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 June 30, 2017
 
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X]   No [   ]
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 [  ]
Accelerated filer
[  ]
Non-Accelerated filer
 [  ]
Smaller reporting company
[X]
(do not check if a smaller reporting company)
 [  ]
Emerging growth company
[ ]
     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [   ]   No [X]
 
The number of shares outstanding of the issuer’s common stock as of August 21, 2017 was 78,696,461.
 
 
 
 

 
 
 
 
TABLE OF CONTENTS
 
 
PAGE
PART I - FINANCIAL INFORMATION
 
 
 
 
 
 
 
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-i-
 
PA RT I – FINANC IAL 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, 2016.  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.
 
 
 
IT E M 1.  Financial Statements
 
QUANTRX BIOMEDICAL CORPORATION
CONSOLIDATED BALANCE SHEETS
 
 
 
June 30,
 
 
December 31,
 
 
 
2017
 
 
2016
 
 
 
(Unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Cash and cash equivalents
  $ 33,368  
  $ 691  
Prepaid expenses
    9,365  
    28,094  
Total Current Assets
    42,733  
    28,785  
 
       
       
Investments, net of impairment of $30,051
    169,948  
    169,948  
Intangible assets, net
    12,086  
    13,874  
Total Assets
  $ 224,767  
  $ 212,607  
 
       
       
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
       
       
Current Liabilities:
       
       
Accounts payable
  $ 167,276  
  $ 160,671  
Accrued expenses
    17,437  
    36,342  
Shareholder loans
    86,000  
    36,000  
Notes payable and accrued interest
    1,664,175  
    1,059,784  
Notes payable, related party and accrued interest
    114,403  
    558,287  
Current portion of LT notes payable
    2,523  
    2,461  
Total Current Liabilities
    2,051,814
    1,853,545
Notes payable, long-term
    35,684
    37,561  
Total Liabilities
    2,087,498  
    1,891,106  
 
       
       
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 16,676,942 issued and outstanding
    166,769  
    166,769  
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
    48,740,389  
    48,740,389  
Accumulated deficit
    (51,556,853 )
    (51,372,621 )
Total Stockholders’ Equity (Deficit)
    (1,862,731 )
    (1,678,499 )
 
       
       
Total Liabilities and Stockholders’ Equity (Deficit)
  $ 224,767  
  $ 212,607  
 
 
The accompanying condensed notes are an integral part of these consolidated financial statements.
 
 
 
QUANTRX BI OM E DICAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 
 
 
Three Months Ended 
June 30,
 
 
Six Months Ended 
June 30,
 
  
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Sales, general and administrative
  $ 17,936  
  $ 21,494  
  $ 40,308  
  $ 39,730  
Professional fees
    16,195  
    29,562  
    29,437  
    35,555  
Amortization
    893  
    2,145  
    1,788  
    4,288  
Depreciation
    -  
    275  
    -  
    548  
Total Costs and Operating Expenses
    35,024  
    53,476  
    71,533  
    80,121  
 
       
       
       
       
Loss from Operations
    (35,024 )
    (53,476 )
    (71,533 )
    (80,121 )
 
       
       
       
       
Other Income (Expense):
       
       
       
       
Interest expense
    (56,537 )
    (55,403 )
    (112,699 )
    (101,978 )
Gain/(loss) on disposition
    -  
    540  
    -  
    540  
Total Other Income (Expense), net
    (56,537 )
    (54,863 )
    (112,699 )
    (101,438 )
 
       
       
       
       
Loss Before Taxes
    (91,561 )
    (108,339 )
    (184,232 )
    (181,559 )
 
       
       
       
       
Provision for Income Taxes
    -  
    -  
    -  
    -  
 
       
       
       
       
Net Loss
  $ (91,561 )
  $ (108,339 )
  $ (184,232 )
  $ (181,559 )
 
       
       
       
       
Basic and Diluted Net Loss per Common Share
  $ (0.00 )
  $ (0.00 )
  $ (0.00 )
  $ (0.00 )
 
       
       
       
       
Basic and Diluted Weighted Average Shares Used in per Share Calculation
    78,696,461  
    69,772,918  
    78,696,461  
    69,772,918  
 
 
The accompanying condensed notes are an integral part of these interim consolidated financial statements.
 
 
 
QUANTRX BIOM ED I CAL CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
  
 
 
Six Months Ended
 
 
 
June 30,
2017
 
 
June 30,
2016
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net loss
  $ (184,232 )
  $ (181,559 )
Adjustments to reconcile net loss to net cash used by operating activities:
       
       
Depreciation and amortization
    1,788  
    4,835  
(Increase) Decrease in:
       
       
Prepaid expenses
    18,729  
    17,597  
Increase (decrease) in:
       
       
Accounts payable
    6,605  
    21,136  
Accrued interest and expenses
    91,603  
    81,432  
 
       
       
Net Cash Used by Operating Activities
    (65,507 )
    (56,559 )
 
       
       
CASH FLOWS FROM INVESTING ACTIVITIES:
       
       
Net Cash Provided by Investing Activities
    -  
    -  
 
       
       
CASH FLOWS FROM FINANCING ACTIVITIES
       
       
Principal payments on long-term debt
    (1,816 )
    (962 )
Proceeds from the issuance of shareholder loans
    50,000  
    -  
Proceeds from the issuance of notes payable
    50,000  
    -  
Net Cash Provided (used) by financing activities
    98,184  
    (962 )
 
       
       
Net Increase (Decrease) in Cash and Cash Equivalents
    32,677  
    (57,521 )
 
       
       
Cash and Cash Equivalents, Beginning of Period
    691  
    61,078  
 
       
       
Cash and Cash Equivalents, End of Period
  $ 33,368  
  $ 3,557  
 
       
       
Supplemental Cash Flow Disclosures:
       
       
Interest expense paid in cash
  $ 964  
  $ 986  
Income tax paid
  $ -  
  $ -  
 
 
The accompanying condensed notes are an integral part of these interim consolidated financial statements.
 
 
 
QUANTR X BIOMEDI C AL CORPORATION
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
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, a Nevada corporation.
 
We have developed  and intend to commercialize our innovative PAD based products for the over-the-counter markets for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We have also developed genomic diagnostics for the laboratory market, based on our patented PadKit®   technology.  Our platforms include: inSync®, Unique™, PadKit®, 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 remain contingent on the receipt of 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 continuing to comply with the public company reporting requirements. No assurances can be given that we will obtain financing, 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 over-the-counter business (the “ 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 maintain a diagnostic testing business (the “ Diagnostic Business ”) that is based principally on our proprietary PadKit® technology, which we believe provides a patented platform technology for genomic diagnostics, including fetal genomics. Management believes this corporate structure permits the Company to more efficiently explore options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “ Businesses ”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.
 
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) leverage our broad-based intellectual property and patent portfolio to develop new and innovative diagnostic products; (ii) commercialize our OTC Business and Diagnostics Business either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of our investments in non-core assets.  However, as a result of our current financial condition, our efforts in the short-term will be focused on obtaining financing necessary to continue 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, 2016 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 17, 2017.  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 six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. 
 
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.
   
Recent Developments
 
Memorandum of Understanding
 
On February 27, 2017, the Company entered into a memorandum of understanding (“ MOU ”) with an unrelated third party regarding the sale of certain assets pertaining to the Company’s Diagnostic Business, including the intellectual property, trade-secrets and diagnostic applications related to the Company’s PadKit technology and the lateral flow diagnostics technology. Under the MOU, the Company retains all rights and assets necessary to pursue marketing the over the counter miniform products for female hygiene and hemorrhoid treatment. If the transaction outlined in the MOU is completed, the Company would receive a $1.0 million cash payment at closing, a 15% percent ownership interest in the acquiring company and future cash payments ranging from 1.5%-2% of gross revenue generated from the Padkit and lateral flow technologies.   The MOU is subject to numerous contingencies and conditions, and there is no assurance that a transaction will be completed.
 
 
 
Issuance of Promissory Notes 
 
MOU Notes . During the six months ended June 30, 2017, the Company issued two convertible promissory demand notes in connection with the MOU in the aggregate principal amount of $50,000 (the " MOU Notes "). The MOU Notes mature on September 30, 2017, accrue interest at a rate of 8% per annum, and are convertible, at the option of the holder, into that number of shares of the Company's common stock, par value $0.001 per share (" Common Stock ") equal to the outstanding balance, divided by $0.10.
 
2017 Bridge Notes . Subsequent to June 30, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued convertible promissory demand notes in the aggregate principal amount of $86,000 (the “ 2017 Bridge Notes ”). As additional consideration for the purchase of the 2017 Bridge Notes, the Company issued to the purchasers an aggregate of 860,000 shares of the Company’s Series B Convertible Preferred Stock (“ Series B Preferred ”).
 
The 2017 Bridge Notes accrue interest at a rate of 10% per annum, payable in either cash or shares of the Company’s Common Stock, and matures on September 30, 2017. Each 2017 Bridge Note is convertible, at the option of the holder thereof, into that number of shares of Common Stock equal to the outstanding principal balance of the 2017 Bridge Note, plus accrued but unpaid interest (the “ Outstanding Balance ”), divided by $0.08 (the “ Conversion Shares ”). Additionally, in the event the Company completes an equity or equity-linked financing with gross proceeds to the Company of at least $1.5 million (a “ Qualified Financing ”), the Outstanding Balance of the 2017 Bridge Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares.
   
2.            MANAGEMENT STATEMENT REGARDING GOING CONCERN
 
The Company currently is not generating revenue from operations, and does not anticipate generating meaningful revenue from operations or otherwise in the short-term.  The Company has historically financed its operations primarily through issuances of equity and the proceeds from the issuance of promissory notes.  In the past, the Company also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees, as well as divesting its minority equity interests and equity-linked investments.
 
The Company’s history of operating losses, limited cash resources and the absence of an operating plan necessary to capitalize on the Company’s assets raise substantial doubt about our ability to continue as a going concern absent a strengthening of our cash position.  Management is currently pursuing various funding options, including seeking debt or equity financing, licensing opportunities and the sale of certain investment holdings, as well as a strategic, merger or other transaction to obtain additional funding to continue the development of, and to successfully commercialize, its products.  There can be no assurance that the Company will be successful in its efforts.  Should the Company be unable to obtain adequate financing or generate sufficient revenue in the future, the Company’s business, result of operations, liquidity and financial condition would be materially and adversely harmed, and the Company will be unable to continue as a going concern.
 
There can be no assurance that, assuming the Company is able to strengthen its cash position, it will achieve sufficient revenue or profitable operations to continue as a going concern.
 
3.            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to 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 six months ended June 30, 2017 and 2016, 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. 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 six months ended June 30, 2017 and 2016, the Company did not make any Black-Sholes 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. 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 June 30, 2017, the Company had outstanding options exercisable for 2,352,000 shares of its Common Stock, and preferred shares convertible into 16,676,972 shares of its Common Stock, which options and preferred shares were deemed to be antidilutive for the six months ended June 30, 2017.
 
As of June 30, 2016, the Company had outstanding options exercisable for 2,452,000 shares of its Common Stock, and preferred shares convertible into 16,676,942 shares of its Common Stock, which options and preferred shares were deemed to be antidilutive for the six months ended June 30, 2016.
 
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 revenues and expenses during the reporting period.  Accordingly, actual results may differ from those estimates.
 
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 for $200,000. After the investment, QuantRx owned approximately 5% of the total issued and outstanding common stock of GMS Biotech, formerly Genomics USA, Inc. (“ GUSA ”). As of December 31, 2016, 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, 2016, the Company has recorded a loss of $30,051 as 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.   
 
On September 3, 2015, we 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 to us a 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 has deemed the $50,000 Global Advance to be fully impaired as of September 30, 2016.
 
5.            INTANGIBLE ASSETS
 
Intangible assets as of the balance sheet dates consisted of the following:
 
 
 
June 30,
2017
(unaudited)
 
 
December 31,
2016
 
Licensed patents and patent rights
  $ 50,000  
  $ 50,000  
Patents
    41,044  
    41,044  
Lateral Flow Licensed Technology
    13,200  
    13,200  
Less: accumulated amortization
    (92,158 )
    (90,370 )
Intangibles, net
  $ 12,086  
  $ 13,874  
  
The Company’s intangible assets consist of patents, licensed patents and patent rights, are carried at the legal cost to obtain them. Costs to renew or extend the term of intangible assets are expensed when incurred. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives are as follows:
 
Asset Categories
 
Estimated Useful Life in Years
 
Patents
    17  
Patents under licensing
    10  
Intangibles acquired in 2008 (weighted average)
    15  
 
Amortization expense for the six months ended June 30, 2017 and 2016 totaled $1,788 and $4,288, respectively.

6.            CONVERTIBLE NOTES PAYABLE
 
On January 2, 2015, the Company issued an additional Bridge Note in the principal amount of $36,500 and issued 73,000 shares of Common Stock to the purchaser of the additional Bridge Note. Additionally, we issued 500,000 shares of Common Stock in January 2015 to certain investors who purchased Bridge Notes during the year ended December 31, 2014, which were previously classified as shares to be issued.
 
In February 2015, the Company issued an aggregate total of 815,061 shares of 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 Common Stock to the purchasers of these Bridge Notes. In connection with the issuance of these notes, the Company recorded debt discount expenses totaling $2,830 and will amortize 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 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 Common Stock to the Bridge Note holders.
 
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 Common Stock to the purchaser of the Bridge Note.
 
During the quarter ended March 31, 2017, the Company issued a MOU Note in the principal amount of $25,000.
 
During the quarter ended June 30, 2017, the Company issued a MOU Note in the principal amount of $25,000. See Note 12, Subsequent Events, below for a discussion of promissory notes issued subsequent to June 30, 2017.
 
BHA 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 issuance date of March 31, 2016. The BHA Note is payable on demand as of December 31, 2016, and is past due as of June 30, 2017. On April 1, 2017, BHA assigned the BHA Note to certain of its employees, including Michael Abrams who serves as a director of the Company, under the same terms.
 
At June 30, 2017 and December 31, 2016, the Company’s Convertible Notes Payable are as follows:
 
 
 
June 30,
2017
 
 
December 31,
2016
 
Notes Payable
    1,664,175  
    1,059,784  
Notes Payable, related party
    114,403  
    558,287  
Total notes payable
    1,778,578
    1,618,071  
 
Notes Payable, Related Party.
 
As of June 30, 2017, the Company owed Michael Abrams, a director of the Company, an aggregate total of $114,403 for outstanding principal and accrued and unpaid interest on certain Bridge Notes. As of December 31, 2016, the Company owed Mr. Abrams an aggregate total of $2,059 and BHA an aggregate total of $556,168 for outstanding principal and accrued and unpaid interest on certain Bridge Notes. Mr. Abrams is an employee of BHA.
 
On April 1, 2017, BHA assigned its the BHA Note, including all accrued but unpaid interest to its employees, and is no longer a related party note payable. As noted above, Michael Abrams, one of the Company’s directors and an employee of BHA, was assigned $50,000 of the outstanding principal amount of the BHA Note, plus all accrued but unpaid interest on such amount.
 
7.            LONG-TERM NOTES PAYABLE
 
The Company received a $44,000 loan from the Portland Development Commission in 2007. The loan matures in 20 years and was interest free through February 2010. The terms of the note stipulate monthly interest only payments from April 2010 through December 2014, at a 5% annual rate. Effective January 1, 2015, the Company began a payment program whereby it would make quarterly payments towards principal and interest through the life of the loan. During the six months ended June 30, 2017, the Company made principal payments of $614 and payments towards accrued interest of $481. The Company recorded interest expense on this loan of $730 and $729 for the six months ended June 30, 2017 and 2016, respectively. At June 30, 2017 and 2016, the balance of the loan payable was $38,207 and $40,804, respectively.
 
 
 
8.            OTHER BALANCE SHEET INFORMATION
 
Components of selected captions in the accompanying balance sheets consist of:
 
Prepaid expenses:
 
June 30,
2017
(unaudited)
 
 
December 31,
2016
 
Prepaid insurance
  $ 9,365  
  $ 28,094  
Prepaid expenses
  $ 9,365  
  $ 28,094  
 
       
       
Property and equipment:
       
       
Computers and office furniture, fixtures and equipment
  $ 28,031  
  $ 28,031  
Machinery and equipment
    5,475  
    5,475  
Less: accumulated depreciation
    (33,506 )
    (33,506 )
Property and equipment, net
  $ -  
  $ -  
 
       
       
Accrued expenses:
       
       
Other Accrued expenses
  $ 17,437  
    36,342  
Accrued expenses
  $ 17,437  
    36,342  
 
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at June 30, 2017 consisted of computer and office equipment, machinery and equipment with estimated useful lives of three to seven years. As of December 31, 2016 and June 30, 2017, the Company’s property and equipment was fully depreciated.
 
Expenditures for repairs and maintenance are expensed as incurred.
 
9.            PREFERRED STOCK
 
The Company has authorized 20,500,000 shares of preferred stock, of which 20,500,000 is designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $204,000. The remaining authorized preferred shares have not been designated by the Company as of June 30, 2017.
 
On November 19, 2010, the Company filed a Certificate of Withdrawal of the Certificates of Designations of the Series A Preferred Stock (“ Series A Preferred ”) with the Nevada Secretary of State, as there were no shares of Series A Preferred issued and outstanding after the exchange transaction discussed below. 
 
Series B Convertible Preferred Stock
 
The Series B Preferred ranks prior to the Common Stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“ Junior Stock ”).  Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of Common Stock multiplied by the number of shares of Common Stock equal to the outstanding shares of Series B Preferred, on an as converted basis. The holders of Series B Preferred have voting rights to vote as a class on matters a) amending, altering or repealing the provisions of the Series B Preferred so as to adversely affect any right, preference, privilege or voting power of the Series B Preferred; or b) to 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 Common Stock at a 1:1 conversion rate.
 
As of June 30, 2017 and December 31, 2016, the Company had 16,676,942 shares of Series B Preferred Stock issued and outstanding with a liquidation preference of $166,769, respectively, and convertible into 16,676,942 shares of Common Stock. See Note 12, Subsequent Events, for a discussion of issuances of shares of Series B Preferred subsequent to June 30, 2017.
 
10.            COMMON STOCK, OPTIONS AND WARRANTS
 
The Company has authorized 150,000,000 shares of its Common Stock, of which 78,696,461 were issued and outstanding at each of June 30, 2017 and December 31, 2016.
 
In July 2016, the Company authorized an aggregate total of 8.9 million shares of Common Stock to be issued to certain convertible note holders as payment of accrued and unpaid interest in the amount of $151,700.
 
During the three months ended June 30, 2017 and 2016, there were no warrants issued by the Company.  As of June 30, 2017, the Company had no warrants issued and outstanding.  
 
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 six months ended June 30, 2017 or 2016.
  
 
 
11.            COMMITMENTS AND CONTINGENCIES
 
On May 28, 2014, we entered into a Consulting Services Agreement for financial related services with Mayer & Associates (“ Mayer ”) through November 30, 2014. Under the terms of the agreement, Mayer will receive 300,000 shares of Common Stock and four payments of $12,500. During the year ended December 31, 2014, the Company recorded expenses under this agreement totaling $50,000 of which $25,000 has been paid, additionally, the Company reserved for issuance 300,000 shares of its Common Stock in connection with this agreement. Although the Company has yet to receive proceeds sufficient to constitute an initial capital raise of $500,000, in February 2015, the Company agreed to issue 300,000 shares of Common Stock to Mayer as consideration for services rendered under the agreement.  In June 2015, the Company also authorized the issuance of an aggregate total of 286,500 shares of Common Stock to Mayer for services rendered under the Consulting Services Agreement first executed on May 28, 2014. As of June 30, 2017, the requirements under the Mayer agreement had not been met and the Company has terminated this agreement and no further compensation is due or will be paid.
 
On May 28, 2014, the Company entered into a Consulting Services Agreement for financial related services from JFS Investments PR LLC (“ JFS ” ).  Under the terms of the agreement, JFS could receive a total of 2.5 million restricted shares of Common Stock as compensation under the agreement. In February 2015, the Company agreed to issue an initial payment of 625,003 shares as consideration for services rendered. As of September 30, 2016, the requirements under the JFS agreement had not been met, and the Company has terminated this agreement and no further compensation is due or will be paid.
 
12.            SUBSEQUENT EVENTS
 
Issuance of 2017 Bridge Notes . As disclosed under Note 1 above, subsequent to June 30, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued 2017 Bridge Notes in the aggregate principal amount of $86,000. As additional consideration for the purchase of the 2017 Bridge Notes, the Company issued to the purchasers an aggregate of 860,000 shares of Series B Preferred. The 2017 Bridge Notes accrue interest at a rate of 10% per annum, payable in either cash or shares of the Company’s Common Stock and matures on September 30, 2017.
 
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, except as disclosed herein, no subsequent events occurred that are reasonably likely to impact these financial statements.
 
 
 
I TEM 2.  M a nagement'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 innovative PAD based products for the over-the-counter markets for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We have also developed genomic diagnostics for the laboratory market, based on our patented PadKit®   technology.  Our platforms include: inSync®, Unique™, PadKit®, 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 remain contingent on the receipt of 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 continuing to comply with the public company reporting requirements. No assurances can be given that we will obtain financing, 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 over-the-counter business (the “ 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 maintain a diagnostic testing business (the “ Diagnostic Business ”) that is based principally on our proprietary PadKit® technology, which we believe provides a patented platform technology for genomic diagnostics, including fetal genomics. Management believes this corporate structure permits the Company to more efficiently explore options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “ Businesses ”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.
 
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) leverage our broad-based intellectual property and patent portfolio to develop new and innovative diagnostic products; (ii) commercialize our OTC Business and Diagnostics Business either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of our investments in non-core assets.  However, as a result of our current financial condition, our efforts in the short-term will be focused on obtaining financing necessary to continue 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 17, 2017.
 
Recent Developments
 
Memorandum of Understanding
 
On February 27, 2017, the Company entered into a memorandum of understanding (“ MOU ”) with an unrelated third party regarding the sale of certain assets pertaining to the Company’s Diagnostic Business, including the intellectual property, trade-secrets and diagnostic applications related to the Company’s PadKit technology and the lateral flow diagnostics technology. Under the MOU, the Company retains all rights and assets necessary to pursue marketing the over the counter miniform products for female hygiene and hemorrhoid treatment. If the transaction outlined in the MOU is completed, the Company would receive a $1.0 million cash payment at closing, a 15% percent ownership interest in the acquiring company and future cash payments ranging from 1.5%-2% of gross revenue generated from the Padkit and lateral flow technologies.   The MOU is subject to numerous contingencies and conditions, and there is no assurance that a transaction will be completed.
 
 
 
Issuance of Promissory Notes 
 
MOU Notes . During the six months ended June 30, 2017, the Company issued two convertible promissory demand notes in connection with the MOU in the aggregate principal amount of $50,000 (the " MOU Notes "). The MOU Notes mature on September 30, 2017, accrue interest at a rate of 8% per annum, and are convertible, at the option of the holder, into that number of shares of the Company's common stock, par value $0.001 per share (" Common Stock ") equal to the outstanding balance, divided by $0.10.
 
2017 Bridge Notes . Subsequent to June 30, 2017, the Company entered into Note Purchase Agreements with two existing stockholders, pursuant to which the Company issued convertible promissory demand notes in the aggregate principal amount of $86,000 (the “ 2017 Bridge Notes ”). As additional consideration for the purchase of the 2017 Bridge Notes, the Company issued to the purchasers an aggregate of 860,000 shares of the Company’s Series B Convertible Preferred Stock (“ Series B Preferred ”).
 
The 2017 Bridge Notes accrue interest at a rate of 10% per annum, payable in either cash or shares of the Company’s Common Stock, and matures on September 30, 2017. Each 2017 Bridge Note is convertible, at the option of the holder thereof, into that number of shares of Common Stock equal to the outstanding principal balance of the 2017 Bridge Note, plus accrued but unpaid interest (the “ Outstanding Balance ”), divided by $0.08 (the “ Conversion Shares ”). Additionally, in the event the Company completes an equity or equity-linked financing with gross proceeds to the Company of at least $1.5 million (a “ Qualified Financing ”), the Outstanding Balance of the 2017 Bridge Notes will, at the discretion of each respective holder, either (i) convert into securities sold in the Qualified Financing, or (ii) automatically convert into Conversion Shares.
 
Consolidated Results of Operations
 
Comparison of the Three and Six Months Ended June 30, 2017 to the Three and Six Months Ended June 30,   2016
 
The Company did not generate any revenue during the three and six months ended June 30, 2017 or the three and six months ended June 30, 2016.   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 products, which is contingent on the receipt of financing.
 
Sales, general and administrative expense for the three months ended June 30, 2017 and 2016 was $17,936 and $21,494, respectively.  Sales, general and administrative expense for the six months ended June 30, 2017 and 2016 was $40,308 and $39,730, respectively.  The increase in sales, general and administrative expense for the three and six months ended June 30, 2017 is principally attributable to higher costs for maintaining our intellectual property portfolio in the 2017 period, as compared to the 2016 period.
 
Professional fees for the three months ended June 30, 2017 and 2016 were $16,195 and $29,562, respectively. Professional fees for the six months ended June 30, 2017 and 2016 were $29,437 and $35,555, respectively.  Professional fees include the costs of legal, consulting and auditing services provided to us.  The decrease in professional fees for the 2017 periods compared to the 2016 periods is related to lower overall costs for professional services during the 2017 periods. 
 
The Company did not incur any research and development costs during the three and six months ended June 30, 2017 or the three and six months ended June 30, 2016 . The Company did not engage in any research and development efforts in the 2017 period, nor does the Company expect to engage in any research and development activity and until funding is secured and we develop a plan to commercialize its products.
 
Interest expense for the three months ended June 30, 2017 and 2016 was $56,537 and $55,403, respectively. Interest expense for the six months ended June 30, 2017 and 2016 was $112,700 and $101,978, respectively.  The increase in interest expense in the 2017 periods compared to the 2016 periods is related to a higher balance of outstanding notes payable and higher interest rate calculated using the default interest rate during the 2017 periods.
   
The Company’s net loss for the three months ended June 30, 2017 was $91,561 compared to net loss for the three months ended June 30, 2016 of $ 108,339 .  The Company’s net loss for the six months ended June 30, 2017 was $184,232 compared to net loss for the six months ended June 30, 2016 of $ 181,559 .  The increase in net losses in the three and six months period ending June 30, 2017 compared to the comparable periods in 2016 is due to higher expenses, including higher professional fees and sales, general and administrative expense, as discussed above.
 
The Company expects net loss to continue to decrease in future periods due to the current suspension of our active operations and our lack of revenue. We do not expect to recommence active operations until we are able to secure financing necessary to execute our business and operating plan, including the development and launch of its products, or to otherwise capitalize on our PAD technology.
 
 
 
Liquidity and Capital Resources
 
At June 30, 2017, the Company had cash and cash equivalents of $33,368, as compared to $691 at December 31, 2016. During the six months ended June 30, 2017, the Company used $65,507 for operating activities, compared to $56,559 used during the six months ended June 30, 2016.
 
During the six months ended June 30, 2017, the Company had $98,184 provided by financing activities, as compared to $962 used during the six months ended June 30, 2016. The overall increase in cash provided by financing activities for the six months ended June 30, 2017 is primarily attributable to shareholder loans and convertible notes payable received during the period.
 
The Company has not generated sufficient revenues from operations to meet its operating expenses. The Company requires additional funding to complete the development and launch of its products, or to otherwise capitalize on its PAD technology. The Company has historically financed its operations primarily through issuances of equity and the proceeds of debt instruments. In the past, the Company has also provided for its cash needs by issuing Common Stock, options and warrants for certain operating costs, including consulting and professional fees. 
 
Management believes that given the current economic environment and the continuing need to strengthen our cash position, there is substantial doubt about our ability to continue as a going concern. We are pursuing various funding options, including licensing opportunities and the sale of investment holdings, as well 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 recommence operations, and therefore continue as a going concern is dependent upon its ability to do any or all of the following: 
 
●
obtain adequate sources of funding to pay operating expenses and fund long-term business operations;
●
enter into a licensing or other relationship that allows the Company to commercialize its products;
●
manage or control working capital requirements by reducing operating expenses; and
●
develop new and enhance existing relationships with product distributors and other points of distribution for the Company’s products.
 
There can be no assurance that the Company will be successful in achieving its short- or long-term plans as set forth above, or that such plans, if consummated, will enable the Company to obtain profitable operations or continue in the long-term as a going concern. 
 
Off-Balance Sheet Arrangements
 
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
   
Critical Accounting Policies
 
Revenue Recognition
 
The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery has occurred, provided the fee is fixed or determinable and collection is probable. The Company assesses whether the fee is fixed and determinable based on the payment terms associated with the transaction. If a fee is based upon a variable such as acceptance by the customer, the Company accounts for the fee as not being fixed and determinable. In these cases, the Company defers revenue and recognizes it when it becomes due and payable. Up-front engagement fees are recorded as deferred revenue and amortized to income on a straight-line basis over the term of the agreement, although the fee is due and payable at the time the agreement is signed or upon annual renewal. Payments related to substantive, performance-based milestones in an agreement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreement when they represent the culmination of the earnings process.
  
The Company assesses the probability of collection based on a number of factors, including past transaction history with the customer and the current financial condition of the customer. If the Company determines that collection of a fee is not reasonably assured, revenue is deferred until the time collection becomes reasonably assured. Significant management judgment and estimates must be made and used in connection with the revenue recognized in any accounting period. Material differences may result in the amount and timing of our revenue for any period if our management made different judgments or utilized different estimates.
 
 
 
The Company recognizes revenue from nonrefundable minimum royalty agreements from distributors or resellers upon delivery of product to the distributor or reseller, provided no significant obligations remain outstanding, the fee is fixed and determinable, and collection is probable. Once minimum royalties have been received, additional royalties are recognized as revenue when earned based on the distributor’s contractual reporting obligations. The Company is able to recognize minimum royalty payments on an accrual basis, as they are specified in the contract. However, since the Company cannot forecast product sales by licensees, royalty payments that are based on product sales by the licensees are not determinable until the licensee has completed their computation of the royalties due and/or remitted their cash payment to us. Should information on licensee product sales become available so as to enable the Company to recognize royalty revenue on an accrual basis, materially different revenues and results of operations could occur.
 
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.
 
Use of Estimates
 
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The accounting policies discussed below are considered by management to be the most important to the Company’s financial condition and results of operations, and require management to make its most difficult and subjective judgments due to the inherent uncertainty associated with these matters. All significant estimates and assumptions are developed based on the best information available to us at the time made and are regularly reviewed and adjusted when necessary. We believe that our estimates and assumptions are reasonable under the circumstances. However, actual results may vary from these estimates and assumptions. Additional information on significant accounting principles is provided in Note 3 of the attached financial statements.
 
Impairment of Assets
 
We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas which are within or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.
 
In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.  
 
Share-Based Payments
 
We grant options to purchase our Common Stock to our employees and directors under our stock option plan. We estimate the value of stock option awards on the date of grant using a Black-Scholes pricing model (Black-Scholes model). The determination of the fair value of share-based payment awards on the date of grant using the Black-Scholes model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, and risk-free interest rate. If factors change and we employ different assumptions in future periods, the compensation expense that we record may differ significantly from what we have recorded in the current period.
 
 We determine the fair value of the share-based compensation awards granted to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either of (i) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (ii) the date at which the counterparty’s performance is complete.
 
 
 
Estimates of share-based compensation expenses are significant to our financial statements, but these expenses are based on option valuation models and will never result in the payment of cash by us.
 
The above listing is not intended to be a comprehensive list of all of our accounting policies. In most cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States.
 
Deferred Taxes
 
We recognize deferred tax assets and liabilities based on differences between the financial statement carrying amounts and tax bases of assets and liabilities, which requires management to perform estimates of future transactions and their respective valuations. We review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely than not that the Company will not realize the benefit of the net deferred tax asset. At June 30, 2017 and December 31, 2016, 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.
 
IT EM 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 June 30, 2017. 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.  In addition, as a result of the death of our Chief Scientific Officer, any progress toward remediating our material weaknesses will continue to be delayed.
 
 
 
PA R T II - OTHER INFORMATION
 
ITE M 1.  Legal Proceedings
 
As of the date hereof, there are no additional material pending legal proceedings to which we are a party to or of which any of our property is the subject.
 
IT E M 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, 2016, filed on April 17, 2017. 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 June 30, 2017, there have been no material changes to the disclosures made in the above-referenced Form 10-K.
 
IT E M 2.  Unregistered Sales of Equity Securities, and Use of Proceeds
 
None.
 
I T EM 3.  Defaults Upon Senior Securities
 
None.
 
ITE M 4.  Mine Safety Disclosures
 
Not Applicable.
 
I T EM 5.  Other Information
 
None.
 
IT EM 6.  Exhibits
 
Exhibit
 
Description
 
Form of Convertible Promissory Demand Note.
 
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.
 
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
 
 
 
SI G NATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date:  August 21, 2017
/s/ Shalom Hirschman
 
Shalom Hirschman
Principal Executive, Financial and Accounting Officer
 
 
 
 
 
-17-
 
Exhibit 10.1
 
THIS NOTE AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
 
 
Convertible Promissory Demand Note
 
U.S. $___________  
No.: ____________
  Issuance Date: ________, 2017
  Maturity Date: _________ 2017
 
 
FOR VALUE RECEIVED , QUANTRX BIOMEDICAL CORPORATION, a Nevada corporation (the “ Company ”), hereby promises to pay to the order of _______________ or any permitted holder of this Convertible Promissory Demand Note (the “ Payee ”), at the principal office of the Payee set forth herein, or at such other place as the Payee may designate in writing to the Company, the principal sum of _____________ ($______), with interest on the unpaid principal balance hereof at a rate equal to ten percent (10%) per annum commencing on the date hereof, in such coin or currency of the United States of America as at the time shall be legal tender for the payment of public and private debts and in immediately available funds, as provided in this Convertible Promissory Demand Note (this “ Note ”).
 
1.   Mandatory Conversion of Principal and Interest upon Qualified Financing .   Upon the closing by the Company of an equity or equity based financing or a series of equity financings following the Issuance Date (a “ Qualified Financing ”) resulting in gross proceeds to the Company totaling at least $1,500,000 (the “ Qualified Financing Threshold Amount ”), the outstanding principal amount of this Note together with all accrued and unpaid interest hereunder (the “ Outstanding Balance ”) shall convert at the sole option of the Payee, into either 1) such securities, including warrants of the Company as are issued in the Qualified Financing, the amount of which shall be determined in accordance with the following formula: (the Outstanding Balance as of the closing of the Qualified Financing) x (1.20) / (the per security price of the securities sold in the Qualified Financing); or 2) that number of shares of common stock of the Company pursuant to the provisions of Section 2 herein. The principal amount of this Note and of notes of like tenor issued between the date hereof and the closing of the Qualified Financing shall not be included in determining the Qualified Financing Threshold Amount. If the Payee elects to convert into the Qualified Financing, the Payee shall be deemed to be a purchaser in the Qualified Financing and shall be granted all rights afforded to an investor in the Qualified Financing. Notwithstanding anything to the contrary contained in this Section 1, the Company shall have the right, at the Company’s option, to pay all or a portion of the accrued and unpaid interest due and payable to Payee upon such automatic conversion in cash.
 
 
 
 
 
2.   Voluntary Conversion of Principal and Interest . Subject to the terms and conditions of this Section 2 and provided this Note remains outstanding and has not been converted pursuant to Section 1, immediately prior to the Maturity Date and thereafter (as defined below), the Payee shall have the right, at the Payee’s option, to convert the Outstanding Balance (the “ Conversion Option ”) into such number of fully paid and non-assessable shares of the Company’s common stock (the “ Conversion Shares ”) as is determined in accordance with the following formula: (the Outstanding Balance as of the date of the exercise of the Conversion Option) / ($.08). If the Payee desires to exercise the Conversion Option, the Payee shall, by personal delivery or nationally-recognized overnight carrier, surrender the original of this Note and give written notice to the Company (the “ Conversion Notice ”), which Conversion Notice shall (a) state the Payee’s election to exercise the Conversion Option, and (b) provide for a representation and warranty of the Payee to the Company that, as of the date of the Conversion Notice, the Payee has not assigned or otherwise transferred all or any portion of the Payee’s rights under this Note to any third parties. The Company shall, as soon as practicable thereafter, issue and deliver to the Payee the number of Conversion Shares to which the Payee shall be entitled upon exercise of the Conversion Option. Notwithstanding anything to the contrary contained in this Section 2, the Company shall have the right, at the Company’s option, to pay all or a portion of the accrued and unpaid interest due and payable to Payee upon Payee’s exercise of the Conversion Option in cash. In the event the Qualified Financing Threshold Amount is satisfied and the Payee does not elect to the exchange the Outstanding Balance into the Qualified Financing as provided for under Section 1 herein, the Payee shall convert the Outstanding Balance pursuant to the provisions of this Section 2 in connection and simultaneous with the Qualified Financing.
 
3.   Principal and Interest Payments .
 
(a)   In the event a Qualified Financing is not completed and the Payee has not exercised the Conversion Option, Company shall repay the entire principal balance then outstanding under this Note on the later to occur of September 30 th (the “ Maturity Date ”) or upon written demand for payment by the Payee
 
(b)   Interest on the outstanding principal balance of this Note shall accrue at a rate of ten percent (10%) per annum commencing on the date hereof, which interest shall be computed on the basis of the actual number of days elapsed and a year of three hundred and sixty-five (365) days. In the event a Qualified Financing is not completed and the Payee has not exercised the Conversion Option, all accrued and unpaid interest due under this Note shall be payable on the Maturity Date by the Company in cash or shares of common stock. In determining the number of interest shares due, the Company shall use a share price calculated by taking the closing price of the Company’s common stock for the ten trading days prior to the interest payment date multiplied by eighty five (85%) percent. Furthermore, upon the occurrence of an Event of Default (as defined below), or following the Maturity Date the Company will pay interest to the Payee on the then outstanding principal balance of the Note from such date until this Note is paid in full at the rate of eighteen percent (18%) per annum, with interest payable quarterly.
 
(c)   At the Company’s sole option, the Company may prepay all or a portion of the outstanding principal amount of this Note and/or all or a portion of the accrued and unpaid interest hereon in cash at any time prior to the Maturity Date without penalty or premium. Any payments made under this Note shall be applied first to the accrued and unpaid interest, if any, and the remainder to the unpaid principal amount. Notwithstanding the foregoing, the holder of this Note shall retain the right to convert this Note, for a period of ten (10) business days following the Company’s notice of its intention to prepay this Note.
 
4.   Non-Business Days . Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment may be due on the next succeeding business day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.
 
 
 
5.   Representations and Warranties of the Company . The Company represents and warrants to the Payee as follows:
 
(a)   The Company has been duly incorporated and validly exists and is in good standing under the laws of the State of Nevada, with full corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted.
 
(b)   This Note has been duly authorized, validly executed and delivered on behalf of the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors’ rights generally.
 
(c)   The execution, delivery and performance of this Note will not: (i) conflict with or result in a material breach of or a default under any of the terms or provisions of, (A) the Company’s Certificate of Incorporation or by-laws, or (B) any material provision of any indenture, mortgage, deed of trust or other material agreement or instrument to which the Company is a party or by which it or any of its material properties or assets is bound; (ii) result in a violation of any material provision of any law, statute, rule, regulation, or any existing applicable decree, judgment or order by any court, Federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company, or any of its material properties or assets; or (iii) result in the creation or imposition of any material lien or encumbrance upon any material property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party or may be bound or to which the Company or any of its property is subject.
 
(d)   No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Note.
 
6.   Events of Default . The occurrence of any of the following events shall be an “ Event of Default ” under this Note:
 
(a)   the Company shall fail to make the payment of any principal amount outstanding for a period of five (5) business days after the date such payment shall become due and payable hereunder; or
 
(b)   the Company shall fail to make the payment of any accrued and unpaid interest for a period of five (5) business days after the date such interest shall become due and payable hereunder; or
 
(c)   any material breach by the Company of any representations or warranties made by the Company herein; or
 
(d)   the holder of any indebtedness of the Company shall accelerate any payment of any amount or amounts of principal or interest on any such indebtedness (the “ Indebtedness ”) (other than with respect to this Note and notes of like tenor) prior to its stated maturity or payment date, the aggregate principal amount of which Indebtedness is in excess of $250,000, whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration has not been stayed, rescinded or annulled within fifteen (15) business days of such acceleration; or
 
 
 
 
 
(e)   A judgment or judgments for the payment of money shall be rendered against the Company for an amount in excess of $500,000 in the aggregate (net of any applicable insurance coverage) for all such judgments that shall remain unpaid for a period of sixty (60) consecutive days or more after its entry or issue or that shall not be discharged, released, dismissed, stayed or bonded (due to an appeal or otherwise) within the sixty (60) consecutive day period after its entry or issue; or
 
(f)   the Company shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Federal Bankruptcy Code, as amended (the “ Bankruptcy Code ”) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, or (v) acquiesce in writing to any petition filed against it in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic); or
 
(g)   a proceeding or case shall be commenced in respect of the Company without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of forty-five (45) consecutive days or any order for relief shall be entered in an involuntary case under the Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or domestic) against the Company or any of its subsidiaries and shall continue undismissed, or unstayed and in effect for a period of forty-five (45) consecutive days.
 
7.   Remedies Upon An Event of Default . If an Event of Default shall have occurred and shall be continuing, the Payee of this Note may at any time at its option, (a) declare, by providing the Company with not less than five (5) days prior written notice, the entire unpaid principal balance of this Note together with all interest accrued and unpaid hereon, due and payable, and upon the Company’s receipt of such notice, the same shall be accelerated and so due and payable; provided , however , that upon the occurrence of an Event of Default described in (i) Sections 7(f) and (g), without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Company, the outstanding principal balance and accrued and unpaid interest hereunder shall be immediately due and payable, and (ii) Sections 7(a) through (e), the Payee may exercise or otherwise enforce any one or more of the Payee’s rights, powers, privileges, remedies and interests under this Note or applicable law. No course of delay on the part of the Payee shall operate as a waiver thereof or otherwise prejudice the right of the Payee. No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. Notwithstanding anything to the contrary contained in this Note, Payee agrees that its rights and remedies hereunder are limited to receipt of cash or shares of the Company’s common stock in the amounts described herein.
 
8.   Conversion Restrictions.
 
(a)   Notwithstanding anything to the contrary as set forth in Section 1 and 2 of this Note, at no time may a holder of this Note convert this Note if the number of shares of Common Stock to be issued pursuant to such conversion would cause the number of shares of Common Stock owned by such holder at such time to exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock outstanding at such time; provided, however, that upon the Note holder providing the Company with sixty-one (61) days notice (the "Waiver Notice") that such holder would like to waive such Conversion Restriction. This Section 9(a) with regard to any or all shares of Common Stock issuable upon conversion of this Note, shall be of no force or effect with regard to those shares of referenced in the Waiver Notice.
 
 
 
 
 
(b)   Notwithstanding anything to the contrary as set forth in Section 1 and 2 of this Note, at no time may a holder of this Note convert this Note if the number of shares of Common Stock to be issued pursuant to such conversion would cause the number of shares of Common Stock owned by such holder at such time to exceed, when aggregated with all other shares of Common Stock owned by such holder at such time, the number of shares of Common Stock which would result in such holder beneficially owning (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of Common Stock outstanding at such time; provided, however, that upon the Note holder providing the Company with sixty-one (61) days notice (the Waiver Notice") that such holder would like to waive such Conversion Restriction, this Section 9(b) with regard to any or all shares of Common Stock issuable upon conversion of this Note, shall be of no force or effect with regard to those shares of referenced in the Waiver Notice.
 
9.   Replacement . Upon receipt of a duly executed and notarized written statement from the Payee with respect to the loss, theft or destruction of this Note (or any replacement hereof), and without requiring an indemnity bond or other security, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Company shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.
 
10.   Parties in Interest; Transferability . This Note shall be binding upon the Company and its successors and assigns and the terms hereof shall inure to the benefit of the Payee and its successors and permitted assigns. This Note may not be transferred or sold, pledged, hypothecated or otherwise granted as security by the Payee without the prior written consent of the Company, which consent will not be unreasonably withheld.
 
11.   Amendments . This Note may not be modified or amended in any manner except in writing executed by the Company and the Payee.
 
12.   Notices . Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
 
Address of the Payee: 
_____________________
_____________________
_____________________
_____________________
Attention:
Tel. No.:
Fax No.:
 
 
Address of the Company: 
_____________________
_____________________
_____________________
_____________________
Attention:
Tel. No.:
Fax No.:
 
 
 
 
 
13.   Governing Law . This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the choice of law provisions. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.
 
14.   Headings . Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.
 
15.   Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief . The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a Payee’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Payee and that the remedy at law for any such breach may be inadequate. Therefore the Company agrees that, in the event of any such breach or threatened breach, the Payee shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.
 
16.   Failure or Delay Not Waiver . No failure or delay on the part of the Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
 
17.   Enforcement Expenses . The Company agrees to pay all reasonable costs and expenses of enforcement of this Note, including, without limitation, reasonable attorneys’ fees and expenses.
 
18.   Binding Effect . The obligations of the Company and the Payee set forth herein shall be binding upon the successors and permitted assigns of each such party.
 
19.   Compliance with Securities Laws . The Payee acknowledges and agrees that this Note and the securities issuable upon the conversion of this Note, is being, and will be, acquired solely for the Payee’s own account and not as a nominee for any other party, and for investment purposes only and not with a view to the resale or distribution of any part thereof, and that the Payee shall not offer, sell or otherwise dispose of this Note or the securities issuable upon the conversion of this Note other than in compliance with applicable federal and state laws. The Payee understands that this Note and the securities issuable upon the conversion of this Note are “restricted securities” under applicable federal and state securities laws and that such securities have not been, and will not be, registered under the Securities Act of 1933, as amended (the “ Securities Act ”). The Payee represents and warrants to the Company that the Payee is an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act. This Note and any Note issued in substitution or replacement therefore, and the securities issuable upon the conversion of this Note, shall be stamped or imprinted with a legend in substantially the following form:
 
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT THE REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.”
 
 
 
 
 
20.   Severability . The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction.
 
21.   Consent to Jurisdiction . Each of the Company and the Payee (i) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Payee consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address set forth in Section 12 hereof and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 21 shall affect or limit any right to serve process in any other manner permitted by applicable law.
 
22.   Waivers . Except as otherwise specifically provided herein, the Company hereby waives presentment, demand, notice of nonpayment, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and does hereby consent to any number of renewals or extensions of the time for payment hereof and agrees that any such renewals or extensions may be made without notice and without affecting its liability herein, AND DOES HEREBY WAIVE TRIAL BY JURY. No delay or omission on the part of the Payee in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Payee, nor shall any waiver by the Payee of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.
 
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IN WITNESS WHEREOF, the Company has executed and delivered this Note as of the date first written above.
 
 
QUANTRX BIOMEDICAL CORPORATION
 
                                                           By:                                                                                                                                 
Name:
Title:
 
 
__________________________________________
Name of Payee
 
 
 
By:________________________________
           
Name:
Title:
 
 
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 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:  August 21, 2017
/s/ Shalom Hirschman
 
Shalom Hirschman
Principal Executive, Financial and Accounting Officer
 
 
 
 
 
 
 
 
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 of QuantRx Biomedical Corporation (the " Company ") on Form 10-Q for the period ending June 30, 2017, 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; 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:  August 21, 2017
/s/ Shalom Hirschman
 
Shalom Hirschman
Principal Executive, Financial and Accounting Officer