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. 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 September 30, 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 June 30, 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 September 30, 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 twelve months ended
September 30, 2012 and September 30, 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 September 30, 2012 consists of the following:
|
|
Estimate
useful life (year)
|
Acquisition
Cost:
|
|
Office
equipment
|
|
0
|
|
Computer
|
|
0
|
|
Subtotal
|
|
0
|
|
Less
accumulated depreciation
|
|
|
|
Total
|
|
$US
0
|
Property
and equipment as of September 30, 2011 consists of the following:
|
|
Estimate
useful life (year)
|
Acquisition
cost:
|
|
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 years ended September 30, 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 September 30, 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 one-time non-cash gain of $41,645,688 recognized upon the deconsolidation of Entest BioMedical, Inc., the Company generated
net losses of $ 14,434,728 (excluding $663,649 of Equity in Net Losses of Entest BioMedical, Inc. recognized) during the period
from August 2, 2005 (inception) through September 30, 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 September 30, 2012
|
Deferred
tax assets:
|
|
|
|
|
Net
operating tax carry forwards
|
|
$
|
5,329,144
|
|
|
Other
|
|
|
-0-
|
|
|
Gross
deferred tax assets
|
|
|
5,329,144
|
|
|
Valuation
allowance
|
|
|
(5,329,144
|
)
|
|
Net
deferred tax assets
|
|
$
|
-0-
|
|
As
of June 30 , 2012 the Company has a Deferred Tax Asset of $5,329,144 completely attributable to net operating
loss carry forwards of approximately $15,673,954 ( 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)
$15,635,338 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 September 30, 2012 the Company is indebted to David Koos, the Company’s Chairman and Chief Executive Officer, in the
amount of $520. 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.
As of June 30, 2012 no monies are due to Bombardier Pacific ventures, a company controlled by David Koos.
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. As of September 30, 2012 the amount due to
Entest is $39,140. 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
|
|
|
September
30,
2011
|
|
|
|
|
|
|
|
|
|
|
Bio
Technology Partners Business Trust
|
|
|
45,000
|
|
|
|
24,100
|
|
|
Bombardier
Pacific Ventures
|
|
|
|
|
|
|
36,281
|
|
|
Venture
Bridge Advisors
|
|
|
72,000
|
|
|
|
109,294
|
|
|
David
Koos (Note 7)
|
|
|
520
|
|
|
|
--
|
|
|
Sherman
Family Trust
|
|
|
700,000
|
|
|
|
|
|
|
Notes
payable
|
|
$
|
817,020
|
|
|
$
|
169,575
|
|
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 either of David R. Koos or Bombardier Pacific Ventures are due and payable at the demand of Koos
or Bombardier and bear simple interest at a rate of 15% per annum.
$700,000 due
to Sherman Family Trust consists of all rights to and interest in $700,000 of salaries accrued and unpaid due to David
Koos. $700,000 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 September 30, 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 time’s
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.
Common
stock, $ 0.0001 par value; 1,000,000,000 shares authorized: 323,507,887 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.
Non-Voting
Convertible Preferred Stock, $1.00 Par value, 200,000 shares authorized, 75000 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.
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
January 18, 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 9,250,494 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 11,633,000 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 19,351,068 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 issuer’s common stock.
At
September 30, 2012, the following convertible debentures remain outstanding:
(a)
$5,000 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 5 trading days immediately preceding a conversion
date, as reported by Bloomberg.
(b)
$24,179 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 days immediately preceding a conversion
date, as reported by Bloomberg.
(c)
$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.
(d)
$116,000 bearing simple interest at 8% per annum of which:
$53,000,
which 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.
$
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.
(e)
$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.
Convertible
Debentures described in (a) and (b) and (c) are currently due and payable. The holders have not made a demand for payment.
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.
As
of September 30, 2011 the Aggregate Amount of Convertible Debentures outstanding was $313,701 and the Aggregate Amount of Unamortized
discount was $0.
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
October 24,2011 a Complaint (“Complaint”) was filed in the Superior Court of the State
of California, County of San Diego Central Division against the Company, the Company’s Chairman, and American
Stock Transfer and Trust Company LLC by Rick Plote. The Complaint seeks damages from the defendants jointly and severally of no
less than $615, 000 and alleges breach of written agreement, breach of written guarantee and fraud in connection with the defendant’s
failure to transfer 4,000,000 common shares of the Company beneficially owned by the company’s Chairman and CEO and pledged
by the Company’s Chairman to secure payment of a promissory note issued by an unaffiliated third party.
NOTE
12. INVESTMENT SECURITIES
As
of the quarter ending June 30, 2012 the Company reclassified 10,000,000 common shares of Entest as Securities Available for Sale
from Securities Accounted for under the Equity Method.
NOTE
13. STOCK TRANSACTIONS
During
the year ended September 30, 2012 the Company:
Issued
5,000,000 Common Shares to the order of a broker dealer in consideration for services rendered as Placement Agent and valued
at $65,000.
Issued
12,000,000 shares to an employee for services rendered valued at $86,400 subject to a vesting schedule
Issued
12,000,000 shares to an employee for services rendered valued at $48,000 subject to a vesting schedule
Issued
205,821,802 Common Shares in satisfaction of $405,300 of Convertible Notes Payable
Issued
90,000 shares of Series AA Preferred Stock to the Company’s CEO
Issued
16,496,338 common shares pursuant to contractual obligations to debt holders resulting in the Company recognizing expenses of
$66,372 in connection with such issuances.
Issued
75,000 of its Non Voting Convertible Preferred Stock in accordance with the terms and conditions of that Equity Purchase Agreement
(the "Purchase Agreement") entered into by and between the Company and Southridge Partners II, LP (See Note 5)
NOTE
14. SUBSEQUENT EVENTS
On
October 24, 2011 a Complaint (“Complaint”) was filed in the Superior Court of the State of California, County of San
Diego Central Division against the Company, the Company’s Chairman, and American Stock Transfer and Trust Company LLC by
Rick Plote. The Complaint seeks damages from the defendants jointly and severally of no less than $615, 000 and alleges breach
of written agreement, breach of written guarantee and fraud in connection with the defendant’s failure to transfer 4,000,000
common shares of the Company beneficially owned by the company’s Chairman and CEO and pledged by the Company’s Chairman
to secure payment of a promissory note issued by an unaffiliated third party (Note 11).
On
October 24, 2012 a settlement agreement was executed the terms of which require the litigation being dismissed with prejudice
by Rick Plote, the grant to both of the Company and the Company’s Chairman of a waiver and release of and from all claims
by Plote and certain third parties, the grant to Plote and certain third parties of a waiver and release of and from all claims
by the Company and the Company’s Chairman. The grant of waiver and release by the Company to Plote and certain third parties
is the sole obligation imposed on the Company by the settlement agreement.
Between
October 19, 2012 and December 12, 2012 the Company:
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(a)
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Amended
the terms and conditions of $60,000 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 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.
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(b)
|
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Amended
the terms and conditions of $80,000 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 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.
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On
October 19, 2012 the Company issued 8,635,222 Common Shares in satisfaction of $9,000 of outstanding convertible indebtedness
On
October 19, 2012 the Company issued 5,756,000 Common Shares in satisfaction of $6,000 of outstanding convertible indebtedness
On
November 2, 2012 the Company issued 17,500,000 Common Shares in satisfaction of $5,000 of outstanding indebtedness
On
November 8, 2012 the Company issued 15,964,912 Common Shares in satisfaction of $9,100 of outstanding convertible indebtedness
On
November 9, 2012 the Company issued 14,158,067 Common Shares in satisfaction of $8,179 of outstanding convertible indebtedness
On
November 9, 2012 the Company issued 17,500,000 Common Shares in satisfaction of $5,000 of outstanding indebtedness
On
November 14, 2012 the Company issued 32,000,000 Common Shares in satisfaction of $17,600 of outstanding convertible indebtedness
On
November 19, 2012 the Company issued 16,000,000 Common Shares in satisfaction of $5,600 of outstanding convertible indebtedness
On
November 21, 2012 the Company issued 17,500,000 Common Shares in satisfaction of $5,000 of outstanding indebtedness
On
November 29, 2012 the Company issued 46,212, 122 Common Shares in satisfaction of $15,250 of outstanding convertible indebtedness
On
November 29, 2012 the Company issued 30,303,030 Common Shares in satisfaction of $10,000 of outstanding convertible indebtedness
On
November 29, 2012 the Company issued 14,452,111 Common Shares in satisfaction of $5,000 of outstanding convertible indebtedness
On
December 10, 2012 the Company issued 30,303,030 Common Shares in satisfaction of $10,000 of outstanding convertible indebtedness
On
December 12, 2012 the Company issued 57,159,091 Common Shares in satisfaction of $12,575 of outstanding convertible indebtedness
On
December 12, 2012 the Company issued 9,242,425 Common Shares pursuant to contractual obligations to debt holders.
On
November 27, 2012 the Company amended its certificate of incorporation by amending Article 4 to be and read as follows:
"FOURTH.
The total number of shares of stock which this corporation is authorized to issue is:
Two
Billion (2,000,000,000) shares of Common Studs with a par value of $0.0001 each; and Twenty Million (20,000,000) shares
of Preferred Stock with a par value of $0.0001 each, Two Hundred Thousand (200,000) shares of Non Voting Preferred Stock with
a par value of $1.00 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.
The
Common Stock authorized by this Certificate of Incorporation may be issued from time to time in one or more series. The Board
of Directors of the Corporation shall have the full authority permitted by law to establish one or more series and the number
of shares constituting each such series and to fix by resolution full or limited, multiple or fractional, or no voting rights,
and such designations, preferences, qualifications, privileges, limitations, restrictions, options, conversion rights and other
special or relative rights of any series of the Common Stock that may be desired. Subject to the limitation on the total number
of shares of Common Stock which the Corporation has authority to issue hereunder, the Board of Directors is also authorized to
increase or decrease the number of shares of any series, subsequent to the issue of that series, but not below the number of shares
of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares
of such series.
The
Preferred Stock authorized by this Certificate of Incorporation may be issued from time to time in one or more series. The Board
of Directors of the Corporation shall have the full authority permitted by law to establish one or more series and the number
of shares constituting each such series and to fix by resolution full or limited, multiple or fractional, or no voting rights,
and such designations, preferences, qualifications, privileges, limitations, restrictions, options, conversion rights and other
special or relative rights of any series of the Preferred Stock that may be desired. Subject to the limitation on the total number
of shares of Preferred Stock which the Corporation has authority to issue hereunder, the Board of Directors is also authorized
to increase or decrease the number of shares of any series, subsequent to the issue of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares
of such series.”
NOTE
15. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
On
September 9, 2013 the Company determined that certain items included within the Company’s Consolidated Statement of Cash
Flows for the year ended September 30, 2012 and for the period from inception to September 30 2012 constituted noncash activities
which do not affect Net Income and these items have been eliminated from the Company’s Statements of Cash Flows for the
periods below indicated.
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Consolidated
Statement of Cash Flows for
the year ended September 30
2012
CASH
FLOWS FROM OPERATING ACTIVITIES
|
As
originally
presented
(42,740,362)
|
Elimination
(41,314,361)
Increase
(Decrease) in Other Comprehensive Income
|
As
Restated
(1,426,001)
|
|
|
|
|
|
|
Consolidated
Statement
of
Cash
Flows
from
inception
to
September
30
2012
CASH
FLOWS FROM OPERATING ACTIVITIES
|
As
originally
presented
(49,510,595)
|
Elimination
(41,364,361)
Increase
(Decrease) in Other Comprehensive Income
|
As
Restated
(8,146,234)
|
|
|
|
|
|
|
Consolidated
Statement of Cash Flows for
the year ended September 30
2012
CASH
FLOWS FROM FINANCING ACTIVITIES
|
As
originally
presented
42,794,994
|
Elimination:
41,336,361
(Increase)
Decrease in Investment in Subsidiary
Elimination:
(22,000)
(Increase)
Decrease in Securities available for Sale
|
As
Restated
1,480,633
|
|
|
|
|
|
|
Consolidated
Statement
of
Cash
Flows
from
inception
to
September
30
2012
CASH
FLOWS FROM FINANCING ACTIVITIES
|
As
originally
presented
49,593,214
|
Elimination
41,336,361
Increase
(Decrease) in
Investment
in Subsidiary
Elimination:
28,000
(Increase)
Decrease in Securities available for Sale
|
As
Restated
8,228,853
|