**U.
      S. SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**







**FORM
      10-QSB**










QUARTERLY
      REPORT UNDER SECTION 13 OR 15 (d) OF THE


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the quarterly period ended: June 30, 2007**




**Commission
      file No.333-90738**









**Biomoda,
      Inc.**


(Name
      of
      small business issuer as specified in its charter)





**New
                Mexico**
            **85-0392345**(State
                of incorporation)
            (IRS
                Employer Identification No.)







**8301
      Washington NE, Suite 6, Albuquerque, New Mexico 87113**


(Address
      of principal executive offices including zip code)





Issuer's
      telephone
      number:        **(505)
      821-0875**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the  Exchange Act during the past 12 months (or for such
      shorter  period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days.


Yes
x     No
      o





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





The
      number of issuer’s shares of Common Stock outstanding as of August 17, 2007 was
      15,695,652.





Transitional
      Small Business Disclosure Format (check one): Yes o No x











Table
          of Contents








**TABLEOF
      CONTENTS**





**Page****PART
                  I.**
              **Financial
                  Information**Item
                  1.
              Consolidated
                  Financial Statements
                  (unaudited)
              4Item
                  2.
              Management's
                  Discussion and Analysis or Plan of
                  Operation
              10Item
                  3.
              Controls
                  and Procedures
              12**PART
                  II.**
              **Other
                  Information**Item
                  1.
              Legal
                  Proceedings
              13Item
                  2.
              Changes
                  in Securities
              13Item
                  3.
              Defaults
                  Upon Senior Securities
              13Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              13Item
                  5.
              Other
                  Information
              13Item
                  6.
              Exhibits
              13Signatures
              
              14








2
 Table
          of Contents








**PART
      I: FINANCIAL INFORMATION**





Forward
      - Looking Statements





This
      Form
      10-QSB contains forward-looking statements about the business, financial
      condition and prospects of the Company that reflect assumptions made by
      management and management's beliefs based on information currently available
      to
      it. The Company can give no assurance that the expectations indicated by such
      forward-looking statements will be realized. If any of management's assumptions
      should prove incorrect, or if any of the risks and uncertainties underlying
      such
      expectations should materialize, the Company’s actual results may differ
      materially from those indicated by the forward-looking statements.





The
      key
      factors that are not within the Company's control and that may have a direct
      bearing on operating results include, but are not limited to, the acceptance
      by
      customers of the Company's products, the Company's ability to develop new
      products cost-effectively, the ability of the Company to raise capital in the
      future, the development by competitors of products using improved or alternative
      technology, the retention of key employees and general economic
      conditions.





There
      may
      be other risks and circumstances that management is unable to predict. When
      used
      in this Form 10-QSB, words such as, "believes," "expects," "intends," "plans,"
      "anticipates" "estimates" and similar expressions are intended to identify
      forward-looking statements, although there may be certain forward-looking
      statements not accompanied by such expressions. All forward-looking statements
      are intended to be covered by the safe harbor created by Section 21E of the
      Securities Exchange Act of 1934.








3
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          of Contents








ITEM1:  CONSOLIDATED
      FINANCIAL STATEMENTS




**BIOMODA,
        INC. AND SUBSIDIARY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        BALANCE SHEETS**
 **(UNAUDITED)**






**June
                  30, 2007**
              
              
              **December
                  31, 2006****ASSETS**Current
                  AssetsCash
              
              $
              41,357
              
              
              $
              116Prepaid
                  expenses
              
              
              3,241
              
              
              
              3,241Total
                  Current Assets
              
              
              44,598
              
              
              
              3,357Patents,
                  net of accumulated amortization of $97,619 and $88,717
              
              
              227,039
              
              
              
              234,140Property
                  and Equipment, net of accumulated depreciation of $11,588 and
                  $9,621
              
              
              4,455
              
              
              
              6,424Total Assets
              
              $
              276,092
              
              
              $
              243,921**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Current
                  Liabilities
              
              
              -Accounts
                  payable and accrued liabilities
              
              $
              668,903
              
              
              $
              580,050Common
                  stock payable
              
              
              49,669
              
              
              
              45,750Advances
                  from stockholders
              
              
              176,075
              
              
              
              164,842Line
                  of credit from an affiliated entity
              
              
              2,210,805
              
              
              
              1,318,623Total
                  Current Liabilities
              
              
              3,105,452
              
              
              
              2,109,265Commitments
                  and ContingenciesStockholders'
                  DeficitClass
                  A redeemable preferred stock; no par value2,000,000
                  shares authorized; cumulative and
                convertible;
                  liquidation and redemption valuesof
                  $1.50 and $1.80 per share; no shares issued
                and
                  outstanding
              
              
              -
              
              
              
              -Undesignated
                  preferred stock; 2,000,000 shares
                authorized;
                  no shares issued and outstanding
              
              
              -
              
              
              
              -Common
                  stock, no par value, 100,000,000 sharesauthorized;
                  12,418,101 and 9,086,253 issued and outstanding
              
              
              4,970,277
              
              
              
              3,052,213Treasury
                  stock
              
              
              (9,000
              )
              
              
              (9,000
              )Deficit
                  accumulated during development stage
              
              
              (7,790,637
              )
              
              
              (4,908,557
              )Total
                  Stockholders' Deficit
              
              
              (2,829,360
              )
              
              
              (1,865,344
              )Total
                Liabilities and Stockholder's Deficit
              
              $
              276,092
              
              
              $
              243,921






See
      accompanying notes to consolidated financial
      statements.






4
 Table
          of Contents


**BIOMODA,
        INC. AND SUBSIDIARY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**




**Three
                  Months Ended June 30,****2007**
              
              
              **2006**Revenue
              $
              -
              
              
              $
              -Operating
                  expensesProfessional
                  fees
              
              16,750
              
              
              
              8,143General
                  and administrative
              
              806,297
              
              
              
              24,262Licensing
                  fees
              
              5,450
              
              
              
              15,000Research
                  and development
              
              320,009
              
              
              
              146,447Depreciation
                  and amortization
              
              5,680
              
              
              
              4,846Total
                  Operating Expenses
              
              1,154,186
              
              
              
              198,698Loss
                  from continuing operations
              
              (1,154,186
              )
              
              
              (198,698
              )Other
                  income (expense)Gain
                  on forgiveness of debt
              
              -
              
              
              
              16,064Interest
                  income
              
              -
              
              
              
              -Interest
                  expense
              
              (32,464
              )
              
              
              (24,586
              )Total
                  Other Expenses
              
              (32,464
              )
              
              
              (8,522
              )Net
                  loss
              $
              (1,186,650
              )
              
              $
              (207,220
              )Basic
                  and diluted weighted average number ofshares
                  outstanding
              
              11,324,759
              
              
              
              7,187,282Basic
                  and diluted loss per common share
              $
              (0.10
              )
              
              $
              (0.03
              )








See
        accompanying notes to consolidated financial statements.






5
 Table
          of Contents




**BIOMODA,
        INC. AND SUBSIDIARY**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
  **Six
                      Months Ended June 30,****2007**
                  
                  
                  **2006**
                  
                  **January
                      3, 1990 (Inception) to June 30, 2007**Revenue
                  $
                  -
                  
                  
                  $
                  -
                  
                  $
                  23Operating
                      expensesProfessional
                      fees
                  
                  106,050
                  
                  
                  
                  21,643
                  
                  
                  857,544General
                      and administrative
                  
                  1,916,185
                  
                  
                  
                  137,844
                  
                  
                  3,328,595Licensing
                      fees
                  
                  5,500
                  
                  
                  
                  15,000
                  
                  
                  140,293Research
                      and development
                  
                  791,816
                  
                  
                  
                  258,725
                  
                  
                  2,978,459Depreciation
                      and amortization
                  
                  10,869
                  
                  
                  
                  9,693
                  
                  
                  112,320Total
                      Operating Expenses
                  
                  2,830,420
                  
                  
                  
                  442,905
                  
                  
                  7,417,211Loss
                      from continuing operations
                  
                  (2,830,420
                  )
                  
                  
                  (442,905
                  )
                  
                  (7,417,188
                  )Other
                      income (expense)Gain
                      on forgiveness of debt
                  
                  -
                  
                  
                  
                  16,064
                  
                  
                  53,035Interest
                      income
                  
                  -
                  
                  
                  
                  -
                  
                  
                  3,870Interest
                      expense
                  
                  (51,660
                  )
                  
                  
                  (49,142
                  )
                  
                  (430,354
                  )Total
                      Other Expenses
                  
                  (51,660
                  )
                  
                  
                  (33,078
                  )
                  
                  (373,449
                  )Net
                      loss
                  $
                  (2,882,080
                  )
                  
                  $
                  (475,983
                  )
                  $
                  (7,790,637
                  )Basic
                      and diluted weighted average number of
                    shares
                      outstanding
                  
                  10,405,550
                  
                  
                  
                  7,187,282Basic
                      and diluted loss per common share
                  $
                  (0.28
                  )
                  
                  $
                  (0.07
                  )
  See
        accompanying notes to consolidated financial statements.
  6
 Table
            of Contents


**BIOMODA,
      INC. AND SUBSIDIARY**


**(A
      DEVELOPMENT STAGE COMPANY)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**




**Six
                  Months Ended June 30,****2007**
              
              
              **2006**
              
              
              **January
                  3, 1990 (Inception) to**
                **June
                  30, 2007**NET
                  CASH FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              $
              (2,882,080
              )
              
              $
              (475,983
              )
              
              $
              (7,790,637
              )Adjustments
                  to reconcile net loss tonet
                  cash used in operating activities:Stock
                  options expense
              
              2,982
              
              
              
              6,500
              
              
              
              185,024Issuance
                  of common stock for services
              
              1,768,602
              
              
              
              -
              
              
              
              2,512,573Issuance
                  of common stock for bonuses to employees
              
              -
              
              
              
              -
              
              
              
              17,250Loss
                  on sale of assets
              
              -
              
              
              
              -
              
              
              
              358Foreign
                  currency transactions
              
              -
              
              
              
              -
              
              
              
              3,247Gain
                  on debt settlement
              
              -
              
              
              
              (16,064
              )
              
              
              (11,171
              )Depreciation
                  and amortization
              
              10,871
              
              
              
              9,693
              
              
              
              112,322Changes
                  in operating assets and liabilities:Accounts
                  receivable
              
              -
              
              
              
              -
              
              
              
              (7,620
              )Other
                  assets
              
              -
              
              
              
              3,195
              
              
              
              4,379Accounts
                  payable and accrued liabilities
              
              88,853
              
              
              
              127,529
              
              
              
              790,925Net
                  cash flows used in operating activities
              
              (1,010,772
              )
              
              
              (345,130
              )
              
              
              (4,183,350
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of property and equipment
              
              -
              
              
              
              -
              
              
              
              (24,179
              )Sale
                  of property and equipment
              
              -
              
              
              
              -
              
              
              
              1,139Investment
                  in restricted cash
              
              -
              
              
              
              (30,000
              )
              
              
              -Organizational
                  costs
              
              -
              
              
              
              -
              
              
              
              (560
              )Patent,
                  trademark and license fee
              
              (1,801
              )
              
              
              -
              
              
              
              (324,658
              )Net
                  cash flows used in investing activities
              
              (1,801
              )
              
              
              (30,000
              )
              
              
              (348,258
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESProceeds
                  from stockholders' advances
              
              11,233
              
              
              
              7,650
              
              
              
              136,665Proceeds
                  from line of credit from an affiliated entity
              
              1,052,465
              
              
              
              346,568
              
              
              
              3,433,989Repayments
                  on line of credit from an affiliated entity
              
              (86,515
              )
              
              
              -
              
              
              
              (149,416
              )Purchase
                  of treasury stock
              
              -
              
              
              
              (9,000
              )
              
              
              (9,000
              )Proceeds
                  from stock payable
              
              33,919
              
              
              
              
              
              
              
              33,919Issuance
                  of common stock for cash
              
              42,712
              
              
              
              30,000
              
              
              
              1,126,808Net
                  cash flows provided by financing activities
              
              1,053,814
              
              
              
              375,218
              
              
              
              4,572,965Net
                  (decrease) increase in cash
              
              41,241
              
              
              
              88
              
              
              
              41,357Cash,
                  beginning of period
              
              116
              
              
              
              24
              
              
              
              -Cash,
                  end of period
              $
              41,357
              
              
              $
              112
              
              
              $
              41,357Supplemental
                  cash flow information:Cash
                  paid for:Interest
              $
              -
              
              
              $
              -
              
              
              $
              -Income
                  taxes
              $
              -
              
              
              $
              -
              
              
              $
              -Non-cash
                  investing and financing activities:Stock
                  issued for stock payable
              $
              30,000
              
              
              $
              -Stock
                  issued for debt
              
              73,768
              
              
              
              -









See
        accompanying notes to consolidated financial statements.




7
 Table
          of Contents




_____________________________________________


**BIOMODA,
      INC.**


**(A
      Development Stage Company)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**


_____________________________________________


1.  BASIS
      OF PRESENTATION





The
      accompanying unaudited interim financial statements of Biomoda, Inc. ("Biomoda")
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America for interim financial information and with
      the
      instructions to Form 10-QSB. Accordingly, they do not include all of the
      information and notes required by generally accepted accounting principles
      for
      complete financial statements and should be read in conjunction with the
      Management's Discussion and Analysis and the audited financial statements and
      notes thereto contained in Biomoda's 2006 Annual Report filed with the
      Securities and Exchange Commission on Form 10-KSB. In the opinion of management,
      all adjustments, consisting of normal recurring adjustments, necessary for
      a
      fair presentation of financial position and the results of operations for the
      interim periods presented have been reflected herein. The results of operations
      for the interim periods are not necessarily indicative of the results to be
      expected for the full year. Notes to the financial statements which would
      substantially duplicate the disclosure contained in the audited financial
      statements for 2006 as reported in the 10-KSB have been omitted.





2.  DEVELOPMENT
      STAGE AND GOING CONCERN





Biomoda
      has been in the development stage since it began operations on January 3, 1990
      and has not generated any revenues from operations and there is no assurance
      of
      any future revenues. As of June 30, 2007, Biomoda had an accumulated deficit
      of
      $7,790,637 and a working capital deficit of $3,060,854.





In
      addition, Biomoda did not generate any cash from operations and had no cash
      reserve dedicated to fund expenditures. These factors create a substantial
      doubt
      as to Biomoda's ability to continue as a going concern.





Biomoda
      will require substantial additional funding for continuing research and
      development and obtaining regulatory approval and for the commercialization
      of
      its products. Management expects to be able to raise enough funds to meet its
      working capital requirements through the sale of Biomoda's common
      stock.





There
      is
      no assurance that Biomoda will be able to obtain sufficient additional funds
      when needed, or that such funds, if available, will be obtainable on terms
      satisfactory to Biomoda. The consolidated financial statements do not include
      any adjustments that might be necessary should Biomoda be unable to continue
      as
      a going concern.





3.  LINE
      OF CREDIT FROM AN AFFILIATED ENTITY





During
      the six months ended June 30, 2007, an affiliate of the Company exchanged its
      Biomoda common shares, valued at $707,150, for various services provided to
      Biomoda.  In connection with this transaction, Biomoda recorded an
      increase to the line of credit from an affiliated entity of $707,150 and
      recognized $62,500 in professional fees expense and $644,650 in general and
      administrative expense.  As of June 30, 2007, the line of credit from
      an affiliated entity balance was $2,210,805.






8
 Table
          of Contents


_____________________________________________
 **BIOMODA,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 _____________________________________________


4.  COMMON
      STOCK





During
      the first quarter of 2007, Biomoda issued 726,000 shares of restricted common
      stock for services valued at $792,500, 2,000 common shares for cash of $1,000,
      30,000 common shares issued for stock payable, and 86,786 common shares in
      exchange for discharge of debt of $73,768 to a related party.





During
      the second quarter of 2007, Biomoda issued 2,144,062 shares of common stock
      for
      services valued at $976,102 and 343,000 common shares for cash of
      $41,712.





5.  SUBSEQUENT
      EVENTS





Subsequent
      to June 30, 2007, Biomoda issued 931,429 restricted shares for cash for a total
      of $49,413 and 171,000 shares for services for a value of $22,150.  In
      addition, under a Regulation S offering, Biomoda issued 2,175,122 restricted
      shares for a total of approximately $91,405.





Subsequent
      to June 30, 2007, Leslie S. Robins was removed for cause from the Board of
      Directors of Biomoda at a special meeting of the Board held on Tuesday August
      7,
      2007.  The Board removed Mr. Robins from the Board due to his actions
      related to the unauthorized issuance of shares of Biomoda’s common stock and
      unauthorized use of company funds.  Mr. Robins did not serve on any
      committees of the Board.





On
      August
      14, 2007, the Board also ratified the President’s termination of Mr. Robins as
      Vice President and Secretary of Biomoda effective July 21, 2007.  Mr.
      Robins was terminated for cause as described above.





Biomoda
      previously conducted an offering of up to 6,000,000 shares of its common stock
      pursuant to a registration statement on Form SB-2.  This registration
      statement became stale on November 4, 2005, prior to selling any shares under
      this registered offering.  The Board is currently investigating the
      issuance of the following shares of common stock purportedly under the SB-2
      registration statement pursuant to Mr. Robins’ sole and unauthorized direction:
      343,000 shares on or about June 5, 2007, 230,000 shares on or about June 8,
      2007, 500,000 shares on or about June 25, 2007, 90,000 shares on or about July
      11, 2007, 50,000 shares on or about July 11, 2007, and 555,000 shares on or
      about July 13, 2007.  Based upon the Board’s initial investigation,
      all of such shares were issued without registration under the Securities Act
      of
      1933, as amended, or any exemption therefrom.  As a result, such
      shares were issued in violation of the Securities Act of 1933, as
      amended.  Such violations may subject Biomoda to enforcement action by
      the Securities and Exchange Commission.







9
 Table
          of Contents




_____________________________________________
 **BIOMODA,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 _____________________________________________






ITEM2:
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION





COMPANY
      OVERVIEW





Biomoda,
      Inc. (the "Company") is a development stage company incorporated in the state
      of
      New Mexico on January 3, 1990. The Company's general focus is on discovery,
      development, manufacture and marketing of proprietary medical diagnostic and
      treatment products used to treat life threatening and other serious
      diseases.  Our primary focus is creating diagnostic solutions for
      early detection and clinical management of cancer.





On
      July
      19, 2006, the Company closed its offering of up to 6,000,000 shares of its
      common stock pursuant to a registration statement on Form SB-2 (the
      "Registration Statement") under the Securities Act of 1933, as amended, declared
      effective on February 11, 2005. The Company’s market maker filed Form 211 with
      NASD Regulation to initiate quotations in its common stock on the OTC Bulletin
      Board. The request was cleared on October 19, 2006.





PLAN
      OF
      OPERATION





Our
      plan
      of operation for the next nine months is to complete the validation studies
      for
      our lung cancer assay, design our diagnostic product, choose our contract
      manufacturing partner, manufacture our initial batches, register our product
      with the FDA and then with European authorities for our CE mark, and begin
      marketing to reference labs in the US and Europe.  We intend to have
      initial revenues in the last quarter of 2007.  The Company is relying
      on a bridge financing arrangement with Advanced Optics Electronics, Inc., an
      affiliated public company, and also intends to raise additional funds from
      the
      sale of common stock and are assessing various offering
      scenarios.  The Company is currently leasing Laboratory equipment from
      Advanced Optics Electronics, Inc. on a month to month basis and intends to
      purchase this equipment when adequate funds are raised.





Our
      initial product is a diagnostic test for lung cancer that will be performed
      out
      of body by using a sputum sample from the patient.  Our test does not
      require any invasive sample taking.  The sample will be sent to a
      clinical lab where the procedure will be performed to determine the presence,
      or
      not, of lung cancer or precancerous cells.  Our diagnostic test can be
      used for other cell samples and we intend to
      create  and  market  products  to  diagnose  and  screen  for
      other prevalent cancers such as
      breast,  cervical,  bladder,  and
      colorectal.  We have determined that our initial markets will be the
      developed nations of Europe, North America and Japan.  This has been
      determined on the basis of available healthcare delivery and payer
      infrastructure.  Japan is leading the world, and has instituted a
      nationwide lung cancer-screening program.  We also intend to sell our
      product in additional markets throughout the world such as India, Brazil and
      South America, Asia and Russia.  We will market different product
      formats based on the region of the world.





In
      addition to augmenting laboratory research and development, management plans
      to
      further strengthen the corporate infrastructure of the Company to adequately
      manage the future growth and success of our operations.  Management
      expects to hire additional personnel and enter into consulting and collaborative
      arrangements over the next twelve months as needed to continue to strengthen
      and
      enhance the effectiveness of implementing our plan as we grow.





The
      Company’s Research and Development facilities are located on Kirtland Air Force
      Base in Albuquerque, New Mexico.  R&D is housed in approximately
      2500 square feet that includes two state-of-the-art laboratories where primary
      research, assay validation and commercialization work is being
      conducted.





Over
      the
      next twelve months  management
      will  continuously  evaluate and develop our business plan
      which  includes  assessing  the  technology
      we utilize and the markets  we  intend to serve
      and  evaluating  the  prospect  of  expanding  into
      additional  products and markets as
      business  conditions  warrant. In connection with this
      continual evaluation, management will also look at taking actions designed
      to
      mitigate any and all risks associated with our business plan.





In
      January 2005, the U.S. Patent Office awarded a Patent to Biomoda researchers
      entitled   "Compositions and Methods for Detecting Precancerous
      Conditions in Cells and Tissue Samples using 5, 10, 15, 20 Tetrakis
      (Carboxyphenyl) Porphine". This Patent brings a significant addition to
      Biomoda's Patent portfolio and expands the Company's intellectual property
      to
      include cancer screening as a compliment to Biomoda's existing technology.
      Biomoda is completing the formal filing for a continuation for this Patent based
      on research currently underway by researchers at Biomoda.  The Company
      believes its goal to further strengthen and expand its intellectual property
      portfolio will be significantly enhanced by these developments.
      Biomoda,  Inc.'s R&D  Division
      has  successfully  completed  the
      first  clinical validation  of  the
      company's  development  stage assay for lung
      cancer.  These results indicate its ability to differentiate lung
      cancer patients, heavy smokers, and normal individuals.





RESULTS
      OF OPERATIONS





Due
      to
      our limited operating history, we believe that period-to-period comparisons
      of
      our results of operations are not fully meaningful and should not be relied
      upon
      as an indication of future performance.





Comparison
      of the three months ended June 30, 2007 and 2006






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_____________________________________________
 **BIOMODA,
        INC.**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 _____________________________________________





REVENUE.  As
      of June 30, 2007, there have been no significant revenues since
      inception.





PRODUCT
      DEVELOPMENT. Product development expenses consist primarily of personnel
      expenses and consulting fees. Research and development, including payroll costs
      and other technical costs increased to $320,009 in the three months ended June
      30, 2007 from $146,447 in the three months ended June 30, 2006 due to
      significant stock issuance for services. The Company believes that continued
      investment in product development is critical to attaining our strategic
      objectives and, as a result, we expect expenses such as clinical studies and
      collaborations to increase significantly in the next year. We expense product
      development costs as they are incurred.





GENERAL  AND  ADMINISTRATIVE  General  and  administrative  expenses  consist
      of expenses for executive and
      administrative  personnel,  facilities,  professional
      services,  travel and general
      corporate  activities.  General and administrative costs,
      taken together with professional fees, increased to $828,497 in the three months
      ended June 30, 2007 from $47,405 in the three months ended June 30, 2006, and
      to
      $2,027,735 in 2007 from $174,487 in 2006 for the six month periods then ended.
      This increase was due primarily to approximately $1,769,000 of stock issued
      for
      services, which is divided between this classification and research expenses,
      above, and increased legal fees. We expect general and administrative costs
      to
      increase in the future as our business prospects develop and we will require
      more staff. The costs associated with being a publicly traded company and future
      strategic acquisitions will also be a contributing factor to increases in this
      expense.





OTHER
      INCOME (EXPENSE) Other income (expense) in these periods consists of interest
      expense, which increased to $32,464 in the three months ended June 30, 2007
      from
      $24,586 in the three months ended June 30, 2006 due to higher balances in
      intercompany debt and to $51,660 in 2007 from $49,142 in 2006 for the six month
      periods then ended.  Additionally, we recorded $16,064 gain on
      forgiveness of debt in 2006.





Comparison
      of the six months ended June 30, 2007 and 2006




PRODUCT
      DEVELOPMENT.  Product development expenses consist primarily of
      personnel expenses and consulting fees. Research and development, including
      payroll costs and other technical costs increased to $791,816 in the six months
      ended June 30, 2007 from $285,725 in the six months ended June 30, 2006 due
      to
      significant stock issuance for services. The Company believes that continued
      investment in product development is critical to attaining our strategic
      objectives and, as a result, we expect expenses such as clinical studies and
      collaborations to increase significantly in the next year. We expense product
      development costs as they are incurred.





GENERAL
      AND ADMINISTRATIVE.  General and administrative expenses consist of
      expenses for executive and administrative personnel, facilities, professional
      services, travel and general corporate activities. General and administrative
      costs, taken together with professional fees, increased to $2,027,735 in the
      six
      months ended June 30, 2007 from $174,487 in the six months ended June 30, 2006.
      This increase was due primarily to approximately $1,769,000 of stock issued
      for
      services, which is divided between this classification and research expenses,
      above, and increased legal fees. We expect general and administrative costs
      to
      increase in the future as our business prospects develop and we will require
      more staff. The costs associated with being a publicly traded company and future
      strategic acquisitions will also be a contributing factor to increases in this
      expense.





OTHER
      INCOME (EXPENSE).  Other income (expense) in these periods consists of
      interest expense, which increased to $51,660 in the six months ended June 30,
      2007 from $49,142 in the six months ended June 30, 2006 due to higher balances
      in intercompany debt.  Additionally, we recorded $16,064 gain on
      forgiveness of debt in 2006.





LIQUIDITY
      AND CAPITAL RESOURCES





Since
      inception, we have funded our operations through private placement of equity
      securities and loans from Advanced Optics Electronics, Inc
      ("ADOT").  As of June 30, 2007 we have raised net proceeds of
      approximately $4,700,000 from these sources.





Product
        development expenditures, including personnel expense, and general and
        administrative expense approximated $2,714,000 for the six months ended June
        30,
        2007. Funds for operations,  product  development and capital
        expenditures were provided from a line of credit agreement with ADOT. The
        Company will require substantial additional funding for continuing research
        and
        development, obtaining regulatory approval and for the commercialization
        of its
        products.
 
 Management
        believes that sales of securities will provide adequate liquidity and capital
        resources to meet the anticipated development stage requirements through
        the end
        of 2007. In addition, ADOT will continue to provide the Company with bridge
        financing needed to fund the day-to-day operations until the Company has
        raised
        sufficient capital to fund its operations. At that time it is anticipated
        that
        sales of our initial screening product will begin and contribute to operating
        revenues. It is anticipated that these sales will provide the additional
        capital
        resources to fund the proportionately higher working capital requirements
        of
        production and sales  initiatives and continued  product development
        for second-generation diagnostic and therapeutic products.


There  is
      no  assurance  that  the  Company  will
      be able to  obtain  sufficient
      additional  funds  when  needed,  or
      that  such  funds,  if  available,  will
      be obtainable on terms  satisfactory  to the
      Company.  The consolidated financial statements do not include any
      adjustments that might be necessary should the Company be unable to continue
      as
      a going concern.





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_____________________________________________
 **BIOMODA,
          INC.**
 **(A
          Development Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 _____________________________________________




INFLATION





Management
      believes that inflation has not had a material effect on the Company's results
      of operations.





ITEM3:
      CONTROLS AND PROCEDURES





Under
      the
      supervision and with the participation of our management, we evaluated the
      effectiveness of the design and operation of our disclosure controls and
      procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act
      as of
      the end of the period covered by this report, June 30, 2007).  Based
      upon that evaluation, the company concluded that the Company’s disclosure
      controls and procedures were not effective.





The
      Company was in the infancy stages of its business operations and had limited
      resources  available to plan,  develop,  and
      implement  disclosure and procedure controls  and
      other  procedures  that are  designed to
      ensure  that  information required to be disclosed in
      the  Company's  periodic  reports filed or
      submitted under the Exchange Act is
      recorded,  processed,  summarized and reported, within the
      time periods specified in the Securities and Exchange Commission's rules and
      forms. Disclosure controls and procedures include, without limitation, controls
      and procedures designed to ensure that information required to be disclosed
      in
      the Company’s periodic reports filed under the Exchange Act is accumulated and
      communicated to management to allow timely decisions regarding required
      disclosure.  Further, as reported in the Company’s Current Report on
      Form 8-K filed on August 14, 2007, the Company is currently investigating (i)
      what appears to be the unauthorized issuance of shares of its common stock
      in
      violation of the Securities Act of 1933, and (ii) the improper diversion of
      cash
      from the Company to a former officer and director and/or his
      affiliates.





The
      Company is  re-evaluating and revising its existing control policies
      and procedures. As part of such plan and implementation, the Company is
      re-evaluating, re-designing and documenting policies and procedures, putting
      such procedures in operation, and monitoring the effectiveness of the
      procedures.





CHANGES
      IN CONTROLS AND PROCEDURES





There
      were no significant changes made in our internal controls over financial
      reporting during the three months ended June 30, 2007 that have materially
      affected or are reasonably likely to
      materially  affect  these  controls.  Subsequent
      to this reporting period corrective actions, with regard to significant
      deficiencies or material weaknesses, were made.  We are implementing
      controls suggested by the independent third party.





LIMITATIONS
      ON THE EFFECTIVENESS OF INTERNAL CONTROL





The
      Company's management, including the CEO, does not expect that our disclosure
      controls and procedures or our internal control over financial reporting will
      necessarily prevent all fraud and material errors.  An internal
      control system, no matter how well conceived and operated, can provide only
      reasonable, not absolute, assurance that the objectives of the control system
      are met. Further, the design of a control system must reflect the fact that
      there are resource constraints, and the benefits of controls must be considered
      relative to their costs.  Because of the inherent limitations on all
      internal control systems, no evaluation of controls can provide absolute
      assurance that all control issues and instances of fraud, if any, within the
      Company have been detected.  These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Additionally, controls can be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, and/or by management's override of the controls. The design of any
      system of internal control is also based in part upon certain assumptions about
      the likelihood of future events, and there can be no assurance that any design
      will succeed in achieving its stated goals under all potential future
      conditions.  Over time, controls may become inadequate because of
      changes in circumstances, and/or the degree of compliance with the policies
      and
      procedures may deteriorate.  Because of the inherent limitations in a
      cost-effective internal control system,  financial reporting
      misstatements due to error or fraud may occur and not be detected on a timely
      basis.





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**PART
      II. OTHER INFORMATION**





Item1.  LEGAL
      PROCEEDINGS





On
      July
      25, 2007, Leslie Robins filed a Complaint for Declaratory Judgment and
      Application for Temporary Restraining Order/ Preliminary and Permanent
      Injunction against Biomoda, John J. Cousins and Maria Zannes (collectively,
      the
“Biomoda Parties”), Cause No. D-202-CV-2007-06529, Second Judicial District
      Court, State of New Mexico.  Also listed as nominal Plaintiffs were
      Advanced Optics Electronics, Inc. and Ari Maayan. The lawsuit alleges that
      the
      Biomoda Parties are attempting a hostile takeover of Biomoda by unlawfully
      removing Mr. Robins.  At oral argument held on August 7, 2007, the
      Court denied Plaintiffs’ motion for a temporary restraining order that sought to
      enjoin the removal of Mr. Robins from the Board and denied Mr. Robins’ motion to
      place Biomoda in receivership.  The Biomoda Parties filed an answer
      and counterclaim to this lawsuit on August 13, 2007, in which they denied all
      of
      the Plaintiff’s substantive claims and provided affirmative
      defenses.  In addition, the Biomoda Parties counterclaimed that Mr.
      Robins actions in (i) directing the unauthorized and unregistered sale of
      securities in violation of the Securities Act of 1933, as amended (ii) improper
      diversion of cash and other assets from Biomoda, (iii) improper dumping of
      Biomoda shares into the public markets, and (iv) defamation of officers and
      directors of Biomoda, has materially harmed Biomoda.  The Biomoda
      Plaintiffs are seeking a temporary restraining order, preliminary injunction
      and
      permanent injunction preventing Mr. Robins from acting in any capacity on behalf
      of Biomoda and seeking to freeze Mr. Robins bank accounts.  The
      Biomoda Plaintiffs also seek to recover monies and assets improperly taken
      from
      Biomoda.








Item
      2.  CHANGES IN SECURITIES -  None





Item
      3.  DEFAULTS UPON SENIOR SECURITIES - None





Item
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
      None





Item
      5.  OTHER INFORMATION - None.





Item
      6.  EXHIBITS and reports on Forms 8-K





(a)     Exhibits





31.1  Certification  of  Principal  Executive  Officer  pursuant  to  Securities
      Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant to section 302
      of
      the Sarbanes-Oxley act of 2002.





31.2  Certification  of  Principal  Financial  Officer  pursuant  to  Securities
      Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant to section 302
      of
      the Sarbanes-Oxley act of 2002.





32.1  Certification
      of Principal Executive and Accounting Officer pursuant to 18
      U.S.C.  section  1350,  as  adopted  pursuant  to  section  906
      of the  Sarbanes-Oxley act of 2002.





Reports
      on Form 8-K





On
      August
      15, 2007, we reported to removal for cause of Leslie S. Robins as officer and
      director of Biomoda, Inc.  We also reported the resignation of Dr.
      Albert Goodman as director.








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**SIGNATURES**








In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report on Form 10QSB to be signed on its behalf by the undersigned,
      thereunto duly authorized.










**BIOMODA,
              INC.
              and Subsidiary**August
                20,
                2007
            By:
            /s/ 
John.
              J.
              CousinsJohn
              J.
              CousinsPresident(Principal
              Executive and
              Accounting Officer)








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