QUANTRX BIOMEDICAL CORP - FORM 10-K/A

Attached files

file	filename
EX-31 - CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF - QUANTRX BIOMEDICAL CORP	ex31.htm
EX-32 - CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANE - QUANTRX BIOMEDICAL CORP	ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 2016

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

EXCHANGE ACT OF 1934

For the transition period from __________ to ___________

Commission file number: 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)		(IRS Employer Identification No.)

10190 SW 90th Avenue, Tualatin, Oregon 97123

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 980-2235

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

None

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

Common Stock, $0.01 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth 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. (Check one):

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer (Do not check if smaller reporting company)	[ ]	Smaller reporting company Emerging growth company	[X] [ ]

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). [ ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2016): $1,573,929.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of April 14, 2017: 78,696,461 shares.

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EXPLANATORY NOTE

QuantRx Biomedical Corporation (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2017 (the “Original 10-K”). The purpose of this Amendment is to include the financial statements required by Item 8 of Form 10-K, and to update the Report of Independent Registered Public Accounting Firm so as to reference the fiscal years ending December 31, 2016 and 2015. This Amendment does not amend or otherwise update any other information in the Original 10-K.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Amendment also includes currently dated certifications from the Company’s Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.

This Amendment should be read in conjunction with the Original 10-K and the Company’s other filings made with the SEC subsequent to the filing of the Original 10-K on April 17, 2017. This Amendment is not intended to, nor does it, reflect events occurring after the filing of the Original 10-K, and does not modify or update the disclosures therein in any way other than as required to reflect the changes described above.

QUANTRX BIOMEDICAL CORPORATION

FORM 10-K/A

TABLE OF CONTENTS

		PAGE
PART II

Item 8.	Financial Statements and Supplementary Data	1

PART IV

Item 15.	Exhibits and Financial Statement Schedules	1

SIGNATURES		2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

THIS ANNUAL REPORT ON FORM 10-K, INCLUDING EXHIBITS THERETO, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS “ANTICIPATES”, “BELIEVES”, “EXPECTS”, “INTENDS”, “FORECASTS”, “PLANS”, “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” ON PAGE THIRTEEN HEREOF. THE COMPANY ASSUMES NO OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER FACTORS, EXCEPT AS REQUIRED BY LAW.

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PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Audited balance sheets for the years ended December 31, 2016 and 2015 and audited statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2016 and 2015 are included immediately following the signature page to this Amended Annual Report, beginning on page F-1.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following exhibits are filed as part of this annual report:

Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 filed with Form 10-KSB filed on April 16, 2001)
3.2		Certificate of Amendment to the Articles of Incorporation of the Company, dated November 30, 2005 (incorporated by reference to Exhibit 3.2 filed with Form 10-KSB on March 31, 2006)
3.3		Bylaws of the Company (incorporated by reference to Exhibit 3.2 filed with Form 10KSB40/A filed on September 23, 1999)
3.4		Certificate of Amendment to the Bylaws of the Company dated December 2, 2005 (incorporated by reference to Exhibit 3.4 filed with Form 10-KSB on March 31, 2006)
3.5		Certificate of Amendment to the Articles of Incorporation dated January 25, 2010 (incorporated by reference to Exhibit 3.5 filed with Form 10-K on April 14, 2014)
3.6		Certificate of Withdrawal of the Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock, dated November 19, 2010 (incorporated by reference to Exhibit 3.6 filed with Form 10-K on April 14, 2014)
3.7		Certificate of Designation for Series B Convertible Preferred Stock (incorporated by reference to Exhibit 3.6 filed with Form 10-K on April 14, 2011)
4.1		Form of Warrant to Purchase Shares of Common Stock of QuantRx Biomedical Corporation, dated October 2007 (incorporated by reference to Exhibit 10.2 filed with Form 8-K on October 24, 2007)
4.2		Form of Warrant to Purchase Shares of Common Stock of QuantRx issued by QuantRx in favor of Investors (incorporated by reference to Exhibit 4.2 filed with Form 8-K on January 29, 2008)
4.3		Form of Warrant to Purchase Shares of Common Stock of QuantRx, dated June 2008, issued by QuantRx in favor of lender (incorporated by reference to Exhibit 4.2 filed with Form 8-K on July 28, 2008)
4.4		Form of Warrant to Purchase Shares of Common Stock of QuantRx, dated August 2008, issued by QuantRx in favor of lender. (incorporated by reference to Exhibit 4.2 filed with Form 8-K on August 27, 2008)
4.5		Warrant to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30, 2009, issued by QuantRx in favor of NuRx (incorporated by reference to Exhibit 10.4 filed with Form 8-K on August 5, 2009)
4.6		Warrant to Purchase 2,000,000 Shares of Common Stock of QuantRx, dated July 30, 2009, issued by QuantRx in favor of NuRx (incorporated by reference to Exhibit 10.5 filed with Form 8-K on August 5, 2009)
10.1		2007 Incentive and Non-Qualified Stock Option Plan (incorporated by reference to Exhibit C filed with Schedule 14A on June 5, 2007)
10.2		Employment Agreement, dated July 30, 2009, by and between QuantRx and William Fleming (incorporated by reference to Exhibit 10.8 filed with Form 8-K on August 5, 2009)
10.3		Settlement Agreement and Release, dated as of July 7, 2011, by and between the Company and NuRx Pharmaceuticals, Inc. (incorporated by reference to Exhibit 99.1 filed with Form 8-K on July 8, 2011).
14.1		Ethical Guidelines adopted by the Board of Directors of the Company on May 31, 2005 (incorporated by reference to Exhibit 14.1 filed with Form 10-KSB on March 31, 2006)
31*		Certification of Principal Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*		Certification of Principal Executive and Financial Officer pursuant to 18 USC Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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

* Document is filed herewith.

** Previously filed.

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SIGNATURES

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

	QuantRx Biomedical Corporation

Date: October 5, 2017	By:	/s/ Shalom Hirschman
		Shalom Hirschman Principal Executive and Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	QuantRx Biomedical Corporation

Date: October 5, 2017	By:	/s/ Shalom Hirschman
		Shalom Hirschman Chief Executive Officer and Director

Date: October 5, 2017	By:	/s/ Michael Abrams
		Michael Abrams, Director

-2-

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FINANCIAL STATEMENTS

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Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2016 and 2015		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2016 and 2015		F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and 2015		F-5
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2016 and 2015		F-6
Notes to Financial Statements		F-7

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of QuantRx Biomedical Corp.

We have audited the accompanying balance sheets of QuantRx Biomedical Corp. as of December 31, 2016 and 2015, and the related statements of operation, stockholders’ equity, and cash flows for the years then ended. QuantRx Biomedical Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of QuantRx Biomedical Corp. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

/s/ Fruci & Associates II, PLLC Fruci & Associates II, PLLC Spokane, WA
October 5, 2017

F-2

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,	December 31,
	2016	2015
ASSETS
Current Assets:
Cash and cash equivalents	$691	$61,078
Deposit on investment	-	50,000 -
Prepaid expenses	28,094	26,396
Total Current Assets	28,785	137,474

Investments, net of impairment of $30,051	169,948	200,000
Property and equipment, net	-	1,098
Intangible assets, net	13,874	19,949
Total Assets	$212,607	$358,521

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$160,671	$121,821
Accounts payable, related party	-	283,000
Accrued expenses	36,342	34,366
Shareholder loans	36,000	-
Notes payable, net of discount	1,059,784	1,042,529
Notes payable, related party	558,287	267,244
Current portion of LT notes payable	4,376	2,336
Total Current Liabilities	1,855,460	1,751,296
Notes payable, long-term	35,646	39,430
Total Liabilities	1,891,106	1,790,726

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 and 69,772,918 shares issued and outstanding, respectively	786,964	697,729
Additional paid-in capital	48,740,389	48,677,924
Accumulated deficit	(51,372,621)	(50,974,627)
Total Stockholders’ Equity (Deficit)	(1,678,499)	(1,432,205)

Total Liabilities and Stockholders’ Equity (Deficit)	$212,607	$358,521

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

F-3

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2016	2015
Revenues:
Revenues	$-	$156
Total Revenues	-	156

Costs and Operating Expenses:
Sales, general and administrative	75,434	219,292
Professional fees	56,231	116,754
Research and development	-	13,154
Amortization	6,075	8,572
Depreciation	1,099	1,093
Total Costs and Operating Expenses	138,839	358,865

Loss from Operations	(138,839)	(358,709)

Other Income (Expense):
Interest expense	(196,146)	(123,899)
Amortization of debt discount to interest expense	-	(35,075)
Loss on impairment	(80,052)	-
Gain (loss) on conversion of shares	16,503	(7,163)
Gain (loss) on settlement of accounts payable	540	57,066
Total Other Income (Expense), net	(259,155)	(109,071)

Income (Loss) Before Taxes	(397,994)	(467,780)

Provision for Income Taxes	-	-

Net Income (Loss)	$(397,994	$(467,780)

Basic and Diluted Net Income (Loss) per Common Share	$(0.01)	$(0.01)

Basic and Diluted Weighted Average Shares Used in per Share Calculation	74,246,914	66,834,677

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

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2016	2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	(397,994)	$(467,780
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization	7,173	9,665
Interest expense related to amortization of non-cash discount, non-cash beneficial conversion feature and deferred financing costs	-	28,612
Non-cash fair value of Common Stock issued as compensation to management	-	30,000
Non-cash fair value of Common Stock issued as compensation to consultant	-	25,000
Non-cash fair value of Stock Options issued as compensation to management		92,000
Non-cash loss on equity issuance for other financing costs	-	7,163
Non-cash loss on issuance of common stock in exchange for interest on notes payable	68,704	35,700
Non-cash gain on the conversion of shares	(16,503)	-
Non-cash fair value of Common Stock issued in connection with notes payable	-	99,672
(Increase) decrease in:
Accounts receivable	-	352
Loss on impairment	80,042	-
Inventories		-
Prepaid expenses	(1,698)	14,506
Increase (decrease) in:
Accounts payable	38,850	(57,485)
Accrued expenses	(126,783)	(43,783)

Net Cash Used by Operating Activities	(94,643)	(226,378)

CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit on Investment	-	(50,000)
Net Cash Provided (Used) by Investing Activities	-	(50,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payment on long term debt	(1,744)	(2,590)
Proceeds from the issuance of shareholder loans	36,000	-
Proceeds from issuance of convertible promissory notes	-	121,500

Net Cash Provided by Financing Activities	34,256	118,910

Net Increase (Decrease) in Cash and Cash Equivalents	(60,387)	(157,468)
Net Cash of Deconsolidated Subsidiary
Cash and Cash Equivalents, Beginning of Period	61,078	218,546

Cash and Cash Equivalents, End of Period	$691	$61,078

Supplemental Cash Flow Disclosures:
Interest expense paid in cash	$-	$-
Income tax paid	$-	$-

Supplemental Disclosure of Non-Cash Activities:
Common Stock issued for interest conversion	$151,700	$81,173

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

F-5

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QUANTRX BIOMEDICAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Preferred Stock		Common Stock
	Number of Shares	Amount	Number of Shares	Amount	Additioal Paid-in Capital	Stock to be Issued	Accumulated Defecit	Total Stockholders’ Equity
BALANCE, DECEMBER 31, 2014	16,676,942	$166,769	63,341,163	$633,412	$48,428,724	$63,000	$(50,506,847)	$(1,214,942)

Issuance of common stock related to notes payable			1,029,500	10,295	46,888	(42,000)		15,183
Issuance of common stock in exchange for interest payable			2,690,752	26,908	54,265	-		81,173
Issuance of common stock for services to consultant			1,211,503	27,115	41,048	(21,000)		32,163
Issuance of common stock for services to management			1,500,000		30,000			30,000
Issuance of stock options as compensation					92,000			92,000
Net loss for the year ended December 31, 2015							(467,780)	(467,780)

BALANCE, DECEMBER 31, 2015	16,676,942	$166,769	69,772,918	$697,729	$48,677,927	$-	$(50,974,627)	$(1,432,205)

Issuance of common stock in exchange for interest payable	-	-	8,923,543	89,235	62,465	-	-	151,700

Net loss for the year ended December 31, 2016							(397,994)	(397,994)

BALANCE, DECEMBER 31, 2016	16,676,972	166,769	78,696,461	786,964	48,740,389	-	(51,372,621)	(1,648,499)

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

F-6

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QUANTRX BIOMEDICAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS

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 are developing and intend to commercialize 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 diagnostic testing business, operating under our subsidiary QX Labs, Inc. (“QX”) (the “Diagnostic Business”) is based principally on the Company’s proprietary PadKit® technology, which we believe provides a patented platform technology for genomic diagnostics, including fetal genomics. Outside of the Diagnostic Business, our business line consists of our over-the-counter business, including the InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes 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.

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.

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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.	CONSOLIDATED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the consolidated financial statements.

Accounting for Share-Based Payments

The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in employee stock-based compensation expense for the years ended December 31, 2016 and 2015 of $0 and $122,000, respectively.

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. Accordingly, compensation cost has been recognized for the issuance of common stock to non-employee consultants for the years ended December 31, 2016 and 2015 of $0 and $25,000, respectively.

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

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

During 2016, the Company had no share based payments. During 2015, the fair value of each share based payment is estimated on the measurement date using the Black-Scholes model using an average risk free interest rate of 0.52%, expected volatility of 417%, and a dividend yield of zero.

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

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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, 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments and short-term debt instruments with maturities of three months or less from date of purchase to be cash equivalents. Cash equivalents consisted of money market funds at December 31, 2016 and 2015.

Concentration of Risks

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. At times, such balances may exceed federally insured limits. The Company has not experienced any losses to date resulting from this practice. At December 31, 2016 and 2015, our cash was not in excess of these limits.

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 December 31, 2016, the Company had outstanding options exercisable for 2,352,000 shares of its Common Stock, and preferred shares convertible into 16,676,942 shares of its Common Stock. The above options and preferred shares were deemed to be antidilutive for the year ended December 31, 2016.

As of December 31, 2015, 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. The above options and preferred shares were deemed to be antidilutive for the year ended December 31, 2015.

Fair Value of Financial Instruments

Current U.S. generally accepted accounting principles establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

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The three levels of the fair value hierarchy are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 – Pricing inputs include significant inputs that are generally unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Level 3 instruments include those that may be more structured or otherwise tailored to the Company’s needs.

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.

In determining fair value of our investment from GUSA (which investment is further described in Note 6 below), the Company estimated fair value based 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 the carrying value of this investment that are not readily apparent from other sources.

Impairments

We assess the impairment of long-lived assets, including our other intangible assets, at least annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. Changes in our strategic plan and/or market conditions could significantly impact these judgments and could require adjustments to recorded asset balances. We hold investments in companies having operations or technologies in areas, which are within, or adjacent to our strategic focus when acquired, all of which are privately held and whose values are difficult to determine. We record an investment impairment charge if we believe an investment has experienced a decline in value that is other than temporary. Future changes in our strategic direction, adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment’s current carrying value, thereby possibly requiring an impairment charge in the future.

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In determining fair value of assets, the Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets that are not readily apparent from other sources. Actual fair value may differ from management estimates resulting in potential impairments causing material changes to certain assets and results of operations.

During 2016, the Company recorded losses from impairments totaling $80,042 (the “2016 Impairments”). The 2016 Impairments consist the following:

Genomics USA, Inc. (“GUSA”) During the year ended December 31, 2016, the Company has recorded a loss of $30,052 on an impairment on the value of its common stock investment in GUSA. The Company has valued the impairment based on the dilution of the Company’s investment and certain other factors.

Global Cancer Diagnostics, Inc. (“GCD”): During 2015, the Company entered into a letter of intent with GCD, which provided for, among other things, the advance payment of $50,000 towards a potential business combination. During 2016, the Company determined the full amount of the advanced payment to be impaired.

Income Taxes

The Company accounts for income taxes and the related accounts under the liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax bases of assets and liabilities. A valuation allowance is applied against any net deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our balance sheets at December 31, 2016 or 2015, and have not recognized interest and/or penalties in the statement of operations for the years ended December 31, 2016 or 2015. See Note 11, Income Taxes, below.

Intangible Assets

The Company’s intangible assets consist of patents, licensed patents and patent rights, and website development costs, and are carried at the legal cost to obtain them. Costs to renew or extend the term of intangible assets are expensed when incurred. In 2008, through our formerly majority owned subsidiary, the Company also held technology licenses and other acquired intangibles. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives are as follows: patents, 17 years; patents under licensing, 10 years; website development costs, three years, and in 2008, acquired intangibles had a weighted average life of 15 years. Amortization expense for the years ended December 31, 2016 and 2015, totaled $6,075 and $8,572. The remaining unamortized costs will be amortized through 2024. The Company estimates its amortization expense for 2017 will be $3,575.

Inventories

Inventories, consisting solely of products available for sale, are accounted for using the first-in, first-out (FIFO) method, and are valued at the lower of cost of market value. This valuation requires us to make judgments, based on current market conditions, about the likely method of dispositions and expected recoverable value inventories.

Property and Equipment

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 December 31, 2016 and 2015 consisted of computer and office equipment, machinery and equipment and leasehold improvements with estimated useful lives of three to seven years. Estimated useful lives of leasehold improvements do not exceed the remaining lease term. Depreciation expense was $1,099 and $1,093 for the years ended December 31, 2016 and 2015. Expenditures for repairs and maintenance are expensed as incurred. See Note 4below.

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Research and Development Costs

Research and development costs are expensed as incurred. The cost of intellectual property purchased from others that is immediately marketable or that has an alternative future use is capitalized and amortized as intangible assets. Capitalized costs are amortized using the straight-line method over the estimated economic life of the related asset.

Revenue Recognition

The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin Topic 13 when persuasive evidence of an arrangement exists and delivery or performance 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.

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 or reseller’s contractual reporting obligations.

The Company’s strategy includes entering into collaborative agreements with strategic partners for the development, commercialization and distribution of its product candidates. Such collaborative agreements may have multiple deliverables. The Company evaluates multiple deliverable arrangements pursuant to ASC Topic 605-25, “Revenue Recognition: Multiple-Element Arrangements.” Pursuant to this Topic, in arrangements with multiple deliverables where the Company has continuing performance obligations, contract, milestone and license fees are recognized together with any up-front payments over the term of the arrangement as performance obligations are completed, unless the deliverable has standalone value and there is objective, reliable evidence of fair value of the undelivered element in the arrangement. In the case of an arrangement where it is determined there is a single unit of accounting, all cash flows from the arrangement are considered in the determination of all revenue to be recognized. Cash received in advance of revenue recognition is recorded as deferred revenue.

Development Agreements and Royalties

In 2007, the Company entered into a development agreement for an at-home diagnostic test with Church & Dwight Co., Inc. (“C&D”). The C&D agreement included milestone based payments, which were recognized in 2007 and 2008. On August 14, 2008, the Company entered into a Technology License Agreement with C&D. Under the terms of the agreement, C&D acquired exclusive worldwide rights to use certain Company technology related to the jointly developed test. Under the ten-year agreement, the Company received royalties on net sales of the product of $0 and $156 in 2016 and 2015, respectively.

Reclassifications

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

Use of Estimates

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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

As of December 31, 2016 and December 31, 2015, the Company does not expect any of the recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.

4.	OTHER BALANCE SHEET INFORMATION

Components of selected captions in the accompanying balance sheets as of December 31, 2016 and 2015 consist of:

	2016	2015
Prepaid expenses:
Prepaid insurance	28,094	26,396
Other		-
Prepaid expenses	$28,094	$26,396


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)	(32,408)
Property and equipment, net	$-	$1,098

Accrued expenses:
Other accrued expenses	36,342	34,366
Accrued expenses	$36,342	$34,366

5.	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 GUSA. As of the end 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 $30,052 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. Genomics USA, Inc. now does business as GMS Biotech.

6.	INTANGIBLE ASSETS

Intangible assets as of December 31, 2016 and 2015 consisted of the following:

	2016	2015
Licensed patents and patent rights	$50,000	$50,000
Patents	41,044	41,044
NuRx licensed technology	13,200	13,200
Less: accumulated amortization	(90,370)	(84,295)
Intangibles, net	$13,874	$19,949

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Asset Categories	Estimated Useful Life in Years
Patents	17
Patents under licensing	10
Intangibles acquired in 2008 (weighted average)	15

Patent under Licensing

The Company licenses patent rights and know-how for certain hemorrhoid treatment pads and related coatings from The Procter & Gamble Company. The five-year license agreement was entered into July 2006 and has a five-year automatic renewal option. Although the Company renewed the agreement in 2011, payments have been suspended due to the Company’s current financial condition. The Company has subsequently filed for a patent to address the technology used in its treated miniforms, which was issued during 2015.

7.	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.

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. This note is past due as of December 31, 2016.

At December 31, 2016 and 2015, the Company’s Convertible Notes Payable are as follows:

	December 31,
	2016	2015
Notes Payable	1,058,784	1,042,529
Notes Payable, related party	558,287	267,244
Total notes payable, net of discount	1,618,071	1,309,773

Notes Payable, Related Party.

As of December 31, 2016, the Company owed Mr. Michael Abrams, a director of the Company, an aggregate total of $2,059 for outstanding principal and accrued and unpaid interest on certain Bridge Notes. As of December 31, 2016, the Company owes 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.

10.	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 towards principal and interest through the life of the loan. During the year ended December 31, 2016, the Company made principal payments of $1,744 and payments towards accrued interest of $1,539. During the year ended December 31, 2015, the Company made principal payments of $2,234 and payments towards accrued interest of $2,137. The Company recorded interest expense on this loan of $2,040 and $2,137 for the year ended December 31, 2016 and 2015, respectively.

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11.	INCOME TAXES

Pursuant to ASC 740, income taxes are provided for based upon the liability method of accounting. Under this approach, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.

We are subject to taxation in the U.S. and the state of Oregon. The Company is not current on its tax filings and is subject to examination until the filings take place.

At December 31, 2016 and 2015, the Company had gross deferred tax assets calculated at an expected blended rate of 38% of approximately $10,800,000 and $10,700,000, respectively, principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of $10,800,000 and $10,700,000 has been established at December 31, 2016 and 2015, respectively.

Topic 740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2016, the Company had taken no tax positions that would require disclosure under ASC 740.

The Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns and found no positions that would require a liability for unrecognized income tax benefits to be recognized. We are subject to examinations for all unfiled tax years. We deduct interest and penalties as interest expense on the financial statements.

Additionally, the future utilization of our net operating loss and R&D credit carryforwards to offset future taxable income may be subject to an annual limitation, pursuant to IRC Sections 382 and 383, as a result of ownership changes that may have occurred previously or that could occur in the future.

There is no unrecognized tax benefit included in the balance sheet that would, if recognized, affect the effective tax rate.

	2016	2015
Gross deferred tax assets:
Net operating loss carryforwards	$9,800,000	$9,700,000
Difference between book and tax basis of former subsidiary stock held
Stock based expenses	250,000	250,000
Tax credit carryforwards	200,000	200,000
All others	550,000	550,000
	10,800,000	10,700,000

Deferred tax asset valuation allowance	(10,800,000)	(10,700,000)
Net deferred tax asset (liability)	$-	-

At December 31, 2016, the Company has net operating loss carryforwards of approximately $9,800,000, which expire in the years 2015 through 2033. The net change in the allowance account was an increase of approximately $100,000 for the year ended December 31, 2016 and approximately $150,000 for the year ended December 31, 2015.

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12.	CAPITAL STOCK

Preferred Stock

The Company has authorized 25,000,000 shares of preferred stock, of which 20,500,000 is designated as Series B Convertible Preferred Stock, $0.01 par value, with a stated value of approximately $204,000 (“Series B Preferred”). The remaining authorized preferred shares have not been designated by the Company as of December 31, 2016.

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 Company has authorized 20,500,000 shares of Series B Preferred, $0.01 par value. The Series B Preferred ranks prior to the Common Stock for purposes of liquidation preference, and to all other classes and series of equity securities of the Company that by their terms did not rank senior to the Series B Preferred (“Junior Stock”). Holders of the Series B Preferred are entitled to receive cash dividends, when, as and if declared by the Board of Directors, and they shall be entitled to receive an amount equal to the cash dividend declared on one share of Common Stock multiplied by the number of shares of Common Stock equal to the outstanding shares of Series B Preferred, on an as converted basis. The holders of Series B Preferred have voting rights to vote as a class on matters 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 effect any distribution with respect to Junior Stock. At any time, the holders of Series B Preferred may, subject to limitations, elect to convert all or any portion of their Series B Preferred into fully paid nonassessable shares of Common Stock at a 1:1 conversion rate.

As of December 31, 2016 and 2015, the Company had 16,676,942 shares of Series B Preferred Stock issued and outstanding with a liquidation preference of $166,769 and convertible into 16,676,942 shares of Common Stock.

Common Stock

The Company has authorized 150,000,000 shares of its Common Stock, $0.01 par value. The Company had issued and outstanding 78,696,461 and 69,772,918 shares of its Common Stock at December 31, 2016 and 2015.

On January 2, 2015, the Company issued 73,000 shares of Common Stock to the purchaser of a $36,500 note. Additionally, we issued 500,000 shares of Common Stock 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 agreed to issue Common Stock to two consultants for services rendered under the terms of their respective agreements, although neither consultant had fully completed the obligations of their agreements. An aggregate of 925,003 common shares were issued during the three months ended March 31, 2015.

In February 2015, the Company issued 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 February 3, 2015, the Board of Directors granted an aggregate of 2.3 million stock options to its executive management at an exercise price of $0.04 per share. The options have a five-year term and are fully vested on the date of grant.

In May 2013, the executive management received an aggregate of 1.0 million shares of Common Stock as compensation for the completion of certain objectives. On February 20, 2015, the Board of Directors agreed to cancel these shares, as the Company had failed to meet the specified objectives.

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In June 2015, the Company’s Board of Directors authorized the following issuances of Common Stock: (i) an aggregate total of 286,500 shares issuable to the Bridge Note holders as consideration for the extension of the maturity date of the Bridge Notes to December 31, 2015; (ii) an aggregate total of 1,875,691 shares of Common Stock as payment of accrued but unpaid interest on certain of the Company’s convertible promissory notes; and (iii) an aggregate total of 100,000 shares of Common Stock to certain investors who purchased Bridge Notes in the aggregate principal amount of $50,000 during the three months ended June 30, 2015.

In July 2015, the Company issued an aggregate total of 70,000 shares of Common Stock to the purchaser of a $35,000 Bridge Note.

In September 2015, the Company authorized an aggregate total of 1.5 million shares of Common Stock to its officers and directors as consideration for services rendered to the Company, subject to certain vesting schedules. These shares were issued subsequent to September 30, 2015, and all shares were fully vested as of December 31, 2015. Since the shares fully vested during the year ended December 31, 2015, the Company elected to expense the full amount during the 2015 period, rather than amortizing the amount over multiple periods.

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.

13.	STOCK PURCHASE WARRANTS

During the years ended December 31, 2016 and 2015, there were no warrants issued by the Company. As of December 31, 2016, the Company had no warrants issued and outstanding.

14.	COMMON STOCK OPTIONS

In 2007, the Company adopted the 2007 Incentive and Non-Qualified Stock Option Plan (hereinafter the “Plan”), which replaced the 1997 Incentive and Non-Qualified Stock Option Plan, as amended in 2001, and under which 8,000,000 shares of Common Stock are reserved for issuance under qualified options, nonqualified options, stock appreciation rights and other awards as set forth in the Plan.

Under the Plan, qualified options are available for issuance to employees of the Company and non-qualified options are available for issuance to consultants and advisors. The Plan provides that the exercise price of a qualified option cannot be less than the fair market value on the date of grant and the exercise price of a nonqualified option must be determined on the date of grant. Options granted under the Plan generally vest three to five years from the date of grant and generally expire ten years from the date of grant.

During the year ended December 31, 2016, no stock options were granted by the Company. During the year ended December 31, 2015, the Company issued options to purchase 2,300,000 shares of common stock to its management team. Each option has an expiration date of February 3, 2020, and are exercisable for $0.04 per share.

The following is a summary of all Common Stock option activity during the year ended December 31, 2016 and 2015:

	Shares Under Options Outstanding		Weighted Average Exercise Price
Outstanding at December 31, 2014		152,000	$	1.34
Options granted		2,300,000		0.04
Options forfeited		-	$	-
Options exercised		-		-
Outstanding at December 31, 2015		2,452,000		0.12
Options granted		-	$
Options forfeited		(100,000)	$	1.60
Options exercised			$
Outstanding at December 31, 2016		2,352,000	$	$0.06

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	Options Exercisable	Weighted Average Exercise Price Per Share
Exercisable at December 31, 2015	2,352,000	$0.06
Exercisable at December 31, 2016	2,352,000	$0.06

The following represents additional information related to Common Stock options outstanding and exercisable at December 31, 2016:

	Outstanding			Exercisable
Exercise Price	Number of Shares	Weighted Average Remaining Contract Life in Years	Weighted Average Exercise Price	Number of Shares	Weighted Average Exercise Price
$0.04	2,300,000	3.09	$0.04	2,300,000	$0.04
$0.80	1,000	1.16	$0.80	1,000	$0.80
$0.85	51,000	0.77	$0.85	51,000	$0.85
			$		$
	2,352,000	2.00	$0.06	2,352,000	$0.06

The weighted average remaining contractual term for both fully vested share options (exercisable, above) and options expected to vest (outstanding, above) is 2 years.

A summary of the status of the Company’s nonvested stock options as of December 31, 2016 and changes during the year ended December 31, 2016 is presented below:

Nonvested Stock Options	Shares	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2014	100,500	$100,000
Options granted	-	-
Options vested	-	$-
Options forfeited		-
Nonvested at December 31, 2015	100,000	$100.000
Options granted
Options vested
Options forfeited	(100,000)	(100,000)
Nonvested at December 31, 2016	-	-

15.	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 has recorded the expenses under this agreement totaling $50,000 of which $25,000 has been paid, additionally the Company has 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 December 31, 2016, 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.

16.	SUBSEQUENT EVENTS

For the quarter ended March 31, 2017, the Company received proceeds of $75,000 from the issuance of promissory notes.

On February 27, 2017, the Company entered into a memorandum of understanding (“MOU”) with an unrelated third party regarding the sale of certain assets of QX Labs, 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.

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 in this note, no subsequent events occurred that are reasonably likely to impact these financial statements.

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QUANTRX BIOMEDICAL CORP - FORM 10-K/A - October 5, 2017

Attached files

QUANTRX BIOMEDICAL CORP Reports