Company Quick10K Filing
Quantrx Biomedical
Price0.03 EPS-0
Shares79 P/E-8
MCap2 P/FCF-14
Net Debt-0 EBIT-0
TEV2 TEV/EBIT-13
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-20
10-K 2019-12-31 Filed 2020-04-14
10-Q 2019-09-30 Filed 2019-11-19
10-Q 2019-06-30 Filed 2019-08-15
10-Q 2019-03-31 Filed 2019-05-20
10-K 2018-12-31 Filed 2019-04-16
10-Q 2018-09-30 Filed 2018-11-19
10-Q 2018-06-30 Filed 2018-08-20
10-Q 2018-03-31 Filed 2018-05-21
10-K 2017-12-31 Filed 2018-04-17
10-Q 2017-09-30 Filed 2017-11-20
10-Q 2017-06-30 Filed 2017-08-21
10-Q 2017-03-31 Filed 2017-05-22
10-K 2016-12-31 Filed 2017-04-17
10-Q 2016-09-30 Filed 2016-12-02
10-Q 2016-06-30 Filed 2016-08-17
10-Q 2016-03-31 Filed 2016-05-20
10-K 2015-12-31 Filed 2016-04-13
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-17
10-Q 2015-03-31 Filed 2015-07-22
10-K 2014-12-31 Filed 2015-04-15
10-Q 2014-09-30 Filed 2014-11-18
10-Q 2014-06-28 Filed 2014-08-19
10-Q 2014-03-31 Filed 2014-05-20
10-K 2013-12-31 Filed 2014-04-14
10-Q 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-14
10-Q 2013-03-31 Filed 2013-05-20
10-K 2012-12-31 Filed 2013-04-15
10-Q 2012-06-30 Filed 2012-08-20
10-Q 2012-03-31 Filed 2012-05-21
10-K 2011-12-31 Filed 2012-04-17
10-Q 2011-09-30 Filed 2011-11-18
10-Q 2011-06-30 Filed 2011-08-16
10-Q 2011-03-31 Filed 2011-05-20
10-K 2010-12-31 Filed 2011-04-14
10-Q 2010-09-30 Filed 2010-11-19
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-14
10-K 2009-12-31 Filed 2010-03-31

QTXB 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31 ex31.htm
EX-32 ex32.htm

Quantrx Biomedical Earnings 2013-09-30

Balance SheetIncome StatementCash Flow
1.40.70.0-0.6-1.3-2.02012201420172020
Assets, Equity
0.10.0-0.1-0.1-0.2-0.32012201420172020
Rev, G Profit, Net Income
0.50.40.20.1-0.1-0.22012201420172020
Ops, Inv, Fin

10-Q 1 qtxb10q09302013.htm qtxb10q09302013.htm


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

FORM 10-Q
 
[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

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 Incorporation or Organization)
 
(I.R.S. Employer Identification Number)
 
 
10190 SW 90th Avenue, Tualatin, Oregon 97123
 
 
(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 [   ]

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 [   ]

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

Large accelerated filer
[   ]
Accelerated filer
[   ]
Non-accelerated filer
[   ]
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 [   ]   No [X]

The number of shares outstanding of the issuer’s common stock as of November 15, 2013 was 52,528,644.
 


 

 
 
TABLE OF CONTENTS

 
PAGE
PART I - FINANCIAL INFORMATION  
   
ITEM 1.
1
     
  1
     
  2
     
  3
     
  4
     
ITEM 2.
11
     
ITEM 4.
17
     
PART II - OTHER INFORMATION
   
ITEM 1.
17
     
ITEM 2.
17
     
ITEM 3.
17
     
ITEM 4.
17
     
ITEM 5.
17
     
ITEM 6.
18
     
 
 
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, 2012.  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
CONSOLIDATED BALANCE SHEETS
   
September 30,
2013
(unaudited)
   
December 31,
2012
 
ASSETS
           
Current Assets:
           
Cash and cash equivalents
 
$
1,467
   
$
9,989
 
Accounts receivable
   
337
     
2,334
 
Inventories
   
2,076
     
2,564
 
Prepaid expenses
   
31,624
     
22,779
 
Note receivable
   
120,000
     
200,000
 
Total Current Assets
   
155,504
     
237,666
 
                 
Investments
   
200,000
     
200,000
 
Note receivable
   
30,000
     
-
 
Property and equipment, net
   
3,559
     
4,380
 
Intangible assets, net
   
39,622
     
31,981
 
Total Assets
 
$
428,685
   
$
474,027
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
               
Current Liabilities:
               
Accounts payable
 
$
375,765
   
$
375,040
 
Accrued expenses
   
25,361
     
16,978
 
Notes payable and accrued interest, net of discounts
   
525,539
     
417,548
 
Total Current Liabilities
   
926,665
     
809,566
 
Notes payable, long-term
   
44,000
     
44,000
 
Total Liabilities
   
970,665
     
853,566
 
                 
Commitments and Contingencies
           
-
 
Stockholders’ Equity (Deficit):
               
Series B Convertible Preferred Stock; $0.01 par value, 20,500,000 authorized shares, 20,416,228 shares issued and outstanding
   
204,162
     
204,162
 
Common Stock; $0.01 par value; 150,000,000 authorized; 52,528,644  shares issued and outstanding, respectively
   
525,286
     
  525,286
 
Common Stock to be issued
   
121,500
     
82,500
 
Additional paid-in capital
   
48,130,044
     
48,130,044
 
Accumulated deficit
   
(49,522,972
)
   
(49,321,531
)
Total Stockholders’ Equity (Deficit)
   
(541,980
)
   
(379,539
)
                 
Total Liabilities and Stockholders’ Equity (Deficit)
 
$
428,685
   
$
474,027
 

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

 
QUANTRX BIOMEDICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 
Three Months Ended 
September 30,
 
Nine Months Ended 
September 30,
 
  
 
2013
   
2012
   
2013
   
2012
 
Revenue:
                       
Revenue
 
$
812
   
$
6,045
   
$
5,118
   
$
12,864
 
Total Revenue
   
812
     
6,045
     
5,118
     
12,864
 
                                 
Costs and Operating Expenses:
                               
Cost of goods sold (excluding depreciation and amortization)
   
230
     
101
     
488
     
320
 
Sales, general and administrative
   
13,744
     
12,129
     
84,656
     
82,271
 
Professional fees
   
13,388
     
131,167
     
74,433
     
371,035
 
Research and development
   
20,083
     
14,126
     
23,294
     
21,266
 
Amortization
   
1,853
     
1,853
     
5,559
     
5,559
 
Depreciation
   
273
     
4,097
     
821
     
14,124
 
Total Costs and Operating Expenses
   
49,571
     
163,473
     
189,251
     
494,575
 
                                 
Loss from Operations
   
(48,759)
     
(157,428)
     
(184,133)
     
(481,711)
 
                                 
Other Income (Expense):
                               
Interest and dividend income
   
3,085
     
4,000
     
11,085
     
12,000
 
Interest expense
   
(12,988)
     
(8,275)
     
(44,951)
     
(17,281)
 
Gain on exchange of equity investment
   
-
     
-
     
40,953
     
-
 
Other financing costs
   
-
     
 -
     
(27,753)
     
-
 
Amortization of debt discount to interest expense
   
-
     
(1,114)
     
(2,407)
     
(100,599)
 
Gain on settlement of accounts payable
   
-
     
-
     
16,850
     
17,515
 
Loss on Impairment
   
(3,085)
     
-
     
(11,085)
     
-
 
Total Other Income (Expense), net
   
(12,988)
     
(5,389)
     
(17,308)
     
(88,365)
 
                                 
Loss Before Taxes
   
(61,747)
     
(162,817
)
   
(201,441)
     
(570,076
                                 
Provision for Income Taxes
   
-
     
-
     
-
     
  -
 
                                 
Net Loss
 
$
(61,747)
   
$
(162,817)
   
$
(201,441)
   
$
(570,076)
 
                                 
Basic and Diluted Net Loss per Common Share
 
(0.00)
   
$
(0.00)
   
$
(0.00)
   
$
(0.01)
 
                                 
Basic and Diluted Weighted Average Shares Used in per Share Calculation
   
52,528,644
     
50,771,630
     
52,528,644
     
49,267,611
 

The accompanying condensed notes are an integral part of these interim consolidated financial statements.
 
 
QUANTRX BIOMEDICAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
   
Nine Months Ended
 
   
September 30, 2013
   
September 30, 2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net loss
 
$
(201,441
)
 
$
(570,076
)
Adjustments to reconcile net loss to net cash used by operating activities:
               
Depreciation and amortization
   
6,380
     
19,683
 
Interest expense related to amortization of non-cash discount, non-cash beneficial conversion feature and deferred financing costs
   
30,160
     
51,294
 
Non-cash gain on exchange of equity investment
   
(40,953)
         
Non-cash expenses related to common stock warrants issued for consulting
   
-
     
99,994
 
Non-cash fair value of common stock issued as compensation
   
30,000
     
93,500
 
Interest receivable
   
(11,085)
     
(12,000
)
Loss on impairment
   
11,085
     
-
 
Non-cash fair value of common stock issued with notes payable
   
-
     
64,726
 
Net Gain on settlement of accounts payable
   
16,850
     
18,960
 
(Increase) Decrease in:
               
Accounts receivable
   
1,997
     
(1,708
)
Inventories
   
488
     
320
 
Prepaid expenses
   
(8,845)
     
(13,031
)
Increase (decrease) in:
               
Accounts payable
   
(7,124)
     
82,942
 
Accrued interest and expenses
   
49,966
     
7,811
 
                 
Net Cash Used by Operating Activities
   
(122,522
)
   
(157,855
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Cash paid for capital equipment
   
-
     
(5,475
)
Payments received on note receivable
   
50,000
     
 -
 
                 
Net Cash Provided (Used) by Investing Activities
   
50,000
     
(5,475
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Cash provided by Notes Payable
   
64,000
     
175,000
 
                 
Net Cash Provided from financing activities
   
64,000
     
175,000
 
                 
Net Increase (Decrease) in Cash and Cash Equivalents
   
(8,522)
     
11,670
 
                 
Cash and Cash Equivalents, Beginning of Period
   
9,989
     
7,565
 
                 
Cash and Cash Equivalents, End of Period
 
$
1,467
   
$
19,235
 
                 
Supplemental Cash Flow Disclosures:
               
Interest expense paid in cash
 
$
-
   
$
576
 
Income tax paid
 
$
-
   
$
-
 
                 
NON CASH INVESTING & FINANCING ACTIVITIES:
               
Shares issued for accounts payable
 
$
9,000
   
$
68,000
 
 
The accompanying condensed notes are an integral part of these interim consolidated financial statements.
 
QUANTRX BIOMEDICAL CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Description of Business and Basis of Presentation
 
Overview

The Company has developed and ultimately intends to commercialize its innovative PAD based products for the over-the-counter (“OTC”) and laboratory 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 commercialize its products are currently contingent on additional financing to execute its business and operating plan, which is currently focused on the commercialization of the Company’s PAD technology either directly or through a joint venture or other relationship intended to increase shareholder value.  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.  This plan was necessary in order for the Company to continue as a going concern.  No assurances can be given that the Company will obtain financing, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize the Company’s PAD technology.
  
On June 20, 2012, the Company formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), to convey and transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business ("Diagnostics Business"). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, the Company’s other business line will consist of its over-the-counter business, including the InSync feminine hygienic interlabial pad, the Unique pad for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.
 
The Company’s current focus 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 its OTC Business and Diagnostics Business, either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of the Company’s investments in non-core assets.  As a result of its current financial condition, however, the Company’s efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.
 
Recent Developments

Settlement of GUSA Note Receivable and Litigation.  On May 24, 2013, the Company and Genomics USA, Inc. ("GUSA") settled the Company’s complaint filed against GUSA seeking to recover all amounts due to the Company under the terms of a promissory note in the principal amount of $200,000 (the "GUSA Note").  The Complaint was filed in the Supreme Court of the State of New York, and sought repayment of all amounts due under the terms of the GUSA Note, and accrued interest thereon, plus attorney's fees.   The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month shall be paid on the 7th day of each consecutive month thereafter for a total of 18 months.   During the three and nine months ended September 30, 2013, the Company received $30,000 and $50,000, respectively, in payments on the GUSA Note.

 
Issuance of Additional Promissory Notes.  During the nine months ended September 30, 2013, the Company issued two promissory notes to two investors in the principal amounts of $2,000, and $25,000 (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued an aggregate total of 27,000 warrants to purchase shares of FluoroPharma Medical, Inc. (“FPMI”) common stock, for $1.00 per share (“FPMI Warrants”), to the investors. The FPMI Warrants expire on February 15, 2019.
 
The Notes accrue interest at the rate of 6% annually. The Notes were due and payable on June 30, 2013 (the “Maturity Date”), and are currently payable upon demand by the Note holders. The 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, the holder may exchange the Notes for common stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holder of the Notes demands repayment.
 
On October 29, 2013, the holder of certain outstanding Notes totaling approximately $228,000 in principal and accrued interest agreed to cancel such notes in exchange for a new note with a face amount of $228,000 maturing on March 31, 2014 and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $362,500 of  fees accrued from May 15, 2012 to October 15, 2013 that are payable in cash on December 31, 2013 for a note with a face amount of $362,500 maturing on March 31, 2014 and 100,000 FPMI warrants.  These notes accrue 8% interest per annum, and are due and payable on March 31, 2014.
 
The Company presently intends to issue additional Promissory Notes to finance its current working capital needs. However, there can be no assurance that the Company will be able to issue additional Promissory Notes.
 
2.  Management Statement Regarding Going Concern

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

The Company’s history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on the Company’s assets raise substantial doubt about our ability to continue as a going concern, absent a strengthening of our cash position.  Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic, merger or other transaction to obtain additional funding to continue the development of, and to successfully commercialize, its products.  There can be no assurance that the Company will be successful in its efforts.  Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, the Company’s business, result of operations, liquidity and financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going concern.
 
There can be no assurance that, assuming the Company is able to strengthen its cash position, it will achieve sufficient revenue or profitable operations to continue as a going concern.
 
3.  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 accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the financial statements.
 
Accounting for Share-Based Payments.  The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in employee stock-based compensation expense for the nine months ended September 30, 2013 of $30,000, and for the nine months ended September 30, 2012 of $27,000.

 
The Company accounts for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (i) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) the date at which the counterparty’s performance is complete.

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

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

During 2012, the fair value of each share based payment is estimated on the measurement date using the Black-Scholes model using an average risk free interest rate of 3.08%, expected volatility of 261%, and a dividend yield of zero.  
 
Risk-Free Interest Rate. The interest rate used is based on the yield of a U.S. Treasury security as of the beginning of the year.

Expected Volatility. The Company calculates the expected volatility based on historical volatility of monthly stock prices over a three year period.
 
Dividend Yield. The Company has never paid cash dividends, and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.
 
Expected Term. For options, the Company has no history of employee exercise patterns. Therefore, 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.

Black Scholes Option Pricing Model.  During the nine months ending September 30, 2013, the Company has used an average risk-free interest rate of 3%, a dividend yield of 0%, and an average volatility of 261% 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 including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive.

 
As of September 30, 2013, the Company had outstanding options exercisable for 304,500 shares of its common stock, warrants exercisable for 1,785,000 shares of its common stock, and preferred shares convertible into 20,416,228 shares of its common stock. The above options, warrants, and preferred shares were deemed to be antidilutive for the nine months ended September 30, 2013.
 
As of September 30, 2012, the Company had outstanding options exercisable for 304,500 shares of its common stock, warrants exercisable for 2,771,000 shares of its common stock, and preferred shares convertible into 20,416,228 shares of its common stock. The above options, warrants, and preferred shares were deemed to be antidilutive for the nine months ended September 30, 2012. 
 
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, 2012 to conform to the presentation of the financial statements for the three and nine months ended September 30, 2013. These reclassifications had no effect on reported losses, total assets, or stockholders' equity as previously reported.
 
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

   
Warrants
Held
 
Recognized
Gain/(Loss)
Balance as of December 31, 2012
   
373,917
 
115,752
Warrants issued in connection with notes payable during the nine months ended September 30, 2013
   
64,000
 
27,753
Balance as of September 30, 2013
   
309,917
 
143,505
 
In May 2011, FluoroPharma, Inc. ("FPI") entered into a reverse merger with FPMI. In connection with this transaction, the Company's warrants in FPI were exchanged for warrants in FPMI.  During 2012, the Company recognized a gain in the amount of $115,752 as a result of the issuance of certain of these warrants to holders of promissory notes of the Company that matured during the period. During the nine months ended September 30, 2013, the Company recognized a gain of $27,753 as a result of the issuance of additional warrants issued as consideration for the issuance of additional promissory notes during the period.  As of September 30, 2013, the Company retained control over 309,917 warrants, the value of which has been deemed by the Company to be fully impaired. However, following the quarter ended September 30, 2013, the Company assigned an aggregate total of 200,000 of the remaining FPMI Warrants to a certain note holder and to our financial advisor. See Note 12, "Subsequent Events" for a further discussion of these transactions.

5.  Intangible Assets

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

   
September 30,
2013
   
December 31,
2012
 
Licensed patents and patent rights
 
$
63,200
   
$
50,000
 
Patents
   
41,004
     
41,004
 
Less: accumulated amortization
   
(64,582
)    
(59,023
)
Intangibles, net
 
$
39,622
   
$
31,981
 
 
 
The Company’s intangible assets consist of patents, licensed patents and patent rights, and website development costs, and are carried at the legal cost to obtain them. Costs to renew or extend the term of intangible assets are expensed when incurred. In 2008, through our formerly majority owned subsidiary, the Company also held technology licenses and other acquired intangibles. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives are as follows: patents, 17 years; patents under licensing, 10 years; website development costs, three years, and in 2008, acquired intangibles had a weighted average life of 15 years. Amortization expense for the three and nine months ended September 30, 2013 totaled $1,853 and $5,559, respectively. Amortization expense for the three and nine months ended September 30, 2012 totaled $1,853 and $5,559, respectively. The estimated aggregate amortization expense for 2013 through 2015 is $7,412 for each year.    

On March 1, 2013, the Company entered into an Exchange Agreement with NuRx and QND, pursuant to which the Company exchanged its Settlement Shares for certain patents, trademarks and other intellectual property formerly held by NuRx and QND covering point-of-care lateral flow diagnostics (RapidSenseTM) and related oral fluid collection technologies.  The Company has recorded the value associated with this exchange at $13,200, and will amortize these costs over the remaining useful lives of the intellectual property exchanged.

6.  Settlements of Accounts Payable
 
During the nine months ended September 30, 2013, the Company settled an aggregate total of $35,850 of accounts payable and accrued expenses in consideration for the payment of $10,000 cash and 300,000 shares of common stock, valued at $9,000. The Company has recorded gains on settlement of accounts payable of $16,850 during the nine months ended September 30, 2013.

7.  Notes Payable

Convertible 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 $105,000 (the "Notes").  The Notes accrued interest at the rate of 3% annually, and were due and payable on or before November 19, 2011.  On November 19, 2011 these Notes were cancelled and reissued in the original principal amount plus $1,373 of accrued interest, under the terms of the Notes described below.  Concurrently with this debt financing commitment, the lender agreed to surrender and cancel 2,069,000 warrants held by it, and in consideration therefore the Company issued the lender 2,069,000 shares of common stock valued at $62,070.
 
In May 2012, in consideration for the extension of the Notes due and payable on March 31, 2012 to June 30, 2012, the Company agreed to assign a total of 113,127 FPMI Warrants to the holders of the Notes.  In August 2012, in consideration for the extension of the Maturity Date of the Notes maturing on June 30, 2012 to November 15, 2012, the Company agreed to assign a total of 155,877 FPMI Warrants to the holders of the Notes.  As a result, and together with the assignment of 8,496 FPMI Warrants in connection with the issuance of the $10K Note described below, a total of 269,004 FPMI Warrants have been assigned to holders of Notes.
 
Between August 2012 and July, 2013, the Company issued promissory notes to four investors in the principal amounts of $10,000 (the “$10K Note”), $25,000 (the “$25K Note”), $15,000 (the “$15K Note”), $20,000 (the “$20K Note”), $17,000 (the "$17K Note"), $2,000 (the "$2K Note") and $25,000 (the “May $25K Note”) (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued: (i) 200,000 shares of its common stock to the purchaser of the $25K Note and the $15K Note, (ii) 8,496 FPMI warrants exercisable for $0.50 per share to the purchaser of the $10K Note, and (iii) an aggregate of 64,000 FPMI warrants exercisable for $1.00 per share to the purchasers of the $20K Note, the $17K Note, the $2K Note and the May $25K Note.
 
The Notes accrue interest at the rate of 6% annually. All of the Notes are currently due and payable on demand. The Notes are convertible at the option of each respective holder into shares of common stock at a conversion price equal to $0.10 per share. In addition, the holders may exchange the Notes for common stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the Notes demand repayment.

 
In connection with the issuance of all Notes, the Company has recorded debt discount and expenses of the beneficial conversion feature of $106,261 and $28,998, respectively.  The Company will amortize these expenses over the life of the Notes.  As of December 31, 2012, the Company recorded interest expense related to the debt discount of $21,905 and $3,777 related to the beneficial conversion feature.  During the three and nine months ended September 30, 2013, the Company recorded interest expense of $0 and $2,407, related to the debt discount and beneficial conversion feature.

In connection with the issuance of the $20K Note, $17K Note, the $2K Note and the May $25K Note, the Company has recorded debt discount and expenses in the amount of $27,753 related to the value of the exchange of 64,000 FPMI warrants to the holders of the Notes.  The Company will amortize the costs over the remaining life of these Notes.  As of September 30, 2013, the Company recorded other financing costs of $27,753 related to the debt discount on these Notes.
 
On October 29, 2013, the holder of certain outstanding Notes totaling approximately $228,000 in principal and accrued interest agreed to cancel such notes in exchange for a new note with a face amount of $228,000 maturing on March 31, 2014 and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $362,500 of  fees accrued from May 15, 2012 to October 15, 2013 that are payable in cash on December 31, 2013 for a note with a face amount of $362,500 maturing on March 31, 2014 and 100,000 FPMI warrants.  These notes accrue 8% interest per annum, and are due and payable on March 31, 2014.
 
Long-Term Notes Payable. The Company received a $44,000 loan from the Portland Development Commission in 2007. The loan matures in 20 years and was interest free through February 2010. The terms of the note stipulate monthly interest only payments from April 2010 through December 2014, at a 5% annual rate.  The Company recorded interest expense on this loan of $579 and $1,694 for the three and nine months ended September 30, 2013. 
 
8.  Other Balance Sheet Information

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

Prepaid expenses:
 
September 30,
2013
   
December 31,
2012
 
Prepaid insurance
 
$
31,624
   
$
22,779
 
Prepaid expenses
 
$
31,624
   
$
22,779
 
                 
                 
Property and equipment:
               
Computers and office furniture, fixtures and equipment
 
$
28,031
   
$
28,031
 
Machinery and equipment
   
5,475
     
5,475
 
Less: accumulated depreciation
   
(29,947
)
   
(29,127
)
Property and equipment, net
 
$
3,559
   
$
4,380
 
                 
Accrued expenses:
               
Other Accrued expenses
 
$
25,361
     
16,978
 
Accrued expenses
 
$
25,361
     
16,978
 
 
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at September 30, 2013 and 2012 consisted of machinery and equipment with estimated useful lives of one to three years.
 
Depreciation expense for the three and nine months ended September 30, 2013 was $273 and $821, respectively.  Depreciation expense for the three and nine months ended September 30, 2012 was $4,097 and $14,124, respectively.
 
Expenditures for repairs and maintenance are expensed as incurred.

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 $204,000 (“Series B Preferred”).  The remaining 4,500,000 authorized preferred shares have not been designated by the Company as of September 30, 2013.

 
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 A-1 Preferred Stock. In October 2010, the Company entered into certain agreements with certain investors, pursuant to which the Company exchanged substantially all of its equity interest in FluoroPharma and shares of Series B Preferred and in consideration for cash aggregating $789,704, and the termination of certain shares of Series A-1 Preferred with a stated value of approximately $4.45 million (the “Exchange”), including accrued and unpaid dividends of $63,186.  Contemporaneously with the consummation of the Exchange, on November 19, 2010, the Company filed a Certificate of Withdrawal of the Certificates of Designations of the Series A Preferred with the Nevada Secretary of State, as no shares or such preferred stock were issued and outstanding following the Exchange.

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 (i) 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 (ii) 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 non-assessable 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.  In May 2011, the Company issued 2,500,000 shares of its Series B Preferred to its financial advisor, with a deemed value of $37,500, for and in consideration for past professional services provided the Company, consisting of financial advisory, strategic consulting, litigation support, among other services.  At September 30, 2013, the Company had 20,416,228 shares of Series B Preferred issued and outstanding with a liquidation preference of $204,162, and convertible into 20,416,228 shares of common stock.

10.  Common Stock, Options and Warrants

The Company has authorized 150,000,000 shares of its common stock, $0.01 par value.  The Company had issued and outstanding 52,528,644 shares of its common stock at September 30, 2013 and December 31, 2012.  In December 2009, the shareholders of the Company approved an increase in the number of authorized common stock to 150,000,000 shares.  The increase took effect in January 2010 with the filing of the amendment to the articles of incorporation with the State of Nevada.

On May 21, 2013, the Company’s authorized the issuance of 1,000,000 shares of common stock to management as compensation for services.  During the three months ended September 30, 2013, the Company recorded $30,000 of compensation expense related to the fair value of the shares.

Other than the issuances to certain Note investors of an aggregate of 200,000 shares of the Company’s common stock, as described in Note 7 above, 1,800,000 shares of the Company’s common stock issued related to a professional services agreement, as described in Note 11 below, 300,000 shares issued as settlement of accounts payable, and 1,000,000 issued to management, in the nine months ended September 30, 2013, no common stock, or options to 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.  During the three and nine months ended September 30, 2013 and 2012, the Company had no compensation expense related to employee stock options. 

 
11.  Commitments and Contingencies

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.  Under the terms of the consulting agreement, however, amounts due thereunder were not paid, and instead were accrued, until the earlier to occur of such time as the Company's cash balance exceeded $1.5 million, or 24 months from the date of execution.  For each month in which payment of the cash component was deferred, the Company's financial advisor was to be issued a warrant exercisable for 200,000 shares of the Company's common stock at an exercise price of the higher of $0.20 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 was five years.

On August 1, 2012, the consulting agreement was amended to extend the deferral period for accrued cash compensation from May 16, 2013 to December 31, 2013, and the provision related to monthly warrant issuances was replaced with a provision requiring the Company to issue 100,000 shares of restricted stock monthly in lieu of the issuance of 200,000 warrants. In addition, all warrants previously issued under the consulting agreement were exchanged for shares of common stock at a ratio of one share of restricted common stock for every two warrants issued under the terms of the consulting agreement, resulting in the cancellation of warrants to issue 3.0 million shares of common stock and the issuance of a total of 1.5 million shares of restricted common stock.

12.  Subsequent Events
 
Issuance of Additional Promissory Notes
 
On October 29, 2013, the holder of certain outstanding Notes totaling approximately $228,000 in principal and accrued interest agreed to cancel such notes in exchange for a new note with a face amount of $228,000 maturing on March 31, 2014 and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $362,500 of  fees accrued from May 15, 2012 to October 15, 2013 that are payable in cash on December 31, 2013 for a note with a face amount of $362,500 maturing on March 31, 2014 and 100,000 FPMI warrants.  These notes accrue 8% interest per annum, and are due and payable on March 31, 2014.
 
In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events through the date of this filing, and have determined, other than those events disclosed in herein, that no subsequent events are reasonably likely to impact the financial statements.
 
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 laboratory 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 commercialize its products are currently contingent on additional financing to execute its business and operating plan, which is currently focused on the commercialization of the Company’s PAD technology, either directly or through a joint venture or other relationship intended to increase shareholder value.  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.  This plan was necessary in order for the Company to continue as a going concern.  No assurances can be given that the Company will obtain financing, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize the Company’s PAD technology.

For the period ending September 30, 2013, the Company had minority investments in Genomics USA, Inc. ("GUSA"). 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.

On June 20, 2012, the Company formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), to convey and transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business ("Diagnostics Business"). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, the Company’s other business line will consist of its over-the-counter business, including the InSync feminine hygienic interlabial pad, the Unique pad for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.
 
The Company’s current focus 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 its OTC Business and its Diagnostics Business either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of the Company’s investments in non-core assets, including GUSA.  As a result of its current financial condition, however, the Company’s efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.

The following discussion of our financial condition should be read together with our financial statements and related notes included in the Annual Report on Form 10-K, filed on April 15, 2013.

Recent Developments

Settlement of GUSA Note Receivable and Litigation.  On May 24, 2013, the Company and Genomics USA, Inc. ("GUSA") settled the Company’s complaint filed against GUSA seeking to recover all amounts due the Company under the terms of a promissory note in the principal amount of $200,000 (the "GUSA Note").  The Complaint was filed in the Supreme Court of the State of New York, and sought repayment of all amounts due under the terms of the GUSA Note, and accrued interest thereon, plus attorney's fees.   The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month on the 7th day of each consecutive month thereafter for a total of 18 months. During the three and nine months ended September 30, 2013, the Company received $30,000 and $50,000 in payments on the GUSA Note.

Issuance of Additional Promissory Notes.  During the nine months ended September 30, 2013, the Company issued two additional promissory notes to two investors in the principal amounts of $2,000, and $25,000 (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued an aggregate total of 27,000 warrants to purchase shares of FluoroPharma Medical, Inc. (“FPMI”) common stock, for $1.00 per share (“FPMI Warrants”), to the investors. The FPMI Warrants expire on February 15, 2019.

 
The Notes accrue interest at the rate of 6% annually. The Notes were due and payable on June 30, 2013 (the “Maturity Date”), and are currently payable upon demand by the note holders. The 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, the holder may exchange the Notes for common stock in the event the Company consummates a qualified financing (the “Qualified Financing”), which is defined in the Notes as a financing resulting in gross proceeds to the Company of at least $500,000. While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holder of the Notes demands repayment.
 
On October 29, 2013, the holder of certain outstanding Notes totaling approximately $228,000 in principal and accrued interest agreed to cancel such notes in exchange for a new note with a face amount of $228,000 maturing on March 31, 2014 and 100,000 FPMI Warrants. Separately, our financial advisor agreed to exchange $362,500 of  fees accrued from May 15, 2012 to October 15, 2013 that are payable in cash on December 31, 2013 for a note with a face amount of $362,500 maturing on March 31, 2014 and 100,000 FPMI warrants.  These notes accrue 8% interest per annum, and are due and payable on March 31, 2014.
 
The Company presently intends to issue additional Promissory Notes to finance its current working capital needs. However, there can be no assurance that the Company will be able to issue additional Promissory Notes.
 
Consolidated Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2013 to the Three and Nine Months Ended September 30, 2012

Total revenue for the three months ended September 30, 2013 and 2012 was $812 and $6,045, respectively. Total revenue for the nine months ended September 30, 2013 and 2012 was $5,118 and $12,864, respectively. The fluctuations in revenue in the 2013 period compared to the same period in 2012 are due to fluctuations in royalty revenue. Until such time as the Company develops a plan to commercialize its products, which is contingent on the receipt of additional financing, management does not anticipate that revenue will materially increase above amounts received in the current fiscal quarter.

Sales, general and administrative expense for the three months ended September 30, 2013 and 2012 was $13,744 and $12,129 respectively. Sales, general and administrative expense for the nine months ended September 30, 2013 and 2012 was $84,656 and $82,271 respectively. The increase in sales, general and administrative expense is higher legal fees related to intellectual property incurred during the 2013 period.

Professional fees for the three months ended September 30, 2013 and 2012 were $13,388 and $131,167, respectively.  Professional fees for the nine months ended September 30, 2013 and 2012 were $74,433 and $371,035, respectively.  Professional fees include the costs of legal, consulting and auditing services provided to us.  The decrease in professional fees in the 2013 periods is directly related to decreased costs of consulting and professional services provided to the Company.  
 
Research and development costs for the three months ended September 30, 2013 and 2012 were $20,083 and $14,126, respectively.  Research and development costs for the nine months ended September 30, 2013 and 2012 were $23,294 and $21,266, respectively.  The increase in research and development fees in the 2013 periods is directly attributable to the costs associated with clinical trial expense in the 2013 period.

Interest income for the three and nine month periods ended September 30, 2013 and 2012, was $3,085 and $11,085, respectively, for each period.  The interest income related to the Company’s investment has been deemed to be fully impaired, accordingly the Company has recorded a loss on impairment in the 2013 periods of $3,085 and $11,085, respectively.

Interest expense for the three months ended September 30, 2013 and 2012, was $12,988 and $8,275, respectively.  Interest expense for the nine months ended September 30, 2013 and 2012, was $44,951 and $17,281. The increase in interest expense in the 2013 period is related to a higher notes payable balance during the 2013 periods.

During the nine months ended September 30, 2013, the Company recorded non-cash interest expense related to the amortization of debt discount on notes payable of $2,407.  During the three and nine months ended September 30, 2012, non-cash interest expense related to the amortization of debt discount on notes payable was $1,114 and $100,599, respectively.

During the three and nine months ended September 30, 2013, the Company recorded non-cash other financing expenses related to the amortization of the debt discount related to the exchange of FPMI warrants on Notes payable of $0 and $27,753, respectively.

 
During the three and nine months ended September 30, 2013, the Company recorded a gain on equity investment of $0 and $40,953, respectively, representing gains related to the exchange of FPMI warrants related to Notes payable of $0 and $27,773, during the three and nine month periods, respectively.  Also included as gain on equity investments during the nine months ended September 30, 2013, is $13,200 related to the exchange of shares it owned in NuRx.
 
The Company’s net loss for the three months ended September 30, 2013 was $61,747 compared to net loss for the three months ended September 30, 2012 of $162,817.  Net loss for the nine months ended September 30, 2013 was $201,441 compared to net loss for the nine months ended September 30, 2012 of $570,076. The decrease in net losses in the three and nine month periods ended September 30, 2013 compared to the comparable periods in 2012 is due to lower losses on dispositions in the 2012 period partially offset by higher professional fees.

Liquidity and Capital Resources

As of September 30, 2013, the Company had cash and cash equivalents of $1,467, as compared to cash and cash equivalents of $9,989 as of December 31, 2012.  During the three months ended September 30, 2013, the Company’s cash flows from investing activities totaled $50,000 and cash flows from financing activities totaled $64,000.  The overall net decrease in cash of $8,523 for the nine months ended September 30, 2013, is attributable to net cash used for operating activities offset by cash received from financing activities.  

The Company has not generated sufficient revenues from operations to meet its operating expenses. In addition, the Company will require additional funding to complete the development and launch of its products, or to otherwise capitalize on its PAD technology. The Company has historically financed its operations primarily through issuances of equity and the proceeds of debt instruments. In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees.

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

The Company believes that the ability of the Company to recommence operations, and therefore continue as a going concern is dependent upon its ability to do any or all of the following: 
 
 
obtain adequate sources of funding to pay operating expenses and fund long-term business operations;
     
 
enter into a licensing or other relationship that allows the Company to commercialize its products;
     
 
manage or control working capital requirements by reducing operating expenses; and
     
 
develop new and enhance existing relationships with product distributors and other points of distribution for the Company’s products.

There can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern.
  
Off-Balance Sheet Arrangements

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

 
Critical Accounting Policies

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.
 
The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.

The Company recognizes revenue from nonrefundable minimum royalty agreements from distributors or resellers upon delivery of product to the distributor or reseller, provided no significant obligations remain outstanding, the fee is fixed and determinable, and collection is probable. Once minimum royalties have been received, additional royalties are recognized as revenue when earned based on the distributor’s contractual reporting obligations. The Company is able to recognize minimum royalty payments on an accrual basis, as they are specified in the contract. However, since the Company cannot forecast product sales by licensees, royalty payments that are based on product sales by the licensees are not determinable until the licensee has completed their computation of the royalties due and/or remitted their cash payment to us. Should information on licensee product sales become available so as to enable the Company to recognize royalty revenue on an accrual basis, materially different revenues and results of operations could occur. 
 
Our strategy includes entering into collaborative agreements with strategic partners for the development, commercialization and distribution of our product candidates. Such collaboration agreements may have multiple deliverables. In arrangements with multiple deliverables where we have continuing performance obligations, contract, milestone and license fees are recognized as revenue together with any up-front payments over the term of the arrangement as performance obligations are completed, unless the deliverable has stand-alone value and there is objective, reliable evidence of fair value of the undelivered element in the arrangement. In the case of an arrangement where it is determined there is a single unit of accounting, all cash flows from the arrangement are considered in the determination of all revenue to be recognized. Cash received in advance of revenue recognition is recorded as deferred revenue.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The accounting policies discussed below are considered by management to be the most important to the Company’s financial condition and results of operations, and require management to make its most difficult and subjective judgments due to the inherent uncertainty associated with these matters. All significant estimates and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and adjusted when necessary. We believe that our estimates and assumptions are reasonable under the circumstances. However, actual results may vary from these estimates and assumptions. Additional information on significant accounting principles is provided in Note 3 of the attached financial statements.

 
Impairment of Assets

We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas which are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.
 
In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.

Share-Based Payments

We grant options to purchase our common stock to our employees and directors under our stock option plan. We estimate the value of stock option awards on the date of grant using a Black-Scholes pricing model (Black-Scholes model). The determination of the fair value of share-based payment awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, and risk-free interest rate. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.
 
We determine the fair value of the share-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (i) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) the date at which the counterparty’s performance is complete.
 
Estimates of share-based compensation expenses are significant to our financial statements, but these expenses are based on option valuation models and will never result in the payment of cash by us.
 
The above listing is not intended to be a comprehensive list of all of our accounting policies. In most cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States.

Deferred Taxes
 
We recognize deferred tax assets and liabilities based on differences between the financial statement carrying amounts and tax bases of assets and liabilities, which requires management to perform estimates of future transactions and their respective valuations. We review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that the Company will not realize the benefit of the net deferred tax asset. At December 31, 2012 and 2011, 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/ 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, as of September 30, 2013. Based on this evaluation, the Company’s principal executive officer/ principal financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed in the reports submitted under the Securities and Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission 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/ principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
 
(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.
 
PART II - OTHER INFORMATION
 
ITEM 1.  Legal Proceedings
 
On April 8, 2013, the Company filed a Summary Judgment in Lieu of Complaint (the "Complaint") against Genomics USA, Inc. ("GUSA") to recover all amounts due the Company under the terms of a promissory note in the principal amount of $200,000 (the "GUSA Note").  The Complaint was filed in the Supreme Court of the State of New York, and sought repayment of all amounts due under the terms of the GUSA Note, and accrued interest thereon, plus attorney's fees.   On May 24, 2013, the Company and GUSA settled the Company’s complaint.  The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month shall be paid on the 7th day of each consecutive month thereafter for a total of 18 months.

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

ITEM 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**
 
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 19, 2013
/s/ Shalom Hirschman
 
Shalom Hirschman
Principal Executive, Financial and Accounting Officer