NOTE 1.
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bio-Matrix
Scientific Group, Inc. (“Company”) was organized October 6, 1998, under the laws of the State of Delaware as Tasco
International, Inc.
From October
6, 1998 to June 3, 2006 its activities have been limited to capital formation, organization, and development of its business plan
to provide production of visual content and other digital media, including still media, 360-degree images, video, animation and
audio for the Internet.
On July 3,
2006 the Company abandoned its efforts in the field of digital media production when it acquired 100% of the share capital of Bio-Matrix
Scientific Group, Inc., a Nevada corporation, (“BMSG”) for consideration consisting of 10,000,000 shares of the common
stock of the Company and the cancellation of 10,000,000 shares of the Company owned and held by John Lauring.
As a result
of this transaction, the former stockholder of BMSG held approximately 80% of the voting capital stock of the Company immediately
after the transaction. For financial accounting purposes, this acquisition was a reverse acquisition of the Company by BMSG under
the purchase method of accounting, and was treated as a recapitalization with BMSG as the acquirer. Accordingly, the financial
statements have been prepared to give retroactive effect to August 2, 2005 (date of inception), of the reverse acquisition completed
on July 3, 2006, and represent the operations of BMSG.
Through its
wholly owned subsidiary, Regen BioPharma ,Inc., the Company intends to engage primarily in the development of regenerative medical
applications which we intend to license from other entities up to the point of successful completion of Phase I and or Phase II
clinical trials after which we would either attempt to sell or license those developed applications or, alternatively, advance
the application further to Phase III clinical trials
A. BASIS OF
ACCOUNTING
The financial
statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis
of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has
adopted a September 30, year-end.
B. PRINCIPLES
OF CONSOLIDATION
The consolidated
financial statements include the accounts of Bio-Matrix Scientific Group, inc., a Delaware corporation, Bio Matrix Scientific Group,
Inc, a Nevada corporation and a wholly owned subsidiary (“BMSG”), Regen BioPharma, Inc., a Nevada corporation and a
wholly owned subsidiary (Regen) and Entest BioMedical, Inc., (“Entest”), which was a majority owned subsidiary under
common control and a Nevada corporation up to February 3, 2011. Significant inter-company transactions have been eliminated.
C. 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. All estimates are of a normal,
recurring nature and are required for the fair presentation of the financial statements. Actual results could differ from those
estimates.
D. DEVELOPMENT
STAGE
The Company
is a development stage company devoting substantially all of its efforts to establish a new business.
E. CASH EQUIVALENTS
The Company
considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
F. PROPERTY
AND EQUIPMENT
Property and
equipment are recorded at cost. Maintenance and repairs are expensed in the year in which they are incurred. Expenditures that
enhance the value of property and equipment are capitalized.
G. FAIR VALUE
OF FINANCIAL INSTRUMENTS
Fair value
is the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal
or most advantageous market in an orderly transaction between market participants on the measurement date. A fair value hierarchy
requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs
required by the standard that the Company uses to measure fair value:
Level
1: Quoted prices in active markets for identical assets or liabilities
Level
2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the related assets or liabilities.
Level
3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
The Company’s
financial instruments as of December 31, 2012 consisted of Securities Available for Sale consisting of 10,000,000 shares of Entest
Biomedical, Inc.. The fair value of all of the Company’s financial instruments as of December 31, 2012 were valued
according to the Level 1 input. The carrying amount of the financial instruments is equal to the fair value as determined by the
Company
H. INCOME TAXES
The Company
accounts for income taxes using the liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred
tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities
using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records
a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that
some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is
recognized as income or loss in the period that includes the enactment date.
The Company
applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification
related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods
remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of
limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such
adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part,
upon the results of operations for the given period. As of December 31, 2012 the Company had no uncertain tax positions, and will
continue to evaluate for uncertain positions in the future.
The Company
generated a deferred tax credit through net operating loss carry forward. However, a valuation allowance of 100% has been
established.
Interest and
penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance
with ASC Topic 740-10-50-19.
I. BASIC
EARNINGS (LOSS) PER SHARE
The Financial
Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 260, "Earnings Per Share", which specifies
the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common
stock. ASC 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company
has adopted the provisions of ASC 260 effective from inception.
Basic net loss
per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding. All options
and convertible debt outstanding has an anti-dilutive effect on the EPS , therefore Diluted Earnings per Share are the same as
basic earnings per share.
J. ADVERTISING
Costs associated
with advertising are charged to expense as incurred. Advertising expenses were $0 and $0 for the quarters ended December 31 , 2012
and December 31, 2011 respectively.
NOTE 2
.
RECENT
ACCOUNTING PRONOUNCEMENTS
In May 2011,
the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, "Amendments to
Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." The amendments in this update
generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for
measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles
and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP
and IFRS. The amendments in this update are to be applied prospectively. The amendments are effective for interim and annual periods
beginning after December 15, 2011. Early application is not permitted. The Company does not expect this guidance to have a
significant impact on its consolidated financial position, results of operations or cash flows.
In June 2011,
the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." This update was amended in December 2011
by ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items
Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05." This update defers only those
changes in update 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in update 2011-05
are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial
statement or in two separate but consecutive financial statements. ASU No. 2011-05 and 2011-12 are effective for fiscal years
(including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant
impact on its consolidated financial position, results of operations or cash flows.
In December
2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in
this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset
in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement
or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity
should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments
are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance
to have any impact on its consolidated financial position, results of operations or cash flows.
ASU 2011-08,
Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment
is applicable to fiscal years
beginning after December 15, 2011. Early application is permitted. The Company does not expect this ASU has a material impact on
its financial position or carrying value of its intangible assets at this time.
A variety of
proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory
agencies. Due to the tentative and preliminary nature of those proposed standards, the Company’s management has
not determined whether implementation of such standards would be material to its financial statements.
NOTE 3. PROPERTY AND EQUIPMENT
Property
and Equipment as of December 31, 2012 consists of the following:
|
|
|
|
|
|
Acquisition cost:
|
Estimate useful life (year)
|
|
|
|
|
Office equipment
|
|
0
|
Computer
|
|
0
|
|
|
0
|
Subtotal
|
|
0
|
Less accumulated depreciation
|
|
|
Total
|
|
$US 0
|
Property and equipment as of December
31, 2011 consists of the following:
|
|
|
Acquisition cost:
|
Estimate useful life (year)
|
|
|
|
|
Office equipment
|
3 to 5
|
7,250
|
Computer
|
3
|
16,207
|
|
|
|
Subtotal
|
|
23,457
|
Less accumulated depreciation
|
|
(2,668)
|
Total
|
|
$US 20,789
|
Depreciation expenses were $0 and $
0 for the quarters ended December 31, 2012 and quarter ended December 31, 2011, respectively.
Depreciation
expenses were $0 and $ 0 for the quarters ended December 31, 2011 and 2012 respectively. With the exception of one computer which
is fully depreciated, no property and equipment has yet to be utilized in production therefore no depreciation shall be recognized
until usage commences. During the quarter ended September 30, 2012 the Company abandoned $20,789 of Computer Equipment and Office
Equipment .
NOTE 4. OPTIONS AND WARRANTS
On August 20,
2012 the Company issued to the holder of a $165,000 convertible promissory note a warrant, exercisable for three years from August
20, 2012, to purchase up to 16,500,000 of the common shares of the Company at an exercise price of $0.01 per share. As of December
31, 2012 the Company had the following warrants and options outstanding:
Shares issuable through Exercise of Warrant
|
Exercise Price
|
Shares Exercised
|
Expiration date
|
16,500,000
|
$0.01
|
0
|
August 20,2015
|
NOTE 5. GOING CONCERN
The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern. Exclusive of a onetime non-cash
gain of $41, 645,688 recognized upon the deconsolidation of Entest Biomedical, Inc. , the Company generated net losses of $ 15,031,394
(excluding $663,649 of Equity in Net Losses of Entest Biomedical, Inc. recognized) during the period from August 2, 2005 (inception)
through December 31, 2012. This condition raises substantial doubt about the Company's ability to continue as a going concern.
The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing
as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Management
plans to raise additional funds by offering securities for cash.
On April 26,
2012 the Company executed an Equity Purchase Agreement (the "Purchase Agreement") and Registration Rights Agreement (the
"Rights Agreement") with Southridge Partners II, LP, and a Delaware limited partnership ("Southridge").
Under the terms
of the Purchase Agreement, Southridge will purchase, at the Company's election, up to $20,000,000 of the Company's registered common
stock (the "Shares"). During the term of the Purchase Agreement, the Company may at any time deliver a "put notice"
to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of
such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares
shall be equal to 91% of the Market Price, as such capitalized term is defined in the Purchase Agreement, on such date on which
the Purchase Price is calculated in accordance with the terms and conditions of this Agreement.
Market Price,
as such term is defined in the Purchase Agreement, means the lowest Closing Price, as such term is defined in the Purchase Agreement, during
the Valuation Period, as such term is defined in the Purchase Agreement.
Closing Price
is defined in the Purchase Agreement as the closing bid price for the Company’s common stock on the principal market over
which the Company’s common shares trade on a day on which that principal market is open
for business as reported by Bloomberg Finance L.P.
Valuation Period
, as such term is defined in the Purchase Agreement, means the period of 5 Trading Days immediately following
the Clearing Date, as such term is defined in the Purchase Agreement, associated with the applicable Put Notice during
which the Purchase Price of the Shares is valued.
Clearing Date,
as such term is defined in the Purchase Agreement, means the date in which the Estimated Put Shares (as defined in Section 2.2(a)
of the Purchase Agreement) have been deposited into Southridge’s brokerage account and Southridge’s broker
has confirmed with Southridge that Southridge may execute trades of such Estimated Put Shares.
The definition
of Estimated Put Shares in Section 2.2(a) of the Purchase Agreement is that number of Shares equal to the dollar amount indicated
in the Put Notice divided by the Closing Price on the Trading Day immediately preceding the Put Date, multiplied by 125%. Pursuant
to the Purchase Agreement, on a Put Date the Company will be required to the applicable number of Estimated
Put Shares to Southridge’s brokerage account. At the end of the Valuation Period the Purchase
Price shall be established and the number of Shares shall be determined for a particular Put. If the number
of Estimated Put Shares initially delivered to Southridge is greater than the Put Shares purchased by Southridge pursuant
to such Put, then immediately after the Valuation Period Southridge shall deliver to Company any excess Estimated Put Shares associated
with such Put. If the number of Estimated Put Shares delivered to Investor is less than the Shares purchased by Southridge pursuant
to a Put, then immediately after the Valuation Period the Company shall deliver to Southridge the difference between the Estimated
Put Shares and the Shares issuable pursuant to such Put.
The number
of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock
of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's
common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.
The Purchase
Agreement shall terminate (i) on the date on which Southridge shall have purchased Shares pursuant to this Agreement for an aggregate
Purchase Price of $20,000,000, or (ii) on the date occurring 24 months from the date on which the Agreement was executed and delivered
by the Company and Southridge.
Under the terms
of the Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission within
90 days of the date on which the Purchase Agreement was executed and delivered by the Company and Southridge.
The registration
statement shall be filed with respect to not less than the maximum allowable number of Shares issuable pursuant
to a put notice to Southridge that has been exercised or may be exercised in accordance with the terms and conditions
of the Purchase Agreement permissible under Rule 415, promulgated under the Securities Act of 1933.
The Company
is obligated to keep such registration statement effective until (i) three months after the last closing of a sale of Shares under
the Purchase Agreement, (ii) the date when Southridge may sell all the Shares under Rule 144 without volume limitations, or (iii)
the date Southridge no longer owns any of the Shares.
The Purchase
Agreement requires the Company to reserve and keep available until the consummation of such Closing, free of preemptive rights
sufficient shares of common stock for the purpose of enabling the Company to satisfy its obligation to issue the Shares.
The Purchase
Agreement also requires the Company to issue to Southridge shares of a newly designated preferred stock with a stated value of
$50,000 convertible at the option of Southridge into shares of the Company’s common stock at a conversion price equal to
seventy percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding a conversion notice. The
Preferred Stock shall have no registration rights.
NOTE 6. INCOME TAXES
As of December 31, 2012
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|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
Net operating tax carry forwards
|
|
$
|
5,532,010
|
|
Other
|
|
|
-0-
|
|
Gross deferred tax assets
|
|
|
5,532,010
|
|
Valuation allowance
|
|
|
(5,532,010
|
)
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
-0-
|
|
As of June
30 , 2012 the Company has a Deferred Tax Asset of $5,532,010 completely attributable to net operating loss carry
forwards of approximately $16,270,620 ( which expire 20 years from the date the loss was incurred) consisting
of
(a) $38,616,
of Net Operating Loss Carry forwards acquired in the reverse acquisition of BMSG and
(b) $16,232,004 attributable
to Bio-Matrix Scientific Group, Inc. a Delaware corporation, BMSG, Regen and Entest
Realization
of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences
and carry forwards are expected to be available to reduce taxable income. The achievement of required future taxable income is
uncertain. In addition, the reverse acquisition of BMSG has resulted in a change of control. Internal Revenue Code Sec 382 limits
the amount of income that may be offset by net operating loss (NOL) carryovers after an ownership change. As a result, the Company
has the Company recorded a valuation allowance reducing all deferred tax assets to 0.
NOTE 7. RELATED PARTY TRANSACTIONS
As of December
31, 2012 the Company is indebted to David Koos, the Company’s Chairman and Chief Executive Officer, in the amount of $26,920.
These loans are due and payable at the demand of Bombardier pacific Ventures and bear simple interest at a rate of 15% per annum.
These loans
and any accrued interest are due and payable at the demand of Mr. Koos and bear simple interest at the rate of 15% per annum.
On June 15,
2009 Entest entered into an agreement with the Company whereby Entest has agreed to sublease approximately 3,000 square feet of
office space from the Company for a term of 3 years for consideration consisting of monthly rental payments of $4,100 per month.
Beginning October 2010 Entest has been paying rental expenses directly to the owner of the subleased space leaving a balance
of $59,500 of rental expenses prepaid to the Company. Between January 25, 2012 and February 14, 2012 the Company became indebted
to Entest in the amount of an additional $240 for expenses paid on behalf of the Company by Entest. Between October 1, 2011 and
September 30, 2012 the Company made payments to Entest totaling $20,600. Between October 1, 2012 and December 31, 2012 the Company
became indebted to Entest in the amount of an additional $755 for expenses paid on behalf of the Company by Entest . Between October
1, 2012 and December 31, 2012 the Company made payments to Entest totaling $5,000. As of December 31, 2012 the amount due to Entest
is $34,895. This obligation bears no interest and is due and payable on the demand of Entest. Entest is considered a related party
due to the fact that the Chairman and CEO of the Company also serves as the Chairman and CEO of Entest.
NOTE 8. NOTES PAYABLE
|
|
September 30,
2012
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
Bio Technology Partners Business Trust
|
|
|
44,500
|
|
|
|
44,500
|
|
Venture Bridge Advisors
|
|
|
72,000
|
|
|
|
72,000
|
|
David Koos (Note 7)
|
|
|
520
|
|
|
|
26,920
|
|
Sherman Family Trust
|
|
|
700,000
|
|
|
|
395,000
|
|
Notes payable
|
|
$
|
817,020
|
|
|
$
|
538,420
|
|
Both of Bio-Technology
Partners Business Trust and Venture Bridge Advisors have provided lines of credit to the Company in the amount of $700,000 each
or so much thereof as may be disbursed to, or for the benefit of the Company by Lender in Lender's sole and absolute discretion.
The unpaid principal of these lines of credit bear simple interest at the rate of ten percent per annum. Interest is calculated
based on the principal balance as may be adjusted from time to time to reflect additional advances or payments made hereunder.
Principal balance and accrued interest shall become due and payable in whole or in part at the demand of the Lender.
All loans to
the Company made by David R. Koos are due and payable at the demand of Koos or Bombardier and bear simple interest at a rate of
15% per annum.
$395,000 due
to Sherman Family Trust consists of all rights to and interest in salaries accrued and unpaid due to David
Koos. $395,000 due to Sherman Family Trust bears no interest and is payable in whole or in part at the demand of the
Holder.
NOTE 9. STOCKHOLDERS' EQUITY
The stockholders'
equity section of the Company contains the following classes of capital stock as December 31, 2012:
Preferred stock,
$ 0.0001 par value; 20,000,000 shares authorized, following series issued and outstanding:
1,963,821
Preferred Shares issued and outstanding.
With respect to each matter submitted to a vote of
stockholders of the Corporation, each holder of Preferred Stock shall be entitled to cast that number of votes which is equivalent
to the number of shares of Series B Preferred Stock owned by such holder times one (1).
On any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the Preferred Stock shall receive, out of assets legally available for distribution
to the Company's stockholders, a ratable share in the assets of the Corporation.
94,852
Series AA Preferred Shares issued and outstanding.
With respect to each matter submitted to a vote of stockholders
of the Corporation, each holder of Series AA Preferred Stock shall be entitled to cast that number of votes which is equivalent
to the number of shares of Series AA Preferred Stock owned by such holder times ten thousand (10,0000).
On any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the Series AA Preferred Stock shall receive, out of assets legally available for
distribution to the Company's stockholders, a ratable share in the assets of the Corporation.
725,409
Series B Preferred Shares issued and outstanding.
With respect to each matter submitted to a vote of stockholders
of the Corporation, each holder of Series B Preferred Stock shall be entitled to cast that number of votes which is equivalent
to the number of shares of Series B Preferred Stock owned by such holder times two (2).
On any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the Series B Preferred Stock shall receive, out of assets legally available for
distribution to the Company's stockholders, a ratable share in the assets of the Corporation.
Non
Voting Convertible Preferred Stock , $1.00 Par value, 200,000 shares authorized , 75000 shares issued and outstanding
Common
stock, $ 0.0001 par value;2,000,000,000 shares authorized: 1,035,901,471 shares issued and outstanding.
Each Non Voting
Convertible Preferred Stock shall convert at the option of the holder into shares of the corporation’s common stock at a
conversion price equal to seventy percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding
written receipt by the corporation of the holder’s intent to convert.
“CLOSING
PRICE" shall mean the closing bid price for the corporation’s common stock on the Principal Market on a Trading Day
as reported by Bloomberg Finance L.P.
“PRINCIPAL
MARKET" shall mean the principal trading exchange or market for the corporation’s common stock.
“TRADING
DAY” shall mean a day on which the Principal Market shall be open for business.
On any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Non Voting Convertible Preferred shall receive, out of assets
legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.
Common stock, $ 0.0001 par value;2,000,000,000 shares
authorized: 1,035,901, 471 shares issued and outstanding.
With respect to each matter submitted to a vote of
stockholders of the Corporation, each holder of Common Stock shall be entitled to cast that number of votes which is equivalent
to the number of shares of Common Stock owned by such holder times one (1).
On any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the Common Stock shall receive, out of assets legally available for distribution
to the Company's stockholders, a ratable share in the assets of the Corporation.
NOTE 10. CONVERTIBLE DEBENTURES
On November
14, 2007 the Company sold a $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $50,000 to one purchaser.
Interest on
the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest
to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12%
per annum, payable on the maturity Date, which is November 14, 2009.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on Form
SB-2 relating to the sale of an aggregate of 17,195,263 shares of the common stock of the Company by certain selling shareholders
(the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
the Selling Shareholder Registration Statement has been withdrawn by the
Company, the holder may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at
the conversion rate of $0.15 per Share.
Subsequent
to any conversion, the holder shall have the right, upon written demand to Company (“Registration Demand”), to
cause Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On November
30, 2007, the Company sold $75,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $75,000 to one purchaser.
Interest on
the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest
to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12%
per annum, payable on the maturity Date, which is November 14, 2009.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on Form
SB-2 relating to the sale of an aggregate of 17,195,263 shares of the Company’s common stock by certain selling
shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
the Selling Shareholder Registration Statement has been withdrawn by the
Company.
The holder
may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at the conversion rate
of $0.15 per Share (“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”),
to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and
Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the
Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective
by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January
8, 2008, the Company sold $18,400 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $18,400 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on
a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding
principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is December 28,
2009.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on
Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the
“Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
the Selling Shareholder Registration Statement has been withdrawn by
the Company.
The holder
may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.15 per Share
(“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to
cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January
18, 2008, the Company sold $200,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $200,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on
a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding
principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12,
2010.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on
Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the
“Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
the Selling Shareholder Registration Statement has been withdrawn by the
Company.
The holder
may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.25 per Share
(“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to
cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January18,
2008, the Company sold $100,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $100,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based
on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then
outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is
January 12, 2010.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on
Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the
“Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
the Selling Shareholder Registration Statement has been withdrawn by the
Company.
The holder
may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.25 per Share
(“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to
cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
The Company
shall agree to the granting of a Lien to the Holder against collateral which the Company owns or intends to purchase, namely:
|
Flow Cytometer (4 Color) (BD Facscanto)
|
Laboratory computer system/also for enrollments/storage tracking
|
Hematology Analyzer (celldyne 1800)(ABBOTT)
|
Laminar Flow Hood 4 ft ( Clean hood) (2)
|
Bench top centrifuges (2) refrigerated
|
Small equipment (lab set-up)
|
Microscope
|
Tube heat sealers (2 ea)
|
Barcode printer and labeling device
|
On February
15, 2008, the Company sold $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $50,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365
day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding
principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is February 15,
2010.
At any time
subsequent to the expiration of a six month period since either of:
(i)
that Registration Statement, as amended, filed with the SEC on
Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the
“Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii)
The Selling Shareholder Registration Statement has been withdrawn by
the Company.
The holder
may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.10 per Share
(“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to
cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On March 3,
2008 the Selling Shareholder’s Registration Statement was withdrawn by the Company.
On March 3,
2008, the Company sold $10,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase
price of $10,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based
on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then
outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is
March 3, 2010.
At any time
subsequent to the expiration of a six month period from March 3, 2008, the holder may convert the Convertible Debenture, in whole
but not in part, into our common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).
Subsequent
to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to
cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange
Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities
Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the
SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On February
2, 2010 the Company issued 1,433,333 common shares in full satisfaction of a $100,000 face value of convertible debentures bearing
interest at 14% per annum.
On February
10, 2010 the Company issued 3,000,000 shares of common stock in satisfaction of $30,000 owed by the Company to holders of the Company’s
convertible debentures bearing interest at 12% per annum.
On March 31,
2010 the Company issued 4,000,000 shares of common stock in satisfaction of $40,000 owed by the Company to holders of the Company’s
convertible debentures bearing interest at 12% per annum.
On February
17, 2011 the Company issued 1,785,714 common shares in satisfaction of $50,000 face value of convertible debentures.
On December
19, 2011, the Company issued a convertible promissory note in the amount of $50,000 which was funded on December 22,
2011. The note bears an interest rate of eight percent (8%), matures on September 19, 2012 and may be converted after 180 days
from execution of this note for shares of the Company’s common stock. The note may be converted at a forty five percent (45%)
discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion
date. The issuance of the note amounted in a beneficial conversion feature of $40,909 which is amortized under
the Interest Method. This convertible promissory note was satisfied in its entirety by the Company as a result of payment to the
Holder of $76,884 on June 11, 2012 in accordance with the prepayment conditions of the note. A Loss on Early Extinguishment of
Debt of $29,106 was recognized by the Company as a result of this prepayment.
On February
28, 2012, the Company issued a convertible promissory note in the amount of $27,500 which was funded on March 6, 2012.
The note bears an interest rate of eight percent (8%), matures on November 30, 2012 and may be converted after 180 days from execution
of this note for shares of the Company’s common stock. The note may be converted at a forty five percent (45%) discount to
the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. This
convertible promissory note was satisfied in its entirety by the Company as a result of payment to the Holder of $42,305 on August
29, 2012 in accordance with the prepayment conditions of the note. A Loss on Early Extinguishment of Debt of $14,804 was recognized
by the Company as a result of this prepayment.
On April 23,
2012, for no additional consideration, the Company agreed to amend the terms of $25,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $16,666 which has been fully amortized. On April
25, 2012 the Company issued 6,944,444 common shares in full satisfaction of this $25,000 in indebtedness.
On April 23,
2012, for no additional consideration, the Company agreed to amend the terms of $10,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $6,666 which has been fully amortized. On April
23, 2012 the Company issued 2,777,778 common shares in full satisfaction of this $10,000 in indebtedness.
On April 23,
2012, for no additional consideration, the Company agreed to amend the terms of $15,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $10,000 which has been fully amortized. During the quarter
ended June 30, 2012 the Company issued 4,168,541 common shares in full satisfaction of this $15,000 in indebtedness.
On May 2, 2012
the Company issued 3,000,000 common shares in satisfaction of $3,000 of existing convertible debt.
On May
3, 2012, for no additional consideration, the Company agreed to amend the terms of $10,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $5,384 which has been fully amortized. On May
11, 2012 the Company issued 2,564,103 common shares in full satisfaction of this $10,000 in indebtedness.
On May
4, 2012, for no additional consideration, the Company agreed to amend the terms of $80,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $31,111 which has been fully amortized. During
the Quarter ended June 30, 2012 the Company issued 41,431,532 common shares in full satisfaction of this $80,000
in indebtedness.
On May 7, 2012,
the Company issued a convertible promissory note in the amount of $53,000. The note bears an interest rate of eight percent
(8%), matures on February 4, 2013 and may be converted after 180 days from execution of this note for shares of the Company’s
common stock. The note may be converted at a forty five percent (45%) discount to the average of the lowest 3 closing bid prices
of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial
conversion feature of $53,000 which is amortized under the Interest Method.
On May
10, 2012, for no additional consideration, the Company agreed to amend the terms of $40,000 of existing indebtedness to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 51% the average of the
lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The reclassification of
this debt resulted in the recognition of a beneficial conversion feature of $28,000 which has been fully amortized.
During the quarter ended June 30, 2012 the Company issued 15,331, 392 common shares in full satisfaction of this $40,000
in indebtedness.
On June
1, 2012, for no additional consideration, the Company agreed to amend the terms of $40,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $40,000 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 16,434,139 common shares in satisfaction
of $40,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $40,000 of outstanding convertible debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $40,000 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 26,185,202 common shares in satisfaction of $40,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $31,000 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $31,000 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 22,787,766 common shares in satisfaction of $30,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $15,000 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $15,000 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 9250494 common shares in satisfaction
of $15,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $15,000 of outstanding debt
to allow conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60%
(the “Discount”) of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately
preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price
for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account
and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing
Bid Price, then the purchase price for the conversion shares would be adjusted such that the Discount shall be taken
from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted
Purchase Price(“Reset”). The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s
outstanding common stock. The issuance of the note amounted in a beneficial conversion feature of $15,000 which has
been fully amortized. During the Quarter ended June 30, 2012 the Company issued 10,064,506 common
shares in satisfaction of $15,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $10,000 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $10,000 which has been fully amortized. During
the year ended June 30, 2012 the Company issued 6,333,333 common shares in satisfaction
of $10,000 of this indebtedness.
On June
7, 2012, for no additional consideration, the Company agreed to amend the terms of $21,000 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $14,000 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 11633000 common shares in satisfaction
of $15, ,000 of this indebtedness.
On June
22, 2012, for no additional consideration, the Company agreed to amend the terms of $22,300 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $7,433 which has been fully amortized. During
the year ended September 30, 2012 the Company issued 19351068 common shares in satisfaction
of $22,300 of this indebtedness.
On June
22, 2012, for no additional consideration, the Company agreed to amend the terms of $17,179 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 7 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $6,871 which has been fully amortized., 2012
On June
22, 2012, for no additional consideration, the Company agreed to amend the terms of $5,000 of outstanding debt to allow
conversion at the Holder’s option into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has
been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then
the purchase price for the conversion shares would be adjusted such that the Discount shall be taken from the closing
bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance
of the note amounted in a beneficial conversion feature of $2,000 which has been fully amortized.
On July 25 the Company issued a convertible
promissory note in the amount of $ 63,000. The note bears an interest rate of eight percent (8%), matures on April 30, 2013 and
may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted
at a thirty nine percent (39%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading
days prior to the conversion date.
On
August 20, 2012, the “Company”) issued a convertible promissory note in the principal amount of $165,000. The note
bears an annual interest rate of six percent (6%). The unconverted principal amount of the note and any accrued but unpaid interest
is payable at the demand of the Holder at any time after August 20, 2013.
The note is
convertible into the common shares of the Company as follows:
(a)
The
Holder shall have the right to convert up to fifty-percent (50%) of the principal amount of the Note (“Principal Amount”)
on December 20, 2012, up to seventy-five percent (75%) of the Principal Amount on April 20, 2013, and up to one hundred percent
(100%) of the Principal Amount on August 20, 2013.
(b)
The
Holder shall have the right to convert $25,000 of the principal amount due on this note into 5,000,000 shares of the Company’s
common stock at any time on or after August 21, 2012.
With the exception
of (b), The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the
principal amount of this Note to be converted (the “Conversion Amount”) by the applicable Conversion Price.
The “Conversion
Price” means the weighted average of the Trading Prices (as defined below) for the Common Stock during the ten (10) Trading
Day (as defined below) period ending on the latest complete Trading Day prior to the Conversion Date weighted by the daily Trading
Volume. “Trading Price” means the closing bid price on the applicable trading market or, if no closing bid price of
such security is available, the average of the closing bid prices of any market makers for such security that are listed in the
“pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on
such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Company
and the Holder. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the principal
securities exchange or other securities market on which the Common Stock is then being traded. “Trading Volume” shall
mean the number of shares traded on such Trading Day as reported. The Conversion Price shall be equitably adjusted for stock splits,
stock dividends, rights offerings, combinations, recapitalization, reclassifications, extraordinary distributions and similar events
by the Company relating to the Lender’s securities. The Minimum Conversion Price is $0.0035 per share. The issuance of the
note amounted in a beneficial conversion feature of $61,285 which is amortized under the interest method. During
the year ended September 30, 2012 $25,000 of the principal portion of this note was converted into 5,000,000 common shares of the
issuers common stock.
On October
19, 2012 for no additional consideration, the Company agreed to amend the terms of $10,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On October
19.2012 for no additional consideration, the Company agreed to amend the terms of $20,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On October
29,2012 for no additional consideration, the Company agreed to amend the terms of $30,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On November
12, 2012 for no additional consideration, the Company agreed to amend the terms of $50,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On November
15, .2012 for no additional consideration, the Company agreed to amend the terms of $50,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 20 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On December
12,2012 for no additional consideration, the Company agreed to amend the terms of $30,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
On December
12,2012 for no additional consideration, the Company agreed to amend the terms of $100,000 of outstanding debt to allow conversion
at the Holder’s option into common shares of the Company at a conversion price per share equal to 55% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion
date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock
on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received
that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase
price for the conversion shares would be adjusted such that the Discount shall be taken from the closing bid price on the Clearing
Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price(“Reset”).
The Company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.
At December
31, 2012, the following convertible debentures remain outstanding:
(a)
$1,000 in aggregate convertible debt bearing simple interest at 10% per annum convertible into the Company’s common
stock at share and convertible into common shares of the Company at a conversion price per share equal to 60% (the “Discount”)
of the lowest closing bid price for the Company’s common stock during the seven trading days immediately preceding a conversion
date, as reported by Bloomberg.
(b)
$80,701 in aggregate convertible debt bearing simple interest at 12% per annum convertible into the Company’s
common stock at $0.025 per share.
(c) $ 63,000 which bears an
interest rate of eight percent (8%), matures on April 30, 2013 and may be converted after 180 days from execution of this note
for shares of the Company’s common stock. The note may be converted at a thirty nine percent (39%) discount to the average
of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.
(d)
$140,000 bearing an annual interest rate of six percent (6%) of which the unconverted principal amount of the note and any accrued
but unpaid interest is payable at the demand of the Holder at any time after August 20, 2013.
(e)
$30,000 in aggregate convertible debt bearing no interest convertible into the Company’s common stock at share
and convertible into common shares of the Company at a conversion price per share equal to 55% (the “Discount”) of
the lowest closing bid price for the Company’s common stock during the five trading days immediately preceding a conversion
date, as reported by Bloomberg.
(f)
$174,675 in aggregate convertible debt bearing no interest convertible into the Company’s common stock at share
and convertible into common shares of the Company at a conversion price per share equal to 55% (the “Discount”) of
the lowest closing bid price for the Company’s common stock during the twenty trading days immediately preceding a conversion
date, as reported by Bloomberg.
Convertible
Debentures described in (a) , (b), (e) and (f) are currently due and payable. The holders have not made a demand for payment
As of December 31, 2012 the Aggregate Amount of Convertible
Debentures outstanding was $489,376 and the Aggregate Amount of Unamortized discount was $39,155.
As of September 30, 2012 the Aggregate Amount of Convertible
Debentures outstanding was $365,880 and the Aggregate Amount of Unamortized discount was $65,371.
NOTE 11. COMMITMENTS AND CONTINGENCIES
On February
3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania
against the Company, the Company’s Chairman and Entest. by 18KT.TV LLC (“Plaintiffs”). The Complaint is seeking
damages from the Company and Entest in excess of $125,000 and alleges breach of contract, unjust enrichment and breach of implied
in fact contract by the Company and Entest in connection with agreements entered into with the plaintiffs by both the Company and
Entest.
On
March 1, 2013 a SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (“Agreement”) was entered into by and between the Plaintiffs
and the Company.
Pursuant to
the Agreement:
(a)
The
Plaintiffs irrevocably release and forever unconditionally discharge the Company of and from any and all actions, causes of action,
suits, claims, debts, dues, accounts, bonds, covenants, charges, complaints, contracts, agreements, promises, judgments and demands
whatsoever, in law or in equity
(b)
The
Company irrevocably releases and forever unconditionally discharges the Plaintiffs of and from any and all actions, causes of action,
suits, claims, debts, dues, accounts, bonds, covenants, charges, complaints, contracts, agreements, promises, judgments and demands
whatsoever, in law or in equity
(c)
The
Company shall cause to be issued to 18KT.TV LLC 100,000,000 of the Company’s common shares
NOTE 12. INVESTMENT SECURITIES
As of the quarter
ending June 30, 2012 the Company reclassified 10,000,000 common shares of Entest (“Entest Shares”) as Securities Available
for Sale from Securities Accounted for under the Equity Method. The Entest Shares are the Company’s sole Investment Securities.
NOTE 13. STOCK TRANSACTIONS
During the
quarter ended December 31, 2012 the Company:
Issued 542,586,442
Common Shares in satisfaction of $166,504 of Convertible Notes Payable
Issued 52,500,000
Common Shares in satisfaction of $15,000 of Notes Payable
Issued 6,057,142
Common Shares in satisfaction of $2,120 of accrued interest
Issued 111,250,000
Common Shares pursuant to contractual obligations to convertible note holders.
NOTE 14. SUBSEQUENT EVENTS
On January 3, 2013 the Company issued
90,000,000 Common Shares in satisfaction of $9,900 of outstanding convertible indebtedness.
On January 3, 2013 the Company
issued 103,030,303 Common Shares in satisfaction of $17,000 of outstanding convertible indebtedness.
On January 18, 2013 the
Company agreed to the cancellation of 103,030,303 Common Shares issued in satisfaction of $17,000 of outstanding convertible indebtedness
.
On February 27, 2013 the
Company issued 12,792,208 Common Shares in satisfaction of $14,775 of outstanding convertible indebtedness.
On February 27, 2013 the
Company issued 8,658,009 Common Shares issued in satisfaction of $10,000 of outstanding convertible indebtedness.
On March 13, 2013 the Company
issued 100,000,000 Common Shares pursuant to a SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE entered into by and between the
Company and 18KT.TV LLC.
EXHIBITS
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31.1
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Certification of Chief Executive Officer
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31.2
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Certification of Acting Chief Financial Officer
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32.1
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Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of Acting Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
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