10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2022

 

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. 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)

 

(I.R.S. Employer

Identification Number)

 

10190 SW 90th Avenue, Tualatin, Oregon 97062
(Address of Principal Executive Offices) (Zip Code)
 
(212) 980-2235
(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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☐ No

 

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

 

Large accelerated filer Accelerated filer
Non-Accelerated filer Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

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

 

Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par value $0.01 per share

 

The number of shares outstanding of the issuer’s common stock as of May 16, 2022 was 78,696,461.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  PAGE
PART I - FINANCIAL INFORMATION
   
ITEM 1. Financial Statements 4
     
  Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021 4
     
  Statements of Operations (Unaudited) for the three months ended March 31, 2022 and 2021 5
     
  Statements of Cash Flows (Unaudited) for the three months ended March 31, 2022 and 2021 6
     
  Quarterly Statements of Stockholders Equity (Unaudited) for the three months ended March 31, 2022 and 2021 7
     
  Condensed Notes to (Unaudited) Financial Statements 8
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
     
ITEM 4. Controls and Procedures 16
     
PART II - OTHER INFORMATION
   
ITEM 1. Legal Proceedings 17
     
ITEM 1A. Risk Factors 17
     
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
     
ITEM 3. Defaults Upon Senior Securities 17
     
ITEM 4. Mine Safety Disclosures 17
     
ITEM 5. Other Information 17
     
ITEM 6. Exhibits 17
     
Signatures 18

 

2

 

 

PART I – FINANCIAL INFORMATION

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAIN 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, 2021. 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.

 

3

 

 

ITEM 1. Financial Statements

 

QUANTRX BIOMEDICAL CORPORATION

BALANCE SHEETS

 

     1     1 
   March 31,   December 31, 
   2022   2021 
   (Unaudited)    (Audited) 
ASSETS          
Current Assets:          
Cash and cash equivalents  $5,920   $5,950 
Total Current Assets   5,920    5,950 
Total Assets  $5,920   $5,950 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
Current Liabilities:          
Accounts payable  $13,795   $10,219 
Notes Payable   1,387,694    1,387,694 
Notes Payable, accrued interest   1,117,726    1,067,644 
Notes Payable, related party and accrued interest   185,289    181,490 
Total Liabilities   2,704,504    2,647,047 
           
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 6,196,893 issued and outstanding   61,969    61,969 
Common stock; $0.01 par value; 150,000,000 authorized; 78,696,461 shares issued and outstanding   786,964    786,964 
Stock to be issued   8,600    8,600 
Additional paid-in capital   48,876,398    48,876,398 
Accumulated deficit   (52,432,515)   (52,375,028)
Total Stockholders’ Equity (Deficit)   (2,698,584)   (2,641,097)
           
Total Liabilities and Stockholders’ Equity (Deficit)  $5,920   $5,950 

 

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

 

4

 

 

QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF OPERATIONS

(unaudited)

 

     2022     2021 
  

For the Three Months Ended

March 31,

 
   2022   2021 
Costs and Operating Expense:          
Sales, general and administrative  $3,606   $3,547 
Professional fees   -    1,500 
Total Costs and Operating Expenses   3,606    5,047 
           
LOSS FROM OPERATIONS:   (3,606)   (5,047)
           
Other Income (Expense):          
Interest Expense   (53,881)   (53,951)
Total Other Income (Expense), net   (53,881)   (53,951)
           
Profit (Loss) Before Taxes   (57,487)   (58,998)
           
Provision for Income Taxes   -    - 
           
Net Profit (Loss)  $(57,487)  $(58,998)
           
Basic and Diluted Net Loss per Common Share  $(0.00)  $(0.00)
           
Basic and Diluted Weighted Average Shares Used in per Share Calculation   78,696,461    78,696,461 

 

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

 

5

 

 

QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF CASH FLOWS

(unaudited)

 

     2022     2021 
   For the Three Months Ended 
   March 31, 
   2022   2021 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(57,487)  $(58,998)
Adjustments to reconcile net loss to net cash used by operating activities:          
(Increase) Decrease in:          
Increase (Decrease) in:          
Accounts Payable   3,576    (1,886)
Accrued interest   53,881    53,951 
Net Cash Used by Operating Activities   (30)   (6,933)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Net Cash Provided by Investing Activities   -    - 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Net Cash Provided (Used) by Financing Activities   -    - 
           
Net Decrease in Cash and Cash Equivalents   (30)   (6,933)
           
Cash and Cash Equivalents, Beginning of Period   5,950    55,428 
           
Cash and Cash Equivalents, End of Period  $5,920   $48,495 
           
Supplemental Cash Flow Disclosures:          
Interest expense paid in cash  $-   $- 
Income tax paid  $-   $- 

 

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

 

6

 

 

QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

 

   Number of Shares   Amount   Number of Shares   Amount   Paid-in Capital   to be Issued   Accumulated Deficit     Total 
   Preferred Stock   Common Stock   Additional   Stock         
   Number of Shares   Amount   Number of Shares   Amount   Paid-in Capital   to be Issued   Accumulated Deficit   Total 
For the three months ended March 31, 2021                                        
BALANCE, January 1, 2021   6,196,893   $61,969    78,696,461   $786,964   $48,876,398   $8,600   $(52,114,986)  $(2,381,055)
                                         
Net loss for the three months ended March 31, 2021   -    -    -    -    -    -    (58,998)   (58,998)
BALANCE, MARCH 31, 2021   6,196,893   $61,969    78,696,461   $786,964   $48,876,398   $8,600   $(52,173,984)  $(2,440,053)
 For the three months ended March 31, 2022                                        
BALANCE, January 1, 2022   6,196,893   $61,969    78,696,461   $786,964   $48,876,398   $8,600   $(52,375,028)  $(2,641,097)
                                         
Net loss for the three months ended March 31, 2022   -    -    -    -    -    -    (57,487)   (57,487)
BALANCE, MARCH 31, 2022   6,196,893   $61,969    78,696,461   $786,964   $48,876,398   $8,600   $(52,432,515)  $(2,698,584)

 

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

 

7

 

 

QUANTRX BIOMEDICAL CORPORATION

CONDENSED NOTES TO FINANCIAL STATEMENTS

(unaudited)

 

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

 

Overview

 

As used in this Quarterly Report on Form 10-Q, the terms “Company”, “we”, “our”, “us”, “QuantRx” or the “Company” refers to QuantRx Biomedical Corporation, unless context otherwise requires. QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. Our principal business office is located at 10190 SW 90th Avenue, Tualatin, Oregon 97062.

 

We have developed and intend to commercialize our patented miniform pads (“PADs”) and PAD based over-the-counter products for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are also developing and intend to commercialize genomic diagnostics for the laboratory market, based on our lateral flow patents. Our platforms include: inSync®, UniqueTM, and OEM branded over-the-counter and laboratory testing products based on our core intellectual property related to our PAD technology.

 

The continuation of our operations remains contingent upon 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 nominal operations, focused principally on maintaining our intellectual property portfolio and maintaining compliance with the public company reporting requirements. In order to continue as a going concern, we will need to raise capital, which may include through the issuance of debt and/or equity securities. No assurances can be given that we will be able to obtain additional financing under terms favorable to us, if at all, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize our PAD technology.

 

Our principal business line consists of over-the-counter commercialization of our InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as maintaining established and continuing licensing relationships related to these products. We also own certain diagnostic testing technology (the “Diagnostic Business”, and collectively with the OTC Business, the “Business”) that is based on our lateral flow patents. Management believes this corporate structure permits us to more efficiently explore options to maximize the value of our products and intellectual property portfolio, with the objective of maximizing the value of the Businesses for the benefit of the Company and our shareholders.

 

Our current focus is to obtain additional working capital necessary to continue as a going concern, and to develop a longer term financing and operating plan to: (i) commercialize our over-the-counter products either directly or through joint ventures, mergers or similar transactions intended to capitalize on potential commercial opportunities; (ii) contract manufacturing of our over-the-counter products to third parties while maintaining control over the manufacturing process; (iii) maintain our intellectual property portfolio with respect to patents and licenses pertaining to both the OTC Business and the Diagnostics Business; and (iv) maximize the value of our investments in non-core assets. As a result of our current financial condition, however, our efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.

 

We follow the accounting guidance outlined in the Financial Accounting Standards Board (“FASB”) Codification guidelines. The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the items under Regulation S-X required by the instructions to Form 10-Q. They may not include all information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”) included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on April 15, 2022. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported losses, total assets or stockholders’ equity.

 

8

 

 

2. MANAGEMENT STATEMENT REGARDING GOING CONCERN

 

We currently are not generating revenue from operations, and do not anticipate generating meaningful revenue from operations or otherwise in the short-term. We have historically financed our operations primarily through issuances of equity and the proceeds from the issuance of promissory notes. In the past, we also provided for our cash needs by issuing our common stock, par value $0.01 per share (“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.

 

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 continue the development of, and to successfully commercialize, our products. There can be no assurance that the Company will be successful in its efforts. Should we 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 we will be unable to continue as a going concern.

 

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

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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

 

Accounting for Share-Based Payments. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“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. During the three months ended March 31, 2022 and 2021, the Company had no stock compensation expense.

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“2018-07”) to expand the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted for an “emerging growth company” beginning after December 15, 2019. The Company has adopted this standard effective from January 1, 2020 and the adoption of this standard did not have any significant impact on the unaudited condensed consolidated interim financial statements.

 

9

 

 

In the case of modifications, the Black-Scholes model is used to value modified warrants 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. In the past, 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 the three months ended March 31, 2022 and 2021, the Company did not make any Black-Scholes model assumptions, as no share-based payments were made during those periods.

 

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, the Company 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.

 

Earnings per Share. The Company computes net income (loss) per common share in accordance with ASC Topic 260, “Earnings Per Share” (“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. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable.

 

For the three months ended March 31, 2022 and the three months ended March 31, 2021, 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 March 31, 2022 and at March 31, 2021, the Company had outstanding warrants exercisable for 15,000,000 shares of Common Stock, and outstanding preferred stock, $0.01 par value (“Preferred Stock”) convertible into 6,196,893 shares of its Common Stock, which options, warrants and Preferred Stock were deemed to be antidilutive for the three months ended March 31, 2022 and March 31, 2021. At March 31, 2022 and March 31, 2021, the Company had reserved for issuance to certain investors 860,000 shares of its Series B Convertible Preferred Stock, par value $0.01 per share (“Series B Preferred”), convertible into 860,000 shares of its Common Stock. As of March 31, 2022 and at March 31, 2021, the Company has estimated and reserved for issuance approximately 20.0 million shares of Common Stock for a future conversion of its issued and outstanding Bridge Notes (See Note 4).

 

10

 

 

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.

 

Use of Estimates. The accompanying financial statements are prepared in conformity with GAAP, 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 revenue and expense during the reporting period. Accordingly, actual results may differ from those estimates.

 

Reclassifications. Prior period financial statement amounts have been reclassified to conform to current period presentation. The reclassifications have no effect on net loss or earnings per share.

 

Recent Accounting Pronouncements.

 

Management has considered all recent accounting pronouncements in the current period and identified no pronouncements that would have an impact on our financial statements.

 

4. CONVERTIBLE NOTES PAYABLE

 

During the years 2014 to 2017, the Company issued a series of Bridge Notes (the “Bridge Notes”) in aggregate principal amount of $1,489,694. The Bridge Notes matured on various dates through 2018. The Bridge Notes are in default and bear interest rates ranging from 12% to 18%. As of March 31, 2022, the Bridge Notes are due and payable.

 

At March 31, 2022 and December 31, 2021, the Company’s Convertible Notes Payable are as follows:

 

  

March 31,

2022

   December 31, 2021 
Notes Payable  $1,387,694   $1,387,694 
Accrued Interest  $1,117,726   $1,067,644 
Notes Payable, related party  $102,000   $102,000 
Accrued Interest, related Party  $83,289   $79,490 
Total Notes Payable  $2,690,709   $2,636,828 

 

Notes Payable, Related Party.

 

As of March 31, 2022 and December 31, 2021, the Company owed Mr. Abrams, a director of the Company, an aggregate total of $185,289 and $181,490, respectively, for outstanding principal and accrued and unpaid interest on certain Bridge Notes. The Bridge Notes held by Mr. Abrams are in default and bear interest rates ranging from 12% to 18%. As of March 31, 2022, the Bridge Notes are due and payable.

 

5. RELATED PARTY TRANSACTIONS

 

In November 2018, the Company authorized payment of $3,500 per month to Dr. Hirschman for his services as Chief Executive Officer and $3,500 to Mr. Abrams for his services as a Director. Effective January 1, 2020, Mr. Abrams has waived the payments of fees for his services. Effective April 1, 2020, Dr. Hirschman has waived the payment of is fees as Chief Executive Officer.

 

As of March 31, 2022 and December 31, 2021, the Company owed Mr. Abrams, a director of the Company, an aggregate total of $185,289 and $181,490, respectively, for outstanding principal and accrued and unpaid interest on certain Bridge Notes.

 

11

 

 

6. PREFERRED STOCK

 

The Company has authorized 25,000,000 shares of Preferred Stock, of which 20,500,000 are designated as Series B Preferred, with a stated value of approximately $204,000 (“Series B Preferred”). The remaining authorized shares of Preferred Stock had not been designated by the Company as of March 31, 2022.

 

Series B Convertible Preferred Stock

 

The Series B Preferred ranks senior to the Company’s 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 affect 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 non-assessable shares of the Company’s Common Stock at a 1:1 conversion rate.

 

In July and August, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued certain Bridge Notes (the “2017 Bridge Notes”) in the aggregate principal amount of $86,000. As additional consideration for the purchase of the 2017 Bridge Notes, the Company has reserved for issuance an aggregate of 860,000 shares of Series B Preferred to be issued to the purchasers of the 2017 Bridge Notes. The Company has valued the Series B Preferred and has recorded a discount on the 2017 Bridge Notes of $7,818, which was amortized in full during the year ended December 31, 2017.

 

In April 2018, the Company completed the purchase of 10,480,049 shares of Series B Preferred from an institutional shareholder for an aggregate purchase price of $20,000. Following this transaction, the shareholder no longer holds shares in the Company.

 

As of March 31, 2022 and December 31, 2021, the Company had 6,196,893 shares of Series B Preferred issued and outstanding, with a liquidation preference of $61,969 and convertible into 6,196,893 shares of the Company’s Common Stock.

 

7. COMMON STOCK, OPTIONS AND WARRANTS

 

The Company has authorized 150,000,000 shares of its Common Stock for issuance, of which 78,696,461 were issued and outstanding at each March 31, 2022 and December 31, 2021.

 

During the three months ended March 31, 2022 and March 31, 2021, there were no warrants issued by the Company. As of March 31, 2022, the Company has one warrant issued and outstanding, this warrant was issued in December 2018 to Preprogen’s designee to purchase up to 15.0 million shares of the Company’s Common Stock, at an exercise price of $0.05 per share. The warrant was exercisable immediately upon issuance, and expires on December 14, 2022.

 

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. The Company did not issue any options during the three months ended March 31, 2022 or 2021. As of March 31, 2022, the Company has no options issued and outstanding.

 

8. SUBSEQUENT EVENTS

 

On April 12, 2022, the Company received a shareholder loan in the amount of $25,000.

 

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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”, “us”, the “Company” or similar terms refer to QuantRx Biomedical Corporation, a Nevada corporation.

 

Overview

 

We have developed and intend to commercialize our patented miniform pad (“PAD”) and PAD based over-the-counter products for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are also developing and intend to commercialize genomic diagnostics for the laboratory market, based on our lateral flow patents. Our platforms include: inSync®, UniqueTM, and OEM branded over-the-counter and laboratory testing products based on our core intellectual property related to our PAD technology.

 

The continuation of our operations remains contingent upon 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 nominal operations, focused principally on maintaining our intellectual property portfolio and maintaining compliance with the public company reporting requirements. In order to continue as a going concern, we will need to raise capital, which may include through the issuance of debt and/or equity securities. No assurances can be given that we will be able to obtain additional financing under terms favorable to us, if at all, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize our PAD technology.

 

Our principal business line consists of over-the-counter commercialization of our InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as maintaining established and continuing licensing relationships related to the OTC Business. We also own certain diagnostic testing technology that is based on our lateral flow patents (the “Diagnostic Business”, and collectively with the OTC Business, the “Business”). Management believes this corporate structure permits us to more efficiently explore options to maximize the value of the Business, with the objective of maximizing the value of the Business for the benefit of the Company and our shareholders.

 

Our current focus is to obtain additional working capital necessary to continue as a going concern, and to develop a longer term financing and operating plan to: (i) commercialize our over-the-counter products either directly or through joint ventures, mergers or similar transactions intended to capitalize on potential commercial opportunities; (ii) contract manufacturing of our over-the-counter products to third parties while maintaining control over the manufacturing process; (iii) maintain our intellectual property portfolio with respect to patents and licenses pertaining to both the OTC Business and the Diagnostics Business; and (iv) maximize the value of our investments in non-core assets. As a result of our current financial condition, however, our efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.

 

While we expect the impacts of COVID-19 to have an adverse effect on our ability to successfully obtain working capital necessary to continue as a going concern and to develop a longer term financing and operating plan, we are unable to predict the extent or nature of these impacts at this time.

 

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The following discussion of our financial condition should be read together with our financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022.

 

Results of Operations

 

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021.

 

The Company did not generate any revenue during the three months ended March 31, 2022 or the three months ended March 31, 2021. The absence of revenue is due to no royalty revenue attributable to the Company’s PAD technology received during the periods. Management does not anticipate that the Company will generate any revenue until such time as the Company develops a plan to commercialize its over-the-counter products, which is contingent on the receipt of financing.

 

Sales, general and administrative expense for the three months ended March 31, 2022 and 2021 was $3,606 and $3,547, respectively. 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 SEC reporting requirements. The increase in sales, general and administrative expense for the three months ended March 31, 2022 is principally due to higher costs for the Company’s transfer agent, partially offset by lower costs for maintenance of intellectual property.

 

Professional fees for the three months ended March 31, 2022 and 2021 were $0 and $1,500, respectively. Professional fees include the costs of legal, consulting and auditing services provided to us. The decrease in professional fees for the three months ended March 31, 2022 is principally due to higher legal fees paid in the 2021 period.

 

The Company did not incur any research and development costs during the three months ended March 31, 2022 or 2021. The Company does not expect to engage in any research and development activity until funding is secured and it develops a plan to commercialize its products.

 

Interest expense for the three months ended March 31, 2022 and 2021 was $53,881 and $53,951, respectively. The decrease in interest expense in the 2022 period compared to the 2021 period is slightly lower due to timing.

 

During the three months ended March 31, 2022, the Company recorded net loss of $57,487 compared to net loss for the three months ended March 31, 2021 of $58,998. The decrease in net loss during the 2022 period is primarily due lower expenses during the 2022 period, as discussed above.

 

The Company expects net loss to decrease in future periods due to the current suspension of its active operations and its lack of revenue. The Company does not expect to re-commence active operations until it is able to secure financing necessary to execute its business and operating plan, including the development and launch of its OTC Business, or to otherwise capitalize on our PAD technology.

 

Liquidity and Capital Resources

 

At March 31, 2022, the Company had cash and cash equivalents of $5,920 as compared to $5,950 at December 31, 2021.

 

The Company had cash and cash equivalents of $48,495 at March 31, 2021. The decrease in cash and cash equivalents between the corresponding 2022 and 2021 periods of approximately $42,575 is primarily attributable to cash used for operations in the 2021 and 2022 periods.

 

During the three months ended March 31, 2022, the Company used $30 for operating activities, compared to $6,933 used during the three months ended March 31, 2021. The net overall decrease in cash used for operating activities during the three months ended March 31, 2021 is attributable primarily to decreased operating expenses in the 2022 period.

 

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The Company has not generated sufficient revenue from operations to meet its operating expense. The Company requires additional funding to complete the development and launch of its OTC Business, 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 shares of its 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 re-commence 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 expense 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 expense; 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

 

The listing below 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. In addition to the listing below accounting policies listed below, please See to Note 3 to the 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.

 

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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.

 

Genomics USA, Inc. (“GUSA”): During the years ended December 31, 2018 and 2017, the Company had recorded losses of $0 and $169,948, respectively, on an impairment on the value of its Common Stock investment in GUSA. The Company has valued the impairment based on the dilution of the Company’s investment and certain other factors. As of December 31, 2018, the Company has fully impaired its investment in GUSA.

 

Global Cancer Diagnostics, Inc. (“GCD”): During 2015, the Company entered into a letter of intent with GCD, which provided for, among other things, the advance payment of $50,000 towards a potential business combination. During 2017, the Company determined the full amount of the advanced payment to be impaired.

 

Preprogen LLC (“Preprogen): During the years ended December 31, 2019 and December 31, 2018, the Company recorded a loss of $222,000 and $278,000, respectively, on an impairment on the value of its investment in Preprogen. The Company has valued the impairment based on an evaluation by a third-party using the value of similar investments in comparable companies. The Company has fully impaired its investment in Preprogen.

 

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 March 31, 2022 and December 31, 2021, 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 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 amended (the “Exchange Act”), as of March 31, 2022. Based on this evaluation, and in light of the previously disclosed material weaknesses in internal controls over financial reporting, the Company’s Chief Executive Officer, who also serves as its principal financial officer, concluded that our disclosure controls and procedures were not effective.

 

(b) Changes in internal controls 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.

 

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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 1A. Risk Factors

 

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for our fiscal year ended December 31, 2021, filed on April 15, 2022. You should carefully consider these risk factors in conjunction with the other information contained in this Quarterly Report on Form 10-Q. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted. As of March 31, 2022, there have been no material changes to the disclosures made in the above-referenced Form 10-K.

 

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

 

None.

 

ITEM 3. Defaults Upon Senior Securities

 

None.

 

ITEM 4. Mine Safety Disclosures

 

Not Applicable.

 

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   Inline XBRL Instance Document
101.SCH   Inline XBRL Taxonomy Extension Schema
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

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

 

Date: May 16, 2022 /s/ Shalom Hirschman
  Shalom Hirschman
  Principal Executive, Financial and Accounting Officer

 

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