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.

 

 

 

 

 

The Company's technology portfolio, with more than three dozen patents, patents pending and licensed patents, includes: (1) RapidSense® point-of-care testing products based on QuantRx core intellectual property related to lateral flow techniques for the consumer and healthcare professional markets; (2) through our affiliate, Genomics USA, Inc., genome-based diagnostic chips for the laboratory and healthcare professional markets; (3) through FluoroPharma, molecular imaging agents for positron emission tomography (PET) and fluorescence imaging, with initial application in cardiovascular disease, addressing significant unmet medical needs by providing clinicians with important tools for early discovery and assessment; and (4) PAD technology for diagnosis and treatment of women's health concerns and other medical needs.

 

In April 2007, QuantRx increased its ownership in FluoroPharma, Inc., a development-stage molecular imaging company, to 57.78% of outstanding capital stock, resulting in its consolidation effective April 1, 2007. The investment in FluoroPharma is intended to strategically expand QuantRx’s diagnostic platforms.

 

Lateral Flow Diagnostics

 

QuantRx has developed a patented RapidSense® technology - a one-step lateral flow test with unique features such as: positive read indication for drugs-of-abuse, improved sensitivity, and the ability to read both large and small molecules. The rapid, disposable, and point-of-care diagnostic technology is ideal for collection of either urine or oral fluids. QuantRx also has a patented technology based on an innovative oral fluid collection device specifically designed for lateral flow tests – the only one-step oral fluid testing device now on the market developed by QuantRx for use with its patented RapidSense technology. This distinctive collection device has applications in the growing market of oral sample collections for issues ranging from drug-abuse testing, gathering biological evidence for criminal investigation, and screening for numerous communicable diseases including HIV/AIDS and other STDs.

 

The QuantRx device – an industry first – incorporates a removable barrier that prevents test chemicals from washing into the oral cavity during the collection process, and allows the controlled start of the test or tests within the device. Because the QuantRx device is designed for either single or multiple tests using the same sample, it is ideal for emerging drugs of abuse analyses and testing for a range of communicable diseases. The patented technology has a feature that provides a more secure "chain of custody" system, helping to ensure the identity and integrity of a specimen from collection through the reporting of test results.

 

In October, 2007, the U.S. Food and Drug Administration (FDA) granted QuantRx 510(k) clearance on its Follicle Stimulating Hormone (FSH) lateral flow immunoassay test for FSH at 10ng/ml. This female fertility test is a one-step lateral flow device that determines ovarian reserve indirectly by measuring FSH in first morning urine. The Company intends to market this test through third party distribution. The Company is currently developing a male fertility test and anticipates introduction of this test in 2008.

 

QuantRx intends to file over a half a dozen new 510(k) applications for its lateral flow tests for drugs-of-abuse and menopause over the next 12 months. Additionally, feasibility for development of lateral flow tests for infectious disease and cardiac markers is currently being explored.

 

 

The technology has strong potential and numerous possible applications. For this reason, QuantRx is pursuing collaborative research and development and original equipment manufacturer (OEM) relationships with companies and organizations interested in exploring new and existing analytes to drive the development of new products for the diagnostic marketplace to advance healthcare worldwide.

 

In the fourth quarter 2007, QuantRx intends to introduce its Affirm® drugs-of-abuse product line in the U.S. and European markets. This OEM product line is intended to develop distribution channels, complement its RapidSense line expected to be introduced in 2008, and enable QuantRx to offer a complete spectrum of drugs-of-abuse test product lines.

 

Genome-based Diagnostic Microarray Chips

 

Forming the basis of our next-generation point-of-care diagnostic technology is the clinically optimized microarray technology of the QuantRx affiliate company, Genomics USA. This technology platform is based on the non-covalent attachment of DNA probes to a surface which allows for cost-effective fabrication and manufacturing. This novel technology produces the only microarrays for analyzing intermediate numbers of genes.

 

The initial function for this technology is "The HLA Chip," which is based on Human Leukocyte Antigen (HLA) typing. Population-scale typing of HLA, a substrate of the genome, is the initial focus, resulting in the ability to detect disorders related to the immune system. An initial application for this HLA-based “laboratory on a chip” is in vaccine development and personalized vaccine delivery; essentially determining a vaccine’s effectiveness for a particular individual. Additional market applications include population scale testing for Human Papilloma Virus (HPV) and other infectious diseases, tissue transplantation, stem cell therapeutics, personalized treatment for autoimmune diseases such as arthritis and multiple sclerosis, and personalized treatment of microbial infections.

 

Importantly, the biophysical properties of these "self-assembling" DNA microarrays allow Single Nucleotide Polymorphism (SNP)-based hybridizations simply and directly, without the need to perform single-base extension or any other secondary biochemical treatment. This simplification reduces the cost of the product, increases signal quality, and allows the product to be used by non-experts, especially in field-testing or small-clinic environments.

 

Follow-on products in the personalized medicine market will service chemical therapeutics, especially those applications in which personal genetic variation at a number of gene sites can cooperate to alter treatment responsiveness for conditions such as obesity, depression, cardiovascular risk, and others.

 

Development of this critical test has been accelerated by the infusion of approximately $3 million via a Department of Defense sponsored grant, with the focus being to provide the military with information necessary to determine who would benefit from various vaccines, in the event of a biowarfare release. A prototype of this test is anticipated in 2008.

 

Initial commercialization of the HLA micorarray chip for its initial application in vaccine development and personalized vaccine development is expected in early 2009.

 

 

Molecular Imaging

 

The Company, through FluoroPharma, is developing proprietary diagnostic imaging products, with initial focus on the development of novel positron emission tomography (PET) imaging agents for efficient detection and assessment of acute and chronic forms of coronary artery disease (CAD). To date, the technology has been applied to the development of three cardiovascular imaging agents - CardioPET, BFPet, and VasoPet. The agents rapidly target either the myocardial cells within the heart or the vulnerable plaque within the coronary arteries and, combined with PET scanning, provide a non-invasive, highly specific and efficient assessment of heart metabolism and physiology. Future applications exist in the broader cardiovascular, oncology and neurology arenas.

 

CardioPET is a novel metabolic agent in development for the following intended uses: (a) detection of ischemic and infarcted tissue in patients with suspected or proven forms of acute and chronic CAD, particularly in those patients that cannot undergo stress-testing; and, (b) Cardiac Viability Assessment (CVA), for the prediction of functional improvement prior to, or following revascularization in patients with acute CAD, including myocardial infarction.

 

CardioPET represents a potentially highly sensitive means of detecting ischemia at rest, because it can detect subtle metabolic insufficiency in myocardium. Thus a primary application of CardioPET is its use in the assessment of patients with acute and chronic CAD that cannot undergo stress-testing.

 

CardioPET may also be ideal as the metabolic component in CVA due to its ability to specifically identify damaged but viable myocardial tissue. In contrast to non-viable scar tissue, viable myocardial tissue can undergo revascularization, which has been documented to improve left ventricular function and increase survival.

 

CardioPET will address two separate populations: (1) the estimated 1.75 million patients with chronic forms of CAD in the U.S. that undergo pharmacologic stress-testing due to stress-test contraindication; and, (2) the 350,000 patients with presumptive hibernating or stunned myocardium. For at-rest assessment of the former population, we believe CardioPET may be readily adopted by the cardiology community for the assessment of this patient pool. For CVA testing, we believe that CardioPET’s “first mover” advantage, when combined with the favorable technical parameters relative to currently available glucose-based agents such as fluorodeoxyglucose (FDG), should result in favorable market adoption. Another potential application for CardioPET is as a substitute for regular stress testing, as physicians see the benefit of fewer total scans and potentially faster diagnoses.

 

Following the filing of an Investigational New Drug (IND) application with the FDA, a Phase I clinical trial for CardioPET commenced in 2006 and is nearing completion. The Phase I trial is a single center, open label study, designed to evaluate safety, distribution and dosimetry of CardioPET as a PET tracer for myocardial imaging in healthy subjects. All primary study and safety endpoints were achieved; the drug and treatment were exceedingly well-tolerated. Evaluation of the safety and distribution of the agent in subjects with known CAD is ongoing. The Company expects to initiate a limited Phase II study in late 2007 focused on evaluation of cardiac ischemia in subjects with chronic and acute forms of CAD.

 

 

BFPET is a blood flow imaging being developed for use as a myocardial perfusion agent in conjunction with stress-testing for the detection of ischemic and infarcted myocardial tissue in patients with suspected or proven chronic CAD.

 

BFPET has been designed to enter the myocardial cells of the heart muscle in direct proportion to blood flow and membrane potential—the two most important physiological indicators of adequate blood supply to the heart. BFPET effectively differentiates between those cells of the myocardium that are ischemic (reversibly damaged), infarcted (irreversibly damaged), and those that are healthy. Because ischemic and infarcted cells take up significantly less BFPET than normal healthy myocardial cells, the signal emitted by the tracer attached to BFPET is inversely proportional to the extent of myocardial injury, the result of which can be visualized with PET imaging technologies.

 

Currently, it is estimated that approximately 80% of the 7 million patients with suspected acute and chronic forms of CAD in the U.S. are evaluated using the combination of blood flow imaging agents (blood flow agents) and stress-testing. An additional 350,000 patients undergo CVA in which a blood flow agent, such as BFPET, is used in combination with a metabolic imaging agent such as FDG or FluoroPharma’s CardioPET. We believe that BFPET may represent the first commercially feasible cardiovascular blood flow agent for the PET market.

 

VasoPET is a novel imaging agent for the detection of inflamed and/or coronary artery plaque formation in patients with CAD. VasoPET, if approved, would represent the first cardiovascular PET product to reliably differentiate between vulnerable and stable coronary artery plaque.

 

Coronary artery plaques grow over time and progressively narrow the lumen of the coronary artery until blood flow to the heart diminishes to a critical level. The rupture of atherosclerotic plaque and the subsequent formation of clots overlying the plaque are currently recognized as the primary mechanisms of myocardial and cerebral infarctions. Therefore, the detection of vulnerable plaque in atherosclerotic lesions is a highly desirable goal; and to this date remains both a significant clinical objective and large unaddressed market opportunity.

 

VasoPET is positioned to capture a small percentage of the entire atherosclerosis scanning market, which represents more than 50 million Americans. Preliminary estimates for the VasoPET market are a direct function of the more than 100 thousand patients that undergo carotid artery procedures annually. There is a significant need to follow up after treatment to track the success of these procedures. We conservatively estimate that VasoPET will gradually become the standard follow up for carotid artery procedures and that 75% of patients will be scanned with VasoPET one year post-surgery.

 

The Company has completed the studies necessary for the filing of INDs for the myocardial perfusion imaging agent, BFPET and atherosclerotic plaque imaging agent, VasoPET. Single-dose preclinical toxicology studies revealed no untoward effects of either compound when they were administered in doses up to one million times the anticipated clinical dose. Submission of the IND and commencement of Phase I clinical trial to evaluate safety and dosimetry in healthy subjects is expected in late 2007 or early 2008.

 

We anticipate that our first New Drug Application will be filed with the U.S. FDA in 2010.

 

 

Miniform PADs for Diagnosis and Treatment

 

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

 

The QuantRx Miniform PAD is fully biodegradable and flushable, making it safe, convenient, and easy to use, addressing the growing trend in medicine to turn to products that seek to improve health and treat disease chiefly by assisting the body’s innate capacity to recover from illness and injury.

 

The Company plans to market its initial PAD-based products under the QuantRx Unique® and Unique-T® brands through various distribution arrangements. Additionally, the Company expects to introduce the Unique line via the internet in the fourth quarter of 2007. Addressing the over-the-counter market for temporary hemorrhoid pain relief medication and supplies, the Unique line incorporates technology licensed from the Procter & Gamble Company. The proprietary Unique and Unique-T are intended for treatment and daily care of hemorrhoids and minor vaginal infections. They are distinctive in that they are the only PAD-based hemorrhoid-treatment product in a segment of the healthcare market that has experienced little or no innovation in decades.

 

The QuantRx PadKit® was developed on the basis of clinical research indicating that the miniform may also be an ideal diagnostic sample collection device. When coupled with a simple transport kit, it allows patients to take their own samples which are sent to a laboratory for analysis and diagnosis, providing a sample for drug use screening, genetic conditions, and disease. QuantRx holds several patents covering this application and plans to commercialize products it may develop under these patents under the QuantRx PadKit trademark. Commercialization will likely require extensive clinical testing and submission to the FDA for marketing approval.

 

The Company is exploring the potential combination of the miniform PAD sample-collection capability with the microarray technology of its affiliate company, Genomics USA, to bring to market a diagnostic tool for female tissue sampling, specifically testing for colon cancer and HPV, a virus that has been shown to cause cervical cancer. In addition, QuantRx is exploring clinical validation for the use of its PAD technology for application in therapeutic transdermal drug delivery, based on results of preclinical vaginal drug-delivery research conducted at the University of Belfast and Oxford University.

 

Consolidated Results of Operations

 

Net operating revenues for the three months ended September 30, 2007 and 2006, were $85,518 and $32,106, respectively. Net operating revenues for the nine months ended September 30, 2007 and 2006, were $256,169 and $57,788, respectively. The increase in revenues of $53,412 for the quarter and $198,381 for the nine months is due to revenues of $51,844 and $155,145 related to short-term research and development agreements, and an increase of $1,568 and $43,236 accreted from deferred revenue.

 

Other revenues in the three and nine months ended September 30, 2007, included rental income of $6,224 and $14,509, respectively, for the subleasing of research and development laboratory space at our research facility and, in the first quarter, a $14,000 governmental grant for qualified expenditures at our research facility.

 

 

Sales and marketing expense for the three months ended September 30, 2007 and 2006, was $78,243 and $67,468, respectively, and for the nine months ended September 30, 2007 and 2006, was $173,524 and $229,911. The increase of $10,775 for the quarter primarily reflects an increase in business development costs offset by a decrease in personnel and related expenses. The decrease of $56,387 for the nine months primarily reflects a decrease in personnel and related expenses, offset by increased business development costs.

 

General and administrative expense, including professional fees, for the three months ended September 30, 2007 and 2006, was $864,917 and $477,436, respectively, and for the nine months ended September 30, 2007 and 2006, was $3,220,441 and $1,470,513, respectively. The increase of $387,481 for the quarter is primarily attributable to the consolidation of FluoroPharma’s financial results and increased personnel and related expenses. The increase of $1,749,928 for the nine months is primarily attributed to an increase in professional fees and the consolidation of FluoroPharma’s financial results and, to a lesser extent, increased personnel expenses.

 

Research and development expense for the three months ended September 30, 2007 and 2006, was $462,740 and $176,488, respectively, and for the nine months ended September 30, 2007 and 2006, was $1,464,873 and $436,778, respectively. The increase of $286,252 and $1,028,095 for the three and nine months is primarily attributable to the consolidation of FluoroPharma’s financial results and their expenses related to clinical trials, as well as the hiring of additional research and development personnel and increased expenses associated with occupying a new research and development facility beginning in the fourth quarter of 2006.

 

The Company’s net loss for the three months ended September 30, 2007 and 2006, was $1,327,357 and $1,960,676, respectively, and for the nine months ended September 30, 2007 and 2006, was $4,797,193 and $5,558,135, respectively. The decreased net loss for the quarter of $633,319 is primarily due to a reduction in interest expense of $1,279,104 related to convertible promissory notes which were converted to common stock in December 2006, partially offset by the effects of the 2007 consolidation of FluoroPharma. The decreased net loss for the nine months of $760,942 primarily relates to a reduction in interest expense of $3,502,537, partially offset by the effects of the 2007 consolidation of FluoroPharma and an increase in professional fees of $634,041.

 

Liquidity and Capital Resources

 

As of September 30, 2007, the Company had cash and cash equivalents of $184,670, as compared to cash and cash equivalents of $1,256,912 as of December 31, 2006. The net decrease in cash of $1,072,242 for the nine months ended September 30, 2007, is primarily attributable to net operating cash used of $3,933,690, the issuance of a $200,000 8% convertible promissory note to Genomics USA, Inc., and $253,689 for purchased fixed assets, primarily offset by the private placement of 3,532,500 shares of common stock and warrants to accredited investors for gross proceeds of $3,532,500 and gross proceeds from warrant exercises of $584,206.

 

QuantRx has used its financing proceeds, as well as its revenues, to fund current operating expenses and investments intended to strategically expand our platforms and technologies.

 

 

In the future, QuantRx expects to expand operations with the use of additional financing and increased revenues from operations with the introduction of several products in late 2007 and early 2008. On October 16, 2007, QuantRx completed the first tranche of a private placement of 10% senior secured convertible promissory notes and warrants to purchase shares of QuantRx common stock. The private placement may be completed in multiple tranches until $2,000,000 in aggregate notional amount of Notes have been issued. In connection with the private placement, QuantRx issued Notes in the aggregate principal amount of $1,000,000 and Warrants to purchase 250,000 shares of QuantRx' common stock. It is anticipated that an additional $1,000,000 will be raised through the issuance of 10% senior secured convertible promissory notes and warrants to purchase shares of QuantRx common stock in the fourth quarter of 2007.

 

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 the SEC’s Staff Accounting Bulletin Topic 13, “Revenue Recognition” (“Topic 13”) and EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables.” Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed and determinable; and (4) collectibility is reasonably assured.

 

Revenue from licensing agreements is recognized based on the performance requirements of the agreement. Revenue is deferred for fees received before earned. Nonrefundable upfront fees that are not contingent on any future performance by us are recognized as revenue when revenue recognition criteria under Topic 13 and EITF 00-21 are met and the license term commences. Nonrefundable upfront fees, where we have an ongoing involvement or performance obligations, are recorded as deferred revenue and recognized as revenue over the life of the contract, the period of the performance obligation or the development period, whichever is appropriate in light of the circumstances.

 

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 agreements when they represent the culmination of the earnings process. Royalty revenue from licensed products will be recognized when earned in accordance with the terms of the license agreements.

 

 

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.

 

Impairment of Assets

 

We assess the impairment of long-lived assets 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 minority interests 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.

 

We perform annual impairment tests of our equity method goodwill and other intangible assets in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill is not amortized but is subject to impairment tests based upon a comparison of the fair value of the entity and the carrying value of the entity’s net assets. SFAS No. 142 requires a review of goodwill and other intangible assets for impairment at least annually or when circumstances exist that would indicate an impairment of such goodwill or other intangible assets. We determine whether the equity method goodwill and other intangible assets are impaired by comparing the respective fair values of the equity method goodwill and/or other intangible assets to their respective carrying values.

 

In determining fair value of assets, QuantRx 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 subject to the provisions of SFAS No. 123 (R), “Share-Based Payments.” Effective January 1, 2005, we use the fair value method to apply the provisions of SFAS No. 123 (R) with a modified prospective application which provides for certain changes to the method for valuing share-based compensation. The valuation provisions of SFAS No. 123 (R) apply to new awards and to awards that are outstanding on the effective date and subsequently modified or cancelled. Under the modified prospective application, prior periods are not revised for comparative purposes.

 

Upon adoption of SFAS No. 123 (R), we began estimating 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 the application of SFAS No. 123 (R) in future periods, the compensation expense that we record under SFAS No. 123 (R) may differ significantly from what we have recorded in the current period.

 

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.

 

ITEM 3. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is communicated to our management including our Chief Executive Officer and Chief Financial Officer as appropriate. With the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as defined under Exchange Act Rules 13a-15(e) and 15(d)-15(e)), as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of September 30, 2007.

 

(b) Changes in Internal Control over Financial Reporting

 

During the period covered by this Quarterly Report on Form 10-QSB, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

 

Given the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, will have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Further, the design of a control system must reflect the fact that there are resource constraints, and that the benefits of a control system must be considered relative to its cost. The design of any system of controls is also based in part on certain assumptions regarding the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

 

PART II - OTHER INFORMATION

 

ITEM 1. Legal Proceedings.

 

As of the date hereof, the Company has no pending or threatened litigation.

 

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

 

In the third quarter 2007, QuantRx initiated a limited warrant exercise inducement targeting certain large warrant holders. The inducement was a reduction in the exercise price from $1.50 to $0.75 to a limited number of accredited investors holding warrants acquired in conjunction with prior common stock purchases. As a result of this inducement, 751,001 common stock warrants were exercised and exchanged for 751,001 shares of our common stock, $0.01 par value, for aggregate gross proceeds of $563,251. In connection with the exercise of these warrants, QuantRx paid cash commissions to Legend Merchant, Inc., of $16,429.

 

In August 2007, 38,100 common stock warrants were exercised and exchanged for 38,100 shares of our common stock, $0.01 par value, resulting in proceeds to the Company of $20,955. The exercise price for these warrants was $0.55.

 

On September 4 and June 1, 2007, the Company issued 2,000 and 6,000 common stock warrants with five-year terms and exercise prices of $0.87 and $1.15, respectively, in consideration of business development consulting services.

 

The issuances of the above securities were deemed to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(2) of the Securities Act or Regulation D promulgated under the Securities Act, as transactions by an issuer not involving a public offering.

 

All proceeds will be used for general corporate purposes.

 

There were no additional sales of unregistered securities other than as reported in prior reports on Form 8-K.

 

ITEM 3. Defaults on Senior Securities

 

None.

 

 

ITEM 4. Submission of Matters to a Vote of Security Holders

 

None.

 

ITEM 5.  Other Information

 

None.

 

ITEM 6.  Exhibits

 

Exhibit Index

 

Exhibit		Description
31.1		Certification of Chief Executive Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.
31.2		Certification of Chief Financial Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.
32.1*		Certification of Chief Executive 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.
32.2*		Certification of Chief Financial 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.

*The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report on Form 10-QSB 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.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	QuantRx Biomedical Corporation
Date:   November 12, 2007		By:	/s/ Walter Witoshkin
		Walter Witoshkin
		Chairman & CEO
Date:   November 12, 2007		By:	/s/ Sasha Afanassiev
		Sasha Afanassiev
		CFO, Treasurer & VP of Finance