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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

x
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2011

OR

¨
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________to_________

Commission File No. 0-17119

QUANTRX BIOMEDICAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

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

P.O. Box 4960, Portland, Oregon 97062
 (Address of Principal Executive Offices) (Zip Code)

503 575 9385
 (Registrant’s Telephone Number, Including Area Code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x No  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o No  x
 
The number of shares outstanding of the issuer’s common stock as of November 18, 2011 was 50,421,630.

 


 

 
 
TABLE OF CONTENTS
 
PART I - FINANCIAL INFORMATION
 
 
PAGE
ITEM 1.
   
       
    2
       
    3
       
    4
       
    5
       
ITEM 2.
  10
       
ITEM 4.
  14
       
PART II - OTHER INFORMATION
 
   
ITEM 1.
  15
       
ITEM 2.
  15
       
ITEM 3.
  15
       
ITEM 4.
  15
       
ITEM 5.
  15
       
ITEM 6.
  15
       
     
 
 
PART I – FINANCIAL INFORMATION
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 
THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,” “ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING.  VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS; INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2010.  WE ASSUME NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW INFORMATION, ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.

 
ITEM 1.  Financial Statements
 
QUANTRX BIOMEDICAL CORPORATION
BALANCE SHEETS

   
September 30,
 
December 31,
2011
2010
ASSETS
 
unaudited
   
Current Assets:
       
Cash and cash equivalents
 
$
31,325
 
$
229,944
Accounts receivable
   
3,866
   
4,457
Accounts receivable – related party
   
-
   
414,179
Interest receivable – related party
   
75,689
   
63,689
Inventories
   
2,981
   
3,770
Prepaid expenses
   
23,511
   
23,409
Note receivable – related party
   
200,000
   
200,000
Total Current Assets
   
337,372
   
939,448
             
Investments
   
200,000
   
200,000
Property and equipment, net
   
39,413
   
109,479
Intangible assets, net
   
41,246
   
46,805
Security deposits
   
6,093
   
6,093
Total Assets
 
$
624,124
 
$
1,301,825
             
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
           
Current Liabilities:
           
Accounts payable
 
$
187,496
 
$
437,587
Accounts payable – related party
   
-
   
193,987
Accrued expenses
   
30,804
   
168,000
Deferred rent
   
15,626
   
-
Notes payable, net of amortized discount
   
147,910
   
-
Security deposit
   
-
   
2,000
Total Current Liabilities
   
381,836
   
801,574
Notes payable, long-term
   
44,000
   
44,000
Total Liabilities
   
425,836
   
845,574
             
Commitments and Contingencies
         
-
Stockholders’ Equity (Deficit):
         
-
Series B Convertible preferred stock; $0.01 par value, 20,500,000 authorized shares, 20,416,228 and 17,916,228 shares issued and outstanding, respectively
   
204,162
   
179,162
Common stock; $0.01 par value; 150,000,000 authorized; 50,346,630 and 44,427,630 shares issued and outstanding, respectively
   
503,466
   
444,276
Common stock to be issued
   
-
   
128,000
Additional paid-in capital
   
47,807,741
   
47,524,761
Accumulated deficit
   
(48,317,081)
   
 (47,819,948)
Total Stockholders’ Equity (Deficit)
   
198,288
   
456,251
             
Total Liabilities and Stockholders’ Equity (Deficit)
 
$
624,124
 
$
1,301,825
 
The accompanying condensed notes are an integral part of these financial statements. 

 
QUANTRX BIOMEDICAL CORPORATION
STATEMENTS OF OPERATIONS (unaudited)

    Three Months Ended September 30,     Nine Months Ended September 30,  
  
 
2011
   
2010
   
2011
   
2010
 
Revenues:
                       
Revenues
 
$
4,014
   
$
30,941
   
$
14,802
   
$
60,379
 
Revenues – related party
   
-
     
159,067
             
1,429,960
 
Total Revenues
   
4,014
     
190,008
     
14,802
     
1,490,339
 
                                 
Costs and Operating Expenses:
                               
Cost of goods sold (excluding depreciation and amortization)
   
58
     
135
     
339
     
264
 
Sales, general and administrative
   
16,419
     
472,614
     
72,051
     
1,055,717
 
Professional fees
   
121,192
     
125,556
     
399,215
     
553,986
 
Research and development
   
15,371
     
309,784
     
55,179
     
1,443,217
 
Amortization
   
1,428
     
2,066
     
5,559
     
10,910
 
Depreciation
   
4,864
     
14,823
     
22,494
     
47,638
 
Total Costs and Operating Expenses
   
159,318
     
924,978
     
554,837
     
3,111,732
 
                                 
Loss from Operations
   
(155,318)
     
(734,970
)
   
(540,035)
     
(1,621,393
)
                                 
Other Income (Expense):
                               
Interest and dividend income
   
4,000
     
6,629
     
12,000
     
18,016
 
Interest expense
   
(3,567)
     
(1,653
)
   
(5,127)
     
(4,430
)
Rental income
   
-
     
2,750
             
11,000
 
Gain on settlement of accounts payable
   
2,000
             
259,223
     
(63,601)
 
Loss from deconsolidation of subsidiary
                               
Gain (loss) from joint venture
                   
-
         
Gain on sale of investments
           
195,251
     
-
     
946,501
 
Net gain (loss) on dispositions
   
13,598
     
(29,045)
     
(223,204)
     
(11,223)
 
Total Other Income (Expense), net
   
16,031
     
173,932
     
42,902
     
896,263
 
                                 
Income (Loss) Before Taxes
   
(139,287)
     
(561,038)
     
(497,133)
     
(725,130
)
                                 
Provision for Income Taxes
   
-
     
-
     
-
     
-
 
                                 
Preferred Stock Dividend
   
-
     
(324,831)
     
-
     
(324,831)
 
                                 
Net Income (Loss)
 
$
(139,287)
   
$
(885,869)
   
$
(497,133)
   
$
(1,049,961
)
                                 
Basic and Diluted Net Loss per Common Share
 
(0.00)
   
$
(0.02)
   
(0.01)
   
$
(0.02)
 
                                 
Basic and Diluted Weighted Average Shares Used in per Share Calculation
   
49,771,630
     
44,427,630
     
48,260,818
     
44,427,630
 

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

QUANTRX BIOMEDICAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
 
   
September 30,
   
September 30,
 
   
2011
   
2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
 
$
(497,133)
   
$
 (725,130)
 
Adjustments to reconcile net loss to net cash used by operating activities:
               
Depreciation and amortization
   
28,053
     
58,548
 
Interest expense related to amortization of non-cash discount, non-cash beneficial conersion feature and deferred financing costs     1,554       -  
Non-cash expenses related to employee stock based compensation
   
7,950
     
38,943
 
Non-cash expense related to common stock issued as compensation
   
10,000
     
-
 
Non-cash expenses related to common stock warrants issued for consulting
   
63,664
     
 250
 
Non-cash expenses related to fair value of common stock issued in warrant exchange
   
62,070
     
-
 
Non-cash fair value of preferred stock issued as compensation
   
37,500
     
49,083
 
Net Gain on settlement of accounts payable
   
257,235
     
-
 
Loss from joint venture
   
-
     
63,601
 
Gain(loss) on disposition of assets
   
236,333
     
  (759,778)
 
(Increase) decrease in:
               
Accounts receivable
   
414,770
     
 (619,909)
 
     Interest receivable
   
(12,000)
     
                     (12,000)
 
     Inventories
   
789
     
302
 
     Prepaid expenses
   
(102)
     
89,291
 
Increase (decrease) in:
               
     Accounts payable
   
(847,074)
     
501,227
 
     Security deposits
   
(2,000)
     
-
 
     Accrued expenses
   
(135,854)
     
498,335
 
     Deferred rent
   
15,626
     
-
 
     Deferred revenue
   
-
     
 (297,868)
 
             
  -
 
Net Cash Used by Operating Activities
   
(358,619)
     
 (1,123,105)
 
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Cash proceeds from sale of investment securities
   
-
     
771,501
 
                 
Net Cash Provided (Used) by Investing Activities
   
-
     
771,501
 
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Cash proceeds from the issuance of notes payable
   
160,000
     
25,000
 
                 
Net Cash Provided by Financing Activities
   
160,000
     
25,000
 
                 
Net Increase (Decrease) in Cash and Cash Equivalents
   
(198,619)
     
 (326,604)
 
                 
Cash and Cash Equivalents, Beginning of Period
   
229,944
     
376,211
 
                 
Cash and Cash Equivalents, End of Period
 
$
31,325
   
$
49,607
 
                 
Supplemental Cash Flow Disclosures:
               
Interest expense paid in cash
 
$
1,326
   
$
4,430
 
Income tax paid
 
$
-
   
$
-
 
                 
NON CASH INVESTING & FINANCING ACTIVITIES:
               
Shares issued for accounts payable
 
$
43,000
   
$
  -
 
Shares issued related to notes payable
 
$
20,000
   
$
-
 
Fair value of warrants issued as compensation
 
$
-
   
$
49,083
 
Debt discount on convertible notes payable   $ 14,986     $ -  

The accompanying condensed notes are an integral part of these interim financial statements.
 
  QUANTRX BIOMEDICAL CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS

1.
Description of Business and Basis of Presentation
 
QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. The Company’s principal business office is located at 5920 NE 112th Avenue, Portland, Oregon.  When used in this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “our,” “ours,” or “us” mean QuantRx Corporation, a Nevada corporation.

Recent Developments.  During the three months ended June 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $100,000 (the “Q2 Notes”).  The Q2 Notes accrue interest at the rate of 3% annually, and are due and payable on or before November 19, 2011.  In addition to the Q2 Notes, the Company received an additional $5,000 investment during the three months ended June 30, 2011.  The terms of the investments were determined in the quarter ended September 30, 2011, and are identical to the Q3 Notes described below. 
 
During the quarter ended September 30, 2011, the Company also issued promissory notes to certain investors resulting in gross proceeds to the Company of $55,000 (together, the “Q3 Notes”).  The Q3 Notes accrue interest at a rate of 6% annually, and are due and payable on or before March 31, 2012.  In the event of a default on the Q2 Notes and Q3 Notes, the interest rate increases to 12% annually.  The Q3 Notes are convertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $0.10 per share.  In addition, at the option of the holder, 110% of the face value of the Q3 Notes may be exchanged for securities issued in connection with a qualified financing, which is defined as a financing resulting in gross proceeds to the Company of at least $1.0 million.  Pursuant to the terms of the Q3 Notes, the Company issued 50,000 shares of its common stock for each $10,000 in principal amount received in connection with the issuance of the Q3 Notes.  As of September 30, 2011, 300,000 shares of its common stock were issued, in connection with the Q3 Notes.

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

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

2.
Management Statement Regarding Going Concern
 
The Company is currently not generating revenues from operations to meet its operating expenses. 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 has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees, as well as divesting its minority equity interests and equity-linked investments.
 
Management believes that given the current economic environment and the continuing need to strengthen our cash position, there is still doubt about the Company's ability to continue as a going concern. Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic or other transaction with its joint venture partner, to obtain additional funding to continue the development of, and successfully commercialize, its products. There can be no assurance that the Company will be successful in its efforts. Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, the Company’s business, results of operations, liquidity and financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going concern.
 
The Company believes that its ability to execute its business plan, and therefore continue as a going concern, is dependent upon its ability to do the following: 

 
·
obtain adequate sources of funding to pay unfunded operating expenses, execute its business plan and fund long-term business operations;
 
 
·
manage or control working capital requirements by continuing to reduce operating expenses; and
 
 
·
develop new and enhance existing relationships with product distributors and other points of distribution for the Company’s products.

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

3.
Summary of Significant Accounting Policies
 
Accounting for Share-Based Payments.  The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in employee stock-based compensation expense for the three and nine months ended September 30, 2011 of $7,950 and $23,042, respectively, and $7,949 and $38,941 for the three and nine months ended September 30, 2010, respectively.
 
Black Scholes Option Pricing Model.  During 2011, the Company has used Risk-free interest rates ranging from 2.90% to 3.90%, a Dividend Yield of 0%, and volatility ranging from 207% to 388% to calculate the fair value of equity securities issued for services.

Earnings per Share.  The Company computes net income (loss) per common share in accordance with ASC Topic 260. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year. Basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as all common stock equivalents outstanding for the three months ended September 30, 2011 were deemed to be anti-dilutive; moreover, including common stock equivalents in the calculation of diluted earnings per share would have been anti-dilutive for the nine months ended September 30, 2011.  As of September 30, 2011, the Company had (i) outstanding options exercisable for 570,500 shares of common stock with a weighted average exercise price of $1.63 per share and an average remaining term of 3.45 years; (ii) outstanding warrants exercisable into 5,032,971 shares of common stock with a weighted average exercise price of $0.55 per share and average remaining term of 2.70 years; and (iii) 20,416,228 shares of Series B Preferred Stock convertible into 20,416,228 shares of common stock.
     As of September 30, 2010, the Company had outstanding options exercisable for 570,500 shares of its common stock, warrants exercisable for 11,716,346 shares of its common stock, and preferred stock convertible into 20,416,228 shares of its common stock.  The above options, warrants, and convertible debt securities were deemed to be anti-dilutive for the three and nine months ended September 30, 2010.
 
    Fair Value.  The Company has adopted ASC Topic 820, “Fair Value Measurements and Disclosures” for both financial and nonfinancial assets and liabilities. The Company has not elected the fair value option for any of its assets or liabilities.
 
    Reclassifications. Certain reclassifications have been made in the presentation of the financial statements for the three and nine months ended September 30, 2010 to conform to the presentation of the financial statements for the three and nine months ended September 30, 2011.
 
    Use of Estimates.  The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.
 
4.
Investments
 
    FluoraPharma, Inc. In May 2011, Fluoropharma, Inc. (“FPI”) entered into a reverse merger with Fluoropharma Medical, Inc. (“FPMI”).  In connection with this transaction, the Company’s warrants and options in FPI were exchanged for options and warrants in FPMI.  At September 30, 2011, the Company held 277,500 options exercisable at $.50 and 249,278 warrants exercisable at $1.00. The Company deems the value of the options and warrants to be fully impaired at September 30, 2011.
 
    Genomics USA, Inc. (dba GMS Biotech) In May 2006, the Company purchased 144,024 shares of GUSA common stock for $200,000. As of September 30, 2011 and 2010, the Company owned 12% of the issued and outstanding capital stock of GUSA.  The Company uses the cost method to account for this investment since the Company does not control nor have the ability to exercise significant influence over operating and financial policies. In accordance with the cost method, the investment is recorded at cost and impairment is considered in accordance with the Company’s impairment policy. No impairment was recognized for the periods ended September 30, 2011 and September 30, 2010.
 
   NuRx Pharmaceuticals, Inc. ("NuRx").  In July 2011, the Company settled all disputes between the parties relating to the Company's interest in QN Diagnostics, LLC, a joint venture between the Company and NuRx.  Under the terms of the settlement, the Company received 12.0 million shares of common stock in NuRx.  As a result of the issuance, the Company holds an approximate 25% equity interest in NuRx. The Company deems the value of the NuRx shares to be fully impaired at September 30, 2011.
 
5.
Intangible Assets
 
    Intangible assets as of the balance sheet dates consisted of the following:
 
   
September 30,
2011
   
December 31,
2010
 
Licensed patents and patent rights
 
$
50,000
   
$
50,000
 
Patents
   
41,004
     
41,004
 
Less: accumulated amortization
   
(50,158)
     
(44,199
)
Intangibles, net
 
$
41,246
   
$
46,085
 
 
    The Company’s intangible assets are carried at the legal cost to obtain them. Intangible assets are amortized using the straight line method over the estimated useful life. Useful lives are eight to fifteen years for licensed patents and patent rights, and seventeen years for patents. Amortization expense totaled $1,428 and $5,559 for the three and nine months ended September 30, 2011 and $2,066 and $5,450 for the three and nine months ended September 30, 2010, respectively.  Impairment will be considered in accordance with the Company’s impairment policy which requires at least an annual analysis. No impairment was recognized as of September 30, 2011. 
6.
Settlements of Accounts Payable

During the nine months ended September 30, 2011, the Company settled an aggregate total of $332,258 of accounts payable and accrued expenses in consideration for the payment of $32,025 cash and the issuance of 900,000 shares of common stock with a fair value of $43,000.  The Company has recorded gains on settlement of accounts payable of $259,223 during the nine months ended September 30, 2011.
 
During the quarter ended September 30, 2011, in connection with the settlement of certain litigation related to QND, the Company settled its obligations to PRIA Diagnostics, LLC ("PRIA") in consideration for the payment to PRIA of $5,000, and the issuance of 500,000 shares of the Company's common stock with a deemed value of $15,000.

7.
Notes Payable

During the three months ended June 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $100,000 (the “Q2 Notes”).  The Q2 Notes accrue interest at the rate of 3% annually, and are due and payable on or before November 19, 2011.  Concurrent with this debt financing, the lenders agreed to surrender and cancel 2,069,000 warrants held by it, and in consideration therefore the Company issued the lender 2,069,000 shares of common stock.  In addition to the Q2 Notes, the Company received an additional $5,000 investment during the three months ended June 30, 2011, on terms and conditions identical to the Q3 Notes, described below.

During the three months ended September 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $55,000 (the “Q3 Notes”).  The Q3 Notes accrue interest at a rate of 6% annually, and are due and payable on or before March 31, 2012.  In the event of a default on the Q2 Notes and Q3 Notes, the interest rate increases to 12% annually.  The Q3 Notes are conertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $0.10 per share.  In addition, at the option of the holder, 110% of the face value of the Q3 Notes may be exchanged for securities issued in connection with a qualified financing, which is defined as a financing resulting in gross proceeds to the Company of at least $1.0 million.  Pursuant to the terms of the Q3 Notes, the Company issued 50,000 shares of its common stock for each $10,000 in principal amount received in connection with the issuance of the Q3 Notes.  As of September 30, 2011, the Company has issued 300,000 shares of its common stock related to the Q3 Notes. 
 
In accordance with ASC Topic 470, the Company allocated the proceeds of the Q3Notes to the common stock issued and the convertible instruments based upon the relative fair values of the debt instruments without the common stock and shares of common stock itself at the time of issuance of the Q3 Notes. The fair value of the common stock was determined as the closing price of the shares on the date the Q3 Notes were issued, with the value allocated to the common shares reflected in Stockholders’ Equity and a debt discount. Based upon the respective fair values as of the original issuance dates, $14,986 of the $160,000 in total debt was allocated to discounts associated with the common stock. Giving effect to the monthly amortization of the discount, totaling $1,554 as of September 30, 2011, $13,432 of the discount remains to be amortized over the remaining life of the Q3 Notes.
 
8.
Other Balance Sheet Information
 
Components of selected captions in the accompanying balance sheets consist of:
 
   
September 30,
   
December 31,
 
   
2011
   
2010
 
Prepaid expenses:
           
Prepaid insurance
  $ 22,957     $ 17,386  
Other
    554       6,023  
Prepaid expenses
  $ 23,511     $ 23,409  
                 
                 
Property and equipment:
               
Computers and office furniture, fixtures and equipment
  $ 87,370     $ 90,660  
Machinery and equipment
    99,015       173,295  
Leasehold improvements
    8,902       92,233  
Less: accumulated depreciation
    (155,874 )     (246,709 )
Property and equipment, net
  $ 39,414     $ 109,479  

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

Accrued expenses:
           
Payroll and related
  $ 5,250     $ 86,000  
Professional fees
    25,554       82,000  
Accrued expenses
  $ 30,804     $ 168,000  
 
9.
Preferred Stock
 
The Company has authorized 25,000,000 shares of preferred stock, of which 20,500,000 is designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $177,000 (“Series B Preferred”).  The remaining 4,500,000 authorized preferred shares have not been designated by the Company as of December 31, 2010.

Series A Preferred Stock.  On November 19, 2010, the Company filed a Certificate of Withdrawal of the Certificates of Designations of the Series A Preferred Stock (“Series A Preferred”) with the Nevada Secretary of State, as there were no shares of Series A Preferred issued and outstanding after the exchange transaction discussed below. 
 
Series B Convertible Preferred Stock.  The Company has authorized 20,500,000 shares of Series B Preferred, $0.01 par value.  The Series B Preferred ranks prior to the common stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“Junior Stock”).  Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of Common Stock multiplied by the number of shares of Common Stock equal to the outstanding shares of Series B Preferred, on an as converted basis.  The holders of Series B Preferred have voting rights to vote as a class on matters a) amending, altering or repealing the provisions of the Series B Preferred so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred; or b) to effect any distribution with respect to Junior stock.  At any time, the holders of Series B Preferred may, subject to limitations, elect to convert all or any portion of their Series B Preferred into fully paid nonassessable shares of Common Stock at a 1:1 conversion rate.

In December 2010, the Company issued 17,916,228 shares of its Series B Preferred in exchange for 3,583,246 shares of Series A-1 Preferred at a per share price of $0.20.  In addition, in May 2011 the Company issued 2.5 million shares of its Series B Preferred to its financial advisor, in consideration for past professional services provided the Company, consisting of financial advisory, strategic consulting, litigation support, among other services.  
  
10.
Common Stock, Options and Warrants
 
The Company has authorized 150,000,000 shares of its common stock, $0.01 par value. In December 2009, the shareholders of the Company approved an increase in the number of authorized common stock from 75,000,000 to 150,000,000 shares. The increase took effect in January 2010.
             
In consideration for the management and other executive services provided by Drs. Shalom Hirschman and William Fleming, the Company issued 500,000 restricted shares of the Company's common stock to each of Drs. Hirschman and Fleming.  The shares are subject to certain vesting requirements and are subject to forfeiture under certain circumstances.  Drs. Hirschman and Fleming serve as the Company's Principal Executive Officer and Principal Accounting Officer, and President and Chief Science Officer, respectively.

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

Other than (i) the issuances to Drs. Hirschman and Fleming of 1.0 million shares of common stock, (ii) the issuance of 2,069,000 shares of common stock, with a deemed value of $62,070, to a lender in connection with a certain debt financing, as described in Note 7, (iii) the issuance of 500,000 shares of the Company’s common stock to PRIA, as described in Note 6, (iv) the issuance of 900,000 shares of common stock as settlement of accounts payable, as described in Note 6, (v) the issuance of 300,000 shares of common stock related to notes payable, as described in Note 7, and (vi) the issuance of warrants to the Company's financial advisor to purchase 1,000,000 shares of common stock, as described in Note 11 below, in the nine months ended September 30, 2011, no common stock, or options purchase common stock, were issued or granted.  

 
2007 Incentive and Non-Qualified Stock Option Plan.  The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term.  Total compensation cost related to the Company’s employee options was $7,950 and $23,042 for the three and nine months ended September 30, 2011, and $7,949 and $38,941 for the three and nine months ended September 30, 2010, respectively.
 
11.
Commitments and Contingencies
  
Lease Commitments.  The Company had an operating lease agreement for office and research and development lab space with an expiration date of September 30, 2011. In connection with this facility lease, the Company made a security deposit of $5,000 which is included in long-term assets on the balance sheet.  In December 2010, the existing operating lease was amended to reduce the rent payments for February 2011 to September 2011 from $3,950 per month to $2,000 per month, accruing deferred rent that will be due immediately in the case of default on the lease, or to be negotiated in the lease renewal for a minimum of three years. In August 2011, the Company was in default on the lease, and the total deferred rent plus accrued interest at 1% is due and payable.  Deferred rent at September 30, 2011 was $15,626.

Rent expense is recognized on a straight-line basis over the initial lease term. Leasehold improvements have been included in fixed assets.  Rent expense related to operating leases was approximately $14,400 and $38,328 for the three and nine months ended September 30, 2011 and $28,980 and $33,602 for the three and nine months ended September 30, 2010, respectively. In connection with facility leases, the Company has made security deposits totaling $5,000, which are included in long-term assets in the balance sheet.

Professional Services Agreement.  On May 16, 2011, the Company entered into a consulting agreement with its financial advisor, pursuant to which it will provide certain 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; provided, however, such amount shall not be paid, and shall accrue, until the earlier to occur of such time as the Company's cash balance exceeds $1.5 million, or twenty-four months from the date of execution.  For each month in which payment of the cash component is deferred, the Company's financial advisor shall be issued a warrant exercisable for 200,000 shares of the Company's common stock at an exercise price of the higher of $.20 per share or 105% of the closing price on the date of issuance.  The term of the consulting agreement is 18 months, and the term of the warrants is five years.   At September 30, 2011, the Company had issued warrants to purchase 1,000,000 shares of common stock under this agreement.
 
12.
Subsequent Events
 
In October 2011, the Company issued promissory notes to certain investors, resulting in gross proceeds to the Company of $15,000 (the "Q4 Notes").  The Q4 Notes accrue interest at the rate of 6% annually, and are due and payable on or before March 31, 2012.  The Q4 Notes are convertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $0.10 per share.  In addition, at the option of the holder, 110% of the face value of the Q4 Notes may be exchanged for securities issued in connection with a qualified financing, resulting in gross proceeds to the Company of at least $1.0 million.  The Company has reserved for issuance 75,000 shares of its common stock related to the Q4 Notes.  The Company will record a discount on the Q4 Notes in the amount of $6,177 and a beneficial conversion feature of $21,162, each will be amortized as non-cash interest expense over the life of the Q4 Notes.
 
ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion of our financial condition should be read in conjunction with the financial statements and notes to financial statements included elsewhere in this filing.  The following discussion (as well as statements in Item 1 above and elsewhere) contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 that involve risks and uncertainties.  Some or all of the results anticipated by these forward-looking statements may not occur. Forward-looking statements involve known and unknown risks and uncertainties including, but not limited to, trends in the biotechnology, healthcare, and pharmaceutical sectors of the economy; competitive pressures and technological developments from domestic and foreign genetic research and development organizations which may affect the nature and potential viability of our business strategy; and private or public sector demand for products and services similar to what we plan to commercialize.  We disclaim any intention or obligation to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
 
Unless otherwise indicated or the context otherwise requires, all references in this report to “we,” “our,” “ours,” “us,” the “Company” or similar terms refer to QuantRx Biomedical Corporation, a Nevada corporation.

 
Overview
 
The Company has developed and ultimately intends to commercialize its innovative PAD-based products for the OTC and POC markets based on its patented technology platforms, and its genomic diagnostics, based on its patented PADKit® technology for the worldwide healthcare industry. These platforms include: inSync®, Unique™, PADKit®, and OEM branded OTC and laboratory testing products based on the Company’s core intellectual property related to its PAD technology.  These products are intended for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs.  The Company’s efforts to successfully commercialize its products, however, are currently contingent on the development of a financing and operating plan focused on the commercialization of the Company’s PAD technology.  In the interim, the Company has executed a plan to substantially reduce expenses, including headcount, and to restructure and/or eliminate many of its outstanding liabilities, while continuing its efforts to develop a financing and operating plan.  This plan is necessary in order for the Company to continue as a going concern.
  
During the quarter ended September 30, 2011, the Company had a minority investment in Genomics USA, Inc. (“GUSA”), which is developing Single Nucleotide Polymorphism (“SNP”) chips, genome-based diagnostic chips for the next generation of genomic and proteomic diagnostic markets.  The Company is currently evaluating its minority equity interest in GUSA with the objective of extracting the value of such investment for the benefit of the Company and its shareholders.  The Company currently does not realize any material value in its investment in GUSA.
 
The Company’s current strategy is to develop a financing and operating plan to: (i) leverage its broad-based intellectual property (IP) and patent portfolio to develop new and innovative diagnostic products; (ii) commercialize existing products through corporate partners and distributors; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of the Company’s investments in non-core assets, including GUSA.   No assurances can be given that the Company will successfully obtain necessary financing or commercialize its products.
 
Consolidated Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2011 to the Three and Nine Months Ended September 30, 2010
 
Total revenues for the three and nine months ended September 30, 2011 were $4,014 and $14,802, respectively.  Total revenues for the three and nine months ended September 30, 2010 were $190,008 and $989,298, respectively.  The substantial decrease in total revenues in the 2011 periods is due to the divestiture of its interest in QND resulting from the settlement with NuRx, which resulted in the termination of any payments by NuRx to the Company.  No further amounts will be paid to the Company under the terms of the Development Agreement, and the Company expects only nominal revenues pending the successful launch of its PAD-based products.
 
Sales, general and administrative expense for the three months ended September 30, 2011 and 2010 was $16,419 and $472,614 respectively, and for the nine months ended September 30, 2011 and 2010 was $72,051 and $1,055,717, respectively.  The substantial decrease in sales, general and administrative expense in the 2011 periods is due to decreased personnel and related expenses due to the suspension of active operations at December 31, 2010.
 
Professional fees for the three months ended September 30, 2011 and 2010, were $121,192 and $125,556, respectively, and for the nine months ended September 30, 2011 and 2010, were $399,215 and $553,986, respectively. Professional fees include the costs of legal, consulting and auditing services provided to us.  The decrease in professional fees in the 2011 periods is directly related to the suspension of operations at December 31, 2010.  Included in the three and nine months periods in 2011 are non-cash expenses of $136,522 related to stock and warrants issued as payment for professional services.

 
Research and development costs for the three months ended September 30, 2011 and 2010 were $121,192 and 125,556, respectively, and for the nine months ended September 30, 2011 and 2010, were $399,215 and $553,986, respectively.  The decrease in research and development fees in the 2011 periods is directly attributable to the suspension of operations at December 31, 2010.
 
      During the three and nine months ended September 30, 2011, the Company recorded interest expense of $3,567 and $5,127, respectively.  Included in interest expense for the 2011 periods is non-cash interest expense of $1,554 related to the amortization of the debt discount on notes payable.
 
During the three and nine months ended September 30, 2011, the Company had gains on settlement of accounts payable of $2,000 and $259,233, respectively.  During the nine months ended September 30, 2011, the Company settled an aggregate total of $332,258 of accounts payable and accrued expenses in consideration for the payment of  $32,025 and the issuance of 900,000 shares of common stock with a fair value of $43,000.

During the three and nine months ended September 30, 2011, the Company recorded aggregate losses on dispositions of $13,598 and aggregate losses of $223,204, respectively, due primarily to write downs of accounts receivable related to QN Diagnostics, the Company’s former joint venture.

The Company’s net loss for the three months ended September 30, 2011 was $139,287 compared to net loss for the three months ended September 30, 2010 of $561,038.  Net loss for the nine months ended September 30, 2011 and 2010, were $497,133 and $725,130, respectively. The decrease in net losses in the three month period ended September 30, 2011 compared to the comparable period in 2010 is due to substantially lower general and administrative costs, while the increased net loss in the nine month period ended September 30, 2011 compared to the comparable period in 2010 is due to the substantially lower revenues related to the Development Services Agreement with QND during the period.

The Company will incur substantially lower costs and expenses during the year ended December 31, 2011 compared to the year ended December 31, 2010, with decreases being substantially attributable to the Company's decision to scale down active operations as management continues to evaluate and develop its future operating plan.
 
Liquidity and Capital Resources
 
As of September 30, 2011, the Company had cash and cash equivalents of $31,325, as compared to cash and cash equivalents of $229,944 as of December 31, 2010. The net decrease in cash of $198,619 for the nine months ended September 30, 2011 is attributable to net cash used for operating activities and amounts used to settle certain accrued expenses and accounts payable.
 
The Company has not generated sufficient revenues from operations or its investment in intellectual property to meet its operating expenses. The Company has therefore historically financed its operations primarily through issuances of equity and debt securities, and, during the second and third quarters of 2010, through the sale of certain equity interests in FluoroPharma, and in the second and third quarters of 2011, the issuance of certain debt securities.  In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees.

While equity and debt financing has historically provided for the Company’s working capital needs, including capital necessary to fund the development and commercialization of the Company’s lateral flow based products, no assurances can be given that such financing will continue to be available to the Company in the future.   The Company has also actively reduced operating expenses, has recently consolidated its operations in Portland, Oregon, and intends to continue to aggressively control costs and seek additional financing in order to continue as a going concern.  In the event the Company is unable to secure additional financing, or is otherwise unsuccessful in restructuring certain of its liabilities, the Company will be unable to continue as a going concern.
 
Off-Balance Sheet Arrangements
  
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
 
Critical Accounting Policies
 
Revenue Recognition
 
The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.
 
The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.
 
The Company recognizes revenue from nonrefundable minimum royalty agreements from distributors or resellers upon delivery of product to the distributor or reseller, provided no significant obligations remain outstanding, the fee is fixed and determinable, and collection is probable. Once minimum royalties have been received, additional royalties are recognized as revenue when earned based on the distributor’s contractual reporting obligations. The Company is able to recognize minimum royalty payments on an accrual basis, as they are specified in the contract. However, since the Company cannot forecast product sales by licensees, royalty payments that are based on product sales by the licensees are not determinable until the licensee has completed their computation of the royalties due and/or remitted their cash payment to us. Should information on licensee product sales become available so as to enable the Company to recognize royalty revenue on an accrual basis, materially different revenues and results of operations could occur.

Our strategy includes entering into collaborative agreements with strategic partners for the development, commercialization and distribution of our product candidates. Such collaboration agreements may have multiple deliverables. In arrangements with multiple deliverables where we have continuing performance obligations, contract, milestone and license fees are recognized as revenue together with any up-front payments over the term of the arrangement as performance obligations are completed, unless the deliverable has stand-alone value and there is objective, reliable evidence of fair value of the undelivered element in the arrangement. In the case of an arrangement where it is determined there is a single unit of accounting, all cash flows from the arrangement are considered in the determination of all revenue to be recognized. Cash received in advance of revenue recognition is recorded as deferred revenue.
 
Use of Estimates
 
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The accounting policies discussed below are considered by management to be the most important to the Company’s financial condition and results of operations, and require management to make its most difficult and subjective judgments due to the inherent uncertainty associated with these matters. All significant estimates and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and adjusted when necessary. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. Additional information on significant accounting principles is provided in Note 1 of the attached financial statements.

 
Impairment of Assets
 
    We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas which are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.
 
    In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.
 
Share-based Payments
 
    We grant options to purchase our common stock to our employees and directors under our stock option plan. We estimate the value of stock option awards on the date of grant using a Black-Scholes pricing model (Black-Scholes model). The determination of the fair value of share-based payment awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, and risk-free interest rate. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.
 
    We determine the fair value of the share-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached or (2) the date at which the counterparty’s performance is complete.
 
    Estimates of share-based compensation expenses are significant to our financial statements, but these expenses are based on option valuation models and will never result in the payment of cash by us.
 
    The above listing is not intended to be a comprehensive list of all of our accounting policies. In most cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States.
 
ITEM 4.  Controls and Procedures
 
(a)
 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 of September 30, 2011. Based on this evaluation, the Company’s Chief Executive Officer/Principal Accounting Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports submitted under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, including to ensure that information required to be disclosed by the Company is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
(b) 
Changes in internal controls over financial reporting.
 
    The Company's Chief Executive Officer/Principal Accounting Officer have determined that there have been no changes, in the Company’s internal control over financial reporting during the period covered by this report identified in connection with the evaluation described in the above paragraph that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
PART II - OTHER INFORMATION
 
ITEM 1.
Legal Proceedings.
 
As of the date hereof, there are no material pending legal proceedings to which we are a party to or of which any of our property is the subject.

ITEM 2.
Unregistered Sales of Equity Securities, and Use of Proceeds
 
During the quarter ended September 30, 2011, the Company issued promissory notes to certain investors resulting in gross proceeds to the Company of $55,000 (the “Q3 Notes”).  The Q3 Notes accrue interest at a rate of 6% annually, and are due and payable on or before March 31, 2012.  In the event of a default on the Q2 Notes and Q3 Notes, the interest rate increases to 12% annually.  The Q3 Notes are convertible at the option of the holder into shares of the Company's common stock at a conversion price equal to $0.10 per share.  In addition, at the option of the holder, 110% of the face value of the Q3 Notes may be exchanged for securities issued in connection with a qualified financing, which is defined as a financing resulting in gross proceeds to the Company of at least $1.0 million.  Pursuant to the terms of the Q3 Notes, the Company issued 50,000 shares of its common stock for each $10,000 in principal amount received in connection with the issuance of the Q3 Notes.  As of September 30, 2011, 300,000 shares of its common stock were issued or reserved for issuance in connection with the Q3 Notes (the “Note Shares”).

Proceeds from the sale of the Q3 Notes were used for general working capital purposes.  The offer and sale of the Q3 Notes and Note Shares were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 promulgated under the Securities Act of 1933, as amended, and in Section 4(2) of the Securities Act. A legend will be placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

ITEM 3.
Defaults Upon Senior Securities
 
None.
 
ITEM 4.
Reserved
 
ITEM 5.
Other Information
 
None.
 
ITEM 6. 
Exhibits
 
Exhibit
 
Description
31
 
Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.
32*
 
Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
 
101.INS**
XBRL Instance Document
101.SCH**
XBRL Taxonomy Extension Schema
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase
101.DEF**
XBRL Taxonomy Extension Definition Linkbase
101.LAB**
XBRL Taxonomy Extension Label Linkbase
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase
 
*The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by QuantRx Biomedical Corporation for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section.
 
** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.  

 

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


Date: November 18, 2011
/s/ Shalom Hirschman
 
Shalom Hirschman
Principal Executive, Financial and Accounting Officer