UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB*

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

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

Commission file number: 0-27848

BIOFIELD CORP.



(Exact name of small business issuer as specified in its charter)



|Delaware                                       13-3703450
(State or other jurisdiction of                    (IRS Employer
incorporation or organization)                  Identification No.)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



King of Prussia Business Center, Suite C

1019 West Ninth Avenue

King of Prussia, PA 19406

(Address of principal executive offices)

(215) 972-1717(Issuer's telephone number)

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

*Registrant has been delinquent in its Form 10-QSBs for fiscal quarters ended March 31, 2007 and June 30, 2007. Events discussed in this filing are reported and are accurate at the time of preparation.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

AS OF NOVEMBER 19, 2007, THERE WERE  43,142,936 SHARES OF COMMON STOCK ISSUED, 9,994,550 SHARES OF COMMON STOCK ISSUABLE, AND 12,300,000 SHARES OF SERIES A PREFERRED  SHARES ISSUABLE.

Transitional Small Business Disclosure Form Yes [ ] No [X]

1







---

FINANCIAL INFORMATION

Item 1.

Financial Statements



|BIOFIELD CORP. (A DEVELOPMENT STAGE COMPANY)               |                      |  |                  
|---------------------------------------------------------- | -------------------- |  | -----------------
|CONDENSED BALANCE SHEETS                                   |                      |  |                  
|                                                           |                      |  |                  
|                                                           | March 31,            |  | December 31,     
|ASSETS                                                     | 2007                 |  | 2006             
|                                                           | (Unaudited)          |  | (Audited)        
|CURRENT ASSETS:                                            |                      |  |                  
|Cash and cash equivalents                                  | $                 33 |  | $           2,361
|Accounts receivable                                        | 24,950               |  | -                
|Other current assets                                       | -                    |  | 8,234            
|Total current assets                                       | 24,983               |  | 10,595           
|                                                           |                      |  |                  
|PROPERTY AND EQUIPMENT - Net                               | -                    |  | 469              
|TOTAL ASSETS                                               | $          24,983    |  | $         11,064 
|                                                           |                      |  |                  
|LIABILITIES AND STOCKHOLDERS DEFICIT                      |                      |  |                  
|                                                           |                      |  |                  
|CURRENT LIABILITIES:                                       |                      |  |                  
|Accounts payable                                           | $     1,381,235      |  | $    1,352,641   
|Accrued interest                                           | 504,184              |  | 438,529          
|Accrued expenses                                           | 256,287              |  | 253,786          
|Due to affiliate                                           | 382,591              |  | 337,921          
|Advances from stockholder                                  | 2,015,246            |  | 1,966,094        
|Short-term notes payable                                   | 2,173,787            |  | 2,157,085        
|Total current liabilities                                  | 6,713,330            |  | 6,506,056        
|                                                           |                      |  |                  
|Commitments and contingencies                              |                      |  |                  
|                                                           |                      |  |                  
|STOCKHOLDERS DEFICIT:                                     |                      |  |                  
|Preferred stock, $.001 par value;  authorized 12,300,000   |                      |  |                  
|shares; 12,300,000 preferred shares, series A, issuable at |                      |  |                  
|March 31, 2007 and December 31, 2006, respectively         | 12,300               |  | 12,300           
|Common stock, $.001 par value; authorized 60,000,000       |                      |  |                  
|shares; issued 43,142,936 shares issued and 9,994,550      |                      |  |                  
|shares issuable at March 31, 2007 and December 31, 2006,   |                      |  |                  
|respectively                                               | 53,138               |  | 53,138           
|Treasury stock; 2,306,131 shares                           | (3,100)              |  | (3,100)          
|Stock subscriptions                                        | 3,849                |  | 3,849            
|Additional paid-in capital                                 | 66,263,340           |  | 66,263,340       
|Accumulated deficit during development stage               | (73,017,874)         |  | (72,824,519)     
|Total stockholders deficit                                | (6,688,347)          |  | (6,494,992)      
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT                | $          24,983    |  | $         11,064 
|                                                           |                      |  |                  
|See notes to condensed financial statements.              







2







---

|BIOFIELD CORP. (A  DEVELOPMENT STAGE COMPANY)               |                     |  |                      | 
|----------------------------------------------------------- | ------------------- |  | -------------------- | 
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |                     | 
|                                                            |                     |  |                      | 
|                                                            |                     |  |                      | 
|                                                            |                     |  |                      | 
|                                                            | Three Months Ended  |  | Inception) Through  
|                                                            | March 31,           |  | June 30,            
|                                                            | 2007                |  | 2006                 | 
|                                                            |                     |  |                      | 
|                                                            |                     |  |                      | 
|REVENUE                                                     | $          24,950   |  | $                  - | 
|COST OF SALES                                               |                     |  |                      | 
|Cost of goods sold                                          | 3,132               |  | -                    | 
|Loss on write down of inventory                             | -                   |  | -                    | 
|GROSS PROFIT (LOSS)                                         | 21,818              |  | -                    | 
|                                                            |                     |  |                      | 
|OPERATING EXPENSES:                                         |                     |  |                      | 
|Research and development                                    | -                   |  | -                    | 
|Selling, general, and administrative                        | 83,662              |  | 119,405              | 
|Impairment of intangible assets                             | -                   |  | -                    | 
|Gain on disposition of fixed assets                         | -                   |  | -                    | 
|Total operating expenses                                    | 83,662              |  | 119,405              | 
|                                                            |                     |  |                      | 
|                                                            |                     |  |                      | 
|OTHER INCOME (EXPENSE):                                     |                     |  |                      | 
|Interest income                                             | -                   |  | -                    | 
|Interest expense and other finance costs:                   |                     |  |                      | 
|Interest expense                                            | (131,511)           |  | (177,740)            | 
|Amortization of shares issued to lenders                    |                     |  |                      | 
|and other finance costs                                     | -                   |  | -                    | 
|Royalty income and other                                    | -                   |  | 22                   | 
|Net (expense) other income                                  | (131,511)           |  | (177,718)            | 
|LOSS BEFORE INCOME TAXES                                    | (193,356)           |  | (297,123)            | 
|PROVISION FOR INCOME TAXES                                  | -                   |  | -                    | 
|NET LOSS                                                    | $       (193,355)   |  | $       (297,123)    | 
|                                                            |                     |  |                      | 
|NET LOSS PER SHARE:                                         |                     |  |                      | 
|Basic and Diluted                                           | $            (0.00) |  | $            (0.01)  | 
|                                                            |                     |  |                      | 
|WEIGHTED-AVERAGE SHARES                                     |                     |  |                      | 
|Basic and Diluted                                           | 53,137,486          |  | 48,140,211           | 
|                                                            |                     |  |                      | 
|See notes to condensed financial statements.               



3







---



|BIOFIELD CORP. (A DEVELOPMENT STAGE COMPANY)                                |                       |  |                    |  |                             
|--------------------------------------------------------------------------- | --------------------- |  | ------------------ |  | ----------------------------
|CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)                              |                       |  |                    |  |                             
|                                                                            |                       |  |                    |  |                             
|                                                                            |                       |  |                    |  | Period October 16,          
|                                                                            |                       |  |                    |  | 1987 (Date of               
|                                                                            | Three months ended    |  | Inception) Through
|                                                                            | March 31,             |  | March 31,         
|CASH FLOW FROM OPERATING ACTIVITIES:                                        | 2007                  |  | 2006               |  | 2007                        
|Net loss                                                                    | $           (193,355) |  | $   (297,124)      |  | $               (73,017,874)
|Adjustments to reconcile net loss to net cash used in operating activities: |                       |  |                    |  |                             
|Depreciation and amortization                                               | 469                   |  | 507                |  | 2,761,675                   
|Amortization of premiums on short-term investments                          | -                     |  | -                  |  | 156,692                     
|Amortization of deferred financing costs                                    | -                     |  | -                  |  | 2,129,643                   
|Loss on disposal of property and equipment                                  | -                     |  | -                  |  | 194,102                     
|Loss on license and settlement agreements                                   | -                     |  | -                  |  | 49,026                      
|Loss on abandonment of patent applications                                  | -                     |  | -                  |  | 303,234                     
|Loss on inventory write-down                                                | -                     |  | -                  |  | 693,500                     
|Impairment of intangible assets                                             | -                     |  | -                  |  | 194,268                     
|Vendor settlements                                                          | -                     |  | -                  |  | (77,257)                    
|Noncash compensation                                                        | -                     |  | 25,000             |  | 3,533,451                   
|Gain from disposition of fixed assets                                       | -                     |  | -                  |  | (159,473)                   
|Interest paid in common stock                                               | -                     |  | 25,244             |  | 575,260                     
|Commissions and discounts on sale of common stock                           | -                     |  | -                  |  | 96,919                      
|Loan repayment default payable in shares of common stock                    | -                     |  | -                  |  | 350,000                     
|Consultancy fees paid in options                                            | -                     |  | 47,512             |  | 242,762                     
|Changes in assets and liabilities:                                          |                       |  |                    |  |                             
|Accounts receivable                                                         | (24,950)              |  | -                  |  | (24,950)                    
|Inventories                                                                 | -                     |  | -                  |  | (693,500)                   
|Prepaids                                                                    | 8,234                 |  | (750)              |  | (132,582)                   
|Due to affiliate                                                            | 44,670                |  | -                  |  | 382,591                     
|Accounts payable and accrued expenses                                       | 96,749                |  | 109,221            |  | 2,198,787                   
|Net cash used in operating activities                                       | (68,183)              |  | (90,390)           |  | (60,243,726)                
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |                       |  |                    |  |                             
|Acquisitions of property and equipment                                      | -                     |  | -                  |  | (2,610,691)                 
|Costs incurred for patents and patent applications                          | -                     |  | -                  |  | (782,527)                   
|Proceeds from sale of property and equipment                                | -                     |  | -                  |  | 294,748                     
|Purchases of short-term investments                                         | -                     |  | -                  |  | (26,476,638)                
|Proceeds from sale and maturity of short-term investments                   | -                     |  | -                  |  | 26,406,378                  
|Net cash used in investing activities                                       | -                     |  | -                  |  | (3,168,730)                 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |                       |  |                    |  |                             
|Repayments of capitalized lease obligations                                 | -                     |  | -                  |  | (82,234)                    
|Proceeds from issuance of preferred tock - net                              | -                     |  | -                  |  | 22,341,892                  
|Proceeds from issuance of common stock and common stock warrants - net      | -                     |  | -                  |  | 35,203,258                  
|Proceeds from exercise of common stock options and common stock warrants    | -                     |  | -                  |  | 298,546                     
|Proceeds from issuance of notes payable                                     | 207,694               |  | 15,184             |  | 1,696,694                   
|Notes financing costs                                                       | -                     |  | -                  |  | 262,077                     

4







---

|Advances from stockholder and related party                         | (141,839)                |  | 72,931           |  | 3,135,047                       
|------------------------------------------------------------------- | ------------------------ |  | ---------------- |  | --------------------------------
|Repayments of advances from stockholder                             | -                        |  | -                |  | (1,874,728)                     
|Repurchases of common stock held in treasury                        | -                        |  | -                |  | (3,100)                         
|Proceeds from notes payable issued to stockholder and related party | -                        |  | -                |  | 2,546,533                       
|Net cash provided by financing activities                           | 65,855                   |  | 88,115           |  | 63,523,985                      
|                                                                    |                          |  |                  |  |                                 
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                | (2,328)                  |  | (2,275)          |  | 111,530                         
|                                                                    |                          |  |                  |  |                                 
|EFFECT OF EXCHANGE RATE CHANGES                                     | -                        |  | -                |  | (111,497)                       
|                                                                    |                          |  |                  |  |                                 
|BEGINNING OF PERIOD                                                 | 2,361                    |  | 2,794            |  | -                               
|                                                                    |                          |  |                  |  |                                 
|END OF PERIOD                                                       | $                   33   |  | $          519   |  | $                            33 
|                                                                    |                          |  |                  |  |                                 
|Supplementary disclosure of cash flow information:                  |                          |  |                  |  |                                 
|Cash paid for interest                                              | $                      - |  | $              - |  | $                              -
|Cash paid for taxes                                                 | $                      - |  | $              - |  | $                              -
|                                                                    |                          |  |                  |  |                                 
|See notes to condensed financial statements.                       











5







---

BIOFIELD CORP.

A DEVELOPMENT STAGE COMPANY

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS



NOTE 1  ORGANIZATION



As a medical company, Biofield Corp. (the Company) has developed a highly proprietary system to assist in detecting breast cancer. The Company is still in a development stage.



The financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.  The Company has incurred operating losses since its inception. This condition raises substantial doubt as to the Companys ability to continue as a going concern as such continuance is dependent upon the Companys ability to raise sufficient capital.



The accompanying interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2007 and the related operating results and cash flows for the interim period presented have been made. The results of operations of such interim periods are not necessarily indicative of the results of the full year.  This financial information should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2006. There have been no changes in significant accounting policies since December 31, 2006.



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Principles of Consolidation



The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material inter-company transactions and balances have been eliminated in consolidation.



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Estimates that are critical to the accompanying financial statements arise from the determination of the fair value of the Companys investment. Because such determination involves subjective judgment, it is at least reasonably possible that the Companys estimates could change in the near term with respect to this matter.



Reclassification



Certain amounts in the 2006 consolidated financial statements have been reclassified for comparative purposes to conform to the presentation in the 2007 consolidated financial statements.



NOTE 3  RECENT ACCOUNTING PRONOUNCEMENTS



In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115" ("SFAS No.159"). SFAS

---

No. 159 allows companies to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 will become effective for the Company beginning in fiscal 2009. The Company is currently evaluating what effects the adoption of SFAS No. 159 will have on the Company's future results of operations and financial condition.



NOTE 4 - SUBSEQUENT EVENTS



China



On August 1, 2007, MacKay Group Limited (MKG) signed a memorandum of understanding (MOU) to form BIOFIELD ASIA, a joint venture with United Premier Medical Group Limited ("UPMG"), a premier healthcare provider, which in partnership with world renown Western healthcare providers, delivers healthcare services to China, including through UPMG's VIP OB/GYN centers in China.



Under the terms of the MOU, BIOFIELD ASIA will, on an exclusive basis, market, distribute, manufacture, and further develop and conduct R&D on the BDS in or for, among other markets, mainland China, Hong Kong, Macau, and Taiwan. Under the MOU, UPMG at its own cost will seek approval from the State Food and Drug Administration of the People's Republic of China, and will pay certain sums to purchase BDS devices and sensors and will pay certain sums upon certain milestones related to, among others, regulatory approval, manufacture, and sales in China and certain countries.



The Philippines



Since March 31, 2007, MKG has had repeated meetings with, and have conducted demonstrations for, significant government, church, healthcare, and distribution representatives in the Philippines.  In October 2007, MKG formed a joint venture with Eastern Petroleum Corporation, one of the leading businesses and petroleum companies in the Philippines.  The joint venture is called the MacKay Eastern Medical Group and will bear the exclusive responsibility and expense to distribute, market, gain regulatory approval for, and further develop the BDS and related technologies in the Philippines, Indonesia, and Malaysia.  In October 2007, an initial order of 10 devices and 20 cases of sensors was sold and delivered to the joint venture.  On October 24, 2007 the joint venture presented the BDS at a major breast cancer detection symposium in Manila attended by approximately 200 guests, including representatives from 100 of the top hospitals and medical institutions in the Philippines and government and industry representatives from the Philippines, China, and India.  The symposium generated significant interest from medical organizations throughout the Philippines, many of them are discussing possible purchase orders.  The Symposium further generated significant interest from leading organizations in China and India and discussions are taking place about distribution and manufacturing in China and India.



The MKG Master License



On July 27, 2007 the Company signed a master license agreement (the Agreement) with MKG. Pursuant to the Agreement, the Company granted to MKG an exclusive (even to the Company), sub licensable, royalty-bearing, worldwide license to make, have made, use, import, offer for sale, and sell devices, sensors and other products or services incorporating the Companys patented and unpatented breast cancer detection technology, including, but not limited to, the BDS, the Biofield Breast Cancer Proliferation Detection System, the Breast Cancer Diagnostic Device, and the Biofield Breast Examination or BBESM (collectively, the Technology).  The Company also granted MKG, on a worldwide basis, the Exclusive Distribution, Manufacturing, Development, Clinical, and R&D Rights (as those terms are defined in the Agreement) with regard to the Technology. Under the Agreement, MKG assumes from the Company the sole responsibility and expense to market, manufacture, further develop (clinically and technically), and otherwise commercialize the Technology.  MKG further assumes from the Company the sole responsibility and expense to secure additional regulatory approvals and to conduct additional clinical trials and R&D.  MKG will also make commercially reasonable efforts to, among other

7







---

things, further develop the Technology for screening, as opposed to purely diagnostic, purposes and for cancers other than breast cancer.



In return for the exclusive worldwide license, MKG will pay the Company royalties based on gross receipts received by MKG and its affiliates in connection with the Technology. MKG must pay minimum royalties. In addition to royalties, MKG will pay the Company licensing fees based upon certain milestones. The term of the Agreement is 10 years with automatic renewals for additional 10 year terms unless terminated by one of the parties pursuant to the terms of the Agreement.



Developments in the U.S.



Since March 31, 2007 the Company continued to transition its operations, facilities, inventory, and clinical, technical, and financial records from its former offices in Alpharetta, Georgia and California to the Companys new office in King of Prussia.  In July 19, 2007 the Company moved its principal executive office from 1615 Walnut Street, 3rd Floor, Philadelphia, PA 19103 and the contents of its former Alpharetta, Georgia facility to King of Prussia Business Center, Suite C, 1019 West Ninth Avenue, King of Prussia, PA 19406.



In May 2007 Michael Antonoplos was appointed as a Company director and as the Companys interim chief executive officer.  In July 2007 Kenny Lau, who helped spearhead the initiatives with UPMG, was also appointed Company director.  In July 2007, Michael Yoms position changed from president to chief operating officer.

Item 2.

Managements Discussion and Analysis or Plan of Operation

The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto appearing elsewhere in this document.

Certain statements contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report are forward-looking   statements that involve risks and   uncertainties.  These statements relate to future events or our future financial performance.  In some cases,  forward-looking  statements  can be  identified by  terminology  such as "may", "will", "should",  "expect",  "anticipate",  "intend", "plan", "believe", "estimate",  "potential",  or  "continue",  the negative of these terms or other comparable  terminology.  These statements involve a number of risks and uncertainties.  Actual  events  or  results  may  differ  materially  from  any forward-looking  statement  as a result  of  various  factors,  including  those described above and in the Companys last Form 10-KSB for 2005 under "Risk Factors", available online at http://www.sec.gov/Archives/edgar/data/1007018/

000112178106000104/biofield10ksb123105r.txt.  We have no obligation to release publicly the result of any revisions to any of our "forward-looking statements" to reflect events or circumstances that occur after the date of this Report or to reflect the occurrence of other unanticipated events.



THE COMPANYS FOCUS ON FOREIGN MARKETS UNDER MKG



Prior managements focus was on securing U.S. FDA approval to distribute the BDS in the U.S. Under MKG, the Company has reoriented its energies towards generating sales in foreign markets with significant populations of women, where MKG has significant industry and government relationships, where the need for the BDS appears compelling, and where the regulatory hurdles are not as burdensome.  Included among the foreign markets are China (including Hong Kong and Macau), India, the Philippines, Indonesia, Malaysia, and other parts of Asia, Mexico, Latin America, the Caribbean, Africa, Europe, and the Middle East.  The initial countries MKG is focusing on (China, India, Indonesia, the Philippines, Mexico, and Malaysia) account for approximately one half of the worlds female population.  As articulated in the recent October 15, 2007 Time article, MKG recognized from the outset that breast cancer is no longer an affliction which only concerns certain segments of women in the U.S. and Western

8







---

Europe but is tragically a global challenge.  Given the nature of the BDS, the Company believes that the BDS can play a role to help promote early detection in foreign countries, which for a variety of reasons may not have the detection technologies present in the U.S. and Western Europe.



Since 2007, MKG has been working with leading government, medical, distribution, and manufacturing representatives, agencies, and institutions in China, India, the Philippines and other parts of Asia to incorporate the BDS as part of early detection and awareness initiatives. Since 2007, MKG has also been working with those representatives, agencies, and institutions to manufacture the BDS device and sensors overseas; to conduct clinical trials, including joint U.S.-Asian trials; to further develop the BDS device and sensors for screening purposes; and to further develop the BDS device and sensors for cancers other than breast cancer.



Under MKG, the Company is continuing its efforts to secure U.S. FDA approval and in 2007 is working with regulatory, clinical, medical, legal and other experts in the U.S. and Asia towards that end. The Company believes that the government and industry relationships, the possible significant clinical data and research and development (including as it may pertain to screening and other cancers), and revenues it secures abroad will facilitate its efforts to secure U.S. FDA approval.



MKG Initiatives in Foreign Markets



In 2007 MKG continued to meet with significant government, healthcare, distribution, and manufacturing contacts to distribute, manufacture, and develop the BDS in foreign markets. MKG strategy is to form strategic alliances, in the form of a joint venture or sublicense, with entities with significant funding, government relationships and distribution networks, especially those associated with hospital systems, regulatory expertise, and manufacturing capabilities. The joint venture assumes all responsibilities and expenses within the designated territory to distribute the BDS, secure regulatory approval for the BDS, conduct clinical trials and development, and in some cases to manufacture the BDS.



China



In early to middle 2007, MKG has had discussions with representatives of Chinese government, including those associated with Chinas state and military hospitals, about potential orders of the BDS and sensors.  The Chinese representative expressed significant interest in the BDS and discussed, among other things, potential orders for Chinese hospitals; designating a top Chinese medical institution and doctor to work with the Company on additional clinical trials and R&D including joint U.S.-Chinese trials and including on screening and cancers other than breast cancer; incorporating the BDS into Chinese early detection initiatives and a cancer fund established for the indigent.



On August 1, 2007, MKG signed a memorandum of understanding (MOU) to form BIOFIELD ASIA, a joint venture with United Premier Medical Group Limited ("UPMG"), a premier healthcare provider, which in partnership with world renown Western healthcare providers, delivers healthcare services to China, including through UPMG's VIP OB/GYN centers in China.  See MKG press release dated August 1, 2007 available online at http://biz.yahoo.com/bw/070801/20070801005219.html.v=1.



Under the terms of the MOU, BIOFIELD ASIA will, on an exclusive basis, market, distribute, manufacture, and further develop and conduct R&D on the BDS in or for, among other markets, mainland China, Hong Kong, Macau, and Taiwan. Under the MOU, UPMG at its own cost will seek approval from the State Food and Drug Administration of the People's Republic of China, and will pay certain sums to purchase BDS devices and sensors and will pay certain sums upon certain milestones related to, among others, regulatory approval, manufacture, and sales in China and certain countries.



Following the successful demonstration of the BDS at the October 24, 2007 major breast cancer detection symposium in Manila, which was attended by leading Chinese representatives, arrangements are being made for additional meetings with leading Chinese health officials.

9







---



According to the U.N., there are over 172 million women in mainland China, Hong Kong, and Macau ages 40-70 years old.  According to the International Agency for Research on Cancer, the breast cancer incidence rate in China is 18.7 per 100,000.



India



In 2007, MKG has had discussions with hospital, medical and distribution representatives from India, including those associated with leading hospital systems and distribution networks in India, about the distribution of the BDS in India.  Following the successful demonstration of the BDS at the October 24, 2007 major breast cancer detection symposium in Manila, which was attended by leading Indian representatives, there was significant interest from Indian representatives about potential significant orders and about distributing and securing regulatory approval for the BDS in India and other countries in the Indian subcontinent including Nepal and Bangladesh.  Arrangements are being made for meetings in India in October-November 2007.  The Company expects to conclude a distribution arrangement in India before the end of 2007.



According to the U.N., there are over 103 million women in India ages 40-70 years old. According to the International Agency for Research on Cancer, the breast cancer incidence rate in India is 19.1 per 100,000.



The Philippines, Indonesia and Malaysia



In 2007 MKG has had repeated meetings with, and have conducted demonstrations for, significant government, church, healthcare, and distribution representatives in the Philippines. On March 8, 2007, MKG delivered a BDS device and three cases of sensors to a hospital in the Philippines.  The hospital has started to take the unit to the provinces as part of their mobile health systems services.  MKG believes that the Filipino Government and the Catholic Church in the Philippines will publicly support the BDS as part of national initiatives promoting early detection of breast cancer.



In October 2007, MKG formed a joint venture with Eastern Petroleum Corporation, one of the leading businesses and petroleum companies in the Philippines.  The joint venture is called the MacKay Eastern Medical Group and will bear the exclusive responsibility and expense to distribute, market, secure regulatory approval for, and further develop the BDS and related technologies in the Philippines, Indonesia, and Malaysia.  In October 2007, an initial order of 10 devices and 20 cases of sensors was sold and delivered to the joint venture.  On October 24, 2007 the joint venture presented the BDS at a major breast cancer detection symposium in Manila attended by approximately 200 guests, including representatives from 100 of the top hospitals and medical institutions in the Philippines and government and industry representatives from the Philippines, China, and India.  Following the successful demonstration of the BDS at the October 24, 2007 major breast cancer detection symposium in Manila, discussions are taking place about potential significant orders to be delivered in early 2008.



According to the U.N., there are over 22.45, 8.5, and 3 million women ages 40-70 years old in Indonesia, the Philippines and Malaysia respectively. According to the International Agency for Research on Cancer, the breast cancer incidence rate in Indonesia, the Philippines, and Malaysia is 26.1, 46.6, and 30.8 per 100,000 respectively.



Mexico



In January 2007, on behalf of the Company, certain representatives successfully conducted patient demonstrations and seminars of the BDS in Mexico City before more than 50 OB/GYN and other physicians, nurses, officials, and representatives from leading hospitals, clinics, laboratories, pharmaceutical companies, and other health providers based in Mexico and other countries in Latin America. The demonstrations and seminars were conducted by a noted physician in Mexico City on

10







---

female patients with pre-confirmed malignant and benign tumors. Biofields device tested successfully in the patient demonstrations, generating substantial interest among Mexican OBY/GYN and healthcare communities. The purpose of the demonstrations and seminars was to introduce Biofields technology to leading opinion makers in the Mexican healthcare community and to seek to secure purchase orders for the device and sensors. Subsequent meetings and discussions have taken place with leading hospitals, clinics, physicians, and other opinion leaders in Mexico, many of which also have clinics, stores, or other facilities in other Latin American countries. Presentations of Biofields technology were also made on Mexican TV.  See Companys press release dated February 23, 2007, a copy of which is posted on the Companys website www.biofield.com.



Continued discussions have taken place with the Mexican representatives who conducted the Mexico City demonstration (as well as with other representatives).  Discussions have taken place about sublicensing the BDS for Mexico and Spanish-speaking countries in Latin America, purchase orders for the BDS devices and sensors and securing regulatory approval and establishing manufacturing facilities for the BDS in Mexico.  MKG believes that sublicense arrangements will be finalized before the end of 2007.



According to the U.N., there are over 11.6 million women ages 40-70 years old in Mexico. According to the International Agency for Research on Cancer, the breast cancer incidence rate in Mexico is 26.4 per 100,000 respectively.



Singapore



On February 28, 2007, Biofield sold a BDS device and three cases of sensors to leading distributor in Singapore. The gross proceeds totaled $24,950.  The distributor is an industry leader in Singapore in biomedical engineering, which serves all the major medical centers and hospitals in Singapore.  The end user is a nationally and internationally acclaimed institution in Singapore, which is recognized as an innovator for cutting edge technologies, including those in the biomedical science industry and medical device field, and for its commitment to public and community service. The sale was the result of a tender which was awarded to the Company.  In addition to using the BDS for diagnostic purposes, the end user is conducting significant research which may impact the use of the BDS for screening purposes.  The distributor believes its clients may be interested in buying the BDS devices and sensors. See Company press release dated February 28, 2007 available online at www.biofield.com and http://investor.biospace.com/biospace?GUID=1276816&Page=MediaViewer&Ticker=BZET.



According to the U.N., there are over 645,000 women ages 40-70 years old in Singapore.



Other Foreign Markets



In 2007, MKG has had discussions with representatives in other foreign countries concerning South Africa, Japan, and other countries in the Middle East and Africa.  The Company under prior management presented the BDS to leading government, hospital, and medical representatives from South Africa, including First Lady Mbeki.  During the same trip, the Company met with leading government representatives from Botswana.  Significant interest was received including interest about transporting the BDS through mobile van units.  There are currently several BDS devices in South Africa.  The Company has also conducted demonstrations for leading Japanese representatives. One of the Companys prior clinical trials took place in Japan.  Discussions have also taken place about distributing the BDS in Middle Eastern countries such as Iraq, Saudi Arabia, United Arab Emirates, Kuwait, Jordan, and Lebanon.



According to the U.N., there are over 5.1 and 25 million women ages 40-70 years old in South Africa and Japan respectively. According to the International Agency for Research on Cancer, the breast cancer incidence rate in South Africa and Japan is 35 and 32.7 per 100,000 respectively.



Developments in the U.S.

11







---



In 2007 the Company continued to transition its operations, facilities, inventory, and clinical, technical, and financial records from its former offices in Alpharetta, Georgia and California to the Companys new office in King of Prussia.  In July 19, 2007 the Company moved its principal executive office from 1615 Walnut Street, 3rd Floor, Philadelphia, PA 19103 and the contents of its former Alpharetta, Georgia facility to King of Prussia Business Center, Suite C, 1019 West Ninth Avenue, King of Prussia, PA 19406.  Now that the move is complete, the Company is undergoing the steps needed to audit and certify the King of Prussia office and the re-issuance of the CE Mark precipitated by the change in facilities.  See the Companys Form 8-K filed July 19, 2007, available online at http://www.sec.gov/Archives/edgar/

data/1007018/000112178107000218/biofielda8k71907.htm.



In May 2007, Michael Antonoplos was appointed as a Company director and as the Companys interim chief executive officer.  Kenny Lau, who helped spearhead the initiatives with UPMG, was also appointed Company director in July 2007.  In May 2007, Michael Yoms position changed from president to chief operating officer. See the Companys Form 8-K filed July 19, 2007, available online at http://www.sec.gov/Archives/edgar/data/1007018/000112178107000218/biofielda8k71907.htm. The Company continues to meet and have discussions with representatives with significant financial and medical expertise to bolster the Companys management, board, and advisory board.



In 2007 the Company continues to make efforts to (1) manufacture the new prototype of the BDS device (in the U.S., China, Mexico and elsewhere) and (2) reinitiate additional clinical trials in the U.S. which would help facilitate securing U.S. FDA approval.  The Company has had repeated discussions with former representatives of the Company and physicians involved in developing the BDS, clinical trials and development, and the use of the BDS for screening purposes. Those discussions are in addition to the discussions MKG has had and continues to have with leading representatives in China, India, the Philippines and other foreign countries. Several of the representatives and physicians the Company is meeting with have successfully secured U.S. FDA approval for other technology.  Further, the Company has had discussions and meetings with healthcare institutions in the U.S. about additional clinical trials, the use of the BDS in womens health centers, and possible joint clinical trials with leading medical institutions in Asia and Europe introduced by MKG.  Given the availability of patients for clinical trials in Asia and MKGs relationship with leading Asian medical institutions, one of MKGs goals is to conduct clinical trials in Asia with leading Asian and Western medical institutions, which would facilitate efforts to secure U.S. FDA approval. Finally, the Company has met with engineering and design experts in the U.S. and China to manufacture the new prototype of the BDS device and further develop the devise and sensors for screening.  Device schematics are now being reviewed by experts in China to manufacture the new prototype in China.  The Company is also considering facilities in the U.S. which have been certified by the U.S. FDA with regard to non-invasive cancer detection technology.



In October 2007 the Company and MKG entered into a collaboration agreement with SpectRx, Inc.   The chief executive officer of SpectRx, Dr. Mark Faupel, was one of the original inventors of the BDS and has developed similar non-invasive cervical cancer technology. Dr. Faupel and fellow SpectRx board member and international healthcare policy expert, Dr. Ronald Hart, helped presented the BDS at the October 24, 2007 Manila Breast Cancer Detection Symposium. SpectRx has certified manufacturing facilities in the U.S. and will help the Company manufacture the new prototype of the BDS for potential purchase orders from Asia and elsewhere.  Upon reestablishing manufacturing from the U.S. to fulfill more immediate purchase order, discussions are occurring with SpectRx to manufacture the BDS in Asia. SpectRx has CE Mark certification and will work with the Company to expeditiously secure CE Mark certification from the Companys new facilities in King of Prussia and/or from SpectRxs facilities in Atlanta.  SpectRx also has substantial experience before the U.S. FDA and will work with the Company to reinitiate its efforts before the U.S. FDA.  From his time at the Company, Dr. Faupel also has extensive knowledge about the screening application for the BDS and will work with the Company to further develop the BDS device, sensors, and sensor configurations for screening purposes. SpectRx will also work with the Company and MKG to conduct clinical trials, including joint U.S.-Asia trials, which may help the Companys efforts before the U.S. FDA and which relate to the application of the BDS for

12







---

screening and cancers other than breast cancer.  In turn, using its significant relationships in Asia, MKG and the Company will help market and distribute SpectRxs cervical cancer technology in Asia.  MKG have subsequently entered into an arrangement with SpectRx and its affiliates to manufacture the BDS.  Under this arrangement, MKG will become the exclusive distributor of SpectRxs cervical cancer detection technology for Asia.



In 2007, the Company has met with and is working with a leading sensor manufacturer to manufacture the necessary quantities of BDS sensors.  The manufacturer produced the sensors for the Companys Singapore and Filipino orders and for demonstrations in China and Manila.  The manufacturer and its affiliates has manufacturing facilities in the U.S., Eastern Europe, China, and India.  In fall of 2007, the Company visited the manufacturers facilities in Shanghai.  The Company has also discussed with the manufacturer about further developing the sensor for screening purposes.



After previously reducing its debt by $2 million in 2006, in 2007 the Company continues to make efforts to reduce its debt with several of its major creditors.



LONG-TERM STRATEGY AND GOALS



The long term strategy and goal of the Company under MKG is to become a leading provider of state-of-the-art medical and healthcare-related technology throughout the world.  The Companys immediate goal is the distribution and manufacture of the BDS first in foreign markets and then in the U.S. upon securing U.S. FDA approval.  The Company under MKG, however, is working with medical experts in the U.S., Asia, the Middle East, and Europe on advanced medical and healthcare-related technologies other than the BDS, which MKG can use its government and industry relationships in Asia and elsewhere to distribute, manufacture and further develop.  While many of these other technologies relate to womens health and non-invasive technologies, other technologies relate to fields such as hospital and data management, emergency or triage management, diabetes, obesity, and childhood diseases and care.



On the BDS, the Companys goal is to use MKGs government, medical, distribution, manufacturing and other relationships overseas to develop the BDS as a leading breast cancer detection modality outside the U.S.  The initial focus is on China, India, the Philippines, Indonesia, Malaysia, and Mexico.  The Company under MKG will then extend to other parts of Asia, Latin America, the Caribbean, Africa, Europe, and the Middle East.  MKG is currently working with representatives from some of those areas. With sales, acceptance and support from leading government, medical, and industry representatives, clinical trial results, and further research and development from those countries, the Company under MKG will reinitiate efforts before the U.S. FDA to distribute the improved version of the BDS in the U.S.



The Company under MKG seeks to gain acceptance of the BDS overseas at many levels. The first level is with government. Since 2007 MKG has been working with government, healthcare, hospital and other representatives in China, the Philippines and elsewhere to incorporate the BDS as part of national initiatives relating to womens health, early awareness and detection, and cancer programs and funds for the indigent. Discussions to date have generated interest from government not only in potential purchase orders but also with respect to coordinating the Companys clinical and R&D efforts with leading local doctors, hospitals, and agencies; conducting joint U.S.-Asia clinical trials including on screening and other cancers; securing the appropriate regulatory approvals; and manufacturing the BDS overseas.



Second, MKG has been working with leading foreign hospital and medical institutions, which are considered to be influential medical opinion leaders in the country.  Discussions to date have generated interest relating to potential purchase orders and to potential joint clinical trials and development with leading institutions and experts in the U.S. and Europe, including on screening and other cancers.



The third level relates to distribution.  MKG has been working with entities which are considered among the leading businesses in the country and which have established reputations, distribution networks, and manufacturing, logistics, funding and other resources.  Some of these entities own, manage, and/or

13







---

operate hospital and medical networks.  Some are just leading businesses in the country with established distribution networks and a history and vision of helping the citizens of its country.



The fourth level relates to manufacturing.  MKG has been working with manufacturers in China and Mexico which are reviewing the schematics and other materials relating to the prototype device.   MKG has also been working with a sensor manufacturer with manufacturing facilities in China, India, Eastern Europe, and the U.S.  MKG recognizes the importance of properly reestablishing manufacturing given regulatory requirements here and overseas.  Its intent is to first reestablish manufacturing of the prototype device in the U.S. and then supplement and/or transfer manufacturing to certified manufacturing facilities in China, India, Mexico and elsewhere.  It is working with technical and regulatory experts in the U.S. and Asia to properly reestablish manufacturing.  Its ultimate goal is develop its own certified manufacturing facilities, whether in the U.S., Asia and/or elsewhere, which not only would eliminate outsourcing but allow manufacture of other possible medical technology.



Ultimately, the Company under MKG will reinitiate efforts before the U.S. FDA.  To properly prepare for those efforts, MKG is working with regulatory, medical, and legal experts in the U.S., some of which were involved in the Companys previous efforts, and which have substantial experience with the U.S. FDA approval process.  MKG believes that by gaining acceptance of the BDS (government, medical opinion makers and distribution) in significant and heavily populated countries such as China, India, the Philippines, Indonesia, and Mexico and by supplementing the Companys prior clinical trials and R&D with joint U.S.-Asia clinical trials in countries which population size presents an ideal base for clinical trials, these efforts will help the Companys future efforts before the U.S. FDA.  China, India, the Philippines, Indonesia and Mexico represent a significant percentage of the worlds female population.



LIQUIDITY AND CAPITAL RESOURCES



Since the MKG Acquisition on March 30, 2006 we have financed our operations primarily with loans or advanced made by MKG.  During the three months ended March 31, 2007, the Company continued to focus on the transition to new management and facilities and on efforts to penetrate significant foreign markets in Asia including China, the Philippines, and Singapore.



At March 31, 2007 we had a working capital deficiency of $6,688,346.



Our total assets were $24,983 at March 31, 2007. Our cash and cash equivalents were $33 at March 31, 2007.  For the three months ended March 31, 2007 there was a decrease in cash and cash equivalents of $2,328, from $2,361 as of December 31, 2006. Our accounts receivable was $24,950 at March 31, 2007.



Operating Activities



At March 31, 2007, we had no value on the balance sheet for the inventory as a full provision has been recorded for all the items in our inventory. Property and equipment is now fully depreciated.



During the three months ended March 31, 2007, we had a net loss of $193,355, compared to $297,123 for the three months ended March 31, 2006, a decrease of $103,768.   During the three months ended March 31, 2007, our net cash used in operating activities was $68,183, compared to $90,390 for the three months ended March 31, 2006, a decrease of $22,207 or 25%.  The decrease was primarily due to the Companys efforts to transition to new management and facilities.



During the three months ended March 31, 2007, we had an increase in accounts receivables of $24,950, compared to $0 for the three months ended March 31, 2006.  During the three months ended March 31, 2007, we had an increase in  due to affiliate of $$44,670, compared to $0 for the three months ended March 31, 2006. During the three months ended March 31, 2007, accounts payable and accrued liabilities increased $96,749, compared to an increase of $109,221 for the three months ended March 31, 2006, a differential of $12,472 or 11%.

14







---



During the three months ended March 31, 2007, we had depreciation and amortization in connection with operating activities of $469 compared to $507 for the three months ended March 31, 2006, a decrease of $38.



During the three months ended March 31, 2007 we had no non-cash compensation, interest paid in common stock, and share based compensation for consultancy fees paid in options compared to $25,000, $25,244, and $47,512, respectively, for the three months ended March 31, 2006.



Investing Activities



There were no investing activities ended March 31, 2007 and March 31, 2006 respectively.



Financing Activities



During the three months ended March 31, 2007, we had net cash provided by financing activities of $65,855, compared to $88,115 for the three months ended March 31, 2006.  During the three months ended March 31, 2007, we had proceeds from issuance of notes payable of $207,694, compared to $15,184 for the three months ended March 31, 2006.  During the three months ended March 31, 2007 we had a reduction in advances of stockholder and related parties of $141,839, compared to an increase of $72,931 for the three months ended March 31, 2006.   During the three months ended March 31, 2007 and 2006 there were no issuances of common stock, preferred stock, or common stock warrants nor were there any common stock options or warrants exercised.



While we have raised capital to meet our working capital and financing needs in the past, additional financing is required in order to meet our current and projected cash flow deficits from operations and development.  We are seeking financing in the form of equity in order to provide the necessary working capital.  We currently have no commitments for financing.  There is no guarantee that we will be successful in raising the funds required.



By adjusting its operations and development to the level of capitalization, management believes it has sufficient capital resources to meet projected cash flow deficits through the next twelve months. However, if we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition.



The independent auditors report on our December 31, 2006 financial statements states that our recurring losses raise substantial doubts about our ability to continue as a going concern.



RESULTS OF OPERATIONS



Comparison of the three month period ended March 31, 2007 with the three month period ended March 31, 2006



In the fiscal quarter ended March 31, 2007, we sold one device and 3 cases of sensors to a Singaporean distributor.   The gross proceeds were $24,950.  The cost of goods sold was $3,132.  A full provision has been recorded in prior periods for inventory which impacts cost of sales for 2007.  In 2006 we did not sell any products and did not incur any cost of sales.



The total operating expenses for the three months ended March 31, 2007 and March 31, 2006 were $83,662 and $119,405 respectively, thus representing a decrease of $35,743 or 30%.  This decrease period over period is due to reduced operations in 2007. All of our total operating expenses for these three months were selling, general and administrative expenses. We did not incur any research and

15







---

development expenses or impairment to intangible assets in the fiscal quarters ending March 31, 2007 and 2006.



Net interest expense for the three months ended March 31, 2007 and March 31, 2006 was $131,511 and $177,740, representing a decrease of $46,229 or 26%. Period over period, the decrease is a direct result of debt reductions in the first quarter of 2007.



There was no amortization of shares issued to lenders and other finance costs for the three months ended March 31, 2007 and March 31, 2006.



As a result of the foregoing, we incurred a net loss of $193,355 for the three months ended March 31, 2007, compared to $297,123 for the three months ended March 31, 2006, a decrease of $103,768, or 35%.





PRODUCT RESEARCH AND DEVELOPMENT



Material research and development expenditures are expected during the next 12 months, as MKG as the Companys master licensee and MKGs sublicensees proceed to distribute and manufacture the BDS overseas, further develop the BDS, and reinitiate efforts before the U.S. FDA.  Much of the expenses, with the exception of the efforts before the U.S. FDA, will be borne on MKG as the master licensee or MKGs sublicensees.



ACQUISITION OR DISPOSITION OF PLANT AND EQUIPMENT



Overseas sales of the current version of the BDS and sensors are expected to occur during the next 12 months.  We are also working to manufacture more devices and sensors for prospective orders.  The acquisition of significant property, plant or equipment is also expected during the next 12 months as MKG and its sublicensee proceed to distribute and manufacture the BDS overseas.  Much of the expenses will be borne by MKG as the master licensee or MKGs sublicensees.



NUMBER OF EMPLOYEES



From our inception through the MKG Acquisition on March 30, 2006, we relied on the services of outside consultants and had two full time employees.  From the MKG Acquisition to December 31, 2006, we relied on the services of MKG representatives and outside consultants and 1 full time employee.  In 2007, the Company under MKG has been working with medical, financial, regulatory, technical, legal and other experts in the U.S. and Asia towards distributing and manufacturing the BDS overseas, taking the steps for CE Mark certification for the Companys new facilities, reinitiating efforts before the U.S. FDA, and further developing the prototype of the BDS device and the BDS sensors.  Within the next 12 months, the Company under MKG anticipates bringing in these experts as part of the Companys management, outside consultants, board, and advisory board. In order for us to attract quality personnel, we anticipate we will have to offer competitive salaries. relied on the services of outside consultants for services and had two full time employees. relied on the services of outside consultants for services and had two full time employees. As we continue to expand, we will incur additional cost for personnel. This projected increase in personnel is dependent upon our generating revenues and obtaining sources of financing.  There is no guarantee that we will be successful in raising the funds required or generating revenues sufficient to fund the projected increase in the number of employees.



OFF-BALANCE SHEET ARRANGEMENTS



None.



Item 3.

Controls and Procedures

16







---

Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that partly due to the transition to new management and facilities, our disclosure controls and procedures need improvement and were not adequately effective as of December 31, 2006 to ensure timely reporting with the Securities and Exchange Commission.  Our management is in the process of identifying deficiencies with respect to our disclosure controls and procedures and implementing corrective measures, which includes the establishment of new internal policies related to financial reporting.



CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING



As  required by Rule  13a-15(d),  the  Company's  Chairman  and Chief  Financial Officer,  also  conducted an  evaluation of  Biofield's  internal  controls over financial  reporting to determine whether any changes occurred during the fourth fiscal  quarter  that have  materially  affected,  or are  reasonably  likely to materially  affect,  the Company's  internal  control over financial  reporting.  During the preparation of the Company's financial statements as of and for the year ended December 31, 2006, the Company has concluded that the current system of disclosure controls and procedures needs improvement, partly due to the transition to new management, facilities, and auditors.  As a result of this conclusion, the Company has initiated the changes in internal control.  It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met.  In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Lack of Adequate Accounting Staff

Due to limitations in financial and management resources, the Company does not have adequate accounting staff.  As a result, the Company took steps to address its understaffed Finance and Accounting team to correct this material weakness.  The Company engaged an independent contractor with extensive CFO-level management and SEC reporting experience in public companies.  The Company feels this addition to the Company's Finance and Accounting team will improve the quality of future period financial reporting.

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

We are currently not a party to any pending legal proceeding which is not routine litigation incidental to our business or which involves a claim for damages exceeding 10% of our current assets, nor are we aware of any current proceeding concerning us that a governmental authority may be contemplating.

Item 1A.

Risk factors

The U.S. FDA Has Rejected Our Most Recent Submission for Approval of the Biofield

Diagnostic Device and Reclassified Our Device



In March 2004, we submitted our application for clearance of our device, pursuant to the U.S. FDA's 510(k) clearance procedure to KEMA for review prior to formal submission to the U.S. FDA. KEMA subsequently recommended to the U.S. FDA that our diagnostic device be approved.  In November 2004, we submitted our application for formal submission to the U.S. FDA to approve our device.



In December 2004, the U.S. FDA notified us that it had reclassified by statute the BDS into class III (Pre-market Approval) pursuant to Section 513(f) of the Federal Food, Drug and Cosmetic Act. As a

result of the U.S. FDAs reclassification, we must, absent any subsequent reclassification, obtain PMA approval prior to legally marketing or distributing our device.  The basis of the U.S. FDA's decision was its determination that the device is not "substantially equivalent to devices marketed in U.S. interstate

17







---

commerce...." The U.S. FDA also informed us that although a manufacturer whose device is found to be not substantially  equivalent to a predicate  device can request the U.S. FDA to make a  risk-based  classification  for its device,  the U.S. FDA believes that "based on the review of your device,  general  controls would be inadequate and special controls difficult to develop,  to provide  reasonable  assurance of the device's safety and effectiveness."



Had the FDA accepted our submission for clearance, we would have been able to commence sales and marketing efforts in the U.S. immediately.  However, on March 4, 2005 we were notified by the U.S.  FDA that it had reviewed our petition for reclassification and concluded that we have not demonstrated  that the device meets the criteria under section 513(a)(1) of the Federal Food Drug and Cosmetic act (21 U.S.C.  360c (a) (1)) for classification into class I or II. Therefore the device is automatically classified in class III requiring approval through a pre-market approval.  Consequently, there can be no assurance that we will ever obtain FDA clearance for the BDS. At a minimum, we will likely experience  significant additional expense and time in order to obtain clearance for our device from the FDA.



As stated above, at the same time it is proceeding to distribute and manufacture the BDS in foreign countries, which are subject to different regulatory requirements than those of the U.S. FDA, the Company under MKG is concurrently working with regulatory, medical, clinical, legal and technical experts to reinitiate the Companys efforts before the U.S. FDA. The Company under MKG is prepared, and is working with regulatory, medical, and clinical experts in the U.S. and abroad, to proceed ahead to obtain PMA approval.  It is still assessing however its options to reclassify its device. Given the interest it has generated with government and medical representatives overseas, the prospect of joint Asia-U.S. clinical trials and the number of potential clinical subjects in heavily populated countries in Asia, the Company believes that its initiatives overseas will help it when it resubmits before the U.S. FDA.  There can be no reasonable assurance that the Companys efforts to secure U.S. FDA approval will be successful.



We Need to Obtain Financing in Order to Continue Our Operations or we will Cease Operations



Prior to the March 30, 2006 MKG Acquisition, we virtually had no money to operate.  From December 2004 to March 30, 2006, we have survived on some funding we obtained from issuance of notes, sale of our shares abroad and advances made by Dr. Long and his affiliates.  As of March 30, 2006, the Company owed Dr. Long and his affiliates approximately $4.3 million.  We  were  unable  to  repay  the  $1  million  of 12% promissory  notes which we issued in a private  placement  in December  2003 and January and February 2004, when it became due on December 31, 2004. The $329,000 private placement notes and the $50,000 note to our placement agent, both due on May 31, 2005, also remain unpaid.  All the notes will bear interest (until paid) at 1.5% per month after the due dates. Prior to the MKG Acquisition, we had been seeking long-term financing through investment banking channels for over four years, but have not yet been successful in obtaining adequate financing.  We stated in our 2005 Form 10-KSB that unless such resources timely become available, we will be compelled to cease operations.



The situation did not materially change in 2006, as the Company under MKG was focused on, among other things, the transition to new management and facilities.  In 2006, the Company under MKG did reduce the Companys debt by $2 million, and in 2007 is working with several of its major creditors on further debt reduction.  In 2006, the Company under MKG relied on funding in the form of advances by MKG and the issuance of certain notes.  In 2007, the Company under MKG has begun to make arrangements overseas, including China, India, the Philippines, Indonesia, and Mexico, which should generate significant sales revenues, and which also has generated interest from certain significant investors in the U.S. and abroad.  There can be no reasonable assurances that the Companys funding/ sales efforts will be successful.



We Anticipate Significant Dilution of Our Current Stockholders in Obtaining Necessary Funding



18







---

Our $1 million and $329,000 private placements and our $50,000 note to our placement agent required us to issue (in addition to $1.4 million of short-term notes) an aggregate of approximately 6.9 million shares of our common stock.  We also issued 2.5 million shares to the holders of the notes under $1

million private placement for not repaying the notes on December 31, 2004 and 897,500 shares when we defaulted in payment of $329,000 and $50,000 notes on May 31, 2005.  Due to our weak financial position, lack of operating history and inherent risk attached with start-up projects, the cost of obtaining new finance will continue to be very high, and if arrangements involve issuance of shares, the future dilutions could be significant.



We Have a Limited Operating History



We have had a limited history of operations.  From our inception in October 1987 to the MKG Acquisition, we have engaged principally in the development of our device, which has not been approved for sale in the United States.  Consequently, we have little experience in manufacturing, marketing and selling our products.  Since the MKG Acquisition, the Company has utilized MKGs foreign government, manufacturing, distribution, and industry relationships to proceed to distribute the BDS overseas.  Moreover, the Company under MKG is working with regulatory, medical, clinical and manufacturing experts in the U.S. and abroad to distribute, manufacture and further develop the BDS.  There can be no reasonable assurances, however, that such efforts will be successful.



We Expect to Continue to Incur Significant Operating Losses Which Endangers our Viability as a Going-Concern



Prior to the MKG Acquisition, we had no established source of operating revenue and had incurred net operating losses since our inception.  At December 31, 2005, we had an accumulated deficit of approximately $72 million.  These losses have resulted principally from costs incurred in research and development and clinical trials and from general and administrative costs associated with our operations.  Prior to the MKG Acquisition, we expected operating losses to continue, mainly due to the anticipated expenses associated with the pre-market  approval process and proposed  commercialization of  our  device,  research  and  development  and marketing activities and administration   costs. Our  continuing  losses  have  caused  our  independent accountants to qualify their audit report  regarding our use of "going  concern" basis  of  accounting  in  preparation  of  our  2006   consolidated   financial

statements.  The Company under MKG is now focused on distributing the BDS overseas based on MKGs foreign government, industry, and distribution relationships, which MKG believes will not only generate significant revenues and potentially bring in investment, but will also work with MKG and the Company to further develop the BDS, including with respect to clinical trials and research and development. There can be no reasonable assurances, however, that such efforts will be successful.





Our Business May Never Become Profitable



Prior to the MKG Acquisition, our ability to achieve profitability will depend, in substantial part, on our ability to obtain regulatory approvals in the U.S. for our device, and to develop the capacity to successfully manufacture and market our device within a reasonable time.  Prior to the MKG Acquisition, we could not assure you when, or if, we will receive required regulatory approvals to manufacture and market our device.  Accordingly, prior to the MKG Acquisition, the extent of future losses and the time required to achieve profitability, were highly uncertain.  The Company under MKG is proceeding to distribute the BDS overseas and is working with government representatives and regulatory, clinical and medical experts in the U.S. and Asia to timely secure the appropriate regulatory approvals for the applicable countries.  There can be no reasonable assurances that such efforts will be successful.



Our Cash Flow Problems Have Caused Us to Be Delinquent in Payments to Vendors and Other Creditors



19







---

Since  1998,  our lack of  financial  resources  has caused us to delay payment of our  obligations  as they  became due in the  ordinary  course of our business.  Such delays have damaged some of our vendor and professional relationships, and have caused us to incur additional expenses in the payment of

late charges and penalties.  As of December 31, 2005, we had a working capital deficiency of $7.8 million and accounts payable, primarily to service providers and vendors, aggregating approximately $1.3 million, substantially all of which are past due. These amounts have increased since December 31, 2005. At December 31, 2005, we also owed our employees approximately $217,245.  While it was consumed for most of 2006 in the transition to new management and facilities, the Company under MKG is working to reduce its debt with several of the major creditors and in 2006 reduced the debt by $2 million.  There can be no reasonable assurances that its efforts to further resolve debt will be successful.



We Will Require Significant Additional Capital to Continue Operations Which May Not Be Available



Prior to the MKG Acquisition, we expected that we will need significant additional funding to complete all the steps necessary to receive approval from the FDA, for operating expenses and for our marketing program.  Moreover,  our  fixed  commitments,  including salaries and fees for current  employees and consultants,  rent,  payments under license agreements and other contractual  commitments,  including commitments to previous  service  providers and others which are contingent upon improvement in our cash position and have been extended until some indefinite  future time, are substantial  and are likely to increase.  Prior to the MKG Acquisition, we did not expect to generate  positive cash flow for at least several  years,  if at all, as revenues,  initially,  are unlikely to cover funds required for operating expenses,  including the expected cost of  commercializing  our  device.  Prior to the MKG Acquisition. we could not assure you that additional financing would be available when needed or, if available, would be available on acceptable terms.  Since 2001 to the MKG Acquisition, insufficient funds have prevented us from implementing our business strategy and have required us to delay, scale back or eliminate certain activities.  Since the MKG Acquisition, the Company under MKG has garnered significant interest overseas for the BDS and is proceeding to generate sales overseas and to secure funding here and abroad.  There can be no reasonable assurances that such efforts will be successful.



We May Never Be Able to Bring our Device to Market or Sustain Its Sales After Regulatory Approval



Our device faces a high degree of uncertainty, including the following:



·

we may not be able to obtain United States regulatory approval. Obtaining regulatory approval may take significantly more time and cost significantly more money than anticipated.  Lack of United States regulatory approval has significantly affected our ability to sell our device outside of the United States.



·

we may not be able to produce our device in commercial quantities at reasonable cost.



·

we may  not be able  to  successfully  market  our  device  or find an appropriate  corporate  partner,  if  necessary,  to  assist us in the marketing of our device.



·

our device may not gain satisfactory market acceptance.



·

our device may be superseded by another product commercialized for the same use or may infringe patents issued to others, which would prevent us from marketing and selling our device.



·

after approval, our device may be recalled or withdrawn at any time as a result of regulatory issues, including those concerning safety and efficacy.



If we are unable to  successfully  market  our  device or  sustain  its sales,  our business,  financial  condition  and results of  operations  will be significantly and adversely affected.

20







---



The Company under MKG is proceeding to distribute the BDS overseas and has cultivated significant foreign government, medical, distribution, regulatory, and manufacturing relationship, which it believes will help reinitiate its efforts before the U.S. FDA.  Among its foreign initiatives, MKG is working with significant government, medical, distribution and industry entities overseas to market, distribute, and promote the BDS.  The interest generated so far overseas has been significant.  The Company under MKG is also working with regulatory, manufacturing, clinical and technical experts in the U.S. and overseas to manufacture the BDS in the U.S., China, and Mexico, among other countries, at comparable manufacturing costs and at the appropriate quality assurance levels.  There can be no reasonable assurances that such efforts will be successful.



We  Are  Currently  Dependent  on a  Single  Product  Which  Has  Not  Yet  Been Commercialized



We intend to develop additional applications for our device, based on its core technology, none of these applications is expected to result in a commercial product for at least several years, if at all.  Consequently, until  such  time,  if  at  all,  as  our  device  is  approved  for  commercial distribution in the United States,  limited  distribution of our device overseas will account for substantially all of our revenues, if any.  The Company, under MKG, is proceeding to distribute the BDS overseas and is working with foreign government, medical, and other experts to develop the BDS for additional applications such as screening and diagnosis of other cancers.  Moreover, the Company, under MKG, is working to acquire the rights to other medical technologies.  There can be no reasonable assurances that such efforts will be successful.



Our Contract Manufacturers May Be Unable to Produce Commercial Quantities of Our Products



Our current contract manufacturer for our device has not yet completed the redesign of a new version of our device due to our delay in payment for its redesign services and has not yet manufactured our device. We cannot assure you that it will complete its redesign services or be able to manufacture in volume,

when or if the need may arise. If this situation occurs, our business could be significantly and adversely affected.  Given the interest generated overseas, the Company under MKG is considering many options with regard to manufacture, both in the U.S. and overseas, including China, India, and Mexico.  There can be no reasonable assurances that such efforts will be successful.



If Our Single Source Suppliers Are Unable to Deliver, Our Business Would Suffer



For certain services and components, we currently rely on single suppliers. If we encounter delays or difficulties with our third-party suppliers in producing, packaging or distributing our device and its components, market introduction and subsequent sales would be significantly adversely affected. If

we are required to rely on alternative  sources of supply,  we cannot assure you that  we  will  be  able  to  enter  into  alternative  supply  arrangements  at commercially  acceptable  rates, if at all. If we are unable to obtain or retain qualified suppliers and contract manufacturers on commercially acceptable terms,

we will not be able to commercialize our device as planned.  Our dependence upon third parties for the manufacture and supply of our device and components may significantly and adversely affect our ability to attain profitability and our ability to manufacture and deliver our device on a timely and competitive basis.



We May Not Be Able to Apply Our Technology to Other Uses and Products



We cannot assure you that our technology will be approved and accepted for breast cancer screening or for the detection of other cancers.  Furthermore, we also cannot assure you, even if we can develop any new products or uses for our current device, that such products or uses would be approved by the U.S. FDA or by any comparable foreign regulatory bodies, or would be commercially viable.



We May Not Be Able to Obtain Government Regulatory Approval to Market and Sell Our Products

21







---



Regulation by governmental authorities in the United States will be a significant factor in the manufacture and marketing of our products, as well as our research and development activities.  All of our  proposed  products  will require regulatory  approval by governmental  agencies before  commercialization and our products  must undergo  rigorous  preclinical  and clinical  testing and other pre-market approval procedures prescribed by the FDA. Various federal and, in some cases,  state  statutes and  regulations  also govern or  influence  the manufacturing,  safety,  labeling,  storage,  record  keeping and  marketing  of medical  devices.  The lengthy process of seeking these approvals, and the subsequent compliance with applicable statutes and regulations will require us to expend substantial resources.  If we  fail  to  obtain  or  are  otherwise substantially  delayed in  obtaining  regulatory  approvals,  our  business  and operations  could be  significantly  and adversely  affected.  The regulation of medical devices, particularly in Europe, continues to develop and we cannot assure that, as new laws and regulations are adopted, these actions will not have an adverse effect on us.



Our Device Will Be Subject to Continuing Review by the U.S. FDA Which Could Impact On Our Ability to Sell It in the Future



Changes to our device or the manner in which it is used after it is approved will require additional approval by the U.S. FDA. Our failure to receive approval of such a change on a timely basis, or at all, would have a significant adverse effect on our business.



A Failure of Our Contract Manufacturers to Comply with U.S. FDA Regulations Would Impact On Our Ability to Sell Our Device



We cannot assure that our manufacturers will be in compliance with the U.S. FDA's quality system regulations and good manufacturing practices, when the U.S. FDA inspects them, or that they will continue to maintain this compliance. A failure to maintain  compliance  could  significantly  delay  approval of our pre-market application  to the U.S. FDA for our  device or prevent  us from  marketing  it if we obtain  this  approval,  and  would  have a  significant  adverse  effect on our business.



If Foreign Regulatory Approvals Are Withdrawn, Our Business Will Suffer



We cannot assure you that the foreign regulatory approvals that we have received, which allow us to sell the prior version of our device in certain foreign countries, will not be withdrawn or that our redesigned device, when completed, will receive regulatory approval. Our failure to continue to maintain

these approvals or to obtain any additional foreign approvals could have a significant adverse effect on our business.



Changes to Health Care Reimbursement Regulations and Practices Could Adversely Affect Us



Our ability to successfully  commercialize our products will depend, in part,  on the extent to which  reimbursement  for the cost of our  products  and related  treatment  will be  available  from  government  health  administration authorities, private health insurers and other organizations.  These third-parties

payers are increasingly challenging the price of medical products and services.



Several proposals have been made that may lead to a government-directed national health care system.  Adoption  of this  type of  system  could  further  limit reimbursement  for  medical  products,  and we cannot  assure you that  adequate third-party  coverage  will be  available  to enable us to  establish,  and then maintain, price levels sufficient to generate reasonable profit. In addition, we also cannot assure you that the U.S.  government or foreign governments will not implement a system of price controls.  Any change in the existing system might significantly affect our ability to market our products profitably.



Health Care Insurers May Not Reimburse For the Use of Our Products



22







---

Governmental  health  authorities,  private  health  insurers and other organizations  may  not  approve  the  cost  for  the  use of our  device  as an authorized  medical  expenditure  under their  programs,  which  would  severely restrict the marketability of our device.



Certain Foreign Governments May Not Give Reimbursement Code for Our Device



Government health authorities, especially in the countries where most of the reimbursements flow through government agencies, may not provide us with a reimbursement code, which is required for claiming the cost for the use of our device from government agencies.  If we are unable to obtain such reimbursement codes in major markets, marketability of our device may be severely restricted.



We Expect to Encounter Difficulty in Hiring Required Personnel and the Loss of any Key Personnel Could Adversely Affect our Operations



As a small medical technology company, we are heavily dependent upon the talents of key personnel.  Due to lack of funding, we were unable to hire permanent employees.  We use services of some of the ex-employees as consultants when we have the cash and if they are available to perform the required

services.  Competition  for  qualified  personnel  in  the  medical  device  and biotechnology  industries is intense and we do not know if we will be successful in our  recruitment  efforts.  If we are unable to attract, and then retain, qualified personnel, our operations will be significantly adversely affected.  Given the interest MKG has generated overseas, the Company under MKG is working with experts in the U.S. and overseas on distributing, manufacturing and further developing the BDS (clinically and technically).  There can be no reasonable assurances that such efforts will be successful.



Our Results of Operations May Suffer if Foreign Trade is Restricted or Foreign Regulations are Modified



Until we receive approval from the U.S. FDA to market our device in the United States, our revenues, if any, will be derived from international sales. A significant portion of our revenues,  therefore,  may be subject to the risks  associated with  international  sales,  including  foreign regulatory  requirements,  economic or political  instability,  shipping delays, fluctuations in foreign currency exchange rates and various trade  restrictions, all of which could have a significant  impact on our ability to deliver products on a  competitive  and  timely  basis  and our  ability  to  achieve  profitable operations.  Future  impositions  of, or significant  increases in the level of, customs  duties,  export  quotas  or  other  trade  restrictions  could  have  a significant adverse effect on our business.



We Face Substantial Competition in the Medical Technology Field and May Not Be Able to Successfully Compete



The medical technology industry is highly competitive, particularly in the area of cancer screening and diagnostic products. We are likely to encounter significant  competition  with  respect  to our  device,  as well  as any  other products  that we may  develop.  A number of companies are engaged in the same

field as us, and many of these companies have significantly greater financial, technical and marketing resources than us. In addition,  many of these companies may have more  established  positions in the industry and may be better equipped than  us to  develop,  refine  and  market  their  products.  Our inability to successfully compete in the industry would have a significant adverse effect on

our business.



Our Device May Be Rendered Obsolete By Rapid Technological Changes



Methods for the detection of cancer are subject to rapid technological innovation and we cannot assure you that technological changes will not render our device obsolete.  Likewise, we cannot assure you that the development of new types of diagnostic medical equipment or technology will not have a significant

adverse effect on the marketability of our device.  Commercial availability of any new product could render our device obsolete, which would have a significant adverse effect on our business.

23







---



Product Liability Claims in Excess of the Amount of Our Insurance Could Significantly Affect Our Financial Condition



Our business exposes us to potential product liability risks, which are inherent in the testing, manufacturing and marketing of cancer detection products. Significant litigation, none of which has involved us, has occurred in the past based on allegations of false negative diagnoses of cancer.  While our device does not purport to diagnose any patient, we cannot assure you that we will not be subjected to future claims and potential liability. We cannot assure you  that  claims  against  us  arising  with  respect  to our  device  will  be successfully  defended  or  that  any  insurance  which  we then  carry  will be sufficient to cover  liabilities  arising from these claims.  A successful claim against us in excess of any insurance coverage, which we may have, would, in most instances, deplete our assets and have a significant adverse effect on our business.  Furthermore, we cannot assure that we will be able to obtain, or maintain, liability insurance on acceptable terms.



Our Contract Manufacturers Use Potentially Hazardous Materials, the Replacement of Which Could Affect Our Costs



Although we do not manufacture any of our products, we understand that various cleaning solvents, used in connection with the contract manufacture of our products, may contain potentially hazardous materials.  As a result, our contract manufacturers, in the future, could become subject to stringent

federal,  state and local laws,  rules,  regulations and policies  governing the use,  generation,   manufacture,  storage,  air  emission,  effluent  discharge, handling and disposal of these materials.  We cannot assure you that we will not incur significant future price increases imposed by our contract manufacturers to comply with environmental laws, rules, regulations and policies, or that our

business will not be significantly  and adversely  affected by current or future environmental  laws,  rules,  regulations  and  policies  or by any  releases or discharges of hazardous materials.



If We Are Unable to Protect Our Intellectual Property Rights, We Could Lose Our Competitive Advantage



Our commercial success will be dependent upon proprietary rights that we own or license.  We cannot assure you that any of our patents will not be invalidated or that our patents will provide us protection that has commercial significance. Litigation may be necessary to protect our patent positions, which

could be costly and time consuming.  If any of our key patents that we own or license is invalidated, our business may be significantly adversely affected. In addition,  other companies may have trade secrets or may  independently  develop know-how  or  obtain  access  to our  trade  secrets,  know-how  or  proprietary technology, which could significantly and adversely affect our business.



We Do Not Have the Financial Resources to Enforce and Defend All of Our Intellectual Property Rights



The actions, which we may take to protect our intellectual property, may not be adequate to deter misappropriation of this property. We currently do not have adequate financial resources required to enforce, through litigation, our intellectual property rights.  In addition, litigation could result in a

substantial diversion of managerial time and resources, which could adversely affect our business.



Our Device May Infringe Third Party Intellectual Property Rights



Other companies may have obtained other   proprietary   rights to technology that may be potentially useful to us. It is possible that a third party could successfully claim that our device or its components infringe on its intellectual property rights.  If this were to occur, we may be subject to substantial damages, and we may not be able to obtain appropriate licenses at a cost that we could afford and we may not have the ability to timely redesign our device. If we are required to pay material damages or are unable to obtain these rights or are unable to successfully redesign our device at a reasonable cost,

24







---

our business could be significantly and adversely affected.



Our Stock Price Has Been Volatile



The price of our common stock has fluctuated substantially since our initial public offering in 1996.  The market price for our common stock, like that of the common stock of many other medical device companies, is likely to continue to be highly volatile.



Our Principal Stockholder Can Control Most Matters Requiring Approval by Our Stockholders



On March 30, 2006, the Long Group entered into three agreements with MKG.  The  agreements  provide,  among  other  things,  that  MKG  will  hold  a controlling interest in the Company. As a result, MKG has significant influence on the nomination and election of our directors, our policies and the outcome of all important matters that are subject to the vote of our stockholders.  This concentration of ownership, among other things, also may increase our difficulty in raising necessary financing.



We Lack Independent Directors



We cannot assure you that our Board of Directors will have independent directors.  Our previous  independent  directors  resigned in December 2002 due, among other  things,  to our  potential  inability  to maintain  directors'  and officers'  liability  insurance  and to our  financial  inability to continue to

assure that we will operate as a going concern.  In the absence of a majority of independent directors, our current three-member Board of Directors could establish policies and enter into transactions without independent review. This could  present  the  potential  for a conflict  of  interest  between us and our stockholders,  and increases our difficulty in raising necessary  financing.  In addition,  we cannot  establish  an audit  committee or  compensation  committee without independent  directors,  which could prohibit us from listing our shares of common stock for trading on a recognized  national  securities exchange or on any electronic exchange regulated by NASDAQ.  The Company under MKG intends to restructure its board to bring in independent directors as to preserve or prepare for future potential listing opportunities.  There can be no reasonable assurances that such efforts will be successful.



We May Issue Preferred Stock



Our Board of  Directors  has the  authority  to issue up to  12,300,000 shares of  preferred  stock and to  determine  the price,  rights,  preferences, conversion and other privileges and  restrictions,  including voting rights,  of those shares without any vote or action by our common  stockholders.  The rights

of the holders of the common stock will be subject to, and could be materially adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.  The  issuance of  preferred  stock,  while  providing flexibility  in connection  with  corporate  purposes,  could have the effect of

delaying,  deferring  or  preventing  a change in control,  discouraging  tender offers for the common  stock,  and  materially  adversely  affecting  the voting rights and market price of the common stock.



Our Stockholders Could Be Adversely Affected by the Anti-Takeover Effects of Delaware Law



We are  subject  to  the  provisions  of  Section  203  of the  General Corporation  Law of the State of Delaware.  In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder for a period of three years after the date of

the  transaction in which the person becomes an interested  stockholder,  unless the  business  combination  is  approved  in a  prescribed  manner or unless the interested  stockholder  acquires at least 85% of the corporation's voting stock (excluding shares held by certain designated stockholders) in the transaction in which it becomes an interested  stockholder.  A "business combination" includes

mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder.  Subject to certain exceptions, an interested stockholder" is a person who, together with affiliates and associates,  owns, or within the previous three years did own, 15% or more of the corporation's voting

25







---

stock.  This provision of the Delaware law could delay and make more difficult a business  combination,  even if the business  combination would be beneficial to the  interests  of our  stockholders,  and also  could  limit the price  certain investors might be willing to pay for shares of our common stock.



We Do Not Expect That We Will Pay Dividends



We have never declared or paid any cash dividends on our capital stock and do not intend to pay any cash dividends in the foreseeable future.



Our  Obligation to Maintain the  Registration  of Shares of our Common Stock for Two Years Will be Costly and May Lower the Market Price of Our Common Stock.



We are required to maintain the effectiveness of the registration statement of the shares issued in our $1 million and $329,000 private placements for two years from the date of effectiveness.  The cost of maintaining such effectiveness will affect the availability of funds for our business operations.

Furthermore,  sales of these  registered  shares of common  stock in the  public market,  or the perception that these sales could occur,  could adversely affect the  trading  price of our common  stock and could  impair our  ability to raise funding through an offering of our equity securities.



IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD, WE COULD BE INVESTIGATED BY THE SEC OR WE COULD INCUR LIABILITY TO OUR SHAREHOLDERS.



Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. Failure to remain current in our reporting obligations might also subject us to SEC investigation or private rights of action by our shareholders.



OUR  COMMON  STOCK IS SUBJECT  TO THE  "PENNY  STOCK"  RULES OFF THE SEC AND THE TRADING MARKET IN OUR  SECURITIES IS LIMITED,  WHICH MAKES  TRANSACTIONS  IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.



The  Securities  and  Exchange  Commission  has  adopted  Rule 15g-9 which establishes the definition of a "penny stock," for the purposes  relevant to us, as any equity  security  that has a market price of less than $5.00 per share or with an  exercise  price of less  than  $5.00  per  share,  subject  to  certain

exceptions.  For any transaction involving a penny stock, unless exempt, the rules require:

·

that a broker or dealer approve a person's account for transactions in penny stocks; and

·

the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.



In order to approve a persons account for transactions in penny stocks, the broker or dealer must:

·

obtain financial information and investment experience objectives of the person; and

·

make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.



The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

26







---

·

sets  forth  the  basis  on  which  the  broker  or  dealer  made  the suitability determination; and

·

that the broker or dealer received a signed, written agreement from the investor prior to the transaction.



Generally,  brokers  may  be  less  willing  to  execute  transactions  in securities  subject to the "penny stock" rules.  This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.



Disclosure also has to be made  about  the  risks of  investing  in penny stocks  in  both  public  offerings  and in  secondary  trading  and  about  the commissions payable to both the broker-dealer and the registered representative, current  quotations for the securities and the rights and remedies  available to

an investor in cases of fraud in penny stock transactions.  Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.



In addition to the above risk factors set forth in the Companys Form 10-KSB for fiscal year ending December 31, 2005, additional risk factors may arise as a result of new managements focus on distributing and manufacturing the BDS overseas, especially in China.  These include risks associated  with  the  political  and  economic environment,  foreign  currency  exchange  and the legal  system in foreign countries. The economy of China and other foreign countries differs significantly  from the  economies  of the  western industrialized  nations in such  respects as  structure,  level of  development, growth  rate,   capital   reinvestment,   repatriation,   resource   allocation, self-sufficiency,  rate of  inflation  and balance of payment  positions,  among others. While certain foreign governments such as China have enacted laws encouraging foreign investment, it remains to be seen how uniformly they will be enforced and interpreted.



As to China, a major focus of the Company under MKG, the Chinese economy has experienced significant growth in the past several years, but such growth has been uneven among various sectors of the economy and geographic regions.  Such development and growth may present risks to entities operating in China.  Because of the challenges created by such growth, the Chinese government has indicated and taken certain steps to control such growth and address such challenges. Actions by Chinese government to control inflation, for example, have restrained economic expansion in the recent past across several industrial sectors.  Similar and continued actions by the Chinese government in the future could have a significant adverse effect on domestic economic condition in China. There can be no reasonable assurances that there will not be any changes respecting Chinese government, economy, laws, and regulation which may adversely affect the Company.

Item 2.

Unregistered sale 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

No matter was submitted to a vote of our securities holders during the fiscal quarter ended March 31, 2007.

Item 5.

Other information

Not applicable.

27







---

Item 6.

Exhibits and Reports on Form 8-K

A. Exhibits

Exhibit (31) Rule 13a-14(a)/15d-14(a) Certification by Michael J. Antonoplos (Chief Executive Officer) and Joseph Repko (Chief Financial Officer).

Exhibit (32) Section 1350 Certification by Michael J. Antonoplos (Chief Executive Officer) and Joseph Repko (Chief Financial Officer).

B. Reports on Form 8-K

Form 8-K filed March 21, 2007 (pertaining to change in auditors) available on the U.S. SEC website, www.sec.gov at:

http://www.sec.gov/Archives/edgar/data/1007018/000112178107000066/0001121781-07-000066-index.htm



Form 8-K/A filed March 27, 2007 (pertaining to change in auditors) available on the U.S. SEC website, www.sec.gov at:

http://www.sec.gov/Archives/edgar/data/1007018/000112178107000070/0001121781-07-000070-index.htm



Form 8-K/A filed April 7, 2007 (pertaining to change in auditors) available on the U.S. SEC website, www.sec.gov at:

http://www.sec.gov/Archives/edgar/data/1007018/000112178107000088/0001121781-07-000088-index.htm



Form 8-K filed July 19, 2007 (pertaining to new directors and officers and new office) available on the U.S. SEC website, www.sec.gov at:

http://www.sec.gov/Archives/edgar/data/1007018/000112178107000218/0001121781-07-000218-index.htm



Form 8-K filed July 31, 2007 (pertaining to master license agreement) available on the U.S. SEC website, www.sec.gov at:

http://www.sec.gov/Archives/edgar/data/1007018/000112178107000222/0001121781-07-000222-index.htm



C.

Press Releases



Press release dated February 23, 2007 (related to Mexico demonstration) available at:

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=ind_focus.story&STORY=/www/story/02-23-2007/0004533317&EDATE=FRI+Feb+23+2007,+08:45+AM



Press release dated February 28, 2007 (related to Singapore sale) available at:

http://sev.prnewswire.com/biotechnology/20070228/CLW04928022007-1.html



Press released dated March 8, 2007 (related to delivery of device and sensors to the Philippines) available at:

http://sev.prnewswire.com/biotechnology/20070308/CLTH11308032007-1.html



Press release dated July 30, 2007 (related to Biofield-MKG master license agreement) available at:

http://biz.yahoo.com/bw/070730/20070730005474.html?.v=1



28







---

Press release dated August 1, 2007 (related to MKG sublicense to UPMG for China) available at:

http://biz.yahoo.com/bw/070801/20070801005219.html?.v=1



Press release dated October 23, 2007 (related to Filipino joint venture and initial purchase order) available at:

http://biz.yahoo.com/bw/071023/20071023006000.html?.v=1



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

BIOFIELD CORP.



| | Date: November 19, 2007 | By: /s/ Michael J. Antonoplos 
                    Michael J. Antonopolos
               (Chief Executive Officer)
| | ----------------------- | ------------------------------------------------------------------------------------------------------------------
| | Date: November 19, 2007 | By: /s/ Joseph Repko               Joseph Repko
          (Chief Financial Officer)                               















29