QUANTRX BIOMEDICAL CORP - Quarter Report: 2011 June (Form 10-Q)

quantrx10qjune302011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________

Commission File No. 0-17119

QUANTRX BIOMEDICAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Nevada		33-0202574
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

P.O. Box 4960, Portland, Oregon 97062

(Address of Principal Executive Offices) (Zip Code)

503 575 9385

(Registrant’s Telephone Number, Including Area Code)

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 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 o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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

The number of shares outstanding of the issuer’s common stock as of August ______, 2011 was 50,046,630.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
		PAGE
ITEM 1.	Financial Statements

	Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010

	Statements of Operations (Unaudited) for the three and six months ended June 30, 2011 and 2010

	Statements of Cash Flows (Unaudited) for the six months ended June 30, 2011 and 2010

	Condensed Notes to (Unaudited) Financial Statements

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 4.	Controls and Procedures

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings

ITEM 2.	Unregistered Sales of Equity Securities; and Use of Proceeds

ITEM 3.	Defaults Upon Senior Securities

ITEM 4.	Reserved

ITEM 5.	Other Information

ITEM 6.	Exhibits

Signatures

-i-

Table of Contents

PART I – FINANCIAL INFORMATION

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,” “ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS; INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010. WE ASSUME NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW INFORMATION, ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.

-1-

Table of Contents

ITEM 1.

Financial Statements

QUANTRX BIOMEDICAL CORPORATION

BALANCE SHEETS

	June 30,		December 31,
	2011		2010
ASSETS	unaudited
Current Assets:
Cash and cash equivalents	$	11,680	$	229,944
Accounts receivable		1,878		4,457
Accounts receivable – related party		-		414,179
Interest receivable – related party		71,689		63,689
Inventories		3,039		3,770
Prepaid expenses		5,445		23,409
Note receivable – related party		200,000		200,000
Total Current Assets		293,731		939,448

Investments		200,000		200,000
Property and equipment, net		44,277		109,479
Intangible assets, net		42,674		46,805
Security deposits		6,093		6,093
Total Assets	$	586,775	$	1,301,825

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	144,378	$	437,587
Accounts payable – related party		-		193,987
Accrued expenses		8,750		168,000
Deferred rent		9,750		-
Notes payable		105,234		-
Security deposit		2,000		2,000
Total Current Liabilities		270,112		801,574
Notes payable, long-term		44,000		44,000
Total Liabilities		314,112		845,574

Commitments and Contingencies				-
Stockholders’ Equity (Deficit):		-		-
Series B Convertible preferred stock; $0.01 par value, 20,500,000 authorized shares, 20,416,228 and 17,916,228 shares issued and outstanding, respectively		204,162		179,162
Common stock; $0.01 par value; 150,000,000 authorized; 50,046,630 and 44,427,630 shares issued and outstanding, respectively		500,466		444,276
Common stock to be issued		-		128,000
Additional paid-in capital		47,745,829		47,524,761
Accumulated deficit		(48,177,7974)		(47,819,948)
Total Stockholders’ Equity (Deficit)		272,663		456,251

Total Liabilities and Stockholders’ Equity (Deficit)	$	586,775	$	1,301,825

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

-2-

Table of Contents

QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2011		2010				2011		2010
Revenues:
Revenues		$	1,888	$	19,428			$	10,788	$	29,438
Revenues – related party			-		621,612				-		1,270,893
Total Revenues			1,888		641,040				10,788		1,300,331

Costs and Operating Expenses:
Cost of goods sold (excluding depreciation and amortization)			100		97				281		129
Sales, general and administrative			37,265		279,526				55,632		583,103
Professional fees			210,225		178,879				278,023		428,430
Research and development			12,976		529,087				39,808		1,133,433
Amortization			2,065		4,540				4,131		8,844
Depreciation			5,479		15,909				17,630		32,815
Total Costs and Operating Expenses			268,110		1,008,038				395,505		2,186,754

Loss from Operations			(266,222)		(366,998	)			(384,717)		(886,423	)

Other Income (Expense):
Interest and dividend income			4,000		5,127				8,000		11,387
Interest expense			(986)		(1,599	)			(1,560),		(2,777	)
Rental income			-		4,125				-		8,250
Gain on settlement of accounts payable			255,676		-				257,233		-
Gain (loss) from joint venture			9,546		-				(210,646)		(63,601
Gain on sale of investments			-		501,250				-		751,250
Net gain (loss) on disposition of assets			(24,836)		20,251				(26,156)		17,822
Total Other Income (Expense), net			243,400		529,154				26,871		722,331

Income (Loss) Before Taxes			(22,822)		162,156				(357,846)		(164,092	)

Provision for Income Taxes			-		-				-		-

Net Income (Loss)		$	(22,822)	$	162,156			$	(357,846)	$	(164,092	)

Basic and Diluted Net Loss per Common Share		$	Nil	$	Nil			$	Nil	$	Nil

Basic and Diluted Weighted Average Shares Used in per Share Calculation			48,120,174		44,427,630				47,298,902		44,427,630

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

-3-

Table of Contents

QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

Six Months Ended
	June 30,		June 30,
	2011		2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(357,846)	$	(164,092)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		21,761		41,659
Non-cash expenses related to employee stock based compensation		17,950		30,992
Non-cash expenses related to common stock warrants issued for consulting		13,738		250
Non-cash expenses related to fair value of common stock issued in warrant exchange		62,070		-
Non-cash fair value of preferred stock issued as compensation		37,500		-
Net Gain on settlement of accounts payable		257,233		-
Loss from joint venture		210,846		63,601
Gain(loss) on disposition of assets		25,687
(Increase) decrease in:
Accounts receivable		416,758		(468,339)
Interest receivable		(8,000)		(8,000)
Inventories		731		103
Prepaid expenses		17,964		96,900
Increase (decrease) in:
Accounts payable		(890,190)		396,375
Accrued expenses		(159,016)		152,000
Deferred rent		9,750		-
Deferred revenue		-		(328,988)

Net Cash Used by Operating Activities		(323,264)		(1,019,611)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash proceeds from sale of investment securities		-		751,250

Net Cash Provided (Used) by Investing Activities		-		771,501

CASH FLOWS FROM FINANCING ACTIVITIES		105,000		-

Net Increase (Decrease) in Cash and Cash Equivalents		(218,264)		(248,110)

Cash and Cash Equivalents, Beginning of Period		229,944		376,211

Cash and Cash Equivalents, End of Period	$	11,680	$	128,101

Supplemental Cash Flow Disclosures:
Interest expense paid in cash	$	1,326	$	2,777
Income tax paid	$	-	$	-

NON CASH INVESTING & FINANCING ACTIVITIES:
Shares issued for accounts payable		43,000

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

-4-

Table of Contents

QUANTRX BIOMEDICAL CORPORATION

CONDENSED NOTES TO FINANCIAL STATEMENTS

1.	Description of Business and Basis of Presentation

QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. The Company’s principal business office is located at 5920 NE 112th Avenue, Portland, Oregon. When used in this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “our,” “ours,” or “us” mean QuantRx Corporation, a Nevada corporation.

Recent Developments. On July 7, 2011, the Company and NuRx Pharmaceuticals, Inc. (“NuRx”) settled all disputes between the parties relating to a complaint brought against the Company by NuRx relating to QN Diagnostics, LL, a joint venture between the Company and NuRx (“QND”). Since July 2009, the Company had focused on, among other development initiatives, the development of its POC lateral flow diagnostics products through QND. QND was formed to develop and commercialize products incorporating the Company’s lateral flow strip technology and related lateral flow strip readers. Under the terms of the settlement with NuRx, the Company transferred its entire membership interest in QND to NuRx, including all assets held by the Company relating to QND, for and in consideration for the issuance to the Company of 12.0 million shares of common stock of NuRx (the "Settlement Shares"). As a result of the issuance of the Settlement Shares, the Company will hold an approximate 25% equity interest in NuRx, and the Company has no further contractual obligations or liabilities associated with its former interest in QND.

During the quarter ended June 30, 2011, the Company also had minority investments in Genomics USA (“GUSA”), which is developing Single Nucleotide Polymorphism (“SNP”) chips, genome-based diagnostic chips for the next generation of genomic and proteomic diagnostic markets. The Company is currently evaluating GUSA with the objective of extracting the value of such investments for the benefit of the Company and its shareholders.

The interim consolidated financial statements are unaudited; however, in the opinion of management, they include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of financial position and results of operations for the periods reported. The interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. Operating results for the periods presented are not necessarily indicative of future results. These interim financial statements should be read in conjunction with the financial statements and notes to financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, which was filed with the SEC on April 14, 2011.

2.	Management Statement Regarding Going Concern

The Company is currently not generating revenues from operations sufficient to meet its operating expenses. The Company has historically financed its operations primarily through issuances of equity and the proceeds of debt instruments. In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees, as well as divesting its minority equity interests and equity-linked investments.

-5-

Table of Contents

Management believes that given the current economic environment and the continuing need to strengthen our cash position, there is still doubt about the Company's ability to continue as a going concern. Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic or other transaction with its joint venture partner, to obtain additional funding to continue the development of, and successfully commercialize, its products. There can be no assurance that the Company will be successful in its efforts. Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, the Company’s business, results of operations, liquidity and financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going concern.

The Company believes that its ability to execute its business plan, and therefore continue as a going concern, is dependent upon its ability to do the following:

obtain adequate sources of funding to pay unfunded operating expenses, execute its business plan and fund long-term business operations;

manage or control working capital requirements by continuing to reduce operating expenses; and

develop new and enhance existing relationships with product distributors and other points of distribution for the Company’s products.

There can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue as a going concern. In the event the Company is unable to develop a financing and operating plan to allow the Company to execute its business plan, the Company may be unable to continue as a going concern.

3.	Summary of Significant Accounting Policies

Accounting for Share-Based Payments. The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in employee stock-based compensation expense for the three and six months ended June 30, 2011 of $10,000 and $17,950, respectively and $7,950 and $30,992 for the three and six months ended June 30, 2010, respectively.

Black Scholes Option Pricing Model. The Company has adopted a Risk-free interest rate of 3.90%, Dividend Yield of 0% to use for all Black Scholes calculations for 2011. The Company will use actual volatility of its common stock in the Black Scholes calculation for 2011.

Earnings per Share. The Company computes net income (loss) per common share in accordance with ASC Topic 260. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year. Basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as all common stock equivalents outstanding for the three months ended June 30, 2011 were deemed to be anti-dilutive; moreover, including common stock equivalents in the calculation of diluted earnings per share would have been anti-dilutive for the six months ended June 30, 2011. As of June 30, 2011, the Company had (i) outstanding options exercisable for 570,500 shares of common stock with a weighted average exercise price of $1.63 per share and an average remaining term of 3.64 years; (ii) outstanding warrants exercisable into 8,432,971 shares of common stock with a weighted average exercise price of $0.73 per share and average remaining term of 2.80 years; and (iii) 20,416,228 shares of Series B Preferred Stock convertible into shares of common stock.

-6-

Table of Contents

As of June 30, 2010, the Company had outstanding options exercisable for 570,500 shares of its common stock, warrants exercisable for 11,716,346 shares of its common stock, and debt securities convertible into 17,916,228 shares of its common stock. The above options, warrants, and convertible debt securities were deemed to be anti-dilutive for the three and six months ended June 30, 2010.

Fair Value. The Company has adopted ASC Topic 820, “Fair Value Measurements and Disclosures” for both financial and nonfinancial assets and liabilities. The Company has not elected the fair value option for any of its assets or liabilities.

Reclassifications. Certain reclassifications have been made in the presentation of the financial statements for the three months ended June 30, 2010 to conform to the presentation of the financial statements for the three months ended June 31, 2011.

Use of Estimates. The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

4.	Investments

FluoraPharma, Inc. In May 2011, Fluoropharma, Inc. (“FPI”) entered into a reverse merger with Fluoropharma Medical, Inc. (“FPMI”). In connection with this transaction, the Company’s warrants and options in FPI were exchanged for options and warrants in FPMI. At June 30, 2011, the Company held 277,500 options exercisable at $.50 and 373,917 warrants exercisable at $1.00. The Company deems the value of the options and warrants to be fully impaired at June 30, 2011.

Genomics USA, Inc. (dba GMS Biotech) In May 2006, the Company purchased 144,024 shares of GUSA common stock for $200,000. As of June 30, 2011 and 2010, the Company owned 12% of the issued and outstanding capital stock of GUSA. The Company uses the cost method to account for this investment since the Company does not control nor have the ability to exercise significant influence over operating and financial policies. In accordance with the cost method, the investment is recorded at cost and impairment is considered in accordance with the Company’s impairment policy. No impairment was recognized for the periods ended June 30, 2011 and June 30, 2010.

5.	Intangible Assets

Intangible assets as of the balance sheet dates consisted of the following:

	June 30, 2011		December 31, 2010
Licensed patents and patent rights	$	50,000	$	50,000
Patents		41,004		41,004
Less: accumulated amortization		(48,330)		(44,199	)
Intangibles, net	$	42,674	$	46,085

The Company’s intangible assets are carried at the legal cost to obtain them. Intangible assets are amortized using the straight line method over the estimated useful life. Useful lives are as follows: licensed patents and patent rights, eight to 15 years; patents, 17 years; technology license, five years; and website development costs, three years. Amortization expense totaled $2,065 and $4,131 for the three and six months ended June 30, 2011 and $4,540 and $8,844 for the three and six months ended June 30, 2010, respectively. Impairment will be considered in accordance with the Company’s impairment policy which requires at least an annual analysis. No impairment was recognized as of June 30, 2011.

-7-

Table of Contents

6.	Settlements of Accounts Payable

During the six months ended June 30, 2011, the Company settled an aggregate total of $328,676 of accounts payable and accrued expenses for cash settlement of $32,025 and the issuance of 900,000 shares of common stock with a fair value of $43,000. The Company has recorded gains on settlement of accounts payable of $257,233 during the six months ended June 30, 2011.

During the quarter ended June 30, 2011, in connection with the settlement of certain litigation related to QND, the Company settled its obligations to PRIA Diagnostics, LLC ("PRIA") in consideration for the payment to PRIA of $5,000, and the issuance of 500,000 shares of the Company's common stock with a deemed value of $15,000.

7.	Note Payable

On May 19, 2011, the Company reached an agreement with a lender to provide $100,000 in debt financing. Amounts loaned under the terms of the agreement bear simple interest at 3% annually, which amount increases to 12% upon an event of default. All amounts loaned under the terms of the agreement are due and payable the lender on or before November 19, 2011. In addition, a Company shareholder advanced $5,000 to the Company, under terms and conditions to be determined.

Concurrently with this debt financing commitment, the lender agreed to surrender and cancel 2,069,000 warrants held by it, and in consideration therefore the Company issued the lender 2,069,000 shares of common stock valued at $62,070.

8.	Other Balance Sheet Information

Components of selected captions in the accompanying balance sheets consist of:

	June 30,		December 31,
	2011		2010
Prepaid expenses:
Prepaid insurance	$	4,662	$	17,386
Other		783		6,023
Prepaid expenses	$	5,445	$	23,409


Property and equipment:
Computers and office furniture, fixtures and equipment	$	87,370	$	90,660
Machinery and equipment		99,015		173,295
Leasehold improvements		8,902		92,233
Less: accumulated depreciation		(151,010)		(246,709)
Property and equipment, net	$	44,277	$	109,479

During the six months ended June 30, 2011, the Company disposed of assets related to QND and its operations due to downsizing its facility. The asset values as of June 30, 2011 described above are net of these disposals.

Accrued expenses:
Payroll and related	$	8,750	$	86,000
Professional fees		0		82,000
Accrued expenses	$	8,750	$	168,000

-8-

Table of Contents

9.	Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock, of which 20,500,000 is designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $177,000 (“Series B Preferred”). The remaining 4,500,000 authorized preferred shares have not been designated by the Company as of December 31, 2010.

Series A Preferred Stock. On November 19, 2010, the Company filed a Certificate of Withdrawal of the Certificates of Designations of the Series A Preferred Stock (“Series A Preferred”) with the Nevada Secretary of State, as there were no shares of Series A Preferred issued and outstanding after the exchange transaction discussed below.

Series B Convertible Preferred Stock. The Company has authorized 20,500,000 shares of Series B Preferred, $0.01 par value. The Series B Preferred ranks prior to the common stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“Junior Stock”). Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of Common Stock multiplied by the number of shares of Common Stock equal to the outstanding shares of Series B Preferred, on an as converted basis. The holders of Series B Preferred have voting rights to vote as a class on matters a) amending, altering or repealing the provisions of the Series B Preferred so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred; or b) to effect any distribution with respect to Junior stock. At any time, the holders of Series B Preferred may, subject to limitations, elect to convert all or any portion of their Series B Preferred into fully paid nonassessable shares of Common Stock at a 1:1 conversion rate.

In December 2010, the Company issued 17,916,228 shares of its Series B Preferred in exchange for 3,583,246 shares of Series A-1 Preferred at a per share price of $0.20. In addition, in May 2011 the Company issued 2.5 million shares of its Series B Preferred to Burnham Hill Advisors, LLC (“BHA”), with a deemed value of $37,500, in consideration for past professional services provided the Company by BHA, consisting of financial advisory, strategic consulting, litigation support, among other services.

10.	Common Stock, Options and Warrants

The Company has authorized 150,000,000 shares of its common stock, $0.01 par value. In December 2009, the shareholders of the Company approved an increase in the number of authorized common stock from 75,000,000 to 150,000,000 shares. The increase took effect in January 2010.

In consideration for the management and other executive services provided by Drs. Shalom Hirschman and William Fleming, the Company issued 500,000 restricted shares of the Company's common stock to each of Drs. Hirschman and Fleming. The shares are subject to certain vesting requirements and are subject to forfeiture under certain circumstances. Drs. Hirschman and Fleming serve as the Company's Principal Executive Officer and Principal Accounting Officer, and President and Chief Science Officer, respectively.

In June 2011, the Company extended the exercise period for one year on 956,873 warrants to purchase common stock in the Company that had an original termination date of July 31, 2011.

Other than (i) the issuances to Drs. Hirschman and Fleming of 1.0 million shares of common stock, (ii) the issuance of 2,069,000 shares of common stock, with a deemed value of $62,070, to a lender in connection with a certain debt financing, as described in Note 7, (iii) the issuance of 500,000 shares of the Company’s common stock to PRIA, as described in Note 6, (iv) the issuance of 900,000 shares of common stock as settlement of accounts payable, as described in Note 6, and (v) the issuance to BHA of warrants to purchase 400,000 shares of common stock, as described in Note 11 below, in the first six months of 2011, no common stock, or options purchase common stock, were issued or granted.

-9-

Table of Contents

2007 Incentive and Non-Qualified Stock Option Plan. The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term. Total compensation cost related to the Company’s employee options was $0 and $7,950 for the three and six months ended June 30, 2011, and $7,950 and $30,992 for the three and six months ended June 30, 2010, respectively.

11.	Commitments and Contingencies

Lease Commitments. The Company currently leases its office and research and development lab space under an operating lease that expires September 30, 2011. In December 2010, the Company canceled its Doylestown, PA operating lease for a payment of approximately $11,000 and forfeiture of its security deposit of approximately $10,000. In connection with its existing facility lease, the Company has made a security deposit of $5,000 which is included in long-term assets on the balance sheet. In December 2010, the existing operating lease was amended to reduce the rent payments for February 2011 to September 2010 from $3,950 per month to $2,000 per month, accruing deferred rent that will be due immediately in the case of default on the lease, or to be negotiated in the lease renewal for a minimum of three years. This lease contains a termination option subject to a fee equal to the total deferred rent of $15,600. Deferred rent at June 30, 2011 was $9,750.

Rent expense is recognized on a straight-line basis over the initial lease term. Leasehold improvements have been included in fixed assets. Rent expense related to operating leases was approximately $14,400 and $23,858 for the three and six months ended June 30, 2011 and $32,795 and $66,467 for the three and six months ended June 30, 2010, respectively. In connection with facility leases, the Company has made security deposits totaling $6,093, which are included in long-term assets in the balance sheet.

Professional Services Agreement. On May 16, 2011, the Company entered into a Consulting Agreement with BHA, pursuant to which BHA will provide certain business, corporate development, litigation support, financial and strategic consulting services to the Company for and in consideration of the payment to BHA of $12,000 per month; provided, however, such amount shall not be paid, and shall accrue, until the earlier to occur of such time as the Company's cash balance exceeds $1.5 million, or twenty-four months from the date of execution. For each month in which payment of the cash component is deferred, BHA shall be issued a warrant exercisable for 200,000 shares of the Company's common stock at an exercise price of the higher of $.20 per share or 105% of the closing price on the date of issuance. The term of the Consulting Agreement is 18 months, and the term of the warrants is five years. At June 30, 2011, the Company had issued warrants to purchase 400,000 shares of common stock under this agreement with an aggregate fair value of $13,738.

12.	Subsequent Events

Subsequent to June 30, 2011, in connection with the settlement of all litigation with NuRx involving QND, the Company received 12.0 million shares of common stock in NuRx, representing an approximate 25% equity interest in NuRx.

-10-

Table of Contents

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition should be read in conjunction with the financial statements and notes to financial statements included elsewhere in this filing. The following discussion (as well as statements in Item 1 above and elsewhere) contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 that involve risks and uncertainties. Some or all of the results anticipated by these forward-looking statements may not occur. Forward-looking statements involve known and unknown risks and uncertainties including, but not limited to, trends in the biotechnology, healthcare, and pharmaceutical sectors of the economy; competitive pressures and technological developments from domestic and foreign genetic research and development organizations which may affect the nature and potential viability of our business strategy; and private or public sector demand for products and services similar to what we plan to commercialize. We disclaim any intention or obligation to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Unless otherwise indicated or the context otherwise requires, all references in this report to “we,” “our,” “ours,” “us,” the “Company” or similar terms refer to QuantRx Biomedical Corporation, a Nevada corporation.

Overview

The Company has developed and ultimately intends to commercialize its innovative PAD-based products for the OTC and POC markets based on its patented technology platforms, and its genomic diagnostics, based on its patented PADKit® technology for the worldwide healthcare industry. These platforms include: inSync®, Unique™, PADKit®, and OEM branded OTC and laboratory testing products based on the Company’s core intellectual property related to its PAD technology. These products are intended for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. The Company’s efforts to successfully commercialize its products, however, are currently contingent on the development of a financing and operating plan focused on the commercialization of the Company’s PAD technology. In the interim, the Company has executed a plan to substantially reduce expenses, including headcount, and to restructure and/or eliminate many of its outstanding liabilities, while continuing its efforts to develop a financing and operating plan. This plan is necessary in order for the Company to continue as a going concern.

During the quarter ended June 30, 2011, the Company had a minority investment in Genomics USA, Inc. (“GUSA”), which is developing Single Nucleotide Polymorphism (“SNP”) chips, genome-based diagnostic chips for the next generation of genomic and proteomic diagnostic markets. The Company is currently evaluating its minority equity interest in GUSA with the objective of extracting the value of such investment for the benefit of the Company and its shareholders. The Company currently does not realize any material value in its investment in GUSA.

The Company’s current strategy is to develop a financing and operating plan to: (i) leverage its broad-based intellectual property (IP) and patent portfolio to develop new and innovative diagnostic products; (ii) commercialize existing products through corporate partners and distributors; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of the Company’s investments in non-core assets, including GUSA. No assurances can be given that the Company will successfully obtain necessary financing or commercialize its products.

-11-

Table of Contents

Consolidated Results of Operations

Comparison of the Three and Six Months Ended June 30, 2011 to the Three and Six Months Ended June 30, 2010

Total revenues for the three and six months ended June 30, 2011 were $1,888 and $10,788, respectively. Total revenues for the three and six months ended June 30, 2010 were $641,040 and $1,300,331, respectively. The substantial decrease in total revenues in the 2011 periods is due to decreases in revenues pursuant to the terms of the Development Agreement with QND. Due to the divestiture of its interest in QND resulting from the settlement with NuRx, no further amounts will be paid to the Company under the terms of the Development Agreement, and the Company expects only nominal revenues pending the successful launch of its PAD-based products.

Sales, general and administrative expense for the three months ended June 30, 2011 and 2010 was $37,265 and $279,526 respectively, and for the six months ended June 30, 2011 and 2010 was $55,632 and $583,103, respectively. The substantial decrease in sales, general and administrative expense in the 2011 periods is due to decreased personnel and related expenses due to the suspension of active operations at December 31, 2010.

Professional fees for the three months ended June 30, 2011 and 2010, were $210,225 and $178,879, respectively, and for the six months ended June 30, 2011 and 2010, were $278,023 and $428,430, respectively. Professional fees include the costs of legal, consulting and auditing services provided to us. The decrease in professional fees in the 2011 periods are directly related to reduced operations due to the suspension of operations at December 31, 2010. Included in the 2011 three and six months are non-cash expenses of $113,308 related to stock and warrants issued as payment for professional services.

The Company’s net loss for the three months ended June 30, 2011 was $22,822 and net loss for the three months ended June 30, 2010 was $162,156. Net loss for the six months ended June 30, 2011 and 2010, was $357,846 and $164,092, respectively. The decrease in net losses in the three month period ended June 30, 2011 compared to the comparable period in 2010 is due to substantially lower general and administrative costs, while the increased net loss in the six month period ended June 30, 2011 compared to the comparable period in 2010 is due to the substantially lower revenues related to the Development Services Agreement with QND during said period.

The Company anticipates substantially lower costs and expenses during the year ended December 31, 2011 compared to the year ended December 31, 2010, with anticipated decreases being substantially attributable to the Company's decision to scale down active operations as management continues to evaluate and develop its future operating plan.

Liquidity and Capital Resources

As of June 30, 2011, the Company had cash and cash equivalents of $11,680, as compared to cash and cash equivalents of $229,944 as of December 31, 2010. The net decrease in cash of $218,264 for the six months ended June 30, 2011, is attributable to net cash used for operating activities and amounts used to settle certain accrued expenses and accounts payable.

The Company has not generated sufficient revenues from operations or its investment in intellectual property to meet its operating expenses. The Company has therefore historically financed its operations primarily through issuances of equity and debt securities, and, during the second and third quarters of 2010, through the sale of certain equity interests in FluoroPharma, and in the second quarter of 2011, the issuance of certain debt securities. In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees.

-12-

Table of Contents

While equity and debt financing has historically provided for the Company’s working capital needs, including capital necessary to fund the development and commercialization of the Company’s lateral flow based products, no assurances can be given that such financing will continue to be available to the Company in the future. The Company has also actively reduced operating expenses, has recently consolidated its operations in Portland, Oregon, and intends to continue to aggressively control costs and seek additional financing in order to continue as a going concern. In the event the Company is unable to secure additional financing, or is otherwise unsuccessful in restructuring certain of its liabilities, the Company will be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting Policies

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.

The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

The Company recognizes revenue from nonrefundable minimum royalty agreements from distributors or resellers upon delivery of product to the distributor or reseller, provided no significant obligations remain outstanding, the fee is fixed and determinable, and collection is probable. Once minimum royalties have been received, additional royalties are recognized as revenue when earned based on the distributor’s contractual reporting obligations. The Company is able to recognize minimum royalty payments on an accrual basis, as they are specified in the contract. However, since the Company cannot forecast product sales by licensees, royalty payments that are based on product sales by the licensees are not determinable until the licensee has completed their computation of the royalties due and/or remitted their cash payment to us. Should information on licensee product sales become available so as to enable the Company to recognize royalty revenue on an accrual basis, materially different revenues and results of operations could occur.

-13-

Table of Contents

Our strategy includes entering into collaborative agreements with strategic partners for the development, commercialization and distribution of our product candidates. Such collaboration agreements may have multiple deliverables. In arrangements with multiple deliverables where we have continuing performance obligations, contract, milestone and license fees are recognized as revenue together with any up-front payments over the term of the arrangement as performance obligations are completed, unless the deliverable has stand-alone value and there is objective, reliable evidence of fair value of the undelivered element in the arrangement. In the case of an arrangement where it is determined there is a single unit of accounting, all cash flows from the arrangement are considered in the determination of all revenue to be recognized. Cash received in advance of revenue recognition is recorded as deferred revenue.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The accounting policies discussed below are considered by management to be the most important to the Company’s financial condition and results of operations, and require management to make its most difficult and subjective judgments due to the inherent uncertainty associated with these matters. All significant estimates and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and adjusted when necessary. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. Additional information on significant accounting principles is provided in Note 1 of the attached financial statements.

Impairment of Assets

We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas which are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.

In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.

Share-based Payments

We grant options to purchase our common stock to our employees and directors under our stock option plan. We estimate the value of stock option awards on the date of grant using a Black-Scholes pricing model (Black-Scholes model). The determination of the fair value of share-based payment awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, and risk-free interest rate. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.

-14-

Table of Contents

We determine the fair value of the share-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached or (2) the date at which the counterparty’s performance is complete.

Estimates of share-based compensation expenses are significant to our financial statements, but these expenses are based on option valuation models and will never result in the payment of cash by us.

The above listing is not intended to be a comprehensive list of all of our accounting policies. In most cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States.

ITEM 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer/Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on its evaluation, and in light of the previously-identified material weaknesses in internal control over financial reporting, as of December 31, 2010, described in the 2010 Annual Report on Form 10-K, our Chief Executive Officer/ Chief Financial Officer concluded that, as of June 30, 2011, our disclosure controls and procedures were not effective.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There has been no progress towards remediating our previously disclosed material weakness due to the lack of funding.

-15-

Table of Contents

PART II - OTHER INFORMATION

ITEM 1.

Legal Proceedings.

As of the date hereof, there are no material pending legal proceedings to which we are a party to or of which any of our property is the subject.

ITEM 2.

Unregistered Sales of Equity Securities, and Use of Proceeds

During the quarter ended June 30, 2011, the Company issued 1.0 million shares of restricted common stock to Drs. Shalom Hirschman and William Fleming for services provided the Company, in lieu of salary. In addition, the Company issued (i) 500,000 shares of its common stock to PRIA in connection with the settlement of certain amounts owed PRIA; (ii) warrants to BHA to purchase 400,000 shares of common stock under the terms of a Consulting Agreement with BHA; (iii) 900,000 shares of common stock in settlement of accounts payable; and (iv) 2,069,000 shares of common stock to a lender in connection with the surrender and cancellation of 2,069,000 warrants. In each of these transactions, the Company did not receive any proceeds from the issuance of the securities, which securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent the registration or an applicable exemption from the registration requirements of the Securities Act. The transactions contemplated thereby are exempt from the registration requirements of the Securities Act, pursuant to Regulation D and/or Section 4(2).

ITEM 3.

Defaults Upon Senior Securities

None.

ITEM 4.

Reserved

ITEM 5.

Other Information

None.

ITEM 6.

Exhibits

Exhibit		Description
31		Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.
32*		Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

*The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by QuantRx Biomedical Corporation for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section.

** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

-16-

Table of Contents

SIGNATURES

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

Date: August 16, 2011	/s/ Shalom Hirschman
	Shalom Hirschman Principal Executive, Financial and Accounting Officer