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the exchange act:





Large
accelerated filero
Accelerated filero
Non-accelerated filero Smaller reporting companyx




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




Number
of shares of Class A, common stock,No par value, outstanding as of May 15, 2009: 
541, 216,
038






Table of Contents




THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
 MARCH
31, 2009 AND 2008




TABLE
OF CONTENTS
  Page
      No.PART
      I. FINANCIAL INFORMATIONItem
      1.
                      Condensed
      Consolidated Financial Statements (Unaudited)Balance Sheets –
      March 31, 2009 (Unaudited) and December 31, 2008
      (Audited)
                      2Statements of
      Operations - For the three months ended March 31, 2009 and 2008
      (Unaudited)
                      3Statements of Cash
      Flows – For the three months ended March 31, 2009 and 2008
      (Unaudited)
                      4Notes to
      Condensed Consolidated Financial Statements
      (Unaudited)
                      6-17Item
      2.
                      Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                      18Item
      4T.
                      Controls and
      Procedures
                      21PART
      II. OTHER INFORMATIONItem
      5.
                      Other
      Information
                      22Item
      6.
                      Exhibits
                      22












Table of Contents




THOMAS PHARMACEUTICALS, LTD. AND SUBSIDIARY
 CONDENSED
CONSOLIDATED BALANCE SHEETS






March
      31,
                          
                          
                          December
      31,2009
                          
                          
                          2008(unaudited)
                          
                          
                          (audited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                          
                          $
                          4,589
                          
                          
                          $
                          6,557Prepaid
      expenses and other current assets
                          
                          
                          4,699
                          
                          
                          
                          4,699Total
      current assets
                          
                          
                          9,288
                          
                          
                          
                          11,256PROPERTY
      AND EQUIPMENT, net of accumulated depreciation of $118,836 and $118,555,
      respectively
                          
                          
                          1,972
                          
                          
                          
                          2,253TOTAL
      ASSETS
                          
                          $
                          11,260
                          
                          
                          $
                          13,509LIABILITIES
      AND STOCKHOLDERS' DEFICITCURRENT
      LIABILITIESAccounts
      payable and accrued expenses
                          
                          $
                          1,182,036
                          
                          
                          $
                          1,121,244Notes
      payable, net of discounts of $101,717 and $107,945,
      respectively
                          
                          
                          129,235
                          
                          
                          
                          123,007Dividends
      payable
                          
                          
                          170,877
                          
                          
                          
                          157,315Derivative
      liability on convertible debentures
                          
                          
                          1,335,729
                          
                          
                          
                          1,297,494Convertible
      debentures payable, net of discounts of $431,572 and $416,012,
      respectively
                          
                          
                          304,240
                          
                          
                          
                          281,620Total current
      liabilities
                          
                          
                          3,122,117
                          
                          
                          
                          2,980,680LONG
      TERM DEBTNotes
      payable, net of discounts of $106,333 and $111,833,
      respectively
                          
                          
                          47,667
                          
                          
                          
                          42,167Total
      liabilities
                          
                          
                          3,169,784
                          
                          
                          
                          3,022,847COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      DEFICITSeries
      A Convertible Preferred stock, no par value; authorized 500,000
      shares;no
      shares issued and outstanding
                          
                          
                          --
                          
                          
                          
                          --Series
      B Convertible Preferred stock, no par value; authorized 1,000
      shares;550
      shares issued and outstanding
                          
                          
                          550,000
                          
                          
                          
                          550,000Common
      stock, Class A – no par value; authorized 10,000,000,000
      shares;541,810,067
      at March 31, 2009 and 477,810,067 at December 31, 2008shares
      issued and outstanding
                          
                          
                          31,481
                          
                          
                          
                          26,161Common
      stock, Class B - no par value; authorized 50,000,000
    shares;no
      shares issued or outstanding
                          
                          
                          --
                          
                          
                          
                          --Accumulated
      deficit
                          
                          
                          (3,740,005
                          )
                          
                          
                          (3,585,499
                          )Total stockholders'
      deficit
                          
                          
                          (3,158,524
                          )
                          
                          
                          (3,009,338
                          )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                          
                          $
                          11,260
                          
                          
                          $
                          13,509
 The
accompanying notes are an integral part of these condensed consolidated
financial statements.






2
 Table of Contents




THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)




For
      the three monthsended
      March 31,2009
                          
                          
                          2008NET
      REVENUES, net of provision for productreturnsand credits of $0 and $0, respectively
                          
                          $
                          --
                          
                          
                          $
                          285COST
      OF SALES
                          
                          
                          --
                          
                          
                          
                          --GROSS
      PROFIT
                          
                          
                          --
                          
                          
                          
                          285SELLING,
      GENERAL ANDADMINISTRATIVE
      EXPENSESGeneral
      and administrative expenses
                          
                          
                          92,953
                          
                          
                          
                          88,455Depreciation
      and amortization
                          
                          
                          281
                          
                          
                          
                          282Total
      selling, general and administrative expenses
                          
                          
                          93,234
                          
                          
                          
                          88,737LOSS
      FROM OPERATIONS
                          
                          
                          (93,234
                          )
                          
                          
                          (88,452
                          )OTHER
      (INCOME) EXPENSEAmortization
      of debt discount
                          
                          
                          38,668
                          
                          
                          
                          31,259Gain
      on revaluation of derivatives
                          
                          
                          (4,265
                          )
                          
                          
                          (3,699
                          )Interest
      expense
                          
                          
                          29,021
                          
                          
                          
                          70,881Gain
      on settlement of debt
                          
                          
                          (15,714
                          )
                          
                          
                          --Total
      other (income) expense
                          
                          
                          47,710
                          
                          
                          
                          98,441LOSS
      BEFORE PROVISION FORINCOME
      TAXES
                          
                          
                          (140,944
                          )
                          
                          
                          (186,893
                          )PROVISION
      FOR INCOME TAXES
                          
                          
                          -
                          
                          
                          
                          -LOSS
      BEFORE PREFERRED DIVIDENDS
                          
                          
                          (140,944
                          )
                          
                          
                          (186,893
                          )PREFERRED
      DIVIDENDS
                          
                          
                          13,562
                          
                          
                          
                          13,713NET
      LOSS APPLICABLE TO COMMON SHARES
                          
                          $
                          (154,506
                          )
                          
                          $
                          (200,606
                          )NET
      LOSS PER COMMON SHAREBasic
      and diluted
                          
                          $
                          (0.00
                          )
                          
                          $
                          (0.00
                          )WEIGHTED
      AVERAGE SHARES OUTSTANDINGBasic
      and diluted
                          
                          
                          488,654,511
                          
                          
                          
                          269,429,951




The
accompanying notes are an integral part of these condensed consolidated
financial statements.
    3
 Table of Contents




THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 FOR
THE THREE MONTHS ENDED MARCH 31,




2009
                      
                      
                      2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      (loss) before preferred dividends
                      
                      $
                      (140,944
                      )
                      
                      $
                      (186,893
                      )Adjustments
      to reconcile net (loss) to net cash (used in) operating
      activities:Depreciation
      expense
                      
                      
                      281
                      
                      
                      
                      282Amortization
      of debt discount
                      
                      
                      38,668
                      
                      
                      
                      31,259Gain
      on revaluation of derivatives
                      
                      
                      (4,265
                      )
                      
                      
                      (3,699
                      )Provision
      for product returns and reserve for bad debt
                      
                      
                      --
                      
                      
                      
                      (285
                      )Beneficial
      interest on conversion of debt
                      
                      
                      --
                      
                      
                      
                      45,500Gain
      on settlement of debt
                      
                      
                      (15,714
                      )
                      
                      
                      --Changes
      in certain assets and liabilities:Decrease
      in accounts receivable
                      
                      
                      --
                      
                      
                      
                      285(Increase)
      in prepaid expenses and other assets
                      
                      
                      --
                      
                      
                      
                      (881
                      )Increase
      in accounts payable and accrued liabilities
                      
                      
                      120,006
                      
                      
                      
                      106,018Total
      cash (used in) operating activities
                      
                      
                      (1,968
                      )
                      
                      
                      (8,414
                      )NET
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                      
                      
                      (1,968
                      )
                      
                      
                      (8,414
                      )CASH
      AND CASH EQUIVALENTS – BEGINNING OF PERIOD
                      
                      
                      6,557
                      
                      
                      
                      9,705CASH
      AND CASH EQUIVALENTS – END OF PERIOD
                      
                      $
                      4,589
                      
                      
                      $
                      1,291CASH
      PAID DURING THE PERIOD FOR:Interest
      expense
                      
                      $
                      -
                      
                      
                      $
                      -Income
      taxes
                      
                      $
                      -
                      
                      
                      $
                      -NON
      CASH TRANSACTIONS DURING THE PERIOD:Convertible
      debenture issued for unsecured debt
                      
                      $
                      42,500
                      
                      
                      $
                      -Common
      stock issued for settlement of unsecured debt
                      
                      $
                      1,000
                      
                      
                      $
                      -




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






4
 Table of Contents




THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(Continued)
 
 SUPPLEMENTAL
CASH FLOW INFORMATION
 
 For the three months ended
March 31, 2009:
 
 a) The
Company issued 10,000,000 shares of Class A common stock as partial settlement
of outstanding unsecured debt, valued at $1,000.
 
 b) The
Company issued 54,000,000 shares of Class A common stock to iVoice, Inc. as
repayment of principal on an outstanding convertible debenture, valued at
$4,320.
 
 c) The
Company issued a 6% convertible debenture as settlement of outstanding unsecured
debt, valued at $42,500.
 
 d) The
Company accrued $13,562 of preferred stock dividends.
  For the three months ended
March 31, 2008:
 
 a) The
Company issued 142,600,000 shares of Class A common stock to iVoice, Inc. as
repayment of principal on an outstanding convertible debenture, valued at
$47,500. The difference in the market value and the reduction in debt of $2,000
was charged to beneficial interest in the amount of $45,500.
 
 b) The
Company accrued $13,713 of preferred stock dividends.






5
 Table of Contents




THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)


MARCH
31, 2009 AND 2008






NOTE
1 - ORGANIZATION AND BASIS OF PRESENTATION
 
 
 Thomas
Pharmaceuticals, Ltd. (the “Company” or “Thomas Pharmaceuticals”) was a wholly
owned subsidiary of iVoice, Inc. (“iVoice”) by virtue of iVoice’s ownership of
all of the shares of Class A Common Stock prior to the spin-off. The Company was
incorporated as iVoice Acquisitions Corp. in New Jersey on May 19,
2005.  On January 6, 2006, iVoice Acquisitions Corp. completed the
merger with Thomas Pharmaceuticals, Ltd., a New York Corporation (“Thomas NY”).
Pursuant to the terms of the Agreement and Plan of Merger with Thomas NY, iVoice
Acquisition Corp’s name was changed to Thomas Pharmaceuticals, Ltd. On November
21, 2007, the Company was spun-off from iVoice and is now an independent public
reporting company. The Company develops and markets over the counter
non-prescription healthcare products. The Company focuses on high-end, branded
consumables. Its first product, Acid + AllTM, is a calcium-enriched, sugar free,
anti-gas antacid.
 
 Currently
the Company no longer produces any products. Earned sales are derived from
finished goods inventory on hand and the reversal of reserves recorded in 2007
for chargebacks, rebates and product returns as the criteria for meeting the
recognition of this revenue has occurred in 2008.
 
 In June
2008, the Company formed a new, wholly owned subsidiary, Small Cap Advisors,
Inc., to provide investor relation (“IR”) services to small and medium sized
public companies. Micro-cap public companies typically take a stock promotion
approach to IR. This involves sending out  un-targeted mass emails to
potential investors, or getting profiled on investor relations
websites.  The Company believes this is no longer a viable approach to
gaining new investors, and in fact, current IR strategies may actually be
undermining marketing efforts and diminishing shareholder
goodwill.  The Company has developed a process which it calls
“SEO-IR”, which involves a search engine optimization approach to
IR.  SEO-IR is designed to build awareness,
credibility,  relevance, and a community of dedicated shareholders for
the Company’s clients. Furthermore, SEO-IR will facilitate the convergence of
the client’s corporate marketing strategy and IR strategy by aligning multiple
distribution channels to reach a targeted, engaged audience. However, the
Company abandoned this business model in the fall of 2008 after the economic
crisis in the U.S. began and the stock markets began to rapidly deteriorate in
value.  The Company does not anticipate re-starting the operations of
SEO-IR.
 
 The
Company operates its businesses from the home office of iVoice in Matawan,
NJ.
 
 Basis
of Presentation
 
 The
accompanying unaudited condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, Small Cap Advisors,
Inc. (“Small Cap Advisors”). Prior to November 21, 2007, the financial
statements of Thomas Pharmaceuticals had been derived from the consolidated
financial statements and accounting records of iVoice using the historical
results of operations and historical basis of assets and liabilities of iVoice’s
over the counter non-prescription healthcare products business and are prepared
on the accrual basis of accounting in accordance with the accounting principles
generally accepted in the United States of America. Management believes the
assumptions underlying the financial statements
are reasonable and include all costs directly applicable to the Company. These
financial statements do not include any allocation of expenses and assets from
the parent, iVoice.  However, the financial statements included herein
may not necessarily reflect the Company’s results of operations, financial
position and cash flows had the Company been a stand-alone company during the
periods presented. 
 These
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Regulation
S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included.  It is suggested that these
condensed consolidated financial statements be read in conjunction with the
December 31, 2008 audited financial statements and the accompanying notes
thereto.
   6
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
  NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principles
of Consolidation
 
 The
accompanying condensed consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary, Small Cap Advisors, Inc. All
significant inter-company transactions and balances have been eliminated in
consolidation.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
 
 Cash
and Cash Equivalents
 
 The
Company considers all highly liquid debt instruments and other short-term
investments with an initial maturity of three months or less to be cash or cash
equivalents. As of March 31, 2009 and December 31, 2008, the Company has no cash
equivalents.
 
 The
Company maintains cash and cash equivalents with a financial institution, which
is insured by the Federal Deposit Insurance Corporation up to $250,000. The
Company had no uninsured cash balances at March 31, 2009 or December 31,
2008.
 
 Revenue
and Cost Recognition
 
 Product
sales revenue, net of estimated provisions, is recognized when persuasive
evidence that an arrangement exists, delivery has occurred, the selling price is
fixed or determinable, and collectability is reasonably assured. Provisions for
sales discounts, and estimates for chargebacks, rebates, and product returns are
established as a reduction of product sales revenue at the time revenues are
recognized, based on historical experience adjusted to reflect known changes in
the factors that impact these reserves.  Cost of revenue includes
direct costs to produce and distribute the products.
 
 Advertising
Costs
 
 Advertising
costs are expensed as incurred and are included in selling and marketing
expenses.  For the three months ended March 31, 2009 and 2008, the
Company incurred $0 in advertising costs.
 
 Income
Taxes
 
 Prior to
November 2007, the Company was a subsidiary of iVoice and as such, its results
of operations were reported as part of the consolidated federal income tax
returns of iVoice. Upon the spin-off from iVoice, Inc, the Company will no
longer be included in the consolidated returns of iVoice, Inc and will be
required to account for income taxes in accordance with Statements of Financial
Accounting Standards No. 109, “Accounting for Income Taxes,” which requires an
asset and liability approach to financial accounting and reporting for income
taxes. Deferred income taxes and liabilities are computed annually for
differences between the financial statement and the tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.
   7
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 
 Derivative
Liabilities
 
 During
April 2003, the Financial Accounting Standards Board issued SFAS 149, "Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities."  SFAS 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." The statement requires that contracts with
comparable characteristics be accounted for similarly and clarifies when a
derivative contains a financing component that warrants special reporting in the
statement of cash flows.  SFAS 149 is effective for contracts entered
into or modified after June 30, 2003, except in certain circumstances, and for
hedging relationships designated after June 30, 2003. The financial statements
for the three months ended March 31, 2009 and 2008, include the recognition of
the derivative liability on the underlying securities issuable upon conversion
of the iVoice Secured Convertible Debentures, iVoice Secured Promissory Notes
and Thomas Pharmaceuticals Acquisition Corp. (“Thomas Acquisition”) Promissory
Notes.
 
 Fair
Value of Financial Instruments
 
 The
carrying amount reported in the balance sheet for cash and cash equivalents,
accounts receivable, accounts payable and accrued expenses approximate fair
value because of the immediate or short-term maturity of these financial
instruments. The carrying amount reported for notes payable and convertible
debentures approximates fair value because the interest on the underlying
instruments is comparable with current market rates.
  Loss
Per Share of Common Stock
 
 Historical
net loss per common share is computed using the weighted average number of
common shares outstanding. Common stock equivalents were not included in the
computation of diluted earnings per share when the Company reported a loss
because to do so would be antidilutive for periods presented.
 
 The
following is a reconciliation of the computation for basic and diluted
EPS:
  The
Company has shares issuable upon conversion of the iVoice Convertible
Debentures, the iVoice Promissory Notes, the Thomas Acquisition Convertible
Debenture and the Series B Convertible Preferred Stock. At March 31, 2009 and
2008, the Company had common stock equivalents of 20,236,973,469 and
9,112,500,000, respectively.
 
 Recent
Accounting Pronouncements
 
 In April
2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of
Intangible Assets. FSP 142-3 amends the factors an entity should consider in
developing renewal or extension assumptions used in determining the useful life
of recognized intangible assets under SFAS 142, Goodwill and Other Intangible
Assets, and adds certain disclosures for an entity’s accounting policy of the
treatment of the costs, period of extension, and total costs
incurred.  FSP 143-3 must be applied prospectively to intangible
assets acquired after January 1, 2009.  The Company’s adoption of FSP
142-3 did not have a material impact on the Company’s condensed consolidated
financial statements.
 
 In May
2008, the Financial Accounting Standards Board (the “FASB”) issued FAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles” (“FAS 162”). This
statement identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in accordance with GAAP. With the
issuance of this statement, the FASB concluded that the GAAP hierarchy should be
directed toward the entity and not its auditor, and reside in the accounting
literature established by the FASB as opposed to the American Institute of
Certified Public Accountants (AICPA) Statement on Auditing Standards No. 69,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” This statement is effective 60 days following the SEC’s approval of
the Public Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.” The adoption of FAS 162 is not expected to have a material impact
on the Company’s results from operations or financial position.
  8
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 In June
2008, the FASB ratified Emerging Issues Task Force (EITF) Issue No. 08-3,
Accounting for Lessees for Maintenance Deposits Under Lease Arrangements ("EITF
08-3"). EITF 08-3 provides guidance for accounting for nonrefundable maintenance
deposits. It also provides revenue recognition accounting guidance for the
lessor. EITF 08-3 is effective for fiscal years beginning after December 15,
2008. The Company’s adoption of EITF 08-3 is not expected to have a material
impact on the Company’s consolidated financial statements.
 
 In
November 2008, the FASB issued EITF Issue No. 08-7, Accounting for Defensive
Intangible Assets (“EITF 08-7”). EITF 08-7 addresses the accounting for assets
acquired in a business combination or asset acquisition that an entity does not
intend to actively use, otherwise referred to as a ‘defensive asset.’ EITF 08-7
requires defensive intangible assets to be initially accounted for as a separate
unit of accounting and not included as part of the cost of the acquirer’s
existing intangible asset(s) because it is separately identifiable. EITF 08-7
also requires that defensive intangible assets be assigned a useful life in
accordance with paragraph 11 of SFAS 142 and is effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
Company’s adoption of this EITF is not expected to have a material impact on the
Company’s consolidated financial statements.
 
 In April
2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation
of Other-Than-Temporary Impairments. This FSP amends the other-than-temporary
impairment guidance for debt securities to make the guidance more operational
and to improve the presentation and disclosure of other-than-temporary
impairments in the financial statements. The most significant change the FSP
brings is a revision to the amount of other-than-temporary loss of a debt
security recorded in earnings. FSP FAS 115-2 and FAS 124-2 is effective for
interim and annual reporting periods ending after June 15, 2009. The Company
does not believe that the implementation of this standard will have a material
impact on its consolidated financial statements.
 
 In April
2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly. This FSP provides additional
guidance for estimating fair value in accordance with FASB Statement No. 157,
Fair Value Measurements, when the volume and level of activity for the asset or
liability have significantly decreased. This FSP also includes guidance on
identifying circumstances that indicate a transaction is not orderly. This FSP
emphasizes that even if there has been a significant decrease in the volume and
level of activity for the asset or liability and regardless of the valuation
technique(s) used, the objective of a fair value measurement remains the same.
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants at the measurement
date under current market conditions. FSP FAS 157-4 is effective for interim and
annual reporting periods ending after June 15, 2009, and is applied
prospectively. The Company does not believe that the implementation of this
standard will have a material impact on its consolidated financial
statements.
 
 In April
2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments. This FSP amends FASB Statement No. 107,
Disclosures about Fair Value of Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28, Interim Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods.
FSP FAS 107-1 and APB 28-1 is effective for interim and annual reporting periods
ending after June 15, 2009. The Company does not believe that the implementation
of this standard will have a material impact on its consolidated financial
statements.
 
 NOTE
3 – FAIR VALUE MEASUREMENTS
 
 Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 157, Fair Value Measurements. This Statement defines fair value for
certain financial and nonfinancial assets and liabilities that are recorded at
fair value, establishes a framework for measuring fair value, and expands
disclosures about fair value measurements. This guidance applies to other
accounting pronouncements that require or permit fair value measurements. On
February 12, 2008, the FASB finalized FASB Staff Position (FSP) No. 157-2,
Effective Date of FASB Statement No. 157. This Staff Position delays the
effective date of SFAS No. 157 for nonfinancial assets and liabilities to fiscal
years beginning after November 15, 2008 and interim periods within those fiscal
years, except for those items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). The adoption
of SFAS No. 157 had no effect on the Company’s condensed consolidated financial
position or results of operations.
 
 The
Company adopted SFAS 157 on January 1, 2009. This statement establishes a
framework for measuring fair value, and expands disclosures about fair value
measurements. SFAS 157 establishes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value into three levels
as follows:
 
 Level
      1 Inputs– Quoted prices for identical instruments in active
      markets.
 Level
      2 Inputs– Quoted prices for similar instruments in active markets; quoted
      prices for identical or similar instruments in markets that are not
      active; and model-derived valuations whose inputs are observable or whose
      significant value drivers are
observable.
 Level
      3 Inputs– Instruments with primarily unobservable value
      drivers.
   9
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 In
accordance with SFAS 157, the Company determines the level in the fair value
hierarchy within which each fair value measurement in its entirety falls, based
on the lowest level input that is significant to the fair value measurement in
its entirety.
 
 The
following table presents the embedded derivative, the Company’s only financial
assets measured and recorded at fair value on the Company’s Condensed
Consolidated Balance Sheets on a recurring basis and their level within the fair
value hierarchy as of March 31, 2009.
  The
following table reconciles, for the three months ended March 31, 2009, the
beginning and ending balances for financial instruments that are recognized at
fair value in the consolidated financial statements:
 
 The
valuation of the derivatives are calculated using a complex binomial pricing
model that is based on changes in the volatility of our shares, our stock price,
the probability of a reduction in exercise and conversion price, and the time to
conversion of the related financial instruments. See Note 6 for more information
on the valuation methods used.
 
 NOTE
4 – CONVERTIBLE DEBENTURES
 
 On
January 6, 2006 the Company issued to iVoice a $360,000 secured convertible
debenture due on January 1, 2013 bearing interest of 10%, compounded quarterly.
During the three months ended March 31, 2009, the Company issued 54,000,000
shares of Class A common stock as repayment of principal of $4,320. As of March
31, 2009 the remaining principal balance of the convertible debenture was
$343,312 plus $134,524 of accrued interest.
 
 On
January 6, 2006 the Company issued to iVoice a $100,000 administrative service
convertible debenture due on January 1, 2013 bearing interest of 10%, compounded
quarterly. This debenture is issued in lieu of payments on the Administrative
Services Agreement of the same date. As of March 31, 2009 the remaining
principal balance of the convertible debenture was $100,000 plus $37,610 of
accrued interest.
 
 On April
27, 2006 the Company issued to iVoice a $225,000 secured convertible debenture
due on January 1, 2013 bearing interest of 10%, compounded quarterly. As of
March 31, 2009 the remaining principal balance of the convertible debenture was
$225,000 plus $75,475 of accrued interest.
 
 On
February 7, 2007, the Company issued to iVoice a $25,000 secured convertible
debenture due on February 6, 2014 bearing interest of 10%, compounded quarterly.
As of March 31, 2009 the remaining principal balance of the convertible
debenture was $25,000 plus $5,884 of accrued interest.
 
 The
Company can redeem a portion or all amounts outstanding under the iVoice
Convertible Debentures at any time upon thirty (30) business days advanced
written notice.  The redemption price shall be equal to one hundred
twenty-five percent (125%) multiplied by the portion of the principal sum being
redeemed, plus any accrued and unpaid interest.
 
 iVoice
may, at its discretion, convert the outstanding principal and accrued interest,
in whole or in part, into a number of shares of Thomas Pharmaceuticals Class A
Common Stock at the price per share equal to eighty percent (80%) of the
lowest closing bid price of the Common Stock for the five (5) trading days
immediately preceding the conversion date. The Company determined that the
beneficial conversion feature of the iVoice Debentures met the criteria of EITF
No. 98-5 “Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios”, and therefore the
conversion feature was accounted for as a derivative. The fair value of the
derivative was estimated at the date of issuance using the Black-Scholes model
with the following assumptions: risk free interest rate (5.47%); expected
dividend yield (0%); expected life (7 years); and volatility (169.22%, 194.86%
and 154.79%). The aggregate fair value of the beneficial conversion feature was
greater that the proceeds of the debentures and as such, an aggregate cumulative
amount of $163,437 has been charged to loss on revaluation of derivatives, and
the balance has been recorded as a discount on debt conversion.
   10
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 On March
30, 2009, the Company issued to Bagell Josephs Levine & Co, LLC (“BJL”) a
$42,500 convertible debenture (the “BJL Debenture”) due on March 30, 2012
bearing interest of 6% per annum. BJL may, at its discretion, convert the
outstanding principal and accrued interest, in whole or in part, into a number
of shares of Thomas Pharmaceuticals Class A Common Stock at the price per share
equal to ninety eighty percent (98%) of the lowest closing bid price of the
Common Stock for the five (5) trading days immediately preceding the conversion
date. The Company determined that the beneficial conversion feature of the BJL
Debenture met the criteria of EITF No. 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios”, and therefore the conversion feature was accounted for as a
derivative. The fair value of the derivative was estimated at the date of
issuance using the Black-Scholes model with the following assumptions: risk free
interest rate (3.20%); expected dividend yield (0%); expected life (3 years);
and volatility (360.13%). The fair value of the beneficial conversion feature
was greater that the proceeds of the debenture and as such, an amount of $793
has been charged to loss on revaluation of derivatives, and the balance has been
recorded as a discount on debt conversion. As of March 31, 2009 the remaining
principal balance of the convertible debenture was $42,500 plus $7 of accrued
interest.
 
 The
aggregate principal value of the iVoice and BJL debentures at March 31, 2009 is
$753,812. This amount is shown net of the unamortized portion of the discount on
conversion of $431,572. This discount is being amortized over the life of the
debenture and is being recorded as a charge to amortization of discount on
beneficial conversion on the statement of operations.
 
 NOTE
5 – NOTES PAYABLE
 
 CURRENT
PORTION
 
 As part
of the merger with Thomas NY, the Company assumed a $20,000 promissory note due
to Jana M. Wesley which bears interest at the rate of 5% per annum, compounded
annually.  The promissory note matured on January 19, 2009 with a lump
sum payment due of any remaining principal and interest. As of the date of this
filing, the Company is in default of this obligation and will incur additional
interest charges at a rate of the lesser of 15% per annum or the maximum
interest rate provided by law, and the interest shall be payable monthly. As of
March 31, 2009, the unpaid balance on the promissory note is $20,000 plus
accrued interest of $4,550.
 
 On June
10, 2008, the Company received $77,250 from iVoice, Inc. for an initial
investment in Small Cap Advisors. The Company secured the receipt with a
convertible promissory note, at an interest of prime plus 1 (4.25% at March 31,
2009) percent per annum. Additional amounts may be added to this note based on
any unpaid administrative service fees and will accrue interest at the above
specified rate from date of advance until paid. The principal and interest shall
be due and payable as follows: (a) interest shall accrue monthly on the unpaid
balance and shall be paid annually, and (b) principal shall be payable on
demand. As of March 31, 2009, the balance due on the note is $69,650, plus
accrued interest of $3,120.
 
 On June
11, 2008, the Company converted its outstanding accounts due to iVoice, Inc. for
unpaid administrative services in the amount of $47,302 into a convertible
promissory note at the rate of prime plus 1 (4.25% at March 31, 2009) percent
per annum. Additional amounts may be added to this note based on any unpaid
administrative service fees and will accrue interest at the above specified rate
from date of advance until paid. The principal and interest shall be due and
payable as follows: (a) interest shall accrue monthly on the unpaid balance and
shall be paid annually, and (b) principal shall be payable on demand. At March
31, 2009, the principal balance of the note is $71,302, plus accrued interest of
$2,277.
 
 The
Company determined that the beneficial conversion feature of the iVoice
convertible promissory notes met the criteria of EITF No. 98-5 and therefore the
conversion feature was accounted for as a derivative. The fair value of the
derivative was estimated at the date of issuance using the Black-Scholes model
with the following assumptions: risk free interest rate: 5.47%; expected
dividend yield: 0%: expected life: 5 years; and volatility: 267.55%. The
aggregate fair value of the beneficial conversion feature was greater that the
proceeds of the promissory note and as such, an aggregate of $79,036 was charged
to loss on revaluation of derivatives and the balance was recorded as a discount
on debt conversion at the time of issuance.
 
 On April
16, 2008 and May 7, 2008, the Company executed a consulting agreement with
Jerome Mahoney and an employment agreement with Mark Meller, respectively. As
part of their individual compensation agreements, the Company issued two five
(5) year promissory notes in the amount of $35,000, each, for signing bonuses.
The notes carry interest charges of 3% per annum and are convertible into Class
B common stock on a dollar for dollar basis plus accrued interest. As of March
31, 2009, the balance due on the notes is $35,000 each, plus accrued interest of
$1,004 and $944, respectively.
   11
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 The
aggregate principal balances of the promissory notes at March 31, 2009 is
$230,952. This amount is shown net of the unamortized portion of the discount on
conversion of the iVoice promissory notes of $101,717. This discount is being
amortized over the life of the iVoice promissory notes and is being recorded as
a charge to amortization of discount on beneficial conversion on the statement
of operations.
 
 LONG
TERM PORTION
 
 On
January 26, 2007, Thomas Acquisition issued to an investor a debenture in the
principal amount of $103,200 convertible into Class A Common Stock of Thomas
Pharmaceuticals and a debenture in the principal amount of $96,800 convertible
into Series B Convertible Preferred Stock of the Company. The $103,200
convertible debentures provide that, at the holder’s option, principal and
interest due on the debentures can be converted into the number of shares of the
Company’s Class A Common Stock determined by dividing the amount of the
debenture being converted by a 20% discount to the lowest closing bid price of
the Company’s Class A Common Stock for the five trading days before the
conversion date.  The $96,800 convertible debentures provide that, at
the holder’s option, principal and interest due on the debentures can be
converted into the Company’s Series B Convertible Preferred Stock having a
stated value of $1,000 per share. The $103,200 convertible debenture was secured
with the assets of the Company, subordinate to the security interest previously
granted to iVoice. The net proceeds of $160,000 from the convertible debentures
were loaned to the Company in the form of a Promissory Note. The Promissory Note
bears interest at the rate of ten percent per annum and the term shall be seven
(7) years and shall be due and payable on January 8, 2014. On February 12, 2007,
the Company repaid $6,000 that was applied to the principal balance of the
promissory note. As of March 31, 2009, the unpaid balance on the promissory note
is $154,000 plus accrued interest of $34,037.
 
 The
Company determined that the beneficial conversion feature of the Thomas
Acquisition Debentures met the criteria of EITF No. 98-5 and therefore the
conversion feature was accounted for as a derivative. The fair value of the
derivative was estimated at the date of issuance using the Black-Scholes model
with the following assumptions: risk free interest rate: 5.47%; expected
dividend yield: 0%: expected life: 7 years; and volatility: 154.79%. The
aggregate fair value of the beneficial conversion feature was greater that the
proceeds of the promissory note and as such, an aggregate of $88,546 was charged
to loss on revaluation of derivatives and the balance was recorded as a discount
on debt conversion at the time of issuance.
 
 The
principal amount of the promissory note at March 31, 2009 is $154,000. This
amount is shown net of the unamortized portion of the discount on conversion of
the Thomas Acquisition debentures of $106,333. This discount is being amortized
over the life of the Thomas Acquisition debenture and is being recorded as a
charge to amortization of discount on beneficial conversion on the statement of
operations.
  NOTE
6 - DERIVATIVE LIABILITY
 
 In
accordance with SFAS 133, " Accounting for Derivative Instruments and Hedging
Activities" and EITF 00-19, " Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, a Company’s Own Stock", the beneficial
conversion feature associated with the iVoice Convertible Debentures, the iVoice
Promissory Notes, the Thomas Acquisition Convertible Debentures and the BJL
Debenture represents embedded derivatives in that the conversion price is
variable, the numbers of shares to be issued are indeterminable and the control
of whether shares are issued does not reside with the Company. As such; a) the
Company has recognized embedded derivatives on the iVoice debentures in the
amount of $873,437 as a derivative liability in the accompanying balance sheet
and as of March 31, 2009 they had an estimated fair value of $866,295; b) the
Company had recognized embedded derivatives on the iVoice promissory notes in
the amount of $203,589 as a derivative liability in the
accompanying balance sheet and as of March 31, 2009 they had an estimated fair
value of $176,157; c) the Company has recognized embedded derivatives on the
Thomas Acquisition debentures in the amount of $242,546 as a derivative
liability in the accompanying balance sheet and as of March 31, 2009 it was
measured at its estimated fair value of $249,984; and d) the Company has
recognized embedded derivatives on the BJL Debenture in the amount of $43,293 as
a derivative liability in the accompanying balance sheet and as of March 31,
2009 it was measured at its estimated fair value of $43,293.
 
 The
estimated fair values of the embedded derivatives have been calculated based on
a Black-Scholes pricing model using the following assumptions:
 
 March 31,
      2009Fair
      market value of stock
                              
                              $
                              0.00010Exercise
      price
                              
                              $
                              0.00008-$0.000098Dividend
      yield
                              
                              
                              0.00
                              %Risk
      free interest rate
                              
                              
                              3.20
                              %Expected
      volatility
                              
                              
                              360.13
                              %Expected
      life
                              
                              3.00
      to 4.83 years
 Changes
in the fair value of the embedded derivatives are calculated at each reporting
period and recorded in (gain) loss on revaluation of derivatives in the
condensed consolidated statements of operations. For the three months ended
March 31, 2009, there was a change in the fair value of the embedded
derivatives, which resulted in a gain of $5,058.  This gain was offset
by the immediate recognition of loss on revaluation of derivatives issued during
the same period in the amount of $793, resulting in a net gain of $4,265. For
the three months ending March 31, 2008, there was a change in the fair value of
the embedded derivatives, which resulted in a gain of $3,699.
   12
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 
 In
accordance with SFAS 133, SFAS 150, “Accounting for Certain Financials
Instruments With Characteristics of Both Liabilities and Equity” and EITF 00-19,
the fair market value of the derivatives are recorded as a debt
discount.  The debt discount on the iVoice debentures, the iVoice
notes, the Thomas Acquisition debentures and the BJL debenture of $710,000,
$124,552, $154,000 and $42,500, respectively, is being amortized over the life
of the convertible debentures. Amortization expense on the debt discount for the
three months ended March 31, 2009 and 2008 was $38,668 and $31,259,
respectively.
 
 NOTE
7 - RELATED PARTY TRANSACTIONS
 
 In
addition to the financing provided, iVoice provided administrative services and
other miscellaneous support to the Company from time to time. As of January 1,
2009, iVoice no longer provides administrative services to the Company. For the
three months ended March 31, 2009 and 2008, the Company has recorded $0 and
$12,000 of these charges in the financial accounts of the Company. As of March
31, 2009, the unpaid balance of the current accounts due was transferred to a
secured promissory note payable to iVoice. These amounts will remain unpaid
until the Board of Directors determines that the Company has sufficient
liquidity to make such payments.
 
 NOTE
8 – COMMITMENTS AND CONTINGENCIES
 
 On
January 2, 2006 the Company entered into an Employment Agreement with John E.
Lucas to serve as its Chief Executive Officer through December 31, 2008 at an
annual salary of $60,000 with annual cost of living increases.  On
June 11, 2007, this agreement was amended to add the additional title of
President and allow the Company to issue Class A Common Stock in lieu of cash
payments for any compensation due and owing to Mr. Lucas. On April 29, 2008, Mr.
Lucas resigned his positions with the Company and the board accepted his
resignation. At the time of Mr. Lucas’ resignation, the Company had accumulated
unpaid compensation of $73,558 which is due and owing in cash or Class A Common
Stock, as determined by the Board of Directors.
 
 On March
1, 2007 the Company entered into a five-year employment agreement with Jerome
Mahoney, which became effective at the time of the distribution, to serve as its
Non-Executive Chairman of the Board for a term of five years. As consideration,
the Company will pay Mr. Mahoney the sum of $85,000 the first year with an
annual increase based on the Consumer Price Index every year thereafter. The
compensation payable to Mr. Mahoney under the agreement may be paid in the form
of cash, debt or shares of Class B Common Stock. On April 16, 2008, Mr. Mahoney
resigned his positions with the Company and the board accepted his resignation.
At the time of Mr. Mahoney’s resignation, the Company had accumulated unpaid
compensation of $48,997 which is due and owing in cash or Class A Common Stock,
as determined by the Board of Directors.
 
 On March
1, 2007,the
Company entered into an administrative services agreement with iVoice which
became effective at the time of the distribution and replaced the administrative
services agreement entered into on January 6, 2006. Under this agreement, iVoice
provides the Company with physical premises, contract review, sales issuance,
invoicing and collection services, financial accounting and reporting, claims
administration and reporting, and other areas where the Company needs
transitional assistance and support. Under the administrative services
agreement, iVoice provides the Company substantially the same level of service
and use substantially the same degree of care as iVoice’s personnel provided and
used in providing such services prior to the execution of the agreement. For
these services, the Company will pay iVoice a fee of $4,000 per month. On June
11, 2008, the administrative services agreement was amended to provide that any
fees that are earned and remain unpaid shall be converted into a secured
convertible promissory note which shall accrue interest at prime plus 1% (4.25%
at March 31, 2009) per annum. As of January 1, 2009, iVoice no longer provides
administrative services to the Company. As of March 31, 2009, the unpaid fees in
the amount of $71,302 were converted to the promissory note and remain
unpaid.
 
 On June
10, 2008,the
Company entered into an administrative services agreement with iVoice on behalf
of its wholly owned subsidiary, Small Cap Advisors. Under this agreement, iVoice
provides the Company with physical premises, contract review, sales issuance,
invoicing and collection services, financial accounting and reporting, claims
administration and reporting, and other areas where the Company needs
transitional assistance and support. For these services, Small Cap Advisors will
pay iVoice a fee of $4,000 per month. In addition, fees that are earned and
remain unpaid at the end of a month shall be added to iVoice secured convertible
promissory note which shall accrue interest at prime plus 1% (4.25% at March 31,
2009) per annum. As of January 1, 2009, iVoice no longer provides administrative
services to the Company. As of March 31, 2009, the unpaid fees in the amount of
$19,400 were converted to the promissory note and remain unpaid.
   13
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 
 On May
22, 2008, the Company entered into a consulting agreement with Jerome Mahoney to
provide consulting services on strategic plans, policies and procedures,
acquisitions, personnel matters and other assignments as directed by the Chief
Executive Officer. As consideration, the Company will pay Mr. Mahoney the sum of
$80,000 the first year with an annual increase of 10% every year thereafter.
This compensation may be paid in Class B Common Stock, in lieu of cash, at the
option of Board of Directors. In addition, the Company issued a five (5) year
promissory note in the amount of $35,000 for a signing bonus. The promissory
note carries an interest charge of 3% per annum and is convertible into Class B
common stock on a dollar for dollar basis plus accrued interest. As of March 31,
2009, the total unpaid compensation in the amount of $122,881 is due and
owing.
 
 On May
22, 2008, the Company entered into an Employment Agreement with Mark Meller to
serve as its Chief Executive Officer and Director through May 7, 2013 at an
annual salary of $80,000 with an annual increase of 10% every year thereafter.
This compensation may be paid in Class B Common Stock, in lieu of cash, at the
option of Board of Directors. In addition, the Company issued a five (5) year
promissory note in the amount of $35,000 for a signing bonus. The promissory
note carries an interest charge of 3% per annum and is convertible into Class B
common stock on a dollar for dollar basis plus accrued interest. As of March 31,
2009, unpaid compensation in the amount of $82,639 is due and
owing.
 
 On
December 13, 2007, Independent Can filed suit against the Company seeking
payment of monies owed equal to $19,100.80. Independent Can had provided the
Company the tins that held the Acid+All® tablets.  In June 2008, the
Company defaulted on a settlement agreement and Independent Can was awarded a
judgment for $14,785.32 for amounts due on the original stipulation of
settlement. As of the date of this filing, the judgment is still
outstanding.
  On May
27, 2008, Lebhar Friedman, Inc. filed suit against the Company in the Superior
Court of New Jersey, Monmouth County, for the sum of $16,230.80 for failure to
pay for goods and/or services received by the Company.  On December 1,
2008 a Default Judgment was entered against the Company.  On February
11, 2009, the Company executed a settlement with Lebhar Friedman by the issuance
of 10,000,000 shares of Class A Common Stock and a cash payment of
$1,500.
  On August
7, 2008, the intellectual property attorney Ursula Day asserted a claim against
the Company for unpaid bills equal to $9,547.  The Company has been in
discussions attempting to resolve this dispute. Ms. Day has been gathering
documentation to support her claim. As soon as this is completed, the Company
will attempt to settle this dispute.
  On
January 22, 2009, the accounting firm of Rosen, Seymour, Shapss, Martin &
Company LLP filed suit against the Company for the sum of $25,000 claiming that
the Company did not pay the accounting firm fees previously agreed
upon.  The Company has retained local counsel to represent it in the
negotiations.
 
 NOTE
9 - STOCKHOLDERS’ DEFICIT
 
 Pursuant
to the Company’s Certificate of Incorporation, the Company is authorized to
issue 1,000,000 shares of preferred stock, no par value per share,
10,000,000,000 shares of Class A Common Stock, no par value per share, and
50,000,000 shares of Class B Common Stock, no par value per share. Of the
1,000,000 authorized shares of Preferred Stock, 500,000 shares are designated as
“Series A Convertible Preferred Stock” and 1,000 shares are designated as
“Series B Convertible Preferred Stock”.
   14
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 a) Preferred
Stock
  Preferred
Stock consists of 1,000,000 shares of authorized preferred stock with no par
value, of which 501,000 shares are in the designations listed below. The balance
of the shares, 499,000, remain available for designation by the
Company.
 
 Series A Convertible
Preferred Stock
 
 Series A
Convertible Preferred Stock consisted of 500,000 shares with no par value. The
initial value of each share is $.01 and were subject to adjustment for stock
dividends, combinations, splits, recapitalizations and the like. On January 6,
2006, the Company completed the merger with Thomas NY and as a result of the
merger; the shareholders of Thomas NY exchanged all of their common stock shares
of Thomas NY for 500,000 shares of Series A Convertible Preferred Stock.
Following the spin-off from iVoice in November 2007, the holders of the 500,000
shares of Series A Convertible Preferred Stock shares were exchanged for
5,091,237 shares of Class A Common Stock pursuant to the provisions of the
spin-off agreement.
 
 As of
March 31, 2009 and 2008, there are no shares issued and
outstanding.
  Series B Convertible
Preferred Stock
 
 Series B
Convertible Preferred Stock consists of 1,000 shares with no par value. The
initial value of each share is $1,000 and is subject to adjustment for stock
dividends, combinations, splits, recapitalizations and the like. The holders of
these shares are entitled to receive dividends at a rate of 10% per annum based
on the initial value of the shares outstanding. Upon liquidation, the holders of
these shares will receive up to 125% of the initial value of the shares plus
accumulated and unpaid dividends, but following the distribution to any senior
debt or senior equities. On June 12, 2008, the Certificate of Incorporation was
amended such that the holders of these shares may convert their shares into
Class A Common Stock at the price per share equal to eighty percent (80%)
of the lowest closing bid price of the Common Stock for the thirty (30) trading
days immediately preceding the conversion date and to limit the Series B
Preferred stockholders to hold no more than 9.99% of the total Class A Common
Stock at that time of conversion.   The holders of these shares
shall have one vote for each share of Class A Common Stock into which each share
of Series B Preferred Shares could be converted, assuming a conversion price of
eighty percent (80%) of the lowest closing bid price of the Common Stock
for the thirty (30) trading days immediately preceding the record date and to
limit the voting rights of the Series B Preferred stockholders to no more than
9.99% of the total voting rights of the aggregate of the Series B Preferred
Stock, Class A Common Stock and Class B Common Stock shareholders. The
Corporation must also get a majority approval from the holders of the Series B
Preferred Stock to make any changes to the structure of the Company or to
authorize or issue any equity or debt security that has a preference or priority
over the Series B Preferred Stock as to liquidation preferences, dividend
rights, voting rights, or otherwise.
 
 On
January 6, 2006, the Company issued 550 shares of Series B Convertible Preferred
Stock valued at $550,000 to iVoice, Inc., a related party, pursuant to the terms
of the Agreement and Plan of Merger, with Thomas NY.
 
 As of
March 31, 2009 and 2008, there are 550 shares issued and
outstanding.
 
 b) Class A Common
Stock
 
 Class A
Common Stock consists of 10,000,000,000 shares with no par value.  As
of March 31, 2009, there are 541,810,067 shares issued and outstanding. As of
March 31, 2008, there are 273,276,105 shares issued and
outstanding.
 
 Each
holder of Class A common stock is entitled to one vote for each share held of
record.  Holders of our Class A common stock have no preemptive,
subscription, conversion, or redemption rights.  Upon liquidation,
dissolution or winding-up, the holders of Class A common stock are entitled to
receive net assets pro rata.  Each holder of Class A common stock is
entitled to receive ratably any dividends declared by our board of directors out
of funds legally available for the payment of dividends.
  15
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
  For
the three months ended March 31, 2009, the Company had the following
transactions in its Class A common stock:
 
 On
February 11, 2009, the Company issued 10,000,000 shares of Class A Common Stock
to Lebhar Friedman as part of a settlement of all outstanding debts due to
Lebhar Friedman pursuant to the agreement executed on the same day.
 
 On March
23, 2009, the Company issued 54,000,000 shares of Class A common stock to
iVoice, Inc. as repayment of principal on an outstanding convertible debenture,
valued at $5,400.
 
 For
the three months ended March 31, 2008, the Company had the following
transactions in its Class A common stock:
 
 The
Company issued 25,000,000 shares of Class A common stock to iVoice, Inc. as
repayment of principal on an outstanding convertible debenture, valued at
$47,500. The difference in the market value and the reduction in debt of $2,000
was charged to beneficial interest in the amount of $45,500.
 
 c) Class B Common
Stock
 
 Class B
Common Stock consists of 50,000,000 shares with no par value.  As of
March 31, 2009 and 2008 there are no shares issued and outstanding.
 
 Upon the
consummation of a Spin-off Transaction and the commencement of public trading of
the Class A Common Stock of the Corporation, each holder of Class B Common Stock
shall have the right to convert each share of Class B Common Stock into the
number of Class A Common Stock Shares calculated by dividing the number of Class
B Common Stock Shares being converted by eighty percent (80%) of the lowest
price that the Company had previously issued its Class A Common Stock since the
Class B Common Stock Shares were issued.
 
 Each
holder of Class B common stock is entitled to one vote for each share of Class B
common stock held.  Each holder has full voting rights and powers
equal to the voting rights and powers of the holders of Class A Common Stock and
is entitled to vote, together with holders of Class A Common Stock and not as a
separate class (except as required by law), with respect to any question upon
which holders of Class A Common Stock have the right to vote. Upon the
consummation of a Spin-off Transaction and the commencement of public trading of
the Class A common stock, then every holder of the outstanding shares of the
Class B Common Stock shall be entitled on each matter to cast the number of
votes equal to the number of Class A Common Stock Shares that would be issued
upon the conversion of the Class B Common Stock Shares held by that holder, had
all of the outstanding Class B Common Stock Shares held by that holder been
converted on the record date used for purposes of determining which shareholders
would vote in such an election.  With respect to all matters upon
which shareholders are entitled to vote or to which shareholders are entitled to
give consent, the holders of the outstanding shares of Class B Common Stock
Shares shall vote together with Class A Common Stock Shares without regard to
class, except as to those matters on which separate class voting is required by
applicable law.
 
 Each
share of Class B Common Stock shall receive dividends or other distributions, as
declared, equal to the number of Class A Common Stock Shares that would be
issued upon the conversion of the Class B Common Stock Shares, had all of the
outstanding Class B Common Stock Shares been converted on the record date
established for the purposes distributing any dividend or other shareholder
distribution.
  16
 Table of Contents
  THOMAS
PHARMACEUTICALS, LTD. AND SUBSIDIARY
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 MARCH
31, 2009 AND 2008
 
 d) Dividends
 
 Pursuant
to the Company’s amended certificate of incorporation, the Company is required
to accrue dividends at the rate of 10% per annum of the Series B Initial Value
of each share of Series B Convertible Preferred Stock outstanding on each
Dividend Payment Date, being March 31, June 30, September 30 and December 31.
Dividends on the Series B Preferred Stock shall be cumulative from the date of
issue. Accrued and unpaid dividends for any past Dividend Period, being the
quarterly period commencing on and including the day after the preceding
Dividend Payment Date, may be declared and paid at any time as may be fixed by
the Board of Directors. The Company has not paid any dividends on its Series B
Convertible Preferred Stock or its common stock and management does not
contemplate doing so in the foreseeable future. The Company anticipates that any
earnings generated from operations will be used to finance growth.
 
 NOTE
10 - INCOME TAXES
 
 Deferred
income taxes will be determined using the liability method for the temporary
differences between the financial reporting basis and income tax basis of the
Company’s assets and liabilities.  Deferred income taxes will be
measured based on the tax rates expected to be in effect when the temporary
differences are included in the Company’s tax return.  Deferred tax
assets and liabilities are recognized based on anticipated future tax
consequences attributable to differences between financial statement carrying
amounts of assets and liabilities and their respective tax bases. At March 31,
2009 and December 31, 2008 deferred tax assets consist of the
following:
 
 March 31,
      2009
                                      
                                      
                                      December 31,
      2008Deferred
      tax assets
                                      
                                      $
                                      390,000
                                      
                                      
                                      $
                                      350,000Less:
      Valuation allowance
                                      
                                      
                                      (390,000
                                      )
                                      
                                      
                                      (350,000
                                      )Net
      deferred tax assets
                                      
                                      $
                                      0
                                      
                                      
                                      $
                                      0
  At March
31, 2009 and December 31, 2008, the Company had a federal net operating loss
carry forwards in the approximate amount of $975,000 and $875,000, respectively,
available to offset future taxable income.  The Company established a
valuation allowance equal to the full amount of the deferred tax asset due to
the uncertainty of the utilization of the operating loss in future periods.
Prior to the spin-off from iVoice, Inc, the Company was a subsidiary of iVoice
and as such, did not have its’ own federal tax liability or federal net
operating loss carry forward.
 
 NOTE
11 - GOING CONCERN
 
 The
Company has sustained net operating losses, has a deficit working capital and
has negative cash flows from operations for the year ended December 31, 2008 and
for the three months ended March 31, 2009. There is no guarantee that the
Company will be able to raise enough capital or generate revenues to sustain its
operations. This raises substantial doubt about the Company’s ability to
continue as a going concern.
 
 The
Company’s future success is dependent upon its ability to achieve profitable
operations and generate cash from operating activities, and from additional
financing. There is no guarantee that the Company will be able to raise enough
capital or generate revenues to sustain its operations. The Company continues to
search for potential merger candidates with or without compatible technology and
products, which management feels may make financing more appealing to potential
investors.
 
 The
financial statements do not include any adjustments relating to the
recoverability or classification of recorded assets and liabilities that might
result should the Company be unable to continue as a going concern.
  17
 Table of Contents
 ITEM
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 
 This
discussion and analysis of our financial condition and results of operations
includes “forward-looking” statements that reflect our current views with
respect to future events and financial performance. We use words such as we
“expect,” “anticipate,” “believe,” and “intend” and similar expressions to
identify forward-looking statements. You should be aware that actual results may
differ materially from our expressed expectations because of risks and
uncertainties inherent in future events and you should not rely unduly on these
forward looking statements. We will not necessarily update the information in
this discussion if any forward-looking statement later turns out to be
inaccurate.
 
 You
should read the following discussion in conjunction with our audited financial
statements and related notes included in the Form 10-KSB previously filed with
the SEC. Our fiscal year currently ends on December 31, and each of our fiscal
quarters ends on the final day of a calendar quarter (each March 31, June 30 and
September 30). The following discussion contains forward-looking statements.
Please see Forward-Looking Statements for a discussion of uncertainties, risks
and assumptions associated with these statements
 
 Overview
  Thomas
Pharmaceuticals, Ltd. (the “Company” or “Thomas Pharmaceuticals”) was a
wholly-owned subsidiary of iVoice.  Thomas Pharmaceuticals was founded
on the premise that money can be made by making the “humdrum hip” or by
retooling a mundane product to make it new and exciting.  The strategy
of Thomas Pharmaceuticals is to capitalize on “old school” or “retro” products,
such as antacids, with proven effectiveness and usefulness, but with improved
formulation, packaging, marketing and advertising to articulate the brand
attributes to a new generation of consumer who demand substance with
style.
 
 Currently
the Company no longer produces any products. Earned sales are derived from
finished goods inventory on hand and cash receipts from previously written off
bad debts.
 
 In June
2008, the Company formed a new, wholly owned subsidiary, Small Cap Advisors,
Inc., to provide investor relation (“IR”) services to small and medium sized
public companies. Micro-cap public companies typically take a stock promotion
approach to IR. This involves sending out un-targeted mass emails to potential
investors, or getting profiled on investor relations websites.  The
Company believed this was no longer a viable approach to gaining new investors,
and in fact, current IR strategies may have actually undermined marketing
efforts and diminishing shareholder goodwill.  The Company developed a
process which it called “SEO-IR”, which involved a search engine optimization
approach to IR.  SEO-IR was designed to build awareness, credibility,
relevance, and a community of dedicated shareholders for the Company’s clients.
Furthermore, SEO-IR would have facilitated the convergence of the client’s
corporate marketing strategy and IR strategy by aligning multiple distribution
channels to reach a targeted, engaged audience. However, the Company abandoned
this business model in the fall of 2008 after the economic crisis in the U.S.
began and the stock markets began to rapidly deteriorate in
value.  The Company does not anticipate re-starting the operations of
SEO-IR.
  Results
of Operations
 
 Three
months ended March 31, 2009 compared to three months ended March 31,
2008.
 
 Total
revenues for the three months ended March 31, 2009 and 2008 were $0 and $285,
respectively. There were no revenues in the three months ended March 31, 2009.
Revenues in the three months ended March 31, 2008 were from the reversal of
reserves recorded in 2007 for chargebacks, rebates and product returns as the
criteria for meeting the recognition of this revenue has occurred in
2008.
 
 Gross
profit for the three months ended March 31, 2009 and 2008 was $0 and $285,
respectively. There is no gross profit in the three months ended March 31, 2009.
The gross profit for the three months ended March 31, 2008 was the result of the
sales of finished goods that had previously been written down to $0 and there
were no costs on collections.
  18
 Table of Contents
 
 Operating
expenses for the three months ended March 31, 2009 and 2008 were $93,234 and
$88,737, respectively, for an increase of $4,497.  The increase
primarily consist of an increase of $41,618 in consulting and legal fees offset
by a decrease in executive compensation and benefits of approximately $25,000
and a decrease in administrative service fees of $12,000.
  Total
other expense for the three months ended March 31, 2009 was an expense of
$47,710. This total was primarily comprised of $38,668 amortization of the
discount on debt and $29,021 of interest expense on the debentures and
promissory notes offset by $4,265 gain on revaluation of the derivatives and
$15,714 gain on the write-off of the Lebhar-Friedman debt in the settlement.
Total other expense for the three months ended March 31, 2008 was an expense of
$98,441. This total was primarily comprised of $31,259 amortization of the
discount on debt, $45,500 of beneficial interest on debt conversion and $25,381
of interest expense on the debentures and promissory notes offset by a $3,699
gain on revaluation of the derivatives. The increase in amortization of the
discount on debt and the increase in interest expense were related to the
increases in convertible debt as compared to the prior year.
  Loss
before preferred dividends for the three months ended March 31, 2009 and 2008
were $140,944 and $186,893, respectively. The decrease in loss before preferred
dividends of $45,949 was primarily the results the gain on the write-off of debt
and the non-recurrence of the beneficial interest charge in the current
year.
  Preferred
dividends for the three months ended March 31, 2009 and 2008 were $13,562 and
$13,713, respectively. These dividends are accrued pursuant to the provisions of
the Series B Convertible Preferred Stock and remain unpaid.
  Liquidity
and Capital Resources
 
 Between
January 6, 2006 and February 7, 2007, iVoice purchased from Thomas
Pharmaceuticals an aggregate of $550,000 of Thomas Pharmaceuticals Series B
Convertible Preferred Stock (550 shares), an aggregate of $610,000 10% secured
convertible debenture and a $100,000 10% administrative service convertible
debenture. The administrative service debenture was issued by Thomas
Pharmaceuticals to compensate iVoice for the administrative services that iVoice
provided to Thomas Pharmaceuticals under the administrative services agreement.
The purchase of the Series B Convertible Preferred Stock and the convertible
debentures provided working capital to Thomas Pharmaceuticals.  The
debentures are due between January 1, 2013 and February 6, 2015 and bear
interest of 10%, compounded quarterly.
 
 iVoice
has the right to convert $710,000 in principal (plus accrued and unpaid
interest) of convertible debentures into an indeterminate number of shares of
Thomas Pharmaceuticals Class A Common Stock. The debentures are convertible at
the option of iVoice any time up to maturity at a conversion price equal to 80%
of the lowest closing bid price of the common stock for the 30 trading days
immediately preceding the conversion date. In the event the debentures are
redeemed, Thomas Pharmaceuticals will pay $125,000 plus interest for each
$100,000 redeemed. There is no limitation on the number of shares of Class A
Common Stock that we may be required to issue to iVoice upon the conversion of
this indebtedness.
 
 iVoice
also has the right to convert each share of Series B Convertible Preferred Stock
into the number of shares of Thomas Pharmaceuticals’ Class A Common Stock
determined by dividing the number of shares of Series B Convertible Preferred
Stock being converted by 80% of the lowest closing bid price of the common stock
for the 30 trading days immediately preceding the conversion date. There is no
limit upon the number of shares of Class A Common Stock that we may be required
to issue upon conversion of any of these shares, except that the holders of the
Series B Convertible Preferred Stock cannot hold more than 9.99% of the total
Class A Common stock at the time of the conversion.
  iVoice
executed a Security Agreement with Thomas Pharmaceuticals to secure the
obligations of Thomas Pharmaceuticals under the various debentures set forth
above.
 
 On August
9, 2006, iVoice entered into a Stock Purchase Agreement (the “Stock Purchase
Agreement”) by and among Thomas Pharmaceuticals, Thomas Pharmaceutical
Acquisition Corp. (“Thomas Acquisition”) and iVoice, whereby Thomas Acquisition,
an entity unaffiliated with Thomas Pharmaceuticals or iVoice, agreed to purchase
all of the securities of Thomas Pharmaceuticals outstanding as of such date and
owned by iVoice (the “Securities”), for the purchase price of $1,235,100 plus
twenty-five (25%) percent thereof, plus interest and dividends accrued under the
terms of such securities through the closing date. iVoice had the right to
terminate the Stock Purchase Agreement in the event the closing did not occur by
October 31, 2006.
  19
 Table of Contents
 On
January 26, 2007, iVoice entered into an Extension Agreement (the “Extension
Agreement”) by and among Thomas Pharmaceuticals, Thomas Acquisition and iVoice.
The Extension Agreement amended the Stock Purchase Agreement whereby the
expiration date provided for in the Stock Purchase Agreement was extended to and
through the date on which the Securities and Exchange Commission declares
effective a registration statement for the distribution of Class A Common Stock
of Thomas Pharmaceuticals to the shareholders of the iVoice (the “Effective
Date”). It was also agreed by the parties that Thomas Acquisition would provide
$160,000 to Thomas Pharmaceuticals as bridge financing.  Upon
effectiveness of the registration statement on October 26, 2007, the Stock
Purchase Agreement was terminated and Thomas Acquisition no longer had the
right to purchase the iVoice Securities and iVoice is proceeding with the
Distribution.
  On
January 26, 2007, Thomas Acquisition issued to BioBridge LLC a debenture in the
principal amount of $103,200 convertible into Class A Common Stock of Thomas
Pharmaceuticals and a debenture in the principal amount of $96,800 convertible
into Series B Convertible Preferred Stock of Thomas Pharmaceuticals. The
$103,200 convertible debentures provide that, at the holder’s option, principal
and interest due on the debentures can be converted into the number of shares of
Thomas Pharmaceuticals Class A Common Stock determined by dividing the amount of
the debenture being converted by a 20% discount to the lowest closing bid price
of the Thomas Pharmaceuticals Class A Common Stock for the five trading days
before the conversion date. The $96,800 convertible debentures provide that, at
the holder’s option, principal and interest due on the debentures can be
converted into the Thomas Pharmaceuticals Series B Convertible Preferred Stock
having a stated value of $1,000 per share. The Thomas Pharmaceuticals Series B
Convertible Preferred Stock is convertible at the holder’s option into the
number of shares of Thomas Pharmaceuticals Class A Common Stock determined
by dividing the stated value of the shares of Thomas Pharmaceuticals Series B
Convertible Preferred Stock being converted by a 20% discount to the lowest
closing bid price of the Thomas Pharmaceuticals Class A Common Stock for the
five trading days before the conversion date. There is no limit upon the number
of shares that Thomas Pharmaceuticals may be required to issue upon conversion
of any of these obligations. The $103,200 convertible debenture was secured by
substantially all of the assets of Thomas Pharmaceuticals (including goods,
inventory, contract rights, accounts receivable, products and proceeds),
subordinate to the security interest previously granted to iVoice. The net
proceeds of $160,000 from the convertible debentures were loaned by Thomas
Acquisition to Thomas Pharmaceuticals and Thomas Pharmaceuticals executed a
Promissory Note for such funds. The Promissory Note bears interest at the rate
of ten (10%) percent per annum and has a term of seven years.  In
exchange for and in consideration of BioBridge LLC purchasing the secured
convertible debenture and thereby permitting Thomas Acquisition to loan the net
proceeds to Thomas Pharmaceuticals for operations, Thomas Pharmaceuticals agreed
to have the convertible debenture secured with assets of Thomas Pharmaceuticals
and convertible into shares of Thomas Pharmaceuticals.
 
 On April
16, 2008 and May 7, 2008, the Company executed a consulting agreement with
Jerome Mahoney and an employment agreement with Mark Meller, respectively. As
part of their individual compensation agreements, the Company issued two five
(5) year promissory notes in the amount of $35,000, each, for signing bonuses.
The notes carry an interest charge of 3% per annum and are convertible into
Class B common stock on a dollar for dollar basis plus accrued
interest.
 
 On June
10, 2008, the Company received $77,250 from iVoice, Inc. for an initial
investment in Small Cap Advisors. The Company secured the receipt with a
convertible promissory note, at an interest of prime plus 1 percent per annum.
Additional amounts of $12,000 was added to this note based on any unpaid
administrative service fees and will accrue interest at the above specified rate
from date of advance until paid.
 
 On June
11, 2008, the Company converted its outstanding accounts due to iVoice, Inc. for
unpaid administrative services in the amount of $47,302 into a convertible
promissory note at the rate of prime plus 1 percent per annum. Additional
amounts of $12,000 was added to this note based on any unpaid administrative
service fees and will accrue interest at the above specified rate from date of
advance until paid.
 
 On March
30, 2009, the Company issued to Bagell Josephs Levine & Co, LLC a $42,500
convertible debenture due on March 30, 2012 bearing interest of 6% per annum.
BJL may, at its discretion, convert the outstanding principal and accrued
interest, in whole or in part, into a number of shares of Thomas Pharmaceuticals
Class A Common Stock at the price per share equal to ninety eighty
percent (98%) of the lowest closing bid price of the Common Stock for the
five (5) trading days immediately preceding the conversion date.
 
 To date,
the Company has incurred substantial losses, and will require financing for
working capital to meet its operating obligations. We anticipate that we will
require financing on an ongoing basis for the foreseeable future to fund our
working capital needs.
  20
 Table of Contents
 
 During
the three months ended March 31, 2009, the Company had a net decrease in cash of
$1,968. The Company’s principal sources and uses of funds were as
follows:
 
 Cash used by operating
activities. The Company used $1,968 in cash for operating activities in
the three months ended March 31, 2009. The use of funds is primarily the result
of the cash losses from operations sustained by the Company offset by increases
in accounts payable and accrued expenses.
 
 Off-balance
Sheet Arrangements
 
 The
Company has no off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to
investors.
 
 Forward
Looking Statements - Cautionary Factors
 
 Certain
information included in this Form 10-Q and other materials filed or to be filed
by us with the Securities and Exchange Commission (as well as information
included in oral or written statements made by us or on our behalf), may contain
forward-looking statements about our current and expected performance trends,
growth plans, business goals and other matters.  These statements may
be contained in our filings with the Securities and Exchange Commission, in our
press releases, in other written communications, and in oral statements made by
or with the approval of one of our authorized officers.  Information
set forth in this discussion and analysis contains various “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.  The Private
Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe
harbor” provisions for forward-looking statements.  The reader is
cautioned that such forward-looking statements are based on information
available at the time and/or management’s good faith belief with respect to
future events, and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed in the
statements.  Forward-looking statements speak only as of the date the
statement was made.  We assume no obligation to update forward-looking
information to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information.  Forward-looking
statements are typically identified by the use of terms such as “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”
“predict,” “project,” “should,” “will,” and similar words, although some
forward-looking statements are expressed differently.  Although we
believe that the expectations reflected in such forward-looking statements are
reasonable, we can give no assurance that such expectations will prove to be
correct.
 
 ITEM
4T - CONTROLS AND PROCEDURES
 
 Management's
report on internal control over financial reporting.
 
 Management
of the Company has evaluated, with the participation of the Chief Executive
Officer and Chief Financial Officer of the Company, the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or
15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end
of the period covered by this Quarterly Report on Form 10-Q. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer of the
Company had concluded that the Company's disclosure controls and procedures as
of the period covered by this Quarterly Report on Form 10-Q were not effective
for the following reasons:
 
 a)           The
deficiency was identified as the Company's limited segregation of duties amongst
the Company's employees with respect to the Company's control activities. This
deficiency is the result of the Company's limited number of employees. This
deficiency may affect management's ability to determine if errors or
inappropriate actions have taken place. Management is required to apply its
judgment in evaluating the cost-benefit relationship of possible changes in our
disclosure controls and procedures.
 
 b)           The
deficiency was identified in respect to the Company's Board of Directors. This
deficiency is the result of the Company's limited number of external board
members. This deficiency may give the impression to the investors that the board
is not independent from management. Management and the Board of Directors are
required to apply their judgment in evaluating the cost-benefit relationship of
possible changes in the organization of the Board of Directors.
 
 Changes
in internal control over financial reporting.
 
 Management
of the Company has also evaluated, with the participation of the Chief Executive
Officer of the Company, any change in the Company’s internal control over
financial reporting that occurred during the period covered by this Quarterly
Report on Form 10-Q and determined that there was no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
  21
 Table of Contents
 
 PART
II – OTHER INFORMATION
 
 ITEM
1- LEGAL PROCEEDINGS
 
 On
December 13, 2007, Independent Can filed suit against the Company seeking
payment of monies owed equal to $19,100.80. Independent Can had provided the
Company the tins that held the Acid+All® tablets.  In June 2008, the
Company defaulted on a settlement agreement and Independent Can was awarded a
judgment for $14,785.32 for amounts due on the original stipulation of
settlement. As of the date of this filing, the judgment is still
outstanding.
  On August
7, 2008, the intellectual property attorney Ursula Day asserted a claim against
the Company for unpaid bills equal to $9,547.  The Company has been in
discussions attempting to resolve this dispute. Ms. Day has been gathering
documentation to support her claim. As soon as this is completed, the Company
will attempt to settle this dispute.
 
 On
January 22, 2009, the accounting firm of Rosen, Seymour, Shapss, Martin &
Company LLP filed suit against the Company for the sum of $25,000 claiming that
the Company did not pay the accounting firm fees previously agreed
upon.  The Company has retained local counsel to represent it in the
negotiations.
 
 ITEM
5 - OTHER INFORMATION
 
 (b)
                  The
      Company does not have a standing nominating committee or a committee
      performing similar functions as the Company’s Board of Directors consists
      of only two members and therefore there would be no benefit in having a
      separate nominating committee that would consist of the same number of
      members as the full board of directors.  Both members of the
      Board of Directors participate in the consideration of director
      nominees.
 
 ITEM
6 - EXHIBITS
 
 31.1
                  Rule 13a-14(a)/15d-14(a)
    Certifications.
 32.1
                  Certification of Chief Executive and Chief Financial
      Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002.
  22
 Table of Contents
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 Thomas
Pharmaceuticals, Ltd.
 
 By:/s/ Mark
Meller                                                                                                            Date:  May
20, 2009
 Mark
Meller, Chief Executive Officer and
 Principal
Accounting Officer
   23
 Table of Contents
  
 Index
of Exhibits
 
 
 31.1
                  Rule 13a-14(a)/15d-14(a)
    Certifications.
 
 32.1
                  Certification of Chief Executive and Chief Financial
      Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002.




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