TheraBiogen, Inc. - FORM 10-Q/A

Attached files

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EX-32.2 - EXHIBIT 32.1 - TheraBiogen, Inc.	ex321.htm
EX-31.1 - EXHIBIT 31.1 - TheraBiogen, Inc.	ex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10- Q/A

(Mark One)

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended May 31, 2010

[ ] 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 000-53008

THERABIOGEN, INC.

(Exact name of registrant as specified in its charter)

NEVADA	98-0559606
State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

1365 N. Courtenay Parkway, Suite A	32953
Merritt Island, FL
(Address of principal executive offices)	(Zip Code)

321-735-0265

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act: NONE.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 Par Value Per Share.

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

[ x ]Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [x] Yes [ ] No

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

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ x ]

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

As of July 10, 2010, we had 34,986,000 shares of common stock outstanding.

INDEX

		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Balance Sheets – As of May 31, 2010 (Unaudited) and February 28, 2010 (Audited)	1

	Statements of Operations for the three months ended May 31, 2010 and 2009, and for the period from inception to May 31, 2010 (Unaudited)	2

	Statements of Cash Flows for the three months ended May 31, 2010 and 2009, and for the period from inception to May 31, 2010 (Unaudited)	3

	Notes to the Financial Statements (unaudited)	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17


PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	19

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

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits	19

PART I.

ITEM 1. FINANCIAL INFORMATION

THERABIOGEN, INC.

(A Development Stage Company)

BALANCE SHEETS

ASSETS

	May 31, 2010			February 28, 2010
CURRENT ASSETS	(unaudited)
Cash and cash equivalents	$	10,151		$	4,137
Deposits		-			13,270
Employee advances		35,000			-
Interest receivable - related party		713			411
Inventory		25,265			877
Note receivable - related party		10,000			10,000
Total Current Assets		81,129			28,695

OTHER ASSETS
License, net of amortization of $185,195 and $161,993		2,243,005			2,266,207
Mineral rights		7,349			7,349
Goodwill		101,183			101,183
Total Other Assets		2,351,537			2,374,739

TOTAL ASSETS	$	2,432,666		$	2,403,434

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	85,186		$	89,623
Accrued interest		3,164			1,006
Accrued interest - related parties		89,991			69,553
Payroll taxes payable		18,007			9,905
Notes payable - current portion, net of discount of 16,807		133,193			-
Notes payable-related parties - current portion		272,500			272,500
Total Current Liabilities		602,041			442,587

LONG-TERM LIABILITIES
Notes payable		20,000			20,000
Notes payable-related parties		388,107			374,000
Total Long-Term Liabilities		408,107			394,000

Total Liabilities		1,010,148			836,587

STOCKHOLDERS' EQUITY
Common stock, $0.001 par value. 150,000,000 shares authorized, 34,586,000 and		34,586			32,927
32,927,500 shares issued and outstanding at May 31, 2010 and February 28, 2010
Additional paid-in capital		3,405,596			2,689,422
Deficit accumulated during the development stage		(2,017,664	)		(1,155,502	)
Total stockholders' equity		1,422,518			1,566,847

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,432,666		$	2,403,434

See accompanying notes to financial statements.

THERABIOGEN, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(UNAUDITED)

	Quarter ended May 31, 2010			Quarter ended May 31, 2009			Inception to Date
REVENUE
Interest income	$	302		$	-		$	11,166
Total Revenue		302			0			11,166

OPERATING EXPENSES
General and administrative
Amortization		23,202			29,415			185,195
Bank fees		1,830			404			5,134
Consulting		711,149			29,500			1,298,000
Computer and internet expense		5,949			-			24,961
Insurance		21,908			2,169			89,338
Licenses and permits		7,275			300			16,028
Marketing and sales		11,500			21,896			89,008
Office expense		4,216			57			10,607
Payroll expense		33,935			-			65,081
Professional expenses		6,325			6,534			82,945
Rent		1,650			1,650			24,200
Testing		2,525			-			19,950
Other expenses		4,378			-			19,802

Total Operating Expenses		835,842			91,925			1,930,249

INCOME (LOSS) FROM OPERATIONS		(835,540	)		(91,925	)		(1,919,083	)
Other income and expenses:
Interest expense		6,184			-			7,190
Interest expense - related parties		20,438			7,023			91,391
Total other income and expenses		26,622			7,023			98,581

INCOME (LOSS) BEFORE INCOME TAX
Provision for income tax		-			-			-
NET INCOME (LOSS)	$	(862,162	)	$	(98,948	)	$	(2,017,664	)


Earnings per share
Basic	$	(0.02	)	$	(0.01	)
Diluted	$	(0.02	)	$	(0.01	)

Weighted Average shares
Basic		33,918,739			18,791,000
Diluted		35,626,543			19,191,000

See accompanying notes to financial statements

THERABIOGEN, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Quarter ended			Quarter ended			From
	May 31,			May 31,			inception
	2010			2009			To date
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(862,162	)	$	(98,948	)	$	(2,017,664	)
Adjustments to reconcile to net cash
used by operating activities:
Amortization expense		27,228			29,415			189,221
Stock options issued for services		530,000			-			695,000
Stock options issued for services		-			-			8,390
Changes in assets and liabilities
Interest receivable		(302	)		-			(713	)
Inventory		(24,388	)		-			(25,265	)
Deposits		13,270			-			-
Accounts payable and accrued expenses		(4,437	)		7,420			37,808
Accrued interest payable		22,596			7,023			94,555
Payroll taxes payable		8,102			-			18,007

Net cash used by operating activities		(290,093	)		(55,090	)		(1,000,661	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of license		-			-			(150,000	)
Advance to employee		(35,000	)					(35,000	)
Loan to related party		-			-			(10,000	)
Net cash used by investing activities		(35,000	)		-			(195,000	)

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from issuance of common stock		167,000			-			434,205
Proceeds from capital contribution		-			-			5,000
Proceeds from notes payable		150,000			-			170,000
Payment of note payable-related party		(6,000	)					(6,000	)
Proceeds from notes payable - related parties		20,107			65,000			596,607
Net cash provided by investing activities		331,107			65,000			1,205,812

Net increase (decrease) in cash		6,014			9,910			10,151

Cash and cash equivalents, beginning of period		4,137			871			-

Cash and cash equivalents, end of period	$	10,151		$	10,781		$	10,151

SUPPLEMENTAL CASH FLOW INFORMATION
Noncash transaction - issuance of common stock
in exchange for debt	$	-		$	-		$	11,000
Noncash transaction - issuance of common stock
in exchange for accrued interest	$	-		$	-		$	1,400
Noncash transaction - issuance of common stock
in exchange for Kushi Resources, Inc.	$	-		$	-		$	61,154

Noncash transaction - issuance of debt
in exchange for intangible asset	$	-		$	-		$	75,000
Noncash transaction - issuance of common stock
in exchange for intangible asset	$	-		$	-		$	2,203,200
Noncash transaction – debt discount credited to equity	$	20,833		$	-		$	20,833
Interest paid	$	-		$	-		$	-
Income taxes paid	$	-		$	-		$	-

See accompanying notes to financial statements.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Nature of Operations

Kushi Resources, Inc. (Kushi) was incorporated on October 3, 2005, under the laws of the State of Nevada. Kushi’s principal business has been the acquisition and exploration of mineral resources in northern British Columbia, Canada.

In November, 2009, Kushi announced that it had entered into an Agreement and Plan of Merger with TheraBiogen, Inc., a Nevada corporation, which was incorporated in Nevada in April 2000, and that merger closed on January 5, 2010. Kushi, as the surviving entity, changed its name to TheraBiogen, Inc. as part of the merger.

During 2007, TheraBiogen, Inc. entered into an exclusive licensing agreement with a California company, Nasal Therapeutics, Inc., to develop, manufacture, market and sell four homeopathic nasal sprays, THERAMAX™ Cold Relief, THERAMAX™ Flu Relief, THERAMAX™ Allergy Relief and THERAMAX™ Migraine Relief, on an exclusive basis in North America and with a right of first refusal for all other areas. The principal of Nasal Therapeutics, Inc., Dr. Charles Hensley, also developed the homeopathic nasal product ZICAM. Dr. Hensley also developed ZICAM Allergy and the nasal delivery systems used in the ZICAM product line extensions. Dr. Hensley founded Geltech, LLC., the company that launched ZICAM and made the product a household name. In 2001, Dr. Hensley and his partners sold their interest in Geltech to Matrixx Initiatives (MTXX).

The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable. The Company had not commenced significant operations as of May 31, 2010, and was considered an Exploration Stage Company, as defined by SEC Industry Guide 7, and follows FASB ASC Topic 270-10-599 (SFAS 7) Acco unting and Reporting by Development Stage Enterprises , where applicable.

In these notes, the terms Company, we, us, or our mean TheraBiogen, Inc., formerly Kushi Resources, Inc., the surviving entity in the merger.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for annual financial information and the instructions to Form 10-Q. In the opinion of management, the financial statements include all adjustments considered necessary for a fair presentation of the Company's financial position, as of May 31, 2010 and 2009, and its results of operations and cash flows for the quarters ended May 31, 2010 and 2009. As described in Note 3, effective January 5, 2010, the former TheraBiogen, Inc. merged into Kushi Resources, Inc., and Kushi Resources, Inc. changed its corporate name to TheraBiogen, Inc. For accounting purposes, this transaction was treated as an acquisition of Kushi Resources, Inc. and a recapitalization of the former TheraBiogen, Inc. The former TheraBiogen, Inc. is the accounting acquirer and the results of its operations carryover. Accordingly, the operations of Kushi Resources, Inc. are not carried over.

The Company uses the last day of February as its fiscal year end, and the basis for which these financial statements are presented. This represents a change from the fiscal year end of December 31 as used by the former TheraBiogen in its previously issued financial statements.

Exploration and Development Stage

The Company has not produced any revenues from its principal business and was an exploration stage company as defined by FASB ASC Topic 271-10-S99 at May 31, 2010. In an exploration stage company, management devotes most of its time to conducting exploratory work and developing its business.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION (continued)

Going Concern

The accompanying financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a development stage company, has incurred significant net losses and negative cash flows from operations since inception, and requires debt financing to fund operations. Management believes that current available resources will not be sufficient to fund the Company’s planned expenditures over the next twelve months.

The Company has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The Company’s continuation as a going concern and its ability to emerge from the exploration stage with any planned principal business activity is dependent upon the continued financial support of its shareholders and its ability to obtain the necessary equity financing and attain profitable operations. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations on its operations, through debt covenants or other restrictions.

The Company has not yet determined whether to proceed with its exploration activities after the merger with former TheraBiogen, Inc.

There can be no assurance that the Company will be able to raise additional funds, or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable terms, it may be unable to execute its business plan, the Company could be required to delay or reduce the scope of its operations, and the Company may not be able to pay off its obligations, if and when they come due.

These financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities or other adjustments that may be necessary should the Company not be able to continue as a going concern. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

For purposes of the balance sheet and statement of cash flows, the Company considers all amounts on deposit with financial institutions and highly liquid investments with maturities of 90 days or less to be cash equivalents. At May 31, 2010, the Company did not have any cash equivalents.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with FASB ASC Topic 830 (SFAS 52) Foreign Currency Translation , using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. During the quarter ended May 31, 2010, the Company incurred no foreign currency losses. The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive Income (Loss)

Comprehensive Income (loss) reflects changes in equity that results from transactions and economic events from non-owner sources. At May 31, 2010 and May 31, 2009, the Company has no items that represent a comprehensive income (loss) and, therefore, has not included a schedule of comprehensive income (loss) in these unaudited financial statements.

Inventory

Inventory at May 31, 2010 consists of bottles and spray tops purchased from a third party supplier and delivered to the Company’s contract manufacturer of the TheraMax™ products to be used in the final packaging of the products for distribution. Inventory is carried at the lower of cost or market on a first in, first out basis.

iMineral Property Costs

Kushi Resources, Inc. has been in the exploration stage since its inception on October 3, 2005 and has not yet realized any revenues from its planned operations. It was primarily engaged in the acquisition and exploration of mining properties as of May 31, 2010. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred . The Company assesses the carrying costs for impairment under FASB ASC Topic 350-30 (SFAS No. 144), Accounting for Impairment or Disposal of Long Lived Assets at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value.

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

License Agreement

The Company recorded an intangible asset for the cost of a license agreement entered into with Nasal Therapeutics, Inc. based on the consideration paid. The intangible asset is amortized on a straight-line basis over the 25 year life of the agreement. The Company evaluates for impairment when events and circumstances warrant in accordance with FASB ASC Topic 350-30, and an impairment loss will be recognized if the carrying amount of an intangible asset is not recoverable and its carrying amount exceeds its fair value. After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis.

Goodwill

The Company recorded goodwill as the excess of the consideration paid over the estimated fair values of the assets acquired and liabilities assumed in a business combination. The goodwill is not amortized, but is subject to an annual impairment test in accordance with FASB ASC Topic 350-20. The two step test first determines whether the carrying amount of the reporting unit exceeds the fair value of the reporting unit. If so, the next step is to measure the impairment loss as the difference between the implied fair value of the good will and the carrying amount of the reporting unit.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Asset Retirement Obligations

FASB ASC Topic 410-10 (SFAS 143), Accounting for Asset Retirement Obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Specifically, Topic 410-10 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and subsequently allocated to expense over the asset’s useful life. At May 31, 2010, the Company did not have any asset retirement obligations.

Financial Instruments

Foreign Exchange Risk

The Company may be subject to foreign exchange risk for transactions denominated in foreign currencies. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. The Company does not believe that it has any material risk due to foreign currency exchange.

Fair Value of Financial Instruments

The carrying amounts reported in the accompanying balance sheets of all financial instruments approximates their fair values because of the immediate or short-term maturity of these financial instruments or comparable interest rates of similar instruments. The Company follows newly issued accounting guidance relating to fair value measurements. This guidance establishes a framework for measuring fair value and expands disclosures about fair value measurements. This guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 -- quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

Level 2 -- inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 -- unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the unobservable inputs.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash deposits. At May 31, 2010 and February 28, 2010, the Company had $4,137 and $10,781, respectively in bank accounts fully insured by the FDIC. As part of its cash management process, the Company performs periodic evaluations of the relative credit standing of this financial institution. The Company has not experienced any losses in cash balances and does not believe it is exposed to any significant credit risk on its cash.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Estimates

The preparation of these unaudited financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these unaudited financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basic and Diluted Net (Loss) Per Common Share (“EPS”)

Basic net (loss) per share is computed by dividing the net (loss) attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted net income per common

share includes the potential dilution that could occur upon exercise of the options and warrants to acquire common stock computed using the treasury stock method which assumes that the increase in the number of shares is reduced by the number of shares which could have been repurchased by the Company with the proceeds from the exercise of the options and warrants (which were assumed to have been made at the average market price of the common shares during the reporting period).

Income Taxes

The Company accounts for income taxes in accordance with the Financial Accounting Standards Board ASC 740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement 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. A valuation allowance is recorded and deducted from deferred tax assets when the deferred tax assets are not expected to be realized based on currently available evidence. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Financial Accounting Standards Board has issued guidance on Accounting for Uncertainty in Income Taxes, FASB ASC 740, Income Taxes which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Management has concluded that the Company has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance.

When applicable, the Company will include interest and penalties related to uncertain tax positions in income tax expense.

Stock-Based Compensation

The Company adopted SFAS No. 123(revised) (ASC Topics 718 and 505), "Share-Based Payment", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. Topics 718 and 505 eliminate the option to use former APB 25’s intrinsic value method of accounting and requires recording expense for stock compensation based on a fair value based method. These topics also require excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

Operations for the period ended May 31, 2010 include $530,000 of stock-based compensation, arising from the granting of 1,325,000 common shares to various consultants of the Company as described in Note 6.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements:

In February 2010, the FASB issued Accounting Standards Update No. 2010-09 ("ASU 2010-09"), "Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements," which among other things amended ASC 855 to remove the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated. This change alleviates potential conflicts between ASC 855 and the SEC's requirements. All of the amendments in this update are effective upon issuance of this update. Management has included the provisions of these amendments in the financial statements.

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to be consistent with the May 31, 2010 presentation.

NOTE 3 – MERGER

On November 13, 2009, the Board of Directors of Kushi Resources, Inc. (the Company) entered into a merger agreement between the Company and the former TheraBiogen, Inc., a Nevada corporation, under which the former TheraBiogen, Inc. would merge into the Company, and the Company would change its corporate name to TheraBiogen, Inc. The merger and the corporate name change were approved unanimously by the Company's shareholders and was approved by a majority of the shareholders of the former TheraBiogen, Inc. by written consent. On December 16, 2009, the Board of Directors of the former TheraBiogen, Inc. approved the merger, obtained written consent of a majority of the former TheraBiogen, Inc. shareholders, and then filed a definitive Information Statement with the SEC on Form 14C disclosing the terms of the merger. The merger transaction closed on January 5, 2010, the effective date of the filing of the Certificate of Merger with the Secretary of State for Nevada.

Under the terms of the Agreement and Plan of Merger, each share of common stock of former TheraBiogen, Inc. issued and outstanding at the time of the merger was converted into one share of the common stock of Kushi Resources, Inc. In the merger, the Company changed its corporate name to TheraBiogen, Inc. Prior to the merger, The Company completed a 2.6 for 1 forward split of its common stock. The merger closed on January 5, 2010.

A total of 19,091,000 shares of the Company were issued to the previous shareholders of TheraBiogen, Inc. in the merger. Each share of common stock of the Company issued and outstanding at the time of the merger remained issued and outstanding after the merger. There were 5,230,000 shares the Company's common stock issued and outstanding which were forward split on the basis of 2.6 shares of the common stock for each outstanding share of common stock prior to the merger. As a result of the merger, the capital stock of the merged entity (new TheraBiogen, Inc.) is:

Shareholder	Shares		Percent
Common shares held by former TheraBiogen, Inc. shareholders		19,091,000		58.4
Common shares held by Kushi Resources, Inc. shareholders		13,598,000		41.6
Total post-merger shares		32,689,000		100.0

As a result of the merger and the corporate name change of the Company to TheraBiogen, Inc., the common shares of the Company remained listed for trading on the OTC Bulletin Board under the symbol KUSI, although a new trading symbol TRAB has been approved for use due to the corporate name change. During the quarter ended May 31, 2010, the Company changed its trading symbol to "TRABE".

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 3 – MERGER (continued)

The purchase consideration was determined by multiplying the 41.6 percent of total post merger shares acquired by former Kushi Resources, Inc. shareholders times the number of former TheraBiogen, Inc. shares outstanding at the time of merger. This amount of shares was then multiplied by the estimated fair value of $0.0077 per share to arrive at purchase consideration of $61,154.

The acquisition price was allocated to the assets acquired and liabilities assumed based on the estimated fair values with the excess being recorded in goodwill. The following table summarizes the estimated preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition:

Mineral rights	$	7,349
Goodwill		101,183
Accounts payable		(47,378	)
	$	61,154

NOTE 4 – LICENSE AGREEMENT

In September 2008, 15,300,000 shares of common stock were issued to Nasal Therapeutics, Inc. of Long Beach, California, as part of the license payment for the licensing rights to the THERAMAX products. These shares were valued at $0.144 per share, based on the valuation of the license as agreed with Nasal Therapeutics, Inc. at the time the license was executed. The parties negotiated and agreed on a total value of the license, exclusive of future royalties, equal to $2,353,200, of which $150,000 was represented by the cash payment made, and the balance, $2,203,200, by the 15,300,000 shares of common stock of the Company.

On July 31, 2009, the Company renegotiated the terms of the license agreement, extending the territory to the entire world and the term to 25 years from July 31, 2009, and also received a transfer of all trademark rights to the THERAMAX™ name in exchange for $75,000 of cash, which was paid to Nasal Therapeutics, Inc. by Leaddog in exchange for a note payable.

The following table summarizes the license agreement, net as of May 31, 2010 and February 28, 2010:

	May 31, 2010			February 28, 2010
License Agreement	$	2,428,200		$	2,428,200
Accumulated amortization		(185,195	)		(161,993	)
License agreement, net	$	2,243,005		$	2,266,207

NOTE 5 – RELATED PARTY TRANSACTIONS

As described in Note 7, the Company has entered in various loan payable agreements with Leaddog Capital, LP (“Leaddog”), which owns or has the option to acquire shares totaling more than 10 per cent of the Company at May 31, 2010. The principal balance due Leaddog as of May 31, 2010 and 2009 is $646,500 and $249,500, respectively, and accrued interest payable to Leaddog is $65,332 and $8,135, respectively.

Pursuant to a consulting agreement with CF Consulting, LLC, a 5% shareholder, the Company is obligated to pay for financial and legal consulting services in the amount of $10,000 monthly effective January 1, 2010 . The Company also has entered into a rental agreement effective September 2008 wherein the Company pays $550 per month for the use of office space. The Company also pays $5,000 per month for a subcontractor of CF Consulting, Inc. to provide accounting services. For the quarters ended May 31, 2010 and 2009, the Company incurred consulting and rent expenses of $113,500 and $27,750, respectively, related to CF Consulting, LLC.

The Company also has a consulting agreement with FSR, Inc., a shareholder of the Company, to provide the services of Kelly T. Hickel as Chairman and CEO of the Company. FSR, Inc. is entitled to receive $10,000 per month under the

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 5 – RELATED PARTY TRANSACTIONS (continued)

agreement, commencing in November, 2010. As of May 31, 2010, FSR, Inc. had been advanced an additional $35,000 in excess of the monthly payment amounts, which is reported as Employee advances in the accompanying financial statements.

All of the Company’s mineral claims are registered in the name of a former president of the Company and pursuant to a trust agreement are held in trust on behalf of the Company.

NOTE 6 - UNPROVED MINERAL PROPERTIES

On January 30, 2006, the Company staked a mineral claim near Atlin, British Columbia, Canada, comprising an area of 410.65 hectares. The Company was required to incur approximately CDN$2,997 ($2,600 US) on or before January 30, 010 and each year thereafter in exploration expenditures or pay the equivalent sum in cash in lieu of work, in order to retain title to the claims. In January 2008, the Company paid CDN$1,643 ($1,635 US) in cash to the Province of British Columbia, in lieu of work, to retain title to the claims until January 30, 2009 and on January 5, 2009, the Company registered $12,000 CDN ($11,430 US) in exploration work performed on its unproved mineral properties with the Government of British Columbia, which extend the Company’s title to the claims until January 30, 2012. As of May 31, 2010 and February 28, 2010, the Company reported $7,349 in mineral rights.

NOTE 7 – NOTES PAYABLE

The Company has entered into notes payable agreements with related parties totaling $660,607. There are an additional $170,000 in notes payable to unrelated parties at May 31, 2010. All notes are uncollateralized and require principal and interest to be paid at maturity.

During the quarter ended May 31, 2010, the Company issued six promissory notes totaling $150,000 to unrelated parties. All of the notes bear interest at 12 percent per annum, with interest and principal payable at maturity, which is six months from the date of issue. The notes have no conversion feature. Relating to $125,000 of the notes payable, the Company also agreed to issue one share of common stock for each $2.00 of principal amount borrowed, a total of 62,500 shares. The shares have not yet been issued. A discount of $20,833, based on the estimated fair value of the shares at $0.40 per share was recorded as a reduction of debt and increase to additional paid in capital. This discount will be amortized over the life of the loans using the straight line method which approximates the effective interest method. During the quarter ended May 31, 2010, the Company amortized $4,026 of the discount to interest expense.

During the quarter ended May 31, 2010, the Company also issued two promissory notes to a related party in the amounts of $16,107 and $4,000. Both notes have seven month terms, are unsecured, bear interest at 16 percent per annum, and have all interest accrued and paid at maturity. There is no conversion feature in either note.

Of its notes payable – related parties, $605,500 of the notes are convertible debentures, convertible anytime during the outstanding term of the debt, and will automatically convert to shares at maturity if not repaid in cash. Conversion rates and convertible shares are as follows:

		Minimum		Minimum		Maximum		Maximum
Amount		Rate		Shares		Rate		Shares
$	4,500	$	0.001		4,500,000	$	0.001		4,500,000
$	25,000	$	0.00714		3,500,028	$	0.00714		3,500,028
$	576,000	$	0.10		5,760,000	$	0.01		57,600,000

$	605,500				13,760,028				65,600,0280

Conversion by the holder is limited to its ownership of no more than 4.99% of common shares outstanding. As of May 31, 2010, the holder owns more than 4.99% of the outstanding shares.

Accrued interest as of May 31, 2010 and February 28, 2010 was $93,155 and $70,559, respectively. Of these totals, $3,164 and $89,991, respectively, are owed to unrelated parties and the balance to a related party, at May 31, 2010 and $69,553 and $1,006, respectively, at February 28, 2010.

NOTE 8 – DEFERRED TAX ASSETS

At May 31, 2010, the Company had net operating loss (NOL) carry-forwards available to offset future taxable income of approximately $2.12 million including approximately $104,000 from Kushi Resources, Inc. at date of the merger. The utilization of the NOL carry-forwards is dependent upon the tax laws in effect at the time the NOL carry-forwards can be utilized. It is also likely that utilization of the NOL carry-forwards are limited based on changes in control from the merger. At May 31, 2010, a valuation allowance of $798,000 (February 28, 2010 - $474,000) has been recorded against the deferred tax asset due to the uncertainty surrounding its realization caused by the Company’s recurring losses. The NOL carry-forwards will expire from 2020 through 2030.

THERABIOGEN, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

MAY 31, 2010 AND 2009

NOTE 9 - COMMON STOCK

During the quarter ended May 31, 2010, the Company issued a total of 334,000 shares of common stock and 167,000 two-year warrants to acquire common shares at $1.00 per share, for a total of $167,000 in cash. The Company also issued 1,325,000 as stock grants to directors and consultants, charging $530,000 to Stock Compensation Expense, and an additional 400,000 in warrants were exercised for an exercise price of $400. As a result, there were 34,586,000 common shares outstanding at May 31, 2010.

NOTE 10 - SUBSEQUENT EVENTS

The Company has evaluated all events that occurred as of and through the date this Quarterly Report on Form 10-Q was filed with the Securities and Exchange Commission and made available to the public. The Management of the Company determined there were no reportable subsequent events to be disclosed.

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

Statements contained in this Plan of Operation of this Quarterly Report on Form 10-Q include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the actual results of the Company (sometimes referred to as “we”, “us” or the “Company”), performance (financial or operating) or achievements expressed or implied by such forward-looking statements not to occur or be realized. Such forward-looking statements generally are based upon the Company’s best estimates of future results, general merger and acquisition activity in the marketplace, performance or achievement, based upon current conditions and the most recent results of operations. Forward-looking statements may be identified by the use of forward-looking terminology such as “may,” “will,” “project,” “expect,” “believe,” “estimate,” “anticipate,” “intends,” “continue”, “potential,” “opportunity” or similar terms, variations of those terms or the negative of those terms or other variations of those terms or comparable words or expressions. (See the Company’s Form 10-K for the year ended February 28, 2010 for a description of certain of the known risks and uncertainties of the Company.)

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the fiscal quarter ended May 31, 2010, and changes in our financial condition. This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2010. The following discussion includes information regarding our mining and exploration business operated by us since our formation as well as the homeopathic nasal spray products developed and marketed by the former TheraBiogen, Inc., acquired as part of the merger which closed on January 5, 2010.

OVERVIEW

We were incorporated on October 3, 2005 under the laws of the State of Nevada as Kushi Resources, Inc. On January 5, 2010, we merged with TheraBiogen, Inc., a Nevada corporation, incorporated in April, 2000. We were the surviving entity in the merger and changed our name to TheraBiogen, Inc. All references in this Report to TheraBiogen or Company mean TheraBiogen, Inc., a Nevada corporation, formerly Kushi Resources Inc., unless otherwise indicated.

Until the merger with TheraBiogen, Inc. on January 5, 2010, we have been an exploration stage company engaged in the acquisition and exploration of mineral properties. We currently own a 100 percent undivided interest in a mineral property that we call the “Bee Peak Claim.” The Bee Peak Claim consists of approximately 410.65 hectares and is located in the Atlin mining district of northwest British Columbia, Canada.

We have not generated any revenues from our mineral exploration activities. There is no assurance that a commercially viable mineral deposit exists on the Bee Peak Claim. Further exploration will be required before an evaluation as to the economic feasibility of the Bee Peak Claim can be determined. The Bee Peak Claim is without known reserves and management is intending to proceed with a three-phase mineral exploration program as recommended by our consulting geological technician, as described below.

On June 18, 2009, Kelly T. Hickel was appointed to our board of directors. During August, 2009, a controlling interest in the Company was acquired as reported on the Form 14F-1 filed with the SEC on August 31, 2009. As part of that change in control, our former Chairman and sole officer, Greg Corcoran, resigned as an officer and director, leaving Mr. Hickel as the sole remaining director. Mr. Hickel also was appointed as our President, Secretary and Treasurer and sole officer. On November 17, 2009, we appointed three new directors to the Board: Dwight Brunhoeler, Barry Saxe and Boris Rubizhevsky, to serve with Mr. Hickel. Mr. Brunhoeler later resigned for personal reasons in May 2010.

On November 17, 2009, our Board of Directors approved the terms of an Agreement and Plan of Merger with TheraBiogen, Inc., which was approved unanimously by our shareholders, also on November 17, 2009. Under the terms of the merger, Kushi Resources, Inc. would be the surviving entity but would change its corporate name to TheraBiogen, Inc., and would issue one share of its post-forward split common stock for each of the 19,091,000 shares of common stock of TheraBiogen, Inc. then outstanding. Following approval by a majority of the shareholders of TheraBiogen, Inc. in December, 2009, the merger closed on January 5, 2010.

On January 4, 2010, we completed a 2.6 for 1 forward split of our common stock, as a result of which, our outstanding shares increased from 5,230,000 shares to 13,598,000 shares. We issued an additional 19,091,000 shares of our common stock to the former shareholders of the old TheraBiogen, Inc. in the merger. Following the merger, there were 32,689,000 common shares outstanding. As a result of our corporate name change to TheraBiogen, Inc. in the merger, our trading symbol on the NASDAQ OTC Bulletin Board also changed from KUSI to TRABE. For accounting purposes, the transaction has been accounted for as a reverse acquisition.

The financial statements contained in this Quarterly Report are the results of operations and financial position of the two entities as a result of the merger for all periods reported, except that the historical financial statements of TheraBiogen, Inc. have been restated to a fiscal year ended February 28, 2010 to conform with the fiscal year of Kushi Resources, Inc., the surviving entity in the merger. The former TheraBiogen, Inc. filed a Form 15 Notice of Termination of its former reporting status with the SEC on March 31, 2010, and we have assumed the former reporting obligations of the Kushi Resources, Inc., as the survivor in the merger. Although the transaction was a statutory merger under Nevada law, for financial purposes, the transaction has been treated as a reverse acquisition of the old Kushi Resources, Inc. by the shareholders of the former TheraBiogen, with the financial results of the former TheraBiogen presented, and with the equity of former TheraBiogen restated at the acquisition date to reflect that of the surviving entity, the former Kushi Resources.

PLAN OF OPERATION

Results of operations

Revenues for the three months ended May 31, 2010 consisted of $302 of interest income. No revenues were earned in the prior year three month period ended May 31, 2009. The Company has not yet generated any revenues from planned operations.

Expenses for the three months ended May 31, 2010 totaled $862,464 compared to $98,948 for the three months ended May 31, 2010. These expenses are detailed in the statement of operations on page 2. The interest expense is primarily related to an increase in consulting fees or $681,649, including $530,000 of stock compensation.

Exploration

Our plan of operation to date has been to conduct mineral exploration activities on the Bee Peak Claim in order to assess whether the property contains mineral reserves that are capable of commercial extraction. Our exploration program has been designed to explore for commercially viable deposits of copper, silver and gold. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on our mineral claim.

We received a geological evaluation report on the Bee Peak Claim titled “Report on the Bee Peak Claim” prepared by Stephen G. Diakow, a geological technician, on December 28, 2006. In his geological report, Mr. Diakow recommended that a three phase continuing exploration program be conducted as follows:

Phase	Exploration Program	Approximate Cost*	Status
One	Prospecting, Trenching and Sampling and Helicopter-Supported Magnetic Survey	$22,000	Completed Helicopter- Supported Magnetic Survey at a cost of $11,648. The balance of this phase is expected to be completed in August 2010.
Two	Coverage of the area with VLF-EM and magnetometer surveys	between $55,000 and $130,000	Dependent upon the results of Phase One.
Three	Geological mapping and sampling	between $175,000 and $215,000	Dependent upon the results of Phase Two.
	Total Estimated Cost	between $250,000 and $365,000

We commenced Phase One of our exploration program by conducting a helicopter-supported magnetic survey on our Bee Peak Claim. The magnetic survey has shown this area to have medium to weak exploration potential, especially in the area of the north facing slope of the Bee Peak. Mr. David G. Mark, the author of report titled “Geophysical Report on a Helicopter Supported Magnetic Survey on the Bee Peak Property” (the “Survey Report”), has recommended that we conduct further prospecting and sampling in the area. Following prospecting and sampling, Mr. Mark has recommended that we follow up with a soil geochemistry test and geophysical surveys, especially in the area of the known showings and in those areas where magnetic lineations cross each other.

Over the next twelve months, we anticipate that, if we continue our exploration activities, we will have to incur the following expenses:

Category	Expenditures Over The Next 12 Months (US$)
Legal and Accounting Fees	$	47,200
Regulatory and Other Operating Expenses	$	7,000
Mineral Property Exploration Expenses	$	12,150
TOTAL	$	66,350

Our total expenditures over the next twelve months are anticipated to be approximately $66,350 if we continue our exploration activities. Our cash on hand as of May 31, 2010 was $10,151 and we had a working capital deficit of approximately $521,000. We do not have sufficient cash on hand to meet our ongoing operating costs and to pay the anticipated costs of our three-phase exploration program. As such, we will require additional financing to fund our mining operations for the next twelve months. We currently do not have any arrangements for additional financing if we continue our mining activities.

Nasal Products

ZICAM had been a leading cold remedy in the United States with sales exceeding $100,000,000 in 2006. However, in recent years, the use of zinc in the ZICAM product has come under fire. In 2003, reports began to surface that a small number of ZICAM users suffered a condition known as anosmia, or total loss of smell. These reports left questions in the minds of consumers, creating a significant market for a ZICAM-type product that does not contain zinc. In May, 2009, the Food & Drug Administration issued a nationwide recall of ZICAM nasal spray products containing zinc. No THERAMAX™ product contains zinc in any form.

Under the terms of the License Agreement, TheraBiogen, Inc. issued 15,300,000 shares of its common stock to Nasal Therapeutics, Inc. on September 2, 2008 and paid Nasal Therapeutics, Inc. the sum of $150,000, as an initial license fee. There was also an annual license fee of $100, payable on September 1 of each subsequent year of the license, which has a 20 year term. The shares of common stock issued to Nasal Therapeutics, Inc. were valued at $0.144 per share, resulting in the cost of the license being $2,353,200, including the $150,000 cash payment and the value of the stock issued. This total license cost is being amortized over the twenty year life of the license.

In July, 2009, TheraBiogen, Inc. entered into an Amended and Modified License Agreement with Nasal Therapeutics, Inc. to remove all territorial limits, to extend the terms to 25 years, and to obtain the transfer of the pending trademark application for the THERAMAX™ name. TheraBiogen, Inc. paid a total of $75,000 for the extension and the trademark. As a result of this modification, TheraBiogen, Inc. calculated the amortization of the license cost over the new term, as follows:

Original license cost	$	2,460,855
Less: Amortization to 7-31-2009		(107,855	)
Remaining cost		2,353,200
Add: Modification cost		75,000
Total adjusted cost at 7-31-2009	$	2,428,200

The adjusted cost at July 31, 2009 is being amortized over the 25 year term of the modified license commencing August 1, 2009, in equal monthly installments of $7,734. The unamortized balance at May 31, 2010 is $2,243,005.

Business model

Over the next 6 months, we expect to launch two homeopathic nasal sprays into the United States over-the-counter market. We are launching THERAMAX™ Cold and Flu Relief and THERAMAX™ Allergy Relief in the second half of this fiscal year. We have identified and contracted with manufacturers for the products, and have designed packaging materials. On June 26, 2009, TheraBiogen, Inc. entered into a marketing, sales and distribution agreement with Elias Shaker Company for distribution of THERAMAX™ products. We are in the final stages of approval of THERAMAX™ Cold Relief by several major retailers for introduction into their retail stores this season. We have received vendor numbers in four of those retailers and are in the process of final vendor set up with each. We expect our first purchase order from a major retailer in July 2010, for delivery in August, 2010.

Homeopathic nasal sprays

THERAMAX™ Cold Relief

THERAMAX™ Cold Relief homeopathic nasal spray is the next generation ZICAM cold remedy product, but without any actual or potential hazards from zinc. ZICAM, which was developed by Dr. Hensley in the late 1990s, has been a highly successful product with sales exceeding US$100,000,000 in 2006.

Common colds are caused primarily by rhinoviruses and coronaviruses. Rhinoviruses infect nasal cells by attaching to ICAM receptor sites on the nasal membrane. The Company believes that THERAMAX™ Cold Relief is superior to other homeopathic cold remedies on a variety of levels. Similar to other remedies, the active ingredients of THERAMAX™ Cold Relief also binds to the rhinovirus attachment site inhibiting rhinovirus attachment to ICAM receptors. However, unlike other remedies, THERAMAX™ Cold Relief ingredients also inhibits the ability of rhinovirus to increase the amount of ICAM receptors on the nasal membrane. Furthermore, the actives in THERAMAX™ Cold Relief also inhibits the entry coronaviruses making it effective for coronavirus common colds as well. The fact that the actives in THERAMAX™ Cold Relief decreases ICAM levels and inhibits both rhinovirus and coronavirus should result in a more complete suppression of common cold infections than what is seen with other homeopathic products. Human studies on THERAMAX™ Cold Relief are still a few months from being initiated. However, we expect THERAMAX™ Cold Relief to be much more effective than other homeopathic products at reducing the duration of the common cold. Patents protecting the THERAMAX™ Cold Relief intellectual property have been filed with the United States Patent and Trademark Office.

THERAMAX™ Flu Relief

THERAMAX™ Flu Relief homeopathic nasal spray is the influenza equivalent to ZICAM cold remedy. The active THERAMAX™ Flu Relief inhibits influenza virus infections by blocking influenza virus entry into cells. Furthermore,

the active ingredient of THERAMAX™ Flu Relief inhibits influenza viral uncoating and replication. Based on the in vitro data and preliminary clinical results, we expect the THERAMAX™ Flu Relief to be extremely effective at treating influenza in humans. Patents protecting the THERAMAX™ Flu Relief intellectual property have been filed with the United States Patent and Trademark Office.

We are marketing the Cold Relief and the Flu Relief in a formulation which distinguishes our product from any other product currently on the market.

THERAMAX™ Allergy Relief

The nasal manifestation of allergies is mediated by receptors present on the surface of the nasal membrane. Antigens such as pollen, dust, animal proteins etc. increase the expression and subsequent presentation of receptors on the nasal membranes and provide the attachment site for inflammatory mediators of the allergic response. The intracellular mediator of the antigen induced increase in expression and the rhinovirus induced expression is the same. Therefore, active ingredients in THERAMAX™ cold that inhibit the expression form the core of the THERAMAX™ Allergy Relief formulation. By inhibiting the antigen induced expression on the nasal membrane, it is predicted that

THERAMAX™ Allergy Relief will be extremely effective at treating and preventing nasal allergies. We expect to launch the allergy relief during the second half of this year.

Liquidity .

Subsequent to the end of the quarter, we have received an additional $150,000 in gross proceeds from our continuing private offering of stock and debt securities, and expect to raise an additional $500,000 in July and August , 2010. These funds, together with the anticipated proceeds from the initial sale of product in August, 2010, are expected to be sufficient to meet our operating requirements for the remainder of the year.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in the notes to our financial statements included in the Annual Report on Form 10-K for the year ended February 28, 2010.

Mineral Property Costs

Kushi Resources has been in the exploration stage since its inception on October 3, 2005 and has not yet realized any revenues from our planned operations other than cancellation of debt income. We are still engaged in the acquisition and exploration of mining properties, but may decide to abandon that activity in favor of our other business operations. Mineral property exploration costs are expensed as incurred. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

FINANCIAL INFORMATION ABOUT MARKET SEGMENTS

The Company is now primarily engaged in the business of developing, manufacturing and the marketing of the TheraMax™ products in the U.S. and Canada, a single market segment. All material information regarding the activities of the Company is reflected in the financial statements included in this report.

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4 – CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company is in the process of implementing disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the ‘‘Exchange Act’’), that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in rules and forms of the Securities and Exchange Commission, and that such 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.

As of May 31, 2010, management of the Company carried out an assessment, under the supervision of and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). As of the date of this assessment, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of May 31, 2010, because of the material weakness described below.

The Company’s management performed additional accounting and financial analyses and other post-closing procedures including detailed validation work with regard to balance sheet account balances, additional analysis on income statement amounts and managerial review of all significant account balances and disclosures in this Quarterly Report on Form 10-Q, to ensure that the Company’s Quarterly Report and the financial statements forming part thereof are in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements included in this Quarterly Report fairly present, in all material respects, the Company’s financial condition, results of operations, and cash flows for the periods presented.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the interim or annual financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of May 31, 2010. In performing its assessment of the effectiveness of the Company’s internal control over financial reporting, management applied the criteria described in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’).

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified during management's assessment were (i) insufficient evidence of a robust corporate governance function; (ii) lack of sufficient resources with SEC, generally accepted accounting principles (GAAP) and tax accounting expertise; (iii) inadequate security over information technology, (iv) inconsistent operation or lack of evidence to document compliance with the operation of internal accounting controls in accordance with Company’s policies and procedures; and (v) insufficient resources to remediate deficiencies in internal control identified in prior year's assessment of the effectiveness of internal controls. These control deficiencies did not result in audit adjustments to the Company’s 2010 interim or annual financial statements. However, these control deficiencies could result in a material misstatement of significant accounts or disclosures that would result in a material misstatement to the Company’s interim or annual financial statements that would not be prevented or detected. Accordingly, management has determined that these control deficiencies constitute material weaknesses.

Because of the material weakness, management concluded that the Company did not maintain effective internal control over financial reporting as of May 31, 2010, based on the criteria in Internal Control-Integrated Framework issued by COSO.

Changes in Internal Control over Financial Reporting

The Company is in the process of correcting the internal control deficiency through the addition of capital and human resources to meet the control needs of the Company.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS .

None.

ITEM 1A. RISK FACTORS.

Not applicable.

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

During the quarter ended May 31, 2010, the Company issued a total of 334,000 shares of common stock and 167,000 two-year warrants to acquire common shares at $1.00 per share, for a total of $167,000 in cash. The Company also issued 1,325,000 as stock grants to directors and consultants, charging $530,000 to Stock Compensation Expense. As a result, there were 34,586,000 common shares outstanding at May 31, 2010. The shares were issued pursuant to exemptions from registration as private transactions, and the share certificates were issued with appropriate restrictions on re-sale or transfer.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None during the quarter ended May 31, 2010.

ITEM 5 - OTHER INFORMATION

None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit		Description
31.1		Certification of Chief Executive and Principal Financial Offcer

32.1		Section 1350 Certification

(b) Reports on Form 8-K

None

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	TheraBiogen, Inc.

March 16, 2011	By:	/s/ Kelly T. Hickel
		Kelly T. Hickel,
		President and CEO

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TheraBiogen, Inc. Reports