Summary of PURAMED BIOSCIENCE INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read and considered along with our condensed financial statements and related notes included in this 10-Q. These financial statements were prepared in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in these forward-looking statements as a result of various factors including those set forth in the "Risk Factors" section of our Form 10-K filing for fiscal year ending June 30, 2011 filed with the SEC on September 28, 2011.

Background

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

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

Overview of Business

The Company is engaged in the business of developing and marketing a line of non-prescription medicinal or healthcare products to be marketed through various retail channels under the LipiGesic® brand and trademark. In an effort to add continuity to all of the PuraMed BioScience™ products, the Company trademarked the brand name LipiGesic®. The Company has completed all product development and design packaging for its initial three products, LipiGesic® M (Migraine), LipiGesic® PM (Insomnia), and LipiGesic® H (Tension Headache), and began their commercial introduction to the marketplace.

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

The Company entered the OTC healthcare products marketplace by employing "direct to consumer" marketing via television commercials and print articles. This will be followed by broad retail distribution through mainstream drug store chains, mass merchandisers, and food chains. As of January 2012, PuraMed has achieved retail distribution in the top two national retail drug chains in the United States, Walgreens and CVS. The Company is currently looking to expand its retail placement amongst national retail drug chains as well as undergoing substantial marketing activities directed toward supporting its initial commercial launch of its LipiGesic®M migraine headache relief product.

In addition to the national retail drug chain roll-out campaign, PuraMed is now implementing its public relations effort utilizing the evidence from its recently completed clinical study. The clinical study design was a double blind, placebo controlled, multi-site study measuring the effectiveness of LipiGesic® M for the treatment of acute migraine attacks. The Company announced in June 2011 that their independent clinical study of LipiGesic® M has been accepted for publication in a top-ranked medical journal. Headache, a top-tier medical journal of the American Headache Society published the clinical study of LipiGesic® M in their July/August 2011 print edition.

The Company has implemented a robust Social Marketing effort utilizing popular social internet sites like Facebook, YouTube, Twitter, Google+ and the abundance of "blogs" to drive consumers and revenue by obtaining access to large audiences and influencers. In addition to a strong consumer emphasis, this program will have a major component that promotes our LipiGesic® M product directly to the medical professionals who treat headaches.

The Company intends to continue to develop and grow its intellectual property portfolio in 2012 which is expected to substantially enhance shareholder value. The Company is currently engaged in conducting a clinical study on its LipiGesic® M migraine product for the potential use on children and adolescents. PuraMed already has established its protocol, identified researchers, and selected sites for a new Double Blind Placebo Controlled study of LipiGesic® M for the potential use with children. There are nearly 2 million children in the USA that suffer from frequent debilitating migraines with no prescription treatments approved for use on children.

LipiGesic® M

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

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

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

LipiGesic® PM

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

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

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

Future LipiGesic® Products

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

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

LipiGesic® Smoker's Pal - provides relief from the symptoms associated with nicotine withdrawal with the added benefit of an appetite suppressant.

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

LipiGesic® GI - provides relief of symptoms associated with nighttime reflux disorders.

LipiGesic® CS - provides fast relief for canker sore outbreaks.

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

Sublingual Delivery System

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

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

Regulation of PuraMed Products

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

Business Structure

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

Product Manufacturing

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

Sales and Marketing

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

Phase One Rollout: Direct Response. In December 2009 PuraMed began running its two-minute direct response television commercials via selected national cable television stations. The media spend over the initial ninety day test phase was modest in an effort to optimize the television campaign. PuraMed will also employ website and toll-free telephone access in conjunction with its TV direct response campaigns. A Social Media Campaign conducted on the internet via popular internet networking sites like Facebook, twitter and Google + has also been implemented to drive customers to our eCommerce websites. PuraMed began Phase One Rollout for its migraine produce, LipiGesic® M, during the fourth quarter of calendar year 2009.

Phase Two Rollout: Retail Drugstores. PuraMed began consumer awareness and delivering product sales from its direct response marketing phase coupled with its Social Marketing Plan to reach both consumers and medical professionals by the second quarter of 2011. In the fourth quarter of calendar year 2011 it began marketing through more than 15,000 retail drugstores targeted by PuraMed, including Walgreens and CVS which are the top two national retail drug chains in the US. Due to PuraMed's management having extensive and good relationships with targeted retail outlets for PuraMed products, PuraMed believes it has the ability to place its products on the shelf in all its targeted retail outlets.

Phase Three Rollout: Further Retail Outlets. Beginning early 2012, PuraMed will launch Phase Three which will consist of placing PuraMed products in a further approximately 25,000 targeted retail outlets including mass merchandisers such as Rite Aid, Wal-Mart and Target, food store chains such as SuperValu, Kroger and Safeway, and additional well-known regional drugstores.

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

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

Results of Operations

Revenues

Revenues consist of wholesale, website and telephone sales of the LipiGesic® M migraine product. The wholesale sales have been to the largest drug chain store in the United States.

Cost of Sales

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

Operating Expenses

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

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

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

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

Salaries include payments to our office manager and corporate controller.

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

Comparison of Operations for Three Months Ended December 31, 2011 and 2010

Revenue

Revenue for the three months ended December 31, 2011 were $608,676 compared to $1,869 for the three months ended December 31, 2010. The revenue increased due to new retail distribution.

Cost of Sales

Cost of sales for the three months ended December 31, 2011 were $118,095, compared to $753 for the three months ended December 31, 2010. The cost of sales increased due to additional raw material costs, production and freight costs for the new retail distribution.

Gross profit

The gross profit for the three months ended December 31, 2011 was $490,581, compared to $1,116 for the three months ended December 31, 2010. The increase in gross profit is due to new retail distribution.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $43,286 and $15,782 for the three months ended December 31, 2011 and 2010, respectively. The increase is primarily attributed to product liability insurance as a result of new retail distribution.

Amortization and Depreciation

Amortization and depreciation expenses for the three months ended December 31, 2011 and 2010 were similar at $12,775 compared to $12,155.

Marketing and Advertising Expense

Marketing and advertising expense for the three months ended December 31, 2011 were $164,944 compared to $56,311 for the three months ended December 31, 2010. The increase in the expenses was due to the marketing and advertising necessary to support our product's entry into retail drugstores.

Professional Fees

Professional fees for the three months ended December 31, 2011 were $125,146 compared to $13,407 for the three months ended December 31, 2010. The increase was attributed to additional consulting fees paid to support the Company's product entry into the retail drugstores.

Research and Development Expenses

Research and development expenses for the three months ended December 31, 2011 were similar at $117 compared to $140 for the three months ended December 31, 2010.

Salaries

Salaries for the three months ended December 31, 2011 were $18,535 compared to $13,616 for the three months ended December 31, 2010, which is attributed to the increase in hours worked by administrative personnel compared to the previous period.

Officers' Salaries

Officer salaries for the three months ended December 31, 2011 and 2010 were $108,000 and $48,000, respectively. The increase in salaries is attributed to the warrants issued to Russell Mitchell in connection with the successful entry into the largest drugstore chain in the United States.

Interest Expense

Interest expense for the three months ended December 31, 2011 and 2010 was $118,255 and $46,117, respectively. The increase in the expense is attributed to additional notes used to finance the Company.

Gain/(Loss) on Disposal of Assets

The loss on disposal of assets is the result of disposal of software no longer used by the Company. The amount for December 31, 2011 was $302, there were no disposals recorded for the quarter ended December 31, 2010.

Gain/(Loss) on Derivative Liability

The gain on derivative liability is the difference in value using the lattice model for the warrants between the date issued and the quarter ended December 31, 2011 and 2010. The amount for December 31, 2011 was $206,249, there were no derivative liabilities recorded for the quarter ended December 31, 2010.

Net Income/Loss

Net income for the three months ended December 31, 2011 was $105,470 compared to a loss of $204,412 for the three months ended December 31, 2010. The gain in 2011 was due to new distribution in retail drugstores.

Comparison of Operations for Six Months Ended December 31, 2011 and 2010

Revenue

Revenue for the six months ended December 31, 2011 were $613,931 compared to $5,472 for the six months ended December 31, 2010. The revenue increased due to new retail distribution.

Cost of Sales

Cost of sales for the six months ended December 31, 2011 were $121,311, compared to $3,507 for the six months ended December 31, 2010. The cost of sales increased due to additional raw material costs, production and freight costs for the new retail distribution.

Gross Profit

The gross profit for the six months ended December 31, 2011 was $492,620, compared to $1,965 for the six months ended December 31, 2010. The increase in gross profit is due to new retail distribution.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $66,584 and $31,515 for the six months ended December 31, 2011 and 2010, respectively. The increase is primarily attributed to product liability insurance as a result of new retail distribution.

Amortization and Depreciation

Amortization and depreciation expenses for the six months ended December 31, 2011 and 2010 were similar at $25,494 compared to $24,312.

Marketing and Advertising Expense

Marketing and advertising expense for the six months ended December 31, 2011 were $268,647 compared to $144,400 for the six months ended December 31, 2010. The increase in the expenses was due to the marketing and advertising necessary to support our product's entry into retail drugstores.

Professional Fees

Professional fees for the six months ended December 31, 2011 were $158,988 compared to $58,698 for the six months ended December 31, 2010. The increase was attributed to additional consulting fees paid to support the Company's product entry into the retail drugstores.

Research and Development Expenses

Research and development expenses for the six months ended December 31, 2011 were $2,247 compared to $890 for the six months ended December 31, 2010. The increase in expense was due to design changes in retail packaging.

Salaries

Salaries for the six months ended December 31, 2011 were $36,803 compared to $27,920 for the six months ended December 31, 2010, which is attributed to the fluctuation of hours worked by administrative personal in the previous period.

Officers' Salaries

Officer salaries for the six months ended December 31, 2011 and 2010 were $156,000 and $96,000, respectively. The increase in salaries is attributed to the warrants issued to Mr. Mitchell in connection with the successful entry into the largest drugstore chain in the United States.

Interest Expense

Interest expense for the six months ended December 31, 2011 and 2010 were $215,356 and $158,486, respectively. The increase in the expense is attributed to additional notes used to finance the Company.

Gain/(Loss) on Disposal of Assets

Gain/(Loss) on Derivative Liability

The gain on derivative liability is the difference in value using the Black-Scholes formula for the warrants between the date issued and the six months ended December 31, 2011 and 2010. The amount for December 31, 2011 was $136,495, there were no derivative liabilities recorded for the six months ended December 31, 2010.

Day One Gain in Derivative Liability

The difference between the proceeds received and the value of the warrants issued resulted in a gain. The amount for the six months ended December 31, 2011 was $7,912, there were no derivative liabilities recorded for the six months ended December 31, 2010.

Net Losses

Net losses for the six months ended December 31, 2011 were $293,394 compared to $540,525 for the six months ended December 31, 2010. The reduction in the loss from the comparison period is due to new distribution in retail drugstores in 2011, net of the effect of additional expenses.

Financial Condition, Liquidity and Capital Resources

As of December 31, 2011, the Company had cash of $255,683 and negative working capital of $353,812, excluding derivative liabilities, which are expected to be paid with common stock.

As in the past, we intend to raise the funds needed to implement our plan of operation through both private sales of debt and equity securities. In addition revenue received from the successful roll-out of our product at national retail drug stores will now play an increased role in our capital needs. There is no assurance, however, that we will be successful in raising the necessary capital to implement our business plan, either through debt or equity sources.

Business Strategy

PuraMed's current business strategy is to continue the promotion of its initial non-prescription migraine headache relief product, LipiGesic® M, and continue with their commercial retail drug chain roll-out plan through the calendar year 2012. The product has gained nationwide distribution in Walgreens and CVS retail drug chains with additional drug chains being targeted for distribution in calendar year 2012. PuraMed's primary goal is to achieve continual material growth of LipiGesic® product sales through mainstream drug, mass merchandiser and food retail channels while at the same time promoting LipiGesic® brand awareness to realize substantial profitability as soon as possible. To implement this strategy, PuraMed intends to execute the following activities during the next twelve months:

The Successful Outcome of the Clinical Trial - The outcome of our clinical study coupled with the publication of the manuscript in the peer reviewed-medical journal "Headache, The Journal of Head and Face Pain" has proved to be very successful. It has and is expected to continue to provide us with numerous marketing and promotion opportunities that could significantly help with the retail launch of our LipiGesic® M migraine product. PuraMed is in the process of executing a detailed marketing plan that focuses on the medical community since the successful outcome of our clinical study trial supports such actions. Medical marketing efforts geared toward doctors, physician's assistants, pharmacists, etc. is expected to be very lucrative as a component in our overall marketing strategy.

The Company plans to continue its research efforts in 2012. PuraMed already has established its protocol, identified researchers, and selected sites for a new Double Blind Placebo Controlled study of LipiGesic M for the potential use with children. There are nearly 2 million children in the USA that suffer from frequent debilitating migraines with no prescription treatments approved for use on children. Medical professionals will not recommend any of the adult approved treatments because they have concerns of side effect profiles. Children were included in the LipiGesic M study, published earlier this year and the encouraging efficacy and safety results have paved the way to study a larger population. This study will commence in early 2012.

Promotion to the medical community will utilize the published results of the study which are expected to help promote LipiGesic® M as a new non-prescription abortive therapy which offers a broad range of advantages over the current first line prescription abortive treatment. The Company expects to exhibit and detail the product at key medical conferences throughout the country focusing on . . .