QUANTRX BIOMEDICAL CORP - Annual Report: 2014 (Form 10-K)

qtxb10k_dec312014.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 2014

[ ] 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: 000-17119

QUANTRX BIOMEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		33-0202574
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

10190 SW 90th Avenue, Tualatin, Oregon 97123

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (503) 575-9385

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required 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]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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. (Check one):

Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer (Do not check if 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 Exchange Act). [ ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2014): $4,349,000.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of April 13, 2015: 65,654,227 shares.

Table of Contents

QUANTRX BIOMEDICAL CORPORATION

FORM 10-K

TABLE OF CONTENTS

		PAGE
PART I

Item 1.	Business	2
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	11
Item 2.	Properties	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	13
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Change in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 9A.	Controls and Procedures	18
Item 9B.	Other Information	19

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	20
Item 11.	Executive Compensation	21
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	21
Item 13.	Certain Relationships and Related Transactions, and Director Independence	23
Item 14.	Principal Accounting Fees and Services	23
Item 15.	Exhibits and Financial Statement Schedules	24
		25
SIGNATURES

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

THIS ANNUAL REPORT ON FORM 10-K, INCLUDING EXHIBITS THERETO, 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”, “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” ON PAGE THIRTEEN HEREOF. THE COMPANY ASSUMES NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.

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PART I

As used in this Annual Report on Form 10-K, “we,” “us,” “our,” “QuantRx” and “Company” refer to QuantRx Biomedical Corporation, unless the context otherwise requires.

ITEM 1. Business

QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. The Company’s principal business office is located at 10190 SW 90th Avenue, Tualatin, Oregon 97123. When used in this Annual Report on Form 10-K, the terms “Company,” “we,” “our,” “ours,” or “us” refer to QuantRx Corporation, a Nevada corporation.

Recent Developments

PadKit Studies

During the year ended December 31, 2014, the Company initiated two separate international studies to develop the laboratory techniques needed to utilize the Company’s PadKit sampling technology for fetal cell and genome detection and analysis. The Company completed one of the studies initiated during 2014, and expects current and future studies to be an on-going effort, as it continues to expand and validate new disease targets and markets for its PadKit based diagnostic system.

Bridge Financing

In July 2014, the Company’s Board of Directors approved of a private offering of convertible promissory demand notes (the “Bridge Notes”) to certain accredited investors in the aggregate principal amount of up to $500,000. As additional consideration for the purchase of the Bridge Notes, the Board approved of the issuance of 200,000 shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), to participating investors for every $100,000 invested. During the year ended December 31, 2014, the Company issued Bridge Notes in the aggregate principal amount of $386,000, and issued an aggregate total of 772,000 shares of its Common Stock.

Each Bridge Note accrues interest at a rate of 10% per annum, payable in either cash or shares of the Company’s Common Stock and matures during the first half of 2015. Each Bridge Note is convertible, at the option of the holder thereof, into that number of shares of Common Stock equal to the outstanding principal balance of the Bridge Note, plus accrued but unpaid interest (the “Outstanding Balance”), divided by $0.08 (the “Conversion Shares”). Additionally, in the event the Company completes an equity or equity-linked financing with gross proceeds to the Company of at least $1.5 million (a “Qualified Financing”), the Outstanding Balance of all Bridge Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares.

The Company presently intends to issue additional promissory notes to finance its current working capital needs. However, there can be no assurance that the Company will be able to issue additional promissory notes.

Overview

We have developed and intend to commercialize our innovative non-woven disposable absorbent PAD products and technology for over-the-counter ("OTC") treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are developing and intend to commercialize genomic diagnostics for the laboratory market, based on our patented PadKit® technology. Our 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.

Our efforts to commercialize our products remain contingent on the receipt of additional financing required to execute our business and operating plan, which is currently focused on the commercialization of our PAD technology either directly or through a joint venture or other relationship intended to increase shareholder value. In the interim, we have had nominal operations, focused principally on the limited online sale of our Unique® Miniform PAD product, maintaining and expanding our intellectual property and maintaining compliance with the public company reporting requirements. We have continued to issue promissory notes to continue as a going concern. No assurances can be given that the Company will obtain financing, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize the Company’s PAD products and technology.

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In June 2012, the Company formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), and proceeded to transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business (“Diagnostics Business”). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, the Company’s remaining business line consists of its OTC business, including the InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stockholders.

The Company’s current focus is to obtain additional working capital necessary to continue as a going concern, and develop a longer term 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 its OTC Business and its Diagnostics Business either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (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. As a result of its current financial condition, however, the Company’s efforts in the short-term will be focused on limited online sale of our Unique® Miniform PAD product, and obtaining financing necessary to maintain the Company as a going concern.

Our Business

Management’s objective is to develop the Company’s innovative PAD based products through genomic testing, although commercialization efforts are conditioned on securing adequate financing. Assuming the availability of adequate working capital, the Company’s objective is to target significant market opportunities for its products through the following platforms:

PAD/Health and Wellness

PAD products are based on the Company’s non-woven disposable absorbent pad technology, with products for aiding the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, the OTC catamenial markets, and other medical needs, including diagnostic sampling products which enable self-collection and worldwide transport for indications such as various cancers, premature delivery, and genomic testing.

Diagnostic Products

Diagnostic products historically constitute the core of the Company’s product development focus. The Company’s healthcare technologies are currently in different stages of development, ranging from commercialization to proof of concept. The Company ultimately plans to bring its products to commercialization; however, commercialization of these technologies is contingent on the development of a financing and operating plan that permits the Company to successfully capitalize on its development efforts to date. Such plan may include seeking a strategic or other partner to economically commercialize or finance the Company’s technologies. The Company’s objective in the interim is to maintain strict cost control measures, as well as maintain control of its technologies, in order to continue as a going concern. The discussion below assumes the Company continues with the development and commercialization of its technologies, although no assurances can be given.

Product and Product Candidates

The Company has historically operated under a two-fold product development strategy: (i) maximize the value of internally developed products that are market-ready for near-term distribution, and (ii) aggressively develop technology platforms for products the Company believes will address medical diagnostic and treatment issues into the future.

When introducing its PAD product lines and other products, the Company sought to align itself with experienced marketing partners that have established distribution channels. The Company teamed with a manufacturing partner in Asia, as well as niche United States manufacturers, in order to bring products to market in an efficient manner while controlling product quality. While these relationships are currently in effect, each has been suspended pending the development of a financing and operating plan to commercialize the Company’s products and technology.

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PADs for Diagnosis and Treatment

The miniform PAD is a Company patented technology that provides the basis for a line of products that address an array of consumer health issues including: temporary relief of hemorrhoid and minor vaginal infection itch and discomfort, feminine urinary incontinence, catamenial needs, drug delivery, and medical sample collection and transport for diagnostic testing.

The Company’s PAD products for the consumer markets are FDA Class I OTC devices, and are easy to use, non-invasive, fully biodegradable, highly absorbent pads. Additionally, the unique non-woven technology utilized for the PADs allows for a PAD to be used as a sample collection device, providing a sample for diagnostic purposes, or to provide local or systemic therapy.

PADKit®

The PADKit integrates the Company’s miniform technology with its diagnostic expertise. The PADKit contains a miniform used as a collection device to collect samples for diagnostic evaluation. Vaginally, the miniform collects blood along with numerous cells, vaginal mucous and discharge flushed out by the menstrual flow or during normal daily exfoliation. The PADKit is designed to provide the preferred sample collection system for use in population scale testing of indications such as HPV, HIV and general health screenings where healthcare professionals are not readily accessible.

Although significant improvements have been made in the area of Pap test sample reading and sample preparation, clinical indications support broad testing for HPV that will have a greater impact in lowering the incidence of cervical cancer. The Company believes the PADKit will provide a superior and more consistent sample, as well as a simpler, more comfortable and convenient procedure for HPV testing. The Company further hopes to demonstrate viability of the PADKit as the basis of various other diagnostic and screening tests.

The Company holds several patents for the method and apparatus for collecting vaginal fluid and exfoliated vaginal cells for diagnostic purposes, collection of a sample for general diagnostic screening, and the collection of an anal sample for prostate and other diagnostic purposes. Several clinical studies have been conducted with and on the PADKit, which have provided data needed to show the degree to which the sample collected can be used to replace other accepted samples, ability to provide a genomic testing sample as well as its safety and ease of use.

Unique® Miniforms

Miniform is a safe, convenient, and flushable technology for the underserved OTC hemorrhoid, feminine hygiene and urinary incontinence markets. The disposable miniform pads contain no adhesives, requires no insertion, and are small enough to fit in the palm of a hand.

The Unique miniform is available as a treated pad for the temporary relief of the itch and discomfort associated with hemorrhoids and minor vaginal infection, and as an untreated pad, for the daily protection of light urinary, vaginal or anal leakage.

While the Company initiated a limited web-based domestic roll-out of the Unique miniform, it is in search of a strategic partnership(s) to expand the retail availability of the product across the United States and internationally.

The Company has significant experience manufacturing its miniform and a clear understanding of its costs. The miniform technology is protected by numerous patents covering various applications, the manufacturing process, and certain materials. The Company previously contracted with a firm based in Taiwan to manufacture its pads, although the manufacturing relationship is currently suspended due to the Company’s financial condition, and pending the development of a financing and operation plan that allows the Company to recommence active operations.

Competition

Our industry is highly competitive and characterized by rapid and significant technological change. Significant competitive factors in our industry include, among others product efficacy and safety; the timing and scope of regulatory approvals; the government reimbursement rates for and the average selling price of products; the availability of raw materials and qualified manufacturing capacity; manufacturing costs; intellectual property and patent rights and their protection; and sales, marketing and distribution capabilities.

We face, and will continue to face, competition from organizations such as pharmaceutical and biotechnology companies, as well as academic and research institutions.

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Any product candidates that we successfully develop, which are cleared for sale by the FDA or similar international regulatory authorities in other countries, may compete with similar products currently available or that may become available in the future. Most of our competitors have substantially greater capital resources than we have, and greater capabilities and resources for research, conducting preclinical studies and clinical trials, regulatory affairs, manufacturing, marketing and sales. As a result, we may face competitive disadvantages relative to these organizations should they develop or commercialize a competitive product. In addition, given our current lack of working capital, our competitors will have the opportunity to capture market opportunities missed by the Company as we attempts to secure additional financing necessary to commercialize our products.

Raw Materials and Manufacturing

The Company currently does not have manufacturing capacity for any of its products and therefore has historically contracted for the manufacturing of its products to third-party manufacturers in and outside the United States. All manufactured products are produced under FDA mandated Good Manufacturing Practices standard operating procedures developed and controlled by the Company’s quality system, which specifies approved raw materials, vendors, and manufacturing methodology. During the quarter ended June 30, 2012, the Company’s operations were inspected by the FDA and found to be in full compliance.

Intellectual Property Rights and Patents

As of December 31, 2014, the Company had thirteen (13) patents issued, seven (7) patents pending, one (1) allowed patent, and two (2) licensed patents. Our issued patents expire between 2018 and 2030; however, the Company may obtain continuations, which would extend the rights granted under our issued patents, and additional patents to cover technology in development. The Company also holds six (6) registered U.S. and foreign trademarks and has one (1) pending trademark.

Patents and other proprietary rights are an integral part of our business. It is our policy to seek patent protection for our inventions and also to rely upon trade secrets and continuing technological innovations and licensing opportunities to develop and maintain our competitive position.

However, our patent positions involve complex legal and factual questions and, therefore, enforceability of our patents cannot be predicted with any certainty. Our issued patents, those licensed to us, and those that may be issued to us in the future may be challenged, invalidated or circumvented, and the rights granted thereunder may not provide us with proprietary protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies or duplicate any technology developed by us. Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any of our product candidates can be approved for sale and commercialized, our relevant patent rights may expire or remain in force for only a short period following commercialization. Expiration of patents we own or license could adversely affect our ability to protect future product development and, consequently, our operating results and financial position.

Licensing, Distribution and Development Agreements

On August 14, 2008, the Company entered into a ten-year Technology License Agreement with Church & Dwight Co., Inc. (“Church & Dwight”). Under the terms of the Agreement, Church & Dwight acquired exclusive world-wide rights to use certain Company technology related to a jointly developed at-home diagnostic test and began distributing the product in early 2009, resulting in the Company receiving royalties on net sales of the product in 2014 and 2013 of $1,027 and $5,147 respectively.

The Company licenses patent rights and know-how for certain hemorrhoid treatment pads and related coatings from The Procter & Gamble Company. The five-year license agreement was entered into July 2006 and has a five-year automatic renewal option. Although the Company renewed the agreement in 2011, payments have been suspended due to the Company’s current financial condition. The Company has subsequently filed for a patent to address the technology used in its treated miniforms, which patent was issued during 2013.

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Regulatory Requirements

Some of our products and manufacturing activities are, or will be subject to regulation by the FDA, and by other federal, state, local and foreign regulatory authorities. Pursuant to the Food, Drug and Cosmetic Act of 1938, commonly known as the FD&C Act, and the regulations promulgated under it, the FDA regulates the research, development, clinical testing, manufacture, packaging, labeling, storage, distribution, promotion, advertising and sampling of medical devices and medical imaging products. Before a new device or pharmaceutical product can be introduced to the market, the manufacturer must generally obtain marketing clearance through a section 510(k) notification, through a Premarket Approval (“PMA”), or New Drug Approval (“NDA”).

In the United States, medical devices intended for human use are classified into three categories, Class I, II or III, on the basis of the controls deemed reasonably necessary by the FDA to assure their safety and effectiveness with Class I requiring the fewest controls and Class III the most controls. Class I, unless exempted, and Class II devices are marketed following FDA clearance of a Section 510(k) premarket notification. Since Class III devices (e.g., a device whose failure could cause significant human harm or death) tend to carry the greatest risks, the manufacturer must demonstrate that such a device is safe and effective for its intended use by submitting a PMA application. PMA approval by the FDA is required before a Class III device can be lawfully marketed in the United States. Usually, the PMA process is significantly more time consuming and costly than the 510(k) process.

The U.S. regulatory scheme for the development and commercialization of new pharmaceutical products, which includes the targeted molecular imaging agents, can be divided into three distinct phases: an investigational phase including both preclinical and clinical investigations leading up to the submission of an NDA; a period of FDA review culminating in the approval or refusal to approve the NDA; and the post-marketing period.

All of our OTC products derived from the miniform technology, including Unique, are currently classified as Class I – exempt devices, requiring written notification to the FDA before marketing. RapidSense product candidates generally require validation and notification to the FDA under Section 510(k) prior to commercialization. The Company does not currently market any product that requires full clinical validation as a Class III product under FDA regulations, nor is it involved in RapidSense regulatory issues.

In addition, the FD&C Act requires device manufacturers to obtain a new FDA 510(k) clearance when there is a substantial change or modification in the intended use of a legally marketed device, or a change or modification, including product enhancements, changes to packaging or advertising text and, in some cases, manufacturing changes, to a legally marketed device that could significantly affect its safety or effectiveness. Supplements for approved PMA devices are required for device changes, including some manufacturing changes that affect safety or effectiveness, or disclosure to the consumer, such as labeling. For devices marketed pursuant to 510(k) determinations of substantial equivalence, the manufacturer must obtain FDA clearance of a new 510(k) notification prior to marketing the modified device. For devices marketed with PMA, the manufacturer must obtain FDA approval of a supplement to the PMA prior to marketing the modified device. Such regulatory requirements may require the Company to retain records for up to seven years, and be subject to periodic regulatory review and inspection of all facilities and documents by the FDA.

The FD&C Act requires device manufacturers to comply with Good Manufacturing Practices regulations. The regulations require that medical device manufacturers comply with various quality control requirements pertaining to design controls, purchasing contracts, organization and personnel, including device and manufacturing process design, buildings, environmental control, cleaning and sanitation; equipment and calibration of equipment; medical device components; manufacturing specifications and processes; reprocessing of devices; labeling and packaging; in-process and finished device inspection and acceptance; device failure investigations; and record keeping requirements including complaint files and device tracking. Company personnel and non-affiliated contract auditors periodically inspect the contract manufacturers to assure they remain in compliance.

The Company’s operations are currently in compliance with current FDA requirements. In the quarter ended June 30, 2012, the FDA audited the Company, and its operations were found to be fully compliant.

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Additionally, the Centers for Medicare & Medicaid Services (“CMS”) regulates all laboratory testing (except research) performed on humans in the U.S. through the Clinical Laboratory Improvement Amendments (“CLIA”). In total, CLIA covers approximately 225,000 laboratory entities. The Division of Laboratory Services, within the Survey and Certification Group, under the Office of Clinical Standards and Quality (“OCSQ”) has the responsibility for implementing the CLIA Program.

The objective of the CLIA program is to ensure quality laboratory testing. Although all clinical laboratories must be properly certified to receive Medicare or Medicaid payments, CLIA has no direct Medicare or Medicaid program responsibilities. In the event the Company’s current operating plan includes such a facility, it will fall under CLIA regulatory requirements.

Certain of our product candidates will require significant clinical validation prior to obtaining marketing clearance from the FDA. The Company intends to contract with appropriate and experienced CROs (contract research organizations) to prepare for and review the results from clinical field trials. The Company engages certain scientific advisors, consisting of scientific Ph.D.s and M.D.’s, who contribute to the scientific and medical validity of its clinical trials when appropriate.

Research and Development Activities

The Company spent $65,735 and $27,917 on research and development activities during the years ended December 31, 2014 and 2013, respectively. The increase in research and development fees in 2014 is directly attributable to the costs associated with international studies conducted on the Company’s PadKit sampling technology during the 2014 period.

The Company anticipates that its research and development activities will continue to increase as the Company seeks to expand and validate new disease targets and markets for its PadKit based diagnostic system.

Employees

As of December 31, 2014, we had no employees; however, the Company has four part-time consultants providing services to the Company in order to maintain the Company as a going concern and to protect the Company’s IP and other assets.

ITEM 1A. RISK FACTORS

You should consider carefully the following risks, along with other information contained in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only ones that may affect us. Additional risks and uncertainties may also adversely affect our business and operations, including those discussed in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation. If any of the following risks actually occur, our business, result of operations, and financial condition could be adversely affected.

We have a history of incurring net losses and, currently, we are not generating significant revenue. There can be no assurances that we will generate significant revenue in the future, achieve profitable operations or continue as a going concern.

As of the year ended December 31, 2014, the Company had an accumulated deficit of $50,506,847. Our losses resulted principally from costs related to our research programs and the development of our product candidates and general and administrative costs relating to our operations. Currently, we are not generating significant revenue from operations, and we will incur substantial and increasing losses in 2015. Historically, we have financed our operations with the proceeds from issuances of equity and debt securities, including, most recently, issuances of promissory notes. In the past, we also provided for our cash needs by issuing shares of our Common Stock, options and warrants as payment for certain operating costs, including consulting and professional fees, as well as divesting our minority equity interests and equity-linked investments.

Our history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on our assets raise substantial doubt about our ability to continue as a going concern, absent a strengthening of our cash position. 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, merger or other transaction to obtain additional funding to recommence operation and to continue the development of, and to successfully commercialize, our products. There can be no assurance that we will be successful in our efforts. Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, our business, result of operations, liquidity and financial condition would be materially and adversely harmed, and we will be unable to continue as a going concern.

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There can be no assurance that, assuming we are able to strengthen its cash position, we will achieve adequate revenue or profitable operations sufficient to continue as a going concern.

Our ability to recommence and support operations and continue as a going concern is dependent upon raising adequate financing. We may not be able to obtain such capital on a timely basis or under commercially reasonable terms, if at all.

We expect that our need for additional capital to recommence operations will be substantial and the extent of this need will depend on many factors, some of which are beyond our control, including the continued development of our product candidates; the costs associated with maintaining, protecting and expanding our patent and other intellectual property rights; future payments, if any, received or made under existing or possible future collaborative arrangements; the timing of regulatory approvals needed to market our product candidates; and market acceptance of our products. Although we are pursuing various funding and related options to recommence operations and, ultimately, commercialize our innovative PAD-based products, management has been unsuccessful to date in securing financing other than bridge financing. There can be no assurance that we will be successful in our efforts to obtain adequate financing. Should we be unable to raise adequate financing or generate revenue in the future, the Company’s business prospects would be materially and adversely harmed. As a result, management believes that given the current economic environment and the continuing need to strengthen our cash position, there is substantial doubt about our ability to continue as a going concern.

During the years ended December 31, 2014 and 2013, we issued promissory notes in the aggregate principal amount of approximately $736,000, of which approximately $268,000 was due and payable at December 31, 2013 and now bears interest at 12.0% per annum. Additionally, promissory notes with an aggregate principal amount of approximately $467,000 became due and payable on demand on March 31, 2014, and now bear interest at 8.0% per annum. In the event the holders of any of these notes demand repayment and we are unable to pay such notes or restructure the notes, the notes will be in default, and the Company may not be able to continue as a going concern.

Assuming the Company is able to successfully develop a financing and operating plan, and therefore recommence operations, there is no assurance that the Company’s products will gain market acceptance.

Efforts to commercialize our products are conditioned on the development of a financing and operating plan that allows the Company to recommence operations. Assuming the successful development of such a plan, the success of the Company will depend in substantial part on the extent to which our products achieve market acceptance. We cannot predict or guarantee that physicians, patients, healthcare insurers or maintenance organizations, or the medical community in general, will accept or utilize any products of the Company.

The Company faces intense competition.

If successfully brought into the marketplace, any of the Company’s products will likely compete with several existing products. The Company anticipates that it will face intense and increasing competition in the future as new products enter the market and advanced technologies become available. We cannot assure that existing products or new products developed by competitors will not be more effective, or more effectively marketed and sold than those by the Company. Competitive products may render the Company’s products obsolete or noncompetitive prior to the Company’s recovery of development and commercialization expenses.

Many of the Company’s competitors also have significantly greater financial, technical and human resources and will likely be better equipped to develop, manufacture and market products. Smaller companies may also prove to be significant competitors, particularly through collaborative arrangements with large biotechnology companies. Furthermore, academic institutions, government agencies and other public and private research organizations are becoming increasingly aware of the commercial value of their inventions and are actively seeking to commercialize the technology they have developed. Accordingly, competitors may succeed in commercializing products more rapidly or effectively than the Company, which would have a material adverse effect on the Company.

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If we fail to establish marketing and sales capabilities or fail to enter into effective sales, marketing and distribution arrangements with third parties, we may not be able to successfully commercialize our products.

Upon recommencement of operations, we will be primarily dependent on third parties for the sales, marketing and distribution of our products. We may enter into various agreements providing for the commercialization of our product candidates. We intend to sell our product candidates primarily through third parties and establish relationships with other companies to commercialize them in other countries around the world. We currently have no internal sales and marketing capabilities, and only a limited infrastructure to support such activities. Therefore, our future profitability will depend in part on our ability to enter into effective marketing agreements. To the extent that we enter into sales, marketing and distribution arrangements with other companies to sell our products in the United States or abroad, our product revenues will depend on their efforts, which may not be successful.

Further testing of certain of our product candidates is required and regulatory approval may be delayed or denied, which would limit or prevent us from marketing our product candidates and significantly impair our ability to generate revenues.

Human pharmaceutical products are subject to rigorous preclinical testing and clinical trials and other approval procedures mandated by the FDA and foreign regulatory authorities. Various federal and foreign statutes and regulations also govern or influence the manufacturing, safety, labeling, storage, record keeping and marketing of pharmaceutical products. The process of obtaining these approvals and the subsequent compliance with appropriate U.S. and foreign statutes and regulations is time-consuming and requires the expenditure of substantial resources. In addition, these requirements and processes vary widely from country to country.

To varying degrees based on the regulatory plan for each product candidate, the effect of government regulation and the need for FDA and other regulatory agency approval will delay commercialization of our product candidates, impose costly procedures upon our activities, and put us at a disadvantage relative to larger companies with which we compete. There can be no assurance that FDA or other regulatory approval for any products developed by us will be granted on a timely basis, or at all. If we discontinue the development of one of our product candidates, our business and stock price may suffer.

The Company’s success will be dependent on licenses and proprietary rights it receives from other parties, and on any patents it may obtain.

Our success will depend in large part on the ability of the Company and its licensors to (i) maintain license and patent protection with respect to our products, (ii) defend patents and licenses once obtained, (iii) maintain trade secrets, (iv) operate without infringing upon the patents and proprietary rights of others, and (v) maintain and obtain appropriate licenses to patents or proprietary rights held by third parties if infringement would otherwise occur, both in the United States and in foreign countries.

The patent positions of biomedical companies, including those of the Company, are uncertain and involve complex legal and factual questions. There is no guarantee that the Company or its licensors have or will develop or obtain the rights to products or processes that are patentable, that patents will issue from any of the pending applications or that claims allowed will be sufficient to protect the technology licensed to the Company. In addition, we cannot be certain that any patents issued to or licensed by the Company will not be challenged, invalidated, infringed or circumvented, or that the rights granted thereunder will provide competitive disadvantages to the Company.

Litigation, which could result in substantial cost, may also be necessary to enforce any patents to which the Company has rights, or to determine the scope, validity and unenforceability of other parties’ proprietary rights, which may affect the rights of the Company. United States patents carry a presumption of validity and generally can be invalidated only through clear and convincing evidence. There can be no assurance that the Company’s patents would be held valid by a court or administrative body or that an alleged infringer would be found to be infringing. The mere uncertainty resulting from the institution and continuation of any technology-related litigation or interference proceeding could have a material adverse effect on the Company pending resolution of the disputed matters.

The Company may also rely on unpatented trade secrets and know-how to maintain its competitive position, which it seeks to protect, in part, by confidentiality agreements with employees, consultants and others. There can be no assurance that these agreements will not be breached or terminated, that the Company will have adequate remedies for any breach, or that trade secrets will not otherwise become known or be independently discovered by competitors.

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Protecting our proprietary rights is difficult and costly.

The patent positions of biotechnology companies can be highly uncertain and involve complex legal and factual questions. Accordingly, we cannot predict the breadth of claims allowed in these companies’ patents or whether the Company may infringe or be infringing these claims. Patent disputes are common and could preclude the commercialization of our products. Patent litigation is costly in its own right and could subject us to significant liabilities to third parties. In addition, an adverse decision could force us to either obtain third-party licenses at a material cost or cease using the technology or product in dispute.

We currently do not have any full-time employees, resulting from our objective of substantially reducing expenses. At such time as we recommence operations, we may be unable to attract skilled personnel and maintain key.

The success of our business will depend, in large part, on our ability to attract and retain highly qualified management, scientific and other personnel, and on our ability to develop and maintain important relationships with leading research institutions and consultants and advisors. Competition for these types of personnel and relationships is intense among numerous pharmaceutical and biotechnology companies, universities and other research institutions. As a result of the suspension of the development of our PAD based products, we do not have any full-time employees, and currently rely on consultants and/or contract managers to manage the business and operations of the Company. There can be no assurance that the Company will be able to attract and retain skilled personnel at such time as it recommences operations, and the failure to do so would have a material adverse effect on the Company.

The Company may not be able to efficiently develop manufacturing capabilities or contract for such services from third parties on commercially acceptable terms.

The Company has established relationships with third-party manufacturers for the commercial production of our products, which relationships have been suspended due to the suspension of direct, active operations. There can be no assurance that the Company will be able to reestablish or maintain relationships with third-party manufacturers on commercially acceptable terms or that third-party manufacturers will be able to manufacture our products on a cost-effective basis in commercial quantities under good manufacturing practices mandated by the FDA.

The dependence upon third parties for the manufacture of products may adversely affect future costs and the ability to develop and commercialize our products on a timely and competitive basis. Further, there can be no assurance that manufacturing or quality control problems will not arise in connection with the manufacture of our products or that third party manufacturers will be able to maintain the necessary governmental licenses and approvals to continue manufacturing such products. Any failure to establish relationships with third parties for its manufacturing requirements on commercially acceptable terms would have a material adverse effect on the Company. Additionally, the Company may rely upon foreign manufacturers. Any event which negatively impacts these manufacturing facilities, manufacturing systems or equipment, or suppliers, including, among others, wars, terrorist activities, natural disasters and outbreaks of infectious disease, could delay or suspend shipments of products or the release of new products.

In the future, we anticipate that we will need to obtain additional or increased product liability insurance coverage and it is uncertain that such increased or additional insurance coverage can be obtained on commercially reasonable terms.

The business of the Company will expose it to potential product liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical products. There can be no assurance that product liability claims will not be asserted against the Company. The Company has obtained insurance coverage; however, there can be no assurance that the Company will be able to obtain additional product liability insurance on commercially acceptable terms or that the Company will be able to maintain such insurance at a reasonable cost or in sufficient amounts to protect against potential losses. A successful product liability claim or series of claims brought against the Company could have a material adverse effect on the Company.

Insurance coverage is increasingly more difficult to obtain or maintain.

Obtaining insurance for our business, property and products is increasingly more costly and narrower in scope, and we may be required to assume more risk in the future. If we are subject to third-party claims or suffer a loss or damage in excess of our insurance coverage, we may be required to share that risk in excess of our insurance limits. Furthermore, any first- or third-party claims made on any of our insurance policies may impact our ability to obtain or maintain insurance coverage at reasonable costs or at all in the future.

The market price of our shares, like that of many biotechnology companies, is highly volatile.

Market prices for the Company’s Common Stock and the securities of other medical and biomedical technology companies have been highly volatile and may continue to be highly volatile in the future. Factors such as announcements of technological innovations or new products by the Company or its competitors, government regulatory action, litigation, patent or proprietary rights developments, and market conditions for medical and high technology stocks in general can have a significant impact on any future market for Common Stock of the Company.

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Trading of our Common Stock is limited, which may make it difficult for you to sell your shares at times and prices that you feel are appropriate.

Trading of our Common Stock, which is conducted on the OTCBB, has been limited. This adversely affects the liquidity of our Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts and the media’s coverage of us. This may result in lower prices for our Common Stock than might otherwise be obtained and could also result in a larger spread between the bid and ask prices for our Common Stock.

The issuance of shares of our preferred stock may adversely affect our Common Stock.

The board of directors of the Company is authorized to designate one or more series of preferred stock and to fix the rights, preferences, privileges and restrictions thereof, without any action by the stockholders. The designation and issuance of such shares of our preferred stock may adversely affect our Common Stock if the rights, preferences and privileges of such preferred stock (i) restrict the declaration or payment of dividends on our Common Stock, (ii) dilute the voting power of our Common Stock, (iii) impair the liquidation rights of our Common Stock, or (iv) delay or prevent a change in control of the Company from occurring, among other possibilities.

Our Common Stock is subject to “penny stock” rules.

Our stock is currently defined as a “penny stock” under Rule 3a51-1 promulgated under the Exchange Act. “Penny stocks” are subject to Rules 15g-2 through 15g-7 and Rule 15g-9, which impose additional sales practice requirements on broker-dealers that sell penny stocks to persons other than established customers and institutional accredited investors. Among other things, for transactions covered by these rules, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. Consequently, these rules may affect the ability of broker-dealers to sell our Common Stock and affect the ability of holders to sell their shares of our Common Stock in the secondary market. To the extent our Common Stock is subject to the penny stock regulations, the market liquidity for our shares will be adversely affected.

Because we do not expect to pay dividends, you will not realize any income from an investment in our Common Stock unless and until you sell your shares at a profit.

We have never paid dividends on our Common Stock and do not anticipate paying any dividends for the foreseeable future. You should not rely on an investment in our stock if you require dividend income. Further, you will only realize income on an investment in our shares in the event you sell or otherwise dispose of your shares at a price higher than the price you paid for your shares. Such a gain would result only from an increase in the market price of our Common Stock, which is uncertain and unpredictable.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We did not maintain a corporate headquarters during the year ended December 31, 2014 or 2013, nor do we have any further obligation under any prior lease agreements. We currently plan to transfer operations to a new facility pending obtaining financing to recommence operations.

ITEM 3. LEGAL PROCEEDINGS

On April 8, 2013, the Company filed a Motion for Summary Judgment in Lieu of Complaint (the “Complaint”) against Genomics USA, Inc. ("GUSA") to recover all amounts due the Company under the terms of a promissory note in the principal amount of $200,000. (“GUSA Note”). The Complaint was filed in the Supreme Court of the State of New York, and sought repayment of all amounts due under the terms of the GUSA Note, and accrued interest thereon, plus attorney's fees. On May 24, 2013, the Company and GUSA settled the Company’s complaint. The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month has been paid on the 7th day of each consecutive month thereafter. As of December 31, 2014, the GUSA Note was paid in full. There are no obligations to the Company under the GUSA Note.

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

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock

Our common stock, par value $0.01 per share (“Common Stock”) trades on the OTCBB under the symbol “QTXB”. The prices below are based on high and low reported sales prices as reported by the OTC Markets during the calendar quarters indicated. The prices represent quotations between dealers without adjustment for retail mark-up, mark-down or commission and do not necessarily represent actual transactions.

	High		Low
Year ended December 31, 2014
Fourth Quarter	$	0.08	$	0.02
Third Quarter	$	0.09	$	0.05
Second Quarter	$	0.11	$	0.04
First Quarter	$	0.10	$	0.01

Year ended December 31, 2013
Fourth Quarter	$	0.04	$	0.01
Third Quarter	$	0.04	$	0.02
Second Quarter	$	0.14	$	0.02
First Quarter	$	0.09	$	0.02

Stockholders

As of December 31, 2014, there were approximately 256 shareholders of record of our Common Stock, one of which was Cede & Co., a nominee for the Depository Trust Company or DTC. Shares of Common Stock that are held by financial institutions, as nominees for beneficial owners, are deposited into principal accounts at the DTC, and are considered to be held of record by Cede & Co. as one stockholder.

Dividends

We have not declared nor paid any cash dividends on our Common Stock. We currently anticipate that we will retain all of our future earnings for use in the expansion and operation of our business, thus we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future.

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Recent Sales of Unregistered Securities

As discussed under Item 1, ‘Recent Developments’, above, we issued Bridge Notes in the aggregate principal amount of $386,000 in unregistered transactions during fiscal year 2014 and issued an aggregate total of 772,000 shares of Common Stock to investors as additional consideration for the purchase of the Bridge Notes. Additionally, during the year ended December 31, 2014, we also issued an aggregate total of 2,601,233 shares of Common Stock to holders of certain outstanding promissory notes as payment of interest accrued on those notes. All securities were issued in non-registered transactions in reliance on Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”).

ITEM 6. SELECTED FINANCIAL DATA

Not required under Regulation S-K for “smaller reporting companies.”

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Overview

In June 2012, we formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), and proceeded to transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business (“Diagnostics Business”). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, the Company’s remaining business line consists of its OTC business, including the InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.

The following discussion of our financial condition should be read together with our financial statements and related notes included in this Annual Report on Form 10-K.

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Recent Developments

PadKit Studies. During the year ended December 31, 2014, the Company initiated two separate international studies to develop the laboratory techniques needed to utilize the Company’s PadKit sampling technology for fetal cell and genome detection and analysis. The Company completed one of the studies initiated during 2014, and expects current and future studies to be an on-going effort, as it continues to expand and validate new disease targets and markets for its PadKit based diagnostic system.

Bridge Notes. In July 2014, the Company’s Board of Directors approved of a private offering of Bridge Notes to certain accredited investors in the aggregate principal amount of up to $500,000. As additional consideration for the purchase of the Bridge Notes, the Board approved of the issuance of 200,000 shares of Common Stock to participating investors for every $100,000 invested. During the year ended December 31, 2014, the Company issued Bridge Notes in the aggregate principal amount of $386,000, and issued an aggregate total of 772,000 shares of its Common Stock.

Each Bridge Note accrues interest at a rate of 10% per annum, payable in either cash or shares of the Company’s Common Stock and matures during the first half of 2015. Each Bridge Note is convertible, at the option of the holder thereof, into Conversion Shares equal to the Outstanding Balance of the Bridge Notes, divided by $0.08. Additionally, in the event the Company completes a Qualified Financing with gross proceeds to the Company of at least $1.5 million, the Outstanding Balance of all Bridge Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares.

Our Results of Operations

We recognized total revenues of $2,430 and $6,113 for the years ended December 31, 2014 and 2013, respectively. The decrease in revenue for the 2014 period, as compared to the 2013 period, is due to lower sales of licensed products in the 2014 period. Until we are able to develop a plan to commercialize our products, which is contingent on the receipt of additional financing, management does not anticipate that revenue will materially increase above amounts received during the year ended December 31, 2014.

Total costs and operating expenses for the years ended December 31, 2014 and 2013 were $464,911and $383,074, respectively. Highlights of the major components of our results of operations are detailed and discussed below:

	Year Ended December 31, 2014		Year Ended December 31, 2013

Sales, general and administrative	$	95,951	$	111,232
Professional fees	$	291,583	$	234,155
Research and development	$	65,735	$	27,917
Other operating expense, net	$	11,643	$	9,770

Sales, general and administrative expense includes, but is not limited to, consulting expense, office and insurance expense, accounting and other costs to maintain compliance with the Company’s reporting requirements to the Securities and Exchange Commission (the “SEC”). The increase in sales, general and administrative expenses in the year ended December 31, 2014 compared to the year ended December 31, 2013 is attributable to higher legal fees related to maintaining our intellectual property incurred during the 2014 period. Also included in sales, general and administrative expenses for the year ended December 31, 2014 are non-cash expenses of $21,000 related to stock issued as compensation under certain consulting agreements.

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Professional fees include the costs of legal, consulting and auditing services provided to us. The increase in professional fees in the 2014 period is primarily attributable to the expansion of the Company's intellectual property suite.

Research and development expense during 2014 primarily reflects technical consulting and expenses incurred to support international studies conducted on the Company’s PadKit sampling technology during the 2014 period. The Company anticipates that its research and development activities will continue to increase as the Company seeks to expand and validate new disease targets and markets for its PadKit based diagnostic system.

Other operating expenses for the years ended December 31, 2014 and 2013 were $11,643 and $9,480, respectively. The increase in other operating expenses is due primarily to increased amortization expenses in the 2014 period.

Other income and expense for the years ended December 31, 2014 and 2013 include expenses of $364,504 and of $18,630, respectively. Highlights of the major components of other income and expense our results of operations are detailed and discussed below:

	Year Ended December 31, 2014			Year Ended December 31, 2013

Gain (loss) on settlement of accounts payable	$	(62,150	)	$	16,850
Amortization of debt discount to interest expense	$	(197,666	)	$	(2,407	)
Interest expense	$	(104,687	)	$	(56,931	)
Loss on dispositions	$	-		$	-
Loss on impairment	$	(4,376	)	$	(13,706	)
Interest, dividend and rental income	$	4,376		$	13,706
Gain on securities	$	26,660		$	86,944
Other financing costs	$	(26,660	)	$	(39,026	)
Gain on acquisition of IP	$	-		$	13,200

During the year ended December 31, 2014, the Company recorded losses of $62,150, as compared to gains of $16,850 during the year ended December 31, 2013, on the settlement of accounts payable related to settlement agreements reached with its vendors and compensation settlements reached with executive management.

During the year ended December 31, 2014, interest expense increased to $104,687 from $56,931 during the 2013 period, primarily due to an increase in outstanding notes payable in the 2014 period.

Net loss for the 2014 period was $826,985, compared to net loss of $358,331 reported for the 2013 period. The increase in net losses during the year ended December 31, 2014, as compared to the same period for 2013, is primarily due to increased interest, increased debt discount costs and increased professional fees during the 2014 period.

Liquidity and Capital Resources

At December 31, 2014, the Company had cash and cash equivalents of $218,546, as compared to $4,457 at December 31, 2013.

During the year ended December 31, 2014, we used $291,911 of cash for operating activities, as compared to $149,532 during the year ended December 31, 2013. The overall net increase in cash of $214,089 for the year ended December 31, 2014, is attributable to net cash used for operating activities offset by cash received from financing activities.

During the year ended December 31, 2014, cash provided by investing activities totaled $120,000 from the receipt of payments on the GUSA Note during the year.

Cash provided by financing activities during the year ended December 31, 2014 was $386,000 as compared to $64,000 during the year ended December 31, 2013. The period over period increase is primarily attributable to proceeds received from the issuance of the Bridge Notes.

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The Company has not generated sufficient revenues from operations to meet its operating expenses. In addition, the Company will require additional funding to complete the development and launch of its products, or to otherwise capitalize on its PAD technology. 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.

Management believes that given the current economic environment and the continuing need to strengthen our cash position, there is substantial doubt about our ability to continue as a going concern. We are pursuing various funding options, including licensing opportunities and the sale of investment holdings, as well other financing transactions, to obtain additional funding to continue the development of our products and bring them to commercial markets. There can be no assurance that we will be successful in our efforts. Should we be unable to raise 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.

The Company believes that the ability of the Company to recommence operations, and therefore continue as a going concern is dependent upon its ability to do any or all of the following:

	●	obtain adequate sources of funding to pay operating expenses and fund long-term business operations;

	●	enter into a licensing or other relationship that allows the Company to commercialize its products;

	●	manage or control working capital requirements by reducing 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 in the long-term 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.

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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.

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 3 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.

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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.

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 (i) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) 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.

Deferred Taxes

We recognize deferred tax assets and liabilities based on differences between the financial statement carrying amounts and tax bases of assets and liabilities, which requires management to perform estimates of future transactions and their respective valuations. We review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that the Company will not realize the benefit of the net deferred tax asset. At December 31, 2014 and 2013, a valuation allowance has been established. The likelihood of a material change in the valuation allowance depends on our ability to generate sufficient future taxable income. In the future, if management determines that the likelihood exists to utilize the Company’s deferred tax assets, a reduction of the valuation allowance could materially increase the Company’s net deferred tax asset.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for “smaller reporting companies.”

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Audited balance sheets for the years ended December 31, 2014 and 2013 and audited statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2014 and 2013 are included immediately following the signature page to this Annual Report, beginning on page F-1.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of December 31, 2014. Based on this evaluation, and in light of the material weaknesses in internal controls over financial reporting described below, the Company’s Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.

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Management's Annual Report on Internal Control over Financial Reporting

Our Chief Executive Officer/Principal Accounting Officer is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our internal control over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting include 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 our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Our Chief Executive Officer/Principal Accounting Officer assessed the effectiveness of our internal control over financial reporting presented in conformity with accounting principles generally accepted in the U.S. as of December 31, 2014. In conducting its assessment, our Chief Executive Officer/Principal Accounting Officer used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on this assessment, our Chief Executive Officer/Principal Accounting Officer concluded that, as of December 31, 2014, our internal control over financial reporting was not effective based on those criteria due to the material weakness in our entity level control environment described in the 2010 Annual Report on Form 10-K.

In an effort to remediate the identified material weaknesses in our entity level control environment, we have initiated and/or undertaken the following actions:

Management has retained, and will continue to retain, additional personnel with technical knowledge, experience, and training in the application of generally accepted accounting principles commensurate with our financial reporting and U.S. GAAP requirements. Where necessary, we will supplement personnel with qualified external advisors.

While the Company has retained competent accounting and finance professionals necessary to ensure timely and accurate reporting with the SEC, the weaknesses in our entity level control environment arguably persist, and will continue to persist pending financing necessary to allow the Company to recruit additional accounting and/or finance professionals to address the material weakness in our entity level control environment.

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 year 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.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table sets forth the Company’s executive officers and directors:

Directors and Executive Officers	Age	Position
Dr. Shalom Hirschman	78	Chief Executive Officer, Principal Accounting Officer and Chairman
William H. Fleming, Ph.D. (1)	68	Chief Scientific Officer, President and Director
Michael Abrams	45	Director

(1)	Dr. Fleming passed away on March 22, 2015.

Shalom Hirschman, M.D. was appointed Chief Executive Officer and Principal Accounting Officer on December 31, 2010, and has served as a Director of the Company since September 2005. Dr. Hirschman was Professor of Medicine, Director of the Division of Infectious Diseases and Vice-Chairman of the Department of Medicine at Mt. Sinai School of Medicine and the Mount Sinai Hospital. He spent nearly three decades at Mt. Sinai until his retirement. He then became the CEO, President and Chief Scientific Officer of Advanced Viral Research Corp. from which he retired in 2004.

Dr. Hirschman’s extensive experience in healthcare, in both academia and as an executive working in advanced clinical research, contribute to the efforts of the Board of Directors in shaping the direction of the Company as it seeks to execute its business plan.

William H. Fleming, Ph.D., prior to his passing on March 22, 2015, Dr. Fleming served as the Company’s President since November 2008, Chief Scientific Officer since July 2005, and as a Director and Secretary of the Company since February 1994. Prior to that, he served as the Company’s Vice President of Diagnostics from August 1997 through July 2005, and as Acting CEO from 2003 until May 2005. From February 1994 through August 1997, Dr. Fleming served as the Company’s President and Chief Operating Officer. In addition, he was President, Chief Operating Officer and a Director of ProFem from July 1993 until its merger with the Company in June 1994. From April 1992 until July 1993, Dr. Fleming served as an associate with Sovereign Ventures, a healthcare consulting firm; concurrently he served as director of corporate development of Antivirals, Inc., a biotechnology company involved in antisense technology. Additionally, Dr. Fleming developed and marketed the first automatic defibrillator (AED) while serving as Executive Vice President at Cardiac Resuscitator Corporation, and was part of the team at Epitope, Inc. that discovered the first antibody to HIV. Dr. Fleming is also a director of ERC, a non-profit organization.

Michael S. Abrams was appointed to the Board of Directors in March 2012. Mr. Abrams is currently the Chief Financial Officer and Director of FitLife Brands, Inc., a publicly traded company, and is a Managing Director of Burnham Hill Partners LLC, a New York-based investment and merchant banking firm he joined in August of 2003. Mr. Abrams holds a Master of Business Administration with Honors from the Booth School of Business at the University of Chicago.

The Board of Directors believes that Mr. Abrams’ broad experience in corporate finance, including restructurings, as well as his experience as a finance executive working with public companies, provides necessary and relevant experience to the Board of Directors given the Company’s financing challenges and efforts to restructure its business and operations.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s Directors and Officers, and persons who own more than 10% of a registered class of the Company’s equity securities (“Section 16 Persons”), to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Section 16 Persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. Based on the Company’s review of the forms it has received, on other reports filed by Section 16 Persons with the SEC and on the Company’s records, the Company believes no delinquent Section 16 reports were filed during 2014.

Code of Ethics

The Company has adopted a code of ethics, which applies to all our directors, officers and employees. Our code of ethics is intended to comply with the requirements of Item 406 of Regulation S-K. Any person may also obtain a copy of the Company’s code of ethics without charge by sending a written request addressed to: QuantRx Biomedical Corporation, 10190 SW90th Avenue, No. 4690, Tualatin, Oregon, 97123.

Audit Committee

At December 31, 2014, the Company did not have an audit committee. Considering the current suspension of active development of our PAD based products, together with the costs associated with procuring and providing the infrastructure to support an independent audit committee and the Company’s limited number of transactions, Management has concluded that the risks associated with the lack of an independent audit committee are justified and manageable. Management will, however, periodically reevaluate its position with a view to establishing an audit committee in the event it is deemed to be in the best interests of the Company’s stockholders.

Compensation Committee

The Company does not currently have a compensation committee due to the lack of sufficient independent directors. At such time as the Company actively recruits additional management in connection with the recommencement of active operations, the Board of Directors will establish a compensation committee to administer the Company’s stock option plans and to reestablish general policies relating to compensation.

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Nominating Committee

The Company’s entire Board participates in consideration of director nominees. The Board will consider candidates who have experience as a board member or senior officer of a company or who are generally recognized in a relevant field as a well-regarded practitioner, faculty member or senior government officer. The Board will also evaluate whether the candidate’s skills and experience are complementary to the existing Board’s skills and experience as well as the Board’s need for operational, management, financial, international, technological or other expertise. The Board will interview candidates that meet the criteria, and then select nominees that the Board believes best suit the Company’s needs.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth information concerning the compensation paid to the Company’s Chief Executive Officer, and the Company’s two most highly compensated executive officers other than its chief executive officer, who were serving as executive officers as of December 31, 2014 and whose annual compensation exceeded $100,000 during such year (collectively the “Named Executive Officers”):

Name And Principal Position	Year	Salary ($)		Bonus ($)		Option Awards (1) ($)		All other Compensation ($)		Total ($)
Dr. Shalom Hirschman	2014		-		-		-	-			-
Chief Executive Officer and Principal Accounting Officer	2013		2,000		-		-	10,500	(2)		12,500

(1)	During the years ended December 31, 2014 and 2013, the Company did not grant stock options to its Named Executive Officers or Directors.
(2)	Amount represents the fair value of 550,000 shares of Common Stock issued to Dr. Hirschman as compensation during 2013.

Outstanding Equity Awards at Fiscal Year-End

Dr. Shalom Hirschman, the Company’s only Named Executive Officer, did not hold any outstanding equity awards at December 31, 2014.

Director Compensation

No compensation was paid to any of our non-employee directors during the year ended December 31, 2014.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information as of April 13, 2015, concerning the ownership of Common Stock by (i) each stockholder of the Company known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each current member of the Board of Directors of Company, and (iii) each Executive Officer of the Company named in the Summary Compensation Table appearing under “Executive Compensation” above.

The number and percentage of shares beneficially owned is determined in accordance with Rule 13(d)(3) of the Securities Exchange Act and the information is not necessarily indicative of beneficial ownership for any other purpose. Under that rule, beneficial ownership includes any shares as to which the individual or entity has voting power or investment power and any shares that the individual has the right to acquire within 60 days through the exercise of any stock option or other right. Unless otherwise indicated in the footnotes or table, each person or entity has sole voting and investment power, or shares such powers with his or her spouse, with respect to the shares shown as beneficially owned.

Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership as of April 13, 2015		Percentage of Class (2)

Officers and Directors
William H. Fleming (3)		1,714,034		2.61	%

Shalom Hirschman (4)		1,450,000		2.21	%

Michael Abrams (5)		511,728		*

Total Officers and Directors as a Group (3 persons)		3,675,762		5.59	%

5% Beneficial Owners
Jason T. Adelman (6) c/o Cipher Capital Partners LLC 1251 Avenue of Americas, Suite 936 New York, NY 10020		4,437,918		6.76	%

Matthew Balk (7) 50 North 5th Street, Apt. 5GE Brooklyn, NY 11249		5,302,898		8.08	%

*	Less than 1%.

(1)	Unless indicated otherwise, the address of each person listed in the table is: c/o QuantRx Biomedical Corporation, 10190 SW 90th Avenue, Tualatin, Oregon 97123.
(2)	The percentage of beneficial ownership of Common Stock is based on 65,654,772 shares of Common Stock outstanding as of April 13, 2015 and excludes all shares of Common Stock issuable upon the exercise of outstanding options or warrants to purchase Common Stock or conversion of any Common Stock equivalents, other than the shares of Common Stock issuable upon the exercise of options or warrants to purchase Common Stock held by the named person to the extent such options or warrants are exercisable within 60 days of April 13, 2015.
(3)	Dr. Fleming passed away on March 22, 2105. Prior to his passing, his ownership included beneficial ownership of 1,000 shares of Common Stock held by his brother, 112,500 Common Stock options currently exercisable, and Common Stock warrants currently exercisable for 260,000 common shares. Does not include 650,000 shares of Common Stock reserved for issuance at April 13, 2015.

(4)	Does not include 550,000 shares of Common Stock reserved for issuance at April 13, 2015.
(5)	Does not include 1,000,000 shares of Common Stock reserved for issuance at April 13, 2015.
(6)	Shares are owned by Mr. Adelman in JTWROS with Cass G. Adelman, Mr. Adelman’s spouse. The shares exclude 3,085,336 shares of Common Stock issuable upon conversion of shares of Series B Preferred, and Common Stock issuable upon conversion of certain convertible promissory notes in the principal amount of $467,000 beneficially owned by Mr. Adelman. The terms of the promissory notes and the Series B Preferred contain provisions preventing their conversion if as a result of such conversion the holder thereof owns in excess of 4.99% and 9.99%, respectively, of the issued and outstanding shares of the Company’s Common Stock.
(7)	Shares exclude 300,000 shares of Common Stock issuable upon conversion of shares of Series B Preferred, and Common Stock issuable upon conversion of certain convertible promissory notes in the principal amount of $74,000 beneficially owned by Mr. Balk. The terms of the promissory notes and the Series B Preferred contain provisions preventing their conversion if as a result of such conversion or exercise the holder thereof owns in excess of 4.99% and 9.99%, respectively, of the issued and outstanding shares of the Company’s Common Stock.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Parties

Mr. Michael Abrams, a director of the Company, is an employee of Burnham Hill Advisors, LLC (“BHA”). BHA is a party to a Consulting Agreement for Services ("Agreement") by and between the Company and BHA, dated as of October 29, 2013, which Agreement replaced the previous Consulting Agreement for Services dated August 1, 2012. As compensation for services rendered to the Company under the terms of the Agreement, the Company is required to issue to BHA 100,000 shares of restricted stock monthly through the date of termination, as well as accrue $12,000 per month, which amount continues to accrue until the earlier to occur of such time as the Company's cash balance exceeded $1.5 million, or the date of termination of the Amended Agreement. On July 1, 2014, the Company and BHA modified the terms of this agreement to provide for a one-time $15,000 payment in August 2014, and deferral of all other remaining cash fees until December 31, 2014 in consideration for the issuance of warrants previously held by the Company to purchase and aggregate total of 109,917 shares of common stock of FluoroPharma Medical, Inc.

Director Independence

The Company has determined that none of its directors were independent as of December 31, 2014, as determined under Rule 10A-3(b)(1) of the Securities Exchange Act of 1934 adopted pursuant to the Sarbanes-Oxley Act.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed for professional services rendered by MartinelliMick PLLC ("MartinelliMick") for the audit of our annual financial statements and the reviews of financial statements for years 2014 and 2013 were $26,604 and $25,891, respectively.

Audit-Related Fees

During the years ended December 31, 2014 and 2013, no assurance or related services were performed MartinelliMick that were reasonably related to the performance of the audit or review of our financial statements.

Tax Fees

During the year ended December 31, 2014 and 2013, no fees were billed by MartinelliMick for tax compliance, tax advice or tax planning services.

All Other Fees

During the years ended December 31, 2014 and 2013, no fees were billed by MartinelliMick other than the fees set forth under the captions “Audit Fees” and “Tax Fees” above.

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of this annual report:

Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 filed with Form 10-KSB filed on April 16, 2001)
3.2		Certificate of Amendment to the Articles of Incorporation of the Company, dated November 30, 2005 (incorporated by reference to Exhibit 3.2 filed with Form 10-KSB on March 31, 2006)
3.3		Bylaws of the Company (incorporated by reference to Exhibit 3.2 filed with Form 10KSB40/A filed on September 23, 1999)
3.4		Certificate of Amendment to the Bylaws of the Company dated December 2, 2005 (incorporated by reference to Exhibit 3.4 filed with Form 10-KSB on March 31, 2006)
3.5		Certificate of Amendment to the Articles of Incorporation dated January 25, 2010 (incorporated by reference to Exhibit 3.5 filed with Form 10-K on April 14, 2014)
3.6		Certificate of Withdrawal of the Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock, dated November 19, 2010 (incorporated by reference to Exhibit 3.6 filed with Form 10-K on April 14, 2014)
3.7		Certificate of Designation for Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.6 filed with Form 10-K on April 14, 2011)
4.1		Form of Warrant to Purchase Shares of Common Stock of QuantRx Biomedical Corporation, dated October 2007 (incorporated by reference to Exhibit 10.2 filed with Form 8-K on October 24, 2007)
4.2		Form of Warrant to Purchase Shares of Common Stock of QuantRx issued by QuantRx in favor of Investors (incorporated by reference to Exhibit 4.2 filed with Form 8-K on January 29, 2008)
4.3		Form of Warrant to Purchase Shares of Common Stock of QuantRx, dated June 2008, issued by QuantRx in favor of lender (incorporated by reference to Exhibit 4.2 filed with Form 8-K on July 28, 2008)
4.4		Form of Warrant to Purchase Shares of Common Stock of QuantRx, dated August 2008, issued by QuantRx in favor of lender. (incorporated by reference to Exhibit 4.2 filed with Form 8-K on August 27, 2008)
4.5		Warrant to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30, 2009, issued by QuantRx in favor of NuRx (incorporated by reference to Exhibit 10.4 filed with Form 8-K on August 5, 2009)
4.6		Warrant to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30, 2009, issued by QuantRx in favor of NuRx (incorporated by reference to Exhibit 10.5 filed with Form 8-K on August 5, 2009)
10.1		2007 Incentive and Non-Qualified Stock Option Plan (incorporated by reference to Exhibit C filed with Schedule 14A on June 5, 2007)
10.2		Employment Agreement, dated July 30, 2009, by and between QuantRx and William Fleming (incorporated by reference to Exhibit 10.8 filed with Form 8-K on August 5, 2009)
10.3		Settlement Agreement and Release, dated as of July 7, 2011, by and between the Company and NuRx Pharmaceuticals, Inc. (incorporated by reference to Exhibit 99.1 filed with Form 8-K on July 8, 2011).
14.1		Ethical Guidelines adopted by the Board of Directors of the Company on May 31, 2005 (incorporated by reference to Exhibit 14.1 filed with Form 10-KSB on March 31, 2006)
31**		Certification of Principal Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32**		Certification of Principal Executive and Financial Officer pursuant to 18 USC Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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

** Document is filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	QuantRx Biomedical Corporation

Date: April 15, 2015	By:	/s/ Shalom Hirschman
	Principal Executive and Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	QuantRx Biomedical Corporation

Date: April 15, 2015	By:	/s/ Shalom Hirschman
	Shalom Hirschman, Director

Date: April 15, 2015	By:	/s/ Michael Abrams
	Michael Abrams, Director

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QUANTRX BIOMEDICAL CORPORATION

FINANCIAL STATEMENTS

Table of Contents

Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2014 and 2013		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013		F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013		F-5
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2014 and 2013		F-6
Notes to Financial Statements		F-7

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218 North Bernard Street Second Floor

Spokane, WA 99201

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of QuantRx Biomedical Corp. Portland, Oregon

We have audited the accompanying consolidated balance sheets of QuantRx Biomedical Corp. as of December 31, 2014 and 2013, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. QuantRx Biomedical Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of QuantRx Biomedical Corp. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred a net loss during the period and has no history of profitability, currently generates little revenue, and relies on outside funding, which raises substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

MartinelliMick PLLC Spokane, WA

April 15, 2015

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2014			2013
ASSETS
Current Assets:
Cash and cash equivalents	$	218,546		$	4,457
Accounts receivable		352			917
Interest receivable – related party, less impairment reserve of $0 and $59,935		-			-
Inventories		-			1,978
Prepaid expenses		40,902			30,218
Note receivable		-			120,000
Total Current Assets		259,800			157,570

Investments		200,000			200,000
Property and equipment, net		2,191			3,285
Intangible assets, net		28,521			37,092
Total Assets	$	490,512		$	397,947

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	462,306		$	285,412
Accrued expenses		42,770			19,711
Notes payable, net of discount		1,156,378			738,694
Total Current Liabilities		1,661,454			1,043,817
Notes payable, long-term		44,000			44,000
Total Liabilities		1,705,454			1,087,817

Commitments and Contingencies		-			-

Stockholders’ Equity (Deficit):
Preferred stock; $0.01 par value, 25,000,000 authorized shares; 20,500,000 shares designated as Series B Convertible Preferred Stock; Series B Convertible Preferred shares: 16,676,942 and 20,416,228 issued and outstanding		166,769			204,162
Common Stock; $0.01 par value; 150,000,000 authorized; 63,341,163 and 52,728,644 shares issued and outstanding, respectively		633,412			527,286
Common Stock to be issued		63,000			120,000
Additional paid-in capital		48,428,724			48,138,544
Accumulated deficit		(50,506,847	)		(49,679,862	)
Total Stockholders’ Equity (Deficit)		(1,214,942	)		(689,870	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	490,512		$	397,947

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

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2014			2013
Revenues:
Revenues	$	2,430		$	6,113
Total Revenues		2,430			6,113

Costs and Operating Expenses:
Cost of goods sold (excluding depreciation and amortization)		1,978			586
Sales, general and administrative		95,951			111,232
Professional fees		291,583			234,155
Research and development		65,735			27,917
Amortization		8,571			8,089
Depreciation		1,094			1,095
Total Costs and Operating Expenses		464,912			383,074

Loss from Operations		(462,482	)		(376,961	)

Other Income (Expense):
Interest and dividend income		4,376			13,706
Interest expense		(104,687	)		(56,931	)
Amortization of debt discount to interest expense		(197,666	)		(2,407	)
Loss on impairment of interest		(4,376	)		(13,706	)
Gain on issuance of equity securities		26,660			86,944
Other financing costs		(26,660	)		(39,026	)
Net loss on dispositions		-			-
Gain on settlement of accounts payable		(62,150	)		16,850
Gain on acquisition of IP		-			13,200
Total Other Income (Expense), net		(364,503	)		(18,630	)

Income (Loss) Before Taxes		(826,985	)		(358,331	)

Provision for Income Taxes		-			-

Net Income (Loss)	$	(826,985	)	$	(358,331	)

Net Income (Loss) Available to Common Shareholders	$	(826,985	)	$	(358,331	)

Basic and Diluted Net Income (Loss) per Common Share	$	(0.01	)	$	(0.01	)

Basic and Diluted Weighted Average Shares Used in per Share Calculation		58,805,401			52,563,165

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

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		(826,985	)	$	(358,331	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		9,665			9,184
Interest expense related to amortization of non-cash discount, non-cash beneficial conversion feature and deferred financing costs		213,347			(45,798	)
Non-cash gain on equity investment		(26,660	)		86,944
Non-cash fair value of Common Stock issued as compensation		21,000			39,000
Non-cash fair value of Common Stock issued in connection with notes payable		63,760			-
Net gain on settlement of accounts payable		62,150			16,850
Net gain on acquisition of IP		-			(13,200	)
(Increase) decrease in:
Accounts receivable		565			1,417
Interest receivable		(4,376	)		(13,706	)
Loss on impairment		4,376			13,706
Inventories		1,978			586
Prepaid expenses		(10,684	)		(7,439	)
Increase (decrease) in:
Accounts payable		176,894			118,522
Accrued expenses		23,059			2,733

Net Cash Used by Operating Activities		(291,911	)		(149,532	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from notes receivable, related party		120,000			80,000

Net Cash Provided (Used) by Investing Activities	120,000				80,000

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible promissory notes		386,000			64,000

Net Cash Provided by Financing Activities		386,000			64,000

Net Increase (Decrease) in Cash and Cash Equivalents		214,089			(5,532	)
Net Cash of Deconsolidated Subsidiary
Cash and Cash Equivalents, Beginning of Period		4,457			9,989

Cash and Cash Equivalents, End of Period	$	218,546		$	4,457

Supplemental Cash Flow Disclosures:
Interest expense paid in cash	$	-		$	-
Income tax paid	$	-		$	-

Supplemental Disclosure of Non-Cash Activities:
Common Stock issued from stock to be issued for settlements	$	-		$	9,000

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

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Preferred Stock						Common Stock				Additional Paid-in Capital		Stock to be Issued			Accumulated Deficit			Total Stockholders’ Equity
	Number of Shares			Amount			Number of Shares		Amount		Additional Paid-in Capital		Stock to be Issued			Accumulated Deficit			Total Stockholders’ Equity
BALANCE, DECEMBER 31, 2012		20,416,228		$	204,162			52,528,644	$	525,286	$	48,130,044	$	82,500		$	(49,321,531	)	$	(379,539	)

Issuance of common stock related to accounts payable														9,000						9,000
Fair value of common stock issued as compensation														39,000						39,000
Issuance of common stock related to notes payable								200,000		2,000		8,500		(10,500	)					-
Net loss for the year ended December 31, 2013																	(358,331	)		(358,331	)

BALANCE, DECEMBER 31, 2013		20,416,228		$	204,162			52,728,644	$	527,286	$	48,138,544	$	120,000		$	(49,679,862	)	$	(689,870	)

Issuance of common stock related to notes payable								505,881		5,059		91,812		27,967						124,838
Fair value of common stock for services								1,800,000		18,000		54,000		72,000						-
Issuance of common stock as compensation								2,200,000		22,000		26,000		(48,000	)					-
Issuance of common stock in exchange for interest payable								2,367,352		23,674		118,368		14,033						156,075
Issuance of common stock for services														21,000						21,000
Preferred stock conversion into common stock		(3,739,286	)		(37,393	)		3,739,286		37,393										-
Net loss for the year ended December 31, 2014																	(826,985	)		(826,985	)

BALANCE, DECEMBER 31, 2014		16,676,942		$	166,769			63,341,163	$	633,412	$	48,428,724	$	63,000		$	(50,506,847	)	$	(1,214,942	)

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

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QUANTRX BIOMEDICAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS

Overview

We have developed and intend to commercialize our innovative PAD based products for the OTC markets for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are developing and intend to commercialize genomic diagnostics for the laboratory market, based on our patented PadKit® technology. Our 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.

On June 20, 2012, the Company formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), and proceeded to transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business ("Diagnostics Business"). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, the Company’s remaining business line consists of its over-the-counter business, including the InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.

Recent Developments

PadKit Studies

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Bridge Financing

2.	MANAGEMENT STATEMENT REGARDING GOING CONCERN

The Company currently is generating only nominal revenue from operations. The Company has historically financed its operations primarily through issuances of equity and the proceeds from the issuance of promissory notes. In the past, the Company 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.

The Company’s history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on the Company’s assets raise substantial doubt about our ability to continue as a going concern absent a strengthening of our cash position. 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, merger or other transaction to obtain additional funding to continue the development of, and to 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, result of operations, liquidity and financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going concern.

There can be no assurance that, assuming the Company is able to strengthen its cash position, it will achieve sufficient revenue or profitable operations to continue as a going concern.

3.	CONSOLIDATED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (GAAP) and have been consistently applied in the preparation of the consolidated financial statements.

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 years ended December 31, 2014 and 2013 of $0 and $39,000, respectively.

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The Company accounts for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment 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 (i) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) the date at which the counterparty’s performance is complete.

In the case of modifications, the Black-Scholes model is used to value the warrant on the modification date by applying the revised assumptions. The difference between the fair value of the warrants prior to the modification and after the modification determines the incremental value. The Company has modified warrants in connection with the issuance of certain notes and note extensions. These modified warrants were originally issued in connection with previous private placement investments. In the case of debt issuances, the warrants were accounted for as original issuance discount based on their relative fair values. When modified in connection with a note issuance, the Company recognizes the incremental value as a part of the debt discount calculation, using its relative fair value in accordance with ASC Topic 470-20, “Debt with Conversion and Other Options.” When modified in connection with note extensions, the Company recognized the incremental value as prepaid interest, which is expensed over the term of the extension.

The fair value of each share based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year:

During 2014, the fair value of each share based payment is estimated on the measurement date using the Black-Scholes model using an average risk free interest rate of 2.73%, expected volatility of 242%, and a dividend yield of zero. During 2013, the fair value of each share based payment is estimated on the measurement date using the Black-Scholes model using a risk free interest rate of 2.6%, expected volatility of 331%, and a dividend yield of zero.

Risk-Free Interest Rate. The interest rate used is based on the yield of a U.S. Treasury security as of the beginning of the year.

Expected Volatility. The Company calculates the expected volatility based on historical volatility of monthly stock prices over a three year period.

Dividend Yield. The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

Expected Term. For options, the Company has no history of employee exercise patterns; therefore, uses the option term as the expected term. For warrants, the Company uses the actual term of the warrant.

Pre-Vesting Forfeitures. Estimates of pre-vesting option forfeitures are based on Company experience. The Company will adjust its estimate of forfeitures over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods.

Accounts, Notes and Interest Receivable and Allowance for Bad Debts

The Company carries its receivables at net realizable value. Interest on notes receivable is accrued based upon the terms of the note agreement. The Company provides reserves against receivables and related accrued interest for estimated losses that may result from a debtor’s inability to pay. The amount is determined by analyzing known uncollectible accounts, economic conditions, historical losses and customer credit-worthiness. Additionally, all accounts with aged balances greater than one year are fully reserved. Amounts later determined and specifically identified to be uncollectible are charged or written off against the reserve. At December 31, 2014, the Company has determined that its Accounts Receivable outstanding is deemed to be collectible, and accordingly has not recorded a reserve for the year ended December 31, 2014.

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Cash and Cash Equivalents

The Company considers all highly liquid investments and short-term debt instruments with maturities of three months or less from date of purchase to be cash equivalents. Cash equivalents consisted of money market funds at December 31, 2014 and 2013.

Concentration of Risks

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. At times, such balances may exceed federally insured limits. The Company has not experienced any losses to date resulting from this practice. At December 31, 2014 and 2013, our cash was not in excess of these limits.

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 including Common Stock equivalents in the calculation of diluted earnings per share would have been antidilutive.

As of December 31, 2014, the Company had outstanding options exercisable for 152,000 shares of its Common Stock, and preferred shares convertible into 16,676,942 shares of its Common Stock. The above options and preferred shares were deemed to be antidilutive for the year ended December 31, 2014.

As of December 31, 2013, the Company had outstanding options exercisable for 304,500 shares of its Common Stock, warrants exercisable for 1,556,000 shares of its Common Stock, and preferred shares convertible into 20,416,228 shares of its Common Stock. The above options, warrants, and preferred shares were deemed to be antidilutive for the year ended December 31, 2013.

Fair Value of Financial Instruments

Current U.S. generally accepted accounting principles establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 – Pricing inputs include significant inputs that are generally unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to the Company’s needs.

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.

			At December 31, 2014 Fair Measurements Using
Description	Year Ended 12/31/2013		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)		Total Gains (Losses)

Investment from GUSA	$	200,000		$	200,000		-

Recognized in earnings						$	-

In determining fair value of our investment from GUSA, the Company estimated fair value based 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 the carrying value of this investment that are not readily apparent from other sources.

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 in FPI were exchanged for warrants in FPMI (the “FPMI Warrants”). During 2012, the Company recognized a gain in the amount of $115,752 as a result of the issuance of certain of these warrants to holders of promissory notes of the Company that matured during the period. During the period ended September 30, 2014, the Company assigned its remaining 109,917 FPMI Warrants, with an exercise price of $1.00 and expiring on February 15, 2019 to Burnham Hill Advisors, LLC (“BHA”) in exchange for the extension of BHA’s previous cash deferral agreement through December 31, 2014. Following the transaction, the Company recognized a gain on the exchange in the amount of $26,660 and no longer held FPMI warrants.

Impairments

At December 31, 2013, the Company determined that its interest receivable from a related party in the amount of $59,395 was fully impaired. At December 31, 2014 the related party obligation was fulfilled and all interest owed was fully forgiven and written off.

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Income Taxes

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at December 31, 2014 or 2013, and have not recognized interest and/or penalties in the statement of operations for the years ended December 31, 2014 or 2013. See Note 11, Income Taxes, below.

Intangible Assets

The Company’s intangible assets consist of patents, licensed patents and patent rights, and website development costs, and are carried at the legal cost to obtain them. Costs to renew or extend the term of intangible assets are expensed when incurred. In 2008, through our formerly majority owned subsidiary, the Company also held technology licenses and other acquired intangibles. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives are as follows: patents, 17 years; patents under licensing, 10 years; website development costs, three years, and in 2008, acquired intangibles had a weighted average life of 15 years. Amortization expense for the years ended December 31, 2014 and 2013, totaled $8,571 and $8,089. The remaining unamortized costs will be amortized through 2024. The Company estimates its amortization expense for 2015 will be $8,572.

Inventories

Inventories, consisting solely of products available for sale, are accounted for using the first-in, first-out (FIFO) method, and are valued at the lower of cost of market value. This valuation requires us to make judgments, based on current market conditions, about the likely method of dispositions and expected recoverable value inventories.

Non-Controlling Interest

In January 2009, we adopted an amendment to ASC Topic 810 “Consolidation”, which required us to make certain changes to the presentation of our financial statements. This amendment required noncontrolling interests to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. Upon a loss of control, the interest sold, as well as any interest retained, is required to be measured at fair value, with any gain or loss recognized in earnings. The statement required that the noncontrolling interest continue to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance; if this would result in a material change to net income, pro forma financial information is required. As of January 1, 2009, the Company presented its financial statements in accordance with this statement.

On May 5, 2009, the Company and FPMI reorganized their relationship by terminating their investment and related agreements. The termination of these agreements, which were originally executed on March 10, 2006, allowed FPMI to close an equity financing with third party investors. In conjunction with the termination of these agreements and the additional investment in FPMI by third parties, the Company agreed to convert all outstanding receivables from FPMI into Common Stock of FPMI. As a result of these transactions and the third party investment, the Company’s ownership interest in FPMI’s issued and outstanding capital stock was reduced to a noncontrolling interest, which resulted in deconsolidation and a loss at deconsolidation in accordance with ASC 810. See Note 8 below for additional details.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at December 31, 2014 and 2013 consisted of computer and office equipment, machinery and equipment and leasehold improvements with estimated useful lives of three to seven years. Estimated useful lives of leasehold improvements do not exceed the remaining lease term. Depreciation expense was $1,094 and $1,095 for the years ended December 31, 2014 and 2013. Expenditures for repairs and maintenance are expensed as incurred. See Note 5 below.

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Recently Issued Accounting Principles

In February, 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The Company does not intend to early adopt this standard. Adoption of the new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not intend to early adopt this standard. Adoption of the new guidance is not expected to have a material impact on the financial condition of Company.

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. This ASU does the following, among other things: a) eliminates the requirement to present inception-to-date information on the statements of income, cash flows, and shareholders’ equity, b) eliminates the need to label the financial statements as those of a development stage entity, c) eliminates the need to disclose a description of the development stage activities in which the entity is engaged, and d) amends FASB ASC 275, Risks and Uncertainties, to clarify that information on risks and uncertainties for entities that have not commenced planned principal operations is required. The amendments in ASU No. 2014-10 are effective for public companies for annual and interim reporting periods beginning after December 15, 2014. Early adoption is permitted. Adoption of the new guidance is not expected to have a material impact on the consolidated financial position, results of operations or cash flows.

Research and Development Costs

Research and development costs are expensed as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life of the related asset.

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery or performance 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.

The Company’s strategy includes entering into collaborative agreements with strategic partners for the development, commercialization and distribution of its product candidates. Such collaborative agreements may have multiple deliverables. The Company evaluates multiple deliverable arrangements pursuant to ASC Topic 605-25, “Revenue Recognition: Multiple-Element Arrangements.” Pursuant to this Topic, in arrangements with multiple deliverables where the Company has continuing performance obligations, contract, milestone and license fees are recognized together with any up-front payments over the term of the arrangement as performance obligations are completed, unless the deliverable has standalone 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.

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Development Agreements and Royalties

In 2007, the Company entered into a development agreement for an at-home diagnostic test with Church & Dwight Co., Inc. (“C&D”). The C&D agreement included milestone based payments, which were recognized in 2007 and 2008. On August 14, 2008, the Company entered into a Technology License Agreement with C&D. Under the terms of the agreement, C&D acquired exclusive worldwide rights to use certain Company technology related to the jointly developed test. Under the ten-year agreement, the Company received royalties on net sales of the product of $1,027 and $5,147 in 2014 and 2013, respectively.

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.	INVESTMENT IN JOINT VENTURE - QN DIAGNOSTICS, LLC

On July 30, 2009, the Company and NuRx entered into agreements to form QND. Pursuant to the agreements, the Company contributed certain intellectual property and other assets related to its lateral flow strip technology and related lateral flow strip reader technology with a fair value of $5,450,000, and NuRx contributed $5,000,000 in cash to QND. Following the respective contributions by NuRx and the Company to the joint venture, NuRx and the Company each owned a 50% interest in QND. The purpose of the joint venture was to develop and commercialize products incorporating the lateral flow strip technology and related lateral flow strip readers.

Under the terms of the agreements, QND made a $2,000,000 cash distribution to the Company. The Company was committed to further capital contributions aggregating $1.55 million, comprised of: payment of milestone payments with PRIA Diagnostics in Company Common Stock (fair value of $750,000); transfer of fixed assets with a fair value of $100,000 at QND’s discretion; and a $700,000 sustaining capital contribution as required by QND. Subsequent sustaining capital contributions were required to be made by the Company and NuRx on an equal basis.

The Company and QND also entered into the Development Agreement, pursuant to which QND was required to pay a monthly fee to the Company in exchange for the Company providing all services related to the development, regulatory approval and commercialization of lateral flow products.

On July 20, 2010, the Company notified NuRx that NuRx was in material breach of the Development Agreement, and on August 24, 2010, NuRx filed suit against the Company and one of its directors. On July 7, 2011, the Company and NuRx settled all disputes between the parties relating to a complaint brought against the Company by NuRx relating to QND. 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 held an approximate 25% equity interest in NuRx at December 31, 2012, and the Company had no further contractual obligations or liabilities associated with its former interest in QND.

On March 1, 2013, the Company entered into an Exchange Agreement with NuRx and QND, pursuant to which the Company exchanged its Settlement Shares for certain patents, trademarks and other intellectual property formerly held by NuRx and QND covering point-of-care lateral flow diagnostics (RapidSenseTM) and related oral fluid collection technologies.

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5.	OTHER BALANCE SHEET INFORMATION

Components of selected captions in the accompanying balance sheets as of December 31, 2014 and 2013 consist of:

	2014			2013
Prepaid expenses:
Prepaid insurance		24,866			23,718
Other		16,036			6,500
Prepaid expenses	$	40,902		$	30,218


Property and equipment:
Computers and office furniture, fixtures and equipment	$	28,031		$	28,031
Machinery and equipment		5,475			5,475
Less: accumulated depreciation		(31,315	)		(30,221	)
Property and equipment, net	$	2,191		$	3,285

Accrued expenses:
Other accrued expenses		42,770			19,711
Accrued expenses	$	42,770		$	19,711

6.	NOTES RECEIVABLE

Genomics USA, Inc.

In January 2007, the Company advanced $200,000 to GUSA through an 8% promissory note due April 8, 2007 (the “GUSA Note”). On September 24, 2012, the Company sent a final notice to GUSA, demanding immediate payment in full of all amounts due under the terms of the GUSA Note. On April 8, 2013, the Company filed a Motion for Summary Judgment in Lieu of Complaint (the “Complaint”) against GUSA to recover all amounts due the Company under the terms of GUSA Note. On May 24, 2013, the Company and GUSA settled the Company’s complaint. The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month shall be paid on the 7th day of each consecutive month thereafter for a total of 18 months (collectively, the “Settlement Payments”). As of December 31, 2014, the Company had received full payment under the GUSA Note.

7.	INVESTMENTS

	Warrants Held			Options Held		Recognized Gain/(Loss)
Balance as of December 31, 2013		109,917			-			-
Warrants issued for consideration of debt extension		(109,917	)		-		-
Balance as of December 31, 2014		-

In May 2011, FPI entered into a reverse merger with FPMI, and the Company's warrants in FPI were exchanged for FPMI Warrants. During 2012, the Company recognized a gain in the amount of $115,752 as a result of the issuance of certain of these warrants to holders of promissory notes of the Company that matured during the period. During the year ended December 31, 2014, the Company assigned its remaining 109,917 FPMI Warrants, with an exercise price of $1.00 and expiring on February 15, 2019 to BHA in exchange for the extension of BHA’s previous cash deferral agreement through December 31, 2014. Following this transaction, the Company recognized a gain on the exchange in the amount of $26,660 and no longer held FPMI warrants.

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8.	INTANGIBLE ASSETS

Intangible assets as of December 31, 2014 and 2013 consisted of the following:

	2014			2013
Licensed patents and patent rights	$	50,000		$	50,000
Patents		41,044			41,044
NuRx licensed technology		13,200			13,200
Less: accumulated amortization		(75,684	)		(67,112	)
Intangibles, net	$	28,521		$	37,092

Patent under Licensing

9.	CONVERTIBLE NOTES PAYABLE

2012 Notes and 2013 Notes. In May 2012, in consideration for the extension of certain promissory notes originally due and payable on March 31, 2012 (the “2012 Notes”) to June 30, 2012, the Company assigned to the holders of the 2012 Notes FPMI Warrants to purchase a total of 113,127 shares of FPMI common stock for $0.50 per share (the “$0.50 FPMI Warrants”). In August 2012, in consideration for the extension of the maturity date of the 2012 Notes to November 15, 2012, the Company agreed to assign a total of 155,877 $0.50 FPMI Warrants to the holders of the 2012 Notes. As a result, a total of 260,508 $0.50 FPMI Warrants have been assigned to holders of 2012 Notes.

Between August 2012 and July 2013, the Company issued promissory notes in the aggregate principal amount of $114,000 (the “2013 Notes”). As additional consideration for the 2013 Notes, the Company issued an aggregate total of 200,000 shares of Common Stock, 8,496 $0.50 FPMI Warrants and 64,000 FPMI Warrants exercisable for $1.00 per share.

The 2012 and 2013 Notes accrue interest at the rate of 6% annually prior to maturity, and 12% annually thereafter. All 2012 Notes and 2013 Notes have matured and are currently due and payable on demand. The 2012 Notes and 2013 Notes are convertible at the option of each respective holder into shares of Common Stock at a conversion price equal to $0.10 per share. In addition, the holders may exchange the 2012 Notes and 2013 Notes for Common Stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the 2012 Notes and 2013 Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the 2012 Notes and 2013 Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the 2012 Notes and 2013 Notes demand repayment.

In connection with the issuance of the 2012 Notes and 2013 Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $106,261 and $28,998, respectively. The Company will amortize these expenses over the life of the 2012 Notes and 2013 Notes. As of December 31, 2012, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature.

In connection with the issuance of the 2013 Notes, the Company has recorded debt discount and expenses in the amount of $27,753 related to the value of the 64,000 FPMI warrants to the holders of the 2013 Notes. The Company will amortize the costs over the remaining life of these 2013 Notes. As of September 30, 2014, the Company recorded other financing costs of $27,753 related to the debt discount on the 2013 Notes.

On October 29, 2013, the holder of certain outstanding 2012 Notes and 2013 Notes totaling approximately $217,000 in principal and accrued interest agreed to cancel such notes in exchange for a new promissory note with a face amount of $217,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $216,000 of fees accrued from May 15, 2012 to October 15, 2013, otherwise payable in cash on or before December 31, 2013, for a promissory note with a face amount of $250,000 maturing on March 31, 2014, and 100,000 FPMI Warrants. These promissory notes accrued interest at a rate of 8% annually prior to maturity, and, following maturity of both promissory notes on March 31, 2014, now accrue interest at rate of 12% annually.

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Bridge Notes.

During the year ended December 31, 2014, the Company issued Bridge Notes in the aggregate principal amount of $386,000. As additional consideration for the purchase of the Bridge Notes, the Company issued an aggregate total of 772,000 shares of Common Stock to the purchasers of the Bridge Notes. In connection with the issuance of the Bridge Notes during the year ended December 31, 2014, the Company recorded debt discount and expenses related to the beneficial conversion feature in the amount of $35,944 and $48,444, respectively. The Company will amortize these amounts over the life of the debt and, accordingly, recorded interest expense related to the debt discount and beneficial conversion feature in the amount of $26,958, and $36,333, respectively. The Company also incurred $46,000 of costs related to issuance of the Bridge Notes, which will also be amortized over the life of the debt. Total issuance costs recognized during the year ended December 31, 2014 amounted to $34,263.

During the year ended December 31, 2014, the Company authorized the issuance of 2,601,233 shares of Common Stock to the holders of all outstanding notes payable with an aggregate outstanding principal balance of $870,693 in order to satisfy all accrued, but unpaid, interest on the notes issued between 2012 and June 2014. During the period, all of the authorized shares of Common Stock were issued to settle the total outstanding interest payable on the notes, which amounted to $93,924. The Company recognized a loss of $62,150 in connection with the settlement.

10.	LONG-TERM NOTES PAYABLE

The Company received a $44,000 loan from the Portland Development Commission in 2007. The loan matures in 20 years and was interest free through February 2010. The terms of the note stipulate monthly interest only payments from April 2010 through December 2014, at a 5% annual rate. The Company recorded interest expense on this loan of $2,582 for the year ended December 31, 2014.

11.	INCOME TAXES

Pursuant to ASC 740, income taxes are provided for based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.

We are subject to taxation in the U.S. and the state of Oregon. The Company is not current on its tax filings and is subject to examination until the filings take place.

At December 31, 2014 and 2013, the Company had gross deferred tax assets calculated at an expected blended rate of 38% of approximately $10,548,000 and $10,251,000, respectively, principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of $10,548,000 and $10,251,000 has been established at December 31, 2014 and 2013, respectively.

Topic 740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2014, the Company had taken no tax positions that would require disclosure under ASC 740.

The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and found no positions that would require a liability for unrecognized income tax benefits to be recognized. We are subject to examinations for all unfiled tax years. We deduct interest and penalties as interest expense on the financial statements.

Additionally, the future utilization of our net operating loss and R&D credit carryforwards to offset future taxable income may be subject to an annual limitation, pursuant to IRC Sections 382 and 383, as a result of ownership changes that may have occurred previously or that could occur in the future.

There is no unrecognized tax benefit included in the balance sheet that would, if recognized, affect the effective tax rate.

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The significant components of the Company’s net deferred tax assets (liabilities) at December 31, 2014 and 2013 are as follows:

	2014			2013
Gross deferred tax assets:
Net operating loss carryforwards	$	9,566,000		$	9,275,000
Difference between book and tax basis of former subsidiary stock held					-
Stock based expenses		217,000			202,000
Tax credit carryforwards		205,000			211,000
All others		560,000			563,000
		10,548,000			10,251,000

Deferred tax asset valuation allowance		(10,548,000	)		(10,251,000	)
Net deferred tax asset (liability)	$	-			-

At December 31, 2014, the Company has net operating loss carryforwards of approximately $9,566,000, which expire in the years 2014 through 2032. The net change in the allowance account was an increase of $297,000 for the year ended December 31, 2014 and $136,000 for the year ended December 31, 2013.

12.	CAPITAL STOCK

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 $166,769 (“Series B Preferred”). The remaining authorized preferred shares have not been designated by the Company as of December 31, 2014. During the year ended December 31, 2014, 3,739,286 shares of Series B Preferred stock were converted into a like number of shares of Common 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.

At December 31, 2014, the Company had 16,676,942 shares of Series B Preferred issued and outstanding with a liquidation preference of $166,769, and convertible into 16,676,942 shares of Common Stock.

Common Stock

The Company has authorized 150,000,000 shares of its Common Stock, $0.01 par value. The Company had issued and outstanding 63,341,163 and 52,728,644 shares of its Common Stock at December 31, 2014 and 2013.

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During the year ended December 31, 2014, the Company issued 3,739,286 shares of Common Stock from the conversion of Series B Preferred stock; 1.8 million shares of Common Stock issued in connection with a professional services agreement, 300,000 shares of Common Stock issued to a consultant for financial services, 300,000 shares of Common Stock as settlement of accounts payable, 1.9 million shares of Common Stock issued to management, 500,000 shares of Common Stock to certain Bridge Note investors and 2,367,352 shares of to certain note investors as payment of accrued interest on convertible notes payable. At December 31, 2014, 800,000 of the aforementioned shares are reserved for issuance.

During the year ended December 31, 2013, the Company reserved for issuance 300,000 shares Common Stock as settlement of accounts payable, and 1,900,000 shares of Common Stock as compensation to its three board members.

13.	STOCK PURCHASE WARRANTS

Common Stock Warrants

The following is a summary of all Common Stock warrant activity during the years ended December 31, 2014 and 2013:

	Number of Shares Under Warrants			Exercise Price Per Share	Weighted Average Exercise Price
Warrants issued and exercisable at December 31, 2012		2,480,000		$0.31 - $1.25	$	0.66
Warrants granted		-		-		-
Warrants expired		(924,000	)	$0.55 - $1.25	$	0.75
Warrants exercised		-
Warrants issued and exercisable at December 31, 2013		1,556,000		$0.31 - $1.25	$	0.61
Warrants granted
Warrants expired		(1,556,000	)	$0.31 - $1.25	$	0.61
Warrants exercised
Warrants issued and exercisable at December 31, 2014		-		-	$	-

During the years ended December 31, 2014 and 2013, there were no warrants issued by the Company. As of December 31, 2014, the Company had no warrants issued and outstanding.

14.	COMMON STOCK OPTIONS

In 2007, the Company adopted the 2007 Incentive and Non-Qualified Stock Option Plan (hereinafter the “Plan”), which replaced the 1997 Incentive and Non-Qualified Stock Option Plan, as amended in 2001, and under which 8,000,000 shares of Common Stock are reserved for issuance under qualified options, nonqualified options, stock appreciation rights and other awards as set forth in the Plan.

Under the Plan, qualified options are available for issuance to employees of the Company and non-qualified options are available for issuance to consultants and advisors. The Plan provides that the exercise price of a qualified option cannot be less than the fair market value on the date of grant and the exercise price of a nonqualified option must be determined on the date of grant. Options granted under the Plan generally vest three to five years from the date of grant and generally expire ten years from the date of grant.

During the years ended December 31, 2014 and 2013 no stock options were granted by the Company.

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The following is a summary of all Common Stock option activity during the year ended December 31, 2014 and 2013:

	Shares Under Options Outstanding		Weighted Average Exercise Price
Outstanding at December 31, 2012	304,500		$	0.91
Options granted	-		$	-
Options forfeited	-		$	-
Options exercised	-			-
Outstanding at December 31, 2013	304,500		$	0.91
Options granted	-		$	-
Options forfeited	(152,500	)	$	(0.47	)
Options exercised	-		$	-
Outstanding at December 31, 2014	152,000		$	1.34

	Options Exercisable		Weighted Average Exercise Price Per Share
Exercisable at December 31, 2013		142,000	$	0.60
Exercisable at December 31, 2014		52,000	$	0.85

The following represents additional information related to Common Stock options outstanding and exercisable at December 31, 2014:

		Outstanding				Exercisable
Exercise Price		Number of Shares	Weighted Average Remaining Contract Life in Years	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
$	0.80	1,000	3.16	$	0.80	1,000	$	0.80
$	0.85	51,000	2.77	$	0.85	51,000	$	0.85
$	1.60	100,000	1.26	$	1.00	-	$	-
		152,000	1.78	$	1.34	52,000	$	0.85

The weighted average remaining contractual term for both fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 2.0 years.

A summary of the status of the Company’s nonvested stock options as of December 31, 2014 and changes during the year ended December 31, 2014 is presented below:

Nonvested Stock Options	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2012		162,500			1.09
Options granted		-			-
Options vested		-			-
Options forfeited		-			-
Nonvested at December 31, 2013		162,500		$	1.09
Options granted		-			-
Options vested		-		$	-
Options forfeited		(62,500	)		(0.47	)
Nonvested at December 31, 2014		100,000		$	1.60

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15.	COMMITMENTS AND CONTINGENCIES

Professional Services Agreement. On May 16, 2011, the Company entered into a consulting agreement with its financial advisor, BHA, pursuant to which BHA provided business, corporate development, litigation support, financial and strategic consulting services to the Company for and in consideration of the payment of $12,000 per month. Under the terms of the consulting agreement, however, amounts due thereunder, but not paid accrued until the Company's cash balance exceeded $1.5 million, or 24 months from the date of execution. This agreement expired pursuant to its terms in December 2012.

On August 1, 2012, the consulting agreement was amended to extend the deferral period for accrued cash compensation from May 16, 2013 to December 31, 2013, and to require the Company to issue 100,000 shares of restricted Common Stock for the remaining term of the agreement in lieu of the agreement’s previous requirement of monthly issuances of warrants to purchase Common Stock. The warrants previously issued under the consulting agreement were exchanged for shares of Common Stock at a ratio of one share for every two warrants issued under the agreement resulting in the cancellation of warrants to issue 3.0 million shares of Common Stock in exchange for a total of 1.5 million shares of restricted Common Stock.

On October 29, 2013, we entered into a new advisory agreement with BHA. Pursuant to this agreement, we agreed to pay a retainer in the amount of $100,000 and $15,000 per month beginning on November 29, 2013. The initial term of the agreement expires on December 31, 2014. BHA agreed to defer the cash fees due under the new agreement until June 30, 2014. On July 1, 2014, the Company and BHA modified the terms of this agreement to provide for a one-time $15,000 payment in August 2014, and deferral of all other remaining cash fees until December 31, 2014 in consideration for the issuance of the 109,917 FPMI Warrants.

On May 28, 2014, we entered into a Consulting Services Agreement for financial related services from Mayer & Associates (“Mayer”) through November 30, 2014. Under the terms of the agreement, Mayer will receive 300,000 shares of Common Stock and four payments of $12,500. During the year ended December 31, 2014, the Company has recorded the expenses under this agreement totaling $50,000 of which $25,000 has been paid, additionally the Company has reserved for issuance 300,000 shares of its Common Stock in connection with this agreement.

On May 28, 2014, the Company entered into a Consulting Services Agreement for financial related services from JFS Investments PR LLC (“JFS”). Under the terms of the agreement, JFS will receive a total of 2.5 million restricted shares of Common Stock as compensation under the agreement. The initial payment of 625,003 shares will be issued provided the Company receives gross proceeds of at least $500,000 of equity capital (the “Initial Capital Raise”). As of December 31, 2014, the requirements under this agreement had not been met.

16.	SUBSEQUENT EVENTS

Issuance of Additional Bridge Notes and Payment of Interest in Shares of Common Stock

On January 2, 2015, the Company issued an additional Bridge Note in the aggregate principal amount of $36,500 and issued 73,000 shares of Common Stock to the purchaser of the additional Bridge Note. Additionally, we issued 500,000 shares of Common Stock in January 2015 to certain investors who purchased Bridge Notes during the year ended December 31, 2014.

In February 2015, the Company issued 815,061 shares of Common Stock as payment for accrued interest for the period from July 1, 2014 through December 31, 2014 under certain convertible notes payable.

Issuance of Stock Options; Cancellation of Management Shares

On February 3, 2015, the Board of Directors granted an aggregate of 2.3 million stock options to its executive management at an exercise price of $0.04 per share. The options have a five year term and are fully vested on the date of grant.

In May 2013, the executive management received an aggregate of 1 million shares of Common Stock as compensation for the completion of certain objectives. On February 20, 2015, the Board of Directors agreed to cancelled these shares, as the Company had failed to meet the specified objectives.

Financial Consulting Agreements

Although the Company has yet to receive proceeds sufficient to constitute an Initial Capital Raise (as defined above), in February 2015, the Company agreed to issue 300,000 shares of Common Stock to Mayer and 625,003 shares to JFS Investments as consideration for services rendered under the agreements thus far.

Passing of Dr. William H. Fleming

On March 21, 2015, Dr. William Fleming, the Company's Chief Scientific Officer and member of the Company's Board of Directors, unexpectedly passed away. The Board of Directors is currently searching for a successor to manage the Company as it executed its current business plan.