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: September 30, 2005


                          Commission file No. 333-90738
                                              ---------


                                  BIOMODA, INC.
                                  -------------
           (Name of small business issuer as specified in its charter)


            New Mexico                                   85-03923
     (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
   ---       ---

The number of issuer's  shares of Common  Stock  outstanding  as of November 10,
2005 was 7,187,282.

Transitional Small Business Disclosure Format (check one): Yes    No  X
                                                              ---    ---


<PAGE>

                                TABLE OF CONTENTS

PART I. Financial Information

    Item 1. Consolidated Financial Statements........................ F-1 to F-7

    Item 2. Management's Discussion and Analysis or Plan of Operation......... 4

    Item 3. Controls and Procedures........................................... 6

PART II. Other Information

    Item 1. Legal Proceedings................................................. 7

    Item 2. Changes in Securities............................................. 7

    Item 3. Defaults Upon Senior Securities.................. ................ 7

    Item 4. Submission of Matters to a Vote of Security Holders............... 7

    Item 5. Other Information................................................. 7

    Item 6. Exhibits.......................................................... 8

Signatures



                                        2

<PAGE>

                          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


<PAGE>

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS


                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                               September 30, 2005
                                    UNAUDITED


                                     ASSETS

Current Assets
        Cash                                                        $       198
        Prepaid expenses                                                  3,241
                                                                   -------------
        Total Current Assets                                              3,439

Patents, net of accumulated
  amortization of $67,792                                               236,038

Property and Equipment, net of accumulated
  depreciation of $5,077                                                 10,967
                                                                   -------------

                                                                    $   250,444
                                                                   =============

                   LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
        Bank overdraft                                              $     4,758
        Accounts payable and accrued liabilities                        288,532
        Advances from stockholders                                      146,683
        Line of credit from an affiliated entity                      1,363,236
                                                                   -------------

        Total Current Liabilities                                     1,803,209
                                                                   -------------

Commitments and Contingencies

Stockholders' Deficit
        Class A redeemable preferred stock; no par value                     --
          2,000,000 shares authorized; cumulative and
          convertible; liquidation and redemption values
          of $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 shares
          authorized; 7,147,282 issued and outstanding                1,364,696
        Deficit accumulated during development stage                 (2,917,461)
                                                                   -------------

        Total Stockholders' Deficit                                  (1,552,765)
                                                                   -------------

                                                                    $   250,444
                                                                   =============

       See accompanying notes to these consolidated financial statements.

--------------------------------------------------------------------------------
F-1

<PAGE>

                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
    AND FOR THE PERIOD FROM JANUARY 3, 1990 (INCEPTION) TO SEPTEMBER 30, 2005
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                                           January 3, 1990
                                                        Nine Months Ended September 30       (Inception)
                                                    -----------------------------------      to September
                                                         2005                 2004             30, 2005
                                                    ---------------     ---------------    ---------------
<S>                                                 <C>                 <C>                <C>

Revenue                                              $           --      $           --     $           23
                                                    ---------------     ---------------    ---------------

Operating expenses
  Professional fees                                          19,724              68,915            452,863
  General and administrative                                 97,499              63,133            430,426
  Licensing fees                                             15,125              15,000            103,918
  Research and development                                  229,691             367,411          1,650,391
  Depreciation and amortization                              15,225              11,318             75,983
                                                    ---------------     ---------------    ---------------
Total Operating Expenses                                    377,264             525,777          2,713,581
                                                    ---------------     ---------------    ---------------

Loss from operations                                       (377,264)           (525,777)        (2,713,558)

Other Income (Expenses)
  Gain on forgivness of debt                                     --                  --             36,971
  Interest income                                                --                  --              3,870
  Interest expense                                          (63,708)            (21,897)          (244,744)
  Foreign currency transaction loss                              --                  --                 --
                                                    ---------------     ---------------    ---------------
Total Other Expenses                                        (63,708)            (21,897)          (203,903)
                                                    ---------------     ---------------    ---------------


Loss Before Provision For Income Taxes                     (440,972)           (547,674)        (2,917,461)

Provision for income taxes                                       --                  --                 --
                                                    ---------------     ---------------    ---------------
Net Loss and Losses Accumulated
During the Development Stage                         $     (440,972)     $     (547,674)    $   (2,917,461)
                                                    ===============     ===============    ===============

Basic and diluted weighted average number                 7,120,734           6,863,463
  of shares outstanding
                                                    ===============     ===============

Basic and diluted loss per common share              $        (0.06)    $        (0.08)
                                                    ===============     ===============

</TABLE>

       See accompanying notes to these consolidated financial statements.

--------------------------------------------------------------------------------
F-2

<PAGE>

                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                     Three Months Ended September 30
                                                   ------------------------------------
                                                         2005                2004
                                                   ----------------    ----------------
<S>                                                <C>                 <C>

Revenue                                             $            --     $            --
                                                   ----------------    ----------------

Operating expenses
Professional fees                                             6,468              16,923
General and administrative                                   30,067              20,789
Licensing fees                                                  125                  --
Research and development                                     81,157             111,996
Depreciation and amortization                                 5,961               4,031
                                                   ----------------    ----------------
Total Operating Expenses                                    123,778             153,739
                                                   ----------------    ----------------

Loss from operations                                       (123,778)           (153,739)

Other Income (Expenses)
Gain on forgivness of debt                                       --                  --
Interest income                                                  --                  --
Interest expense                                           (13,272)             (8,919)
Foreign currency transaction loss                                --                  --
                                                   ----------------    ----------------

Total Other Expenses                                       (13,272)             (8,919)
                                                   ----------------    ----------------

Loss Before Provision For Income Taxes                    (137,050)           (162,658)

Provision for income taxes                                       --                  --
                                                   ----------------    ----------------

Net Loss and Losses Accumulated
During the Development Stage                        $      (137,050)    $      (162,658)
                                                   ================    ================

Basic and diluted weighted average number of              7,120,734           6,892,117
  shares outstanding
                                                   ================    ================

Basic and diluted loss per common share             $         (0.02)    $         (0.02)
                                                   ================    ================
</TABLE>

       See accompanying notes to these consolidated financial statements.

--------------------------------------------------------------------------------
F-3

<PAGE>

                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
          FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2005 AND 2004
    AND FOR THE PERIOD FROM JANUARY 3, 1990 (INCEPTION) TO SEPTEMBER 30, 2005
                                    UNAUDITED

<TABLE>
<CAPTION>

                                                     ----------------   ----------------   ----------------
                                                       Nine Months         Nine Months     January 3, 1990
                                                          Ended              Ended          (Inception) to
                                                       September 30,      September 30,      September 30,
                                                           2005               2004                2005
                                                     ----------------   ----------------   ----------------
<S>                                                  <C>                <C>                <C>

NET CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                              $      (440,972)   $      (547,674)   $    (2,917,461)
Adjustments to reconcile net loss to
    net cash used in operating activities:
  Issuance of common stock for bonuses
    to employees                                                4,500             10,710             28,150
  Issuance of common stock for services                            --             17,500             47,101
  Loss on sale of assets                                           --                 --                358
  Depreciation and amortization                                15,225             11,318             79,506
  Changes in operating assets and liabilities:
  Other Assets                                                     --             (6,448)            (3,241)
  Accounts payable and accrued liabilities                     61,779             82,029            293,290
                                                     ----------------   ----------------   ----------------
Net cash flows used in operating activities                  (359,468)          (432,565)        (2,472,297)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                               --            (14,178)           (24,177)
  Sale of property and equipment                                   --                 --              1,139
  Patent, trademark and license fee                           (41,460)           (63,743)          (303,831)
                                                     ----------------   ----------------   ----------------
Net cash flows used in investing activities                   (41,460)           (77,921)          (326,869)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from stockholders' advances                         11,695                 --            146,683
  Proceeds from line of credit from an
    affiliated entity                                         388,071            505,971          1,363,236
  Issuance of common stock for cash                                --                 --          1,289,445
                                                     ----------------   ----------------   ----------------
Net cash flows provided by financing activities               399,766            505,971          2,799,364

Net (decrease) increase in cash                                (1,162)            (4,515)               198

Cash, beginning of period                                       1,360              4,747                 --

                                                     ----------------   ----------------   ----------------
Cash, end of period                                   $           198    $           232    $           198
                                                     ================   ================   ================
</TABLE>

          See accompanying notes to consolidated financial statements.

--------------------------------------------------------------------------------
F-4

<PAGE>

                  --------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2005 AND 2004
                  --------------------------------------------

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  footnotes  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 2004 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 2004 as reported in the 10-KSB have been omitted.

Pursuant to a registration statement on Form SB-2 (the "Registration Statement")
under the Securities  Act of 1933, as amended,  the Company is offering for sale
up to  6,000,000  shares of its  common  stock at a price of $3 per  Share.  The
Registration Statement was declared effective on February 11, 2005. The Offering
will  terminate  on the  earlier of  February  11, 2008 or the date on which the
maximum  number of shares  have been sold.  The  Company had not sold any shares
under such Registration Statement as of September 30, 2005.

2. DEVELOPMENT STAGE AND GOING CONCERN

The Company 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 September 30, 2005, the Company had
an accumulated deficit of $2,917,461 and a working capital deficit of
$1,799,770.

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

The Company will require substantial  additional funding for continuing research
and development,  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 the  Company's  common stock
offered  in  its  Registration  Statement.  Advanced  Optics  Electronics,  Inc.
("ADOT")  continues 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 (See Note 6).

--------------------------------------------------------------------------------
F-5

<PAGE>

                  --------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2005 AND 2004
                  --------------------------------------------

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.

3. EARNINGS PER SHARE

Because the Company has incurred a net loss in the three and nine month periods
ended September 30, 2005 and 2004, basic and diluted loss per share are the same
as additional potential common shares would be anti-dilutive.

4. RESEARCH AND DEVELOPMENT

Research  and  development  costs are charged to  operations  as  incurred.  The
Company incurred approximately $230,000, $367,000 and $1,650,000 of research and
development  expenses for the nine months ended  September 30, 2005 and 2004 and
for the period from Inception  through September 30, 2005,  respectively.  These
expenses  consist  primarily  of  personnel  costs  of  research  employees  and
consulting fees.

5. ADVANCES FROM STOCKHOLDERS

As of September  30, 2005,  the Company had advances of  approximately  $146,000
payable to two of its stockholders.  Such advances historically bore interest at
10% per annum.  No interest  expense related to such advances for the nine month
period ended September 30, 2004 was recorded. Interest expense was approximately
$12,000 and $132,000 for the nine month period ended  September 30, 2005 and for
the period from inception through September 30, 2005, respectively.

6. LINE OF CREDIT FROM AN AFFILIATED ENTITY

On May 1, 2002,  the Company  entered into a one-year  line of credit  agreement
(the  "Agreement")  with ADOT with an annual interest rate of 5%. On May 1, 2003
the Agreement was amended to be payable on demand.  Interest  expense related to
such a line of credit for the nine month periods ended  September 30, 2005, 2004
and for the period from Inception  through  September 30, 2005 was approximately
$57,000, $22,000 and $91,000, respectively.

7. OTHER RELATED PARTY TRANSACTIONS

On May 1, 2002,  the  Company  entered  into a sublease  agreement  with ADOT to
sublease  an  office  space for $300 a month.  The lease is on a  month-to-month
basis and the  Company is to abide  with all  relevant  covenants  of the master
lease.

On December 1, 2003,  the Company  entered into a lease  agreement  with ADOT to
lease certain lab equipment for $500 a month.  The lease is on a  month-to-month
basis and the  Company is to abide  with all  relevant  covenants  of the master
lease.

--------------------------------------------------------------------------------
F-6

<PAGE>

                  --------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2005 AND 2004
                  --------------------------------------------

Rental  expense  related to the above  leases for the nine month  periods  ended
September 30, 2005 and 2004 and for the period from Inception  through September
30, 2005 was approximately $7,200, $7,200 and $16,100, respectively.






















--------------------------------------------------------------------------------
F-7

<PAGE>

        ITEM 2: 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.

Pursuant to a registration statement on Form SB-2 (the "Registration Statement")
under the Securities  Act of 1933, as amended,  the Company is offering for sale
up to  6,000,000  shares of its  common  stock at a price of $3 per  share.  The
Registration Statement was declared effective on February 11, 2005. The Offering
will  terminate  on the  earlier of  February  11, 2008 or the date on which the
maximum  number of shares have been sold. The Company has not sold any shares as
of September 30, 2005.

PLAN OF OPERATION

Our plan of  operation  for the next six 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
revenues  in the  second  quarter  of 2006.  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 its effective
Form SB-2  Registration  Statement  during the next six  months.  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


                                       4
<PAGE>

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 CyPath, the company's  development stage assay for
lung cancer.  These results  indicate  CyPath's  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 month periods Ended September 30, 2005 and 2004
-----------------------------------------------------------------------

REVENUE. As of September 30, 2005, there have been no significant revenues since
inception.

PRODUCT DEVELOPMENT. Product development expenses consist primarily of personnel
expenses and consulting fees. Research development and other operating technical
costs decreased to approximately $230,000 in the nine months ended September 30,
2005 from  approximately  $367,000 in the nine months ended  September 30, 2004.
For the three month periods ended  September 30, 2005 and 2004, the amounts were
approximately  $81,000 and  $112,000,  respectively.  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,  including  professional fees, increased to approximately  $30,000 in the
three  months  ended  September  30, 2005 from $21,000 in the three months ended
September 30, 2004 and increased to  approximately  $97,000 from $63,000 for the
nine month periods then ended.  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)  consists of interest and other
income and expense.  Other (expense)  increased to approximately  $13,000 in the
three months ended  September  30, 2005 from  approximately  $9,000 in the three


                                       5

<PAGE>

months ended  September 30, 2004 and  increased  from  approximately  $22,000 to
approximately  $64,000  for the nine  month  periods  then  ended  due to larger
balances in intercompany debt and accrued liabilities.

LIQUIDITY AND CAPITAL RESOURCES

Since  inception,  we have  funded  our  operations  primarily  through  private
placement of equity securities and loans from Advanced Optics  Electronics,  Inc
("ADOT").  As of September 30, 2005 we have raised net proceeds of approximately
$2,799,000 from these sources.

Product development expenditures approximated $230,000 for the nine months ended
September  30,  2005.  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. The Company's cash balance was $198 as of September 30, 2005.

Management believes that sales of securities will provide adequate liquidity and
capital resources to meet the anticipated development stage requirements through
the end of 2005.  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.

INFLATION

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

                         ITEM 3: CONTROLS AND PROCEDURES

Under the supervision and with the  participation  of our management,  including
our Chief  Executive  Officer ("CEO") and Chief Financial  Officer  ("CFO"),  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,  September 30,
2005). Based upon that evaluation,  the CEO and CFO concluded that the Company's
disclosure controls and procedures were 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, including the Company's CEO and CFO, to allow timely
decisions regarding required disclosure.


                                       6

<PAGE>

In 2004, the Company hired an independent  third party consultant to re-evaluate
and revise its existing  control  policies and  procedures  and to implement new
disclosure controls 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 nine months ended  September 30, 2005 that have materially
affected or are reasonably likely to materially affect these controls.  Thus, no
corrective   actions  with  regard  to  significant   deficiencies  or  material
weaknesses were necessary.

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.

                           PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

The  Company may on occasion  be a party to  litigation  involving  claims by or
against the Company arising in the ordinary course of business. The officers and
directors know of no legal  proceedings  pending or  contemplated by any person,
entity or governmental  authority which would have a material  adverse effect on
the Company.

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.


                                        7

<PAGE>

Item 6.  EXHIBITS

(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.



                                        8

<PAGE>

                                   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.


Dated: November 11, 2005            BIOMODA, INC. and Subsidiary



                                    By: /s/John J. Cousins
                                    -----------------------
                                    John J. Cousins
                                    President
                                   (Principal Executive and Accounting Officer)