Forward Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors".

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report and unless otherwise indicated, the terms "we", "us", "our", "our company" and "Parallax" refer to Parallax Diagnostics, Inc., a Nevada corporation.

History and Background

We were incorporated in the State of Nevada on April 12, 2010. Prior to the acquisition transaction described below, our business purpose was to seek the acquisition of or merger with, an existing private company. Accordingly, we were engaged in organizational efforts in order to put us in a position where we could seek to target and eventually acquire an existing private company.

On January 11, 2011 (the "Closing Date"), we entered into and closed a share exchange agreement (the "Share Exchange Agreement") with Amersey Investments, LLC ("Amersey"), Parallax Diagnostics, Inc., a Delaware corporation ("Parallax") and its sole shareholder, Montecito Bio Sciences, Ltd. ("Montecito"). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) we acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001; and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the "Merger"). Additionally, as further consideration for the share exchange and Merger, and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of our common stock.

As a result of the transactions effected by the Share Exchange Agreement, (i) the former business of Parallax is now our sole business and (ii) there is a change of control whereby the former shareholder of Parallax, Montecito, now own a 75% controlling ownership interest in the Company.

As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned, and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company. Additionally, Mr. Norman A. Kunin was appointed to serve as the Company's CFO, Mr. Mike Contarino was appointed to serve as the Company's Vice President and Dr. Roger Morris was appointed to serve as the Company's Chief Science Officer. Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.

Parallax was incorporated in the State of Delaware on December 30, 2008, under the name Roth Kline, Inc. Roth Kline, Inc. was renamed Parallax Diagnostics, Inc. on December 29, 2010. Parallax is a development stage company whose principal line of business is in the bio-medical sector. More specifically, Parallax is focused on the exploitation of a proprietary diagnostic and monitoring platform and processes in the area of infectious disease.

The Company is a development stage company as defined by ASC 915-10, "Accounting and Reporting by Development Stage Enterprises." A development stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. At March 31, 2012 the Company has not yet commenced any operations. All activity from April 12, 2010 (date of inception) through March 31, 2012 relates to the Company's formation and continuing development.

Results of Operations

Three months ended March 31, 2012 compared to three months ended March 31, 2011

The following summary should be read in conjunction with our financial statements for the quarter ended March 31, 2012, which are included herein.

                                                                                Inception
                                            Three months ended              (April 12, 2010)
                                     March 31, 2012     March 31, 2011      to March 31, 2012
Revenue                             $              -   $              -   $                 -

General and administrative expenses $        129,684   $         71,985   $           586,391

Depreciation and amortization       $         54,417   $        123,267   $           428,586

Net (loss)                          $       (184,446 ) $       (195,252 ) $        (1,015,420 )

Net cash provided by (used in) operating activities. During the three months ended March 31, 2012, net cash (used in) operating activities was ($82,562) compared with net cash provided by operating activities of $53,222 for the three months ended March 31, 2011. The decrease in net cash provided by operating activities of ($135,784) was primarily attributable to an increase in depreciation expense of $5,451, a decrease in amortization of intangible assets of ($25,002) a decrease in amortization of stock compensation in the amount of ($74,310), and a decrease in related party payables of ($41,567).

Net cash provided by (used in) investing activities. During the three months ended March 31, 2012, net cash (used in) investing activities decreased to ($2,184) compared with ($1,500,000) for the three months ended March 31, 2011. The decrease was the result of a one-time (increase) in intangible assets as of March 31, 2011 of ($1,500,000) resulting from the Assignment and License Agreements entered into in September, 2010, compared to none in the current period; and an (increase) in property, plant and equipment in the current period of ($2,184), compared to none for the same period last year.

Net cash provided by (used in) financing activities. During the three months ended March 31, 2012, net cash provided by (used in) financing activities decreased to ($4,950), compared with net cash provided by financing activities of $1,446,939 for the three months ended March 31, 2011. The decrease was a result of a one-time increase in deferred revenue as of March 31, 2011 of $1,500,000; compared to none in the current period; an (increase) in deferred compensation as of March 31, 2011 of ($281,250), compared to none in the current period; and an increase in paid in capital of $227,439 as of March 31, 2011, versus none in the current period.

General and Administrative Expenses. General and administrative expenses increased by $57,699 to $129,684 for the three months ended March 31, 2012, compared to $71,985 for the three months ended March 31, 2011. The increase was primarily due to an increase in legal and accounting fees of $3,606, an increase in executive compensation and related taxes and benefits of $47,365, an increase in travel, entertainment and promotion of $4,770 and an increase in other general office expenses of $1,958.

General and Administrative Expenses            For the three months ended
                                                       March 31,
                                                 2012              2011         Variances

Legal, accounting and professional fees     $        15,599     $     11,993    $     3,606
Executive compensation                              100,096           59,231         40,865
Employer/employee taxes & benefits                    7,261              761          6,500
Travel, entertainment and promotion                   4,770                -          4,770
Office supplies and miscellaneous expenses            1,958                -          1,958

Total  General and Administrative Expenses  $       129,684     $     71,985    $    57,699

Depreciation and Amortization. Depreciation and amortization for the three months ended March 31, 2012 was $54,408, compared to $123,267 for the three months ended March 31, 2011, resulting in a decrease of $68,859. The decrease is primarily due to a decrease in deferred compensation expense of $74,310, resulting from the initial stock compensation expense of $98,265 for the three months ended March 31, 2011, versus $23,955 for the same period in the current year; and an increase in depreciation expense of $5,451; compared to no expense for the same period last year.

Net Income (loss). We had a net (loss) of ($184,446) for the three months ended March 31, 2012, as compared to a net (loss) of ($195,252) for the three months ended March 31, 2011. The decrease in net (loss) is primarily attributable to an increase in executive compensation of $47,365, a decrease in amortization of deferred compensation expense ($68,850), and an increase in other general and administrative expenses of $10,679.

Off-balance sheet arrangements.

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Liquidity and Capital Resources



      Working Capital            At March 31,     At December, 31     Increase
                                     2012              2011          (Decrease)
      Current Assets            $       46,820   $         136,066   $   (89,246 )
      Current Liabilities              482,243             276,874       205,369
      Working Capital (Deficit) $     (435,423 ) $        (140,808 ) $  (294,615 )

 Cash Flows                                            For the three months ended
                                                               March 31,
                                                         2012             2011
 Net Cash Provided by (Used in) Operating Activities $     (82,562 )  $      53,222
 Net Cash Provided by (Used in) Investing Activities        (2,184 )     (1,500,000 )
 Net Cash Provided by (Used in) Financing Activities        (4,500 )      1,446,939
 Increase (Decrease) in Cash                         $     (89,246 )  $         161

Liquidity and Capital Resources

We are a development stage company focused on developing our business in the bio-medical sector. Our principal business objective for the next twelve (12) months will be to continue to develop our business plan in the bio-medical field. We have not earned any revenue.

As of March 31, 2012, we had cash on hand of $46,820, compared to $136,066 as of December 31, 2011. We had a working capital deficit of ($435,423) as of March 31, 2012, compared to a working capital deficit of ($140,808) as of December 31, 2011. We do not have sufficient capital to operate our business and will require additional funding to sustain operations through December, 2012. There is no assurance that we will be able to achieve revenues sufficient to become profitable.

We anticipate that we will require a minimum of $2,000,000 to fund our continued operations for the next twelve months.

We have incurred losses of $1,015,420 since inception. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. We anticipate that we will have to raise additional funds through private placements of our equity securities and/or debt financing to complete our business plan. There is no assurance that the financing will be completed as planned or at all. If we are unable to secure adequate capital to continue our planned operations, our shareholders may lose some or all of their investment and our business may fail.

As at March 31, 2012, affiliates and related parties are due a total of $216,303, which is comprised of loans to the Company of $14,000, unpaid compensation of $192,961, and unpaid reimbursable expenses of $9,342. During the three months ended March 31, 2012, unpaid compensation increased by $49,942.

Our principal sources of funds have been from sales of our common stock and loans from related parties.

Going Concern

The unaudited financial statements included with this quarterly report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Contractual Obligations

As a "smaller reporting company", we are not required to provide tabular disclosure obligations.

Application of Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

Net Income (Loss) Per Common Share

Our company calculates net income (loss) per share as required by ASC 450-10, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when anti-dilutive, common stock equivalents, if any, are not considered in the computation.

Inflation.

We do not believe that inflation has had in the past or will have in the future any significant negative impact on our operations