ubdf10-qsba20060831.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment #1
to
FORM 10-QSB/A
 
 (Mark One)        
             QUARTERLY REPORT PURSUANT TO SECTION 13
 [X]            OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
             1934
 For the quarterly period ended: August 31, 2006    
 Or        
             TRANSITION REPORT PURSUANT TO SECTION 13
 [ ]            OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
             1934
 For the transition period from __________ to __________     
 Commission File Number: 000-31431    
 
US BIODEFENSE, INC.
(Exact name of registrant as specified in its charter)
 
Utah   33-0052057
(State of Other Jurisdiction of Incorporation)   (IRS Employer Identification No.)
 
375 South 6th Avenue    
City of Industry, California   91746
(Address of Principal Executive Offices)   (Zip Code)
 
(626) 961-0562
(Registrant's telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
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 [X] No [ ]
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13
or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes [ ] No [ ]
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable
date: 39,059,047


US Biodefense, Inc.
 
Table of Contents
    Page
PART I - FINANCIAL INFORMATION    
          Item 1. Financial Statements   3
                    Balance Sheet   4
                    Statements of Operations   5
                    Statements of Cash Flows   6
                    Notes   7
          Item 2. Management's Discussion and Plan of Operation   17
PART II - OTHER INFORMATION    
                    Item 3. Controls and Procedures   19
                    Item 6. Exhibits   19
SIGNATURES   20
 
-2-  


PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements

     The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's Annual Report on Form 10-KSB previously filed with the Commission on February 24, 2006, and subsequent amendments made thereto.

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

-3-


US Biodefense, Inc.
Balance Sheet
 
ASSETS   (Unaudited)    
    August 31,   November 30,
    2006   2005
Current assets        
   Cash and cash equivalents   $69,035    $17,223 
   Marketable securities   150,000    150,000 
   Accounts receivable   15,727    --- 
   Inventory   73,447    --- 
   Prepaid expenses   ---    20,000 
 
         Total current assets   308,209    187,223 
 
Property and equipment, net of accumulated depreciation of $59 and $-0- at        
August 31, 2006 and November 30, 2005   2,418    --- 
 
Licenses   ---    20,000 
Deposits   1,000    1,000 
 
         Total assets   311,627    208,223 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
 
Current liabilities        
   Bank overdraft   ---    3,947 
   Accounts payable and accrued expenses   86,541    79,167 
   Due to related parties   19,013    1,812 
   Accrued income taxes   9,596    9,596 
   Deferred revenues   37,500    101,667 
 
         Total current liabilities   152,650    196,189 
 
Deferred taxes   19,150    19,150 
 
         Total liabilities   171,800    215,339 
 
Stockholders’ equity:        
   Common stock, $0.001 par value, 100,000,000 shares authorized, $.001        
         par value, 39,059,047 and 30,304,047 share issued        
         and outstanding   39,059    30,304 
   Additional paid in capital   4,234,531    3,773,086 
   Other comprehensive deficit   30,850    30,850 
   Accumulated deficit   (4,164,613)    (3,841,356) 
 
         Total stockholders’ equity (deficit)   139,827    (7,116) 
 
         Total liabilities and stockholders’ equity (deficit)   $311,627    $208,223 
 
 
See accompanying notes to financial statements

-4-


US Biodefense, Inc.
Statements of Operations
For the three and nine
months ended August 31, 2006 and 2005
(Unaudited)
 
    Three months ended   Nine months ended
    August 31,   August 31,
    2006   2005   2006   2005
 
Revenues                
 
Sales   $31,302    $---    $31,302    $--- 
Cost of sales   25,415    ---    24,415    --- 
Gross margin   5,887    ---    5,887    --- 
 
Consulting revenues   37,500    ---    37,500    --- 
Revenues – Related parties   6,667    25,000    46,667    104,167 
 
Expenses                
 
Research and development expenses   ---    ---    23,171    --- 
General and administrative expenses   86,738    42,217    93,939    111,385 
General & administrative expenses –   ---    ---    ---    --- 
 Related party   ---    3,000    3,500    3,000 
 Stock issued for consulting services   270,200    ---    270,200    --- 
Impairment of assets   22,500    ---    22,500    --- 
 
Total expenses   379,438    45,217    413,310    114,385 
 
Net income (loss)   $(329,384)    $(20,217)    $(323,256)    $(10,218) 
 
Weighted average number of shares                
 outstanding - basic and fully diluted   34,885,714    10,101,349    31,831,269    10,101,349 
 
Basic and diluted net income (loss)                
 per common share   $(0.01)    $(0.00)    $(0.01)    $(0.00) 
 
See accompanying notes to financial statements
 
-5-


US Biodefense, Inc.
Statement of Cash Flows
For the nine months ended August 31, 2006 2005
(Unaudited)
 
    2006   2005
 
Cash flows from operating activities        
Net income (loss)   $(323,256)    $(10,218) 
 Adjustments to reconcile net loss to net cash used in        
    operating activities:        
       Depreciation   59    --- 
       Impairment of assets   22,500    --- 
       Stock issued for consulting services   270,200    --- 
       Changes in operating assets and liabilities:        
         Accounts receivable   (15,727)    --- 
         Inventory   (73,447)    --- 
         Prepaid expenses   20,000    --- 
         Bank overdraft   (3,947)    --- 
         Accounts payable and accrued expenses   7,374    (377) 
         Deferred revenues   (64,167)    (4,166) 
 
             Net cash (used for) provided by operating activities   (160,411)    (14,761) 
 
Cash flows from financing activities        
       Principal advance from (repayment to) related party   17,200    1,00 
       Proceeds from sale of common stock   200,000    --- 
 
             Total cash flows from financing activities   217,200    1,000 
 
Cash flows from investing activities        
       Purchase of investment   ---    (9,000) 
       Purchase of licenses   (2,500)    --- 
       Purchase of equipment   (2,477)    --- 
 
             Total cash flows from (used for) investing activities   (4,977)    (9,000) 
 
Increase (decrease in) cash and cash equivalents   51,812    (22,761) 
 
Cash and cash equivalents, beginning of year   17,223    33,558 
 
Cash and cash equivalents, end of year   $69,035    $10,797 
 
Income taxes paid   $---    $--- 
Interest expense paid   $---    $--- 
 
See accompanying notes to financial statements
 
-6-


US Biodefense, Inc.
Notes to Financial Statements
 
Note 1 - Background and Summary of Significant Accounting Policies
 
Background
 
US Biodefense , Inc. (the "Company"), a Utah corporation is headquartered in the City of 
Industry, California. The Company is a registered government contractor with the Department 
of Defense Logistics Agency. The Company is focused on designing and developing 
homeland security and biodefense products. 
 
The Company was originally incorporated under the name Teal Eye, Inc. in the state of 
Utah on June 29, 1983. The Company then merged with Terzon Corp. and amended its 
Articles of Incorporation to change the name to Terzon Corp. On September 7, 1984, 
the Company amended its articles of incorporation changing its name to Candy Stripers 
Corporation, Inc. On January 6, 1998, the Company amended its Articles of Incorporation 
changing its name to Piedmont, Inc. On May 31, 2003, the Company amended its 
articles of Incorporation and changed its name to US Biodefense, Inc. 
 
The accompanying financial statements for the nine months ended August 31, 2006, include the 
accounts of the Company and its wholly-owned subsidiaries Stem Cell Research Institute, Inc. 
and Emergency Disaster Systems, Inc. All significant intercompany transactions and balances 
have been eliminated. 
 
Basis of Presentation
 
The accompanying financial statements have been prepared in conformity with accounting 
principles generally accepted in the United States of America, which contemplate continuation 
of the Company as a going concern. The Company incurred a net loss for the nine months ended 
August 31, 2006 of $323,256 and at August 31, 2006, had an accumulated deficit 
of $4,164,613. In addition, the Company generates minimal revenue from its operations. 
These conditions raise substantial doubt as to the Company's ability to continue as a growing 
concern. These financial statements do not include any adjustments that might result from 
the outcome of this uncertainty. These financial statements do not include any adjustments 
relating to the recoverability and classification of recorded asset amounts, or amounts and 
classification of recorded asset amounts, or amounts and classification of liabilities that might 
be necessary should the Company be unable to continue as a going concern. 
 
Management plans to take the following steps that it believes will be sufficient to provide the 
Company with the ability to continue in existence. 
 
Management intends to raise financing through the issuance of its common stock or other means 
and interests that it deems necessary, with a view to moving forward with the development of the 
emergency preparedness, homeland security and biodefense products. 
 
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 reported amounts of assets and liabilities, 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. 
 
-7-


US Biodefense, Inc.
Notes to Financial Statements
 
Fair Value of Financial Instruments
 
For certain of the Company's financial instruments, including cash and cash equivalents, prepaid 
expenses, accounts payable and deferred revenues, the carrying amounts approximate fair value 
due to their short maturities. 
 
Revenue Recognition
 
Sales revenues and consulting revenues are realized or realizable and earned when all of the following 
criteria are met - there is persuasive evidence that an arrangement exists; delivery has occurred, or services 
have been rendered; the price to our customer is fixed or determinable; and collectibility is reasonably 
assured. 
 
Accounts receivable of the Company are reviewed to determine if their carrying value has become impaired. 
The Company considers the assets to be impaired if the balances are greater than six months old. Management 
regularly reviews accounts receivable and will establish an allowance for potentially uncollectible amounts when 
appropriate. When accounts are written off, they will be charged against the allowance. Receivables are not 
collateralized and do not bear interest. 
 
Concentration of Credit Risk
 
Financial instruments which subject the Company to concentrations of credit risk include cash 
and cash equivalents. 
 
The Company maintains its cash in well-known banks selected based upon management's 
assessment of the bank's financial stability. Balances may periodically exceed the $100,000 
federal depository insurance limit; however, the Company has not experienced any losses on 
deposits. The Company extends credit based on an evaluation of the customer's financial condition, 
generally without collateral. Exposure to losses on receivables is principally dependent on each 
customer's financial condition. The Company monitors its exposure for credit losses and maintains 
allowances for anticipated losses, as required. 
 
Cash Equivalents
 
For purposes of reporting cash flows, the Company considers all short-term investments with an 
original maturity of three months or less to be cash equivalent. 
 
Inventory
 
Inventory is stated at the lower of cost or market. Inventory consists of purchased items held for resale. 
Inventory will be monitored by Company management for excess and obsolete items, and will make 
the necessary valuation adjustment when required. 
 
-8- 


US Biodefense, Inc.
Notes to Financial Statements
 
Fixed Assets
 
Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the 
straight-line method over the estimated useful lives of the assets, which is generally 3 to 10 years. The cost of 
repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and 
renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated 
depreciation are removed from the accounts and any gain or loss is reflected in other income (expense). 
 
 
The Company will periodically evaluate whether events and circumstances have occurred that may warrant 
revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be 
evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the 
remaining life of the fixed assets in measuring their recoverability. 
 
Comprehensive Income
 
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive 
Income," establishes standards for the reporting and display of comprehensive income and its 
components in the financial statements. For the six months ended May 31, 2005 and May 31, 
2004, the Company has no items that represent other comprehensive income, and accordingly, 
has not included a schedule of comprehensive income in the financial statements. 
 
Advertising Costs
 
Advertising costs are expensed as incurred. There were no advertising costs for the nine month 
periods ended August 31, 2006 or 2005. 
 
Income Taxes
 
The Company accounts for income taxes under SFAS 109, "Accounting for Income Taxes." Under 
the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized 
for the future tax consequences attributable to differences between the financial statements 
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax 
assets and liabilities are measured using enacted tax rates expected to apply to taxable income 
in the years in which those temporary differences are expected to be recovered or settled. 
 
Loss per Share
 
In accordance with SFAS No. 128, "Earnings Per Share," the basic income / (loss) per common 
share is computed by dividing net income / (loss) available to common stockholders by the 
weighted average number of common shares outstanding. Diluted income per common share is 
computed similar to basic income per share except that the denominator is increased to include 
the number of additional common shares that would have been outstanding if the potential common 
shares had been issued and if the additional common shares were dilutive. As of August 31, 
2006 and August 31, 2005, the Company does not have any equity or debt instruments 
outstanding that can be converted into common stock. 
 
-9-


US Biodefense, Inc.
Notes to Financial Statements
 
Stock-Based Compensation
 
Stock-Based Compensation
 
Effective January 1, 2006, the Company prospectively adopted FAS 123 R , Stock -Based Payments, and 
related Securities and Exchange Commission rules included in Staff Accounting Bulletin No. 107. Under this 
method, compensation cost recognized beginning January 1, 2006 will include costs related to all share-based 
payments granted subsequent to December 31, 2005 based on the grant-date fair value estimated in accordance 
with the provisions of FAS 123 R. Compensation cost for stock options granted to employees is recognized 
ratably over the vesting period. 
 
 
Prior to January 1, 2006, the Company measured compensation cost for stock-based employeee compensation 
plans using the intrinsic value method of accounting as prescribed in Accounting Principles Board Opinion No. 
25, Accounting for Stock Issued to Employees, and related interpretations. For non-employee stock-based 
compensations, the Company recognizes expense in accordance with FAS 123 and values the equity securities 
based on the fair value of the security on the date of grant. 
 
Recent Accounting Pronouncements
 
In January 2003, the FASB issued Interpretation No 46, "Consolidation of Variable Interest Entities" 
(an interpretation of Accounting Research Bulletin (ARB) No. 51, Consolidation Financial State- 
ments). Interpretation 46 addresses consolidation by business enterprises of entities to which the 
usual condition of consolidation described in ARB-5 does not apply. The Interpretation changes 
the criteria by which one company includes another entity in its consolidated financial statements. 
The general requirement to consolidate under ARB-51 is based on the presumption that an enter- 
prise's financial statement should include all of the entities in which it has a controlling financial 
interest (i.e., majority voting interest). Interpretation 46 requires a variable interest entity to receive 
a majority of the entity's residual returns or both. A company that consolidated a variable interest 
entity is called the primary beneficiary of that entity. In December 2003, the FASB concluded to 
revise certain elements of FIN 46, primarily to clarify the required accounting for interests in variable 
interest entities. FIN-46R replaces FIN-46. that was issued in January, 2003. FIN-46R exempts 
certain entities from its requirements and provides for special effective dates for entities that have 
fully or partially applied FIN-46 as of December 24, 2003. In certain situations, entities have the 
option of applying or continuing to apply FIN-46 for a short period of time before applying IN-46R. 
In general, for all entities that were previously considered special purpose entities, FIN 46 should 
be applied for registrants who file under Regulation SX in periods ending after March 31, 2004, and 
for registrants who file under Regulation SB, in periods ending after December 15, 2004. The 
Company does not expect the adoption to have a material impact on the Company's financial 
position or results of operations. 
 
-10- 


US Biodefense, Inc.
Notes to Financial Statements
 
During April 2003, the FASB issued SFAS 149 - "Amendment of Statement 133 on Derivative 
Instruments and Hedging Activities", effective for contracts entered into or modified after 
September 30, 2003, except as stated below and for hedging relationships designated after 
September 30, 2003. In addition, except as stated below, all provisions of this Statement should 
be applied prospectively. The provisions of this Statement that relate to Statement 133 Implement- 
ation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should 
continue to be applied in accordance with their respective effective dates. In addition, paragraphs 
7(a) and 23(a), which relate to forward purchases or sales of when-issued securities or other 
securities that do not yet exist, should be applied to both existing contracts and new contracts 
entered into after September 30, 2003. The adoption of this statement had no impact on the 
Company's financial statements. 
 
During May 2003, the FASB issued SFAS 150 - "Accounting for Certain Financial Instruments with 
Characteristics of both Liabilities and Equity", effective for financial instruments entered into or 
modified after May 31, 2003, and otherwise is effective for public entities at the beginning of the 
first interim period beginning after June 15, 2003. This Statement establishes standards for how 
an issuer classifies and measures certain financial instrument with characteristics of both 
liabilities and equity. It requires that an issuer classify a freestanding financial instrument that is 
within its scope as a liability (or an asset in some circumstances). Many of those instruments 
were previously classified as equity. Some of the provisions of this Statement are consistent with 
the current definition of liabilities in FASB Concepts Statement No. 6, Element of Financial 
Statements. The adoption of this statement had no impact on the Company's financial statements. 
 
In December 2003, the FASB issued a revised SFAS No. 132, “Employers’ Disclosures about 
Pensions and Other Postretirement Benefits” which replaces the previously issued Statement. The 
revised Statement increases the existing disclosures for defined benefit pension plans and other 
defined benefit postretirement plans. However, it does not change the measurement or recognition 
of those plans as required under SFAS No. 88, “Employers’ Accounting for Settlements and 
Curtailments of Defined Benefit Pension Plans and for Termination Benefits,” and SFAS No. 106, 
“Employers’ Accounting for Postretirement Benefits Other Than Pensions.” Specifically, the 
revised Statement requires companies to provide additional disclosures about pension plan assets, 
benefit obligations, cash flows, and benefit costs of defined benefit pension plans and other 
defined benefit postretirement plans. Also, companies are required to provide a breakdown of plan 
assets by category, such as debt, equity and real estate, and to provide certain expected rates 
of return and target allocation percentages for these asset categories. The Company has 
implemented this pronouncement and has concluded that the adoption has no material impact 
to the financial statements. 
 
In December, 2003, the Securities and Exchange Commission (“SEC”) issued Staff Accounting 
Bulletin (“SAB”) No. 104, “Revenue Recognition.” SAB 104 supersedes SAB 11, “Revenue 
Recognition in Financial Statements.” SAB 104’s primary purpose is to rescind accounting 
guidance contained in SAB 101 related to multiple element revenue arrangements, superseded 
as a result of the issuance of EITF 00-21, “Accounting for Revenue Arrangements with Multiple 
Deliverables.” Additionally, SAB 104 rescinds the SEC’s Revenue Recognition in Financial 
Statements Frequently Asked Questions and Answers (the FAQ) issued with SAB 101 that had 
been codified in SEC Topic, 13, Revenue Recognition. Selected portions of the FAQ have been 
incorporated into SAB 104. While the wording of SAB 104 has changed to reflect the issuance 
of EITF 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the 
issuance of SAB 104, which was effective upon issuance. The adoption of SAB 104 did not 
impact the financial statements. 
 
-11- 


US Biodefense, Inc.
Notes to Financial Statements
 
In March, 2004, the FASB approved the consensus reached on the Emerging Issues Task Forces 
(ETIF) Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to 
Certain Investments.” The objective of this Issue is to provide guidance for identifying impaired 
investments. EITF 03-1 also provides new disclosure requirements for investments for investments 
are deemed to be temporarily impaired. In September 204, the FASB issued a FASB Staff 
Position (FSP) EITF 03-1-1 that delays the effective date of the measurement and recognition 
are effective only for annual periods ending after June15,2004. The Company has evaluated the 
impact of the adoption of the disclosure requirements of EITF 03-1 and does not believe it will have 
an impact to the Company’s overall combined results of operations or combined financial position. 
Once the FASB reaches a final decision on the measurement and recognition provisions, the 
Company will evaluate the impact of the adoption of EITF 03-1. 
 
In November 2004, the FASB issued SFAS No. 151 “Inventory Costs, an amendment of ARB 
No. 43, Chapter 4 (“SFAS No. 151”. The amendments made by SFAS 151 clarify that abnormal 
amount of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be 
recognized as current-period charges and require the allocation of fixed production overheads to 
inventory based on the normal capacity of the production facilities. The guidance is effective for 
inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is 
permitted for inventory costs incurred during fiscal years beginning after November 23, 2004. The 
Company has evaluated the impact of the adoption of SFAS 151, and does not believe the impact 
will be significant to the Company’s overall results of operations or financial position. 
 
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate Time-Sharing 
Transactions-an amendment of FASB Statements No. 66 and 67" ("SFAS 152") SFAS 152 
amends SFAS No. 66, "Accounting for Sales of Real Estate", to reference the financial accounting 
and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement 
of Position (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions". SFAS 152 also 
amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of Real Estate Projects", 
to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate 
projects does not apply to real estate time-sharing transactions. The accounting for those operations 
and costs is subject to the guidance in SOP04-2. SFAS 152 is effective for financial statements 
for fiscal years beginning after June 15, 2005, with earlier applications encouraged. The Company 
has evaluated the impact of the adoption of SFAS 152, and does not believe the impact will be 
significant to the Company's overall results of operations or financial position. 
 
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Asset, an 
amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions." The amendments 
made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be 
measured based on the fair value of the assets exchanged. Further, the amendments eliminate 
the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a 
broader exception for exchanges of nonmonetary assets that do not have commercial substance. 
Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a 
similar productive asset or an equivalent interest in the same or similar productive asset should be 
based on the recorded amount of the asset relinquished. Opinion 29 provided an exception to its 
basis measurement principle (fair value) for exchanges of similar productive assets. That exception 
required that some nonmonetary exchanges, although commercially substantive, to be recorded on 
a carryover basis. By focusing the exception on exchanges that lack commercial substance, the 
FASB believes SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal 
periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset 
 
-12-


US Biodefense, Inc.
Notes to Financial Statements
 
exchanges occurring in fiscal periods beginning after the date of issuance. The provisions of SFAS 
No. 153 shall be applied prospectively. The Company has evaluated the impact of the adoption of 
SFAS 153, and does not believe the impact will be significant to the Company's overall results of 
operations or financial position. 
 
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment" 
("SFAS 123R"). SFAS 123R will provide investors and other users of financial statements with 
more compete and neutral financial information by requiring that the compensation costs relating to 
share-based payment transactions be recognized in financial statements. That cost will be 
measured based on the fair value of the equity or liability instruments issued SFAS 123R covers 
a wide range of share-based compensation arrangements including share options, restricted 
share plans, performance-based awards, share appreciation rights and employee share purchase 
plans. SFAS 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and 
supercedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as 
originally issued in 1995, established as preferable a fair-value-based method of accounting for 
share-based payment transactions with employees. However, that statement permitted entities 
the option of continuing to apply the guidance in Opinion 25, as long as the footnotes to financial 
statements disclosed what net income would have been had the preferable fair-value based method 
been used. Public entities (other than those filing as small business issuers) will be required to 
apply SFAS 123R as of the first interim or annual reporting period that begins after June 15, 2005. 
The Company has evaluated the impact of the adoption of SFAS 123R and does not believe the 
impact will be significant to the Company's overall results of operations or financial position. 
 
In June, 2005, the Financial Accounting Standards Board ('FASB") issued SFAS No. 154, Account- 
ing Changes and Error Corrections - a replacement of APB No. 20 and FAS No. 3" ("SFAS No. 154"). 
SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and 
error corrections. It establishes, unless impracticable, retrospective application as the required 
method for reporting a change in accounting principle in the absence of explicit transition require- 
mints specify to the newly adopted accounting principle. SFAS No. 154 also provides guidance 
for determining whether retrospective application of a change in a accounting principle is impractical- 
able. The correction of an error in previously issued financial statements is not an accounting 
change. However, the reporting of an error correction involves adjustments to previously issued 
financial statements similar to those generally applicable to reporting an accounting change retro- 
spectively. Therefore, the reporting of a correction of an error by restating previously issued financial 
is also addressed by SFAS No. 154. SFAS No. 154 is required to be adopted in fiscal years 
beginning after December 15, 2005. The Company does not believe its adoption in fiscal year 2007 
will have a material impact on its results of operations or financial position. 
 
In March, 2005, the SEC issued guidance on FASB SFAS 123R, "Share-Based Payments" ("SFAS 
No. 123R"). Staff Accounting Bulletin No. 107 ("SAB 107") was issued to assist preparers by simpli- 
fying some of the implementation challenges of SFAS No. 123R while enhancing the information 
that investors receive. SAB 107 creates a framework that is premised on two themes: (a) consider- 
able judgment will be required by preparers to successfully implement SFAS no. 123R, specifically 
when valuing employee stock options; and (b) reasonable individuals, acting in good faith, may 
conclude differently on the fair value of employee stock options. Key topics covered by SAB 107 
include (a) valuation models - SAB 107 reinforces the flexibility allowed by SFAS No. 123R to 
choose an option-pricing model that meets the standard's fair value measurement objective; (b) 
expected volatility - SAB 107 provides guidance on when it would be appropriate to rely exclusively 
on either historical or implied volatility; and ( c) expected term - the new guidance includes examples 
and some simplified approaches to determining the expected term under certain circumstances. 
 
-13-


US Biodefense, Inc.
Notes to Financial Statements
 
The Company will apply the principles of SAAB 107 in conjunction with its adoption of SOFAS No. 
123R. 
 
In June, 2005, the Emerging Issues Task Force (EAT) issued No. 05-06, "Determining the Abort- 
inaction Period of Leasehold Improvements Acquired in a Business Combination" (EAT No. 05-06). 
EAT No. 05-06 provides that the amortization period for leasehold improvements acquired in a 
business combination or purchased after the inception of a lease to be the shorter of (a) the useful 
life of the assets or (b) a term that includes required lease periods and renewals that are reason- 
ably assured upon the acquisition of the purchase. The guidance in EAT No. 05-06 will be applied 
prospectively and is effective for periods beginning afar June 29, 2005. The Company does not 
believe its adoption will have a material impact on its consolidated results of operations or 
financial position. 
 
Note 2 - Marketable Securities Available For Sale
 
On May 11, 2005, the Company entered into an agreement with a Partner. The Company will assist 
the Partner in identifying opportunities for commercialization of their listed technologies, while main- 
taining the confidentiality of the Partner. 
 
As compensation for providing these services, the Partner gave the Company 5,000,000 shares of 
Section 144 stock which is restricted from sale for twelve months from date of issue, May 11, 2005. 
The agreement is for a period of twenty four months. 
 
The Company recorded the stock at the value of the services to be provided which is estimated to be 
$100,000. The Company recorded revenue for the six month period from May through November, 
2005 in the amount of $25,000, and $37,500 for the nine month period ended August 31, 2006. The 
balance of $37,500 is included as deferred revenues on the balance sheet. 
 
The Company has adopted SFAS 130 as required by the Financial Accounting Standards Board. 
SFAS 130 requires that securities that are available for sale be presented at market value on the 
balance sheet date. Unrealized gains and losses are recognized as a separate component of 
stockholders' equity. The specific identification method is used in calculating realized gains and 
losses. SFAS 30 also requires a statement of comprehensive income which adjusts net income 
for the unrealized activity. At November 30, 2005, the fair market value of common equity securities 
with a cost of $100,000 was $150,000. The unrealized loss of $50,000, net of the related income tax 
benefit $19,150 is included as a component of other comprehensive income. 
 
Note 3 - Licenses
 
The Company has agreed to exercise options to license stem cell technology through the University 
of British Columbia under two option agreements. 
 
Having passed the initial validation phase, the Company is working toward a full licensing relation- 
ship and will begin pre-clinical analysis of how the cell line can be utilized. The Company is 
considering investigating the stem cells applications in combating ALS and Parkinson's disease. 
 
-14-


US Biodefense, Inc.
Notes to Financial Statements
 
The licenses are for periods of ten to twenty years. The Company will review the licenses at least 
annually. When necessary, we record changes for impairments of long-lived assets for the amount 
by which the present value of future cash flows, or some other fair value measure, is less than the 
carrying value of the respective asset. 
 
At August 31, 2006, the Company management determined that the value of the licenses had become 
impaired since the Company was no longer pursuing stem cell research. The balance of $27,500 has 
been charged to operations, and is included in expenses on the operating statement for the nine months 
ended August 31, 2006. 
 
Note 4 - Notes Payable (Including Related Parties)
 
As of November 30, 2005, an officer and director of the Company loaned the Company a total of 
$4,313 to pay for general and administrative expenses. The loan bears no interest and is due 
upon demand. As of August 31, 2006, the amount owed is $1,313. 
 
In July, 2006, an officer of the Company loaned the Company $17,700. The loan bears no interest 
and is due upon demand. As of August 31, 2006, the amount owed is $17,700. 
 
Note 5 - Deferred Revenues (Including Related Parties)
 
On May 1, 2004, the Company entered into an agreement with Financialnewsusa.com, Inc., to 
develop content for its' Biodefense Industry News. Financialnewsusa.com, Inc. is a 
related party due to a common officer and director. 
 
The deferred portion of the agreement described in Note 2 totals $37,500 at August 31, 2006. 
 
Note 6 - Comprehensive income
 
Accounting principles generally require that recognized revenues, expenses, gains and losses be 
included in net income. Although certain changes in assets and liabilities, such as unrealized gains 
and losses on available for sale securities are reported as a separate component of the equity section 
of the balance sheet, such items, along with net income, are components of comprehensive income. 
 
The components of other comprehensive income and related tax effects for the year ended November 30, 
2005 are unrealized holding gain on available for sale securities, net of tax benefit of $19,150, for a net 
comprehensive loss of $30,850. 
 
-15-


US Biodefense, Inc.
Notes to Financial Statements
 
Note 7 - Income Taxes        
 
The income tax provision reflected in the statement of operations consists of the following components
for the year ended November 30, 2005:        
 
                   Current income taxes payable:        
                                                 Federal   $8,780     
                                                 State   816     
    9,596     
 
                   Deferred tax expense relating to change in        
                     unrealized gains (losses) on available        
                     for-sale securities:        
                                                 Federal   17,500     
                                                 State   1,550     
    19,050     
 
                   The items accounting for the difference between income taxes computed at the federal statutory
                   rate and the provision for income taxes as follows:        
        Impact on
    Amount   Rate
                   Income tax at federal rate   (12,742)    35.00% 
                   State tax, net of federal effect   815    -2.24% 
                   Permanent differences   70,020    -192.33% 
                   Net operating loss deduction   (48,497)    133.21% 
 
    9,596    -26.36% 
 
Note 8 - Earnings per share        
 
Basic earnings per share are calculated by dividing net income by the weighted average number
of common shares outstanding during the period.        
 
Note 9 - Concentrations        
 
Financialnewsusa.com, Inc. is a related party due to a common officer and director, and represented
40% of the revenues generated by the Company for the nine months period ended August 31, 2006.
 
Note 10- Other Information        
 
During August, 2006, the Company incorporated Emergency Disaster Systems, Inc. The Company is a
retailer of emergency disaster equipment.        
 
Note 11 - Common Stock Transactions        
 
During the nine months ended August 31, 2006, the Company issued 2,000,000 shares of common stock
and received proceeds of $200,000.        
 
During the nine months ended August 31, 2006, the Company issued 6,755,000 shares of common stock
to three entities as consulting fees totaling $270,200.        
-16-


Item 2. Management's Discussion and Plan of Operation
 
Forward-Looking Statements
 
                   This Quarterly Report contains forward-looking statements about US Biodefense, Inc.’s business, financial 
condition and prospects that reflect management’s assumptions and beliefs based on information currently available. 
We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of 
our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such 
expectations should materialize, UBDE’s actual results may differ materially from those indicated by the forward- 
looking statements. 
 
                   The key factors that are not within our control and that may have a direct bearing on operating results include, 
but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise 
capital in the future, the retention of key employees and changes in the regulation of our industry. 
 
                   There may be other risks and circumstances that management may be unable to predict. When used in this 
Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar 
expressions are intended to identify forward-looking statements, although there may be certain forward-looking 
statements not accompanied by such expressions. 
 
Overview
 
                   We were incorporated in the State of Utah on June 29, 1983, under the name Teal Eye, Inc. We merged with 
Terzon Corporation and changed our name to Terzon Corporation in 1984. We subsequently changed our name to 
Candy Stripers Candy Corporation. We were engaged in the business of manufacturing and selling candy and gift items 
to hospital gift shops across the country. We were traded Over-the-Counter Bulletin Board for several years. In 1986 
we ceased the candy manufacturing operations and filed for Chapter 11 Bankruptcy protection. After emerging from 
Bankruptcy in 1993, we remained dormant until January 1998, when we changed our name to Piedmont, Inc. On May 
13, 2003, we filed an amendment to our Articles of Incorporation to change our name from Piedmont, Inc. to US 
Biodefense, Inc. We are a registered government contractor with the Department of Defense Logistics Agency that is 
focused on designing ad developing homeland security and biodefense products. 
 
                   On August 7, 2006, we completed the acquisition of Emergency Disaster Systems, Inc., a California 
corporation engaged in the business of disaster mitigation and emergency preparedness. We purchased a 100% interest 
in EDS for an aggregate of $25,000 in cash. EDS was originated by Charles Wright in 1989 to provide earthquake 
preparedness supplies to communities in California. EDS currently serves Emergency Medical Services and mass 
casualty rapid response systems, as well as local communities, government agencies and Fortune 500 companies with 
innovative emergency preparedness technology, systems and services. EDS is currently a wholly-owned subsidiary of 
US Biodefense. 
 
Results of Operations
 
Revenues
 
                   Our aggregate revenues for the three months ended August 31, 2006 were $75,469. Revenues consisted of 
$6,667 attributable to the October 15, 2005 renewal of the agreement with Financialnewsusa.com, a related party, to 
provide consulting services to them in exchange for $40,000, for which we were paid in advance the entire balance of 
the contract. We also recognized $37,500 in deferred revenues attributed to stock received in advance for services to be 
provided, which stock was received on May 11, 2005. The remainder of revenues earned in the three and nine months 
ended August 31, 2006, $31,302, was generated from our wholly-owned subsidiary, Emergency Disaster Systems, Inc., 
which we acquired in August of 2006. After accounting for cost of sales for the three month period ended August 31, 
2006, in the amount of $25,415, our gross profit was $50,054. 
 
                   During the three month period ended August 31, 2005, we generated revenues of $25,000, which we earned 
from our October 15, 2005 agreement with Financialnewsusa.com. Without cost of sales incurred during the period, our 
gross profit was $25,000. 
-17-


                   In the nine months ended August 31, 2006, we generated total revenues of $115,469, of which $31,302 was 
generated from sales by EDS, our wholly-owned subsidiary, $37,500 was earned from our May 11, 2005 agreement, for 
which stock was received as payment and $46,667 was earned from our October 15, 2006 agreement with 
Financialnewsusa.com. Taking into consideration cost of sales of $25,415 during the nine month period ended August 
31, 2006, our gross profit was $90,054. 
 
                   We generated $104,167 in revenues during the nine month period ended August 31, 2005. All of these 
revenues were earned from our service agreements with Financialnewsusa.com, a related party. Our resultant gross 
profit was $104,167 during this period. 
 
                   We cannot guarantee that we will be able to attract future customers and continue to generate sales. In the year 
ago period, we did not generate any revenues. 
 
Expenses
 
                   Total expenses for the three months ended August 31, 2006 were $379,438, consisting materially of $270,200 
for stock issued to consultants for services and $86,738 in general and administrative expenses. Additionally, we have 
recorded $22,500 as an impairment to our license agreements related to stem cell research. In the comparable year ago 
three month period ended August 31, 2005, our total expenses were $45,217, consisting primarily of $42,217 in general 
and administrative expenses and $3,000 in general and administrative expenses paid to a related party. We believe total 
expenses for the three months ended August 31, 2006 were significantly higher than the comparable period ended 
August 31, 2005 because of our acquisition of EDS and the hiring of independent consultants in an effort to increase our 
revenue generating potential and explore additional business ventures. 
 
                   During the nine months ended August 31, 2006, we incurred $413,310 in total expenses, of which $270,200 is 
attributable to stock issued for consulting services, $93,939 was paid for general and administrative costs, research and 
development costs of $23,171 was paid, $22,500 was recorded as an impairment of license agreements and $3,500 was 
paid to a related party for general and administrative fees. In the year ago nine month period ended August 31, 2005, 
we incurred $114,385 in total expenses, all of which was related to general and administrative expenses in the amount 
of $111,385 and general and administrative expenses paid to a related party in the amount of $3,000. As was the case 
during the three months ended August 31, 2006, our acquisition of EDS and the hiring of outside consultants 
contributed to the significant increase in aggregate expenses. 
 
Net Income (Loss)
 
                   We incurred a net loss of $329,384 for the most recent quarter ended August 31, 2006. In comparison, we 
incurred a net loss from operations in the amount of $20,217 in the year ago three month period. The key factor 
providing this change: namely, our expenses were significantly higher in the current period as opposed to a year ago 
because of stock issued to consultants and the impairment of assets. 
 
                   For the nine months ended August 31, 2006, we incurred a net loss of $323,256, as opposed to a net loss of 
$10,218 in the prior nine month period ended August 31, 2005. The difference is attributable mainly to the level of 
expenditures in the period ended August 31, 2006 being higher in the current period. 
 
Liquidity and Capital Resources 
 
                   We have limited cash on hand, in the amount of $69,035 as of August 31, 2006, and may be unable to continue 
operations for the next at least 12 months if we are unable to generate revenues or obtain capital infusions by issuing 
equity or debt securities in exchange for cash. If we are unable to obtain capital through issuances of equity or debt, 
David Chin, a shareholder and President of our company, has verbally agreed to loan us cash, which shall bear no 
interest and be due upon demand. As of August 31, 2006, David Chin loaned us a total of $4,312 to pay for general and 
administrative expenses. The loan bears no interest and is due upon demand. As of August 31, 2006, the amount owed 
is $1,313. We have no formal written agreement with Mr. Chin for any further loans, and we cannot guarantee you that 
we will be able to enforce our verbal agreement. 
 
                   On August 7, 2006, we sold 2,000,000 shares of our restricted common stock at a price per share of $0.10, for 
gross cash proceeds of $200,000, to Equity Solutions, Inc., a California corporation. This sale was conducted privately 
between US Biodefense and Equity Solutions, not involving any solicitation or advertising, and was not underwritten. 
 
-18-


                   Notwithstanding cash provided by our President and received from Equity Solutions, there can be no assurance 
that we will be able to secure additional funds in the future to stay in business. Our independent registered public 
accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited 
operations. 
 
                   We have also paid outside consultants with our common stock in lieu of cash for services provided to us. As 
of August 31, 2006, we have issued an aggregate of 6,775,000 shares of our common stock for aggregate consulting 
fees in the amount of $270,200. 
 
                   There are no known trends, events or uncertainties that have had or that are reasonably expected to have a 
material impact on our revenues from continuing operations. 
 
                   Our management does not anticipate the need to hire additional full- or part- time employees over the next 12 
months, as the services provided by our officers and directors appear sufficient at this time. We believe that our 
operations are currently on a small scale that is manageable by a few individuals. While we believe that the addition of 
employees is not required over the next 12 months, we intend to hire independent contractors to perform research 
activities and market any potential products and services we may develop. 
 
                   We do not have any off-balance sheet arrangements. 
 
                   We currently do not own any significant plant or equipment that we would seek to sell in the near future. 
 
                   We have not paid for expenses on behalf of any of our directors. Additionally, we believe that this fact shall 
not materially change. 
 
Item 3. Controls and Procedures
 
                   We maintain a set of disclosure controls and procedures designed to ensure that information required to be 
disclosed in our reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within 
the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of 
ensuring that this information is accumulated and communicated to our management, including our chief executive 
officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. 
 
                   Based upon their evaluation as of the end of the period covered by this report, David Chin, who serves as our 
chief executive officer and chief financial officer, concluded that our disclosure controls and procedures are not 
effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, 
summarized, and reported within the time periods specified in the SEC rules and forms. 
 
                   Our board of directors was advised by E. Randall Gruber, CPA, PC, our independent registered public 
accounting firm, that during their performance of audit procedures for 2005 E. Randall Gruber, CPA, PC identified a 
material weakness as defined in Public Company Accounting Oversight Board Standard No. 2 in our internal control 
over financial reporting. 
 
                   This deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely 
identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. 
However, our size prevents us from being able to employ sufficient resources to enable us to have adequate segregation 
of duties within our internal control system. Our management is required to apply their judgment in evaluating the cost- 
benefit relationship of possible controls and procedures. 
 
-19-


PART II - OTHER INFORMATION
 
Item 2. Unregistered Sales of Equity Securities
 
     On August 7, 2006, we sold 2,000,000 shares of our restricted common stock at a price per share of $0.10, for
gross cash proceeds of $200,000, to Equity Solutions, Inc., a California corporation, pursuant to a Stock Purchase
Agreement. This sale was conducted privately between US Biodefense and Equity Solutions, not involving any
solicitation or advertising, and was not underwritten. At the time of the issuance, Equity Solutions was given, and had
fair access to, information about our company. The shares bear a restrictive transfer legend. The issuance of stock to
Equity Solutions was made in accordance with an exemption from registration contained in Section 4(2) of the
Securities Act of 1933.
 
Item 6. Exhibits and Reports on Form 8-K
 
Exhibit    
Number      Name and/or Identification of Exhibit
 
3      Articles of Incorporation & By-Laws
                 a. Articles of Incorporation of Teal Eyes, Inc. Incorporated by reference herein filed as Exhibit
                 (a) to Form 10SB12G filed on September 1, 2000.
                 b. Amendment to Articles of Incorporation of Teal Eyes, Inc. Incorporated by reference herein
                 filed as Exhibit (b) to Form 10SB12G filed on September 1, 2000.
                 c. Amendment to Articles of Incorporation of Terzon Corporation. Incorporated by reference
                 herein filed as Exhibit (c) to Form 10SB12G filed on September 1, 2000.
                 d. Amended and Restated Articles of Incorporation of Candy Stripers Candy Corp. Incorporated
                 by reference herein filed as Exhibit (d) to Form 10SB12G filed on September 1, 2000.
                 e. By-Laws of the Company. Incorporated by reference herein filed as Exhibit (e) to Form
                 10SB12G filed on September 1, 2000.
                 f. Certificate of Amendment to Articles of Incorporation filed May 13, 2003. Incorporated by
                 reference herein filed as Exhibit 3 to Form 10-QSB filed on July 15, 2003.
 
31      Rule 13a-14(a)/15d-14(a) Certifications
                 David Chin
 
32      Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
 
 
Date of    
Form 8-K      Item(s) Reported
 
08/14/2006      Items 2.01, 3.02 and 9.01
 
08/30/2006      Items 1.01, 5.02 and 9.01
 
-20-


SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

US BIODEFENSE, INC.
(Registrant)
 
October 14, 2006

Signed:   /s/ David Chin   President and
Print:   David Chin   Director
 
Signed:   /s/ David Chin   Secretary and
Print:   David Chin   Director
 
Signed:   /s/ David Chin   Treasurer and
Print:   David Chin   Director

-21-