**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





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





**For
      the quarterly period ended September 30, 2007**





**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 Number: 000-50484**





**Marshall
      Edwards, Inc.**


(Exact
      name of registrant as specified in its charter)





**DELAWARE**
            **51-0407811**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)





**140
      Wicks Road, North Ryde, NSW, 2113 Australia**


(Address
      of principal executive offices) (Zip Code)





**(011)
      61 2 8877- 6196**


**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 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. Yes  x  No
      o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
                accelerated filer o
            Accelerated
                filer o
            Non-accelerated
                filer   x





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


As
      of
      October 31, 2007 the number of shares outstanding of the issuer’s common stock,
      $0.00000002 par value, was 68,854,938.








1


**MARSHALL
      EDWARDS, INC.**





**INDEX**


**PART
                I**
            **FINANCIAL
                INFORMATION**
            **Page**Item
                1:
            Financial
                Statements (Unaudited)Consolidated
                Balance Sheets as of September 30, 2007 and June 30, 2007
            3Consolidated
                Statements of Operations for the three months ended September 30,
                2007 and
                2006 and for the period from December 1, 2000 (inception) through
                September 30, 2007
            4Consolidated
                Statements of Cash Flows for the three months ended September 30,
                2007 and
                2006 and for the period from December 1, 2000 (inception) through
                September 30, 2007
            5Consolidated
                Statement of Stockholders’ Equity
            6Notes
                to Consolidated Financial Statements
            7Item
                2:
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation
            21Item
                3:
            Quantitative
                and Qualitative Disclosures about Market Risk
            32Item
                4:
            Controls
                and Procedures
            33**PART
                II**
            **OTHER
                INFORMATION**Item
                1A
            Risk
                factors
            34Item
                6:
            Exhibits
            35**SIGNATURES**
            36





2


**PART
      I  FINANCIAL INFORMATION**


Item
      1:
      Financial Statements





**MARSHALL
      EDWARDS, INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      BALANCE SHEETS**


(In
      thousands, except share and per share data)





**September
                  30,**
              
              
              **June
                  30,****2007**
              
              
              **2007**(unaudited)**ASSETS**Current
                  assetsCash
                  and cash equivalents
              
              **$**
              **28,927**
              
              
              **$**
              **16,158**Deferred
                  offering costs
              
              ****
              **-**
              
              
              ****
              **25**Prepaid
                  expenses and other current assets
              
              ****
              **104**
              
              
              ****
              **107**Total
                  current assets
              
              ****
              **29,031**
              
              
              ****
              **16,290**Total
                  assets
              
              **$**
              **29,031**
              
              
              **$**
              **16,290****LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilitiesAccounts
                  payable
              
              **$**
              **1,226**
              
              
              **$**
              **1,197**Accrued
                  expenses
              
              ****
              **1,689**
              
              
              ****
              **984**Amount
                  due to related company
              
              ****
              **529**
              
              
              ****
              **332**Total
                  current liabilities
              
              ****
              **3,444**
              
              
              ****
              **2,513**Stockholders'
                  equity:Preferred
                  stock, $0.01 par value, authorized 100,000 shares,none
                  outstanding
              
              ****
              **-**
              
              
              ****
              **-**Common
                  stock, $ 0.00000002 par value, 113,000,000 authorizedshares;
                  shares issued and outstanding: 68,854,938 atSeptember
                  30,
                  2007 and 63,390,937 at June 30, 2007
              
              ****
              **-**
              
              
              ****
              **-**Additional
                  paid-in capital
              
              ****
              **68,274**
              
              
              ****
              **53,098**Deficit
                  accumulated during development stage
              
              ****
              **(42,687**
              **)**
              
              ****
              **(39,321**
              **)**Total
                  stockholders' equity
              
              ****
              **25,587**
              
              
              ****
              **13,777**Total
                  liabilities and stockholders' equity
              
              **$**
              **29,031**
              
              
              **$**
              **16,290**








*See
      accompanying notes to the consolidated financial
      statements.*


3





**MARSHALL
      EDWARDS, INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


(In
      thousands, except share and per share data)


(Unaudited)


**Three
                  Months Ended September 30,**
              
              
              **Period
                  from December 1, 2000 (Inception) through September
                  30,****2007**
              
              
              **2006**
              
              
              **2007**Revenues:Interest
                  and other income
              
              **$**
              **218**
              
              
              $
              135
              
              
              $
              1,962Total
                  revenues
              
              ****
              **218**
              
              
              
              135
              
              
              
              1,962Operating
                  expenses:Research
                  and development
              
              ****
              **(2,906**
              **)**
              
              
              (927
              )
              
              
              (18,847
              )License
                  fees
              
              ****
              **-**
              
              
              
              (5,000
              )
              
              
              (17,000
              )Selling,
                  general and administrative
              
              ****
              **(677**
              **)**
              
              
              (2,088
              )
              
              
              (8,798
              )Total
                  operating expenses
              
              ****
              **(3,583**
              **)**
              
              
              (8,015
              )
              
              
              (44,645
              )Loss
                  from operations
              
              ****
              **(3,365**
              **)**
              
              
              (7,880
              )
              
              
              (42,683
              )Income
                  tax expense
              
              ****
              **(1**
              **)**
              
              
              -
              
              
              
              (4
              )Net
                  loss arising during development stage
              
              **$**
              **(3,366**
              **)**
              
              $
              (7,880
              )
              
              $
              (42,687
              )Net
                  loss per common share:Basic
                  and diluted
              
              **$**
              **(0.05**
              **)**
              
              $
              (0.13
              )Weighted
                  average common shares outstanding
              
              ****
              **66,657,459**
              
              
              
              62,619,391














*See
      accompanying notes to the consolidated financial
      statements.*


4





**MARSHALL
      EDWARDS, INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


(In
      thousands)


(Unaudited)








**Three
                  Months Ended September 30,**
              
              
              **Period
                  from December 1, 2000 (Inception) through September
                  30,****2007**
              
              
              **2006**
              
              
              **2007****Operating
                  activities**Net
                  loss arising during development stage
              
              **$**
              **(3,366**
              **)**
              
              $
              (7,880
              )
              
              $
              (42,687
              )Adjustments
                  to
                  reconcile net loss to net cash(used
                  in) provided by operating activities:Share
                  based payments
              
              ****
              **-**
              
              
              
              1,642
              
              
              
              1,642Changes
                  in operating assets and liabilities:Prepaid
                  expenses and other current assets
              
              ****
              **3**
              
              
              
              182
              
              
              
              (104
              )Accounts
                  payable
              
              ****
              **29**
              
              
              
              (233
              )
              
              
              1,226Accrued
                  expenses
              
              ****
              **705**
              
              
              
              164
              
              
              
              1,689Amounts
                  due to related company
              
              ****
              **197**
              
              
              
              3
              
              
              
              529Net
                  cash used in operating activities
              
              ****
              **(2,432**
              **)**
              
              
              (6,122
              )
              
              
              (37,705
              )**Financing
                  activities**Net
                  proceeds from issuance of  common stock *
              
              ****
              **15,201**
              
              
              
              16,962
              
              
              
              66,632Net
                  cash provided by financing activities
              
              ****
              **15,201**
              
              
              
              16,962
              
              
              
              66,632Net
                  increase (decrease) in cash and cashequivalents
              
              ****
              **12,769**
              
              
              
              10,840
              
              
              
              28,927Cash
                  and cash equivalents at beginning of period
              
              ****
              **16,158**
              
              
              
              10,054
              
              
              
              -Cash
                  and cash equivalents at end of period
              
              **$**
              **28,927**
              
              
              $
              20,894
              
              
              $
              28,927Income
                  taxes paid
              
              **$**
              **(1**
              **)**
              
              $
              -
              
              
              $
              (4
              )






*
      Deferred offering costs of $25,000 from the year ended June 30, 2007 have been
      offset against net proceeds from the issuance of common stock in the three
      months to September 30, 2007.























*See
      accompanying notes to the consolidated financial statements.*





5


**MARSHALL
      EDWARDS, INC.**


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


(In
      thousands, except share data)


(Unaudited)







**Common
                Stock**
            
            
            **Additional
                paid in capital**
            
            
            **Deficit
                accumulated during development stage**
            
            
            **Total***(shares)***Balance
                at June 30, 2007**
            
            ****
            **63,390,937**
            
            
            **$**
            **53,098**
            
            
            **$**
            **(39,321**
            **)**
            
            **$**
            **13,777**Net
                loss arising during development stage
            
            
            
            
            
            
            
            
            
            ****
            **(3,366**
            **)**
            
            ****
            **(3,366**
            **)**Comprehensive
                Loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            ****
            **(3,366**
            **)**Common
                Stock issued August 6, 2007
            
            ****
            **5,464,001**
            
            
            ****
            **14,735**
            
            
            
            
            
            
            ****
            **14,735**Warrants
                issued as share-based payment (refer Note 6)
            
            
            ****
            **441**
            
            
            ****
            **-**
            
            
            **$**
            **441****Balance
                at September 30, 2007**
            
            ****
            **68,854,938**
            
            
            **$**
            **68,274**
            
            
            **$**
            **(42,687**
            **)**
            
            **$**
            **25,587**





















*See
      accompanying notes to the consolidated financial
      statements.*


6


**MARSHALL
      EDWARDS, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


**September
      30, 2007**








**1.      The
      Company and Summary of Significant Accounting Policies**





Marshall
      Edwards, Inc. (“MEI”) including its subsidiary Marshall Edwards Pty Ltd (“MEPL”)
      (together the “Group or the “Company”) is a development stage company
      incorporated in December 2000 as a wholly-owned subsidiary of Novogen Limited
      (“Novogen”). The Company commenced operations in May 2002 and its business
      purpose is the development and commercialization of drugs for the treatment
      of
      cancer. The Company is presently engaged in the clinical and pre-clinical
      development of the anti-cancer drugs phenoxodiol, NV-196 and NV-143. Novogen’s
      subsidiary has granted to MEPL, worldwide non-transferable licenses under its
      patent right and patent applications and its relevant know-how to conduct
      clinical trials and commercialize and distribute all forms of phenoxodiol,
      NV-196 and NV-143 for uses in the field of prevention, treatment, and cure
      of
      cancer in humans, except topical applications. As at the date of this report
      Novogen owns approximately 71.9% of the outstanding shares of the Company’s
      common stock.





The
      Company’s main focus since commencing operations has been to undertake human
      clinical testing of phenoxodiol. Operations have now expanded to include the
      additional licensed drug candidates NV-196 and NV-143. During fiscal year 2007,
      the Company commenced the OVATURE Phase III clinical trial for phenoxodiol
      (known as “OVATURE”) and continued to recruit patients into the existing
      clinical trial programs. The Company has reached agreement under the Special
      Protocol Assessment (SPA) process with the United States Food and Drug
      Administration (FDA) on the design of its OVATURE pivotal study protocol for
      phenoxodiol. The trial is designed to test the ability of phenoxodiol to restore
      sensitivity of late-stage ovarian cancers to carboplatin, a standard form of
      therapy for ovarian therapy.








**Principles
      of Consolidation**





The
      consolidated financial statements include the accounts of MEI and its
      wholly-owned subsidiary, MEPL. Significant intercompany accounts and
      transactions have been eliminated on consolidation.





**Estimates**





The
      preparation of the consolidated financial statements in conformity with
      accounting principles generally accepted in the United States requires
      management to make estimates and assumptions that affect the amounts reported
      in
      the financial statements and the accompanying notes. Actual results could differ
      from those estimates.





7


**Revenue
      Recognition**





*Interest*





The
      only
      revenue earned to date is interest on cash balances, which is recognized on
      an
      accruals basis.





**Cash
      and Cash Equivalents and Short Term Investments**





Cash
      on
      hand and in banks and short-term deposits are stated at their nominal value.
      The
      Company considers all highly liquid investments with a maturity of three months
      or less when purchased to be cash equivalents. Highly liquid investments with
      stated maturities of greater than three months are classified as short-term
      investments. The Company’s cash, held in the United States, is deposited in
      financial institutions that are FDIC insured. These deposits are in excess
      of
      the FDIC insurance limits. The Company also holds cash with Australian financial
      institutions.





**Income
      Taxes**





Income
      taxes have been provided for using the liability method in accordance with
      FASB
      Statement No. 109, “Accounting for Income Taxes.” Under this method, deferred
      tax assets and liabilities are recognized and measured using enacted tax rates
      in effect for the year in which the differences are expected to be recognized.
      Valuation allowances are established against the recorded deferred income tax
      assets to the extent that management believes that it is more likely than not
      that a portion of the deferred income tax assets are not
      realizable.





Effective
      July 1, 2007 the Company adopted Financial Accounting Standards Interpretation
      48 (FIN 48), “Accounting for Uncertainty in Income Taxes – an interpretation of
      FASB No 109”. FIN 48 prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of uncertain
      tax positions taken or expected to be taken in a company’s income tax return,
      and also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. FIN 48
      utilizes a two step approach for evaluating uncertain tax positions accounted
      for in accordance with SFAS No. 109, “Accounting for Income Taxes” (SFAS 109).
      Step one, recognition, requires a company to determine if the weight of
      available evidence indicates that a tax position is more likely than not to
      be
      sustained upon audit, including resolution of related appeals or litigation
      processes, if any. Step two, measurement, is based on the largest amount of
      benefit, which is more likely than not to be realised upon ultimate settlement.
      The cumulative effect of adopting FIN 48 on July 1, 2007 is recognised as a
      change in accounting principle, recorded as an adjustment to the opening balance
      of accumulated deficit on the adoption date. As a result of the implementation
      of FIN 48 the Company did not recognise any increase or decrease in the
      liability for unrecognised tax benefits related to tax positions taken in prior
      periods, therefore, there was no corresponding adjustment in accumulated
      deficit. Additionally, FIN 48 specifies that tax positions for which the timing
      of the ultimate resolution is uncertain should be recognised as long term
      liabilities. The Company's total amount of net tax losses carried forward as
      of
      July 1, 2007 adoption date was $43 million.





The
      Company's major tax jurisdictions are the United States and Australia and its
      tax years since inception remain subject to examination by the appropriate
      governmental agencies in those jurisdictions due to its tax loss
      position.





8


**Fair
      Value of Financial Instruments**





The
      carrying amounts of the Company’s financial instruments, including cash and cash
      equivalents and accounts payable approximate fair value.





**Foreign
      Currency Translation**





The
      financial statements of MEPL have been translated into U.S. dollars in
      accordance with FASB Statement No. 52, “Foreign Currency Translation.” Assets
      and liabilities are translated into U.S. dollars using the exchange rates in
      effect at the balance sheet date. Income statement amounts have been translated
      using the average exchange rate for the periods. Realized gains and losses
      from
      foreign currency transactions are reflected in the consolidated statements
      of
      operations.





Translation
      of MEPL’s financial statements into U.S. dollars does not have a material impact
      on the Company’s financial position.





**Research
      and Development Expenses**





Research
      and development expenses relate primarily to the cost of conducting human
      clinical and pre-clinical trials of phenoxodiol, NV-196 and NV-143. Research
      and
      development costs are charged to expense as incurred.





**License
      Fees**





Costs
      incurred related to the acquisition or licensing of products that have not
      yet
      received regulatory approval to be marketed, or that are not commercially viable
      and ready for use or have no alternative future use, are charged to earnings
      in
      the period incurred.





**Stock-Based
      Compensation**





The
      Company’s stock option plan provides for the grant of options to the Company’s
      directors, employees, employees of the Company’s affiliates and certain of the
      Company’s contractors and consultants. To date, no options have been issued
      under the plan.





Other
      stock-based payments have been accounted for in accordance with SFAS No. 123R
      “Share-Based Payments”. The Company therefore recognizes the cost of goods
      acquired or the expense for services received in a share-based payment
      transaction when it obtains the goods or as services are received. The Company
      recognizes a corresponding increase in equity or a liability depending on the
      classification of the share-based instrument granted.





**Basic
      and Diluted Loss Per Share**





Basic
      and
      diluted earnings or loss per share is calculated in accordance with FASB
      Statement No. 128, “Earnings Per Share.” In computing basic earnings or loss per
      share, the dilutive effect of stock options are excluded, whereas for diluted
      earnings per share they are included unless the effect is anti-dilutive. Since
      the Company has a loss for all periods presented, there is no dilutive effect
      of
      stock options.





9


**Comprehensive
      Loss**





Comprehensive
      loss is comprised of net loss and other comprehensive loss. Other comprehensive
      loss includes certain changes in stockholders’ equity that are excluded from net
      loss. Comprehensive loss for all periods presented has been reflected in
      the Consolidated Statement of Stockholders’ Equity.





**Stockholders’
      Equity**





Ordinary
      share capital is recognized at the fair value of the consideration received
      by
      the Company. Any transaction costs arising on the issue of shares are recognized
      directly in equity as a reduction in the share proceeds received.





**Deferred
      Offering Costs**





Where
      costs associated with a capital raising have been incurred at balance date
      and
      it is probable that the capital raising will be successfully completed after
      balance date, such costs are deferred and offset against the proceeds
      subsequently received from the capital raising.





**2.           Loss
      Per Share**





The
      following table sets forth the computation of basic and diluted net loss per
      common share:





**Three
                  Months Ended September 30,****2007**
              **2006***(In
                  Thousands, except share and per share data)***Numerator**Net
                  loss arising during development stage
              
              
              (3,366)
              (7,880)Effect
                  of dilutive securities
              
              
              -
              -Numerator
                  for diluted earnings per share
              
              $
              (3,366)
              $         (7,880)**Denominator**Denominator
                  for basic earnings per share:Weighted
                  average number of shares used in computing net loss per share,
                  basic and
                  diluted
              66,657,459
              62,619,391Effect
                  of dilutive securities
              
              
              -
              -Dilutive
                  potential common shares
              
              
              66,657,459
              62,619,391Basic
                  and diluted earnings per share
              
              $
              (0.05)
              $           (0.13)





During
      the period presented, the Company had warrants outstanding that could
      potentially dilute basic earnings per share in the future, but were excluded
      from the computation of diluted net loss per share as the effect would have
      been
      anti-dilutive. Since the Company has






10


a
      loss
      for all periods presented, diluted and basic earnings per share are the same.
      The outstanding warrants consist of the following potential common
      shares:





**As
                  at September 30,****2007**
              **2006***(Number
                  of warrant shares)*Warrants
                  exercisable prior to December 18, 2006 at an exercise price of
                  $9.00
              -
              2,392,000Warrants
                  exercisable prior to July 11, 2010 at an exercise price of
                  $4.35
              2,815,258
              2,815,258Warrants
                  exercisable prior to August 6, 2012 at an exercise price of
                  $3.60
              2,185,598
              -Warrants
                  exercisable prior to August 6, 2012 at an exercise price of
                  $3.00
              248,364
              -Common
                  shares issuable upon exercise of outstanding warrants
              
              5,249,220
              5,207,258




The
      2,392,000 warrants exercisable prior to December 18, 2006 have expired. No
      shares of common stock have been issued as a result of exercise of any of these
      warrants.





During
      July 2006, the Company issued 6,452,937 shares of common stock and 2,815,258
      warrants in connection with a PIPE capital raising and to secure a Standby
      Equity Distribution Agreement. For further details see Note 6
“Equity”.





During
      August 2007, the Company issued 5,464,001 shares of common stock and warrants
      exercisable for 2,433,962 shares of common stock in connection with a PIPE
      capital raising. For further details see Note 6 “Equity”.








**3.**      **Expenditure
      Commitments**





At
      September 30, 2007, the Company had contractual obligations for the conduct
      of
      clinical trials, pre-clinical research and development and manufacturing process
      development of approximately $13,069,000. Of the expenditure commitments,
      clinical trial amounts are based on the assumption that all patients enrolled
      in
      clinical trials will complete the maximum number of allowed treatment cycles.
      The amounts, assuming all treatment cycles are completed, are expected to be
      incurred as follows:





(In
                  thousands)
              
              
              
              
              Payment
                  due by period**Contractual
                  Obligations**
              
              **Total**
              
              
              less
                  than 1 Year
              
              
              1
                  -
                  3 Years
              
              
              3
                  -
                  5 Years
              
              
              More
                  than 5 YearsPurchase
                  Obligations
              
              $
              13,069
              
              
              $
              8,711
              
              
              $
              4,172
              
              
              $
              186
              
              
              $
              -Total
              
              $
              13,069
              
              
              $
              8,711
              
              
              $
              4,172
              
              
              $
              186
              
              
              $
              -
   No
      amounts have been included for future payments to Novogen which may arise in
      connection with the license agreements for phenoxodiol, NV-143 and NV-196,
      the
      services agreement or the manufacturing license and supply agreement as future
      payments under the terms of the agreements are subject to termination
      provisions. Payments in connection with these agreements are detailed in Note
      5
“Related Party Transactions”.





The
      Company is not currently a party to any material legal proceedings.







11


The
      Company’s certificate of incorporation provides that it will indemnify Novogen
      in connection with certain actions brought against Novogen by any of the
      Company’s stockholders or any other person.





The
      Company has guaranteed the payment and performance of the obligations of its
      subsidiary, Marshall Edwards Pty Limited, to Novogen and its subsidiaries,
      Novogen Laboratories Pty Limited and Novogen Research Pty Limited, under the
      license agreement for phenoxodiol, the manufacturing license and supply
      agreement and the services agreement. Novogen has guaranteed the performance
      of
      the obligations of Novogen Research Pty Limited under the license agreements
      for
      phenoxodiol and the obligations of Novogen Laboratories Pty Limited under the
      manufacturing license and supply agreement to Marshall Edwards Pty Limited.
      Each
      of the Company and Novogen’s obligations in the guarantee and indemnity
      agreement are absolute, unconditional and irrevocable.








**4.**
            **Segment
                Information**





The
      Company’s focus is to continue the clinical and pre-clinical program currently
      underway for the development and commercialization of phenoxodiol, NV-143 and
      NV-196. The business contains two major segments based on geographic
      location.





**Three
                  Months Ended September 30, 2007**
              
              
              **Three
                  Months Ended September 30, 2006***(In
                  Thousands)*USA
              
              
              Australia
              
              
              USA
              
              
              AustraliaLoss
                  from operations
              
              $
              (79
              )
              
              $
              (3,287
              )
              
              $
              (1,772
              )
              
              $
              (6,108
              )Segment
                  assets
              
              
              22,746
              
              
              
              6,285
              
              
              
              15,277
              
              
              
              5,680


**5.           Related
      Party Transactions**





**License
      Agreement for Phenoxodiol**





In
      September 2003, the Company entered into a license agreement pursuant to which
      Novogen’s subsidiary, Novogen Research Pty Limited, granted to MEPL a worldwide
      non-transferable license under its patents and patent applications and in its
      know-how to conduct clinical trials and commercialize and distribute phenoxodiol
      products (the “Phenoxodiol License Agreement”). The Phenoxodiol License
      Agreement covers uses of phenoxodiol in the field of prevention, treatment
      or
      cure of cancer in humans delivered in all forms except topical applications.
      The
      license is exclusive until the expiration or lapsing of the last relevant
      Novogen patents or patent applications in the world and thereafter is
      non-exclusive. MEPL may terminate the Phenoxodiol License Agreement by giving
      three months notice to Novogen. MEPL paid $5,000,000 to Novogen in February
      2004
      which was the first lump sum license fee payment due under the terms of the
      Phenoxodiol License Agreement. Also, MEPL paid $2,000,000 to Novogen in January
      2005 and $4,000,000 in January 2006 which were the annual milestone license
      fee
      payments due under the Phenoxodiol License Agreement. The Company paid a second
      lump sum license fee of $5,000,000 to Novogen in July 2006 following the raising
      of funds in a private placement. This license fee was due on the later of
      November 1, 2003 or such later date when the cumulative total of all funds
      received from debt or equity issuances and revenue received from
      commercialization (income other than sales)






12


and
      sales
      of phenoxodiol products exceeded $50,000,000. Following the PIPE capital raising
      on July 11, 2006, the
      funds
      received from equity issuances exceeded $50,000,000 which triggered this license
      fee payment. Future amounts payable to Novogen under terms of the Phenoxodiol
      License Agreement are as follows:





1.
      Until
      the expiration of the exclusivity period of the license, MEPL must pay Novogen
      2.5% of all net sales and 25% of commercialization income. After the exclusivity
      period of the license, 1.5% of net sales must be paid to Novogen. The
      preconditions to such payments have not yet occurred.





The
      “Exclusivity Period” ends on the later of:





(a)
            the
                date of expiration or lapsing of the last patent right in the patents
                and
                patent applications set out in the Phenoxodiol License Agreement
                with
                Novogen; or





(b)
            the
                date of expiration or lapsing of the last licensed patent right which
                MEPL
                would, but for the license granted in the license agreement, infringe
                in
                any country in the geographical territory covered by the Phenoxodiol
                License Agreement by doing in that country any of the things set
                out in
                the Phenoxodiol License Agreement.





2.
      In
      addition to the amounts above, beginning in 2006, an $8,000,000 annual milestone
      license fee is payable under the amended terms of the license agreement for
      each
      calendar year ending December 31 during the exclusivity period of the license.
      The annual milestone license fees have been deferred under the License Amendment
      Deed for Phenoxodiol and the Further Amended and Restated License Agreement
      which are discussed below.





**License
      Amendment Deed for Phenoxodiol**





In
      June 2006, the Company entered into
      an amendment deed to the Phenoxodiol License Agreement (the “License Amendment
      Deed for Phenoxodiol”). Pursuant to the original term of the Phenoxodiol License
      Agreement the Company was required to pay an $8,000,000 license milestone fee
      to
      Novogen Research Pty Limited in December 2006. The License Amendment Deed for
      Phenoxodiol extends the date that the $8,000,000 license milestone fee is
      payable until the earliest receipt by MEPL of the first:





(i)
            approval
                by the FDA of a New Drug Application (NDA) for
                phenoxodiol;


(ii)
            approval
                or authorization of any kind to market phenoxodiol in the United
                States;
                or


(iii)
            approval
                or authorization of any kind by a government agency in any other
                country
                to market phenoxodiol.





Upon
      receipt of any of the above (the
“Approval Date”), the Company must pay
      to Novogen, $8,000,000, together
      with interest on that amount from (and including) December 31, 2006, calculated
      at the bank bill rate. This milestone replaces the $8,000,000 December 31,
      2006
      milestone fee.





13


**Further
      Amended and Restated License Agreement**





Following
      agreement in March 2007, MEPL and Novogen Research Pty Limited entered into
      another amendment deed to the Phenoxodiol License Agreement for the purpose
      of
      further amending
      and restating the Phenoxodiol License Agreement (the “Further Amended and
      Restated License Agreement”).





The
      combined result of the License Amendment Deed for Phenoxodiol and the Further
      Amended and Restated License Agreement will be that upon the Approval Date,
      MEPL
      will be required to pay Novogen Research $8,000,000, together with interest
      on
      such amount from (and including) December 31, 2006 to (but excluding) the
      Approval Date. Thereafter, MEPL will be required to make license milestone
      fee
      payments of $8,000,000 to Novogen Research Pty Limited on December 31 of
      the year of the Approval Date and on December 31 of each year thereafter
      during the exclusivity period under the Phenoxodiol License
      Agreement.





No
      license fees have been accrued at September 30, 2007.








**License
      Agreement for NV-196 and NV-143**





In
      May
      2006, the Company entered into a second license agreement with Novogen for
      two
      oncology compounds, NV-196 and NV-143 (the “License Agreement for NV-196 and
      NV-143”). NV-196 is being developed initially in oral form for pancreatic and
      bile duct cancer and is currently in Phase I human testing. NV-143 is targeted
      for the treatment of melanoma, also in oral dose form, and is in the
      pre-clinical testing stage. The License Agreement for NV-196 and NV-143 is
      an
      agreement under which Novogen’s subsidiary, Novogen Research Pty Limited, grants
      to MEPL a worldwide non-transferable license under its patents and patent
      applications and in its know-how to conduct clinical trials and commercialize
      and distribute NV-196 and NV-143 products. The License Agreement for NV-196
      and
      NV-143 covers uses of NV-196 and NV-143 in the field of prevention, treatment
      or
      cure of cancer in humans delivered in all forms except topical applications.
      The
      license is exclusive until the expiration or lapsing of the last relevant
      Novogen patents or patent applications in the world and thereafter is
      non-exclusive. MEPL may terminate the agreement by giving three months notice
      to
      Novogen. The Company is required to make payments under the terms of the License
      Agreement for NV-196 and NV-143 with Novogen as follows:





1.           A
      lump sum license fee of $1,000,000 is payable to Novogen on the commencement
      date of the license in consideration of the license granted. This initial lump
      sum license fee was paid to Novogen in May 2006.





2.           In
      further consideration of the license granted, MEPL must pay to Novogen the
      following milestone license fees upon the occurrence of the corresponding
      milestone as set forth below;





a)           the
      first license product containing NV-196 to reach a milestone as set forth below;
      and


b)           the
      first licensed product containing NV-143 to reach a milestone as set forth
      below.


The
      milestone license fees are: i)
              $1,000,000
                  on the date an investigational new drug application (IND) for the
                  licensed
                  product goes into effect or the equivalent approval of a government
                  agency
                  is obtained in another country. If this event does not occur before
                  March
                  31, 2008 then this amount will be due on this
                  date;







14




ii)
              $2,000,000
                  on the date of enrollment of the first clinical trial subject in
                  a Phase
                  II clinical trial of the licensed product. If this event does not
                  occur
                  before June 30, 2009, then this amount will be due on this
                  date;
 iii)
              $3,000,000
                  on the date of enrollment of the first clinical trial subject in
                  a Phase
                  III clinical trial of the licensed product. If this event does
                  not occur
                  before December 31, 2011, then this amount will be due on this
                  date;
                  and
 iv)
              $8,000,000
                  on the date of first receipt of a NDA for the licensed product
                  from the
                  FDA or equivalent approval from a government agency in another
                  country. If
                  this event does not occur before December 31, 2013, then this amount
                  will
                  be due on this date.




3.           MEPL
      must pay Novogen royalties of 5.0% of all net sales and 25% of commercialization
      income for the term of the license. The royalty rate is reduced by 50% if the
      licensed patent rights in any country or territory expire, lapse, are revoked,
      do not exist or are assigned to MEPL and the product is entirely manufactured
      and supplied in such country.





4.           Minimum
      royalties of $3,000,000 per year are payable following the date of first receipt
      of an NDA for a licensed product from the FDA (or equivalent approval from
      a
      government agency in any other country) until the expiration of the
      term.





**Amended
      and Restated License Option Deed**





On
      September 24, 2003, MEPL and Novogen Resarch Pty Limited entered into an Amended
      and Restated License Option Deed (the “License Option Deed”). The license option
      deed grants MEPL an exclusive right to accept and an exclusive right to match
      any proposed dealing by Novogen of its intellectual property rights with a
      third
      party relating to synthetic compounds (other than phenoxodiol) that have known
      or potential applications in the field of prevention, treatment or cure of
      cancer in humans in all forms other than topical applications.





**Amended
      and Restated Services Agreement**





On
      September 24, 2003, the Company, Novogen and MEPL entered into an Amended and
      Restated Services Agreement (the “Services Agreement”). The Company does not
      currently intend to directly employ any staff. Under the terms of the Services
      Agreement, Novogen or its subsidiaries have agreed to provide services
      reasonably required by the Company relating to the development and
      commercialization of phenoxodiol and other licensed products, including NV-196
      and NV-143. Novogen has agreed to provide these services at cost plus a 10%
      mark-up. The Company may terminate the agreement on three months written notice
      to Novogen.





Transactions
      giving rise to expenditures amounting to $594,000 and $515,000 were made under
      the Services Agreement with Novogen during the three months ended September
      30,
      2007 and 2006, respectively. Of these amounts, $360,000 and $318,000 related
      to
      service fees paid to Novogen for research and development services provided
      in
      the three months ended September 30, 2007 and 2006, respectively, reflecting
      the
      time spent by Novogen research staff on the development of phenoxodiol, NV-196
      and NV-143. Additionally, $234,000 and $197,000 of the total expenditures during
      the three months ended September 30, 2007 and






15


2006,
      respectively, related to costs incurred for administration and accounting
      services provided by Novogen.





At
      September 30, 2007 and 2006, $454,000 and $187,000, respectively, were due
      and
      owing to Novogen under the services agreement and are included in amounts due
      to
      related company in the balance sheet.





**Manufacturing
      License and Supply Agreement**





Under
      the
      terms of the manufacturing license and supply agreement (the “Manufacturing
      License and Supply Agreement”), MEPL has granted to one of  Novogen’s
      subsidiaries an exclusive, non-transferable sub license to manufacture and
      supply phenoxodiol in its primary manufactured form. Novogen’s subsidiary has
      agreed to supply phenoxodiol to MEPL for the clinical trial development program
      and phenoxodiol’s ultimate commercial use. Phenoxodiol supplied by Novogen under
      the terms of this agreement will be charged at cost plus a 50%
      markup.





Transactions
      giving rise to expenditures amounting to $12,000 and $50,000 were made under
      the
      manufacturing license and supply agreement with Novogen during the three months
      ended September 30, 2007 and 2006, respectively.





At
      September 30, 2007 there was no amount owning to Novogen under the Manufacturing
      License and Supply Agreement. At September 30, 2006 $6,000 was due and owing
      to
      Novogen under the Manufacturing License and Supply Agreement and are included
      in
      amounts due to parent company.





Novogen
      has taken the strategic decision not to manufacture large scale Active
      Pharmaceutical Ingredients (API) for cancer drugs, including phenoxodiol, as
      these can be more economically supplied by third parties with particular
      expertise in this area. The contract facilities that have been identified are
      FDA licensed, have a track record of large scale API manufacture and have
      already invested in capital and equipment. The Company has completed the
      novation to MEPL of contracts that Novogen had entered into with third parties
      to develop a scalable manufacturing method to ensure that sufficient quantities
      of phenoxodiol can be manufactured in compliance with cGMP (Current Good
      Manufacturing Practices), to supply the necessary quantities of API for the
      OVATURE trial and to complete the analytical and stability work necessary for
      an
      NDA submission.








**6.
      Equity**





MEI
      is a
      development stage company incorporated in December 2000. MEI commenced
      operations in May 2002 coinciding with its listing on the London Stock
      Exchange’s Alternative Investment Market (AIM).





In
      May
      2002, the Company sold 2,523,000 shares of its common stock and 2,523,000
      warrants, raising proceeds of $9,022,000, net of $1,070,000 of transaction
      costs. The warrants were exercisable prior to November 30, 2003 at an exercise
      price of $4.00 per share. The common stock was listed for trading on the
      AIM.  Following the listing, Novogen retained 95.1% of the Company’s
      common stock.





16


In
      June
      2003, 9,000 warrants were exercised at an exercise price of $4.00 per share,
      resulting in proceeds to the Company of $36,000. In November 2003, the remaining
      2,514,000 warrants were exercised at an exercise price of $4.00 per share with
      proceeds to the Company of $10,056,000.





In
      December 2003, the Company sold 2,392,000 common stock units at a public
      offering price
      of
      $7.50 per unit.  Each common stock unit consisted of:





·
            one
                share of common stock; and




·
            one
                warrant to purchase a share of common stock, exercisable prior to
                December
                18, 2006 at an exercise price equal to
                $9.00.




The
      2,392,000 warrants exercisable prior to December 18, 2006 have expired. No
      shares of common stock have been issued as a result of exercise of any of these
      warrants.





In
      connection with the December 2003 offering, the Company’s common stock and
      warrants commenced trading separately on the Nasdaq Global Market. The Company
      received proceeds of $15,522,000, net of $2,431,000 transaction costs in the
      December 2003 offering. Following the offering, Novogen retained 86.9% of
      the Company’s common stock.





In
      January 2006, the Company voluntarily cancelled the trading of its common stock
      on the Alternative Investment Market of the London Stock Exchange
      (AIM).





On
      July
      11, 2006, the Company entered into a securities subscription agreement with
      certain accredited investors providing for the placement of 6,329,311 shares
      of
      the Company’s common stock and warrants exercisable for 2,215,258 shares of the
      Company’s common stock at a purchase price of $2.90 per unit. Each unit
      consisted of one share of common stock and 0.35 of a warrant to purchase one
      share of common stock. The warrants have an exercise price of $4.35 per share,
      subject to certain adjustments. The exercise price and number of shares issuable
      upon exercise of such warrants are subject to adjustment in the event of stock
      dividends, stock splits and other similar events. The warrants may be exercised
      no less than six months from the closing date and will expire four years from
      the date of issuance, or July 11, 2010. The Company closed the private placement
      or PIPE on July 11, 2006. In connection with the private placement or PIPE,
      the
      Company received proceeds of $16.8 million net of $1.5 million commissions
      and
      other costs.





In
      connection with the securities subscription agreement described above the
      Company entered into a registration rights agreement pursuant to which the
      Company is obligated to file a resale registration statement with the Securities
      and Exchange Commission (the “SEC”) covering the shares of common stock issued
      in connection with the securities subscription agreement, in addition to the
      shares of common stock underlying the warrants issued in connection with the
      securities subscription agreement. The Company filed the registration statement
      on August 9, 2006. The resale registration statement was declared effective
      September 5, 2006.





On
      July
      11, 2006, the Company entered into a standby equity distribution agreement
      (the
“SEDA”), with YA Global Investments, L.P. (“YA Global” formerly Cornell Capital
      Partners, L.P.). The SEDA was subsequently terminated in August 2007. Under
      the
      SEDA, the Company may have issued and sold to YA Global shares of its common
      stock for a total purchase price of up to $15 million, once a resale
      registration




17


statement
      was in effect. Commencing as of the effective date of the registration statement
      and continuing for up to 24 months thereafter, the Company had sole discretion
      whether and when to sell shares of its common stock to YA Global. YA Global
      would have been irrevocably bound to purchase shares of common stock from the
      Company after the Company sent a notice that it intended to sell shares of
      its
      common stock to YA Global. Each advance under the SEDA was limited to a maximum
      of $1.5 million.





In
      connection with the SEDA, the Company paid YA Global a commitment fee of 123,626
      shares of its common stock and warrants to purchase 600,000 shares of its common
      stock which expire on July 11, 2010. The warrants have an exercise price of
      $4.35 per share, subject to certain adjustments. The exercise price and number
      of shares issuable upon exercise of such warrants are subject to adjustment
      in
      the event of stock dividends, stock splits and other similar events. The
      commitment fee, comprising shares and warrants, is a share-based payment
      and has been accounted for in accordance with FAS123R "Share-based Payment".
      The
      fair values of shares and warrants issued have been recognized directly as
      equity in the balance sheet and as selling, general and administration expenses
      in the income statement in the quarter ended September 30, 2006.





On
      August
      1, 2007, the Company entered into a securities subscription agreement with
      certain accredited investors providing for the placement of 5,464,001 shares
      of
      its common stock at a purchase price of $3.00 per share. The investors in the
      transaction also received a warrant to purchase an additional 4 shares of common
      stock for every block of 10 shares of common stock purchased. All of the
      warrants have an exercise price of $3.60 per share. The warrants may be
      exercised beginning February 6, 2008 and will expire five years from the date
      of
      issuance, or August 6, 2012. The Company also issued 62,091 warrants to Blue
      Trading, LLC, which acted as the placement agent in the private placement,
      as
      part of the placement fee. The warrants issued to Blue Trading, LLC have an
      exercise price of $3.00 per share and each warrant is convertible for 4 shares
      of common stock. These warrants may be exercised immediately and will expire
      five years from the date of issuance, on August 6, 2012. The Company closed
      the
      private placement on August 6, 2007. In connection with the private placement
      or
      PIPE we received proceeds of $15.2 million net of $1.2 million in commissions
      and other costs.





The
      Company entered into a registration rights agreement with the investors party
      to
      the securities subscription agreement, and Blue Trading, LLC, and has agreed
      to
      file a registration statement with the SEC for the common stock and the common
      stock issuable upon exercise of the warrants sold pursuant to the securities
      subscription agreement for resale thereunder. The Company filed the registration
      statement on October 2, 2007. The resale registration statement was declared
      effective October 19, 2007.





Under
      the
      terms of the July 11, 2006 and the August 1, 2007 PIPEs, the Company is required
      to maintain effective registration statements covering the resale shares of
      common stock issued in the PIPEs and the shares of common stock issuable upon
      exercise of the warrants issued in the PIPEs. In relation to the July 11, 2006
      PIPE, at the date of issuance, the Company assessed the terms of the agreement,
      and as the penalty for not maintaining the registration of common stock is
      less
      than the difference between the value of registered shares and unregistered
      shares, the equity has been classified as permanent equity. The August 1, 2007
      PIPE has been assessed as permanent equity under FASB Staff Position No. EITF
      00-19-2, described below.





18


On
      January 1, 2007 the Company adopted FASB Staff Position No. EITF 00-19-2 (FSP
      00-19-2). FSP 00-19-2 requires the contingent obligation to make future payments
      under the registration rights agreements be recognized separately in accordance
      with FASB Statement No. 5, Accounting for Contingencies and the underlying
      warrants be recognized without regard to the contingent obligation. The adoption
      of FSP 00-19-2 had no effect on the Company’s financial statements as the
      warrants will remain classified as permanent equity and management does not
      currently believe that it is probable a payment will be made under either of
      the
      registration rights agreements.





Following
      the private placement, Novogen retained approximately 71.9% of the
      Company’s common stock.








**7.
      Contingent Liability**





On
      July
      11, 2006 the Company entered into a registration rights agreement in connection
      with the private placement or PIPE capital raising which provides for liquidated
      damages of up to 10% of the aggregate purchase price of the shares issued as
      part of the PIPE transaction if the Company does not maintain an effective
      resale registration of those shares. An effective resale registration has been
      maintained at the date of this report.





On August
      1, 2007 in connection with the private placement of PIPE capital raising, the
      Company entered into a registration rights agreement pursuant to which it is
      obligated to file a resale registration statement with the SEC by the fifth
      calendar day following the filing of the Annual Report on Form 10-K for the
      fiscal year ended June 30, 2007. The resale registration statement will cover
      the shares of common stock issued in connection with the securities subscription
      agreement as well as the shares of common stock underlying the warrants issued
      in connection with the securities subscription agreement. The resale
      registration statement also covers the shares underlying the warrants issued
      to
      Blue Trading, LLC, which acted as placement agent in the PIPE as part of its
      placement fee. The Company filed the resale registration statement on October
      2,
      2007. The resale registration statement was declared effective October 19,
      2007.







In
      the
      event that the resale registration statements covering the registrable
      securities issued in the July 2006 PIPE and August 2007 PIPE ceases to be
      effective or usable at any time while shares of common stock covered by them
      remain unsold or may only be sold subject to certain volume limitations, or
      investors are not permitted to utilize the prospectus in connection with the
      resale registration statements to resell shares of common stock covered by
      the
      resale registration statements, the Company will be obligated to pay investors
      who purchased shares of common stock in the private placement liquidated damages
      equal to 1% of the aggregate purchase price paid by each investor pursuant
      to
      the securities subscription agreement for any shares of common stock, shares
      of
      common stock issuable upon exercise of warrants or warrants then held by each
      investor per month (pro rated for any period less than a month) until the resale
      registration statements are effective or the investors are permitted to utilize
      the prospectus in connection with the resale registration statements to resell
      shares of common stock covered by the resale registration statements. An
      effective resale registration statement with respect to the registrable
      securities issued in the August 2007 PIPE has been maintained at the date of
      this report.





19


Liquidated
      damages paid to each investor in the private placements or PIPEs may not exceed
      more than 10% of the purchase price paid by such investor for shares of common
      stock purchased under the securities subscription agreements.




20


Item
      2:
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operation





**Special
      Note Regarding Forward-Looking Statements**




This
      quarterly report on Form 10-Q includes 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.  All statements
      other than statements of historical facts contained in this quarterly report,
      including statements regarding the future financial position, business strategy
      and plans and objectives of management for future operations, are
      forward-looking statements. The words “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” and similar
      expressions, as they relate to the Company, are intended to identify
      forward-looking statements. We have based these forward-looking statements
      largely on current expectations and projections about future events and
      financial trends that we believe may affect our financial condition, results
      of
      operations, business strategy and financial needs. These forward-looking
      statements are subject to a number of risks, uncertainties and assumptions,
      including, among other things:




·our
                  limited operating history;·our
                  inability to obtain any additional required financing or financing
                  available to us on acceptable terms;·our
                  failure to successfully commercialize our product candidates;·costs
                  and delays in the development and/or receipt of FDA or other required
                  governmental approvals, or the failure to obtain such approvals,
                  for our
                  product candidates;·uncertainties
                  in clinical trial results;·our
                  inability to maintain or enter into, and the risks resulting from
                  our
                  dependence upon, collaboration or contractual arrangements necessary
                  for
                  the development, manufacture, commercialization, marketing, sales
                  and
                  distribution of any products;·our
                  inability to control the costs of manufacturing our products;·continued
                  cooperation and support of Novogen Limited (“Novogen”), our parent
                  company;·competition
                  and competitive factors;·our
                  inability to protect our patents or proprietary rights and obtain
                  necessary rights to third party patents and intellectual property
                  to
                  operate our business;·our
                  inability to operate our business without infringing the patents
                  and
                  proprietary rights of others;·costs
                  stemming from our defence against third party intellectual property
                  infringement claims;·difficulties
                  in enforcement of civil liabilities against those of our officers
                  and
                  directors who are residents of jurisdictions outside the United
                  States;




21
   ·general
                  economic conditions;·the
                  failure of any products to gain market acceptance;·technological
                  changes;·government
                  regulation generally and the receipt of the regulatory
                  approvals;·changes
                  in industry practice; and·one-time
                  events.




These
      risks are not exhaustive. Other sections of this quarterly report may include
      additional factors which could adversely impact business and financial
      performance. In addition, our business and financial performance may be affected
      by the factors that are discussed under “Risk Factors” in the Annual Report on
      Form 10-K for the year ended June 30, 2007. Moreover, we operate in a very
      competitive and rapidly changing environment.




You
      should not rely upon forward-looking statements as predictions of future events.
      We cannot assure you that the events and circumstances reflected in the
      forward-looking statements will be achieved or will occur. Although we believe
      that the expectations reflected in the forward-looking statements are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements.




The
      following discussion is qualified in its entirety by, and should be read in
      conjunction with, the more detailed information set forth in the financial
      statements and the notes thereto appearing elsewhere in this
      report.




**Overview**





Our
      main
      focus since commencing operations is to undertake human clinical testing of
      phenoxodiol. Operations have now expanded to include the additional licensed
      drug candidates NV-196 and NV-143. During fiscal year 2007, we commenced the
      OVATURE Phase III clinical trial for phenoxodiol and continued to recruit
      patients into the existing clinical trial programs. We have reached agreement
      under the Special Protocol Assessment (SPA) process with the United States
      Food
      and Drug Administration (FDA) on the design of our OVATURE pivotal study
      protocol for phenoxodiol. The trial is designed to test the ability of
      phenoxodiol to restore sensitivity of late-stage ovarian cancers to carboplatin,
      a standard form of therapy for ovarian cancer.





As
      at the
      date of the report Novogen owns approximately 71.9% of the outstanding shares
      of
      our common stock.





We
      do not
      employ any staff directly but obtain services from Novogen under a services
      agreement. We have incurred losses since inception and expect to incur operating
      losses and generate negative cash flows from operations for the foreseeable
      future as we expand research and development activities and move phenoxodiol
      into later stages of development. As of September 30, 2007, we had accumulated
      losses of $42,687,000.





22


We
      have
      not generated any revenues from operations since inception other than interest
      on cash assets.





Expenses
      have consisted primarily of costs associated with conducting the clinical trials
      of phenoxodiol, costs incurred under the Phenoxodiol License Agreement, costs
      incurred under the License Agreement for NV-196 and NV-143, the Services
      Agreement and the Manufacturing License and Supply Agreements with Novogen
      and
      its subsidiaries, including the costs of the clinical trial drug
      supplies.





To
      date,
      operations have been funded primarily through the sale of equity
      securities.





We
      expect
      that quarterly and annual operating results will fluctuate for the foreseeable
      future due to several factors including the timing and extent of research and
      development efforts and the outcome and extent of clinical trial activities.
      Our
      limited operating history makes accurate prediction of future operating results
      difficult or impossible.





**Critical
      Accounting Estimates**





The
      preparation of the consolidated financial statements in conformity with
      accounting principles generally accepted in the United States requires
      management to make estimates and assumptions that affect the amounts reported
      in
      the financial statements and the accompanying notes. Actual results could differ
      from those estimates.





*Development
      Expenses*





Research
      and development costs incurred since inception through September 30, 2007
      aggregate to $18,847,000.





Research
      and development costs include clinical trial expenses and are expensed as they
      are incurred. These costs are expected to increase in the future as the
      phenoxodiol clinical program progresses and as we expand our research and
      development of NV-196 and NV-143. The planned phenoxodiol Phase III OVATURE
      trial will require large patient numbers resulting in significantly increased
      costs.





Historical
      research and development costs and clinical trial costs have not been documented
      on a project by project basis. In addition, research and development resources
      are supplied by Novogen across several projects. As a result, the costs incurred
      for each clinical project cannot be stated precisely on a project by project
      basis.





We
      expect
      that a large percentage of research and development expenses in the future
      will
      be incurred in support of current and future clinical development programs.
      These expenditures are subject to a number of uncertainties in timing and cost
      to completion.





The
      duration and cost of clinical trials may vary significantly over the life of
      a
      project as a result of:


·the
                  number of sites included in the trials;·the
                  length of time required to enroll suitable patients;·the
                  number of patients that participate in the
                  trials;
  23
   ·the
                  number of treatment cycles patients complete while they are enrolled
                  in
                  the trials;·the
                  indication being studied; and·the
                  efficacy and safety profile of the
                  product.


Our
      strategy also includes the option of entering into collaborative arrangements
      with third parties to participate in the development and commercialization
      of
      our drug candidates. In the event third parties have control over the clinical
      development process, the completion date would largely be under the control
      of
      that third party.





As
      a
      result of these uncertainties, we are unable to determine the duration of,
      or
      completion costs for research and development projects or when, and to what
      extent, we will receive cash inflows from the commercialization and sale of
      the
      drug candidates.





We
      intend
      to continue the clinical development of phenoxodiol as well as NV-196 and
      NV-143, which were licensed from Novogen. We will also continue to assess the
      opportunity to license other cancer drugs developed by Novogen as the
      opportunities arise.





*Clinical
      Trial Expenses*





Estimates
      have been used in determining the expense liability under certain clinical
      trial
      contracts where services have been performed but not yet invoiced. The actual
      costs of those services could differ in amount and timing from the estimates
      used in completing the financial results.





Clinical
      trial expenses of $610,000 have been accrued at September 30, 2007. These
      estimates are based on the number of patients in each trial and the number
      of
      drug administration cycles completed.





Clinical
      research contracts may vary depending on the clinical trial design and protocol.
      Generally the costs, and therefore estimates, associated with clinical trial
      contracts are based on the number of patients, drug administration cycles,
      the
      type of treatment and the outcome being measured. The length of time before
      actual amounts can be determined will vary depending on length of the patient
      cycles and the timing of the invoices by the clinical trial
      partners.





*Manufacturing
      Scale-up Expenses*





Estimates
      have been used in determining the expense liability under certain manufacturing
      scale-up contracts where services have been performed but not yet invoiced.
      The
      actual costs of those services could differ in amount and timing from the
      estimates used in completing the financial results.





Manufacturing
      expenses of $810,000 have been accrued at September 30, 2007. These estimates
      are based on the milestones completed for each of the service
      contracts.








24





*Stock
      Based Compensation*





We
      account for stock based payments in accordance with SFAS No. 123R “Share-Based
      Payments”. The costs of these equity-settled transactions are determined using a
      binomial model to calculate the fair value at the date on which they are
      granted. With respect to the fair value of 600,000 warrants issued July 11,
      2006, in connection with the SEDA commitment fee and the 62,091 warrants
      representing 248,364 warrant shares issued August 6, 2007 to Blue Trading,
      LLC
      as part of placement fee, the following assumptions were used:


7/11/06
              8/6/07Dividend
                  yield
              0%
              0%Expected
                  volatility
              76%
              71%Historical
                  volatility
              76%
              71%Risk-free
                  interest rate
              5.45%
              4.13%Expected
                  life of warrant
              4
                  years
              5
                  yearsWarrant
                  fair value
              $1.998
              $1.777
 The
        dividend yield reflects the assumption that the current dividend payout,
        which
        is zero, will continue with no anticipated increases. The expected life of
        the
        option is based on historical data and is not necessarily indicative of exercise
        patterns that may occur. The expected volatility reflects the assumption
        that
        the historical volatility is indicative of future trends, which may also
        not
        necessarily be the actual outcome.





The
      Company’s stock option plan provides for the grant of options to the Company’s
      directors, employees, employees of the Company’s affiliates and certain of the
      Company’s contractors and consultants. To date, no options have been issued
      under the plan.






25


**Results
      of Operations**





**Three
      Months Ended September 30, 2007 and 2006**





We
      recorded a consolidated loss of $3,366,000 and $7,880,000 for the three months
      ended September 30, 2007 and 2006, respectively.





**Revenues:**
      We received interest on cash assets and cash equivalents and short term
      investments of $218,000 for the three months ended September 30, 2007 versus
      $135,000 for the three months ended September 30, 2006. The increase was due
      to
      higher cash balances following the capital raising in August 2007 combined
      with
      an increase in interest rates earned by our cash deposits.





**Research
      and Development:** Research and development expenses increased $1,979,000
      to $2,906,000 for the three months ended September 30, 2007 compared to $927,000
      for the three months ended September 30, 2006. The increase was due primarily
      to
      the costs associated with the Phase III OVATURE clinical trial.





**License
      Fees:**No milestone license fees have been expensed in the three months
      ended September 30, 2007. Pursuant to the Further Amended and Restated License
      Agreement for phenoxodiol, the annual $8,000,000 milestone payment, due to
      Novogen on each December 31 during the exclusivity period, will not become
      payable until receipt of a New Drug Application (“NDA”) for phenoxodiol or other
      approval to market phenoxodiol in the U.S. or abroad has been obtained. The
      second lump sum license fee of $5,000,000 due under the terms of the Amended
      and
      Restated License Agreement was expensed in the three months ended September
      30,
      2006.





Under
      the
      terms of the License Agreement for NV-196 and NV-143 the next milestone payment
      of $1,000,000 will become due on the date an IND for the licensed product goes
      into effect or the equivalent approval of a government agency is obtained in
      another country. If this event does not occur before March 31, 2008, then this
      amount will be due on this date. As neither of these triggers have been met,
      no
      amount has been expensed in three months ended September 30, 2007 under the
      terms of this agreement.





**Selling,
      General and Administrative:**Selling, general and administrative
      expenses decreased by $1,411,000 to $677,000 for the three months ended
      September 30, 2007 compared to $2,088,000 for the three months ended September
      30, 2006. The decrease was primarily due no share based payment expense in the
      three months ended September 30, 2007 compared to share based payment expense
      of
      $1,642,000 in the three months ended September 30, 2006 which represented a
      fee
      for entering into the SEDA. This decrease in expense was partially offset by
      increased investor and public relation costs, increased travel costs and
      additional director fees.





Foreign
      exchange gains/(losses) are included in selling, general and administrative
      expenses and occur when revaluing cash denominated in foreign currencies and
      upon consolidation of our wholly owned subsidiary Marshall Edwards Pty Ltd
      (MEPL). MEPL uses U.S. dollars as its functional currency and also engages
      in
      transactions in foreign currencies. Further, MEPL’s accounts and financial
      statements are denominated in Australian dollars. Translation of MEPL’s
      financial statements into U.S. dollars did not have a material impact on our




26


financial
      position. At September 30, 2007, we had not established a foreign currency
      hedging program. Net foreign exchange losses during the three months ended
      September 30, 2007 were $104,000 compared with net foreign exchange gains of
      $19,000 during the three months ended September 30, 2006.





**Liquidity
      and Capital Resources**





At
      September 30, 2007, we had cash resources of $28,927,000 compared to $16,158,000
      at June 30, 2007.  The increase was due to the capital raising in
      August 2007, as described below, which was partially offset by expenditures
      in
      the clinical trial program and other corporate expenses incurred in the period.
      Funds are invested in short term market accounts, pending use.





On
      August
      1, 2007, we entered into a securities subscription agreement with certain
      accredited investors providing for the placement of 5,464,001 shares of our
      common stock at a purchase price of $3.00 per share. The investors in the
      transaction also received a warrant to purchase an additional 4 shares of common
      stock for every block of 10 shares of common stock purchased. All of the
      warrants have an exercise price of $3.60 per share. The warrants may be
      exercised beginning February 6, 2008 and will expire five years from the date
      of
      issuance, or August 6, 2012. We also issued 62,091 warrants to Blue
      Trading, LLC, which acted as the placement agent in the private placement,
      as
      part of the placement fee. The warrants issued to Blue Trading, LLC have an
      exercise price of $3.00 per share and each warrant is convertible for 4 shares
      of common stock. These warrants may be exercised immediately and will expire
      five years from the date of issuance, on August 6, 2012. We closed the private
      placement on August 6, 2007 and we received proceeds of $15.2 million net of
      $1.2 million commissions and other costs.





We
      have
      entered into a registration rights agreement with the investors party to the
      securities subscription agreement, and Blue Trading, LLC, and have agreed to
      file a registration statement with the Securities and Exchange Commission (the
      “SEC”) for the common stock and the common stock issuable upon exercise of the
      warrants sold pursuant to the securities subscription agreement for resale
      thereunder. We filed the registration statement on October 2, 2007. The resale
      registration statement was declared effective October 19, 2007.





In
      August
      2007, we terminated the standby equity distribution agreement (the “SEDA”) which
      we had entered into with YA Global Investments, L.P. (formally Cornell Capital
      Partners, L.P.) on July 11, 2006.





**Source
      and Uses of Cash**





*Cash
      Used in Operating Activities*





Cash
      used
      in operating activities for the three months ended September 30, 2007 was
      $2,432,000 compared to $6,122,000 for the same period in 2006. The decrease
      in
      cash outflow of $3,690,000 was due primarily to no license fees in the three
      months ended September 30, 2007 compared to the same period last year which
      contained the second lump sum license fee paid to Novogen of $5,000,000,
      partially offset by increased cash outflows incurred in connection with the
      increased costs associated with the Phase III OVATURE trial.








27





*Cash
      Requirements*





We
      are
      currently conducting the OVATURE Phase III clinical study to support marketing
      approval of phenoxodiol for ovarian cancer and the clinical and pre clinical
      development of NV-196 and NV-143.





Ongoing
      operations through the conduct of the clinical trial program will continue
      to
      consume cash resources without generating revenues.





We
      believe that the proceeds of the private placement closed in August 2007 provide
      us with sufficient cash resources to fund our planned operations over the next
      twelve months which include the OVATURE trial, the planned preclinical
      development of NV-196 and NV-143 and the planned human Phase I clinical program
      for NV-196.





We
      will
      however need additional funds in order complete the OVATURE trial and to further
      the clinical development program for NV-196 and NV-143 beyond the current
      objectives.





**License
      Agreement for Phenoxodiol**





In
      September 2003, we entered into a license agreement pursuant to which Novogen’s
      subsidiary, Novogen Research Pty Limited, granted to MEPL a worldwide
      non-transferable license under its patents and patent applications and in its
      know-how to conduct clinical trials and commercialize and distribute phenoxodiol
      products (the “Phenoxodiol License Agreement”). The Phenoxodiol License
      Agreement covers uses of phenoxodiol in the field of prevention, treatment
      or
      cure of cancer in humans delivered in all forms except topical applications.
      The
      license is exclusive until the expiration or lapsing of the last relevant
      Novogen patents or patent applications in the world and thereafter is
      non-exclusive. MEPL may terminate the Phenoxodiol License Agreement by giving
      three months notice to Novogen. MEPL paid $5,000,000 to Novogen in February
      2004
      which was the first lump sum license fee payment due under the terms of the
      Phenoxodiol License Agreement. Also, MEPL paid $2,000,000 to Novogen in January
      2005 and $4,000,000 in January 2006 which were the annual milestone license
      fee
      payments due under the Phenoxodiol License Agreement. We paid a second lump
      sum
      license fee of $5,000,000 to Novogen in July 2006 following the raising of
      funds
      in a private placement. This license fee was due on the later of November 1,
      2003 or such later date when the cumulative total of all funds received from
      debt or equity issuances and revenue received from commercialization (income
      other than sales) and sales of phenoxodiol products exceeds $50,000,000.
      Following the PIPE capital raising on July 11, 2006, the funds received from
      equity issuances exceeded $50,000,000 which triggered this license fee payment.
      Future amounts payable to Novogen under terms of the license agreement are
      as
      follows:





1.
      Until
      the expiration of the exclusivity period of the license, MEPL must pay Novogen
      2.5% of all net sales and 25% of commercialization income. After the exclusivity
      period of the license, 1.5% of net sales must be paid to Novogen. The
      preconditions to such payments have not yet occurred.








28





The
      “Exclusivity Period” ends on the later of:





(a)
            the
                date of expiration or lapsing of the last patent right in the patents
                and
                patent applications set out in the Phenoxodiol License Agreement
                with
                Novogen; or





(b)
            the
                date of expiration or lapsing of the last licensed patent right which
                MEPL
                would, but for the license granted in the Phenoxodiol License Agreement,
                infringe in any country in the geographical territory covered by
                the
                Phenoxodiol License Agreement by doing in that country any of the
                things
                set out in the Phenoxodiol License
                Agreement.





2.
      In
      addition to the amounts above, beginning in 2006, an $8,000,000 annual milestone
      license fee is payable under the amended terms of the Phenoxodiol License
      Agreement for each calendar year ending December 31 during the exclusivity
      period of the license. The annual milestone license fees have been deferred
      under the License Amendment Deed for Phenoxodiol and the Further Amended and
      Restated License Agreement which are discussed below.





**License
      Amendment Deed for Phenoxodiol**





In
      June 2006, we entered into an
      amendment deed to the Phenoxodiol License Agreement (the “License Amendment Deed
      for Phenoxodiol”). Pursuant to the original term of the Phenoxodiol License
      Agreement for phenoxodiol we were required to pay an $8,000,000 license
      milestone fee to Novogen Research Pty Limited in December 2006. The amendment
      deed extends the date that the $8,000,000 license milestone fee is payable
      until
      the earliest receipt by MEPL of the first:





(i)
            approval
                by the FDA of a NDA for
                phenoxodiol;


(ii)
            approval
                or authorization of any kind to market phenoxodiol in the United
                States;
                or


(iii)
            approval
                or authorization of any kind by a government agency in any other
                country
                to market phenoxodiol.





Upon
      receipt of any of the above (the “Approval Date”), we must pay to Novogen,
      $8,000,000, together with interest on that amount from (and including) December
      31, 2006, calculated at the bank bill rate. This milestone replaces the
      $8,000,000 December 31, 2006 milestone fee.





**Further
      Amended and Restated License Agreement**





Following
      agreement in March 2007, MEPL and Novogen Research Pty Limited entered into
      another amendment deed to the Phenoxodiol License Agreement for the purpose
      of
      further amending and restating the Phenoxodiol License Agreement (the “Further
      Amended and Restated License Agreement”).





The
      combined result of the License Amendment Deed for Phenoxodiol and the Further
      Amended and Restated License Agreement will be that upon the Approval Date,
      MEPL
      will be required to pay Novogen Research $8,000,000, together with interest
      on
      such amount from (and including) December 31, 2006 to (but excluding) the
      Approval Date. Thereafter, MEPL will be required to make license milestone
      fee
      payments of $8,000,000 to Novogen Research




29


Pty
      Limited on December 31 of the year of the Approval Date and on
      December 31 of each year thereafter during the exclusivity period under the
      Phenoxodiol License Agreement.





No
      license fees have been accrued at September 30, 2007.





**License
      Agreement for NV-196 and NV-143**





In
      May
      2006, we entered into a second license agreement with Novogen for two oncology
      compounds, NV-196 and NV-143 (the “License Agreement for NV-196 and NV-143”).
      NV-196 is being developed initially in oral form for pancreatic and bile duct
      cancer and is currently in Phase I human testing. NV-143 is targeted for the
      treatment of melanoma, also in oral dose form, and is in the pre-clinical
      testing stage. The License Agreement for NV-196 and NV-143 is an agreement
      under
      which Novogen’s subsidiary, Novogen Research Pty Limited, grants to MEPL a
      worldwide non-transferable license under its patents and patent applications
      and
      in its know-how to conduct clinical trials and commercialize and distribute
      NV-196 and NV-143 products. The License Agreement for NV-196 and NV-143 covers
      uses of NV-196 and NV-143 in the field of prevention, treatment or cure of
      cancer in humans delivered in all forms except topical applications. The license
      is exclusive until the expiration or lapsing of the last relevant Novogen
      patents or patent applications in the world and thereafter is non-exclusive.
      MEPL may terminate the agreement by giving three months’ notice to Novogen. We
      are required to make payments under the terms of the License Agreement for
      NV-196 and NV-143 with Novogen as follows:





1.           A
      lump sum license fee of $1,000,000 is payable to Novogen on the commencement
      date of the license in consideration of the license granted. This initial lump
      sum license fee was paid to Novogen in May 2006.





2.           MEPL
      must pay to Novogen the following milestone license fees upon the occurrence
      of
      the corresponding milestone as set forth below:





a)       the
      first licensed product containing NV-196 to reach a milestone as set forth
      below; and


b)       the
      first licensed product containing NV-143 to reach a milestone as set forth
      below.


The
      milestone license fees
      are:


i)
            $1,000,000
                on the date an IND for the licensed product goes into effect or the
                equivalent approval of a government agency is obtained in another
                country.
                If this event does not occur before March 31, 2008, then this amount
                will
                be due on this date;


ii)
            $2,000,000
                on the date of enrollment of the first clinical trial subject in
                a Phase
                II clinical trial of the licensed product. If this event does not
                occur
                before June 30, 2009, then this amount will be due on this
                date;


iii)
            $3,000,000
                on the date of enrollment of the first clinical trial subject in
                a Phase
                III clinical trial of the licensed product. If this event does not
                occur
                before December 31, 2011 then this amount will be due on this date;
                and


iv)
            $8,000,000
                on the date of first receipt of a NDA for the licensed product from
                the
                FDA or equivalent approval from a government agency in another country.
                If
                this event does not occur before December 31, 2013, then this amount
                will
                be due on this date.





30


3.           MEPL
      must pay Novogen royalties of 5.0% of all net sales and 25% of commercialization
      income for the term of the license. The royalty rate is reduced by 50% if the
      licensed patent rights in any country or territory expire, lapse, are revoked,
      does not exist or is assigned to MEPL and the product is entirely manufactured
      and supplied in such country.





4.           Minimum
      royalties of $3,000,000 per year are payable following the date of first receipt
      of an NDA for a licensed product from the FDA (or equivalent approval from
      a
      government agency in any other country) until the expiration of the
      term.








We
      will
      also be required to make payments to Novogen under the Services Agreement and
      Manufacturing License and Supply Agreement.





We
      do not
      intend to incur any significant capital expenditures in the foreseeable
      future.





We
      are
      currently assessing the future cash requirements needed to fund new clinical
      trial initiatives and licensing options available under the license option
      deed.








*Off-Balance
      Sheet Arrangements*





We
      do not
      currently have any off-balance sheet arrangements.





*Contractual
      Obligations*





The
      following table summarizes our contractual obligations at September 30,
      2007:





(In
                  thousands)
              
              
              
              
              Payment
                  due by period**Contractual
                  Obligations**
              
              **Total**
              
              
              less
                  than 1 Year
              
              
              1
                  -
                  3 Years
              
              
              3
                  -
                  5 Years
              
              
              More
                  than 5 YearsPurchase
                  Obligations
              
              $
              13,069
              
              
              $
              8,711
              
              
              $
              4,172
              
              
              $
              186
              
              
              $
              -Total
              
              $
              13,069
              
              
              $
              8,711
              
              
              $
              4,172
              
              
              $
              186
              
              
              $
              -


No
      amounts have been included for future payments to Novogen which may arise in
      connection with the Phenoxodiol License Agreement, the License Agreement for
      NV-196 and NV-143, the Services Agreement or the Manufacturing License and
      Supply Agreement as future payments under the terms of the agreements are
      subject to termination provisions.





31





Item
      3:                      Quantitative
      and Qualitative Disclosures about Market Risk







**Interest
      Rate Risk**





We
      place
      cash in “on call” deposits and short term investments with high quality
      financial institutions.





We
      do not
      consider the effects of interest rate movements to be a material risk to our
      financial condition. We do not use derivative financial instruments to hedge
      our
      risks associated with the fluctuations of interest rates.





**Foreign
      Currency Risk**





We
      conduct a portion of our business in various currencies, primarily in U.S.
      and
      Australian dollars. At September 30, 2007, we had not established a foreign
      currency hedging program. Net foreign exchange losses during the three months
      ended September 30, 2007 were $104,000 compared with net foreign exchange gains
      of $19,000 during the three months ended September 30, 2006. Foreign exchange
      gains and losses occur upon consolidation of MEPL, which uses U.S. dollars
      as
      its functional currency and also engages in transactions in foreign currencies.
      MEPL’s accounts are denominated in Australian dollars. Translation of MEPL’s
      financial statements into U.S. dollars did not have a material impact on our
      financial position.





We
      do not
      consider the effects of foreign currency movements to be a material risk to
      our
      financial condition.








32











Item
      4:                                                                    Controls
      and Procedures




**Evaluation
      of Disclosure Controls and Procedures**





At
      the
      end of the period covered by this report, our management, with the participation
      of our principal executive officer and principal financial officer, evaluated
      the effectiveness 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).
      Based on this evaluation, our principal executive officer and principal
      financial officer have concluded that our disclosure controls and procedures
      are
      effective to ensure that information required to be disclosed by us in reports
      that we file or submit under the Securities Exchange Act of 1934, as amended
      is
      recorded, processed, summarized and reported within the time periods specified
      in Securities and Exchange Commission rules and forms.




There
      were no changes in our internal control over financial reporting during the
      period covered by this Form 10-Q that have materially affected, or are
      reasonably likely to affect, the Company’s internal control over financial
      reporting.





33







**PART
      II  OTHER INFORMATION**





Item
      1A:                                Risk
      Factors





The
      risks
      described in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the
      year ended June 30, 2007, could materially and adversely effect our business,
      financial condition and results of operations. Additional information concerning
      those risks and uncertainties and other factors that you may wish to consider
      are contained elsewhere in our filings with the Securities and Exchange
      Commission.





The
      risk
      factor titled “***If we fail to maintain registration of
      the************common stock issued
      or issuable pursuant to the exercise of warrants we issued in connection with
      the securities subscription agreement we entered into with certain investors
      effective******August 1, 2007******, we
      may be obligated to pay the investors of those securities liquidated
      damages******.****”* in our Annual Report
      on Form 10-K for the year ended June 30, 2007, is amended in its entirety to
      read as follows:





***“If
      we fail to maintain registration of the common stock issued or issuable pursuant
      to the exercise of warrants we issued in connection with the securities
      subscription agreement we entered into with the selling stockholders (other
      than
      Blue Trading, LLC) effective August 1, 2007, we may be obligated to pay such
      selling stockholders liquidated damages.”***





In
      connection with the securities subscription agreement we entered into with
      the
      selling stockholders (other than Blue Trading, LLC) as of August 1, 2007, we
      entered into a registration rights agreement pursuant to which we are obligated
      to file a resale registration statement with the SEC by the fifth calendar
      day
      following the filing of the our Annual Report on Form 10-K for the fiscal year
      ended June 30, 2007, covering the shares of common stock issued in connection
      with the securities subscription agreement, in addition to the shares of common
      stock underlying the warrants issued in connection with the securities
      subscription agreement.  We filed the registration statement on
      October 2, 2007.





In
      the
      event that the registration statement covering the registrable securities ceases
      to be effective or usable at any time while shares of common stock covered
      by it
      remain unsold or may only be sold subject to certain volume limitations, or
      the
      selling stockholders (other than Blue Trading, LLC) are not permitted to utilize
      the prospectus in connection with the registration statement to resell shares
      of
      common stock covered by the registration statement, we will be obligated to
      pay
      the selling stockholders who purchased shares of common stock in the private
      placement liquidated damages equal to 1% of the aggregate purchase price paid
      by
      each such selling stockholder pursuant to the securities subscription agreement
      for any shares of common stock, shares of common stock issuable upon exercise
      of
      warrants or warrants then held by each such selling stockholder per month (pro
      rated for any period less than a month) until the registration statement is
      effective or such selling stockholders are permitted to utilize the prospectus
      in connection with the registration statement to resell shares of common stock
      covered by the registration statement.





Liquidated
      damages paid to the selling stockholders (other than Blue Trading, LLC) may
      not
      exceed more than 10% of the purchase price paid by such selling stockholders
      for
      shares of common stock purchased under the securities subscription
      agreement.  If we become obligated to pay liquidated damages, we would
      deplete our limited working capital and potentially need to raise additional
      funds.  Additionally, the payment of liquated damages would negatively
      impact our ability to complete future PIPEs.








34





Item
      6:                                Exhibits
      and Reports on Form 8-K








a)
      Exhibits


**Exhibit
      Index**








Exhibits





31.1
            Certification
                required by Rule 13a-14(a) or Rule 15d-14(a)31.2
            Certification
                required by Rule 13a-14(a) or Rule 15d-14(a)32
            Certification
                required by Rule 13a-14(b) or Rule 15d-14(b) and section 1350 of
                Chapter
                63 of Title 18 of the United States Code (18 U.S.C
                1350).























35








**SIGNATURES**











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.





MARSHALL
      EDWARDS, INC.




/s/
      DAVIDSEATON





David R. Seaton


Chief Financial Offer  (Duly
      Authorized Officer and Principal Financial Officer)     Date:
      November 6, 2007





36








Exhibit
      31.1


**CERTIFICATION**





I,
      Christopher Naughton, certify that:







1.
            I
                have reviewed this report on Form 10-Q of Marshall Edwards,
                Inc.;




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) ) for the registrant
                and have:




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




(b)
            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




(c)
            Disclosed
                in this report any change in the registrant’s internal control over
                financial 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:




(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.








/s/CHRISTOPHERNAUGHTON





Christopher
      Naughton


Chief Executive Officer


Date: November 6, 2007





37








Exhibit
      31.2


**CERTIFICATION**





I,
      David
      Ross Seaton, certify that:







1.
            I
                have reviewed this report on Form 10-Q of Marshall Edwards,
                Inc.;




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) ) for the registrant
                and have:




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




(b)
            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




(c)
            Disclosed
                in this report any change in the registrant’s internal control over
                financial 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 Company’s internal control over financial
                reporting; and




5.
            The
                Company’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:




(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.













/s/
      DAVIDSEATON







David
      R. Seaton


Chief
      Financial Officer  Date:
      November 6, 2007







38


Exhibit
      32





**CERTIFICATION**








Pursuant
      to the requirement set forth in Rule 13a-14(b) or Rule 15d-14(b) of the
      Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63
      of
      Title 18 of the United States Code (18 U.S.C. § 1350), Christopher Naughton, the
      President and Chief Executive Officer of Marshall Edwards, Inc.  (the
“Registrant”), and David R. Seaton, the Chief Financial Officer of the
      Registrant, each hereby certifies that, to his or her knowledge:





1.
            The
                Registrant’s Quarterly Report on Form 10-Q for the period ended September
                30, 2007, to which this Certification is attached as Exhibit 32 (the
                “Periodic Report”), fully complies with the requirements of Section 13(a)
                or Section 15(d) of the Securities Exchange Act of 1934, as amended;
                and


2.
            The
                information contained in the Periodic Report fairly presents, in
                all
                material respects, the financial condition of the Registrant at the
                end of
                the period covered by the Periodic Report and results of operations
                of the
                registrant for the period covered by the Periodic
                Report.





These
      certifications accompany the Form 10-Q to which they relate, are not deemed
      filed with the Securities and Exchange Commission and are not to be incorporated
      by reference into any filing of the registrant under the Securities Act of
      1933,
      as amended, or the Securities Exchange Act of 1934, as amended (whether made
      before or after the date of the Form 10-Q), irrespective of any general
      incorporation language contained in such filing.





Dated:
      November 6, 2007




















/s/
      CHRISTOPHERNAUGHTON





Christopher
      Naughton








/s/
      DAVID SEATON





David R. Seaton


Chief Financial Officer







39