**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**


x 
QUARTERLY
          REPORT
          UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
          1934
 For
        the
        quarterly period ended September 30, 2007
 
 o  TRANSITION
        REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
        1934
  For
        the
        transition period from _________to_________





Commission
      File No. 0-17119





**QUANTRX
      BIOMEDICAL CORPORATION**


(Exact
      Name of Small Business Issuer as Specified in Its Charter)





Nevada
            33-0202574(State
                or Other Jurisdiction of
            (I.R.S.
                EmployerIncorporation
                or Organization)
            Identification
                No.)




100
      S.
      Main Street, Suite 300, Doylestown, PA 18901


(Address
      of Principal Executive Offices)





(267)
      880-1595


(Issuer’s
      Telephone Number)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the 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. x Yes o
      No





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





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity as
      of the latest practicable date:




The
      number of shares of the issuer’s common stock outstanding as of November 1, 2007
      was 41,699,681.





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










**PART
                I - FINANCIAL INFORMATION**ITEM
                1.
            Consolidated
                Financial StatementsConsolidated
                Balance Sheets as of September 30, 2007 (Unaudited) and December
                31,
                2006
            4Consolidated
                Statements of Operations (Unaudited) for the three and nine months
                ended
                September 30, 2007 and 2006
            5Consolidated
                Statements of Cash Flows (Unaudited) for the nine months ended September
                30, 2007 and 2006
            6Condensed
                Notes to (Unaudited) Consolidated Financial Statements
            7ITEM
                2.
            Management’s
                Discussion and Analysis of Consolidated Financial Condition and
                Consolidated Results of Operations
            20ITEM
                3.
            Controls
                and Procedures
            29**PART
                II - OTHER INFORMATION**ITEM
                1.
            Legal
                Proceedings
            30ITEM
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            30ITEM
                3.
            Defaults
                Upon Senior Securities
            30ITEM
                4.
            Submission
                of Matters to a Vote of Security Holders
            31ITEM
                5.
            Other
                Information
            31ITEM
                6.
            Exhibits
            31SIGNATURES
            
            32


2


**PART
      I – FINANCIAL
      INFORMATION**




**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**




**THIS
      QUARTERLY REPORT ON FORM 10-QSB, INCLUDING EXHIBITS HERETO, CONTAINS
      FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
      ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
      1934,
      AS AMENDED. THESE FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE
      WORDS “ANTICIPATES,” “BELIEVES,” “EXPECTS,” “INTENDS,” “FORECASTS,” “PLANS,”
“ESTIMATES,” “MAY,” “FUTURE,” “STRATEGY,” OR WORDS OF SIMILAR MEANING. VARIOUS
      FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED
      IN
      THE FORWARD-LOOKING STATEMENTS; INCLUDING THOSE DESCRIBED IN “RISK FACTORS” IN
      OUR REGISTRATION STATEMENT ON FORM SB-2 FILED WITH THE SECURITIES AND EXCHANGE
      COMMISSION ON APRIL 13, 2007 AND OUR ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR
      ENDED DECEMBER 31, 2006 FILED WITH THE SEC ON APRIL 2, 2007. WE ASSUME NO
      OBLIGATIONS TO UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT NEW
      INFORMATION, ACTUAL RESULTS, CHANGES IN ASSUMPTIONS, OR CHANGES IN OTHER
      FACTORS, EXCEPT AS REQUIRED BY LAW.**




3


**ITEM
      1.**  **Financial
      Statements**




**QUANTRX
      BIOMEDICAL CORPORATION**


**CONSOLIDATED
      BALANCE SHEETS**









September
                30,
              2007
            
            December
                31,
              2006(unaudited)**ASSETS**Current
                Assets:Cash
                and cash equivalents
            
            $
            184,670
            
            $
            1,256,912Accounts
                receivable
            
            
            57,531
            
            
            -Interest
                receivable, net of allowance for bad debt of $14,000 and
                $0
            
            
            -
            
            
            9,917Interest
                receivable –
                related
                party
            
            
            14,575
            
            
            986Prepaid
                expenses
            
            
            98,795
            
            
            113,386Note
                receivable, net of allowance for bad debt of $200,000 and
                $0
            
            
            -
            
            
            200,000Notes
                receivable – related party
            
            
            300,000
            
            
            250,000Deposits
            
            
            -
            
            
            5,350Total
                Current Assets
            
            
            655,571
            
            
            1,836,551Investments
            
            
            200,000
            
            
            2,195,023Property
                and equipment, net
            
            
            408,969
            
            
            156,823Intangible
                assets, net
            
            
            2,204,485
            
            
            113,669Security
                deposits
            
            
            10,667
            
            
            10,667Total
                Assets
            
            $
            3,479,692
            
            $
            4,312,733**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                Liabilities:Accounts
                payable
            
            $
            377,580
            
            $
            244,863Accrued
                expenses
            
            
            139,840
            
            
            41,692Deferred
                revenue, current portion
            
            
            86,333
            
            
            83,333Security
                deposits
            
            
            2,000
            
            
            -Notes
                payable, current portion
            
            
            10,694
            
            
            -Total
                Current Liabilities
            
            
            616,447
            
            
            369,888Deferred
                revenue, long-term portion
            
            
            311,069
            
            
            376,569Notes
                payable, long-term portion
            
            
            52,524
            
            
            -Total
                Liabilities
            
            
            980,040
            
            
            746,457Commitments
                and Contingencies
            
            
            -
            
            
            -Minority
                Interest
            
            
            -
            
            
            -Stockholders’
                Equity:Preferred
                stock - $0.01 par value; 25,000,000 shares authorized, no shares
                issued
                and outstanding
            
            
            -
            
            
            -Common
                stock - $0.01 par value; 75,000,000 shares authorized; 41,699,681
                and
                37,378,080 shares issued and outstanding
            
            
            416,996
            
            
            373,780Additional
                paid-in capital
            
            
            38,223,733
            
            
            33,706,733Accumulated
                deficit
            
            
            (36,141,077
            )
            
            (30,514,237
            )Total
                Stockholders’ Equity
            
            
            2,499,652
            
            
            3,566,276Total
                Liabilities and Stockholders’ Equity
            
            $
            3,479,692
            
            $
            4,312,733





The
      accompanying condensed notes are an integral part of these interim consolidated
      financial statements.


4


**QUANTRX
      BIOMEDICAL CORPORATION**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**





Three Months Ended September 30,
            
            Nine Months Ended September 30,2007
            
            2006
            
            2007
            
            2006(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)Revenues
            
            $
            85,518
            
            $
            32,106
            
            $
            256,169
            
            $
            57,788Operating
                Expenses:Sales
                and marketing
            
            
            78,243
            
            
            67,468
            
            
            173,524
            
            
            229,911General
                and administrative
            
            
            534,658
            
            
            284,952
            
            
            1,635,186
            
            
            861,307Professional
                fees
            
            
            330,259
            
            
            192,484
            
            
            1,585,255
            
            
            609,206Research
                and development
            
            
            462,740
            
            
            176,488
            
            
            1,464,873
            
            
            436,778Amortization
            
            
            44,209
            
            
            2,456
            
            
            88,666
            
            
            4,868Depreciation
            
            
            24,452
            
            
            4,167
            
            
            55,745
            
            
            7,149Total
                operating expenses
            
            
            1,474,561
            
            
            728,015
            
            
            5,003,249
            
            
            2,149,219Loss
                from Operations
            
            
            (1,389,043
            )
            
            (695,909
            )
            
            (4,747,080
            )
            
            (2,091,431
            )Other
                Income (Expense):Interest
                and dividend income
            
            
            12,070
            
            
            14,497
            
            
            66,681
            
            
            36,438Interest
                expense
            
            
            (636
            )
            
            (82,029
            )
            
            (1,371
            )
            
            (228,206
            )Bad
                debt expense
            
            
            -
            
            
            -
            
            
            (214,000
            )
            
            -Rental
                income
            
            
            6,224
            
            
            -
            
            
            14,509
            
            
            -Grant
                income
            
            
            -
            
            
            -
            
            
            14,000
            
            
            -Loss
                on equity investee
            
            
            -
            
            
            -
            
            
            (267,608
            )
            
            -Amortization
                of debt discount to interest expense
            
            
            -
            
            
            (1,080,366
            )
            
            -
            
            
            (2,952,519
            )Amortization
                of deferred financing costs to interest expense
            
            
            -
            
            
            (116,869
            )
            
            -
            
            
            (322,417
            )Total
                Other Income (Expense)
            
            
            17,658
            
            
            (1,264,767
            )
            
            (387,789
            )
            
            (3,466,704
            )Loss
                before Minority Interest and Income Taxes
            
            
            (1,371,385
            )
            
            (1,960,676
            )
            
            (5,134,869
            )
            
            (5,558,135
            )Minority
                Interest
            
            
            44,028
            
            
            -
            
            
            337,676
            
            
            -Provision
                for Income Taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                Loss
            
            $
            (1,327,357
            )
            $
            (1,960,676
            )
            $
            (4,797,193
            )
            $
            (5,558,135
            )Basic
                and Diluted Net Loss per Common Share
            
            $
            (0.03
            )
            $
            (0.06
            )
            $
            (0.12
            )
            $
            (0.19
            )Weighted
                Average Shares Used in Per Share Calculation:Basic
                and diluted
            
            
            41,263,039
            
            
            30,648,305
            
            
            40,265,924
            
            
            28,646,617





The
      accompanying condensed notes are an integral part of these interim consolidated
      financial statements.


5


**QUANTRX
      BIOMEDICAL CORPORATION**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





Nine Months Ended September 30,2007
            
            2006(unaudited)
            
            (unaudited)CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (4,797,193
            )
            $
            (5,558,135
            )Adjustments
                to reconcile net loss to net cash used by operating
                activities:Depreciation
                and amortization
            
            
            144,411
            
            
            12,017Interest
                expense related to amortization of non-cash discount, non-cash beneficial
                conversion feature and deferred financing costs
            
            
            -
            
            
            3,274,936Bad
                debt expense
            
            
            214,000
            
            
            -Non-cash
                stock-based compensation expense
            
            
            106,457
            
            
            157,137Expenses
                related to common stock warrants issued
            
            
            118,403
            
            
            -Non-cash
                fair value of warrants and options issued for consulting
            
            
            454,972
            
            
            219,000Non-cash
                fair value of common stock issued for consulting
            
            
            -
            
            
            65,000Non-cash
                fair value of warrants issued for purchased R&D
            
            
            -
            
            
            100,010Loss
                on equity investee
            
            
            267,608
            
            
            -Minority
                interest
            
            
            (337,676
            )
            
            -(Increase)
                decrease in:Accounts
                receivable
            
            
            (57,531
            )
            
            (7,002
            )Interest
                receivable
            
            
            (17,673
            )
            
            -Prepaid
                expenses
            
            
            114,572
            
            
            (93,570
            )Deposits
            
            
            5,350
            
            
            (10,512
            )Accounts
                payable
            
            
            (132,539
            )
            
            91,555Accrued
                expenses
            
            
            43,649
            
            
            213,448Security
                deposits
            
            
            2,000
            
            
            -Deferred
                revenue
            
            
            (62,500
            )
            
            480,735Net
                cash used by operating activities
            
            
            (3,933,690
            )
            
            (1,055,381
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchase
                of fixed assets
            
            
            (253,689
            )
            
            (91,530
            )Cash
                paid for purchase of investments
            
            
            -
            
            
            (200,000
            )Cash
                paid for equity interest in FluoroPharma
            
            
            (1,536,000
            )
            
            (1,754,000
            )Cash
                obtained from equity interest in FluoroPharma
            
            
            764,223
            
            
            -Payment
                on note receivable from FluoroPharma
            
            
            250,000
            
            
            -Increase
                in note receivable
            
            
            -
            
            
            (200,000
            )Payment
                for patent under licensing agreement
            
            
            -
            
            
            (50,000
            )Issuance
                of notes receivable –
                related
                party
            
            
            (300,000
            )
            
            -Cash
                paid for license agreement
            
            
            (15,000
            )
            
            -Cash
                paid for capitalized website development costs
            
            
            (29,700
            )
            
            -Net
                cash used by investing activities
            
            
            (1,120,166
            )
            
            (2,295,530
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from sale of common stock and warrants, net of cash issuance costs
                of
                $157,504
            
            
            3,374,996
            
            
            -Proceeds
                from long-term note payable
            
            
            44,000
            
            
            -Proceeds
                from exercise of warrants to common stock, net of placement fees
                of
                $16,429 and $0
            
            
            567,777
            
            
            57,430Payments
                on note receivable used to finance equipment purchase
            
            
            (5,159
            )
            
            -Repayment
                of loans payable
            
            
            -
            
            
            (8,500
            )Proceeds
                from issuance of convertible notes
            
            
            -
            
            
            3,155,000Cash
                financing costs paid for issuance of convertible notes
            
            
            -
            
            
            (167,200
            )Decrease
                in payables related to debt financing costs
            
            
            -
            
            
            (56,400
            )Net
                cash provided by financing activities
            
            
            3,981,614
            
            
            2,980,330Net
                increase in cash and cash equivalents
            
            
            (1,072,242
            )
            
            (370,581
            )Cash
                and cash equivalents, beginning of period
            
            
            1,256,912
            
            
            990,523Cash
                and cash equivalents, end of period
            
            $
            184,670
            
            $
            619,942Supplemental
                cash flow disclosures:Interest
                expense paid in cash
            
            $
            10,193
            
            $
            445Income
                tax paid
            
            
            -
            
            
            -Supplemental
                disclosure of non-cash activities:Fair
                value of warrants issued with common stock
            
            $
            1,243,087
            
            $
            -Fair
                value of warrants issued to placement agents for equity financing
                costs
            
            
            277,778
            
            
            -Fair
                value of convertible note beneficial conversion feature
            
            
            -
            
            
            2,023,337Fair
                value of warrants issued with convertible notes
            
            
            -
            
            
            1,131,663Fair
                value of warrants issued to placement agents for debt financing
                costs
            
            
            -
            
            
            143,049Decrease
                in payables related to purchase of fixed assets
            
            
            32,978
            
            
            -Increase
                in payables related to equipment purchase financing
            
            
            24,377
            
            
            -Increase
                in payables due to investment in FluoroPharma
            
            
            
            
            
            241,023Conversion
                of preferred stock to common stock
            
            
            -
            
            
            81,411Issuance
                of common stock pursuant to conversion of convertible note
                payable
            
            
            -
            
            
            50,000Issuance
                of common stock for accrued interest pursuant to convertible note
                payable
            
            
            -
            
            
            2,244Issuance
                of common stock to satisfy loans payable
            
            
            -
            
            
            20,000





The
      accompanying condensed notes are an integral part of these interim consolidated
      financial statements.


6




**QUANTRX
      BIOMEDICAL CORPORATION**


**CONDENSED
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**


**September
      30, 2007**




Description
      of Business




QuantRx
      Biomedical Corporation is a broad-based diagnostics company focused on the
      development and commercialization of innovative diagnostic products based on
      its
      patented technology platforms for the worldwide healthcare industry. The
      Company’s strategy is to commercialize its products through partners or
      distributors, contracting the manufacturing to third party partners while
      maintaining control over the manufacturing process. When used in these notes,
      the terms "Company," “we,” “our,” “ours,” or "us" mean QuantRx Biomedical
      Corporation, a Nevada corporation, and its subsidiary.




The
      Company’s principal business office is located at 100 South Main Street, Suite
      300, Doylestown, Pennsylvania. QuantRx also has a research and development
      facility in Portland, Oregon.




In
      April
      2007, QuantRx increased its ownership in FluoroPharma, Inc., a development-stage
      molecular imaging company, to 57.78% of outstanding capital stock, resulting
      in
      its consolidation effective April 1, 2007.




1.
            Summary
                of Significant Accounting
                Policies




Basis
      of Presentation




The
      interim consolidated financial statements are unaudited; however, in the opinion
      of management, they include all adjustments (consisting only of normal recurring
      adjustments) necessary for a fair statement of financial position and results
      of
      operations for the periods reported. The interim consolidated financial
      statements have been prepared pursuant to the rules and regulations of the
      SEC.
      Certain information and footnote disclosures normally included in consolidated
      financial statements prepared in accordance with accounting principles generally
      accepted in the United States of America have been condensed or omitted pursuant
      to such rules and regulations, although QuantRx believes that the disclosures
      included herein are adequate to prevent the presented information from being
      misleading.




Operating
      results for the periods presented are not necessarily indicative of future
      results. These interim consolidated financial statements should be read in
      conjunction with the financial statements and notes to financial statements
      included in the Company’s Annual Report on Form 10-KSB for the year ended
      December 31, 2006.




Certain
      amounts from prior periods have been reclassified to conform to the current
      period presentation. These reclassifications have resulted in no changes to
      the
      Company’s accumulated deficit or net losses presented.




The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires the
      use
      of estimates and assumptions regarding certain types of assets, liabilities,
      revenues, and expenses. Such estimates primarily relate to unsettled
      transactions and events as of the date of the financial statements, fair
      valuations of share-based payments, and fair valuations of acquired assets
      and
      liabilities. Actual results may differ from estimated amounts.


7




Earnings
      per Share




The
      Company computes net income (loss) per common share in accordance with Statement
      of Financial Accounting Standards (SFAS) No. 128, “Earnings per Share.” Net
      income (loss) per share is based upon the weighted average number of outstanding
      common shares and the dilutive effect of common stock equivalents such as
      options and warrants to purchase common stock, convertible preferred stock,
      and
      convertible notes, if applicable, that are outstanding. Basic and diluted
      earnings per share were the same at the reporting dates of the accompanying
      financial statements, as including common stock equivalents in the calculation
      of diluted earnings per share would have been antidilutive.




As
      of
      September 30, 2007, the Company had outstanding common stock options of
      1,372,500 and common stock warrants of 6,757,383. The above options and warrants
      were deemed to be antidilutive for the three and nine months ended September
      30,
      2007.




As
      of
      September 30, 2006, the Company had outstanding common stock options of
      1,360,000, common stock warrants of 3,705,447, and convertible debt of
      $3,980,000 subject to beneficial conversion of 3,980,000 shares outstanding.
      The
      above options, warrants, and convertible securities were deemed to be
      antidilutive for the three and nine months ended September 30,
      2006.




Accounting
      for Share-Based
      Payments




Effective
      January 1, 2005, QuantRx adopted SFAS No. 123 (R), “Share-Based
      Payments,” using the modified prospective method of application. SFAS No. 123
      (R) establishes the accounting for transactions in which an entity exchanges
      equity securities for services and requires companies to expense the estimated
      fair value of these awards over the requisite service period. QuantRx uses
      the
      Black-Scholes method in determining fair value. Accordingly, compensation cost
      has been recognized using the fair value method and expected term accrual
      requirements as prescribed in SFAS No. 123 (R), which resulted in stock-based
      compensation expense related to employees of $36,972 and $106,457 for the three
      and nine months ended September 30, 2007 (including $4,459 and $8,917 relating
      to subsidiary options, respectively), and $68,260 and $157,137 for the three
      and
      nine months ended September 30, 2006, respectively.




Recent
      Accounting Pronouncements




In
      February 2007, the Financial Accounting Standard Board (FASB) issued SFAS No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment to FASB Statement No. 115.” This standard permits an
      entity to choose to measure many financial instruments and certain other items
      at fair value at specified election dates and applies to all entities with
      available-for-sale and trading securities. Implementation of this statement
      is
      required in the first quarter of 2008. QuantRx has not yet evaluated the
      potential impact of these new requirements.




In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," to
      clarify how to measure fair value and to expand disclosures about fair value
      measurements. Implementation is required in the first quarter of 2008 with
      any
      changes to the fair values of assets or liabilities to be reported generally
      in
      net income or in accumulated comprehensive income for the period. QuantRx has
      not yet evaluated the potential impact of these new requirements.


8




In
      June
      2006, the FASB issued FASB Interpretation No. (FIN) 48, “Accounting for
      Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109,”
which prescribes a recognition threshold and measurement attribute for the
      financial statement recognition and measurement of a tax position taken or
      expected to be taken in a tax return. This interpretation is effective for
      fiscal years beginning after December 15, 2006. Adoption of this interpretation
      has had no impact on the Company’s financial condition or results of operations.




In
      February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
      Financial Instruments, an Amendment of FASB Standards No. 133 and 140.” This
      statement established the accounting for certain derivatives embedded in other
      instruments. This statement is effective for fiscal years beginning after
      September 15, 2006. Adoption of this statement has had no impact on the
      Company’s financial condition or results of operations.




In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,”
which replaces Accounting Principles Board Opinion No. 20, “Accounting Changes”,
      and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements -
      An Amendment of APB Opinion No. 28”. SFAS No. 154 provides guidance on
      accounting for and reporting changes in accounting principles and error
      corrections. SFAS No. 154 requires that changes in accounting principle be
      applied retrospectively to prior period financial statements and is effective
      for fiscal years beginning after December 15, 2005. Adoption of this statement
      has had no impact on the Company’s financial position, results of operations, or
      cash flows.




Principles
      of Consolidation




These
      interim consolidated financial statements include the accounts of the Company
      and, from April 1, 2007, its majority-owned subsidiary, FluoroPharma, Inc.
      All
      significant intercompany accounts and transactions have been eliminated in
      consolidation.




Revenue
      Recognition




The
      Company recognizes revenue in accordance with the Securities and Exchange
      Commission’s (“SEC”) Staff Accounting Bulletin Topic 13, “Revenue
      Recognition” ** (“Topic
      13”) and Emerging Issues Task Force Issue (“EITF”) No. 00-21, “Revenue
      Arrangements with Multiple Deliverables.” Revenue is recognized when all of the
      following criteria are met: (1) persuasive evidence of an arrangement
      exists; (2) delivery has occurred or services have been rendered;
      (3) the seller’s price to the buyer is fixed and determinable; and
      (4) collectibility is reasonably assured.




Revenue
      from licensing agreements is recognized based on the performance requirements
      of
      the agreement. Revenue is deferred for fees received before earned.
      Nonrefundable upfront fees that are not contingent on any future performance
      by
      us are recognized as revenue when revenue recognition criteria under Topic
      13
      and EITF 00-21 are met and the license term commences. Nonrefundable upfront
      fees, where we have an ongoing involvement or performance obligations, are
      recorded as deferred revenue and recognized as revenue over the life of the
      contract, the period of the performance obligation, or the development period;
      contingent upon whichever is appropriate in light of the circumstances.


9




Payments
      related to substantive, performance-based milestones in an agreement are
      recognized as revenue upon the achievement of the milestones as specified in
      the
      underlying agreements when they represent the culmination of the earnings
      process. Royalty revenue from licensed products will be recognized when earned
      in accordance with the terms of the license agreements.




2.
            Consolidation
                of FluoroPharma, Inc.




In
      March
      2006, QuantRx purchased 1,096,170 shares of FluoroPharma common stock for a
      total purchase price of $1,566,023. Contemporaneously, QuantRx negotiated the
      purchase of an additional 300,000 shares from private investors for $429,000.
      In
      February 2007, QuantRx purchased an additional 200,000 shares from private
      investors for $286,000. On April 13, 2007, QuantRx and FluoroPharma closed
      the
      transactions contemplated by a “stage 2” investment agreement. Under the
      investment agreement, effective April 1, 2007, QuantRx purchased 627,058 shares
      of common stock of FluoroPharma for $1,250,000, consisting of (i) cash payments
      aggregating $741,178; and (ii) cancellation in full of two promissory notes
      issued by FluoroPharma in favor of QuantRx, in the aggregate principal amount
      of
      $500,000, and with accrued and unpaid interest of $8,822, for a total of
      $508,822. As a result of these equity purchases, QuantRx’s ownership in
      FluoroPharma exceeded 50%, requiring QuantRx to consolidate FluoroPharma.
      FluoroPharma, Inc. is a privately held molecular imaging company based in
      Boston, Massachusetts, engaged in the discovery, development, and
      commercialization of proprietary products for positron emission tomography.
      The
      investment in FluoroPharma is intended
      to strategically expand QuantRx’s diagnostic platforms.




As
      of
      September 30, 2007, QuantRx owned approximately 57.78% of the issued and
      outstanding capital stock of FluoroPharma. Effective April 1, 2007,
      FluoroPharma’s results of operations have been included in the accompanying
      consolidated financial statements.




The
      investment in FluoroPharma of $1,995,023 at December 31, 2006, and until the
      date of consolidation, was accounted for in accordance with the equity method
      of
      accounting. Since FluoroPharma’s liabilities exceeded assets on the investment
      dates, each investment was recorded as equity method goodwill. In accordance
      with SFAS No. 142, “Goodwill and Other Intangible Assets,” equity method
      goodwill is not amortized or tested for impairment in accordance with this
      standard. QuantRx reviewed the equity method goodwill in accordance with
      Accounting Principles Board Opinion (“APB”) No. 18, “The Equity Method of
      Accounting for Investments in Common Stock,” under which QuantRx would have
      recognized an impairment loss had there been a loss in the value of the equity
      method goodwill which was deemed to be other than a temporary decline. No
      impairment was recognized through March 31, 2007.




QuantRx
      is not accounting for the acquisition of FluoroPharma’s equity as a business
      combination since FluoroPharma is a development-stage enterprise and does not
      meet the definition of a business in accordance with SFAS No. 141, “Business
      Combinations” and EITF 98-3, “Determining Whether a Nonmonetary Transaction
      Involves Receipt of Productive Assets or of a Business.” As a result of the
      consolidation and pursuant to Accounting Research Bulletin (“ARB”) No. 51,
“Consolidated Financial Statements,” effective April 1, 2007, QuantRx recognized
      previously unrecognized equity method losses relating to its investment in
      FluoroPharma of $829,648, attributable to 2006, as an adjustment to retained
      earnings, and $267,608, attributable to 2007, in the second quarter of 2007.
      These losses were previously unrecognized since APB No. 18 stipulated that
      the
      entire investment be treated as equity method goodwill with no equity method
      loss recognition.


10




QuantRx’s
      aggregate investment in the equity of FluoroPharma of $3,531,023 was reduced
      at
      April 1, 2007, by the $1,097,256 in previously unrecognized equity method losses
      required to be recorded upon consolidation in accordance with ARB No. 51. The
      remaining investment balance of $2,433,767 at April 1, 2007, has been allocated
      upon consolidation based on fair value estimates as follows:




Cash
            
            $
            764,223Prepaid
                expenses
            
            
            99,980Property
                and equipment
            
            
            62,802Intangible
                assets
            
            
            2,134,783Current
                liabilities
            
            
            (352,733
            )Minority
                interests
            
            
            (275,288
            )$
            2,433,767




Acquired
      intangibles primarily consist of patent rights and technology licenses and
      are
      estimated to have a weighted average life of 15 years. Amortization expense
      related to these intangibles (subsequent to the acquisition) in the three and
      nine months ending September 30, 2007, was $38,570 and $76,700.




Minority
      interests of $275,288 at April 1, 2007, resulted from the consolidation of
      FluoroPharma reflecting the interests held by third parties of FluoroPharma.
      Since acquisition, and as of September 30, 2007, the portion of FluoroPharma’s
      losses attributable to the minority interest has been reflected, reducing the
      minority interest to zero.




In
      the
      third quarter of 2007, QuantRx advanced an aggregate of $400,000 to FluoroPharma
      through three convertible promissory notes due within twelve months. These
      notes
      and accrued interest of $4,755 for the three and nine months ended September
      30,
      2007, were eliminated in consolidation.




Under
      the
      initial investment agreement with FluoroPharma, QuantRx has the option to
      acquire additional shares of FluoroPharma through a series of staged
      investments. Such staged investments will take the form of cash at increasing
      valuations upon FluoroPharma’s achievement of certain milestones with respect to
      the successful completion of Phase I and Phase II FDA trials for certain
      compounds being developed by FluoroPharma. The final staged investment to wholly
      acquire FluoroPharma will be settled in QuantRx’s common stock. Any subsequent
      investment in FluoroPharma by QuantRx will be consummated pursuant to the terms
      and subject to the conditions set forth in separate definitive agreements.




In
      connection with the initial investment, QuantRx received an option to purchase
      an additional 260,000 shares of FluoroPharma common stock at an exercise price
      of $0.75. FluoroPharma has outstanding common stock equivalents which, if
      exercised together with the Company’s option, would reduce the Company’s
      ownership percentage to approximately 51.65% on a fully diluted and as converted
      basis as of September 30, 2007.


11




3.
            Other
                Balance Sheet Information




Components
      of selected captions in the accompanying balance sheets consist of:


September 30,
                2007
              
              December 31,
                2006**Prepaid
                  expenses:**Prepaid
                  consulting
              
              $
              21,846
              
              $
              73,000Prepaid
                  consulting - related party
              
              
              32,459
              
              
              -Prepaid
                  conferences
              
              
              10,027
              
              
              -Prepaid
                  insurance
              
              
              6,613
              
              
              30,313Prepaid
                  press releases
              
              
              5,748
              
              
              2,538Prepaid
                  rent
              
              
              5,309
              
              
              5,309Prepaid
                  travel
              
              
              8,055
              
              
              1,361Other
              
              
              8,738
              
              
              865**Prepaid
                  expenses**
              
              $
              98,795
              
              $
              113,386**Property
                  and equipment:**Computers
                  and office furniture, fixtures and equipment
              
              $
              143,534
              
              $
              84,129Machinery
                  and equipment
              
              
              248,350
              
              
              37,104Leasehold
                  improvements
              
              
              92,233
              
              
              51,228Less:
                  accumulated depreciation
              
              
              (75,148
              )
              
              (15,638
              )**Property
                  and equipment, net**
              
              $
              408,969
              
              $
              156,823**Accrued
                  expenses:**Professional
                  fees
              
              $
              105,050
              
              $
              30,000Other
              
              
              34,790
              
              
              11,692**Accrued
                  expenses**
              
              $
              139,840
              
              $
              41,692





4.
            Notes
                Receivable




FluoroPharma,
      Inc.




In
      February 2007 and December 2006, QuantRx advanced an aggregate of $500,000
      to
      FluoroPharma through two $250,000, 8% promissory notes due May 16 and March
      31,
      2007, respectively. QuantRx accrued interest of $7,836 on these notes for the
      nine months ended September 30, 2007. The principal balances and unpaid accrued
      interest were settled through a staged investment transaction in the second
      quarter of 2007; see Note 2.


12


Genomics
      USA, Inc.




In
      January 2007, QuantRx advanced $200,000 to Genomics USA, Inc. (“GUSA”) through
      an 8% promissory note due April 8, 2007. The note is currently convertible
      at
      QuantRx’s discretion into 10% of GUSA’s outstanding capital stock on a fully
      diluted and as converted basis. QuantRx is currently exploring the possibility
      of further investment, and has postponed settlement of the note during this
      exploratory period, during which the note shall continue to accrue interest.
      QuantRx accrued interest of $4,033 and $11,617 on this note for the three and
      nine months ended September 30, 2007. GUSA, a privately held Illinois
      corporation, is a technology company focused on the development of Micro-Array
      Detection for DNA. This technology may strategically expand QuantRx’s diagnostic
      platforms. See Note 5 for additional information on GUSA.




Rockland
      Technimed, Ltd.




In
      April
      2006, QuantRx advanced $200,000 to Rockland Technimed, Ltd. (“Rockland”) through
      a 7% convertible promissory note due twelve months from the date of issuance.
      Rockland, a privately held Delaware corporation, is a development stage company
      focused on the research and development of tissue viability imaging diagnostics
      using magnetic resonance imaging (MRI) scanners. QuantRx has accrued interest
      of
      $4,083 for the nine months ended September 30, 2007. The note is convertible
      at
      QuantRx’s discretion into 20%
      of
      Rockland’s outstanding capital stock on a fully diluted and as converted basis to
      satisfy the note and accrued interest. QuantRx ceased accruing interest as
      of
      the maturity date and established an allowance for bad debt in the amount equal
      to the principal balance and accrued interest, $214,000, as the Company attempts
      to resolve this matter.




5.
            Investments




Genomics
      USA, Inc.




In
      May
      2006, QuantRx purchased 144,024 shares of GUSA common stock for $200,000. As
      of
      September 30, 2007, QuantRx owned approximately 10% of the issued and
      outstanding capital stock of GUSA on a fully diluted and as converted basis.




QuantRx
      uses the cost method to account for this investment since QuantRx does not
      control nor have the ability to exercise significant influence over operating
      and financial policies. In accordance with the cost method, the investment
      is
      recorded at cost and impairment is considered in accordance with the Company’s
      impairment policy. No impairment was recognized in the nine months ended
      September 30, 2007.


13




6.
            Intangible
                Assets




Intangible
      assets as of the balance sheet dates consisted of the following:


September 30,
                2007
              
              December 31,
                2006Acquired
                  intangibles
              
              $
              2,149,784
              
              $
              -Patents
              
              
              82,008
              
              
              82,008Patent
                  under licensing
              
              
              50,000
              
              
              50,000Website
                  development
              
              
              38,200
              
              
              8,500Less:
                  accumulated amortization
              
              
              (115,507
              )
              
              (26,839
              )**Intangibles,
                  net**
              
              $
              2,204,485
              
              $
              113,669




The
      Company’s intangible assets are carried at the legal cost to obtain them.
      Intangible assets are amortized using the straight line method over the
      estimated useful life. Useful lives are as follows: acquired intangibles, 15
      years (weighted average); patents, 17 years; patents under licensing, 10 years;
      website development costs, three years. Amortization expense totaled $44,209
      and
      $88,666 for the three and nine months ended September 30, 2007 and $2,456 and
      $4,868 for the three and nine months ended September 30, 2006, respectively.
      Impairment will be considered in accordance with the Company’s impairment
      policy. No impairment was recognized as of September 30, 2007.




7.
            Deferred
                Revenue




On
      July
      7, 2006 (“the effective date”), QuantRx and Synova Healthcare, Inc. (“Synova”)
      entered into a distribution agreement pursuant to which Synova will act as
      the
      exclusive distributor of specified hemorrhoid products of QuantRx in the United
      States. The initial term of the agreement commenced on the effective date and,
      unless sooner terminated as provided in the agreement, shall continue in effect
      for a period of five years following the month in which Synova makes first
      shipment of products to its initial customers. Management has estimated the
      effective term of the agreement to be six years from the effective date. The
      territory covered by the distribution agreement will be expanded to include
      Canada and Mexico if Synova meets specified minimum sales milestones during
      the
      first year of the distribution agreement’s term. Exclusivity is conditioned on
      Synova achieving specified minimum annual sales milestones.




QuantRx
      received an up-front, non-refundable payment of $500,000 upon execution of
      the
      distribution agreement in 2006, which has been recorded as deferred revenue,
      and
      is being amortized into revenue over the expected term of the agreement, six
      years.




QuantRx
      recognized revenue of $20,833 and $62,500 in the three and nine months ended
      September 30, 2007, and $19,265 in the three and nine months ended September
      30,
      2006, in connection with the distribution agreement. As of September 30, 2007,
      deferred revenue related to the distribution agreement was $397,402, of which
      $83,333 is considered current.


14




8.
            Portland
                Development Commission




In
      February 2007, QuantRx received a $44,000 loan from the Portland Development
      Commission. The loan matures in 20 years and is interest free through March
      1,
      2010, and no payments are due until April 1, 2010. The terms of the promissory
      note stipulate that the interest rate will accrue beginning in March 1, 2010,
      at
      an annual rate between 1% and 8.5% based upon the level of compliance with
      certain employment milestones beginning in 2008.




Additionally,
      QuantRx received a $14,000 grant for qualified expenditures related to its
      research facility. QuantRx satisfied the grant terms and recorded the grant
      as
      other income in the first quarter of 2007.




9.
            Preferred
                Stock and Warrants




The
      Company has authorized 25,000,000 shares of preferred stock, of which 9,750,000
      are designated Series A convertible preferred stock, $0.01 par value. The
      remaining 15,250,000 authorized preferred shares have not yet been designated
      by
      the Company. The Company had no issued and outstanding preferred stock at
      September 30, 2007 and 2006, respectively.




Effective
      February 13, 2006, holders of all outstanding shares of the Series A convertible
      preferred stock of QuantRx exercised their rights under the terms of the Series
      A preferred stock to convert all of their outstanding shares of Series A
      preferred stock into shares of QuantRx’s common stock. Each share of Series A
      preferred stock was converted into 1.5 shares of QuantRx’s common stock,
      resulting in the issuance by QuantRx of 12,211,721 common shares. As of the
      date
      hereof, there are no shares of Series A preferred stock outstanding.
      Additionally, warrants to purchase 180,000 shares of Series A preferred stock
      were submitted and exchanged for warrants to purchase 180,000 shares of common
      stock, with the same terms as the original warrants.




10.
            Common
                Stock, Options and Warrants




Common
      Stock




In
      the
      third quarter 2007, QuantRx initiated a limited warrant exercise inducement
      targeting certain large warrant holders. The inducement was a reduction in
      the
      exercise price from $1.50 to $0.75 to a limited number of accredited investors
      holding warrants acquired in conjunction with prior common stock purchases.
      As a
      result of this inducement, 751,001 common stock warrants were exercised and
      exchanged for 751,001 shares of our common stock, $0.01 par value, for aggregate
      gross proceeds of $563,251. In connection with the exercise of these warrants,
      QuantRx paid cash commissions to Legend Merchant, Inc. of $16,429.




In
      the
      third quarter 2007, 38,100 common stock warrants were exercised and exchanged
      for 38,100 shares of our common stock, $0.01 par value, resulting in proceeds
      to
      the Company of $20,955. The exercise price for these warrants was
      $0.55.




On
      March
      1, 2007, QuantRx completed a private placement of 3,532,500 shares of common
      stock and warrants with a five-year term valued at $1,243,087 to purchase an
      aggregate of 1,059,750 shares of common stock at $1.50 per share to accredited
      investors for gross proceeds of $3,532,500 in cash. The Company issued warrants
      with a seven-year term to purchase 194,250 shares of common stock at $1.00
      per
      share valued at $277,778, and paid cash commissions of $155,400 in connection
      with the private placement to Legend Merchant Inc., and an additional $2,104
      for
      related legal services.


15




In
      the
      third quarter of 2006, QuantRx issued 52,244 common shares upon conversion
      of
      $50,000 convertible debt and related accrued interest of $2,244. The conversion
      was made at the holder’s option pursuant to the terms of the convertible note.




In
      the
      second quarter of 2006, 50,000 common shares were issued to an investor
      relations consulting firm pursuant to a one-year consulting agreement. The
      common shares were valued at $1.30 per share, the closing price on the date
      of
      issuance, for a total valuation of $65,000. The fair value of these issued
      common shares will be expensed pursuant to the terms of the agreement.




In
      the
      second quarter of 2006, execution of a settlement of a loan in the amount of
      $20,000 resulted in the issuance of 40,000 shares of common stock in complete
      satisfaction of the loan. The shares were issued at $0.50 per share, which
      was
      the market value of the shares at the time the negotiation of the terms of
      the
      settlement had been concluded.




Warrants




In
      the
      third quarter 2007, QuantRx initiated a limited warrant exercise inducement
      targeting certain large warrant holders. The inducement was a reduction in
      the
      exercise price from $1.50 to $0.75 to a limited number of accredited investors
      holding warrants acquired in conjunction with prior common stock purchases.
      As a
      result of this inducement, 751,001 common stock warrants were exercised and
      exchanged for 751,001 shares of our common stock, $0.01 par value, for aggregate
      net proceeds of $546,822.




In
      August
      2007, 38,100 common stock warrants were exercised and exchanged for 38,100
      shares of our common stock, $0.01 par value, resulting in proceeds to the
      Company of $20,955. The exercise price for these warrants was $0.55.




On
      September 4 and June 1, 2007, the Company issued 2,000 and 6,000 common stock
      warrants with five-year terms and exercise prices of $0.87 and $1.15,
      respectively, in consideration of business development consulting services.
      The
      fair value of these warrants was calculated to be $7,660, of which $5,664 and
      $7,660 was expensed in three and nine months ended September 30, 2007,
      respectively.




On
      April
      30, 2007, the Company issued a warrant to in consideration of financial advisory
      and public relations consulting services performed through April 30, 2007.
      The
      warrant has a term of five years and represents the right to purchase 30,000
      shares of common stock at an exercise price of $1.20. The fair value of this
      warrant was calculated to be $31,800 and was expensed in April
      2007.




16




On
      April
      16, 2007, the Company issued a warrant in consideration of a financial advisory
      and investor relations consulting services agreement with an initial one year
      term. The original agreement was modified June 20, 2007. The original warrant
      had a term of five years and represented the right to purchase 350,000 shares
      of
      common stock at an exercise price of $1.35 and vested ratably each month over
      the initial one year term. The fair value of the original warrant was calculated
      to be $420,000. On June 20, 2007, the agreement was modified and the original
      warrant was cancelled. The warrant issued upon modification of the agreement
      has
      the same terms as the originally issued warrant other than it represents the
      right to purchase 150,000 shares of common stock at an exercise price of $0.95,
      which was the closing price on the modification date. The fair value of the
      modified warrant was calculated to be $126,000 on the modification date, and
      shall be remeasured during the vesting term as required. Consulting expense
      related to the issuance of these warrants was $25,188 and $85,063 in the three
      and nine months ended September 30, 2007, and includes $28,000 expensed in
      the
      second quarter related to the cancelled warrants.




On
      April
      16, 2007, the Company issued common stock warrants with a five year term to
      purchase 50,000 shares of common stock at an exercise price of $1.35. The
      warrants were issued as payment for technical advisory services related to
      medical diagnostics. The fair value of these warrants was calculated to be
      $60,000, and will be expensed over the initial year of the agreement. Consulting
      expense related to the issuance of these warrants was $15,082 and
      $27,451 in three
      and nine months ended September 30, 2007, respectively.




In
      the
      first quarter of 2007, QuantRx issued 200,000 common stock warrants with a
      five-year term to purchase 200,000 shares of common stock at an exercise price
      of $1.50. The warrants were issued pursuant to a financial advisory services
      agreement, and the fair value of $250,000 for
      these
      warrants was expensed over the
      service term of four months.




On
      March
      1, 2007, QuantRx issued warrants with a five-year term valued at $1,243,087
      to
      purchase an aggregate of 1,059,750 shares of common stock at $1.50 per share
      to
      accredited investors in conjunction with a private placement of common stock.
      The Company issued warrants with a seven-year term to purchase 194,250 shares
      of
      common stock at $1.00 per share valued at $277,778 in connection with the
      private placement to Legend Merchant Inc.




In
      the
      second quarter of 2006, the Company issued 150,000 common stock warrants with
      a
      five-year term to purchase 150,000 shares of common stock at an exercise price
      of $2.00. The warrants were issued pursuant to a one-year consulting agreement,
      and the fair value of $219,000 for these warrants was expensed over the one-year
      term of the agreement.




In
      the
      second quarter of 2006, the Company issued 68,500 common stock warrants with
      a
      five-year term to purchase 68,500 shares of common stock at an exercise price
      of
      $2.00. The warrants were issued as payment for purchased research and
      development data, and the fair value of $100,010 for these warrants was recorded
      as research and development expense in the second quarter of 2006.




In
      the
      first quarter of 2006, 85,800 common stock warrants were exercised and exchanged
      for 85,800 shares of common stock, $0.01 par value, resulting in proceeds to
      the
      Company of $57,430. The exercise prices ranged from $0.20 to $0.85.




In
      the
      first quarter of 2006, 723,250 common stock warrants with an exercise price
      of
      $1.50 and a term of five years were issued to investors in conjunction with
      the
      issuance of convertible promissory notes. The warrants were valued at
      $1,131,663, which was recorded as debt discount and expensed over the term
      of
      the notes.




In
      the
      first quarter of 2006, 90,560 common stock warrants with an exercise price
      of
      $1.50 and a term of five years were issued to placement agents for services
      related to the debt financing closed February 15, 2006. The warrants were valued
      at $143,049, which was recorded as deferred financing costs and expensed over
      the term of the notes.


17


Incentive
      and Non-Qualified Stock Option Plan




Pursuant
      to SFAS 123(R), the fair value of options granted under the Company’s Incentive
      and Non-Qualified Stock Option Plan is recorded as compensation expense over
      the
      vesting period, or, for performance based awards, the expected service term.
      Total compensation cost related to the Incentive and Non-Qualified Stock Option
      Plan was $32,513 and $97,540 for the three and nine months ended September
      30,
      2007, and $68,260 and $157,137 for the three and nine months ended September
      30,
      2006, respectively. No options were granted in the nine months ended September
      30, 2007.




In
      the
      second quarter of 2006, a total of 225,000 qualified common stock options were
      granted to executive officers and issued from the Company’s Incentive and
      Non-Qualified Stock Option Plan. The options were issued with an exercise price
      of $1.60, and have a term of ten years. Of the options granted in the second
      quarter, 25,000 vested immediately, with the remaining 200,000 vesting when
      certain sales milestones have been reached. The Company estimates that these
      milestones will be reached over a five-year period. The options were valued
      using the fair value method as prescribed by SFAS No. 123 (R), resulting in
      a
      total value associated with these options of $357,750.




In
      the
      third quarter of 2006, 75,000 qualified common stock options were granted to
      an
      executive officer and issued from the Company’s Incentive and Non-Qualified
      Stock Option Plan. The options were issued with an exercise price of $1.15,
      have
      a term of ten years and vested January 1, 2007. The options were valued using
      the fair value method as prescribed by SFAS No. 123 (R), resulting in a total
      value associated with these options of $85,575.




11.
            Related
                Party Transactions




On
      April
      16, 2007, the Company issued common stock warrants with a five year term to
      purchase 50,000 shares of common stock at an exercise price of $1.35. The
      warrants were issued as payment for technical advisory services related to
      medical diagnostics to an executive officer of FluoroPharma, Inc., a subsidiary
      of the Company. The fair value of these warrants was calculated to be $60,000.
      The term of the agreement is two years unless terminated with or without cause
      by either party with fourteen days notice, and stipulates additional
      compensation in the form of 25,000 common stock warrants with an exercise price
      of $1.35 due on the first and second anniversary dates of the agreement,
      provided the consultant is still under contract on those dates.




In
      April
      2007, the Company advanced $100,000 to an executive officer of FluoroPharma,
      Inc., a subsidiary of the Company, through a 6% promissory note due December
      31,
      2007. The Company accrued interest of $1,512 and $2,959 on this note for the
      three and nine months ended September 30, 2007, respectively. The note and
      accrued interest was paid in full in October 2007.




On
      March
      9, 2007, the Company issued 200,000 common stock warrants with a five year
      term
      to purchase 200,000 shares of common stock at an exercise price of $1.50. The
      warrants were issued as payment pursuant to a financial advisory services
      agreement with Burnham Hill Partners, of which a beneficial owner of more than
      5% of QuantRx common stock is a managing member. The fair value of these
      warrants was calculated to be $250,000 and was expensed over the four month
      service term. Additionally, cash compensation of $200,000 was paid pursuant
      to
      the terms of the agreement and was also expensed over the four month service
      term.




18




A
      member
      of the Company’s board of directors serves as a consultant to the Company on
      various business, strategic, and technical issues. Fees paid and expensed for
      these services by the Company during the three and nine months ended September
      30, 2007 and 2006, were $12,000 and $36,000, respectively.




The
      Company had a temporary arrangement in which it leased office space from Trident
      Group, LLC, of which the current chief executive officer of the Company was
      a
      principal. In addition to a monthly rental payment for office space, the Company
      reimbursed Trident for related office expenses. The Company entered into the
      agreement in the second quarter of 2005 and terminated it in the third quarter
      of 2006. The Company expensed $1,903 and $10,040 under this arrangement for
      the
      three and nine months ended September 30, 2006, respectively.




12.
            Commitments
                and Contingencies




Operating
      Leases




QuantRx
      leases office space and research and development lab space under operating leases
      that expire at various times through 2011. Some of these leases
      contain cancellation clauses subject to a termination fee and include
      allocations for common expenses subject to future adjustment. Rent expense
      related to operating leases
      was approximately $29,945 and $89,039 for the three and nine months ended
      September 30, 2007, and $21,410 and $45,034 for the three and nine months ended
      September 30, 2006, respectively. In connection with some of these facility leases,
      the Company has made security deposits totaling $10,667, which are included
      in
      long-term assets in the balance sheet. Future minimum lease obligations,
      inclusive of potential termination fees, for operating leases
      as
      of September 30, 2007, are estimated as follows:




Remainder
                of 2007
            
            $
            30,1172008
            
            
            122,2632009
            
            
            101,5632010
            
            
            57,2402011
            
            
            43,875Total
                minimum payments
            
            $
            355,058




In
      February 2007, the Company began subleasing research and development lab space
      under the noncancellable operating leases. The sublease terminates September
      30,
      2007; however, it will automatically renew for one-year terms, not to exceed
      the
      term of QuantRx’s operating lease. The sublease can be terminated upon ninety
      days notice by either party, and a $2,000 security deposit is being held by
      QuantRx pursuant to the terms of the lease. Sublease revenue for the three
      and
      nine months ended September 30, 2007, was $6,224 and $14,509,
      respectively.




19




Executive
      Employment Contracts




The
      Company has entered into an employment contract with a key Company executive
      that provides for the continuation of salary to the executive if terminated
      for
      reasons other than cause, as defined in those agreements. At September 30,
      2007,
      the future employment contract commitment for such key executive based on this
      termination clause was approximately $240,000.




13.
            Subsequent
                Events




On
      October 16, 2007, QuantRx completed the first tranche of a private placement
      of
      10% senior secured convertible promissory notes and warrants to purchase shares
      of QuantRx common stock. The private placement may be completed in multiple
      tranches until $2,000,000 in aggregate notional amount of Notes have been
      issued. In connection with the private placement, QuantRx issued notes in the
      aggregate principal amount of $1,000,000 and warrants with a five-year term
      and
      an exercise price of $1.25 to purchase 250,000 shares of QuantRx's common stock




**ITEM
      2.**  **Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations**




The
      following discussion of our financial condition should be read in conjunction
      with the consolidated financial statements, and notes to the consolidated
      financial statements, included elsewhere in this filing. The following
      discussion (as well as statements in Item 1 above and elsewhere) contains
      forward-looking statements within the meaning of the Private Securities
      Litigation Act of 1995 that involve risks and uncertainties. Some or all of
      the
      results anticipated by these forward-looking statements may not occur.
      Forward-looking statements involve known and unknown risks and uncertainties
      including, but not limited to, trends in the biotechnology, healthcare, and
      pharmaceutical sectors of the economy; competitive pressures and technological
      developments from domestic and foreign genetic research and development
      organizations which may affect the nature and potential viability of our
      business strategy; and private or public sector demand for products and services
      similar to what we plan to commercialize. We disclaim any intention or
      obligation to publicly announce the results of any revisions to any of the
      forward-looking statements contained herein to reflect future events or
      developments.




Unless
      otherwise indicated or the context otherwise requires, all references in this
      report to “we,” “our,” “ours,” “us,” the “Company,” or similar terms, refer to
      QuantRx Biomedical Corporation, a Nevada corporation, and its
      subsidiary.




**Overview**




QuantRx
      is a broad-based diagnostics company focused on the development and
      commercialization of innovative diagnostic products based on its patented
      technology platforms for the worldwide healthcare industry. The Company’s
      strategy is to commercialize its products through partners or distributors,
      contracting the manufacturing to third party partners while maintaining control
      over the manufacturing process. The Company’s principal business office is
      located at 100 South Main Street, Suite 300, Doylestown, Pennsylvania. QuantRx
      also has a research and development facility in Portland, Oregon.




20




The
      Company's technology portfolio, with more than three dozen patents, patents
      pending and licensed patents, includes: (1) RapidSense® point-of-care testing
      products based on QuantRx core intellectual property related to lateral flow
      techniques for the consumer and healthcare professional markets; (2) through
      our
      affiliate, Genomics USA, Inc., genome-based diagnostic chips for the laboratory
      and healthcare professional markets; (3) through FluoroPharma, molecular imaging
      agents for positron emission tomography (PET) and fluorescence imaging, with
      initial application in cardiovascular disease, addressing significant unmet
      medical needs by providing clinicians with important tools for early discovery
      and assessment; and (4) PAD technology for diagnosis and treatment of women's
      health concerns and other medical needs.




In
      April
      2007, QuantRx increased its ownership in FluoroPharma, Inc., a development-stage
      molecular imaging company, to 57.78% of outstanding capital stock, resulting
      in
      its consolidation effective April 1, 2007. The investment in FluoroPharma is
      intended to strategically expand QuantRx’s diagnostic platforms.




***Lateral
      Flow Diagnostics***




QuantRx
      has developed a patented RapidSense® technology - a one-step lateral flow test
      with unique features such as: positive read indication for drugs-of-abuse,
      improved sensitivity, and the ability to read both large and small molecules.
      The rapid, disposable, and point-of-care diagnostic technology is ideal for
      collection of either urine or oral fluids. QuantRx also has a patented
      technology based on an innovative oral fluid collection device specifically
      designed for lateral flow tests – the only
      one-step
      oral fluid testing device now on the market developed by QuantRx for use with
      its patented RapidSense technology. This distinctive collection device has
      applications in the growing market of oral sample collections for issues ranging
      from drug-abuse testing, gathering biological evidence for criminal
      investigation, and screening for numerous communicable diseases including
      HIV/AIDS and other STDs.




The
      QuantRx device – an industry
      first
–
      incorporates a removable barrier that prevents test chemicals from washing
      into
      the oral cavity during the collection process, and allows the controlled start
      of the test or tests within the device. Because the QuantRx device is designed
      for either single or multiple tests using the same sample, it is ideal for
      emerging drugs of abuse analyses and testing for a range of communicable
      diseases. The patented technology has a feature that provides a more secure
      "chain of custody" system, helping to ensure the identity and integrity of
      a
      specimen from collection through the reporting of test results.




In
      October, 2007, the U.S. Food and Drug Administration (FDA) granted QuantRx
      510(k) clearance on its Follicle Stimulating Hormone (FSH) lateral flow
      immunoassay test for FSH at 10ng/ml. This female fertility test is a one-step
      lateral flow device that determines ovarian reserve indirectly by measuring
      FSH
      in first morning urine. The Company intends to market this test through third
      party distribution. The Company is currently developing a male fertility test
      and anticipates introduction of this test in 2008.




QuantRx
      intends to file over a half a dozen new 510(k) applications for its lateral
      flow
      tests for drugs-of-abuse and menopause over the next 12 months. Additionally,
      feasibility for development of lateral flow tests for infectious disease and
      cardiac markers is currently being explored.




21




The
      technology has strong potential and numerous possible applications. For this
      reason, QuantRx is pursuing collaborative research and development and original
      equipment manufacturer (OEM) relationships with companies and organizations
      interested in exploring new and existing analytes to drive the development
      of
      new products for the diagnostic marketplace to advance healthcare
      worldwide.




In
      the
      fourth quarter 2007, QuantRx intends to introduce its Affirm® drugs-of-abuse
      product line in the U.S. and European markets. This OEM product line is intended
      to develop distribution channels, complement its RapidSense line expected to
      be
      introduced in 2008, and enable QuantRx to offer a complete spectrum of
      drugs-of-abuse test product lines.




***Genome-based
      Diagnostic Microarray Chips***




Forming
      the basis of our next-generation point-of-care diagnostic technology is the
      clinically optimized microarray technology of the QuantRx affiliate company,
      Genomics USA. This technology platform is based on the non-covalent attachment
      of DNA probes to a surface which allows for cost-effective fabrication and
      manufacturing. This novel technology produces the only microarrays for analyzing
      intermediate numbers of genes.




The
      initial function for this technology is "The HLA Chip," which is based on Human
      Leukocyte Antigen (HLA) typing. Population-scale typing of HLA, a substrate
      of
      the genome, is the initial focus, resulting in the ability to detect disorders
      related to the immune system. An initial application for this HLA-based
“laboratory on a chip” is in vaccine development and personalized vaccine
      delivery; essentially determining a vaccine’s effectiveness for a particular
      individual. Additional market applications include population scale testing
      for
      Human Papilloma Virus (HPV) and other infectious diseases, tissue
      transplantation, stem cell therapeutics, personalized treatment for autoimmune
      diseases such as arthritis and multiple sclerosis, and personalized treatment
      of
      microbial infections.




Importantly,
      the biophysical properties of these "self-assembling" DNA microarrays allow
      Single Nucleotide Polymorphism (SNP)-based hybridizations simply and directly,
      without the need to perform single-base extension or any other secondary
      biochemical treatment. This simplification reduces the cost of the product,
      increases signal quality, and allows the product to be used by non-experts,
      especially in field-testing or small-clinic environments.




Follow-on
      products in the personalized medicine market will service chemical therapeutics,
      especially those applications in which personal genetic variation at a number
      of
      gene sites can cooperate to alter treatment responsiveness for conditions such
      as obesity, depression, cardiovascular risk, and others.




Development
      of this critical test has been accelerated by the infusion of approximately
      $3
      million via a Department of Defense sponsored grant, with the focus being to
      provide the military with information necessary to determine who would benefit
      from various vaccines, in the event of a biowarfare release. A prototype of
      this
      test is anticipated in 2008.




Initial
      commercialization of the HLA micorarray chip for its initial application in
      vaccine development and personalized vaccine development is expected in early
      2009.




22




***Molecular
      Imaging***




The
      Company, through FluoroPharma, is
      developing proprietary diagnostic imaging products, with initial focus on the
      d evelopment
      of novel positron emission tomography (PET) imaging agents for efficient
      detection and assessment of acute and chronic forms of coronary artery disease
      (CAD). To date, the technology has been applied to the development of three
      cardiovascular imaging agents - CardioPET, BFPet, and VasoPet. The agents
      rapidly target either the myocardial cells within the heart or the vulnerable
      plaque within the coronary arteries and, combined with PET scanning, provide
      a
      non-invasive, highly specific and efficient assessment of heart metabolism
      and
      physiology. Future applications exist in the broader cardiovascular, oncology
      and neurology arenas.




CardioPET
      is a novel metabolic agent in development for the following intended uses:
      (a)
      detection of ischemic and infarcted tissue in patients with suspected or proven
      forms of acute and chronic CAD, particularly in those patients that cannot
      undergo stress-testing; and, (b) Cardiac Viability Assessment (CVA), for the
      prediction of functional improvement prior to, or following revascularization
      in
      patients with acute CAD, including myocardial infarction.




CardioPET
      represents a potentially highly sensitive means of detecting ischemia at rest,
      because it can detect subtle metabolic insufficiency in myocardium. Thus a
      primary application of CardioPET is its use in the assessment of patients with
      acute and chronic CAD that cannot undergo stress-testing.




CardioPET
      may also be ideal as the metabolic component in CVA due to its ability to
      specifically identify damaged but viable myocardial tissue. In contrast to
      non-viable scar tissue, viable myocardial tissue can undergo revascularization,
      which has been documented to improve left ventricular function and increase
      survival.




CardioPET
      will address two separate populations: (1) the estimated 1.75 million patients
      with chronic forms of CAD in the U.S. that undergo pharmacologic stress-testing
      due to stress-test contraindication; and, (2) the 350,000 patients with
      presumptive hibernating or stunned myocardium. For *at-rest* assessment of the former population, we believe CardioPET may be readily adopted
      by the cardiology community for the assessment of this patient pool. For CVA
      testing, we believe that CardioPET’s “first mover” advantage, when combined with
      the favorable technical parameters relative to currently available glucose-based
      agents such as fluorodeoxyglucose (FDG), should result in favorable market
      adoption. Another potential application for CardioPET is as a substitute for
      regular stress testing, as physicians see the benefit of fewer total scans
      and
      potentially faster diagnoses.




Following
      the filing of an Investigational New Drug (IND) application with the FDA, a
      Phase I clinical trial for CardioPET commenced in 2006 and is nearing
      completion. The Phase I trial is a single center, open label study, designed
      to
      evaluate safety, distribution and dosimetry of CardioPET as a PET tracer for
      myocardial imaging in healthy subjects. All primary study and safety endpoints
      were achieved; the drug and treatment were exceedingly well-tolerated.
      Evaluation of the safety and distribution of the agent in subjects with known
      CAD is ongoing. The Company expects to initiate a limited Phase II study in
      late
      2007 focused on evaluation of cardiac ischemia in subjects with chronic and
      acute forms of CAD.




23




BFPET
      is
      a blood flow imaging being developed for use as a myocardial perfusion agent
      in
      conjunction with stress-testing for the detection of ischemic and infarcted
      myocardial tissue in patients with suspected or proven chronic CAD.




BFPET
      has
      been designed to enter the myocardial cells of the heart muscle in direct
      proportion to blood flow and membrane potential—the two most important
      physiological indicators of adequate blood supply to the heart. BFPET
      effectively differentiates between those cells of the myocardium that are
      ischemic (reversibly damaged), infarcted (irreversibly damaged), and those
      that
      are healthy. Because ischemic and infarcted cells take up significantly less
      BFPET than normal healthy myocardial cells, the signal emitted by the tracer
      attached to BFPET is inversely proportional to the extent of myocardial injury,
      the result of which can be visualized with PET imaging
      technologies.




Currently,
      it is estimated that approximately 80% of the 7 million patients with suspected
      acute and chronic forms of CAD in the U.S. are evaluated using the combination
      of blood flow imaging agents (blood flow agents) and stress-testing. An
      additional 350,000 patients undergo CVA in which a blood flow agent, such as
      BFPET, is used in combination with a metabolic imaging agent such as FDG or
      FluoroPharma’s CardioPET. We believe that BFPET may represent the first
      commercially feasible cardiovascular blood flow agent for the PET market.




VasoPET
      is a novel imaging agent for the detection of inflamed and/or coronary artery
      plaque formation in patients with CAD. VasoPET, if approved, would represent
      the
      first cardiovascular PET product to reliably differentiate between vulnerable
      and stable coronary artery plaque.




Coronary
      artery plaques grow over time and progressively narrow the lumen of the coronary
      artery until blood flow to the heart diminishes to a critical level. The rupture
      of atherosclerotic plaque and the subsequent formation of clots overlying the
      plaque are currently recognized as the primary mechanisms of myocardial and
      cerebral infarctions. Therefore, the detection of vulnerable plaque in
      atherosclerotic lesions is a highly desirable goal; and to this date remains
      both a significant clinical objective and large unaddressed market opportunity.




VasoPET
      is positioned to capture a small percentage of the entire atherosclerosis
      scanning market, which represents more than 50 million Americans. Preliminary
      estimates for the VasoPET market are a direct function of the more than 100
      thousand patients that undergo carotid artery procedures annually. There is
      a
      significant need to follow up after treatment to track the success of these
      procedures. We conservatively estimate that VasoPET will gradually become the
      standard follow up for carotid artery procedures and that 75% of patients will
      be scanned with VasoPET one year post-surgery.




The
      Company has completed the studies necessary for the filing of INDs for the
      myocardial perfusion imaging agent, BFPET and atherosclerotic plaque imaging
      agent, VasoPET. Single-dose preclinical toxicology studies revealed no untoward
      effects of either compound when they were administered in doses up to one
      million times the anticipated clinical dose. Submission of the IND and
      commencement of Phase I clinical trial to evaluate safety and dosimetry in
      healthy subjects is expected in late 2007 or early 2008.




We
      anticipate that our first New Drug Application will be filed with the U.S.
      FDA
      in 2010.




24




***Miniform
      PADs for Diagnosis and Treatment***




The
      Miniform PAD is a QuantRx-patented technology that provides the basis for a
      line
      of products that address an array of consumer health issues including: temporary
      relief of hemorrhoid and minor vaginal infection itch and discomfort, feminine
      urinary incontinence, drug delivery, and medical sample collection for
      diagnostic testing.




The
      QuantRx Miniform PAD is fully biodegradable and flushable, making it safe,
      convenient, and easy to use, addressing the growing trend in medicine to turn
      to
      products that seek to improve health and treat disease chiefly by assisting
      the
      body’s innate capacity to recover from illness and injury.




The
      Company plans to market its initial PAD-based products under the QuantRx Unique®
and Unique-T® brands through various distribution arrangements. Additionally,
      the Company expects to introduce the Unique line via the internet in the fourth
      quarter of 2007. Addressing the over-the-counter market for temporary hemorrhoid
      pain relief medication and supplies, the Unique line incorporates technology
      licensed from the Procter & Gamble Company. The proprietary Unique and
      Unique-T are intended for treatment and daily care of hemorrhoids and minor
      vaginal infections. They are distinctive in that they are the only PAD-based
      hemorrhoid-treatment product in a segment of the healthcare market that has
      experienced little or no innovation in decades.




The
      QuantRx PadKit® was developed on the basis of clinical research indicating that
      the miniform may also be an ideal diagnostic sample collection device. When
      coupled with a simple transport kit, it allows patients to take their own
      samples which are sent to a laboratory for analysis and diagnosis, providing
      a
      sample for drug use screening, genetic conditions, and disease. QuantRx holds
      several patents covering this application and plans to commercialize products
      it
      may develop under these patents under the QuantRx PadKit trademark.
      Commercialization will likely require extensive clinical testing and submission
      to the FDA for marketing approval.




The
      Company is exploring the potential combination of the miniform PAD
      sample-collection capability with the microarray technology of its affiliate
      company, Genomics USA, to bring to market a diagnostic tool for female tissue
      sampling, specifically testing for colon cancer and HPV, a virus that has been
      shown to cause cervical cancer. In addition, QuantRx is exploring clinical
      validation for the use of its PAD technology for application in therapeutic
      transdermal drug delivery, based on results of preclinical vaginal drug-delivery
      research conducted at the University of Belfast and Oxford University.




**Consolidated
      Results of Operations**




Net
      operating revenues for the three months ended September 30, 2007 and 2006,
      were
      $85,518 and $32,106, respectively. Net operating revenues for the nine months
      ended September 30, 2007 and 2006, were $256,169 and $57,788, respectively.
      The
      increase in revenues of $53,412 for the quarter and $198,381 for the nine months
      is due to revenues of $51,844 and $155,145 related to short-term research and
      development agreements, and an increase of $1,568 and $43,236 accreted from
      deferred revenue.




Other
      revenues in the three and nine months ended September 30, 2007, included rental
      income of $6,224 and $14,509, respectively, for the subleasing of research
      and
      development laboratory space at our research facility and, in the first quarter,
      a $14,000 governmental grant for qualified expenditures at our research
      facility.




25




Sales
      and
      marketing expense for the three months ended September 30, 2007 and 2006, was
      $78,243 and $67,468, respectively, and for the nine months ended September
      30,
      2007 and 2006, was $173,524 and $229,911. The increase of $10,775 for the
      quarter primarily reflects an increase in business development costs offset
      by a
      decrease in personnel and related expenses. The decrease of $56,387 for the
      nine
      months primarily reflects a decrease in personnel and related expenses, offset
      by increased business development costs.




General
      and administrative expense, including professional fees, for the three months
      ended September 30, 2007 and 2006, was $864,917 and $477,436, respectively,
      and
      for the nine months ended September 30, 2007 and 2006, was $3,220,441 and
      $1,470,513, respectively. The increase of $387,481 for the quarter is primarily
      attributable to the consolidation of FluoroPharma’s financial results and
      increased personnel and related expenses. The increase of $1,749,928 for the
      nine months is primarily attributed to an increase in professional fees and
      the
      consolidation of FluoroPharma’s financial results and, to a lesser extent,
      increased personnel expenses.




Research
      and development expense for the three months ended September 30, 2007 and 2006,
      was $462,740 and $176,488, respectively, and for the nine months ended September
      30, 2007 and 2006, was $1,464,873 and $436,778, respectively. The increase
      of
      $286,252 and $1,028,095 for the three and nine months is primarily attributable
      to the consolidation of FluoroPharma’s financial results and their expenses
      related to clinical trials, as well as the hiring of additional research and
      development personnel and increased expenses associated with occupying a new
      research and development facility beginning in the fourth quarter of 2006.




The
      Company’s net loss for the three months ended September 30, 2007 and 2006, was
      $1,327,357 and $1,960,676, respectively, and for the nine months ended September
      30, 2007 and 2006, was $4,797,193 and $5,558,135, respectively. The decreased
      net loss for the quarter of $633,319 is primarily due to a reduction in interest
      expense of $1,279,104 related to convertible promissory notes which were
      converted to common stock in December 2006, partially offset by the effects
      of
      the 2007 consolidation of FluoroPharma. The decreased net loss for the nine
      months of $760,942 primarily relates to a reduction in interest expense of
      $3,502,537, partially offset by the effects of the 2007 consolidation of
      FluoroPharma and an increase in professional fees of $634,041.




**Liquidity
      and Capital Resources**




As
      of
      September 30, 2007, the Company had cash and cash equivalents of $184,670,
      as
      compared to cash and cash equivalents of $1,256,912 as of December 31, 2006.
      The
      net decrease in cash of $1,072,242 for the nine months ended September 30,
      2007,
      is primarily attributable to net operating cash used of $3,933,690, the issuance
      of a $200,000 8% convertible promissory note to Genomics USA, Inc., and $253,689
      for purchased fixed assets, primarily offset by the private placement of
      3,532,500 shares of common stock and warrants to accredited investors for gross
      proceeds of $3,532,500 and gross proceeds from warrant exercises of
      $584,206.




QuantRx
      has used its financing proceeds, as well as its revenues, to fund current
      operating expenses and investments intended to strategically expand our
      platforms and technologies.




26




In
      the
      future, QuantRx expects to expand operations with the use of additional
      financing and increased revenues from operations with the introduction of
      several products in late 2007 and early 2008. On October 16, 2007, QuantRx
      completed the first tranche of a private placement of 10% senior secured
      convertible promissory notes and warrants to purchase shares of QuantRx common
      stock. The private placement may be completed in multiple tranches until
      $2,000,000 in aggregate notional amount of Notes have been issued. In connection
      with the private placement, QuantRx issued Notes in the aggregate principal
      amount of $1,000,000 and Warrants to purchase 250,000 shares of QuantRx' common
      stock. It is anticipated that an additional $1,000,000 will be raised through
      the issuance of 10% senior secured convertible promissory notes and warrants
      to
      purchase shares of QuantRx common stock in the fourth quarter of
      2007.




**Off-Balance
      Sheet Arrangements**




We
      have
      not entered into any transactions with unconsolidated entities in which we
      have
      financial guarantees, subordinated retained interests, derivative instruments
      or
      other contingent arrangements that expose us to material continuing risks,
      contingent liabilities or any other obligations under a variable interest in
      an
      unconsolidated entity that provides us with financing, liquidity, market risk,
      or credit risk support.




**Critical
      Accounting Policies**




***Revenue
      Recognition***




The
      Company recognizes revenue in accordance with the SEC’s Staff Accounting
      Bulletin Topic 13, “Revenue Recognition” ** (“Topic
      13”) and EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables.”
Revenue is recognized when all of the following criteria are met:
      (1) persuasive evidence of an arrangement exists; (2) delivery has
      occurred or services have been rendered; (3) the seller’s price to the
      buyer is fixed and determinable; and (4) collectibility is reasonably
      assured.




Revenue
      from licensing agreements is recognized based on the performance requirements
      of
      the agreement. Revenue is deferred for fees received before earned.
      Nonrefundable upfront fees that are not contingent on any future performance
      by
      us are recognized as revenue when revenue recognition criteria under Topic
      13
      and EITF 00-21 are met and the license term commences. Nonrefundable upfront
      fees, where we have an ongoing involvement or performance obligations, are
      recorded as deferred revenue and recognized as revenue over the life of the
      contract, the period of the performance obligation or the development period,
      whichever is appropriate in light of the circumstances.




Payments
      related to substantive, performance-based milestones in an agreement are
      recognized as revenue upon the achievement of the milestones as specified in
      the
      underlying agreements when they represent the culmination of the earnings
      process. Royalty revenue from licensed products will be recognized when earned
      in accordance with the terms of the license agreements.




27




***Use
      of Estimates***




The
      preparation of financial statements and related disclosures in conformity with
      accounting principles generally accepted in the United States requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities, revenues and expenses, and related disclosures of
      contingent assets and liabilities in the financial statements and accompanying
      notes. The accounting policies discussed below are considered by management
      to
      be the most important to the Company’s financial condition and results of
      operations, and require management to make its most difficult and subjective
      judgments due to the inherent uncertainty associated with these matters. All
      significant estimates and assumptions are developed based on the best
      information available to us at the time made and are regularly reviewed and
      adjusted when necessary. We
      believe that our estimates and assumptions are reasonable under the
      circumstances; however, actual results may vary from these estimates and
      assumptions.




***Impairment
      of Assets***




We
      assess
      the impairment of long-lived assets whenever events or changes in circumstances
      indicate that their carrying value may not be recoverable. The determination
      of
      related estimated useful lives, and whether or not these assets are impaired,
      involves significant judgments related primarily to the future profitability
      and/or future value of the assets. Changes in our strategic plan and/or market
      conditions could significantly impact these judgments and could require
      adjustments to recorded asset balances. We hold minority interests in companies
      having operations or technologies in areas which are within or adjacent to
      our
      strategic focus when acquired, all of which are privately held and whose values
      are difficult to determine. We record an investment impairment charge if we
      believe an investment has experienced a decline in value that is other than
      temporary. Future changes in our strategic direction, adverse changes in market
      conditions or poor operating results of underlying investments could result
      in
      losses or an inability to recover the carrying value of the investments that
      may
      not be reflected in an investment’s current carrying value, thereby possibly
      requiring an impairment charge in the future.




We
      perform annual impairment tests of our equity method goodwill and other
      intangible assets in accordance with SFAS No. 142, “Goodwill and Other
      Intangible Assets.” Under SFAS No. 142, goodwill is not amortized but is
      subject to impairment tests based upon a comparison of the fair value of the
      entity and the carrying value of the entity’s net assets. SFAS No. 142
      requires a review of goodwill and other intangible assets for impairment at
      least annually or when circumstances exist that would indicate an impairment
      of
      such goodwill or other intangible assets. We determine whether the equity method
      goodwill and other intangible assets are impaired by comparing the respective
      fair values of the equity method goodwill and/or other intangible assets to
      their respective carrying values.




In
      determining fair value of assets, QuantRx bases estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about carrying values of assets that are not readily apparent from
      other sources. Actual fair value may differ from management estimates resulting
      in potential impairments causing material changes to certain assets and results
      of operations.




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***Share-based
      Payments***




We
      grant
      options to purchase our common stock to our employees and directors under our
      stock option plan subject to the provisions of SFAS No. 123 (R), “Share-Based
      Payments.” Effective January 1, 2005, we use the fair value method to apply
      the provisions of SFAS No. 123 (R) with a modified prospective application
      which provides for certain changes to the method for valuing share-based
      compensation. The valuation provisions of SFAS No. 123 (R) apply to new
      awards and to awards that are outstanding on the effective date and subsequently
      modified or cancelled. Under the modified prospective application, prior periods
      are not revised for comparative purposes.




Upon
      adoption of SFAS No. 123 (R), we began estimating the value of stock option
      awards on the date of grant using a Black-Scholes pricing model (Black-Scholes
      model). The determination of the fair value of share-based payment awards on
      the
      date of grant using the Black-Scholes model is affected by our stock price,
      as
      well as assumptions regarding a number of complex and subjective variables.
      These variables include, but are not limited to, our expected stock price
      volatility over the term of the awards, actual and projected employee stock
      option exercise behaviors, and risk-free interest rate. If factors change and
      we
      employ different assumptions in the application of SFAS No. 123 (R) in
      future periods, the compensation expense that we record under SFAS No. 123
      (R) may differ significantly from what we have recorded in the current period.




Estimates
      of share-based compensation expenses are significant to our financial
      statements, but these expenses are based on option valuation models and will
      never result in the payment of cash by us.




**ITEM
      3.**  **Controls
      and Procedures**




(a)  Evaluation
      of Disclosure Controls and Procedures




The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in our SEC reports is recorded,
      processed, summarized, and reported within the time periods specified in the
      SEC’s rules and forms, and that such information is communicated to our
      management including our Chief Executive Officer and Chief Financial Officer
      as
      appropriate. With the supervision and with the participation of our management,
      including the Chief Executive Officer and Chief Financial Officer, we have
      evaluated the effectiveness of our disclosure controls and procedures (as
      defined under Exchange Act Rules 13a-15(e) and 15(d)-15(e)), as of the end
      of the period covered by this report. Based on that evaluation, our Chief
      Executive Officer and Chief Financial Officer have concluded that these
      disclosure controls and procedures were effective as of September 30,
      2007.




(b)  Changes
      in Internal Control over Financial Reporting




During
      the period covered by this Quarterly Report on Form 10-QSB, there were no
      changes in our internal control over financial reporting that have materially
      affected, or are reasonably likely to affect, our internal control over
      financial reporting.




Given
      the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that misstatements due to error or fraud will not
      occur or that all control issues and instances of fraud, if any, will 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. Further, the design of a control system must reflect the
      fact
      that there are resource constraints, and that the benefits of a control system
      must be considered relative to its cost. The design of any system of controls
      is
      also based in part on certain assumptions regarding 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.




29




**PART
      II - OTHER INFORMATION**




**ITEM
      1.**  **Legal
      Proceedings.**




As
      of the
      date hereof, the Company has no pending or threatened litigation.




**ITEM
      2.**  **Unregistered
      Sales of Equity Securities, and Use of Proceeds**




In
      the
      third quarter 2007, QuantRx initiated a limited warrant exercise inducement
      targeting certain large warrant holders. The inducement was a reduction in
      the
      exercise price from $1.50 to $0.75 to a limited number of accredited investors
      holding warrants acquired in conjunction with prior common stock purchases.
      As a
      result of this inducement, 751,001 common stock warrants were exercised and
      exchanged for 751,001 shares of our common stock, $0.01 par value, for aggregate
      gross proceeds of $563,251. In connection with the exercise of these warrants,
      QuantRx paid cash commissions to Legend Merchant, Inc., of $16,429.




In
      August
      2007, 38,100 common stock warrants were exercised and exchanged for 38,100
      shares of our common stock, $0.01 par value, resulting in proceeds to the
      Company of $20,955. The exercise price for these warrants was
      $0.55.




On
      September 4 and June 1, 2007, the Company issued 2,000 and 6,000 common stock
      warrants with five-year terms and exercise prices of $0.87 and $1.15,
      respectively, in consideration of business development consulting services.




The
      issuances of the above securities were deemed to be exempt from registration
      under the Securities Act of 1933, as amended (the “Securities Act”), in reliance
      on Section 4(2) of the Securities Act or Regulation D promulgated under the
      Securities Act, as transactions by an issuer not involving a public
      offering.




All
      proceeds will be used for general corporate purposes.




There
      were no additional sales of unregistered securities other than as reported
      in
      prior reports on Form 8-K.




**ITEM
      3.**  **Defaults
      on Senior Securities**




None.




30




**ITEM
      4.**  **Submission
      of Matters to a Vote of Security Holders**




None.




**ITEM
      5.**  **Other
      Information**




None.




**ITEM
      6.**  **Exhibits**




Exhibit
      Index




Exhibit
            
            Description31.1
            
            Certification
                of Chief Executive Officer required under Rule 13a-14(a) or Rule
                15d-14(a)
                of the Securities and Exchange Act of 1934, as amended.31.2
            
            Certification
                of Chief Financial Officer required under Rule 13a-14(a) or Rule
                15d-14(a)
                of the Securities and Exchange Act of 1934, as amended.32.1*
            
            Certification
                of Chief Executive Officer required under Rule 13a-14(a) or Rule
                15d-14(a)
                of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C.
                Section 1350.32.2*
            
            Certification
                of Chief Financial Officer required under Rule 13a-14(a) or Rule
                15d-14(a)
                of the Securities and Exchange Act of 1934, as amended, and 18 U.S.C.
                Section 1350.





**The
      certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly
      Report on Form 10-QSB pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002
      and shall not be deemed “filed” by QuantRx Biomedical Corporation for purposes
      of Section 18 of the Exchange Act.*


31


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act
      of 1934, the registrant has duly caused this report to be signed on its behalf
      by the undersigned, thereunto duly authorized.




QuantRx
                Biomedical CorporationDate:  
                November 12, 2007
            By:
            /s/
                Walter WitoshkinWalter
                WitoshkinChairman
                & CEODate:  
                November 12, 2007
            By:
            /s/
                Sasha AfanassievSasha
                AfanassievCFO,
                Treasurer & VP of Finance




32