U.S.
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 March 31,
2008





Transition
report under Section 13 or 15(d) of the Exchange Act for the Transition Period
from ________ to ________.





Commission
file number 0-27545





QUICK-MED TECHNOLOGIES,
INC.


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





Nevada
            
            65-0797243(State
      or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
      Employer Identification No.)





902 N.W. 4thStreet, Gainesville,
Florida 32601


(Address
of Principal Executive offices)





(888)  835-2211


(Issuer’s
Telephone Number, Including Area Code)








(Former
Name, Former Address and Former Fiscal Year,


if
Changed Since Last Report)





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







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





Applicable
Only to Issuers Involved in Bankruptcy


Proceedings
During the Preceding Five Years





Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes_______________No_______________







Number of
shares of common stock outstanding as of May 7, 2008: 30,725,625



















QUICK-MED
      TECHNOLOGIES, INC.
              
              INDEX TO FORM 10-QSBPART
      I
            FINANCIAL
      INFORMATIONItem
      1.  Financial
    StatementsCondensed Balance Sheet as of  March 31, 2008
      (unaudited)
            1Condensed Statements of Operations for thethree and nine
      months ended March 31, 2008  and 2007
      (unaudited)
            2Condensed Statement of Changes in Stockholders’ Deficit for the
      three monthsended March 31,
      2008 (unaudited)
            3Condensed Statements of Cash Flows for the nine months ended
      March 31, 2008 and 2007 (unaudited)
            4Notes to Condensed Financial Statements
      (unaudited)
            5-12Item
      2.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
            13-20Item
      3.  Controls and Procedures
            20PART
      II
            OTHER
      INFORMATIONItem
      1.  Legal Proceedings
            21Item
      2.  Unregistered Sales of Equity
      Securities and Use of Proceeds
            21Item
      3.  Defaults Upon Senior
      Securities
            21Item
      4.  Submission of Matters to a Vote of
      Security Holders
            21Item
      5.  Other Information
            21Item
      6.  Exhibits
            21SIGNATURES
            22





Index





PART
      I
            FINANCIAL
      INFORMATION





ITEM
      1.
            FINANCIALSTATEMENTS










QUICK-MED TECHNOLOGIES, INC.
 CONDENSED
BALANCE SHEET
 AS
OF MARCH 31, 2008
 (UNAUDITED)






ASSETSCurrent
      assets:Cash
      and cash equivalents
              $
              83,606Restricted
      cash
              
              45,953Accounts
      receivable
              
              183,946Total
      current assets
              
              313,505Property
      and equipment, net
              
              22,701Other
      assets:Prepaid
      expenses
              
              2,214Intangible
      asset, net
              
              413,475Total
      other assets
              
              415,689Total
      assets
              $
              751,895LIABILITIES AND STOCKHOLDERS'
      DEFICITCurrent
      liabilities:Accounts
      payable
              $
              892,513Unearned
      revenue
              
              42,856Accrued
      expenses
              
              14,528Total
      current liabilities
              
              949,897License
      payable
              
              160,000Long-term
      liability - convertible note payable - related party
              
              392,836Long-term
      liability - convertible note payable - director
              
              2,534,209Total
      liabilities
              
              4,036,942Commitments
      and contingenciesStockholders'
      deficit:Common
      stock, $0.0001 par value; 100,000,000authorized
      shares; 30,725,625 shares issuedand
      outstanding
              
              3,072Additional
      paid-in capital
              
              11,820,018Stock
      options
              
              2,395,806Accumulated
      deficit
              
              (17,503,943
              )Total
      stockholders' deficit
              
              (3,285,047
              )Total
      liabilities and stockholders' deficit
              $
              751,895





See
accompanying notes to condensed financial statements.
 -1-
 Index








QUICK-MED
TECHNOLOGIES, INC.
 CONDENSED STATEMENTS OF OPERATIONS
 FOR
THE THREE AND NINE MONTHS ENDED MARCH 31, 2008 AND 2007
 (UNAUDITED)







Three
      Months Ended
              
              Nine
      Months EndedMarch
      31,
              
              March
      31,2008
              
              2007
              
              2008
              
              
              2007RevenuesProduct
      sales
              $
              42,367
              
              $
              15,523
              
              $
              119,592
              
              
              $
              1,323,426Research
      and development service
              
              247,560
              
              
              30,000
              
              
              727,253
              
              
              
              30,000License
      fees
              
              26,786
              
              
              98,270
              
              
              99,733
              
              
              
              98,270316,713
              
              
              143,793
              
              
              946,578
              
              
              
              1,451,696Expenses:Cost
      of sales
              
              9,617
              
              
              3,279
              
              
              31,381
              
              
              
              265,774Research
      and development
              
              384,448
              
              
              310,288
              
              
              1,193,589
              
              
              
              1,013,639General
      and administrative expenses
              
              282,235
              
              
              345,068
              
              
              1,127,981
              
              
              
              1,077,731Licensing
      and patent expenses
              
              42,395
              
              
              65,137
              
              
              233,891
              
              
              
              256,960Depreciation
      and amortization
              
              18,143
              
              
              15,703
              
              
              54,428
              
              
              
              44,980Total
      expenses
              
              736,838
              
              
              739,475
              
              
              2,641,270
              
              
              
              2,659,084Loss
      from operations
              
              (420,125
              )
              
              (595,682
              )
              
              (1,694,692
              )
              
              
              (1,207,388
              )Other
      income (expense):Interest
      income
              
              573
              
              
              325
              
              
              2,021
              
              
              
              874Interest
      expense
              
              (45,078
              )
              
              (22,518
              )
              
              (115,249
              )
              
              
              (67,019
              )Other
      income
              
              -
              
              
              -
              
              
              -
              
              
              
              166,500Loss
      before income taxes
              
              (464,630
              )
              
              (617,875
              )
              
              (1,807,920
              )
              
              
              (1,107,033
              )Provision
      (benefit) for income taxes
              
              -
              
              
              -
              
              
              -
              
              
              
              -Net
      loss
              $
              (464,630
              )
              $
              (617,875
              )
              $
              (1,807,920
              )
              
              $
              (1,107,033
              )Net
      loss per share (basic and diluted)
              $
              (0.02
              )
              $
              (0.02
              )
              $
              (0.06
              )
              
              $
              (0.04
              )Weighted
      average commonshares
      outstanding (basic and diluted)
              
              30,725,625
              
              
              30,407,687
              
              
              30,673,089
              
              
              
              30,321,099











See
accompanying notes to condensed financial statements.
 -2-
 Index









QUICK-MED
TECHNOLOGIES, INC.
 CONDENSED
STATEMENT OF CHANGESIN STOCKHOLDERS’ DEFICIT
 FOR
THE THREE MONTHS ENDED MARCH 31, 2008
 (UNAUDITED)


AdditionalCommon
      Stock
              
              Paid-In
              
              AccumulatedShares
              
              Amount
              
              Capital
              
              Deficit
              
              Stock
      Options
              
              
              TotalBalance,
      December 31, 2007
              30,725,625
              
              
              3,072
              
              $
              11,820,018
              
              $
              (17,039,313
              )
              $
              2,313,452
              
              
              $
              (2,902,771
              )Stock
      options granted for services
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              82,354
              
              
              
              82,354Net
      loss, January 1, 2008 to March 31, 2008
              -
              
              
              -
              
              
              -
              
              
              (464,630
              )
              
              -
              
              
              
              (464,630
              )Balance,
      March 31, 2008
              30,725,625
              
              
              3,072
              
              $
              11,820,018
              
              $
              (17,503,943
              )
              $
              2,395,806
              
              
              $
              (3,285,047
              )













See
accompanying notes to condensed financial statements.
 -3-
 Index









QUICK-MED
TECHNOLOGIES, INC.
 CONDENSED
STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED MARCH 31, 2008 AND 2007
 (UNAUDITED)








2008
              
              2007Cash
      flows from operating activities:Net
      loss
              $
              (1,807,920
              )
              $
              (1,107,033
              )Adjustments
      to reconcile net loss to netcash
      provided by (used in) operating activities:Depreciation
      and amortization
              
              54,428
              
              
              44,980Stock
      granted for services
              
              24,182
              
              
              141,086Stock-based
      compensation
              
              497,802
              
              
              420,820(Increase)
      decrease in:Restricted
      cash
              
              (45,953
              )
              
              -Accounts
      receivable
              
              201,650
              
              
              (75,666
              )Prepaid
      expenses
              
              2,954
              
              
              (67
              )Increase
      (decrease) in:Accounts
      payable
              
              125,830
              
              
              420,682Accrued
      interest
              
              115,249
              
              
              (16,875
              )Other
      current liabilities
              
              (47,127
              )
              
              65,000Net
      cash used in operating activities
              
              (878,905
              )
              
              (107,073
              )Cash
      flows from investing activities:Purchase
      of fixed assets
              
              -
              
              
              (3,102
              )Investments
      in Patents
              
              (32,198
              )
              
              (112,686
              )Net
      cash used in investing activities
              
              (32,198
              )
              
              (115,788
              )Cash
      flows from financing activities:Proceeds
      from stock option or warrant exercise
              
              12,150
              
              
              11,000Proceeds
      from note payable - officer
              
              -
              
              
              15,500Repayment
      of note payable - officer
              
              -
              
              
              (15,500
              )Increase
      in convertible notes payable - related party
              
              250,000
              
              
              -Increase
      in convertible notes payable - director
              
              616,840
              
              
              83,893Net
      cash provided by financing activities
              
              878,990
              
              
              94,893Net
      increase in cash and cash equivalents
              
              (32,113
              )
              
              (127,968
              )Cash
      and cash equivalents at beginning of period
              
              115,719
              
              
              184,142Cash
      and cash equivalents at end of period
              $
              83,606
              
              $
              56,174Supplementary
      Information:Cash
      paid for:Interest
              $
              -
              
              $
              -Income
      taxes
              $
              -
              
              $
              -Non-cash
      disclosures of investing andfinancing
      activities:Stock
      options granted for services
              $
              521,984
              
              $
              420,820Stock
      issuance in settlement of a liability
              $
              21,046
              
              $
              -










See
accompanying notes to condensed financial statements.
 -4-
 Index









QUICK-MED
TECHNOLOGIES, INC.
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (UNAUDITED)







NOTE 1 - DESCRIPTION OF
BUSINESS





The
accompanying unaudited condensed financial statements of Quick-Med Technologies,
Inc. (the “Company”) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of the
management of the Company, the accompanying unaudited financial statements
contain all the adjustments (which are of a normal recurring nature) necessary
for a fair presentation.  Operating results for the three and nine
months ended March 31, 2008 are not necessarily indicative of the results that
may be expected for the year ending June 30, 2008. For further information,
refer to the financial statements and the footnotes thereto contained in the
Company’s Annual Report on Form 10-KSB/A for the year ended June 30, 2007, as
filed with the Securities and Exchange Commission.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company has continuing losses
from operations, negative working capital and an accumulated deficit that raises
substantial doubt about its ability to continue as a going
concern.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.








NOTE 2 – BASIS OF
PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES








Cash and Cash
Equivalents





All
highly liquid investments purchased with maturity of three months or less from
the time of purchase are considered to be cash equivalents.





Restricted
Cash





During
the period ended March 31, 2008, the Company finalized the two senior
convertible notes with the Chairman and a major shareholder.  These
notes require the Company to allocate a portion of the proceeds to be restricted
for payment of the Chief Executive Officer’s compensation for the remaining
portion of the twelve months from the date of hire.  See note 5 below
for further details of the notes payable.





Use of
Estimates





The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.





Intangible
Assets





The costs
of obtaining license agreements along with the costs to defend the patents
underlying the license agreements are capitalized and amortized using the
straight-line method over the estimated useful lives of the underlying license
agreements.  The costs of obtaining and maintaining new patents are
capitalized and amortized using the straight-line method over the estimated
useful lives of the patents. The cost of patents in process is not amortized
until the patent is issued.











-5-
 Index








NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES, continued





Property and
Equipment





Property
and equipment are stated at cost.  Depreciation on property and
equipment is computed using the straight-line method over the expected useful
lives of the assets.





Accounts Receivable and
Allowance for Doubtful Accounts





Accounts
receivable as of March 31, 2008 represents amounts due from its customers and is
reported on the balance sheet reduced by an allowance for doubtful accounts for
estimated losses resulting from receivables not considered to be
collectible.





Research and Development
Costs





Research
and development costs are expensed as incurred.





Earnings Per
Share





Basic net
loss per common share is computed by dividing net loss applicable to common
shareholders by the weighted-average number of common shares outstanding during
the period.  Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the period, adjusted
for the dilutive effect of common stock equivalents, consisting of shares that
might be issued upon exercise of common stock options and warrants. For the
nine-month periods ended March 31, 2008 and 2007, 6,619,316 and 3,874,428
diluted common stock equivalents, respectively, have been excluded from the
calculation of diluted earnings per share, as their inclusion would have been
anti-dilutive.





Revenue
Recognition





The
Company recognizes the revenue of its royalties from the sale of products under
a master agreement for product development, manufacturing and distribution (the
“Master Agreement”).  The Company also recognizes revenues from the
non-refundable exclusivity license fees under the Master Agreement and an
Exclusive License Agreement on a pro rata basis over the term of the agreements.
Revenue from a Research Agreement is recognized on a pro rata basis over the
term of the agreement.  Further, the Company recognizes revenue on an
exclusive option fee on a pro rata basis over the term of the
agreement.  Revenues from a small business innovation research program
and a US Army medical research program are recognized based on the research work
performed in accordance with the program requirements.





Unearned
Revenue





The
amount of unearned revenue represents the exclusive option fee, the license fee,
and advance royalty fee yet to be earned on a pro rata basis over the exclusive
option period of the related option and license agreements.





Stock
Compensation





In
December 2004, the Financial Accounting Standards Board ("FASB") issued a final
standard, SFAS No. 123R, "Share-Based Payment," ("SFAS 123R"), which requires
companies to expense the value of employee stock options and similar awards.
Under SFAS 123R, share-based payment awards result in a cost that are measured
at fair value on the grant date of the awards, based on the estimated number of
awards that are expected to vest. Compensation cost for awards that vest would
not be reversed if the awards expire without being exercised.








-6-
 Index








NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES, continued





The
Company adopted SFAS 123R beginning in the first quarter of the fiscal year 2006
via application of the modified prospective approach to all outstanding and
unvested share-based payment awards at the adoption date. The fair value of
stock options was determined using the Black-Scholes option-pricing model. The
fair value of the restricted stock awards was based on the closing price of the
Company's common stock on the date of grant.





Concentration of credit risk
of financial instruments





Financial
instruments that potentially subject the Company to credit risk consist of cash
equivalents and accounts receivable.  As of March 31, 2008, the
Company’s cash levels exceeded the federally insured limit but were maintained
with a high quality institution and management regularly monitors its cash
position.  As of March 31, 2008, all of the Company’s accounts
receivable was derived from BASF, and the U.S. Army. The credit risk of the
accounts receivable is considered limited given the customers’ credit rating.
There were no write-offs of uncollectible receivables during the year ended June
30, 2007.








Income
Taxes





The
Company accounts for income taxes under the provisions of Statement of Financial
Accounting Standards No. 109, “Accounting for Income Taxes.”  This
standard requires, among other things, recognition of future tax consequences,
measured by enacted tax rates attributable to taxable and deductible temporary
differences between financial statement and income tax bases of assets and
liabilities.  Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be
realized.  Income tax expense is the tax payable for the period and
the change during the period in the deferred tax asset and
liability.





Recently Issued Accounting
Pronouncements





In June
2007, the FASB Emerging Issues Task Force issued EITF Issue No. 07-3 (“EITF
07-3”), “Accounting for Nonrefundable Advance Payments for Goods or Services
Received for Use in Future Research and Development Activities.”  EITF
07-3 addresses the accounting for nonrefundable advance payments for goods or
services to be used or rendered in future research and development activities
pursuant to an executory contractual arrangement.  EITF 07-3 concludes
such amounts should be deferred and capitalized and recognized as an expense as
the related goods are delivered or the related services are
performed.  EITF is effective for fiscal years beginning after
December 15, 2007.  The Company is assessing the impact of EITF 07-3,
but it does not expect that it will have a significant impact on its financial
position or results of operations.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
enhances existing guidance for measuring assets and liabilities at fair
value.  SFAS No. 157 defines fair value, establishes
a framework for measuring fair value and expands disclosures about fair value
measurements, and is effective for fiscal year ending after November 15,
2008.  The Company is assessing the impact of the adoption of this
pronouncement, but does not expect that it will have a significant impact on its
financial position or results of operations.





In June
2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes –
an interpretation of FASB Statement No. 109.”  This interpretation
prescribes a comprehensive model for the financial statement recognition,
measurement, presentation and disclosure of uncertain tax positions taken or
expected to be taken in income tax returns.  The Company is assessing
the impact of FIN No. 48, but does not expect that it will have a significant
impact on its financial position or results of operations.







-7-







NOTE 3 – STOCK OPTIONS AND
WARRANTS





The
Company adopted a qualified equity incentive plan (the “Plan”) on March 4, 2001.
Under the Plan the Company is authorized to grant up to 3,000,000 shares of
common stock. On December 13, 2004, the shareholders approved the Plan and
ratified the amendment to increase the total number of shares to be granted
under the Plan from 3,000,000 to 4,000,000 effective November 1,
2004.  On November 13, 2007 the
shareholders ratified the amendment to increase the total number of shares to be
granted under the Plan from 4,000,000 to 6,000,000.





In
December 2004, the Financial Accounting Standards Board ("FASB") issued a final
standard, SFAS No. 123R, "Share-Based Payment," ("SFAS 123R"), which requires
companies to expense the value of employee stock options and similar awards.
Under SFAS 123R, share-based payment awards result in a cost that will be
measured at fair value on the grant date of the awards, based on the estimated
number of awards that are expected to vest. Compensation cost for awards that
vest would not be reversed if the awards expire without being exercised. The
Company adopted SFAS 123R beginning in the first quarter of the
fiscal year 2006 using the modified prospective approach.  Under the
modified prospective approach, SFAS 123R applies to all outstanding and unvested
share-based payment awards at the adoption date. The fair value of stock options
was determined using the Black-Scholes option-pricing model. The fair value of
the restricted stock awards was based on the closing price of the Company's
common stock on the date of grant.





On August
6, 2007, the Board of Directors (the “Board”) granted 484,056 non-qualified
stock options to the Chief Executive Officer (“CEO”) at an exercise price of
$0.75 per share. These options were fully vested and immediately exercisable at
the date of grant.  In addition, the Board granted 1,452,167
non-qualified stock options at an exercise price of $0.74 per share on September
25, 2007, as part of the CEO’s employment agreement. The second stock options
are vested and become exercisable 1/16th of the
total 1,452,167 options on each three-month anniversary beginning on June 11,
2007.  The average grant date fair value of the options was $0.46 per
share based on the Black-Scholes option-pricing model.  These options
expire five years from the date of grant.





On
December 20, 2006, the Company issued 790,770 stock options to the board
members, the management, the employees, and the consultants for their
services.  These options have an exercise price of $1.05 per share.
The stock options were vested one-third immediately, one-third was vested on
December 20, 2007 and the remaining one-third will be vested on December 20,
2008, assuming the person receiving the equity awards is employed by the Company
at the time of vesting.  The weighted average grant date fair value of
options was $0.69 per share based on the Black-Scholes option-pricing
model.  The options expire five years from the date of
grant.  On March 5, 2008, 84,615 stock options were
forfeited.





On
September 9, 2005, the Board granted 130,000 shares of restricted common stock
as payment for the services rendered by the board members for the year ended
June 30, 2005, and all shares were immediately vested.  In addition,
the Board granted 710,000 stock options and 175,000 warrants to the employees
and directors and consultants, respectively, in recognition of individual
performance for the year ended June 30, 2005.  The stock options and
warrants were vested one-third immediately, one-third was vested on July 1, 2006
and the remaining one-third was vested on July 1, 2007.  The exercise
price of those stock options and warrants is $0.80 per share, which was the
closing price of the common stock on the date of grant.  The weighted
average grant date fair value of options was $0.72 per share based on the
Black-Scholes option-pricing model.  The options and warrants expire
five years from the date of grant.




The
weighted average grant date fair value of options granted during the period
ended March 31, 2008 were estimated on the date of grant using the Black-Scholes
option-pricing model with the assumptions noted in the following table. Expected
volatilities are based on historical volatility of common stock, and other
factors.  The expected term of the options represents the period of
time that options granted are expected to be outstanding and is derived from
historical terms and other factors.
 
 Assumptions
utilized to value options are as follows:
 
 Risk-free interest
rate                                                      4.75%
to 6%
 Expected life
(years)                                                     
  5
 Expected
volatility                                                          
50% to 138%
 Expected
dividends                                                        
None





-8-
 Index





NOTE 3 – STOCK OPTIONS AND
WARRANTS, continued





A summary
of options for the periods ended March 31, 2008 and 2007 is shown
below:





March
      31, 2008
              
              March
      31, 2007Number
              
              Weighted-Average
              
              Number
              
              
              Weighted-Averageof
      Shares
              
              Exercise
      Price
              
              of
      Shares
              
              
              Exercise
      PriceOutstanding
      at beginning of period
              2,757,270
              
              $
              0.61
              
              2,779,834
              
              
              $
              1.33Granted
              1,936,223
              
              
              0.74
              
              790,770
              
              
              
              1.05Exercised
              -
              
              
              -
              
              (33,334
              )
              
              
              0.15Forfeited
              (84,615
              )
              
              1.05
              
              (15,000
              )
              
              
              0.80Expired
              -
              
              
              -
              
              -
              
              
              
              -Outstanding
      at end of period
              4,608,878
              
              $
              0.66
              
              3,522,270
              
              
              $
              1.28Exercisable
      at end of period
              3,167,839
              
              
              
              
              2,811,720Available
      for issuance at end of period
              1,391,122
              
              
              
              
              444,396






During
the period ended March 31, 2008, the Company issued 18,329 common stock warrants
to consultants as part of the payment for their services.  These
warrants were accounted for in accordance with the fair value provisions of SFAS
123R.  The warrants were vested immediately with fair values ranging
from $0.44 to $0.58 per share and the total cost of approximately
$12,000.





During
the period ended March 31, 2008, approximately 82,500 warrants were exercised
ranging from $0.14 to $0.20 per share or an aggregate price of
$12,150.





During
the period ended March 31, 2007, the Company issued 26,351 common stock warrants
to consultants as part of payment for their services.  These warrants
were accounted for in accordance with the provisions of SFAS
123R.  The warrants were vested immediately with fair market values
ranging from $0.55 to $1.25 per share and the total cost of approximately
$20,000.





During
the quarter ended March 31, 2007, 30,000 warrants were exercised at $0.20 per
share or an aggregate price of approximately $6,000.











-9-
 Index







NOTE 3  – STOCK
OPTIONS AND WARRANTS, continued





Assumptions
utilized to value warrants are as follows:





Risk-free
interest
rate                                                      6.00%


Expected life
(years)                                                       
5


Expected
volatility                                                          
73% to 138%


Expected
dividends                                                     
   None








The
following is a summary of warrants granted, exercised, canceled and outstanding
involving the grants in the periods ended March 31, 2008 and 2007:





March
      31, 2008
              
              March
      31, 2007Number
              
              Weighted-Average
              
              Number
              
              
              Weighted-Averageof
      Shares
              
              Exercise
      Price
              
              of
      Shares
              
              
              Exercise
      PriceOutstanding
      at beginning of period
              854,108
              
              $
              0.56
              
              913,968
              
              
              
              0.37Granted
              18,329
              
              
              0.65
              
              26,351
              
              
              
              1.02Exercised
              (82,500
              )
              
              0.15
              
              (30,000
              )
              
              
              0.20Expired
      or forfeited
              -
              
              
              -
              
              -
              
              
              
              -Outstanding
      at end of period
              789,937
              
              $
              0.57
              
              910,319
              
              
              $
              0.37Exercisable
      at end of period
              789,937
              
              
              
              
              895,736







NOTE 4 – STOCKHOLDERS’
EQUITY (DEFICIT)





In July
2007, the Company issued 5,141 shares of restricted common stock for payment of
services provided by a consultant.  The amount charged to operations
was $3,136, the value of the shares on the dates issued.





In
September 2007, the Company issued 15,000 shares of common stock for an
aggregate exercise price of $2,250 or $0.15 per share resulting from the
exercise of a warrant.





In
October 2007, the Company issued 5,000 shares of common stock for an aggregate
exercise price of $1,000 or $0.20 per share resulting from the exercise of a
warrant.





In
November 2007, the Company issued 62,500 shares of common stock for an aggregate
exercise price of $8,900 or $0.14 per share for 60,000 shares and $0.20 per
share for 2,500 shares resulting from the exercise of warrants.





In
November 2007, the Company issued 34,501 shares of common stock as a settlement
for a liability of $21,046.













-10-
 Index


NOTE 5 – NOTES
PAYABLE







Interest
              
              
              ConversionDirector
              Maturity
              
              Rate
              
              
              Price
              
              March
      31, 20082003
      Senior Convertible Note
              2010
              
              6
              %
              
              $
              0.38
              
              $
              1,268,625Senior
      Convertible Note
              2010
              
              8
              %
              
              $
              0.74
              
              
              208,9552007
      Senior Convertible Note
              2010
              
              8
              %
              
              $
              0.74
              
              
              375,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.55
              
              
              50,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.51
              
              
              50,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.40
              
              
              50,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.40
              
              
              50,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.34
              
              
              50,0002007
      Senior Convertible Note 2
              2010
              
              8
              %
              
              $
              0.32
              
              
              50,0002008
      Senior Convertible Note 1
              2010
              
              8
              %
              
              $
              0.32
              
              
              50,0002008
      Senior Convertible Note 1
              2010
              
              8
              %
              
              $
              0.45
              
              
              70,0002008
      Senior Convertible Note 1
              2010
              
              8
              %
              
              $
              0.40
              
              
              75,0002008
      Senior Convertible Note 1
              2010
              
              8
              %
              
              $
              0.33
              
              
              50,000Accrued
      interest
              
              
              
              
              
              
              
              
              
              136,6292,534,209Related Party2007
      Senior Convertible Note
              2010
              
              8
              %
              
              $
              0.74
              
              
              375,000Accrued
      interest
              
              
              
              
              
              
              
              
              
              17,836392,836Total
      long term note payable
              
              
              
              
              
              
              
              
              $
              2,927,045


Effective
February 11, 2008, the Company issued a 2008 senior convertible note payable to
its Chairman to combine the borrowings (the “Advances”) ranging from $50,000 to
$75,000 each from February 11, 2008 through April 29, 2008. As of March 31,
2008, the Company received approximately $245,000.  This senior
convertible note is secured by the Company’s revenues and assets with the same
priority as the 2007 senior convertible notes described below and has a maturity
date of 2010.  This note has the conversion prices determined by the
closing trading prices of the Company’s common stock on the dates the Advances
were received.





Effective
October 30, 2007, the Company issued another 2007 senior convertible note
payable to its Chairman to combine the borrowings (the “Advances”) in a series
of $50,000 each from October 30, 2007 through January 30, 2008. As of March 31,
2008, the Company received $300,000.  This senior convertible note is
secured by the Company’s revenues and assets with the same priority as the 2007
senior convertible notes described below and has a maturity date of
2010.  This note has the conversion prices determined by the closing
trading prices of the Company’s common stock on the dates the Advances were
received.







-11-
 Index





NOTE 5 – NOTES PAYABLE,
continued




In June
2007, the Company issued two other 2007 senior convertible note payables to its
Chairman and a major stockholder for $375,000 each. As of September 30, 2007,
the Company received $303,160 from its Chairman and the remaining $71,840 in
July 2007 totaling $375,000.  The Company also received $125,000 from
a major stockholder and the remainder in September 2007.  These two
senior convertible note payables are secured by the Company’s revenues and
assets.  These note payables require the Company to allocate
approximately $162,000 of these funds to be restricted for payment of the chief
executive officer’s salary for the remainder of the twelve months from the date
of hire. The Company may prepay
the principal and interest upon meeting certain cash flow requirements and the
approval of the board.


In
addition, the Company combined its other outstanding note payables to its
Chairman totaling $208,955 into a single note with the same annual interest rate
and extended the maturity date to 2010.  This senior convertible note
is secured by the Company’s revenues and assets with the same priority as the
2007 senior convertible notes.  Further, the 2003 senior convertible
note maturity date was extended until 2010.





In
September 2003, the Company negotiated a successor agreement with its Chairman
regarding the line of credit, which became a single convertible note for up to
$1,500,000 excluding accrued interest, at an interest rate of 6% and due July 1,
2004.  The convertible note is secured by the assets and revenues of
the Company, which has the same priority as other senior convertible note
payables.   The note plus accrued interest will be convertible at
a conversion rate of $0.38 per share.  The conversion rate was
determined as 15% above the average share price over the prior 20 trading days
($0.33 per share). The note has an anti-dilution provision in the event that the
Company sells stock to other investors at less than $0.20 per
share.  During the year ended June 30, 2006, the maturity date of the
note was extended until October
1, 2007. In January 2007, the Chairman agreed to extend the maturity date of the
note until April 1, 2008.  In June 2007, the maturity date of this
note was extended to June 2010.








NOTE 6  – RELATED
PARTY TRANSACTIONS





As fully
described in Note 5, the Company has several senior convertible note payables
with its Chairman and a major stockholder during the period ended March 31,
2008.





Subsequent
to March 31, 2008, the Company received the additional Advances totaling
$125,000 from its Chairman, which were combined with the $245,000 previous
borrowings into a senior convertible note as more fully described in Note 5
above.





NOTE 7  –
SUBSEQUENT EVENTS





On April
4, 2008, the Company and Mölnlycke Health Care AB (“MHC”) entered into a Joint
Development Agreement (the “Agreement”) effective as of March 19,
2008.  Under the Agreement, the Company is engaged in the development
of the Company's technologies to be incorporated in certain medical
health care products manufactured by MHC.  In consideration for the
development activities, MHC will pay the Company $90,000 during the term of the
Agreement, which will conclude on the earlier of (i) June 30, 2008 or (ii) the
date the Company and MHC execute a License Agreement covering the know-how and
patents that are the subject of the Agreement.




On April
18, 2008, the Company authorized the grant of options to purchase an aggregate
up to 1,247,959 shares of the Company’s common stock to the board members, the
management, the employees, and the consultants for their
services.  These options will have an exercise price of the closing
trading price of the Company’s common stock at the date of grant. The stock
options will vest one-third immediately, one-third to be vested each subsequent
anniversary date, assuming the person receiving the equity awards is employed by
the Company at the time of vesting.










-12-
 Index










ITEM
      2.
            MANAGEMENT'SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS







The
following discussion should be read in conjunction with our financial statements
and related notes appearing elsewhere in this Form 10-QSB and our Annual Report
on Form 10-KSB/A for our fiscal year ended June 30, 2007.   The
terms “Quick-Med”, "the Company," "we," "our" or "us" refer to Quick-Med
Technologies, Inc., a Nevada corporation.  This discussion contains
forward-looking statements based on our current expectations, assumptions, and
estimates. The words or phrases "believe," "expect," "may," "anticipates," or
similar expressions are intended to identify "forward-looking statements."
Actual results could differ materially from those projected in the
forward-looking statements as a result of a number of risks and uncertainties
pertaining to our business, including without limitation: (a) because we have a
limited operating history and our technologies are still evolving, we may not be
able to successfully manage our business or achieve profitability; (b) our
technology and product development processes, which include regulatory
approvals, are lengthy and expensive and there is no assurance that we will have
sufficient resources to complete development related to these processes; (c) our
history of losses makes it difficult for you to evaluate our current and future
business and prospects and future financial results; (d) we have negative cash
flow from operations and an accumulated deficit that raises substantial doubt
about our ability to continue as a going concern; (e) our future business is
dependent upon third parties to market, manufacture, and distribute our
technologies and/or products or jointly developed products;  (f) there
is no assurance that our technologies or products  will be accepted in
the marketplace; (g) we do not currently carry product liability insurance and,
therefore,  should we be subject to a product liability claim, our
financial condition may be adversely affected; (h) our operations are currently
funded by our revenues and our debt and equity financings, but there are no
assurances that these revenues and  financings will be sufficient to
ensure our  future financial performance;  (i) we have
substantial debt obligations that  are secured by our assets and
revenues and  are senior obligations due to our Chairman of the Board
and a major shareholder, who have  funded our operations; and (j)
there is no assurance that we will be able to attract and retain highly skilled
scientific, technical and management personnel, who are critical to our success;
and (k) other risk factors discussed in our annual report, as amended, for the
fiscal year ended June 30, 2007 and other periodic filings, which may be
accessed at http://www.sec.gov.  Statements made herein are as of the date
of the filing of this Form 10-QSB with the Securities and Exchange Commission
and should not be relied upon as of any subsequent date. Unless otherwise
required by applicable law, we do not undertake, and we specifically disclaim
any obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement.






Overview




Quick-Med
is a life sciences company focused on developing proprietary, broad-based
technologies in the consumer, healthcare, and industrial markets. We call one of
these technologies, “NIMBUS®”, which
stands for “Novel Intrinsically MicroBonded Utility Substrate”. NIMBUS is a
family of advanced polymers that are bio-engineered to have antimicrobial,
super-absorbent, hemostatic or other properties with applications across the
medical device and consumer health care related products markets. Our other
leading technology is called “MultiStatTM”, a family of advanced patent methods
and compounds, which we believe may be highly effective in skin care therapy
applications.




Our
strategy is to further develop our core technologies as well as develop future
technologies. We will attempt to commercialize these technologies through
strategic licensing partnership agreements, joint ventures, or co-development
agreements. We do not intend to manufacture or distribute final products;
instead, we will seek partnership arrangements and/or license agreements with
third parties to develop products that use our technologies and who will perform
the manufacturing, marketing, and distribution functions associated with our
technologies.




Our
business model has attempted and will continue to attempt to develop the
following revenue segments:




·
            License
      fees;


·
            Profit
      sharing revenues;


·
            Research
      and development fees paid to us in connection with joint development
      agreements; and


·
            Government
      research and development grants.




Our
potential revenues will be derived from government agencies and the following
types of companies in connection with our NIMBUS and MultiStatTM
technologies:




·
            Healthcare
      and medical;


·
            Apparel;


·
            Cosmetic;
      and


·
            Personal
      care companies.






-13-
 Index








Uncertainties and
Trends




Our
revenues are dependent now and in the future upon the following
factors:






·
            Acceptance
      of our products or future products in the marketplace;·
            Our
      partners’ ability to develop, market and distribute our technologies under
      a  strategic   partnership
    agreement;


·
            Demand
      for products or future products that utilize our
    technologies;


·
            Our
      ability to secure license or profit sharing related agreements and secure
      government research and development
grants;


·
            Our
      ability to market our services to health care, apparel, cosmetic, and
      personal care companies;


·
            Our
      ability to successfully conduct laboratory and clinical testing of our
      potential products; and


·
            Our
      ability to obtain regulatory approval of our future
    products.




Uncertainties
or trends that may affect our business also include the possibility that known
or unknown competitors may develop products with similar applications to our
proposed products, which may prove to be superior in performance and/or price to
our products.






Recent
Developments




On April
4, 2008, we and Mölnlycke Health Care AB (“MHC”) entered into a Joint
Development Agreement (the “Agreement”) effective as of March 19,
2008.  Under the Agreement, we are engaged in the development of our
technologies to be incorporated in certain medical health care products
manufactured by MHC.  In consideration for the development activities,
MHC will pay us $90,000 during the term of the Agreement, which will conclude on
the earlier of (i) June 30, 2008 or (ii) the date the Company and MHC execute a
License Agreement covering the know-how and patents that are the subject of the
Agreement.






Government  Regulation




Many of
the end-user applications for our technology are regulated in the U.S. as
medical devices by the Food and Drug Administration (“FDA”).  The
FDA’s regulations govern, among other things: pre-clinical testing; product
design and development; pre-market clearance or approval; advertising and
promotion; labeling; manufacturing; product import/export; storage; record
keeping; reporting of adverse events; corrective actions and removals; recalls;
and distribution.





One of
the exemptions to the requirement of pre-market clearance is 510(k) pre-market
notification, which is submitted to the FDA to demonstrate that the new device
is “substantially equivalent” to a previously cleared 510(k) device or a device
that was in commercial distribution before May 29, 1976 (or to a pre-1976 Class
II device for which the FDA has not yet called for the submission of pre-market
approval (“PMA”).  Such devices are deemed to be “predicate devices”
for future applications.  A PMA must be submitted if the device cannot
be cleared through the 510(k) process.   The PMA process is much
more demanding than the 510(k) pre-market notification process.





If a
medical device is found NSE (not substantially equivalent) by the FDA and
therefore a 510(k) pathway is not available, a second alternative pathway to the
lengthy and costly PMA is available for low risk devices. This is called the De
Novo application. The FDA Modernization Act of 1997 amended Section 513 (f) (2)
of the Federal Food, Drug and Cosmetic Act (the “FFDC Act”) to provide this
mechanism to reclassify statutorily classified class III products. This is
considered a fairly unique pathway for clearance and typically is only allowed
for new technologies of low risk. The FDA allows unlimited responses when on
this pathway, different than the three allowed responses under a normal 510(k).
A device placed into class I or II in this written order can then be
commercially distributed, subject to other applicable provisions of the FFDC
Act. A device classified into class I or II under this new provision becomes a
predicate device for future pre-market notification submissions, which means
that a manufacturer may show that a new device is substantially equivalent to
this predicate. This route to clearance is referred to as De Novo because it
establishes a new alternative for a new technology.




We filed
with the FDA for one of the end-user applications using our NIMBUS technology
under the medical device exemptions as an alternative to prior pre-market
approval requirements in March 2006, under a 510(k)
application.  After extensive discussions with the FDA staff,
including the Office of Chief Counsel, in January 2007 we were notified by the
FDA that a De Novo application route would be required for our proposed device.
In November 2007, we submitted our amended De Novo application. We responded to
the FDA staff on their follow up questions.  We expect to receive a
response from the FDA staff regarding the status of our De Novo application in
the near term.  However, there are no assurances when we will receive
and if it is received whether our FDA application will be approved by the FDA or
if approved it will be a commercial success. Further delays in receiving FDA
approval may also impair our ability to raise capital to continue
operations.




This
section should be read in conjunction with in our annual report on Form 10-KSB/A
for fiscal year ended June 30, 2007 filed with the SEC for further discussions
on the 510(k) clearance pathway and De Novo: Alternative Pathway to
PMA.








-14-
 Index





Capital
Expenditures and Requirements


From 2000
to March 2008, we have spent approximately $755,000 on the acquisition of
patents and exclusive license agreements.  We owe an additional
$160,000 to Dr. Richard Galardy which is due when certain milestones are met in
connection with a September 2000 license agreement we have with Dr. Galardy and
Dr. Damian Grobelny. This license agreement provides that we compensate Dr.
Galardy and Dr. Grobelny with our common stock and cash for the exclusive
license of the Ilomastat technology, which they invented.





We do not
expect any significant additions to property, plant and equipment.








Critical
Accounting Policies and Estimates





The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amounts. The estimates and assumptions are
evaluated on an on-going basis and are based on historical experience and on
various other factors that are believed to be reasonable. Estimates and
assumptions include, but are not limited to economic useful lives of fixed and
intangible assets, income taxes, valuation of options and warrants granted, and
contingencies. We base our 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 the carrying
values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different
assumptions or conditions. We believe the following critical accounting policies
affect our more significant judgments and estimates used in the preparation of
the financial statements. Our accounting for stock based compensation requires
us to estimate the value of theshares issued, and the
value of intangible assets require us to continually assess whether such assets
are impaired.








Results
of Operations





Comparison
of Nine Months Ended March 31, 2008 and 2007





Revenues.     During
the nine months ended March 31, 2008 we had $946,578 of revenues, compared to
$1,451,696 of revenues for the nine months ended March 31, 2007, representing a
35% decrease in our revenues.  Our revenues during the nine months
ended March 31, 2008 consisted of: (a) $119,592, which represented our royalties
from the product sales by a cosmetic and personal care division of BASF
Catalysts, LLC, a wholly-owned subsidiary of BASF (“BASF”),  in
connection with a master agreement we had with BASF for product development,
manufacturing and distribution (the “Master Agreement”); (b) $727,253, which
represented the revenue earned from the small business innovation research
program and the U.S. Army research on the development of Ilomastat for treatment
of sulfur mustard injuries on the eye and skin  program (the “U.S.
Army Research Program”); and (c) $99,733, which represented the earned portion
of the license  fee from Derma Sciences, Inc.and theearned
portion of the exclusive option fee from Hanesbrands Inc. (“HBI”).





Our
revenues during the nine months ended March 31, 2007 consisted of (a)
$1,323,426, which represented our royalties from the product sales by BASF
Catalysts, LLC, a wholly-owned subsidiary of BASF; (b) $30,000, which
represented the revenue eared from the small business innovation research
program; and (c) $98,270, which represented the earned portion of the exclusive
option fee, and the research and development fee from HBI.




In August
2006, we finalized a certain Letter of Intent (“LOI”) with BASF to amend the
Master Agreement to grant BASF an exclusive license to develop and market our
Ilomastat product for the field of over-the-counter anti-aging cosmetics and
nonexclusive license for the field of over-the-counter acne treatments and skin
moisturizers in the cosmetics market.  In consideration for this
license, as amended, we were entitled to receive certain minimum royalty
payments through the LOI effective period of August 1, 2007.  To date,
we are continuing to receive our royalties from the product sales by
BASF.  We are currently negotiating with BASF to complete a successor
license agreement.  Should we be unable to successfully complete the
successor license agreement, our results of operations and financial condition
would be materially affected.




Effective
February 1, 2007, we and HBI entered into a Development and Exclusive Option
Agreement with HBI (the “HBI Agreement”).  Under the HBI Agreement, we
granted to HBI an exclusive option (the “Option”) for a period of six months
(“Option Period”) to obtain an exclusive license to our technology relating
to  certain products produced by HBI (the “License
Agreement”).  In consideration for the Option, HBI is obligated to pay
the Company $45,000 every three month period during the Option Period. During
the Option Period, HBI would run and complete certain studies, and upon the
conclusion of these studies, HBI would provide us with notice of the final
decision with respect to entering into the License
Agreement.   In September 2007, we were informed that HBI
decided, for internal reasons unrelated to our technology, not to complete these
studies and we mutually agreed not to extend the Option Period.





Operating
Losses.  Operating losses for the nine months ended March 31,
2008 increased by 40% or  $487,304 to $1,694,692 for the nine months
ended March 31, 2008 from $1,207,388 for the nine months ended March 31, 2007.
The increase in operating losses was primarily due to a decrease in revenues of
$505,118 offset by a decrease in expenses of $17,814 for the nine months ended
March 31, 2008.  The decrease in expenses was primarily due to the
following:  (a) an increase of $179,950 or 18% in research and
development expenses; (b) an increase of $50,250 or 5% in general and
administrative expenses; offset by (c) a decrease of $23,069 or 9% in licensing
and patent expenses; and (d) a decrease of $234,393 or 88% in cost of revenues
to the amount in the comparable prior period, as described in more detail
below.







-15-
 Index






Research and Development
Expense.  Research and development expense increased by
$179,950 or 18% to $1,193,589 for the nine months ended March 31, 2008, from
$1,013,639 for the nine months ended March 31, 2007.  The increase in
research and development expense is primarily attributable the expenses related
to the U.S. Army Research Program, and increased compensation to our head of
research and development department and research team.  This increase
was offset by a reduction in share-based compensation expense of approximately
$199,000, which was included in the prior period research and development
expense, while smaller share-based compensation expenses were incurred during
the current period.




General and Administrative
Expense.  General and administrative expense increased by
$50,250 or 5% to $1,127,981 for the nine months  ended March 31, 2008,
from $1,077,731 for the nine months ended March 31, 2007.  This
increase in our general and administrative expenses is primarily attributed to
an increase of approximately of $358,000 in our Chief Executive Officer
compensation expense, including approximately $274,000 related to stock-based
compensation. This increase as mentioned above was offset by a reduction in
other operating expenses. In addition, the increase was reduced further because
the prior period expense included the share-based compensation expense resulting
from the payment for our board members’ and others’ services , while there
was no similar shared-based compensation expense incurred during the current
period.





Licensing and Patent
Expense.  Licensing and patent expense decreased by $23,069 or
9% to $233,891 for the nine months ended March 31, 2008 from $256,960 for the
nine months ended March 31, 2007.  This decrease was primarily due to
the level of utilization of consulting legal patent services and legal licensing
services including licensing negotiation offset by higher patent renewal fees
and the license fee and related patent maintenance expenses under the terms of a
license agreement entered into in June 2007.


Other
Income.  During the nine months ended March 31, 2007, we had
$166,500 in other income, which represented a payment from a cosmetic and
personal care division of BASF Catalysts, LLC, for the transfer of all right,
title and interest of the formulations utilized our proprietary compound that
were customized by BASF for the customers held by us back to
BASF.   However, we did not transfer the intellectual property
rights of our proprietary compound.    There was no such
transaction during the nine months ended March 31, 2008.





Interest
Income.  During the nine months ended March 31, 2008, we had
$2,021 in interest income, an increase of
$1,147 or 131% from $874 for the nine months ended March 31,
2007.  The amounts from both periods represent interest earned on our
certificate of deposits and money market account funded by the revenues and /or
equity financings during the respective period.





Interest
Expense.  Interest expense for the nine months ended March 31,
2008 increased $48,230 or 72% to $115,249 compared to $67,019 the nine months
ended March 31, 2007.  This increase was due to an increase of
approximately $712,000 or 48% in the average outstanding loan balance due to our
Chairman of the Board and a major shareholder to approximately $2,192,000,
compared to approximately $1,480,000 average outstanding balance for the
comparable 2006 period.





Net
Loss.   Net loss for the nine months ended March 31, 2008
was $1,807,920 or $0.06 per share compared to $1,107,033 or $0.04 per share for
the nine months ended March 31, 2007.   This increase is
primarily attributable to a decrease in revenues, an increase in research and
development and general and administrative expenses, offset by the deceases in
cost of revenues, and licensing and patent expenses.








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 Index





Comparison
of Three Months Ended March 31, 2008 and 2007





Revenues.     During
the three months ended March 31, 2008 we had $316,713 of revenues, compared to
$143,793 of revenues for the three months ended March 31, 2007, representing a
120% decrease in our revenues.  Our revenues during the three months
ended March 31, 2008 consisted of: (a) $42,367, which represented our royalties
from product sales by BASF  in connection with the Master Agreement;
(b) $247,560, which represented the revenue earned from the small business
innovation research program and the U.S. Army Research Program; and (c) $26,786,
which represented the earned portion of the license  fee from Derma
Sciences, Inc.





Our
revenues during the three months ended March 31, 2007 consisted of (a)
$15,523, which represented our royalties from product sales by BASF; (b)
$30,000, which represented the revenue eared from the small business innovation
research program; and (c) $98,270, which represented the earned portion of the
exclusive option fee, and the research and development fee from
HBI..





Operating
Losses.  Operating losses for the three months ended March 31,
2008 decreased by 29% or  $175,557 to $420,125 for the three months
ended March 31, 2008 from $595,682 for the three months ended March 31, 2007.
The decrease in operating losses was primarily due to an increase in revenues of
$172,920 offset by a decrease in expenses of $2,637 for the three months ended
March 31, 2008.  The decrease in expenses was primarily due to the
following:  (a) an increase of $74,160 or 24% in research and
development expenses; offset by (b) a decrease of $62,833 or 18% in general and
administrative expenses; (c) a decrease of $22,742 or 35% in licensing and
patent expenses; and (d) an increase of $6,338 or 193% in cost of revenues to
the amount in the comparable prior period, as described in more detail
below.





Research and Development
Expense.  Research and development expense increased by $74,160
or 24% to $384,448 for the three months ended March 31, 2008, from $310,288 for
the three months ended March 31, 2007.  The increase in research and
development expense is primarily attributablethe expenses
related to the U.S. Army Research Program, and increased compensation to our
head of research and development department and research team. The U.S. Army
Research Program began in April 2007.  This increase was offset by
a reduction in share-based compensation expense of approximately $35,000, which
was included in the prior period research and development expense, while smaller
share-based compensation expenses were incurred during the current
period.





General and Administrative
Expense.  General and administrative expense decreased by
$62,833 or 18% to $282,235 for the three months  ended March 31, 2008,
from $345,068 for the three months ended March 31, 2007.  This
decrease in our general and administrative expenses is primarily attributed to a
reduction in approximately $69,000 in executive search fees  that we
did not incur during the quarter ended March 31, 2008, and a decrease in
share-based compensation expense as certain share-based compensation expense was
earned out at December 31, 2007.  This decrease was offset by an
increase in compensation expense due to the addition of our CEO, while there
were no such similar expenses during the period ended March 31,
2007.





Licensing and Patent
Expense.  Licensing and patent expense decreased by $22,742 or
35% to $42,395 for the three months ended March 31, 2008 from $65,137 for the
three months ended March 31, 2007.  This decrease was primarily due
to the reduced level of utilization of consulting legal patent services and
legal licensing services.





Interest
Income.  During the three months ended March 31, 2008, we had
$573 in interest income, an increase of
$248 or 76% from $325 for the three months ended March 31, 2007.  The
amounts from both periods represent interest earned on our certificate of
deposits and money market account funded by the revenues and or equity
financings during the respective periods.





Interest
Expense.  Interest expense for the three months ended March 31,
2008 increased $22,560 or 100% to $45,078 compared to $22,518 the three months
ended March 31, 2007.  This increase was due to an increase of
approximately $934,000 or 63% in the average outstanding loan balance due to our
Chairman of the Board and a major shareholder to approximately $2,419,000,
compared to approximately $1,485,000 average outstanding balance for the
comparable 2007 period.





Net
Loss.   Net loss for the three months ended March 31, 2008
was $464,630 or $0.02 per share compared to $617,875 or $0.02 per share for the
three months ended March 31, 2007.   This decrease is primarily
attributable to an increase in revenues and an increase in research and
development expenses offset by a decrease in general and administrative and
licensing and patent expenses..






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 Index







Liquidity
and Capital Resources





Our
auditors have issued a going concern opinion on our audited financial statements
for the fiscal years ended June 30, 2007 and 2006 as we have experienced
recurring losses and negative cash flows from operations in these
periods.  In addition, we have a net capital
deficiency.  These matters raise substantial doubt about our ability
to continue as a going concern.





Total
cash on hand at March 31, 2008 was $83,606 as compared with $51,700 at December
31, 2007.    Further, we collected the entire outstanding
receivable balance of approximately $183,946 at March 31, 2008. As of April 30,
2008, we received a total of $125,000 to combine with $245,000 previous
borrowings into a 2008 senior secured convertible note from our
Chairman.  During the period ended September 30, 2007, we borrowed
$750,000 from our Chairman and a major shareholder as senior secured convertible
notes.  As of March 31, 2008, approximately $46,000 of the $750,000
funding was allocated to our Chief Executive Officer’s compensation for the
remaining two and a half months period and was included in the restricted
cash.


On April
4, 2008, we and Mölnlycke Health Care AB (“MHC”) entered into a Joint
Development Agreement (the “Agreement”) effective as of March 19, 2008 with
total value of approximately $90,000 over 90 days period.  We
anticipate the direct expenses for this project of approximately
$25,000.




In
September 2006, we received the SBIR Phase II grant, which included including
the option of SBIR Phase I, totaling approximately $840,000 over the next two
years and we expect the cash outflows related to this grant of approximately
$390,000 to subcontractors and other direct expenses.  To date, we
received approximately $315,000 and incurred approximately $66,000 in expenses
to subcontractors and other direct expenses. Effective April 23, 2007, we were
awarded a twelve month military contract valued at approximately $880,000, net
of overhead charged by USAMRAA.  The expected cash outflows during the
term of this military award will be approximately $610,000 for scientific
experiments and other direct expenses. While we expect to receive royalties in
the next twelve to twenty-four months from these agreements subject to certain
contractual terms, we need cash in order to maintain and grow our
businesses.  See the section below for further discussion of our cash
requirements and related strategies to meet these needs.





Equity Financing and our
Cash Requirements





On
November 30, 2004, we completed an agreement to sell 5,000,000 shares of our
restricted common stock to Phronesis Partners, L.P. (“Phronesis”), a Delaware
limited partnership, for $1,000,000 before commission and expenses (the ”Stock
Purchase Agreement”). On November 30, 2004, we received $880,000 net of
commission and expenses of $120,000. In connection with the Stock Purchase
Agreement, our Chairman of the Board, Mr. Granito, converted $500,000 of the
convertible debt we owed to him
into 1,315,790 shares of our restricted common stock at a conversion price
applicable to the convertible debt of $0.38 per share. In connection with the
Stock Purchase Agreement, we entered into a Warrant Agreement with Phronesis, in
which we granted Phronesis certain warrants to purchase shares of our restricted
common stock at an exercise price as defined in the Warrant Agreement. The
Warrant Agreement expired on February 5, 2005 and provided for a maximum
investment of $1,000,000 by Phronesis through the exercise of warrants. On
December 31, 2004, we mutually agreed to amend the exercise price for the
warrant price to $0.46 per share. All other terms of the Stock Purchase
Agreement and the Warrant Agreement remained the same. On the same date,
Phronesis exercised its warrant to purchase 2,173,913 shares of our restricted
common stock at a per share price of $0.46, or an aggregate purchase price of
$1,000,000 before commission of $70,000.





In
connection with the exercise of the warrant and in accordance with the terms of
the Stock Purchase Agreement, Mr. Granito, our Chairman of the Board,
immediately converted $826,087 of his convertible debt owed by us into 2,173,913
shares of our restricted common stock (equal to the number of shares acquired by
Phronesis) at a conversion price applicable to the convertible debt of $0.38 per
share.





In
February 2005, we issued 150,000 shares of restricted common stock for an
aggregate purchase price of $87,000 in cash.




In June
2005, we issued 16,666 shares of restricted common stock for aggregate exercise
price of $2,500 in cash from an exercise of an employee stock
option.




In July
2005, we issued 40,322 shares of restricted common stock for an aggregate
purchase price of $25,000 in cash.




In August
2005, we issued 13,795 shares of restricted common stock for an aggregate
purchase price of $8,553 in cash.




In August
2005, we issued 175,000 shares of restricted common stock for an aggregate
exercise price of $29,750 in cash from an exercise of a stock
option.







-18-
 Index




In
February 2006, we issued 100,000 shares of restricted common stock for an
aggregate purchase price of $80,000 in cash.





In
September 2006, we issued 33,334 shares of common stock for aggregate exercise
price of $5,000 in cash from an exercise of an employee stock
option.





In
February 2007, we issued 30,000 shares of common stock for an aggregate exercise
price of $6,000 in cash from an exercise of a warrant by an
officer.





In May
2007, we issued 100,000 shares of restricted common stock for an aggregate
purchase price of $79,000 in cash.





In June
2007, we issued 67,500 shares of common stock for an aggregate exercise price of
$12,150 in cash and in lieu of payment of an outstanding payable from an
exercise of a warrant.





In
September 2007, we issued 15,000 shares of common stock for an aggregate
exercise price of $2,250 in cash from an exercise of a warrant.





In
October 2007, we issued 67,500 shares of common stock for an aggregate exercise
price of $9,900 in cash from an exercise of warrants.





In
November 2007, the Company issued 62,500 shares of common stock for an aggregate
exercise price of $8,900 or $0.14 per share for 60,000 shares and $0.20 per
share for 2,500 shares resulting from the exercise of warrants.





In
November 2007, the Company issued 34,501 shares of common stock as a settlement
for a liability of $21,046





Based on
our cash position at March 31, 2008, we cannot continue to satisfy our
current cash requirements
for a period of twelve (12) months through our existing capital. We anticipate
total estimated patent related legal fees, operating and research and
development expenditures of approximately $176,000 per month or an aggregate of
approximately $2,112,000 over the next twelve (12) months, in the following
areas:





·
            Research
      and development expenditures of approximately $81,000 per month or an
      aggregate $972,000 over the next twelve (12) months, which will consist of
      the following estimated monthly expenditures: (a) $56,000 in payroll for
      scientists; (b) $10,000 for outside research and development expenditures;
      and (c) $15,000 for chemical supplies and laboratory operating expenses,
      including rent expense;





·
            Patent
      related legal fees of approximately $20,000 per month or an aggregate
      $240,000 annually; and





·
            Operating
      expenses of approximately $75,000 per month or an aggregate $900,000 over
      the next twelve (12) months, including personnel costs, officer and
      director insurance, general liability insurance, rent, consulting fees,
      utilities, legal and accounting fees, and
  payroll.





Our
current cash balance of $83,606 as of March 31, 2008, coupled with
collected accounts receivable of approximately $183,946  and the
receipt of approximately $125,000 funding under a convertible senior debt with
our Chairman will satisfy our cash requirements for approximately two (2)
months assuming no further receipt of revenues. If we are unable to satisfy
the remainder of our obligations by equity and/or debt financing,
we will be unable to satisfy our cash requirements beyond approximately two (2)
months assuming no further receipts of revenues and additional
financing.





We intend
to raise additional cash by means of equity and or debt financing. Additionally,
we plan to implement a cash conservation strategy by extinguishing obligations
through share-based payments and reducing our use of consulting services. There
are no assurances that any planned equity offering and/or debt financing will be
successful or sufficient to meet our cash requirements or that our cash
conservation strategy will be successful.




As of
March 31, 2008, we have four senior convertible notes payable outstanding to our
Chairman totaling $2,534,209 including accrued interest with interest rates
ranging from 6% to 8% per annum and  maturity dates ranging from June
to December 2010.  These notes are convertible at conversion prices
ranging from $0.32 to $0.74 per share and are secured by our revenues and
assets.  We also have a $375,000 senior convertible note payable to a
major stockholder.  The senior convertible note has an 8% interest
rate per annum with a conversion price of $0.74 per share, a maturity date of
2010, and is secured by our revenues and assets.






-19-
 Index




If we are
unable to successfully repay or restructure our loans to our Chairman of the
Board and to the major shareholder or are unable to raise additional cash by
means of equity or debt financing for operations, we may have to liquidate our
business and undertake any or all the steps outlined below.





·
            Significantly
      reduce, eliminate or curtail our business, operating and research and
      development activities so as to reduce operating
  costs;


·
            Sell,
      assign or otherwise dispose of our assets, if any, to raise cash or to
      settle claims by creditors, including our Chairman of the
      Board;


·
            Pay
      our liabilities in order of priority, if we have available cash to pay
      such liabilities;


·
            If
      any cash remains after we satisfy amounts due to our creditors, distribute
      any remaining cash to our shareholders in an amount equal to the net
      market value of our net assets;


·
            File
      a Certificate of Dissolution with the State of Nevada to dissolve our
      corporation and close our business;


·
            Make
      the appropriate filings with the Securities and Exchange Commission so
      that we will no longer be required to file periodic and other required
      reports with the Securities and Exchange Commission, if, in fact, we are a
      reporting company at that time; and


·
            Make
      the appropriate filings with the Financial Industry Regulatory authority
      (FINRA) to affect a delisting of our
stock.





Based
upon our cash requirements for our plan of continued operations and our current
dividend policy of investing any available cash to our operations, we do not
plan to distribute any cash to our stockholders.





At March
31, 2008, we had a negative working capital of $682,345 that primarily consists
of: (a) cash of $83,606, exclusive of approximately $45,953 cash balance
allocated to our CEO’s next two and a half months compensation (b) accounts
receivable of $183,946 (c) accounts payable of $892,513, (d) accrued expenses of
$14,528, and (e) unearned revenue of $42,856.  At March 31, 2008, we
had a stockholders’ deficit of $3,285,047, a portion of which is due to non-cash
stock compensation expense and non-cash interest expense from the notes payable
conversions.





Cash used
in operating activities was $878,905 for the nine months ended March
31, 2008. Net cash used in investing activities was $32,198.  Net cash
provided by financing activities was $878,990, of which $12,150 was provided by
the exercise of 82,500 stock warrants, $71,840 was from our Chairman as part of
a $375,000 senior convertible note, a $300,000 senior convertible, and the
$245,000 borrowings by March 31, 2008, which were combined into a $370,000
senior convertible note,  and $250,000 was from a major stockholder as
the final funding from his $375,000 senior convertible note.





During
the nine months ended March 31, 2007, we received (a) $11,000 from the exercise
of the 33,334 stock options and 30,000 warrants; (b) $15,500 from one of the
officers, which was subsequently paid in full by February 2007; and (c) $83,893
from our Chairman under a long-term note payable.




Off-balance
Sheet Arrangements





We do not
have any off-balance sheet arrangement that have, or are reasonably likely to
have, a current or future effect on financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.







Item 3.  Controls and Procedures





Evaluation
of Disclosure Controls and Procedures




Based on
our management’s evaluation, with the participation of our Chief Executive
Officer and Chief Financial Officer, of our disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act")), our Chief Executive Officer and our Chief Financial Officer
have concluded that as of March 31, 2008, the end of the period covered by this
Quarterly Report on Form 10-QSB, such disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.







Changes
in Internal Controls over Financial Reporting




As of the
end of our quarter ended March 31, 2008, there was no change in the our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.




-20-
 Index

















PART
II


OTHER
INFORMATION





Item 1. LegalProceedings





None.





Item 2. UnregisteredSales of Equity Securities and Use
of Proceeds





None.





Item 3.  Defaults Upon Senior Securities





None.





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





None.





Item 5.  Other Information.





None





Item 6.  Exhibits





Exhibit
      Number
            
            Description10.3
            
            2008
      Senior Convertible Note 2 issued to Michael Granito filed
      herewith.31.1
            
            Certification
      of Principal Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a),
      filed herewith.31.2
            
            Certification
      of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a), filed
      herewith.32.1
            
            Certification
      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
      herewith.32.2
            
            Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
      herewith.








-21-
 Index




















SIGNATURES








In accordance with the requirements
of the Securities Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.





Quick-Med
      Technologies, Inc.___________________________(Registrant)





Date
            May
      15, 2008
            By:
      /s/ J. Ladd GreenoJ.
      Ladd GreenoChief
      Executive Officer and Principal Executive
  Officer





Date
            May
      15, 2008
            By:
      /s/ Nam H. NguyenNam
      H. NguyenChief
      Financial Officer












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