10-Q

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 March 31, 2019

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File No. 000-17119

QUANTRX BIOMEDICAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

10190 SW 90th Avenue, Tualatin, Oregon 97123

(Address of Principal Executive Offices) (Zip Code)

(212) 980-2235

(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]    No [   ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes [  ]   No [X]

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-Accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[  ]

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

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	QTXB	OTC:PINK Marketplace

The number of shares outstanding of the issuer’s common stock as of May 20, 2019 was 78,696,461.

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements	1
	Balance Sheets as of March 31, 2019 (Unaudited) and December 31, 2018	2
	Statements of Operations (Unaudited) for the three months ended March 31, 2019 and 2018	3
	Statements of Cash Flows (Unaudited) for the three months ended March 31, 2019 and 2018	4
	Quarterly Statements of Stockholders Equity (Unaudited) for the three months ended March 31, 2019 and year ended December 31, 2018	5
	Condensed Notes to (Unaudited) Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
ITEM 4.	Controls and Procedures	17
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	18
ITEM 1A.	Risk Factors	18
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
ITEM 3.	Defaults Upon Senior Securities	18
ITEM 4.	Mine Safety Disclosures	18
ITEM 5.	Other Information	18
ITEM 6.	Exhibits	18
Signatures		19

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PART I – FINANCIAL INFORMATION

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING EXHIBITS HERETO, CONTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,” “ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING. VARIOUS FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2018. 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.

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ITEM 1.  Financial Statements

QUANTRX BIOMEDICAL CORPORATION

BALANCE SHEETS

	March 31,	December 31,
	2019	2018
ASSETS	(unaudited)
Current Assets:
Cash and cash equivalents	$281,920	$322,024
Prepaid expense	27,510	37,764
Total Current Assets	309,430	359,788
Investments, net of impairment of $478,000	222,000	222,000
Total Assets	$531,430	$581,788
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$58,142	$48,611
Accounts payable, related party	17,500	7,000
Accrued expense	15,161	26,165
Notes payable and accrued interest	1,919,759	1,870,685
Notes payable, related party and accrued interest	139,486	135,728
Total Liabilities	2,150,048	2,088,189
Commitments and Contingencies	-	-
Stockholders’ Equity (Deficit):
Preferred stock; $0.01 par value, 25,000,000 authorized shares; 20,500,000 shares designated as Series B Convertible Preferred Stock; Series B Convertible Preferred shares 6,196,893 issued and outstanding	61,969	61,969
Common Stock; $0.01 par value; 150,000,000 authorized; 78,696,461 shares issued and outstanding	786,964	786,964
Additional paid-in capital	48,876,398	48,876,398
Stock to be issued	8,600	8,600
Accumulated deficit	(51,352,549)	(51,240,332)
Total Stockholders’ Equity (Deficit)	(1,618,618)	(1,506,401)
Total Liabilities and Stockholders’ Equity (Deficit)	$531,430	$581,788

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

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QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended
	March 31,
	2019	2018
Revenue:
Revenue	$-	$-
Total Revenue	-	-
Costs and Operating Expense:
Sales, general and administrative	22,579	27,980
Professional fees	36,425	18,323
Total Costs and Operating Expenses	59,004	46,603
Loss from Operations	(59,004)	(46,603)
Other Income (Expense):
Interest expense	(53,213)	(58,916)
Interest Income	-	219
Total Other Income (Expense), net	(53,213)	(58,697)
Profit (Loss) Before Taxes	(112,217)	(105,000)
Provision for Income Taxes	-	-
Net Profit (Loss)	(112,217)	$(105,000)
Basic and Diluted Net Loss per Common Share	$(0.00)	$(0.00)
Basic and Diluted Weighted Average Shares Used in per Share Calculation	78,696,461	78,696,461

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

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QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF CASH FLOWS

(unaudited)  

	Three Months Ended
	March 31, 2019	March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(112,217)	$(105,000)
Adjustments to reconcile net loss to net cash used by operating activities:
Interest earned on escrow account	-	(219)
(Increase) Decrease in:
Prepaid expense	10,254	9,386
Increase (decrease) in:
Accounts payable	20,031	(10,542)
Accrued interest and expense	52,832	49,127
Net Cash Used by Operating Activities	(40,104)	(57,248)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided by (Used in) Investing Activities	-	-
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Provided (used) by financing activities	$-	$-
Net Increase (Decrease) in Cash and Cash Equivalents	(40,104)	(57,248)
Cash and Cash Equivalents, Beginning of Period	322,024	460,111
Cash and Cash Equivalents, End of Period	$281,920	$402,863
Supplemental Cash Flow Disclosures:
Interest expense paid in cash	$381	$261
Income tax paid	$-	$-

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

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QUANTRX BIOMEDICAL CORPORATION

STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

	Preferred Stock		Common Stock		Additional	Stock		Total
	Number of Shares	Amount	Number of Shares	Amount	Paid-in Capital	To Be Issued	Accumulated Deficit	Stockholders’ Equity
Balance, January 1, 2018	16,676,942	$166,769	78,696,461	$786,964	$48,791,598	8,600	$(50,503,482)	$(749,551)
Net Loss	-	-	-	-	-	-	(105,000)	(105,000)
Balance, March 31, 2018	16,676,942	$166,769	78,696,461	$786,964	$48,791,598	8,600	$(50,608,482)	$(854,551)

Balance, January 1, 2019	6,196,893	$61,969	78,696,461	$786,964	$48,876,398	8,600	$(51,240,332)	$(1,506,401)
Net Loss	-	-	-	-	-	-	(112,217)	(112,217)
Balance, March 31, 2019	6,196,893	$61,969	78,696,461	$786,964	$48,876,398	8,600	$(51,352,549)	$(1,618,618)

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

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QUANTRX BIOMEDICAL CORPORATION

CONDENSED NOTES TO FINANCIAL STATEMENTS

(unaudited)

1.            DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Overview

QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. Our principal business office is located at 10190 SW 90th Avenue, Tualatin, Oregon 97123. When used in this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “our,” “ours,” or “us” mean QuantRx Biomedical Corporation, unless context otherwise requires.

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

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

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

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

We follow the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the items under Regulation S-X required by the instructions to Form 10-Q. They may not include all information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on April 16, 2019. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. 

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

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2.            MANAGEMENT STATEMENT REGARDING GOING CONCERN

Currently, we are not generating revenue from operations, and do not anticipate generating meaningful revenue from operations or otherwise in the short-term. We have historically financed our operations primarily through issuances of equity and the proceeds from the issuance of promissory notes. In the past, we also provided for our cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees, as well as divesting our minority equity interests and equity-linked investments. In addition, in the fiscal year ended December 31, 2018, we received a cash payment as consideration for the sale and transfer of the certain assets to Preprogen LLC (“Preprogen”).

Our history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on our assets raise substantial doubt about our ability to continue as a going concern absent a strengthening of our cash position. Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic, merger or other transaction to obtain additional funding to continue the development of, and to successfully commercialize, our products. There can be no assurance that we will be successful in our efforts. Should we be unable to obtain adequate financing or generate sufficient revenue in the future, our business, result of operations, liquidity and financial condition would be materially and adversely harmed, and we will be unable to continue as a going concern.

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

3.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Accounting for Share-Based Payments.  The Company follows the provisions of 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. During the three months ended March 31, 2019 and 2018, the Company had no stock compensation expense.

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

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The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year. During the three months ended March 31, 2019 and 2018, the Company did not make any Black-Scholes model assumptions, as no share-based payments were made during those periods.

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

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

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

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

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

Earnings per Share. The Company computes net income (loss) per common share in accordance with ASC Topic 260. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. For the quarter ended March 31, 2019, including potentially dilutive securities in diluted shares outstanding would be immaterial.

For the three months ended March 31, 2018 and the three months ended March 31, 2019, basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive.

As of March 31, 2019, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and outstanding preferred shares convertible into 6,196,893 shares of its common stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2019. At March 31, 2019, the Company had reserved for issuance to certain investors 860,000 shares of its Series B Convertible Preferred Stock, convertible into 860,000 shares of its common stock. As of March 31, 2019, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

As of March 31, 2018, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and preferred shares convertible into 16,676,942 shares of its Common Stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2018. The Company has reserved for issuance 860,000 shares of its Series B Preferred Stock to certain investors in connection with the 2017 Notes. As of March 31, 2018, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

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.

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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 revenue and expense during the reporting period. Accordingly, actual results may differ from those estimates.

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

Recent Accounting Pronouncements.

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

4.            INVESTMENTS

In May 2006, the Company purchased 144,024 shares of common stock of GMS Biotech, formerly Genomics USA, Inc. (“GUSA”) for $200,000. After the investment, the Company owned approximately 5% of the total issued and outstanding common stock of GUSA. As of December 31, 2018, the Company’s position had been diluted to approximately 2% of the issued and outstanding common stock of GUSA. The investment is recorded at historical cost and is assessed at least annually for impairment. During the year ended December 31, 2017, the Company recorded a loss of $169,948 to fully impair the value of its common stock investment in GUSA. The Company has valued the impairment based on the dilution of the Company’s investment and certain other factors.   

On September 3, 2015, the Company entered into a non-binding letter of intent (the “Global LOI”) with Global Cancer Diagnostics, Inc., a privately held laboratory in Tempe, Arizona (“Global”), for a proposed business combination. The Global LOI had an original termination date of October 31, 2015 (the “Termination Date”), but could be terminated or extended anytime by the mutual written consent of the parties. During the quarter ended September 30, 2016, in accordance with the terms and conditions of the executed Global LOI, the Company deemed the Global LOI terminated. Accordingly, Global is obligated to issue the Company the number of shares of Global’s common stock equal to 10% of its then outstanding shares of common stock, on a fully-diluted basis, as payment of the Global Advance. In addition to the share issuance, the Company is evaluating certain additional remedies related to the Global LOI and the $50,000 advance. The Company deemed the $50,000 Global Advance to be fully impaired as of September 30, 2016.

In December 2017, the Company executed an agreement with Preprogen, pursuant to which the Company sold, assigned and licensed-back certain assets pertaining to its Diagnostic Business (the “Preprogen Transaction”). As a part of the Preprogen Transaction, the Company acquired a 15% interest in Preprogen.  On October 8, 2018, the Preprogen Agreement was amended to provide for, among other things, the release of funds held in escrow related to the manufacture of the miniform pads (the “Preprogen Amendment”), which resulted in both parties receiving $200,583 in cash. As consideration for the Preprogen Amendment, the Company agreed to pay Preprogen a royalty of 5% from the sale of all over-the-counter miniform products; provided, however, that such royalty payments shall terminate when Preprogen has received $200,000 in aggregate consideration from the royalties paid by the Company, and that the Company shall be entitled to offset such royalty payments due and payable to Preprogen by amounts equal to certain other payments otherwise due and payable to the Company by Preprogen pursuant to the terms of the Preprogen Agreement. At December 31, 2018, we revalued our investment in Preprogen to $222,000, recording an impairment of $278,000.

5.            INTANGIBLE ASSETS

On December 15, 2017, the Company entered into an agreement with Preprogen, pursuant to which the parties agreed to the sale, assignment, and license-back of certain assets, including intellectual property transferred to Preprogen necessary to the development, manufacture, marketing and sale of the Company’s OTC miniform products for the feminine hygiene and hemorrhoid treatment markets. At March 31, 2019 and December 31, 2018, the Company had reduced its capitalized intangible assets to zero.

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6.            CONVERTIBLE NOTES PAYABLE

On January 2, 2015, the Company issued a Bridge Note in the principal amount of $36,500 and issued 73,000 shares of its common stock to the purchaser of the Bridge Note. Additionally, the Company issued 500,000 shares of its common stock in January 2015 to certain investors who purchased Bridge Notes during the year ended December 31, 2014. 

In February 2015, the Company issued an aggregate total of 815,061 shares of its common stock as payment for accrued interest for the period from July 1, 2014 through December 31, 2014 under certain convertible notes payable.

On June 30, 2015, the Company issued two additional Bridge Notes in the aggregate principal amount of $50,000 and issued an aggregate total of 100,000 shares of its common stock to the purchasers of these Bridge Notes. In connection with the issuance of these notes, the Company recorded debt discount expense totaling $2,830 and has amortized these costs over the life of the notes.

In June 2015, the Company authorized the issuance of an aggregate total of 1,875,691 shares of its common stock as payment for accrued interest for the period from January 1, 2015 through June 30, 2015 under certain convertible notes payable. The Company settled a total of $70,256 in accrued interest, recognizing a gain on settlement in the amount of $23,364. The Company and the holders of the Bridge Notes also agreed to extend the maturity date of the Bridge Notes from June 30, 2015 to December 31, 2015. As consideration for the extension of the maturity date of the Bridge Notes, the Company issued an aggregate total of 286,500 shares of its common stock to the Bridge Note holders. These Bridge Notes are now payable on demand.

In July 2015, the Company issued a Bridge Note in the principal amount of $35,000 and issued an aggregate total of 70,000 shares of its common stock to the purchaser of the Bridge Note.

On March 31, 2016, Burnham Hill Advisors, LLC (“BHA”) agreed to exchange the amounts owed to BHA under the October 29, 2013 agreement for a promissory note, on terms substantially similar to the Bridge Notes (the “BHA Note”), in the principal amount of $283,000 with the issuance date of March 31, 2016. The BHA Note is payable on demand as of December 31, 2016, and was past due as of September 30, 2017. On April 1, 2017, BHA assigned the BHA Note to certain of its then employees, including Michael Abrams, who serves as a director of the Company, under the same terms.

During each of the quarters ended March 31, 2017 and June 30, 2017, the Company issued an MOU Note in the principal amount of $25,000. 

In July and August 2017, the Company issued certain investors Bridge Notes in the aggregate principal amount of $86,000 (the “2017 Bridge Notes”). Each 2017 Bridge Note accrues interest at a rate of 10% per annum, and matured on September 30, 2017. The 2017 Bridge Notes are now payable on demand.

In October 2017, the Company issued an additional MOU Note in the principal amount of $15,000.

The three MOU Notes, with an aggregate principal amount of $65,000, were all cancelled and applied as part of the purchase price in the Preprogen Transaction.

In September 2018, the Company paid three of its note holders an aggregate of $60,750 to settle $121,500 of note principal plus $47,637 of accrued interest.

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At March 31, 2019 and December 31, 2018, the Company’s Convertible Notes Payable and Accrued Interest were as follows:

	March 31, 2019	December 31, 2018
Notes Payable and accrued interest payable	$1,919,759	$1,870,685
Notes Payable and accrued interest payable, related party	139,486	135,728
Total notes payable	$2,059,245	$2,006,413

Notes Payable, Related Party

As of March 31, 2019, the Company owed Michael Abrams, a director of the Company, an aggregate total of $139,486 for outstanding principal and accrued and unpaid interest on certain Bridge Notes. As of December 31, 2018, the Company owed Mr. Abrams an aggregate total of $135,728 for outstanding principal and accrued and unpaid interest on certain Bridge Notes.

 7.            RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2019, the Company paid Dr. Hirschman an aggregate total of $10,500 for his services as CEO.

During the three months ended March 31, 2019, the Company accrued fees due to Mr. Abrams in aggregate of $10,500 for his services as a Director. As of March 31, 2019, the Company owed Mr. Abrams $17,500 in accrued fees.

As of March 31, 2019, the Company owed Michael Abrams, a director of the Company, an aggregate total of $139,486 for outstanding principal and accrued and unpaid interest on certain Bridge Notes.

8.            PREFERRED STOCK

The Company has authorized 25,000,000 shares of preferred stock, of which 20,500,000 are designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $204,000 (“Series B Preferred”). The remaining authorized preferred shares had not been designated by the Company as of March 31, 2019.

Series B Convertible Preferred Stock

The Series B Preferred ranks senior to the Company’s common stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“Junior Stock”). Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of common stock multiplied by the number of shares of common stock equal to the outstanding shares of Series B Preferred, on an as converted basis. The holders of Series B Preferred have voting rights to vote as a class on matters (a) amending, altering or repealing the provisions of the Series B Preferred so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred; or (b) to affect any distribution with respect to Junior Stock. At any time, the holders of Series B Preferred may, subject to limitations, elect to convert all or any portion of their Series B Preferred into fully paid non-assessable shares of the Company’s common stock at a 1:1 conversion rate.

As disclosed under Note 6 above, in July and August, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued the 2017 Bridge Notes in the aggregate principal amount of $86,000. As additional consideration for the purchase of the 2017 Bridge Notes, the Company has reserved for issuance an aggregate of 860,000 shares of Series B Preferred to be issued to the purchasers of the 2017 Bridge Notes. The Company has valued the Series B Preferred and has recorded a discount on the 2017 Bridge Notes of $7,818, which was amortized in full during the year ended December 31, 2017.

-11-

In April 2018, the Company completed the purchase of 10,480,084 shares of Series B Preferred (the “Purchased Shares”) from an institutional shareholder for an aggregate purchase price of $20,000. Following this transaction, the shareholder no longer holds shares in the Company.

As of March 31, 2019, the Company had 6,196,893 shares of Series B Preferred issued and outstanding, with a liquidation preference of $61,969 and convertible into 6,196,893 shares of the Company’s common stock. As of December 31, 2018, the Company had 6,196,893 shares of Series B Preferred issued and outstanding with a liquidation preference of $61,969 and convertible into 6,196,893 shares of the Company’s common stock. 

9.            COMMON STOCK, OPTIONS AND WARRANTS

The Company has authorized 150,000,000 shares of its common stock for issuance, of which 78,696,461 were issued and outstanding at each of March 31, 2019 and December 31, 2018.

During the three months ended March 31, 2019 and 2018, there were no warrants issued by the Company. As of March 31, 2019, the Company has one warrant issued and outstanding, which warrant was issued in December 2018 to Preprogen’s designee to purchase up to 15.0 million shares of the Company’s common stock, at an exercise price of $0.05 per share. The warrant was exercisable immediately upon issuance, and expires on December 14, 2022.

2007 Incentive and Non-Qualified Stock Option Plan.  The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term. The Company did not issue any options during the three months ended March 31, 2019 or 2018.

10.            SUBSEQUENT EVENTS

We have evaluated subsequent events through the date of this filing in accordance with the Subsequent Events Topic of the FASB ASC 855, and have determined that no subsequent events occurred that are reasonably likely to impact these financial statements.

-12-

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

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

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

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

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

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 16, 2019.

-13-

 Results of Operations

Comparison of the Three Months Ended March 31, 2019 to the Three Months Ended March 31,2018.

The Company did not generate any revenue during the three months ended March 31, 2019 or the three months ended March 31, 2018. The absence of revenue is due to no royalty revenue attributable to the Company’s PAD technology received during the periods. Management does not anticipate that the Company will generate any revenue until such time as the Company develops a plan to commercialize its over-the-counter products, which is contingent on the receipt of financing.

Sales, general and administrative expense for the three months ended March 31, 2019 and 2018 was $22,579 and $27,980, respectively. Sales, general and administrative expense includes, but is not limited to, consulting expense, office and insurance expense, accounting and other costs to maintain compliance with the Company’s reporting requirements to the Securities and Exchange Commission (the “SEC”). The overall decrease in sales, general and administrative expense for the three months ended March 31, 2019 is principally due to costs incurred during the 2018 period to move the Company’s facilities. Partially offsetting the overall decrease in the 2019 period are increased costs for maintenance of intellectual property in the 2019 period compared to the 2018 period.

Professional fees for the three months ended March 31, 2019 and 2018 were $36,425 and $18,323, respectively. Professional fees include the costs of legal, consulting and auditing services provided to us. The increase in professional fees for the three months ended March 31, 2019 relates to higher consulting fees paid to Dr. Hirschman for services as CEO and Mr. Abrams for their services as a Director. Also contributing to the increased expenses in the 2019 period are higher costs of legal and audit fees during the 2019 period.

The Company did not incur any research and development costs during the three months ended March 31, 2019 or 2018. The Company did not engage in any research and development efforts in the 2019 period, nor does the Company expect to engage in any research and development activity until funding is secured and it develops a plan to commercialize its products.

Interest expense for the three months ended March 31, 2019 and 2018 was $53,213 and $58,916, respectively. The decrease in interest expense in the 2019 periods compared to the 2018 periods is related to lower convertible notes outstanding partially offset by higher interest rate calculations on certain notes payable during the 2019 periods.

During the three months ended March 31, 2019, the Company recorded net loss of $112,217 compared to net loss for the three months ended March 31, 2018 of $105,000. Net loss for the three months ended March 31, 2019 is directly attributable to higher costs for professional services, as described above.

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

Liquidity and Capital Resources

At March 31, 2019, the Company had cash and cash equivalents of $281,920, as compared to $322,024 at December 31, 2018.

The Company had cash and cash equivalents of $402,863 at March 31, 2018. The decrease in cash and cash equivalents between the 2019 and 2018 periods of approximately $120,000 is primarily attributable to cash used for operations in the 2018 and 2019 periods partially offset by the receipt of escrow funds in December 2018 related to the sale of certain assets pertaining to its Diagnostic Business to Preprogen LLC (“Preprogen”) in 2017. Also participating in the decrease in cash is a one-time payment of $20,000 to settle certain convertible notes payable during the second quarter of 2018.

During the three months ended March 31, 2019, the Company used $40,104 for operating activities, compared to $57,248 used during the three months ended March 31, 2018. The net overall decrease in cash used for operating activities during the three months ended March 31, 2019 is attributable to higher payments of accounts payable during the 2018 period, partially offset by a higher balance of unpaid interest expense on convertible notes payable.

-14-

The Company has not generated sufficient revenue from operations to meet its operating expense. The Company requires additional funding to complete the development and launch of its over-the-counter 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 shares of its common stock, options and warrants for certain operating costs, including consulting and professional fees. In addition, in the fiscal year ended December 31, 2018, the Company received a large cash payment from Preprogen as consideration for the sale and transfer of the certain assets.

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

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

●

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

●

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

●

manage or control working capital requirements by reducing operating expense; and

●

develop new, and enhance existing, relationships with product distributors and other points of distribution for the Company’s products.

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

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

Reclassifications

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

-15-

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, revenue and expense 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 those 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.  

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

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

Preprogen: During the year ended December 31, 2018, the Company recorded a loss of $278,000 on an impairment on the value of its investment in Preprogen. The Company has valued the impairment based on an evaluation by a third-party using the value of similar investments in comparable companies.

-16-

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 expense are significant to our financial statements, but such expense is 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 March 31, 2019 and December 31, 2018, a valuation allowance has been established. The likelihood of a material change in the valuation allowance depends on our ability to generate sufficient future taxable income. In the future, if management determines that the likelihood exists to utilize the Company’s deferred tax assets, a reduction of the valuation allowance could materially increase the Company’s net deferred tax asset.

ITEM 4.  Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2019. Based on this evaluation, and in light of the previously disclosed material weaknesses in internal controls over financial reporting, the Company’s Chief Executive Officer, who also serves as its Principal Financial Officer, concluded that our disclosure controls and procedures were not effective.

(b)  Changes in internal controls over financial reporting.

There has been no change in our internal control over financial reporting that occurred during our most recent fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. There has been no progress towards remediating our previously disclosed material weakness due to the lack of funding. 

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PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

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

ITEM 1A.  Risk Factors

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for our fiscal year ended December 31, 2018, filed on April 16, 2019. You should carefully consider these risk factors in conjunction with the other information contained in this Quarterly Report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted. As of March 31, 2019, there have been no material changes to the disclosures made in the above-referenced Form 10-K.

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

None.

ITEM 3.  Defaults Upon Senior Securities

None.

ITEM 4.  Mine Safety Disclosures

Not Applicable.

ITEM 5.  Other Information

None.

ITEM 6.  Exhibits

Exhibit	Description
31	Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended.
32	Certification of Chief Executive Officer and Principal Financial and Accounting Officer required under Rule 13a-14(a) or Rule 15d-14(a) of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
101.INS	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

-18-

SIGNATURES

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

Date:  May 20, 2019	/s/ Shalom Hirschman
	Shalom Hirschman Principal Executive, Financial and Accounting Officer

-19-

EX-31

Exhibit 31

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13A-14(A)

I, Shalom Hirschman, certify that:

 1. I have reviewed this Quarterly Report on Form 10-Q of QuantRx Biomedical Corporation;

 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 (d) Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has  materially  affected, or  is  reasonably  likely  to  materially  affect, the registrant's internal control over financial reporting; and

 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

 (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 20, 2019	/s/ Shalom Hirschman
	Shalom Hirschman Principal Executive, Financial and Accounting Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. §1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 In connection with the accompanying Quarterly Report on Form 10-Q of QuantRx Biomedical Corporation (the “Company”) for the period ending March 31, 2019, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), the undersigned, Shalom Hirschman, Principal Executive and Principal Financial and Accounting Officer of the Company, certifies, to my best knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date:  May 20, 2019	/s/ Shalom Hirschman
	Shalom Hirschman Principal Executive, Financial and Accounting Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 17, 2019
Document And Entity Information
Entity Registrant Name	QUANTRX BIOMEDICAL CORPORATION
Entity Central Index Key	0000820608
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		786,964,61.
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019
Trading Symbol	QTXB

XML

CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 281,920	$ 322,024
Prepaid expense	27,510	37,764
Total Current Assets	309,430	359,788
Investments, net of impairment of $478,000	222,000	222,000
Total Assets	531,430	581,788
Current Liabilities:
Accounts payable	58,142	48,611
Accounts payable, related party	17,500	7,000
Accrued expense	15,161	26,165
Notes payable and accrued interest	1,919,759	1,870,685
Notes payable, related party and accrued interest	139,486	135,728
Total Liabilities	2,150,048	2,088,189
Stockholders' Equity (Deficit):
Preferred stock; $0.01 par value, 25,000,000 authorized shares; 20,500,000 shares designated as Series B Convertible Preferred Stock; Series B Convertible Preferred shares 6,196,893 issued and outstanding	61,969	61,969
Common Stock; $0.01 par value; 150,000,000 authorized; 78,696,461 shares issued and outstanding	786,964	786,964
Additional paid-in capital	48,876,398	48,876,398
Stock to be issued	8,600	8,600
Accumulated deficit	(51,359,946)	(51,240,332)
Total Stockholders' Equity (Deficit)	(1,626,015)	(1,506,401)
Total Liabilities and Stockholders' Equity (Deficit)	$ 531,430	$ 581,788

XML

CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Stockholders' Equity (Deficit):
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock shares authorized	25,000,000	25,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock,shares authorized	150,000,000	150,000,000
Common stock shares issued	78,696,461	78,696,461
Common stock shares outstanding	78,696,461	78,696,461
Series B Preferred Stock
Stockholders' Equity (Deficit):
Preferred stock shares authorized	20,500,000	20,500,000
Preferred stock shares issued	6,196,893	6,196,893
Preferred stock shares outstanding	6,196,893	6,196,893

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Expenses:
Sales, general and administrative	$ 22,579	$ 27,980
Professional fees	36,425	18,323
Total Costs and Operating Expenses	59,004	46,603
Loss from Operations	(59,004)	(46,603)
Other Income (Expense):
Interest expense	(53,213)	(58,916)
Interest Income	0	219
Total Other Income (Expense), net	(53,213)	(58,697)
Profit (Loss) Before Taxes	(112,217)	(105,000)
Provision for Income Taxes	0	0
Net Profit (Loss)	$ (112,217)	$ (105,000)
Basic and Diluted Net Loss per Common Share	$ (0.00)	$ (0.00)
Basic and Diluted Weighted Average Shares Used in per Share Calculation	78,696,461	78,696,461

XML

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (112,217)	$ (105,000)
Adjustments to reconcile net loss to net cash used by operating activities:
Interest earned on escrow account	0	(219)
(Increase) Decrease in:
Prepaid expenses	10,254	9,386
Increase (decrease) in:
Accounts payable	20,031	(10,542)
Accrued interest and expenses	52,832	49,127
Net Cash Used by Operating Activities	(40,104)	(57,248)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided by (Used in) Investing Activities	0	0
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Provided (used) by financing activities	0	0
Net Increase (Decrease) in Cash and Cash Equivalents	(40,104)	(57,248)
Cash and Cash Equivalents, Beginning of Period	322,024	460,111
Cash and Cash Equivalents, End of Period	281,920	402,863
Supplemental Cash Flow Disclosures:
Interest expense paid in cash	381	261
Income tax paid	$ 0	$ 0

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	StockToBeIssuedMember	Accumulated Deficit	Total
Beginning Balance, Shares at Dec. 31, 2017	16,676,942	78,696,461
Beginning Balance, Amount at Dec. 31, 2017	$ 166,769	$ 786,964	$ 48,791,598	$ 8,600	$ (50,503,482)	$ (749,551)
Net loss for the year					(105,000)	(105,000)
Ending Balance, Shares at Mar. 31, 2018	16,676,942	78,696,461
Beginning Balance, Amount at Mar. 31, 2018	$ 166,769	$ 786,964	48,876,398	8,600	(50,608,482)	(874,551)
Repurchase of Preferred Stock, Shares	(10,480,049)
Repurchase of Preferred Stock, Amount	$ (104,800)		84,800			(20,000)
Net loss for the year					(142,668)	(142,668)
Ending Balance, Shares at Jun. 30, 2018	6,196,893	78,696,461
Beginning Balance, Amount at Jun. 30, 2018	$ 61,969	$ 786,964	48,876,398	8,600	(50,856,150)	(1,017,218)
Net loss for the year					23,785	23,785
Ending Balance, Shares at Sep. 30, 2018	6,196,893	78,696,461
Beginning Balance, Amount at Sep. 30, 2018	$ 61,969	$ 786,964	48,876,398	8,600	(50,727,365)	(993,433)
Net loss for the year					(512,968)	(512,968)
Ending Balance, Shares at Dec. 31, 2018	6,196,893	78,696,461
Beginning Balance, Amount at Dec. 31, 2018	$ 61,969	$ 786,964	$ 48,876,398	$ 8,600	(51,240,332)	(1,506,401)
Net loss for the year					$ (112,217)	$ (112,217)
Ending Balance, Shares at Mar. 31, 2019	6,196,893	78,696,461

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Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Description of Business and Basis of Presentation

Overview

QuantRx Biomedical Corporation was incorporated on December 5, 1986, in the State of Nevada. Our principal business office is located at 10190 SW 90th Avenue, Tualatin, Oregon 97123. When used in this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “our,” “ours,” or “us” mean QuantRx Biomedical Corporation, unless context otherwise requires.

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

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

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

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

We follow the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the items under Regulation S-X required by the instructions to Form 10-Q. They may not include all information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on April 16, 2019. The interim unaudited financial statements presented herein should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. 

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

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Management Statement Regarding Going Concern

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Management Statement Regarding Going Concern

Currently, we are not generating revenue from operations, and do not anticipate generating meaningful revenue from operations or otherwise in the short-term. We have historically financed our operations primarily through issuances of equity and the proceeds from the issuance of promissory notes. In the past, we also provided for our cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees, as well as divesting our minority equity interests and equity-linked investments. In addition, in the fiscal year ended December 31, 2018, we received a cash payment as consideration for the sale and transfer of the certain assets to Preprogen LLC (“Preprogen”).

Our history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on our assets raise substantial doubt about our ability to continue as a going concern absent a strengthening of our cash position. Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic, merger or other transaction to obtain additional funding to continue the development of, and to successfully commercialize, our products. There can be no assurance that we will be successful in our efforts. Should we be unable to obtain adequate financing or generate sufficient revenue in the future, our business, result of operations, liquidity and financial condition would be materially and adversely harmed, and we will be unable to continue as a going concern.

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

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Summary of Significant Accounting Policies

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

Accounting for Share-Based Payments.  The Company follows the provisions of 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. During the three months ended March 31, 2019 and 2018, the Company had no stock compensation expense.

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

The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year. During the three months ended March 31, 2019 and 2018, the Company did not make any Black-Scholes model assumptions, as no share-based payments were made during those periods.

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

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

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

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

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

Earnings per Share. The Company computes net income (loss) per common share in accordance with ASC Topic 260. Net income (loss) per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, convertible preferred stock and convertible notes, if applicable, that are outstanding each year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. For the quarter ended March 31, 2019, including potentially dilutive securities in diluted shares outstanding would be immaterial.

For the three months ended March 31, 2018 and the three months ended March 31, 2019, basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive.

As of March 31, 2019, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and outstanding preferred shares convertible into 6,196,893 shares of its common stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2019. At March 31, 2019, the Company had reserved for issuance to certain investors 860,000 shares of its Series B Convertible Preferred Stock, convertible into 860,000 shares of its common stock. As of March 31, 2019, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

As of March 31, 2018, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and preferred shares convertible into 16,676,942 shares of its Common Stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2018. The Company has reserved for issuance 860,000 shares of its Series B Preferred Stock to certain investors in connection with the 2017 Notes. As of March 31, 2018, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

Fair Value.  The Company has adopted ASC Topic 820, “Fair Value Measurements and Disclosures” for both financial and nonfinancial assets and liabilities. The Company has not elected the fair value option for any of its assets or liabilities.

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

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

Recent Accounting Pronouncements.

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

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Investments

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Investments

In May 2006, the Company purchased 144,024 shares of common stock of GMS Biotech, formerly Genomics USA, Inc. (“GUSA”) for $200,000. After the investment, the Company owned approximately 5% of the total issued and outstanding common stock of GUSA. As of December 31, 2018, the Company’s position had been diluted to approximately 2% of the issued and outstanding common stock of GUSA. The investment is recorded at historical cost and is assessed at least annually for impairment. During the year ended December 31, 2017, the Company recorded a loss of $169,948 to fully impair the value of its common stock investment in GUSA. The Company has valued the impairment based on the dilution of the Company’s investment and certain other factors.   

On September 3, 2015, the Company entered into a non-binding letter of intent (the “Global LOI”) with Global Cancer Diagnostics, Inc., a privately held laboratory in Tempe, Arizona (“Global”), for a proposed business combination. The Global LOI had an original termination date of October 31, 2015 (the “Termination Date”), but could be terminated or extended anytime by the mutual written consent of the parties. During the quarter ended September 30, 2016, in accordance with the terms and conditions of the executed Global LOI, the Company deemed the Global LOI terminated. Accordingly, Global is obligated to issue the Company the number of shares of Global’s common stock equal to 10% of its then outstanding shares of common stock, on a fully-diluted basis, as payment of the Global Advance. In addition to the share issuance, the Company is evaluating certain additional remedies related to the Global LOI and the $50,000 advance. The Company deemed the $50,000 Global Advance to be fully impaired as of September 30, 2016.

In December 2017, the Company executed an agreement with Preprogen, pursuant to which the Company sold, assigned and licensed-back certain assets pertaining to its Diagnostic Business (the “Preprogen Transaction”). As a part of the Preprogen Transaction, the Company acquired a 15% interest in Preprogen.  On October 8, 2018, the Preprogen Agreement was amended to provide for, among other things, the release of funds held in escrow related to the manufacture of the miniform pads (the “Preprogen Amendment”), which resulted in both parties receiving $200,583 in cash. As consideration for the Preprogen Amendment, the Company agreed to pay Preprogen a royalty of 5% from the sale of all over-the-counter miniform products; provided, however, that such royalty payments shall terminate when Preprogen has received $200,000 in aggregate consideration from the royalties paid by the Company, and that the Company shall be entitled to offset such royalty payments due and payable to Preprogen by amounts equal to certain other payments otherwise due and payable to the Company by Preprogen pursuant to the terms of the Preprogen Agreement. At December 31, 2018, we revalued our investment in Preprogen to $222,000, recording an impairment of $278,000.

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Intangible Assets

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Intangible Assets

On December 15, 2017, the Company entered into an agreement with Preprogen, pursuant to which the parties agreed to the sale, assignment, and license-back of certain assets, including intellectual property transferred to Preprogen necessary to the development, manufacture, marketing and sale of the Company’s OTC miniform products for the feminine hygiene and hemorrhoid treatment markets. At March 31, 2019 and December 31, 2018, the Company had reduced its capitalized intangible assets to zero.

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Convertible Notes Payable

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Convertible Notes Payable

On January 2, 2015, the Company issued a Bridge Note in the principal amount of $36,500 and issued 73,000 shares of its common stock to the purchaser of the Bridge Note. Additionally, the Company issued 500,000 shares of its common stock in January 2015 to certain investors who purchased Bridge Notes during the year ended December 31, 2014. 

In February 2015, the Company issued an aggregate total of 815,061 shares of its common stock as payment for accrued interest for the period from July 1, 2014 through December 31, 2014 under certain convertible notes payable.

On June 30, 2015, the Company issued two additional Bridge Notes in the aggregate principal amount of $50,000 and issued an aggregate total of 100,000 shares of its common stock to the purchasers of these Bridge Notes. In connection with the issuance of these notes, the Company recorded debt discount expense totaling $2,830 and has amortized these costs over the life of the notes.

In June 2015, the Company authorized the issuance of an aggregate total of 1,875,691 shares of its common stock as payment for accrued interest for the period from January 1, 2015 through June 30, 2015 under certain convertible notes payable. The Company settled a total of $70,256 in accrued interest, recognizing a gain on settlement in the amount of $23,364. The Company and the holders of the Bridge Notes also agreed to extend the maturity date of the Bridge Notes from June 30, 2015 to December 31, 2015. As consideration for the extension of the maturity date of the Bridge Notes, the Company issued an aggregate total of 286,500 shares of its common stock to the Bridge Note holders. These Bridge Notes are now payable on demand.

In July 2015, the Company issued a Bridge Note in the principal amount of $35,000 and issued an aggregate total of 70,000 shares of its common stock to the purchaser of the Bridge Note.

On March 31, 2016, Burnham Hill Advisors, LLC (“BHA”) agreed to exchange the amounts owed to BHA under the October 29, 2013 agreement for a promissory note, on terms substantially similar to the Bridge Notes (the “BHA Note”), in the principal amount of $283,000 with the issuance date of March 31, 2016. The BHA Note is payable on demand as of December 31, 2016, and was past due as of September 30, 2017. On April 1, 2017, BHA assigned the BHA Note to certain of its then employees, including Michael Abrams, who serves as a director of the Company, under the same terms.

During each of the quarters ended March 31, 2017 and June 30, 2017, the Company issued an MOU Note in the principal amount of $25,000. 

In July and August 2017, the Company issued certain investors Bridge Notes in the aggregate principal amount of $86,000 (the “2017 Bridge Notes”). Each 2017 Bridge Note accrues interest at a rate of 10% per annum, and matured on September 30, 2017. The 2017 Bridge Notes are now payable on demand.

In October 2017, the Company issued an additional MOU Note in the principal amount of $15,000.

The three MOU Notes, with an aggregate principal amount of $65,000, were all cancelled and applied as part of the purchase price in the Preprogen Transaction.

In September 2018, the Company paid three of its note holders an aggregate of $60,750 to settle $121,500 of note principal plus $47,637 of accrued interest.

At March 31, 2019 and December 31, 2018, the Company’s Convertible Notes Payable and Accrued Interest were as follows:

	March 31, 2019		December 31, 2018
Notes Payable and accrued interest payable	$	1,919,759	$	1,870,685
Notes Payable and accrued interest payable, related party		139,486		135,728
Total notes payable	$	2,059,245	$	2,006,413

Notes Payable, Related Party

As of March 31, 2019, the Company owed Michael Abrams, a director of the Company, an aggregate total of $139,486 for outstanding principal and accrued and unpaid interest on certain Bridge Notes. As of December 31, 2018, the Company owed Mr. Abrams an aggregate total of $135,728 for outstanding principal and accrued and unpaid interest on certain Bridge Notes.

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

During the three months ended March 31, 2019, the Company paid Dr. Hirschman an aggregate total of $10,500 for his services as CEO.

During the three months ended March 31, 2019, the Company accrued fees due to Mr. Abrams in aggregate of $10,500 for his services as a Director. As of March 31, 2019, the Company owed Mr. Abrams $17,500 in accrued fees.

As of March 31, 2019, the Company owed Michael Abrams, a director of the Company, an aggregate total of $139,486 for outstanding principal and accrued and unpaid interest on certain Bridge Notes.

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Preferred Stock

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock, of which 20,500,000 are designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $204,000 (“Series B Preferred”). The remaining authorized preferred shares had not been designated by the Company as of March 31, 2019.

Series B Convertible Preferred Stock

The Series B Preferred ranks senior to the Company’s common stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“Junior Stock”). Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of common stock multiplied by the number of shares of common stock equal to the outstanding shares of Series B Preferred, on an as converted basis. The holders of Series B Preferred have voting rights to vote as a class on matters (a) amending, altering or repealing the provisions of the Series B Preferred so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred; or (b) to affect any distribution with respect to Junior Stock. At any time, the holders of Series B Preferred may, subject to limitations, elect to convert all or any portion of their Series B Preferred into fully paid non-assessable shares of the Company’s common stock at a 1:1 conversion rate.

As disclosed under Note 6 above, in July and August, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued the 2017 Bridge Notes in the aggregate principal amount of $86,000. As additional consideration for the purchase of the 2017 Bridge Notes, the Company has reserved for issuance an aggregate of 860,000 shares of Series B Preferred to be issued to the purchasers of the 2017 Bridge Notes. The Company has valued the Series B Preferred and has recorded a discount on the 2017 Bridge Notes of $7,818, which was amortized in full during the year ended December 31, 2017.

In April 2018, the Company completed the purchase of 10,480,084 shares of Series B Preferred (the “Purchased Shares”) from an institutional shareholder for an aggregate purchase price of $20,000. Following this transaction, the shareholder no longer holds shares in the Company.

As of March 31, 2019, the Company had 6,196,893  shares of Series B Preferred issued and outstanding, with a liquidation preference of $61,969 and convertible into 6,196,893  shares of the Company’s common stock. As of December 31, 2018, the Company had 6,196,893 shares of Series B Preferred issued and outstanding with a liquidation preference of $61,969 and convertible into 6,196,893 shares of the Company’s common stock. 

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Common Stock, Options and Warrants

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Common Stock, Options and Warrants

The Company has authorized 150,000,000 shares of its common stock for issuance, of which 78,696,461 were issued and outstanding at each of March 31, 2019 and December 31, 2018.

During the three months ended March 31, 2019 and 2018, there were no warrants issued by the Company. As of March 31, 2019, the Company has one warrant issued and outstanding, which warrant was issued in December 2018 to Preprogen’s designee to purchase up to 15.0 million shares of the Company’s common stock, at an exercise price of $0.05 per share. The warrant was exercisable immediately upon issuance, and expires on December 14, 2022.

2007 Incentive and Non-Qualified Stock Option Plan.  The fair value of options granted under the Company’s 2007 Incentive and Non-Qualified Stock Option Plan is recorded as compensation expense over the vesting period, or, for performance based awards, the expected service term. The Company did not issue any options during the three months ended March 31, 2019 or 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Subsequent Events

We have evaluated subsequent events through the date of this filing in accordance with the Subsequent Events Topic of the FASB ASC 855, and have determined that no subsequent events occurred that are reasonably likely to impact these financial statements.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Accounting for Share-Based Payments

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. During the three months ended March 31, 2019 and 2018, the Company had no stock compensation expense.

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

The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions, which are determined at the beginning of each year and utilized in all calculations for that year. During the three months ended March 31, 2019 and 2018, the Company did not make any Black-Scholes model assumptions, as no share-based payments were made during those periods.

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

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

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

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

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

Earnings per Share

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. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. For the quarter ended March 31, 2019, including potentially dilutive securities in diluted shares outstanding would be immaterial.

For the three months ended March 31, 2018 and the three months ended March 31, 2019, basic and diluted earnings per share were the same at the reporting dates of the accompanying financial statements, as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive.

As of March 31, 2019, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and outstanding preferred shares convertible into 6,196,893 shares of its common stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2019. At March 31, 2019, the Company had reserved for issuance to certain investors 860,000 shares of its Series B Convertible Preferred Stock, convertible into 860,000 shares of its common stock. As of March 31, 2019, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

As of March 31, 2018, the Company had outstanding options exercisable for 2,300,000 shares of its common stock, outstanding warrants exercisable for 15,000,000 shares of its common stock, and preferred shares convertible into 16,676,942 shares of its Common Stock, which options, warrants and preferred shares were deemed to be antidilutive for the three months ended March 31, 2018. The Company has reserved for issuance 860,000 shares of its Series B Preferred Stock to certain investors in connection with the 2017 Notes. As of March 31, 2018, the Company has estimated and reserved for issuance approximately 20.0 million shares of common stock for a future conversion of its issued and outstanding Convertible Notes Payable.

Fair Value

Fair Value.  The Company has adopted ASC Topic 820, “Fair Value Measurements and Disclosures” for both financial and nonfinancial assets and liabilities. The Company has not elected the fair value option for any of its assets or liabilities.

Use of Estimates

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 revenue and expense during the reporting period. Accordingly, actual results may differ from those estimates.

Reclassifications

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

Recent Accounting Pronouncements

Recent Accounting Pronouncements.

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

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Convertible Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Convertible Notes Payable

	March 31, 2019		December 31, 2018
Notes Payable and accrued interest payable	$	1,919,759	$	1,870,685
Notes Payable and accrued interest payable, related party		139,486		135,728
Total notes payable	$	2,059,245	$	2,006,413

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Description of Business and Basis of Presentation (Details Narrative)	3 Months Ended
	Mar. 31, 2019
Description Of Business And Basis Of Presentation Details Narrative
Date of incorporation	Dec. 05, 1986
State of incorporation	Nevada

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Summary of Significant Accounting Policies (Details Narrative) - shares	Mar. 31, 2019	Mar. 31, 2018
Summary Of Significant Accounting Policies Details Narrative
Outstanding options exercisable	2,300,000	2,300,000
Shares of Series B Preferred Stock convertible	860,000	860,000

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Investments (Details Narrative)	12 Months Ended
	Dec. 31, 2018 USD ($)
Investments Details Narrative
Impairment of investment	$ 278,000

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Convertible Notes Payable (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Convertible Notes Payable Details
Notes payable	$ 1,919,759	$ 1,870,685
Notes payable, related party	139,486	135,728
Total notes payable	$ 2,059,245	$ 2,006,413

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Convertible Notes Payable (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Note payable	$ 139,486	$ 135,728
Director
Note payable	$ 139,486
BHA Note
Note payable		$ 135,728

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Preferred Stock (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Preferred stock authorized	25,000,000	25,000,000
Stated value	$ 61,969	$ 61,969
Series B Preferred Stock
Preferred stock authorized	20,500,000	20,500,000
Par value	$ .01	$ .01
Shares issued	6,196,893	6,196,893
Shares outstanding	6,196,893	6,196,893
Liquidation preference	$ 61,969	$ 61,969

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Common Stock, Options and Warrants (Details Narrative) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Common Stock Options And Warrants Details Narrative
Common stock,shares authorized	150,000,000	150,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock shares issued	78,696,461	78,696,461
Common stock shares outstanding	78,696,461	78,696,461