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: March 31, 2005


                          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
                           ----       ----

          The number of issuer's  shares of Common Stock  outstanding  as of May
          10, 2005 was 7,117,282.

          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-6

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

   Item 3. Controls and Procedures.............................................9

PART II. Other Information

   Item 1. Legal Proceedings..................................................10

   Item 2. Changes in Securities..............................................10

   Item 3. Defaults Upon Senior Securities....................................10

   Item 4. Submission of Matters to a Vote of Security Holders................10

   Item 5. Other Information..................................................10

   Item 6. Exhibits...........................................................10

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
                                 March 31, 2005
                                 UNAUDITED

<TABLE>
<CAPTION>
                                   ASSETS
<S>                                                                 <C>
Current Assets
        Cash                                                                580
        Prepaid expenses                                                  3,241
                                                                  -------------
        Total Current Assets                                              3,821

Patents, net of accumulated amortization of $59,386                     233,759

Property and Equipment, net of accumulated depreciation of $2,579        13,465
                                                                  -------------

                                                                  $     251,045
                                                                  =============

                   LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
        Accounts payable and accrued liabilities                        214,794
        Advances from stockholders                                      134,988
        Line of credit from an affiliated entity                      1,123,851
                                                                  -------------
        Total Current Liabilities                                     1,473,633

Commitments and Contingencies

Stockholders' Deficit
        Common stock, no par value, 100,000,000 shares
          authorized; 7,117,282 issued and outstanding                1,360,196
        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                     0.00
          authorized; no shares issued and outstanding
        Deficit accumulated during development stage                (2,582,784)
                                                                  -------------

        Total Stockholders' Deficit                                 (1,222,588)
                                                                  -------------

                                                                  $     251,045
                                                                  =============
</TABLE>

See accompanying notes to these consolidated financial statements.

Page F-1

<PAGE>

                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE-MONTHS PERIOD ENDED MARCH 31, 2005 AND 2004
      AND FOR THE PERIOD FROM JANUARY 3, 1990 (INCEPTION) TO MARCH 31, 2005
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                           January 3, 1990
                                               Three Months Ended March 31   (Inception)
                                               --------------------------    to March 31,
                                                   2005           2004          2005
                                               -----------    -----------    -----------
<S>                                            <C>            <C>            <C>
Revenue                                        $        --    $        --    $        23
                                               -----------    -----------    -----------
Operating expenses
  Professional fees                                  1,904         21,364        435,043
  General and administrative                        14,918          9,703        347,845
  Licensing fees                                         0              0         88,793
  Research and development                          65,969        131,435      1,486,669
  Depreciation and amortization                      4,321          3,412         65,079
                                               -----------    -----------    -----------
      Total Operating Expenses                      87,112        165,914      2,423,429
                                               -----------    -----------    -----------

Loss from operations                               (87,112)      (165,914)    (2,423,406)
  Other Income (Expenses)
  Gain on forgivness of debt                            --             --         36,971
  Interest income                                       --             --          3,870
  Interest expense                                 (19,183)        (6,190)      (200,219)
  Foreign currency transaction loss                     --             --             --
                                               -----------    -----------    -----------
      Total Other Expenses                         (19,183)        (6,190)      (159,378)
                                               -----------    -----------    -----------

Loss Before Provision For Income Taxes            (106,295)      (172,104)    (2,582,784)

Provision for income taxes                              --             --             --
                                               -----------    -----------    -----------
Net Loss and Losses Accumulated
  During the Development Stage                 $  (106,295)   $  (172,104)   $(2,582,784)
                                               ===========    ===========    ===========
Basic and diluted weighted average number of
  shares outstanding                             7,117,282      6,790,522
                                               ===========    ===========

Basic and diluted loss per common share        $     (0.01)   $     (0.03)
                                               ===========    ===========
</TABLE>

See accompanying notes to these consolidated financial statements.

Page F-2

<PAGE>

                          BIOMODA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2005 AND 2004
      AND FOR THE PERIOD FROM JANUARY 3, 1990 (INCEPTION) TO MARCH 31, 2005
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                  Three-Months        Three-Months      January 3, 1990
                                                                    Ended               Ended            (Inception) to
                                                                March 31, 2005      March 31, 2004       March 31, 2005
                                                                ---------------     ---------------     ---------------
<S>                                                             <C>                   <C>               <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                                        $     (106,295)     $     (172,104)     $   (2,582,784)
Adjustments to reconcile net loss to
     net cash used in operating activities:
  Stock options expense                                                    --               17,500              23,650
  Issuance of common stock for services                                    --                  --               47,101
  Issuance of common stock in connection with
      exercise of options                                                  --
  Issuance of common stock for bonuses to employees                        --
  Loss on sale of assets                                                   --                  --                  358
  Foreign currency transactions                                            --                  --
  Depreciation and amortization                                          4,500               3,412              68,601
  Changes in operating assets and liabilities:
  Accounts receivable                                                      --                  --
  Other Assets                                                             --                4,425              (3,241)
  Patents                                                                  --              (16,690)                 --
  Bank overdraft                                                           --                5,744                  --
  Accounts payable and accrued liabilities                              (3,957)             36,119             260,801
  Advances from stockholders                                               --                  --                   --
                                                                ---------------     ---------------     ---------------
Net cash flows used in operating activities                           (105,752)           (126,019)         (2,185,514)

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                                       --              (14,020)            (24,177)
  Sale of property and equipment                                           --                  --                1,139
  Organizational costs                                                     --                  --                   --
  Patent, trademark and license fee                                    (30,953)                --             (293,145)
                                                                ---------------     ---------------     ---------------
Net cash flows used in investing activities                            (30,953)            (14,020)           (316,183)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from stockholders' advances                                     --                  --              134,988
  Proceeds from line of credit from an affiliated entity               135,925             135,490           1,077,844
  Issuance of common stock for cash                                        --                  --            1,289,445
                                                                ---------------     ---------------     ---------------
Net cash flows provided by financing activities                        135,925             135,490           2,502,277

Net (decrease) increase in cash                                           (780)             (4,549)                580

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

                                                                ---------------     ---------------     ---------------
Cash, end of period                                             $          580      $          198                 580
                                                                ===============     ===============     ===============
</TABLE>

See accompanying notes to consolidated financial statements.

Page F-3

<PAGE>


--------------------------------------------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 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 March 31, 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 March 31, 2005, the Company had an
accumulated deficit of approximately $2,583,000 and a working capital deficit of
approximately $1,469,000.

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).

--------------------------------------------------------------------------------
Page F-4

<PAGE>

--------------------------------------------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 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 month periods ended
March 31, 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 $66,000, $131,000 and $1,487,000 of research and
development expenses for the three months ended March 31, 2005 and 2004 and for
the period from Inception through March 31, 2005, respectively.

5.  ADVANCES FROM STOCKHOLDERS

As of March 31, 2005, the Company had advances of approximately $135,000 payable
to two of its stockholders. Such advances historically bore interest at 10% per
annum. No interest expense related to such advances for the three month period
ended March 31, 2004 was recorded. Interest expense was approximately $3,400 and
$124,000 for the three month period ended March 31, 2005 and for the period from
inception through March 31, 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 three month periods ended March 31, 2005, 2004 and
for the period from Inception through March 31, 2005 was approximately $13,000,
$7,000 and $47,000, 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.

--------------------------------------------------------------------------------
Page F-5

<PAGE>

--------------------------------------------------------------------------------
                                  BIOMODA, INC.
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2005 AND 2004
--------------------------------------------------------------------------------

Rental expense related to the above leases for the three month periods ended
March 31, 2005 and 2004 and for the period from Inception through March 31, 2005
was approximately $2,400, $2,400 and $11,300, respectively.






















--------------------------------------------------------------------------------
Page F-6



<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  primary  focus is on
discovery,  development,   manufacture  and  marketing  of  proprietary  medical
diagnostic  and  treatment  products  used to treat life  threatening  and other
serious diseases.

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 March 31, 2005.

PLAN OF OPERATION

Our plan of  operation  for the next  twelve  months is to verify and refine our
assay,  design our kit,  prepare for clinical  studies,  and initiate a dialogue
with the FDA  relative to our approval  submission.  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 if and 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 spit 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.

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.

                                       4
<PAGE>

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 pre-clinical 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 risks associated with our business plan.

The U.S.  Patent  Office  issued its  Formal  Notice of  Allowance  for a Patent
developed  by  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.

CONTRACTS

During  2004,  the  Company  entered  into  numerous  relationships  in order to
expedite  and further  perfect its  patented and  proprietary  developments  for
regulatory approval,  accelerated commercialization and market acceptance. Among
these organizations with whom Biomoda is working:  Esocor LLC, Majestic Sarl and
D.  Lescasse-Laurent,  Triangulum  Consulting Services,  Inc., TriCore Reference
Laboratories,  and  PhenoPath  Laboratories,  PLLC.  The  following  is a  brief
description of some of these contracts:

Tricore Reference Laboratories

On  April   7,   2004   the   Company   and   TriCore   Reference   Laboratories
(http://tricore.org),  both headquartered in Albuquerque  entered into a written
agreement for TriCore to handle  sputum sample  processing  and  management  for
Biomoda  and for TriCore to employ its  expertise  in  cytopathology  to greatly
enhance and accelerate Biomoda's diagnostic development activities.

                                       5
<PAGE>

TriCore  Reference  Laboratories  (Albq. NM) is a  not-for-profit,  full service
medical reference  laboratory  serving  physicians and hospitals  throughout New
Mexico and the Southwest. In addition to clinical and anatomic pathology testing
and consultative  services,  TriCore participates in medical scientific research
through collaborations with local and national biotech firms. Founded in 1998 as
a regional laboratory  consolidation,  TriCore's sponsors include the University
of New Mexico Hospital and Presbyterian  Healthcare  Services in Albuquerque and
St. Vincent Hospital in Santa Fe.

Biomoda's  patented  products,  primarily  involved  with  early  detection  and
targeted  treatment of specific  cancers  will be supported by its  relationship
with TriCore.

By teaming with TriCore, Biomoda is continuing to lessen the "time to market" by
outsourcing strategic areas of its research, development and marketing effort to
world class professional  medical  organizations both at home in Albuquerque and
around the world.

Triangulum Consulting Services, Inc.

On January 26, 2004 the Company entered into a written  contract with Triangulum
Consulting Services, Inc. ("Triangulum")  (www.trianguluminc.com)  headquartered
in Raleigh,  NC to provide guidance with regulatory  approvals and to accelerate
"time to market" for Biomoda's  patented products  primarily involved with early
detection and targeted treatment of specific cancers.

Triangulum,  formerly JASA Consulting Services,  LLC., is widely recognized as a
leading provider of consulting services in biopharmaceutical and related fields.
After a  review  of the  technologies  employed  and  patents  held by  Biomoda,
Triangulum  is prepared to commit  significant  resources  to enable  Biomoda to
efficiently  and cost  effectively  complete  the  regulatory  steps  and  bring
Biomoda's critically needed products to market quickly.

Madame Lescasse-Laurent/Majestic Sarl

On  June  8,  2004  the  Company  entered  into a  written  contract  with  Mme.
Lescasse-Laurent  , based in  Vaugrigneuse,  France.  D.  Lescasse-Laurent  will
support the evaluation of Biomoda's cancer diagnostic products and systems. Mme.
Lescasse-Laurent  has  agreed  to  file  Biomoda's  application  of a CE Mark in
France. Upon approval by the Ministry of Health of France, and more specifically
at AFSSAPS  (Agence  Francaise  de  Securite  Sanitaire  de  Produits de Sante),
Biomoda's  patents and systems will be  processed  for other  European  markets.
AFSSAPS  combines  approvals  for both In Vivo and In  Vitro  products  into the
French market.`

Mme. Lescasse-Laurent provides medical product  commercialization,  consultation
and  management   assistance  to  many  of  the  world's   leading   bio-medical
organizations.

                                       6
<PAGE>


Esocor LLC

As of April 19,  2004,  the  Company  has  announced  the  addition of a leading
clinical pathology consulting firm, Esocor LLC, www.esocor.com, located in White
Plains,  NY, to the group of world class  professionals who have contracted with
Biomoda to assist and assure  that  Biomoda's  patented  and  critically  needed
products,  primarily  involved with early  detection  and targeted  treatment of
specific cancers are brought to market in an orderly and expedited manner.

Esocor's managing director,  Dr. Wolfgang  Hofgartner,  a world recognized board
certified  clinical  pathologist,  will support Biomoda's product entry to offer
the Company's patented systems and treatments.  Dr. Hofgartner, a medical doctor
and doctor of  sciences,  has built and  cultivated a  multinational  network of
academic  opinion leaders in clinical  pathology.  Dr.  Hofgartner has conducted
clinical research in conjunction with world class  institutions  including Sloan
Kettering  Cancer Center and Baylor College of Medicine,  and served as European
medical director for Becton Dickinson (Fortune 500 healthcare).

Dr. Hofgartner will be part of the Company's carefully assembled team of leading
outside medical  professionals.  The Company looks to his  significant  European
experience to provide a head start for global marketing.

PhenoPath Laboratories, PLLC

On March 1, 2004,  the Company  entered into a written  contract with  PhenoPath
Laboratories,  PLLC,  www.phenopath.com  a research  and  development  pathology
laboratory in Seattle,  Washington.  PhenoPath will support Biomoda's diagnostic
development program for early detection and treatment of cancers, primarily lung
cancer.  Phenopath  is a widely  respected  and  highly  experienced  laboratory
organization  with  particular  skills and  expertise in pathology and biomarker
development and applications.

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 March 31, 2005 and 2004
-------------------------------------------------------------------

REVENUE.  As of March 31, 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  $66,000 in the three months ended March 31,
2005 from  approximately  $131,000 in the three months ended March 31, 2004. 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.

                                       7
<PAGE>


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,  decreased to $16,822 in the three months
ended March 31, 2005 from $31,067 in the three  months ended March 31, 2004.  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 $19,183 in the three months
ended March 31, 2005 from $6,190 in the three months ended March 31, 2004 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 March 31,  2005 we have raised net  proceeds  of  approximately
$2,311,124 from these sources.

Product  development  expenditures  approximated  $66,000 for the quarter  ended
March  31,  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 $580 as of March 31, 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.

                                       8
<PAGE>


                        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 a date (the "Evaluation Date") within 90 days prior to filing
the Company's March 31, 2005 Form 10-QSB.  Based upon that  evaluation,  the CEO
and CFO  concluded  that,  as of March 31,  2005,  our  disclosure  controls and
procedures were of limited effectiveness.

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.

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 quarter ended March 31, 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

                                       9
<PAGE>


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.

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.


                                       10
<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: May 13, 2005

BIOMODA, INC. and Subsidiary

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