SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549  FORM 10-Q  (Mark One)  X       QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For quarterly period ended March 31, 2008  ___        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _____ to _____  000-28790 (Commission File Number)  PHYTOMEDICAL TECHNOLOGIES, INC. 
AND SUBSIDIARIES (Exact name of registrant as specified in its charter)  NEVADA (State or other jurisdiction of incorporation)  87-0429962 (I.R.S. Employer Identification No.)  100 OVERLOOK DRIVE, PRINCETON, NEW JERSEY  08540 (Address of principal executive offices)  (800) 611-3388 (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 [  ]  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Large Accelerated Filer [   ] Accelerated Filer [   ] Non-accelerated Filer [   ] Smaller Reporting Company [X]  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X]  Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 200,398,290 shares of Common Stock, par value $0.00001, were outstanding on May 14, 2008.     TABLE OF CONTENTS   PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES FORM 10-Q, QUARTER ENDED MARCH 31, 2008   PART I    FINANCIAL INFORMATION  Item 1. Financial Statements  Interim Unaudited Consolidated Balance Sheets 3  Interim Unaudited Consolidated Statements of Operations 4  Interim Unaudited Consolidated Statement of Stockholders Equity (Deficiency) 5  Interim Unaudited Consolidated Statements of Cash Flows 6  Notes to Interim Consolidated Financial Statements 7  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12  Item 3.  Quantitative and Qualitative Disclosures About Market Risk 16  Item 4.  Controls and Procedures 16  PART II   OTHER INFORMATION  Item 1. Legal Proceedings 17  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17  Item 3. Defaults Upon Senior Securities 17  Item 4. Submission of Matters to a Vote of Security Holders 17  Item 5. Other Information 17  Item 6. Exhibits and Reports on Form 8-K 17  Signatures 18       PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSMarch 31, 2008 and December 31, 2007(Unaudited)March 31,December 31,(Expressed in U.S. Dollars)20082007ASSETSCurrent assetsCash$1,399,178$2,434,230Prepaid expenses3,524-Total current assets1,402,7022,434,230Equipment, Net(Note 4)5,4173,917Intangible asset - Licence fee(Note 7)20,00020,000Total assets$1,428,119$2,458,147LIABILITIESCurrentAccounts payable and accrued liabilities$4,533$2,970Interest payable - related parties (Note 5)199,371241,253Promissory notes - related party (Note 5)750,0001,000,000Total liabilities953,9041,244,223STOCKHOLDERS' EQUITYStockholders' EquityPreferred stock: $0.25 par value; Authorized: 1,000,000Issued and outstanding: nil--Common stock: $0.00001 par value; Authorized: 300,000,000Issued and outstanding: 200,398,290 (2007: 200,398,290)2,0042,004Additional paid-in capital26,285,89926,272,275Accumulated other comprehensive income21Accumulated deficit(25,813,690)(25,060,356)Total stockholders' equity474,2151,213,924Total liabilities and stockholders' equity$1,428,119$2,458,147(The accompanying notes are an integral part of these interim unaudited consolidated financial statements)  3    PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the three months ended March 31, 2008 and 2007(Unaudited)March 31,March 31,(Expressed in U.S. Dollars)20082007Revenue$-$-ExpensesDirectors fees - related party (Note 5)3,150-Investor relations422,53037,215Interest expense - related party25,78225,167Other operating expenses166,021685,426Research and development costs (Notes 6, 7, 8 and 9)149,25253,838766,735801,646Operating loss(766,735)(801,646)Other incomeInterest income13,4012,283Net loss available to common shareholders$(753,334)$(799,363)Loss per common share -basic and diluted$(0.00)$(0.00)Weighted average number of common sharesoutstanding- basic and diluted200,398,290189,445,487(The accompanying notes are an integral part of these interim unaudited consolidated financial statements)   4


PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)for the three months ended March 31, 2008 and year ended December 31, 2007(Unaudited)TotalAccumulated otherStockholders'Common StockAdditionalAccumulatedComprehensivecomprehensiveEquity(Expressed in U.S. Dollars)SharesAmountpaid-in capitaldeficitincome (loss)income(Deficiency)Balance, December 31, 2006189,181,866$1,892$21,722,319$(22,904,995)-$ (1,180,784)Common stock issued for cash533,0915229,995---230,000Common stock issued for cash, net10,683,3331071,910,713---1,910,820Issuance of warrants on private placement--1,175,167---1,175,167Issuance of warrants to broker as commission--23,51323,513Stock based compensation expenses--1,210,568---1,210,568Foreign currency translation adjustment111Loss, year ended December 31, 2007---(2,155,361)(2,155,361)-(2,155,361)(2,155,360)Balance, December 31, 2007200,398,2902,00426,272,275(25,060,356)11,213,924Stock based compensation expenses13,62413,624Foreign currency translation adjustment111Loss, three months ended March 31, 2008(753,334)(753,334)(753,334)$(753,333)Balance, March 31, 2008200,398,290$2,004$26,285,899$ (25,813,690)2$474,215(The accompanying notes are an integral part of these interim unaudited consolidated financial statements)  5


PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSfor the three months ended March 31, 2008 and 2007(Unaudited)March 31,March 31,(Expressed in U.S. Dollars)20082007Cash flows from operating activitiesNet loss$(753,334)$(799,363)Adjustments to reconcile net loss to net cash from operating activities:Amortization and depreciation8002,324Stock based compensation13,624489,621Change in non-cash working capital items:Increase in prepaid expenses(3,524)-Increase (Decrease) in accounts payable1,563(164,173)Increase (Decrease) in interest payable - related party(41,882)20,488Net cash used in operating activities(782,753)(451,103)Cash flows from investing activitiesAdditions to property and equipment(2,300)-Net cash used in investing activities(2,300)-Cash flows from financing activitiesProceeds from issuance of common stock and warrants-230,000Repayment of loan to stockholder(250,000)(25,000)Net cash provided by (used in) financing activities(250,000)205,000Effect on foreign exchange rate1-Decrease in cash(1,035,052)(246,103)Cash, beginning of period2,434,230386,457Cash, end of period$1,399,178$140,354Supplemental disclosure of cash flow information:Interest paid in cash$68,179$4,679Income tax paid in cash$-$-(The accompanying notes are an integral part of these interim unaudited consolidated financial statements)   6   PHYTOMEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2008 (Expressed in US Dollars)  Note 1 - Organization and Going Concern Uncertainties  PhytoMedical Technologies, Inc. (the Company), a Nevada Corporation, has an authorized capital of 301,000,000 shares of which 300,000,000 shares are $0.00001 par value common stock and 1,000,000 shares are $0.25 par value preferred stock.  PhytoMedical Technologies, Inc. together with its wholly owned subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products.  The Company has incurred net operating losses since inception. The Company faces all the risks common to companies that are relatively new, including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. The Companys recurring losses raise substantial doubt about its ability to continue as a going concern. The Companys financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. Although we believe that we have sufficient financial resources and commitments to sustain our current level of research and development activities through the end of 2008, any expansion, acceleration or continuation of such activities (beyond 2008) will require additional capital which may not be available to us, if at all, on terms and conditions that we find acceptable. The future of the Company hereafter will depend in large part on the Companys ability to successfully raise capital from external sources to pay for planned expenditures and to fund operations.  To meet these objectives, the Company has arranged with Mr. Harmel S. Rayat, Chief Financial Officer, Director and majority shareholder of the Company a loan amount up to $2,500,000. Proceeds from the loan, which will be drawn down on an as needed basis at a rate of prime plus 3%, will fund the Companys research and development plans, ongoing expenses for salaries, legal and accounting fees and a comprehensive investor relations and branding program, as well as for working capital and other contingencies. On September 25, 2007, the Company also completed a private placement of the sale of 10,683,333 units at a price of $0.30 per unit or $3,205,000 in the aggregate. Management believes that its current and future plans enable it to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.  Principles of Consolidation  The accompanying consolidated financial statements have been prepared on the accrual basis in accordance with accounting principles generally accepted in the United States, and include the accounts of PhytoMedical Technologies, Inc., its subsidiaries, PhytoMedical Technologies Corp. and PolyPhenol Technologies Corp., both of which were incorporated under the laws of the State of Nevada and PhytoMedical Technologies Ltd., which was incorporated in British Columbia, Canada on April 11, 2007.  All significant intercompany transactions and accounts have been eliminated in consolidation.  Note 2  Presentation of Interim Information  The accompanying unaudited interim consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management of PhytoMedical Technologies, Inc. and Subsidiaries (the Company), include all adjustments (of a normal recurring nature) considered necessary to present fairly the consolidated financial position as of March 31, 2008 and the consolidated results of operations for the three months ended March 31, 2008 and 2007 and cash flows for the three months ended March 31, 2008 and 2007. These results have been determined on the basis of generally accepted accounting principles and practices in the United States and applied consistently with those used in the preparation of the Companys 2007 Annual Report on Form 10-KSB.  Certain information and footnote disclosures normally included in the annual financial statements presented in accordance with generally accepted accounting principles in the United States have been condensed or omitted. It is suggested that the accompanying unaudited interim consolidated financial statements be read in conjunction with the financial statements and notes thereto incorporated by reference in the Companys 2007 Annual Report on Form 10-KSB.   7   Recent Accounting Pronouncements  In December 2007, the FASB ratified EITF No. 07-1, Accounting for Collaborative Arrangements that discusses how parties to a collaborative arrangement (which does not establish a legal entity within such arrangement) should account for various activities. The consensus indicates that costs incurred and revenues generated from transactions with third parties (i.e. parties outside of the collaborative arrangement) should be reported by the collaborators on the respective line items in their income statements pursuant to EITF Issue No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent., Additionally, the consensus provides that income statement characterization of payments between the participants in a collaborative arrangement should be based upon existing authoritative pronouncements; analogy to such pronouncements if not within their scope; or a reasonable, rational, and consistently applied accounting policy election. EITF Issue No. 07-1 is effective for financial statements beginning after December 15, 2008 and is to be applied retrospectively to all periods presented for collaborative arrangements existing as of the date of adoption. The Company is evaluating the impact, if any, the adoption of this consensus will have on the results of operations, financial position or cash flows.  Note 3  Earnings (Loss) Per Share  Basic earnings or loss per share is based on the weighted average number of shares outstanding during the period of the financial statements. Diluted earnings or loss per share are based on the weighted average number of common shares outstanding and dilutive common stock equivalents. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value, when applicable. All loss per share amounts in the financial statements are basic loss per share because the inclusion of stock options and warrants outstanding would be antidilutive. The computation of basic and diluted loss per share is as follows at March 31, 2008:  Three months endedMarch 31,20082007Numerator - net loss available tocommon stockholders$(753,334)$(799,363)Denominator - weighted average number of common shares outstanding200,398,290189,445,487Basic and diluted loss per common share$(0.00)$(0.00)  Note 4  Equipment  March 31,December 31,20082007Computer equipment$8,340$6,040Office equipment19,61319,61327,95325,653Less: accumulated depreciation(22,536)(21,736)$5,417$3,917  Depreciation expenses charged to operations for the three months ended March 31, 2008 were $800 (2007: $2,324).  Note 5 - Related Party Transactions   Directors Fees: During the three months ended March 31, 2008, the Company charged $3,150 (2007: $nil) to operations for director fees incurred for services rendered.  Notes Payable and Accrued Interest:  Notes Payable totaled $750,000 as of March 31, 2008, representing unsecured loans of $750,000 (8.50%) due to Mr. Harmel S. Rayat, a director and majority shareholder of the Company. During the three months ended March 31, 2008, the Company repaid $250,000 to the director and majority shareholder with the accrued interest of  8   $67,664. The entire principal and accrued interest is due and payable on demand. Accrued and unpaid interest on the remaining note as of March 31, 2008, amounted to $199,371 and is included in interest payable - related parties.  The Company has arranged with Mr. Harmel S. Rayat, Chief Financial Officer, director and majority shareholder of the Company a loan amount up to $2,500,000. Proceeds from the loan, which will be drawn down on an as needed basis at a rate of prime plus 3%, will fund the Companys research and development plans, ongoing expenses for salaries, legal and accounting fees and a comprehensive investor relations and branding program, as well as for working capital and other contingencies.  Rent: The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by a director and majority shareholder. The Company paid rent of $6,451 (2007: $8,190) for three months ended March 31, 2008.  Mr. Harmel S. Rayat is an officer, director and majority stockholder of the Company. He is also an officer, director and majority shareholder of each of HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp., MicroChannel Technologies Corporation and International Energy, Inc.  All related party transactions are recorded at the exchange amount established and agreed to between related parties and are in the normal course of business.  Note 6  Cooperative Agreements  Iowa State University  Effective February 1, 2007, the Company, through its wholly owned subsidiary, PolyPhenol Technologies Corporation, entered into an expanded sponsored research agreement with Iowa State University (ISU). Under terms of the agreement, PhytoMedical will continue to undertake its research at ISURF for development of the Companys novel, synthesized type A-1 polyphenolic compounds.  Contractual Obligations under the Agreement are as follows:  Year 1: $62,251 to ISU in 4 quarterly installments, the first of which is due within 30 days of signing of the sponsored research agreement, the second of which is due to ISU 3 months from the previous payment;  Year 2: $70,295 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment; and  Year 3: $72,140 to ISU in 4 quarterly installments, the first of which is due to ISU 3 months from the previous payment.  All rights, title, and interest in any subject invention made solely by the Company are owned by the Company, solely by ISU are owned by ISU, owned jointly by the two parties if made by any of the parties.  The Agreement or parts thereof, is subject to termination at any time by mutual consent. Any party may unilaterally terminate the entire agreement at any time by giving the other parties written notice not less than sixty calendar days prior to the desired termination date.  As at March 31, 2008, the Company paid in total of $224,339 which includes contractual obligations and reimbursed research and development expenses.  Note 7  License Agreement  On June 12, 2006, the Company, through its wholly owned subsidiary, PolyPhenol Technologies Corporation, entered into an exclusive license agreement with Iowa State University Research Foundation Inc. to develop, market and distribute novel synthesized compounds derived from type A-1 polyphenols.  Under terms of the agreement, the Company has to pay to ISURF license fees of $320,000, of which $20,000 is payable (paid) within 30 days of execution of the agreement, $50,000 is payable upon completion of the first successful Phase 2 clinical trial and the remaining $250,000 is payable upon first approval by the regulatory authority on new drug application.  9   In addition, ISURF will receive royalty payments equal to 5% on the net sales of products, except that 3% will apply on the net sales of pharmaceutical products. The Company will pay a minimum annual royalty of $20,000, $50,000 and $100,000 in calendar year 2010, 2011, 2012 and onwards, respectively. The Company also has to reimburse ISURF the cost incurred for filing, prosecuting and maintaining the licensed patents together with 15% of the said costs, not exceeding $10,000, as the administration fee. The Company will administrate the development, regulatory approval and commercialization of the compounds and pursue future collaborative arrangements.  As of March 31, 2008, the Company paid in total of $20,000 for the license fee and $31,223 for reimbursement of the patent costs and research expenses as per agreement with ISURF.  Note 8  Development Agreements  The Company entered into two development agreements with Ricerca BioSciences (Ricerca), to begin developmental work on the Companys BDC-03 compound for cachexia.  As of March 31, 2008, the Company paid in total of $106,158 as per the two agreements with Ricerca.  Note 9  Research Agreement  On May 25, 2007, the Company entered into a Research Agreement with Dartmouth College, in the area of cancer research, specifically furthering research and development of anti-tumor bis-acridines. Dartmouth grants the Company the option of a world-wide, royalty-bearing exclusive license under Dartmouth Pre-existing Patent Rights and Know-How to make, have made, use and sell in the field of oncology, the products embodying or produced through the use of Dartmouths Patent Rights, at reasonable terms and condition as the parties may agree. Dartmouth also grants the Company the option of a world-wide, royalty-bearing exclusive license under Dartmouth Patent Rights and  Know-How, and Joint Patent Rights, to make, have made, use and sell in the field of oncology, the products embodying or produced through the use of Dartmouth's or joint inventions, at reasonable terms and conditions as the parties may agree.  The Company will reimburse Dartmouth for all costs associated with obtaining and maintaining Dartmouth Pre-existing Patent Rights. As of March 31, 2008, the Company paid in total of $137,925 for research expenses as per agreement with Dartmouth.  Note 10 - Stock Options  As of March 31, 2008, the Company had an active stock option plan that provides shares available for options granted to employees, directors and others. Options granted to employees under the Companys option plans generally vest over two to five years or as otherwise determined by the plan administrator. Options to purchase shares expire no later than ten years after the date of grant.  The movement of stock options can be summarized as follows:  RemainingAggregateWeighted averagecontractualintrinsicNumber of optionsexercise priceterm (years)valueOutstanding at December 31, 200611,275,000$0.65Cancelled(9,275,000)0.68Outstanding at March 31, 2008 andDecember 31, 20072,000,0000.528.34$-Exercisable at March 31, 2008-$0.52Available for grant at March 31, 200820,275,000  The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all in-the-money options (i.e. the difference between the Companys closing stock price on the last trading day of the period and the exercise price,  10   multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on March 31, 2008. The change of the amount is based on the fair market value of the Companys stock.  A summary of the Companys unvested stock options and changes during the periods ended March 31, 2008 and 2007 is as follows:  Fair valueSharesper shareUnvested, January 1, 20072,000,000$0.48Granted--Vested--Cancelled--Unvested, March 31, 2008 and December 31, 20072,000,0000.48  During the three months ended March 31, 2008, compensation expenses of $13,624 (2007: $489,621) were recognized for options previously granted which is included in other operating expenses in the consolidated statement of operations. As of March 31, 2008, the Company had no unrecognized compensation cost related to unvested stock options.  The options outstanding and exercisable as of March 31, 2008 can be summarized as follows:  OutstandingExercisableWeightedAverageWeightedWeightedRange ofRemainingAverageAverageExerciseNumber ofContractualExerciseNumber ofExercisePricesoptionsLife (Years)PriceoptionsPrice$0.522,000,0008.59$ 0.52-$-   The Company does not repurchase shares to fulfill the requirements of options that are exercised. Further, the Company issues new shares when options are exercised.  Note 11 - Warrants  As of March 31, 2008, there were 10,897,081 warrants outstanding. Each warrant entitles the holder to purchase one share of the common stock of the Company at an exercise price of $0.40 per share until September 25, 2010.  The Warrants are callable if the Companys common stock trades at a price of $0.70 or higher for 10 consecutive trading days on the OTCBB.   11   Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations  Forward-Looking Statements  Except for the historical information presented in this document, the matters discussed in this Form 10-Q for the three months ending March 31, 2008, this report contains forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for working capital.  Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words may, will, should, expect, anticipate, estimate, believe, intend, or project or the negative of these words or other variations on these words or comparable terminology.  This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements.  These statements may be found under Management's Discussion and Analysis of Financial Condition and Results of Operations,  Business, Properties, as well as in this report generally.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under Risk Factors and matters described in this report generally.  In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur.  Overview  PhytoMedical Technologies, Inc. together with its wholly owned subsidiaries, is a pharmaceutical company focused on research, development and commercialization of pharmaceutical products.  Diabetes Research  Through a sponsored research agreement with Iowa State University (ISU), we are working to synthesize certain insulin enhancing (or mimetic) compounds isolated and characterized from cinnamon bark over a ten year period by a team of United States Department of Agriculture (USDA) Agricultural Research Service (ARS) scientists.  These compounds increase insulin sensitivity by activating key enzymes that stimulate insulin receptors while inhibiting the enzymes that deactivate them.  The primary objectives of our research are to synthesize the active compounds found in cinnamon and characterize their beneficial health effects in cell cultures systems, animals, and ultimately humans. Once active compounds have been synthesized, characterized and tested, we intend to apply for patents for the synthesis and use of such synthetic compounds. Our goal is to develop a pharmacologically approved product that could be ingested orally.  Cancer Research  Pursuant to PhytoMedicals sponsored research agreement with Dartmouth College (Dartmouth), we are synthesizing and testing a novel class of anti-cancer agents which have a cytotoxic or poisonous affinity for cancer cells, and are designed to bind tightly to cancer cell DNA (deoxyribonucleic acid), the blueprint of life for the cancer cell. Previous studies conducted by Dartmouth using a mouse cell line, have demonstrated that such binding (or intercalation) should stop the replication of the DNA, and, ultimately, lead to the death of the cancer cell.  Following the preparation of starting materials, researchers will design, synthesize and test new examples of compounds known to bind to DNA, called bis-acridines; these bis-acridines will be tethered to the DNA with both flexible and semi-rigid linking chains.  If successfully synthesized, the compounds will be submitted for evaluation in human cancer cell lines.  Depending on research outcomes, our plans are to fund various in vitro (test tube) and in vivo (animal) experiments that will involve the use of several commercially available human cancer cell lines covering key areas of concern such as glioblastoma (tumors related to the central nervous system, including but not limited to the brain, spinal cord and optic nerve), small cell lung, breast, kidney, pancreatic, and liver cancers.  Our goal, based on the results of both the in vitro and in vivo tests, will involve identification of the key compound(s) that demonstrated the greatest anti-cancer activity per human cancer cell line.   12    Critical Accounting Policies  Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. We review our estimates on an ongoing basis.  We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made; and changes in the estimate or different estimates that could have been made could have a material impact on our results of operations or financial condition.  General and Administrative Expenses  Our general and administrative expenses consist primarily of personnel related costs, legal costs, including intellectual property, investor relations costs, stock based compensation costs, accounting costs, and other professional and administrative costs.  Research and Development Costs  Research and development costs represent costs incurred to develop our technology incurred pursuant to our sponsored research agreement with ISU and Dartmouth College. The agreements include salaries and benefits for research and development personnel, allocated overhead and facility occupancy costs, contract services and other costs. We charge all research and development expenses to operations as they are incurred except for prepayments which are capitalized and amortized over the applicable period. We do not track research and development expenses by project. In addition costs for third party laboratory work might occur.  Cooperative and License Agreements  Iowa State University  On February 1, 2007, through our wholly owned subsidiary, PolyPhenol Technologies Corporation, we entered into an expanded sponsored research agreement with ISU. Under terms of the agreement, PhytoMedical will continue to undertake its research at ISU for development of the Companys novel, synthesized type A-1 polyphenolic compounds.  Contractual Obligations to ISU:  Year 1: $62,251 to ISU in four equal quarterly installments , the first of which is due within 30 days of signing of the sponsored research agreement, the second of which is due to ISU 3 months from the previous payment;  Year 2: $70,295 to ISU in four equal quarterly installments, the first of which is due to ISU 3 months from the previous payment; and  Year 3: $72,140 to ISU in four equal quarterly installments, the first of which is due to ISU 3 months from the previous payment.  All rights, title, and interest in any subject invention made solely by us are owned by us, solely by ISU are owned by ISU, owned jointly by the two parties if made by any of the parties. The agreement or parts thereof, is subject to termination at any time by mutual consent.  Any party may unilaterally terminate the entire agreement at any time by giving the other party written notice not less than sixty calendar days prior to the desired termination date.  As at March 31, 2008, the Company paid in total of $224,339 as per agreement with ISU.  License Agreement  On June 12, 2006, through our wholly owned subsidiary, PolyPhenol Technologies Corporation, we entered into an exclusive license agreement with ISUs Iowa State University Research Foundation Inc. (ISURF) to develop, market and distribute novel synthesized compounds derived from type A-1 polyphenols, which have been linked to insulin sensitivity by the USDA's Agricultural Research Service.  13    Under terms of the agreement, we have to pay to ISURF license fees of $320,000, of which $20,000 is payable (paid) within 30 days of execution of the agreement, $50,000 is payable upon completion of the first successful Phase 2 clinical trial and the remaining $250,000 is payable upon first approval by the regulatory authority on new drug application. In addition, ISURF will receive royalty payments equal to 5% on the net sales of products, except that 3% will apply on the net sales of pharmaceutical products. We will pay a minimum annual royalty of $20,000, $50,000 and $100,000 in calendar years 2010, 2011, 2012 and onwards, respectively. We also have to reimburse ISURF the costs incurred for filing, prosecuting and maintaining the licensed patents together with 15% of the said costs, not exceeding $10,000, as the administration fee. We will administrate the development, regulatory approval and commercialization of the compounds and pursue future collaborative arrangements.  As of March 31, 2008, the Company paid in total of $20,000 for the license fee and $31,223 for reimbursement of the patent costs and research expenses as per agreement with ISURF.  Dartmouth Agreement  Pursuant to PhytoMedicals sponsored research agreement with Dartmouth, we are synthesizing and testing a novel class of anti-cancer agents which have a cytotoxic or poisonous affinity for cancer cells, and are designed to bind tightly to cancer cell DNA (deoxyribonucleic acid), the blueprint of life for the cancer cell.  Previous studies conducted by Dartmouth using a mouse cell line, have demonstrated that such binding (or intercalation) should stop the replication of the DNA, and, ultimately, lead to the death of the cancer cell.  Following the preparation of starting materials, researchers will design, synthesize and test new examples of compounds known to bind to DNA, called bis-acridines; these bis-acridines will be tethered to the DNA with both flexible and semi-rigid linking chains.  The compounds will be submitted for evaluation in human cancer cell lines.  Depending on research outcomes, our plans are to fund various in vitro (test tube) and in vivo (animal) experiments that will involve the use of several commercially available human cancer cell lines covering key areas of concern such as glioblastoma (tumors related to the central nervous system, including but not limited to the brain, spinal cord and optic nerve), small cell lung, breast, kidney, pancreatic, and liver cancers.  Our goal, based on the results of both the in vitro and in vivo tests, will involve identification of the key compound(s) that demonstrated the greatest anti-cancer activity per human cancer cell line.  Dartmouth granted us the option of a world-wide, royalty-bearing exclusive license to make, have made, use and sell in the field of oncology, the products embodying or produced through Dartmouths previous and future patents and through any joint-inventions related to the agreement, at reasonable terms and conditions as the parties may agree. We will reimburse Dartmouth for all costs associated with obtaining and maintaining Dartmouths pre-existing patents related to the subject technology.  As of March 31, 2008, the Company paid in total of $137,925 for research expenses as per agreement with Dartmouth.  Results of Operation  The Company has yet to establish any history of profitable operations.  The Company has incurred operating losses of $766,735 and $801,646 for the three months ended March 31, 2008 and March 31, 2007, respectively. As a result, at March 31, 2008, the Company has an accumulated deficit of $25,813,690.  We expect that our future revenues will not be sufficient to sustain our operations for the foreseeable future. Our profitability will require the successful completion of our research and development programs, and the subsequent commercialization of the results or of products derived from such research and development efforts.  No assurances can be given when this will occur or that we will ever be profitable.  Three Ended March 31, 2008 and 2007  The Company had no revenues in the three months ended March 31, 2008 and March 31, 2007. Our expenses decreased 21% to $617,483 in the three months ended March 31, 2008, from $747,808 in the same period in 2007. This decrease of $130,325 for the three months ended March 31, 2008 compared to the same period in 2007 was primarily attributable to a decrease in other operating expenses.   14   Interest income increased 487% to $13,401 in the three months ended March 31, 2008, from $2,283 during the same period in 2007, reflecting higher than average cash balances maintained during most of the first quarterly period in 2008.  We incurred net losses of $753,334 and $799,363 during the three months ended March 31, 2008 and in the same period in 2007, respectively.  Liquidity and Capital Resources  As at March 31, 2008, the Company had a cash balance of $1,399,718. The Company has financed its operations primarily from cash on hand during the three month period ending March 31, 2008.  Net cash flows used in operating activities was $782,753 for the three month period ending March 31, 2008, compared to net cash flows used of $451,103 for the same period in 2007.  Net cash used in financing activities was $250,000 for the three months period ending March 31, 2008 compared to net cash from financing activities $205,000 for the same period in 2007. The Company has financed its operations primarily from cash on hand.  At this time, we have no agreements or understandings with any third party regarding any financings.  Related Party Transactions  Directors Fees: During the three months ended March 31, 2008, the Company charged $3,150 (2007: $nil) to operations for director fees incurred for services rendered.  Notes Payable and Accrued Interest:  Notes Payable totaled $750,000 as at March 31, 2008, representing unsecured loans of $750,000 (8.50%) due to Mr. Harmel S. Rayat, a director and majority shareholder of the Company. During the three months ended March 31, 2008, the Company repaid $250,000 to the director and majority shareholder with the accrued interest of $67,664. The entire principal and accrued interest is due and payable on demand. Accrued and unpaid interest on the remaining note as of March 31, 2008, amounted to $199,371 and is included in interest payable - related parties.  The Company has arranged with Mr. Harmel S. Rayat, Chief Financial Officer, director and majority shareholder of the Company a loan amount up to $2,500,000. Proceeds from the loan, which will be drawn down on an as needed basis at a rate of prime plus 3%, will fund the Companys research and development plans, ongoing expenses for salaries, legal and accounting fees and a comprehensive investor relations and branding program, as well as for working capital and other contingencies.  Rent: The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by a director and majority shareholder. The Company paid rent of $6,451 (2007: $8,190) for three months ended March 31, 2008.  Mr. Harmel S. Rayat is an officer, director and majority stockholder of the Company. He is also an officer, director and majority shareholder of each of HepaLife Technologies, Inc., Entheos Technologies, Inc., Octillion Corp., MicroChannel Technologies Corporation and International Energy, Inc.  Off Balance Sheet Arrangements  We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.  Recent Accounting Pronouncements    In December 2007, the FASB ratified EITF No. 07-1, Accounting for Collaborative Arrangements,that discusses how parties to a collaborative arrangement (which does not establish a legal entity within such arrangement) should account for various activities. The consensus indicates that costs incurred and revenues generated from transactions with third parties (i.e.  15   parties outside of the collaborative arrangement) should be reported by the collaborators on the respective line items in their income statements pursuant to EITF Issue No. 99-19, Reporting Revenue Gross as a Principal Versus Net as an Agent.,Additionally, the consensus provides that income statement characterization of payments between the participants in a collaborative arrangement should be based upon existing authoritative pronouncements; analogy to such pronouncements if not within their scope; or a reasonable, rational, and consistently applied accounting policy election. EITF Issue No. 07-1 is effective for financial statements beginning after December 15, 2008 and is to be applied retrospectively to all periods presented for collaborative arrangements existing as of the date of adoption. The Company is evaluating the impact, if any, the adoption of this consensus will have on the results of operations, financial position or cash flows.  ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk  Our exposure to market risk is confined to our cash equivalents and short-term investments. We invest in high-quality financial instruments; primarily money market funds, federal agency notes, and US Treasury obligations, with the effective duration of the portfolio within one year which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. Due to the short-term nature of our investments, we do not believe that we have any material exposure to interest rate risk arising from our investments.  ITEM 4.   Controls and Procedures    Disclosure controls and procedures.  Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation 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 of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and chief financial officer concluded as of March 31, 2008 that our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.  Internal control over financial reporting.  There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2008 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.  16   PART II  Other Information  Item 1.   Legal Proceedings  None  Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds  None  Item 3.   Defaults Upon Senior Securities  None  Item 4.   Submission of Matters to a Vote of Security Holders  None  Item 5.   Other Information  None  Item 6.   Exhibits and Reports on Form 8-K  (a) Exhibits  31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)  31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)  32.1 Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  32.2 Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (b) Reports on Form 8-K  January 25, 2008: On January 22, 2008, PhytoMedical Technologies, Inc. issued a news release to announce that its patented bis-intercalator anti-cancer compound achieved a 50% or greater cancer cell kill rate in new in vitro studies of the DMS 114 strain of human small lung cancer cells  February 8, 2008: On February 4, 2008, PhytoMedical Technologies, Inc. issued a news release to announce that favorable research outcomes from ongoing tests have spurred immediate expansion of the Companys cancer research program, actively working to develop patented, next-generation anticancer compounds targeting multiple human cancer strains.  March 7, 2008: On March 3, 2008, PhytoMedical Technologies, Inc. issued a news release to announce positive results from new tests of the Companys patented next generation anti-cancer compounds, which have demonstrated the ability to kill difficult-to-treat human cancer cells, including colon cancer cells and human glioblastoma cells related to brain cancer, an often fatal form of cancer.    17   SIGNATURES  Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,  thereunto duly  authorized on this 14th day of May, 2008.   PhytoMedical Technologies, Inc. (Registrant)   Date Signature Title   May 14, 2008 /s/ Greg Wujek Director,  President, CEO Greg Wujek   May 14, 2008 /s/ Harmel Rayat Director, Secretary, Treasurer, Harmel S. Rayat Chief Financial Officer, Principal Accounting Officer     18