ubde10-qsb20070831.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
 
FORM 10-QSB

(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, 2007     
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: 60,304,047


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    20 
                     Item 6. Exhibits    20 
SIGNATURES    21 
 
 
-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 March 15, 2007. 
 
          The accompanying notes are an integral part of these consolidated financial statements. 
 
-3-


US Biodefense, Inc. 
Balance Sheet

ASSETS    (Unaudited)     
    August 31,    November 30, 
    2007    2006 
Current assets         
   Cash and cash equivalents    $18,516    $22,663 
   Marketable securities    47,500    73,00 
   Accounts receivable, net of allowance of $20,000    34,720    54,827 
   Inventory    66,691    75,355 
 
         Total current assets    167,427    225,845 
 
Property and equipment, net of accumulated depreciation    1,800    2,418 
Customer list    7,500    7,500 
Deposits    1,000    1,000 
 
         Total assets    177,727    236,763 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)         
 
Current liabilities         
   Accounts payable and accrued expenses    59,490    19,278 
   Notes payable – Related party    185,500    -- 
   Deferred revenues    --    25,000 
 
         Total current liabilities    244,990    44,278 
 
Stockholders’ equity:         
   Common stock 100,000,000 shares authorized, $.0001         
         par value, 60,304,047 and 39,059,047 share issued and outstanding    6,030    3,906 
   Additional paid in capital    4,722,910    4,270,684 
   Other comprehensive deficit    (52,500)    (27,000) 
   Accumulated deficit    (4,743,703)    (4,055,105) 
 
         Total stockholders’ equity (deficit)    (67,263)    192,485 
 
         Total liabilities and stockholders’ equity (deficit)    $177,727    $236,763 
 
See accompanying notes to financial statements
 
 
-4-


US Biodefense, Inc.
Statements of Operations
For the three and nine
months ended August 31, 2007 and 2006 
(Unaudited)

    Three months ended   Nine months ended
    August 31,   August 31,
    2007   2006   2007   2006
 
Revenues                 
Revenues from sales of tangible products    $34,864    $31,302    $162,751    $31,302 
Revenues from services    --    37,500    25,000    37,500 
Revenues – Related parties    --    6,667    --    46,667 
     Total revenues    34,864    75,469    187,751    115,469 
Cost of tangible products sold    21,316    25,415    107,183    25,415 
    13,548    50,054    80,568    90,054 
Research and development expenses    --    --    --    23,171 
General and administrative expenses    86,264    86,738    314,816    93,939 
General and administrative expenses –                 
 Paid by issuance of common stock    17,000    270,200    454,350    270,200 
General & administrative expenses –                 
 Related party    --    22,500    --    22,500 
     Total expenses    103,264    379,438    769,166    413,310 
Net income (loss)    $(89,716)    $(329,384)    $(688,598)    $(323,256) 
Weighted average number of shares                 
 outstanding    58,970,713    34,885,714    48,681,547    31,831,269 
Basic and diluted net income (loss)                 
 per common share    $(0.00)    $(0.01)    $(0.01)    $(0.01) 
 
See accompanying notes to financial statements
 
 
-5-


US Biodefense, Inc.
Statement of Cash Flows
For the nine months ended August 31, 2007 and 2006 
(Unaudited)

    2007   2006
 
Cash flows from operating activities         
Net income (loss)    $(688,598)    $(323,256) 
 Adjustments to reconcile net loss to net cash used in         
        operating activities:         
       Depreciation    618    59 
       Impairment of assets    --    22,500 
       Stock issued for payroll – Related party    100,000    -- 
       Stock issued for services    354,350    270,200 
       Changes in operating assets and liabilities:         
         Accounts receivable    20,107    (15,727) 
         Inventory    8,664    (73,447) 
         Prepaid expenses    --    20,000 
         Bank overdraft    --    (3,947) 
         Accounts payable    40,212    7,374 
         Deferred revenues    (25,000)    (64,167) 
 
             Net cash used for (provided by) operating activities    (189,647)    (160,411) 
 
Cash flows from financing activities         
       Advances from related party, net    185,500    17,200 
       Proceeds from sale of common stock    --    200,000 
 
               Total cash flows from financing activities    185,500    217,200 
 
Cash flows from investing activities         
       Purchase of equipment    --    (2,477) 
       Purchase of licenses    --    (2,500) 
 
               Total cash flows used for investing activities    --    (4,977) 
 
Increase (decrease in) cash and cash equivalents    (4,147)    51,812 
 
Cash and cash equivalents, beginning of year    22,663    17,223 
 
Cash and cash equivalents, end of year    $18,516    $69,035 
 
Income taxes paid    $---    $--- 
Interest expense paid    $---    $--- 
 
Supplemental disclosure of non-cash financing activities         
       Common stock issued for services    $100,000    $-- 
       Common stock issued for executive salaries    354,350    270,200 
 
See accompanying notes to financial statements
 
 
-6-


US Biodefense, Inc.
Notes to Financial Statements
 
Note 1 - Background and Summary of Significant Accounting Policies 
 
Note 1 - Background and Summary of Significant Accounting Policies 
 
The accompanying unaudited financial statements have been prepared in accordance with 
generally accepted accounting principles for interim financial information and pursuant to the 
rules and regulations of the Securities and Exchange Commission ("SEC"). The accompany- 
ing financial statements for the interim periods are unaudited and reflect all adjustments 
(consisting only of normal recurring adjustments) which are, in the opinion of management, 
necessary for a fair presentation of the financial statements and operating results for the 
periods presented. These financial statements should be read in conjunction with the 
Company's financial statements for the years ended November 30, 2006 and 2005 and notes 
thereto contained in the Company's Annual Report on Form 10-KSB for the year ended 
November 30, 2006 as filed with the SEC. The results of operations for the six months 
ended August 31, 2007 are not necessarily indicative of the results of the full fiscal year 
ending November 30, 2007. 
 
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 six months ended May 31, 2007, include the 
accounts of the Company and its wholly-owned subsidiary Stem Cell Research Institute, 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, 2007 of $688,598 and at August 31, 2007, had an accumulated deficit 
of $4,743,703. 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. 
  
 
-7-


US Biodefense, Inc.
Notes to Financial Statements
 
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. 
 
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 
 
The Company recognizes revenue from the sale of products, and from the performance of services to both 
related and non-related parties. The Company recognizes revenue from the sale of products on the gross 
amount charged basis. Under this method of recording the sale of products, the cost of goods sold 
reflects the cost of the goods sold to the customer plus the Company's cost of executing the transaction. 
the Company has chosen this method since it takes ownership of the products that it purchases for 
resale and assumes the risks and rewards of ownership of the goods. 
 
For sale of products, revenue is generally recognized when persuasive evidence of an arrangement exists, 
delivery has occurred, the contract price is fixed or determinable, title and risk of loss has passed to the 
customer and collection is reasonably assured. The Company's sales are typically not subject to rights 
of return and, historically, sales returns have not been significant. 
 
Revenues from services are recognized upon provision of services to the customer. Unearned service 
revenue is deferred and recognized ratably over the duration of the service term. 
 
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. 
 
 
-8-


US Biodefense, Inc.
Notes to Financial Statements
 
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. 
 
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 nine months ended August 31, 2007, the Company 
has items that represent other comprehensive income. 
 
Advertising Costs 
 
Advertising costs are expensed as incurred. Advertising costs totaled $26,330 and $-0- for the nine 
months ended August 31, 2007 and 2006. 
 
 
-9-


US Biodefense, Inc.
Notes to Financial Statements
 
Shipping and Handling 
 
Costs incurred by the Company for shipping and handling are included in costs of revenues. 
 
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, 
2007 and 2006, the Company does not have any equity or debt instruments outstanding that can be 
converted into common stock. 
 
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 employee 
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 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 
 
 
-10-


US Biodefense, Inc.
Notes to Financial Statements
 
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 
 
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. 
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. 
 
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 February, 2006, the Financial Accounting Standards Board (the "FASB") issued Statement of 
Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Instruments" (SFAS 155), 
which amends SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," and 
SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of 
Liabilities." SFAS 155 allows financial instruments that have embedded derivatives to be accounted 
for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to 
 
 
-11-


US Biodefense, Inc.
Notes to Financial Statements
 
account for the whole instrument on a fair value basis. SFAS 155 also clarifies and amends certain 
other provisions of SFAS 133 and SFAS 140. This statement is effective for all financial instruments 
acquired or issued in the fiscal years beginning after September 15, 2006. The Company does not 
expect its adoption of this new standard to have a material impact on the Company's financial 
position, results of operations or cash flows. 
 
In March, 2006, the FASB issued SFAS No. 156 "Accounting for Servicing of Financial Assets - 
an amendment of FASB Statement No. 140" ("SFAS 156"). This statement was issued to simplify 
the accounting for servicing assets and liabilities, such as those common with mortgage securitization 
activities. The statement addresses the recognition and measurement of separately recognized servicing 
assets and liabilities and provides an approach to simplify hedge-like (offset) accounting. SFAS 156 
clarifies when an obligation to service financial assets should be separately recognized (as servicing 
asset or liability), requires initial measurement at fair value and permits an entity to select either the 
Amortization Method of the Fair Value Method. This statement is effective for fiscal years beginning 
after September 15, 2006. The Company does not expect it adoption of this new standard to have a 
material impact on the Company's financial position, results of operations or cash flows. 
 
In July, 2006, the FASB issued interpretation No. 48, "Accounting for Uncertainty in Income Taxes", 
("FIN 48"), which is effective for fiscal years beginning after December 15, 2006. FIN 48 clarifies the 
accounting for uncertainty in income taxes recognized in the financial statements in accordance with 
FASB Statement No. 109, "Accounting for Income Taxes." This interpretation prescribes a 
comprehensive model for how a company should recognize, measure, present, and disclose in its 
financial statements uncertain tax positions that the company has taken or expects to take on a tax 
return. The Company does not expect that the implementation of FIN 48 will have a material impact 
on its financial position, results of operations or cash flows. 
 
In September, 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which defines 
fair value, establishes a framework for measuring fair value in generally accepted accounting 
principles, and expands disclosures about fair value measurements. SFAS 157 is effective in fiscal 
years beginning after November 15, 2007. Management is currently evaluating the impact that the 
adoption of this statement will have on the Company's consolidated financial statements. 
 
In September, 2006, the FASB issued SFAS No. 158 "Employers' Accounting for Defined Pension and 
Other Postretirement Plans." This Statement requires recognition of the funded status of a single- 
employer defined benefit postretirement plan as an asset or liability in its statement of financial 
position. Funded status is determined as the difference between the fair value of plan assets and the 
benefit obligation. Changes in that funded status should be recognized in other comprehensive income. 
This recognition provision and the related disclosures are effective as of the end of the fiscal year ending 
after December 15, 2006. The Statement also requires the measurement of plan assets and benefit 
obligations as of the date of the fiscal year-end statement of financial position. This measurement 
provision is effective for fiscal years ending after December 15, 2008. The Company does not expect 
its adoption of this new standard to have a material impact on the Company's financial position, results 
of operations or cash flows. 
 
On September 13, 2006 the Securities and Exchange Commission ("Sec") issued Staff Accounting 
Bulletin No. 108 ("SAB 108") which provides interpretive guidance on how the effects of the carryover 
or reversal of prior year misstatements should be considered in quantifying a current year misstatement. 
SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not expect 
this pronouncement to have a material impact on the Company's financial statements. 
 
 
-12-


US Biodefense, Inc.
Notes to Financial Statements
 
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, $50,000 for the year ended November 30, 2006, and $25,000 
for the nine months ended August 31, 2007.   
 
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 May 31, 2007, the fair market value of common equity securities 
with a cost of $100,000 was $47,500. The unrealized loss of $52,500, 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. 
 
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.     
 
As of 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. This determination was based 
on the resignation of the head of the Company's stem cell research department and the inability to locate 
a replacement at an economically feasible compensation package. The resignation was effective during 
the Company's third quarter.     
 
                   Balance, May 31, 2006        $ 30,000     
                   Additions        2,500     
                   License balance due, but cancelled        (10,000)       
        $ 22,500     
 
 
-13-


US Biodefense, Inc. 
Notes to Financial Statements 
 
The Company had accrued expenditures related to the stem cell technology licenses in the amount of 
$79,167. These expenditures related to the second stage of licensing, after the initial evaluation phase. 
Since the Company in no longer pursuing stem cell research, the second stage will not be undertaken, 
and the related liabilities have been recorded as forgiveness of debt, and is included as a reduction of 
total expenses on the Company's Statement of Operations at November 30, 2006. 

Note 4 - Property and Equipment   
 
Property and equipment consists of the following at February 28, 2007:   
 
                                        Furniture and fixtures (at cost)    $ 2,477 
                                        Accumulated depreciation     (677) 
     1,800 

Note 5 - 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 six months ended August 31 
2007 are unrealized holding loss on available for sale securities in the amount of $52,500. 
 
Note 6 - Income Taxes     
 
The income tax provision reflected in the statement of operations consists of the following components 
for the year ended November 30, 2006:         
 
          Current income taxes payable:         
          Federal    $(8,780)     
          State    (816)     
    (9,596)     
 
          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    (72,812)    35.00% 
          State tax, net of federal effect    (12,825)    6.00% 
          Net operating loss deduction    78,041    -45.00% 
 
    (9,596)    -4.00% 

Note 7 - 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. 
 
 
-14 -


US Biodefense, Inc.
Notes to Financial Statements 

Note 8 - Related parties and Concentrations   
 
The Company owes related parties $185,500 at August 31, 2007. The notes are non-interest bearing, 
and are due on demand.     
 
Note 9 - Acquisition     
 
On August 7, 2006, the Company acquired 100% of the outstanding stock of Emergency Disaster 
Systems, Inc. (EDS) a retailer of emergency disaster equipment. EDS was incorporated on July 17, 
2006, by its majority stockholder who had been in the disaster prepardness industry for over seventeen 
years experience. The Company paid $25,000 in cash for the stock. The Company has recorded the 
transaction as follows:     
 
                   Inventory    $ 17,50   
                   Customer list     7,500   
    $ 25,000   

Note 10 - Common Stock Transactions   
 
During the year ended November 30, 2006, the Company issued 2,000,000 shares of common stock 
and received proceeds of $200,000.   
 
During the year ended November 30, 2006, the Company issued 6,755,000 shares of common stock 
to two entities as consulting fees totaling $270,200. The shares were issued as follows: 

        Value per        
    Shares   Share       Total
Date Issued   Issued   $ Valuation method   $
 
June 8, 2006    10,000          0.04    Performance commitment date    400 
June 20, 2006    100,000          0.04    Performance commitment date    4,000 
June 29, 2006    125,000          0.04    Performance commitment date    5,000 
July 5, 2006    20,000          0.04    Performance commitment date    800 
July 12, 2006    500,000          0.04    Performance commitment date    20,000 
July 24, 2006    1,000,000          0.04    Performance commitment date    40,000 
July 25, 2006    1,000,000          0.04    Performance commitment date    40,000 
August 1, 2006    2,000,000          0.04    Performance commitment date    80,000 
August 31, 2006    2,000,000          0.04    Performance commitment date    80,000 
    6,755,000            270,200 

The Company applies the provisions of EITF 96-18, "Accounting for Equity Instruments that are issued to 
Other Than Employees for Acquiring , or in conjunction with Selling Goods or Services" (EITF 96-18) for 
our non-employee stock-based awards. Under EITF 96-18, the measurement date at which the fair value 
of the stock-based award is measured is equal to the earlier of (1) the date at which a commitment for 
performance by the counterparty to earn the equity instrument is reached or (2) the date at which the 
counterparty's performance is complete. We recognize stock-based compensation expense for the fair 
value of the vested portion of the non-employee awards in our statements of operations. The performance 
commitment date was July 18, 2006. 
 
 
-15-


US Biodefense, Inc.
Notes to Financial Statements
 
During the three months ended May 31, 2007, the Company issued 9,245,000 shares of common stock 
to two entities as consulting fees totaling $337,350. 
 
During the three months ended May 31, 2007, the Company issued 10,000,000 shares of common stock 
to its Chief Executive Officer for salary totaling $100,000. 
 
During the three months ended August 31, 2007, the Company issued 2,000,000 shares of common stock 
to an individual as consulting fees totaling $17,000. 
 
Note 11 - Other Information 
 
The Company has filed an information statement on Schedule 14C to formally announce that all shareholders 
of record of U.S. BioDefense, Inc. as of September 7, 2007 will receive a dividend share distribution of 
one (1) share of Emergency Disaster Systems, Inc. for every one hundred (100) shares of U.S. BioDefense, 
Inc. owned. The actions were approved by the Board of Directors and are expected to be ratified by the 
majority shareholder on or before September 27, 2007. 
 
 
-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. 
 
          During the year ended November 30, 2006, we impaired various licenses related to our stem cell research 
operations. This impairment was due to the resignation of our stem cell research department head and our inability to 
engage a replacement. As a result, we do not intend to continue to pursue stem cell research initiatives. However, we 
do intend to continue to evaluate additional biological research programs for the possibility of commercialization. 
 
          On August 7, 2006, we completed the acquisition of Emergency Disaster Systems, Inc., a California 
corporation incorporated on July 19, 2006. EDS provides mitigation services, emergency preparedness, and first 
response products to communities, government agencies, corporations and healthcare organizations. We purchased a 
100% interest in EDS for an aggregate of $25,000 in cash. The EDS system, encompassing CERT bags, containers and 
cabinets was initially designed and originated by Charles Wright in 1989 to provide earthquake preparedness supplies to 
communities in California. EDS provides mitigation services, emergency preparedness, and first response products to 
communities, government agencies, corporations and healthcare organizations. The basic kits contain a three day 
supply of food and water rations, in addition to first aid, lighting, hygiene and personal care items and can be scaled for 
individual use or for a family. EDS also sells a stand-alone emergency radio siren product. We believe these items help 
mitigate a person’s vulnerability to disasters such as fires, floods and earthquakes. 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. Charles Wright, 
with his 18 years of experience, currently serves as Vice President and Director of Emergency Disaster Systems, Inc., 
which is a wholly-owned subsidiary of US Biodefense. 
 
          On September 28, 2007, we distributed to all shareholders of record as of September 7, 2007, a dividend share 
distribution of one share of Emergency Disaster Systems, Inc. for every 100 shares of U.S. BioDefense, Inc. owned. 
Shareholders that would own fractional shares were paid in cash for the estimated market value of the EDS stock, or 
$0.80 per share. 
 
 
-17-


Results of Operations 
 
Revenues 
 
          Our revenues are derived primarily from three sources: sales of tangible products, services and related parties. 
Sales of tangible products are attributable solely to Emergency Disaster Systems, Inc., our wholly-owned subsidiary that 
we acquired on August 7, 2006. Revenue from services is derived from the recognition of deferred revenues from stock 
received in advance for services to be performed by us to Diamond I. Finally, revenue from related parties is solely 
from our October 15, 2005 contract with Financialnewsusa.com, a related party, to provide biodefense-related industry 
news and information to them in exchange for $40,000, for which we were paid in advance the entire balance of the 
contract. 
 
          During the three months ended August 31, 2007, we generated aggregate revenues of $34,864, compared to 
total revenues of $75,469 during the year ago three month period ended August 31, 2006. This 54% decrease in total 
revenues, or $40,605, is materially attributable to the full recognition of revenues from our previously prepaid contracts 
for services with Diamond I and Financialnewsusa.com, which contributed $44,167 in revenues during the three month 
period ended August 31, 2006. Despite the overall decline in revenues, however, revenue from tangible products 
attributable to EDS increased $3,562, or 11% from the prior period. 
 
Gross Profit 
 
          In association with sales of tangible products related specifically to our EDS operations, we incurred cost of 
goods sold in the amount of $21,316 during the three months ended August 31, 2007. This amount represents a margin 
of approximately 39% on sales of tangible products, and a gross margin of 39% on total revenues for the period ended 
August 31, 2007. After factoring cost of goods sold, our gross profit was $13,548 during the three months ended 
August 31, 2007. 
 
          In the year ago period ended August 31, 2006, cost of goods sold amounted to 25,415, attributable solely to 
sales recognized from EDS. Our gross margin on sales of tangible products is therefore approximately 19%, and a gross 
margin of 66% on total revenues for the period ended August 31, 2006. After factoring cost of goods sold, our gross 
profit was $50,054 during the three months ended August 31, 2006. 
 
Expenses 
 
          General and administrative expenses during the three months ended August 31, 2007 and 2006 were comprised 
of three main categories: (1) expenses paid in the form of common stock in lieu of cash for services, (2) expenses 
incurred related to the impairment of assets and (3) miscellaneous expenses related to the general operation of our 
business. General and administrative expenses decreased by 73%, or $276,174, year over year from $379,438 in the 
quarter ended August 31, 2006 to $103,264 in the three months ended August 31, 2007. Or management believes the 
decrease in these expenditures are correlated with our reduction in the number of employees and compensation paid 
with common stock in lieu of cash. General and administrative expenses remained comparatively stable, with $86,264 
incurred in the three months ended August 31, 2007, and $86,738 incurred in the year ago three months ended August 
31, 2006. Despite the overall decline in expenses, we expect to continue to incur general and administrative expenses 
for the foreseeable future, although we cannot estimate the extent of these costs. 
 
Losses 
 
          Our net loss from operations totaled $89,716 for the three months ended August 31, 2007, compared to a net 
loss of $329,384 for the three months ended August 31, 2006. This represents a narrowing deficit of 73%, or $239,668, 
in a year-to-year comparison. Although we anticipate incurring ongoing operating losses, we expect these losses to 
continue narrow in year-to-year comparison as we generate increased revenues and as expenses plateau over the next 
several years. However, we cannot guarantee the accuracy of our expectations. 
 
 
-18-


Liquidity And Capital Resources 
 
          We have limited cash on hand, and may be unable to continue operations for the next at least 12 months if we 
are unable to generate greater revenues or obtain capital infusions by issuing equity or debt securities in exchange for 
cash. As of August 31, 2007, we had $18,516 in cash, $47,500 in marketable securities, $34,720 in net accounts 
receivables and $66,691 in saleable inventory. If we are unable to generate sufficient cash flows from sales of our 
products and services, collect outstanding accounts receivable, or 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, 2007, David Chin loaned us a total of $185,500 to pay for general 
and administrative expenses. The loan bears no interest and is due upon demand. As of August 31, 2007, the amount 
owed was $185,500. 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. Notwithstanding this, 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. 
 
          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. 
 
 
-19-


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 2006 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. 
 
PART II - OTHER INFORMATION
 
Item 6. Exhibits and Reports on Form 8-K
 
3                   Articles of Incorporation & By-Laws 
                             a.    Articles of Incorporation of Teal Eyes, Inc. * 
                             b.    Amendment to Articles of Incorporation of Teal Eyes, Inc. * 
                             c.    Amendment to Articles of Incorporation of Terzon Corporation. * 
                             d.    Amended and Restated Articles of Incorporation of Candy Stripers Candy Corp. * 
                             e.    By-Laws of the Company. * 
                             f.    Certificate of Amendment to Articles of Incorporation filed May 13, 2003 ** 
 
10                   Material Contracts 
                             a.    Stock Purchase Agreement with Charles Wright *** 
                             b.    Stock Purchase Agreement with Equity Solutions *** 
                             c.    Consulting Agreement with Charles Wright **** 
 
31                   Rule 13a-14(a)/15d-14(a) Certifications 
 
32                   Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350) 
 
 *                   Incorporated by reference herein filed as en exhibit to Form 10SB12G filed on September 1, 2000. 
 **                   Incorporated by reference herein filed as Exhibit 3 to Form 10-QSB filed on July 15, 2003. 
 ***                   Incorporated by reference herein filed as an exhibit to Form 8-K filed on August 14, 2006 
 ****                   Incorporated by reference herein filed as an exhibit to Form 8-K filed on August 30, 2006 
 
 
-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 22, 2007
 
                              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-