SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

   

Quarterly Report under Section 13 or 15 (d) of

Securities Exchange Act of 1934

 

For Period ended June 30, 2014

 

Commission File Number 0-32201

 

BIO-MATRIX SCIENTIFIC GROUP, INC.

(Exact name of registrant as specified in its charter)

 

   
DELAWARE 33-0824714
(State of Incorporation) (I.R.S. Employer Identification No.)
   
4700 Spring Street, Suite 304, La Mesa, California 91942
(Address of Principal Executive Offices) (Zip Code)

 

(619) 702-1404

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

☐  Large accelerated filer ☐  Accelerated filer
☐  Non-accelerated filer ☑  Smaller reporting company

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes ☑   No    ☐

 

There were 2,951,045,145 shares of Common Stock outstanding as of June 30, 2014.

 

 
 

 

PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

 

 

BIOMATRIX SCIENTIFIC GROUP, INC.        
(A Development Stage Company)        
CONSOLIDATED BALANCE SHEET        
    As Of   As Of
    June 30,   September 30,
    2014   2013
    (unaudited)    
ASSETS        
CURRENT ASSETS                
Cash     99,054       116,714  
Prepaid Expenses     15,000       15,000  
Note Receivable     2,222          
Interest Receivable     14          
     Total Current Assets     116,290       131,714  
                 
PROPERTY & EQUIPMENT (Net of Accumulated Depreciation)                
                 
OTHER ASSETS                
Deposits     4,200       4,200  
Deferred Financing Costs     0       65,000  
Available for Sale Securities     5,000       7,000  
Total Other Assets     9,200       76,200  
                 
TOTAL ASSETS     125,490       207,914  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES                
Accounts Payable     144,474       138,572  
Notes Payable     383,731       219,372  
Bank Overdraft     0       0  
Accrued Payroll     547,094       612,094  
Accrued Payroll Taxes     49,887       45,386  
Accrued Interest     262,747       239,829  
Accrued Expenses     5,000       5,000  
Convertible Note Payable Net of  Unamortized Discount     97,701       98,701  
Due to Affiliate     0       34,895  
Current portion, note payable to affiliated party     1,000       1,000  
Due to Shareholder     100,000          
     Total Current Liabilities     1,591,634       1,394,849  
                 
Total Liabilities     1,591,634       1,394,849  
                 
STOCKHOLDERS' EQUITY (DEFICIT)                
                 
Preferred Stock ($.0001 par value) 20,000,000 shares authorized;                
20,000,000 shares authorized; 2,063,821  issues and outstanding as of                
    September 30, 2013 and June 30, 2014     207       207  
Series AA Preferred ($0.0001 par value)  100,000 shares autorized                
 94,852 issued and outstanding as of September 30, 2013 and                
June 30, 2014     9       9  
Series AAA Preferred ($0.0001 par value) 1,000,000 shares authorized                
40,000 shares issued and outstanding as of September 30, 2013 and June 30, 2014     4       4  
Series B Preferred Shares ($.0001 par value) 2,000,000 shares authorized;                
   725,409 issued and outstanding as of September 30, 2013 and                
 June 30 , 2014 respectively     73       73  
Common Stock ($.0001 par value) 5,000,000,000 shares authorized;                
   2,390,304,145   and   2,951,045,145 issued and outstanding as of                
 September 30, 2013 and  June 30 , 2014 respectively     295,099       239,029  
Non Voting Convertible Preferred Stock ($1 Par value)                
200,000 shares authorized; 0 shares  issued and outstanding                
as of September 30, 2013 and June 30, 2014                
Additional Paid in capital     16,167,486       14,845,671  
Contributed Capital     509,355       509,355  
Retained Earnings (Deficit) accumulated during the development stage     22,845,424       24,542,314  
Accumulated Other Comprehensive Income (Loss)     (41,331,361 )     (41,329,361 )
Total Stockholders' Equity (Deficit)Biomatrix Scientific Group, Inc.     (1,513,704 )     (1,192,699 )
Noncontrolling Interest in subsidiary     47,560       5,765  
Total Stockholders' Equity     (1,466,144 )     (1,186,934 )
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)     125,490       207,914  

The Accompanying Notes are an Integral Part of These Financial Statements.  

 
 

 

BIO MATRIX SCIENTIFIC GROUP,INC            
(A Development Stage Company)            
CONSOLIDATED STATEMENT OF OPERATIONS            
               
               
                                                 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)  
    3 months ended 3 months ended 9 months ended 9 months ended From inception through  
    June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 June 30, 2014  
               
               
REVENUES   0 0 0 0 0  
               
COST AND EXPENSES            
  Research and Development 0 3,000 13,867 9,509 1,296,262  
  General and Administrative 132,975 196,444 459,411 1,170,092 8,676,352  
  Depreciation and Amortization         2,668  
  Consulting and Professional Fees 39,995 51,703 147,998 123,022 5,372,419  
  Impairment of Goodwill and Intangibles         34,688  
  Total Costs and Expenses 172,970 251,147 621,276 1,302,623 15,382,389  
               
OPERATING LOSS (172,970) (251,147) (621,276) (1,302,623) (15,382,389)  
               
OTHER INCOME & (EXPENSES)            
  Interest Expense (8,981) (12,321) (26,388) (32,239) (486,554)  
  Loss on Early Extinguishment of Debt 0 0 0 0 (41,688)  
  Loss on Settlement of Debt through Equity Issuance 0 0 (984,730) 0 (984,730)  
  Interest Expense attributable to            
     amortization of discount 0 (15,321) 0 (446,858) (829,709)  
  Interest Income 14 0 14 0 320  
  Securities issued pursuant to contractual            
  obligations 0 0 0 (35,223) (101,595)  
  Other Income 490 0 490 0 237,406  
  Gain on de-consolidation of subsidiary 0 0 0 0 41,645,688  
  Loss on sale of Available for Sale Securities 0 0 0 0 (487,900)  
  Loss on disposal of Equipment 0 0 0 0 (531,571)  
  Other Expense (65,000) 0 (65,000) 0 (65,166)  
Total Other Income & (Expense) (73,477) (27,642) (1,075,614) (514,320) 38,354,501  
               
NET INCOME (LOSS) (246,447) (278,789) (1,696,890) (1,816,943) 22,972,112  
before loss attributable to noncontrolling interest in Entest            
Biomedical, Inc. and equity in subsidiary losses            
(Net Income) Loss attributable to            
     noncontrolling interest in Entest Biomedical, Inc. 0 0 0 0 536,961  
NET INCOME (LOSS) before            
  equity in subsidiary losses (246,447) (278,789) (1,696,890) (1,816,943) 23,509,073  
Equity in Net Income (Loss)            
  of Entest 0 0 0 0 (663,649)  
               
               
NET INCOME (LOSS) (246,447) (278,789) (1,696,890) (1,816,943) 22,845,424  
Less: (Net Income)Loss attributable to noncontrolling            
  interest Regen Biopharma, Inc. 66,388 0 144,927 0 153,760  
               
NET INCOME (LOSS) available to common shareholders (180,059) (278,789) (1,551,963) (1,816,943) 22,999,184  
               
               
BASIC  AND FULLY DILUTED (0.0001) (0.0002)  $           (0.0006) (0.0016)    
   EARNINGS (LOSS)            
Weighted average number of            
   shares outstanding 2,951,045,145 1,776,048,314 2,819,220,513 1,154,891,111    
               

The Accompanying Notes are an Integral Part of These Financial Statements.

 

BIO-MATRIX SCIENTIFIC GROUP, INC.            
(A Development Stage Company)            
CONSOLIDATED STATEMENT OF CASH FLOWS            
             
             
             
             
    (unaudited)   (unaudited)   (unaudited)
    Nine  Months Ended   Nine  Months Ended   From inception
    June 30, 2014   June 30, 2013   to June 30, 2014
             
CASH FLOWS FROM OPERATING ACTIVITIES                        
                         
Net Income (loss)   $ (1,696,890 )   $ (1,816,943 )   $ 22,845,424  
Adjustments to reconcile net Income to net cash                        
(used in) provided by operating activities:                        
Depreciation expense     0       0       2,667  
Stock issued for compensation to employees     0       43,800       1,289,551  
Stock issued for services rendered by consultants     380       0       4,250,070  
Stock issued for prepaid expenses     0       0       313,665  
Stock issued for interest     3,570       4,640       147,152  
Stock issued for expenses     48,000       640,000       688,000  
                         
Gain Recognized on Deconsolidation of subsidary     0       0       (42,000,000 )
                         
Changes in operating assets and liabilities:                        
(Increase) decrease in prepaid expenses     0       0       (15,000 )
Increase (Decrease) in Accounts Payable     5,902       6,026       144,475  
Increase (Decrease) in Accrued Expenses     (37,581 )     250,880       894,664  
Increase (Decrease) in bank Overdraft     0       47       0  
(Increase) Decrease  in Interest Receivable     (14 )     0       (14 )
Increase (Decrease) in Due to Affiliate     (34,895 )     (4,245 )     0  
Equity in Loss of Entest     0       0       663,649  
(Increase) Decrease  in Note Receivable     (2,222 )     0       (2,222 )
(Increase) Decrease in Gain on cancellation of stock     0       0       (25,000 )
                         
                         
Net Cash Provided by (Used in) Operating                        
Activities     (1,713,750 )     (875,795 )     (10,802,919 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES                        
( Increase) Decrease in Other Assets     0       0       (4,200 )
Purchases of fixed assets     0       0       (541,536 )
Disposal of Fixed Assets     0       0       7,300  
Loss on Disposal of Equipment     0       0       531,569  
Net Cash Provided by (Used in) Investing                        
Activities     0       0       (6,867 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES                        
Preferred Stock issued for Cash     0       0       874,985  
Common Stock issued for cash     0       0       621,164  
Common Stock issued for Accrued Salaries     0       116,452       540,952  
Preferred Stock issued for Accrued Salaries     0       10,000       10,000  
Common Stock issued pursuant to Contractual                        
  Obligations     0       35,223       101,595  
Additional paid in Capital     300,000       390,000       1,652,945  
Principal borrowings on Convertible Debentures     0       446,858       1,261,179  
Principal borrowings (repayments) on notes and                        
  Convertible Debentures     246,360       (188,208 )     3,055,741  
Net Borrowings From Related Parties     0       0       1,195,196  
Contributed Capital     0       0       509,353  
Increase (Decrease) in Notes from Affiliated party     0       0       1,000  
(Increase) Decrease in Deferred Financing Costs     65,000       0       0  
Loss on Settlement of Debt through Equity Issuance     984,730       0       984,730  
Increase (Decrease) in Due to shareholder     100,000       0       100,000  
                         
Net Cash Provided by (Used in) Financing                        
Activities     1,696,090       810,325       10,908,840  
                         
Net Increase (Decrease) in Cash     (17,660 )     (65,470 )     99,054  
                         
Cash at Beginning of Period   $ 116,714     $ 75,752     $ —    
                         
Cash at End of Period   $ 99,054     $ 10,282     $ 99,054  
                         
Supplemental Disclosure of Noncash investing and financing activities:                        
Common Shares Issued for Debt   $ 83,000     $ 792,179     $ 2,924,289  
Common Shares Issued for Nonvoting Preferred                   $ 75,000  

The Accompanying Notes are an Integral Part of These Financial Statements.  

 
 

BIO-MATRIX SCIENTIFIC GROUP, INC.       
(A Development Stage Company)        
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME    
(unaudited)          
           
      Quarter ended    Quarter ended 
      June 30, 2014   June 30, 2013
           
  Net Income   (246,447)   (278,789)
  Add:        
  Unrealized Gains        
  on Securities   (6,000)   (11,000)
  Less:        
  Unrealized Losses        
  on Securities        
  Total Other Comprehensive Income (Loss) (6,000)   (11,000)
  Comprehensive Income   (252,447)   (289,789)
           
           
      Nine Months ended    Nine Months ended 
      June 31, 2014   June 31, 2013
           
  Net Income   (1,696,890)   (1,816,843)
  Add:        
  Unrealized Gains        
  on Securities     2,000
  Less:        
  Unrealized Losses        
  on Securities    (2,000)    
  Total Other Comprehensive Income (Loss) (2,000)   2,000
  Comprehensive Income   (1,698,890)   (1,814,843)
           

The Accompanying Notes are an Integral Part of These Financial Statements.  

 
 

 

BIO-MATRIX SCIENTIFIC GROUP, INC.

Notes to consolidated Financial Statements

As of June 30, 2014

 

 

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by Bio-Matrix Scientific Group Inc. (“the Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated interim financial statements be read in conjunction with the financial statements of the Company for the period ended September 30, 2013 and notes thereto included in the Company's 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

 

 

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 58% 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 58% owned subsidiary (Regen) and Entest BioMedical, Inc., (“Entest”), a Nevada corporation which was a majority owned subsidiary 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 June 30, 2014 consisted of Securities Available for Sale consisting of 10,000,000 shares of Entest Biomedical, Inc and a Note Receivable from Entest Biomedical, Inc. for $2,222 .  The fair value of Securities Available for sale as of June 30, 2014 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. The fair value of the Note Receivable was valued according to Level 3 input.

 

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 June 30, 2014 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 year ended September 30, 2013 and the quarter ended June 30, 2014 respectively.

 

NOTE 2 .   RECENT ACCOUNTING PRONOUNCEMENTS

 

The following accounting standards updates were recently issued and have not yet been adopted by us. These standards are currently under review to determine their impact on our consolidated financial position, results of operations, or cash flows.

 

On January 31, 2013, the FASB issued Accounting Standards Update [ASU] 2013-01, entitled Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The guidance in ASU 2013-01 amends the requirements in the FASB Accounting Standards Codification [FASB ASC] Topic 210, entitled Balance Sheet. The ASU 2013-01 amendments to FASB ASC 210 clarify that ordinary trade receivables and receivables in general are not within the scope of ASU 2011-11, entitled Disclosure about Offsetting Assets and Liabilities, where that ASU amended the guidance in FASB ASC 210. As those disclosures now are modified with the ASU 2013-01 amendments, the FASB ASC 210 balance sheet offsetting disclosures now clearly are applicable only where reporting entities are involved with bifurcated embedded derivatives, repurchase agreements, reverse repurchase agreements, and securities borrowing and lending transactions that either are offset using the FASB ASC 210 or 815 requirements, or that are subject to enforceable master netting arrangements or similar agreements. ASU 2013-01 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of this ASU is not expected to have a material impact on our financial statements.

 

On February 28, 2013, the FASB issued Accounting Standards Update [ASU] 2013-04, entitled Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The ASU 2013-04 amendments add to the guidance in FASB Accounting Standards Codification [FASB ASC] Topic 405, entitled Liabilities and require reporting entities to measure obligations resulting from certain joint and several liability arrangements where the total amount of the obligation is fixed as of the reporting date, as the sum of the following:

 

The amount the reporting entity agreed to pay on the basis of its arrangement among co-obligors.

 

Any additional amounts the reporting entity expects to pay on behalf of its co-obligors.

 

While early adoption of the amended guidance is permitted, for public companies, the guidance is required to be implemented in fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments need to be implemented retrospectively to all prior periods presented for obligations resulting from joint and several liability arrangements that exist at the beginning of the year of adoption. The adoption of ASU 2013-04 is not expected to have a material effect on the Company’s operating results or financial position.

 

On April 22, 2013, the FASB issued Accounting Standards Update [ASU] 2013-07, entitled Liquidation Basis of Accounting. With ASU 2013-07, the FASB amends the guidance in the FASB Accounting Standards Codification [FASB ASC] Topic 205, entitled Presentation of Financial Statements. The amendments serve to clarify when and how reporting entities should apply the liquidation basis of accounting. The guidance is applicable to all reporting entities, whether they are public or private companies or not-for-profit entities. The guidance also provides principles for the recognition of assets and liabilities and disclosures, as well as related financial statement presentation requirements. The requirements in ASU 2013-07 are effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods within those annual periods. Reporting entities are required to apply the requirements in ASU 2013-07 prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The adoption of ASU 2013-07 is not expected to have a material effect on the Company’s operating results or financial position.

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. OPTIONS AND WARRANTS

 

As of June 30, 2014 the Company has no options or warrants outstanding.

 

NOTE 4. 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 $18,136,615 (excluding $663,649 of Equity in Net Losses of Entest Biomedical, Inc. recognized) during the period from August 2, 2005 (inception) through June 30, 2014. 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.

 

During the quarter ended June 30, 2014 the Company incurred net borrowings of $12,094 such funds being borrowed from David Koos, the Company’s Chairman and Chief Executive Officer.

 

NOTE 5. INCOME TAXES

 

As of June 30, 2014

 

Deferred tax assets:      
Net operating tax carry forwards   $ 6,179,578  
Other     -0-  
Gross deferred tax assets     6,179,578  
Valuation allowance     (6,179,578 )
         
Net deferred tax assets   $ -0-  

 

As of June 30,  2014 the Company has a  Deferred Tax Asset of  $6,179,578 completely attributable to net operating loss carry forwards  of approximately $18,175,231 ( 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) $18,136,615   attributable to Bio-Matrix Scientific Group, Inc. a Delaware corporation, BMSG and Regen. 

 

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.

 

Income tax is calculated at the 34% Federal Corporate Rate.

 

NOTE 6. RELATED PARTY TRANSACTIONS

 

As of June 30, 2014 the Company is indebted to David Koos, the Company’s Chairman and Chief Executive Officer, in the amount of $183,731. 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 as of that date.  As of June 30, 2014 the amount due to Entest is $0 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 7. NOTES PAYABLE

 

    June 30, 
2014
  September  30, 2013
                 
Dunhill Ross Partners, Inc. ( formerly Venture Bridge Advisors)     0       82,000  
The Sherman Family Trust     200,000          
David Koos (Note 6)     183,731       137,372  
Notes payable   $ 383,731     $ 219,372  

 

Dunhill Ross Partners, Inc. has provided a line of credit to the Company in the amount of $700,000 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 this line of credit bears 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 and bear simple interest at a rate of 15% per annum.

 

All amounts due to the Sherman Family Trust bear no interest and are due and payable, in whole or in part, at the option of the holder. 

 

NOTE 8. STOCKHOLDERS' EQUITY

 

The stockholders' equity section of the Company contains the following classes of capital stock as of June 30, 2014:

 

Preferred stock, $0.0001 par value; 20,000,000 shares authorized:

 

2,063,821 Preferred Shares, par value $0.0001, 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, par value $0.0001, 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.

 40,000 Series AAA Preferred Shares, par value $0.0001, 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 forty thousand (40,0000).

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, Par Value $0.0001, 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, 0 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; 5,000,000,000 shares authorized: 2,951,045,145 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 9. CONVERTIBLE DEBENTURES

 

At June 30, 2014, the following convertible debentures remain outstanding:

 

 

(a) $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. 

 

(b) $17,000 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.

 

 

Convertible Debentures described in (a) and (b) are currently due and payable. The holders have not made a demand for payment

 

As of June 30, 2014 the Aggregate Amount of Convertible Debentures outstanding was $97,701 and the Aggregate Amount of Unamortized discount was $0.  

NOTE 10. COMMITMENTS AND CONTINGENCIES

On April 12, 2013 a complaint (Complaint) was filed in the U.S. District Court Southern District of the State of new York against the Company, the Company’s Chairman and Does 1-50 by Star city Capital, LLC (“Plaintiff”) alleging securities fraud, common law fraud, negligent misrepresentation, breach of fiduciary duties and breach of contract in connection with the issuance of. The Plaintiff is also request declaratory relief from the Court.

The action arises from the issuance and subsequent cancellation of 103,030,303 of the company’s common shares in satisfaction of $17,000 of convertible indebtedness of the Company held by the Plaintiff. The Plaintiff alleges that a cancellation notice sent by them to the Company’s transfer agent was meant to instruct the Transfer Agent simply to cancel the physical certificate in order that an equivalent number of shares may be transferred via DWAC to the Plaintiff’s stockbroker for the benefit of the Plaintiff. DWAC is the acronym for Deposit/Withdrawal At Custodian. The DWAC transaction system run by The Depository Trust Company (a.k.a. DTC or CEDE & CO) permits brokers and custodial banks, the DTC participants, to request the movement of shares to or from the issuer’s transfer agent electronically. A DWAC results in the crediting or debiting of shares to or from DTC’s book-entry account on the records of the issuer maintained by the transfer agent.

The Company believes that the cancellation notice sent by the Plaintiff clearly represents a cancellation of the conversion notice itself.

The convertible indebtedness held by the Plaintiff is convertible at Holder’s demand into the common shares of the Company’s stock 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 and the Plaintiff had agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. There can be no assurance that a subsequent conversion notice for the same amount of indebtedness issued by the Plaintiff would convert into 103,030,303 of the company’s common shares.

On August 21, 2012 the Company entered into a settlement funding agreement with Princeton Research, Inc. and Jan Vandersande (collectively the “PRI Parties”) which obligates the Company to pay the PRI Parties $1,000 a month over thirty months.

 

NOTE 11. 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 as of June 30, 2014.

 

NOTE 12. SUBSEQUENT EVENTS

 

On July 1, 2014 the Company issued 45,000,000 shares of its common stock for consideration of $100,000.

 

 
 

 

 

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

CERTAIN FORWARD-LOOKING INFORMATION

 

Information provided in this Quarterly report on Form 10Q may contain forward-looking statements within the meaning of Section 21E or Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's expectations or beliefs, including, but not limited to, statements concerning future and operating results, statements concern industry performance, the Company's operations, economic performance, financial conditions, margins and growth in sales of the Company's products, capital expenditures, financing needs, as well assumptions related to the forgoing. For this purpose, any statements contained in this Quarterly Report that are not statement of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including the Company's most recent Form 10Kfor the year ended September 30, 2013. All references to” We”, “Us”,  “Company” or the “Company” refer to Bio-Matrix Scientific Group, Inc.

 

Material Changes in Financial Condition:

 

As of June 30, 2014 we had Cash on Hand of $99,054 and as of September 30, 2013 we had Cash on Hand of $ 116,714

 

The decrease in Cash on Hand of approximately 15 % is primarily attributable to:

 

  (a) The sale during the quarter ended December 31, 2013 of 300,000 newly issued common shares of Regen Biopharma, Inc. for proceeds of $300,000.
  (b) Net loans totaling $16,565 made by David Koos, the Company’s Chairman and Chief Executive Officer, to the Company during the quarter ended December 31, 2013.
  (c)

Net loans totaling $17,700 made by David Koos, the Company’s Chairman and Chief Executive Officer, to the Company during the quarter ended March 31, 2014.

  (d) Net Loans totaling $12,094 made by David Koos, the Company’s Chairman and Chief Executive Officer, to the Company during the quarter ended June 30, 2014.
  (e) The payment of $100,000 for the purchase of 45,000,000 shares of the Company’s common stock during the quarter ended June 30, 2014.

Offset By:

 

  (a) Payments of $34,895 made to or on behalf of Entest Biomedical, Inc.

 

  (b)

Funds expended in the ordinary course of business.

(2) $2,222 loaned to Entest Biomedical, Inc.

 

As of June 30, 2014 we had a Note Receivable of $2, 222 and as of September 30, 2013 we had a Note Receivable of $0.

 

The increase in Notes Receivable of 100% is attributable to $2,222 loaned to Entest Biomedical, Inc.by Regen Biopharma , Inc.

 

As of June 20, 2014 we had Deferred Financing Costs of $0 and as of September 30, 2013 we had Deferred Financing Costs of $65,000.

 

The decrease in Deferred Financing Costs of 100% is attributable to the expiration of the commitment period for that Equity Purchase Agreement and Registration Rights Agreement entered into by and between the Company and Southridge Partners II, LP.

 

As of June 30, 2014 we had Available for Sale Securities of $5,000 and as of September 30, 2013 we had Available for Sale Securities of $7,000. The decrease in Available for Sale Securities of approximately 28% is primarily attributable to remeasurement based on unrealized gain.

 

 

As of June 30, 2014 we had Notes Payable of $ 383,731 and as of September 30, 2013 we had Notes Payable of $ 219,372.

 

This increase of approximately 69% is primarily attributable to:

 

  (a) Net Loans of $45,237 made to the Company by the Company’s Chairman and Chief Executive Officer
  (b) The reclassification of $200,000 of Accrued Salary to Note Payable.

 

Offset by:

 

The satisfaction of $83,000 of principal indebtedness through the issuance of the Company’s common stock. 

 

As of June 30, 2014 we had Accrued Payroll of $547,094 and as of September 30, 2013 we had Accrued Payroll of $ 612,094.

 

The decrease in Accrued Payroll of approximately 11% is primarily attributable to the reclassification of $200,000 of salaries accrued but unpaid as Notes payable offset by compensation expenses incurred during the nine months ended June 30, 2014 with regards to the salaries of David Koos ( our CEO), and Thomas Ichim (who is employed by Regen) which remain unpaid as of June 30, 2014.

 

As of June 30, 2014 we had Accrued Payroll Taxes of $ 49,887 and as of September 30, 2013 we had Accrued Payroll Taxes $45,386.

 

This increase of approximately 10% is primarily attributable to the net accrual of $4,501 of payroll taxes payable during the nine months ended June 30, 2014.

  

As of June 30, 2014 we had $ 0 in Amount Due to Affiliate and as of September 30, 2013 we had $34,895 in Amount Due to Affiliate. The decrease of 100% is attributable to payments of $34,895 made to or on behalf of Entest Biomedical, Inc. by the Company over the nine months ended June 30, 2014.

 

As of June 30, 2014 we had Accrued Interest of $ 262,747 and as of September 30, 2013 we had Accrued Interest of $239,829.

 

This increase of approximately 9.5 % is primarily attributable to interest on Notes payable and Convertible Notes payable accrued but unpaid over the nine months ended June 30, 2014.  

Material Changes in Results of Operations

 

Revenues were -0- for the quarter ending June 30, 2014 and -0- for the same quarter ending 2013. Net Losses were $246,447 for the three months ended June 30, 2014. Net Losses were $278,789 for the same quarter ending 2013 .The decrease in Net Loss of approximately 11% is primarily attributable to:

 

  (a) Higher general and administrative expenses and consulting expenses incurred over the quarter ended June 30, 2013 when compared to the same quarter ended 2014.
  (b) Higher interest expense incurred over the quarter ended June 30, 2013 when compared to the same quarter ended 2014.

 

  (c)

Higher Research and Development expenses and Consulting Fees incurred over the quarter ended June 30, 2013 when compared to the same quarter ended 2014.

  (d)  the recognition of $15,321 interest expense attributable to amortization of discount recognized during the quarter ended June 30, 2013. Offset by the recognition of $65,000 of expenses during the quarter ended June 30, 2014 related to the write of of previously capitalized financing costs.

 

Revenues were -0- for the nine months ending June 30, 2014 and -0- for the same period ending 2013. Net Losses were $ 1,696,890 for the nine months ended June 30, 2014. Net Losses were $1,816,943 for the same period ending 2013 . The decrease in Net Loss of approximately 6.6 % is primarily attributable to:

 

 

  (a) Higher general and administrative expenses incurred over the nine  months ended June 30, 2013 when compared to the same period ended 2014.
  (b) Higher interest expense incurred over the nine  months ended June 30, 2013 when compared to the same period ended 2014.
  (c) The recognition of $446,858 of Interest Expense Attributable to Amortization of Discount during the nine months ended June 30, 2013.

Offset by:

 

  (a) Higher Research and Development expenses and Consulting Fees incurred over the nine months ended June 30, 2014 when compared to the same period ended 2013.
  (b)

The recognition during the nine months ended June 30, 2014 of $984,730 of expenses attributable to the issuance of common stock for less than fair value in satisfaction of indebtedness of the Company

  (c) The recognition of $65,000 of expenses during the quarter ended June 30, 2014 related to the write of of previously capitalized financing costs

 

Liquidity and Capital Resources

 

As of June 30, 2014, we had $99,054 cash on hand and current liabilities of $1,591,634   such liabilities consisting primarily of Accounts Payable, Notes Payable, Expenses Accrued but not yet paid, Convertible Notes Payable and Amounts due to Shareholder.

 

We feel we will not be able to satisfy our cash requirements over the next twelve months and shall be required to seek additional financing.

 

During the nine months ended June 30, 2013 we satisfied our cash requirements primarily through borrowings from David Koos, the Company’s CEO, sale of the Company’s common shares for cash consideration and sale of the common shares of Regen Biopharma, Inc. for cash consideration. There can also be no assurance given by the Company that funds will continue to be lent to the Company by David Koos or that the Company will be successful in selling either its own or its subsidiary’s securities in the future.

 

The Company plans to meet cash needs through applying for governmental and non-governmental grants as well as selling its securities for cash. Management has yet to decide what type of offering the Company will use or how much capital the Company will raise. There is no guarantee that the Company will be able to raise any capital through any type of offerings. Management can give no assurance that any governmental or non-governmental grant will be obtained by the Company despite the Company’s best efforts. As of February 19, 2014 Regen BioPharma, Inc , a majority owned subsidiary of the Company, has identified the National Heart Lung and Blood Institute Clinical Trial Pilot Studies (R34) grant which provides up to $450,000 in funding over a period of three years as well as the Omnibus Solicitation of the NIH for Small Business Technology Transfer Grant Applications administered by the Small Business Innovation Research (SBIR) program of the National Institute of Health as grants for which the Company intends to apply.

 

We cannot assure that we will be successful in obtaining additional financing necessary to implement our business plan. We have not received any commitment or expression of interest from any financing source that has given us any assurance that we will obtain the amount of additional financing in the future that we currently anticipate. For these and other reasons, we are not able to assure that we will obtain any additional financing or, if we are successful, that we can obtain any such financing on terms that may be reasonable in light of our current circumstances. We were not party to any material commitments for capital expenditures as of the end of the quarter ended June 30, 2014. Other than what is disclosed in this document, The Company is unaware of any trends, demands or uncertainties that will result in the Company’s liquidity increasing or decreasing in any material way. 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, as defined by Rule 229.10(f) (1) of Regulation S-K, we are not required to provide the information required by this Item. We have chosen to disclose, however, that we have not engaged in any transactions, issued or bought any financial instruments or entered into any contracts that are required to be disclosed in response to this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of David Koos, who is the Company's Principal Executive Officer/Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Principal Executive Officer/Principal Financial Officer has concluded that the Company's disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the period covered.

 

Changes in Internal Controls over Financial Reporting

 

In connection with the evaluation of the Company's internal controls during the period commencing on April 1, 2014 and ending June 30, 2014, David Koos, who is both the Company's Principal Executive Officer and Principal Financial Officer has determined that there were no changes to the Company's internal controls over financial reporting that have been materially affected, or is reasonably likely to materially effect, the Company's internal controls over financial reporting.  

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On April 12, 2013 a complaint (Complaint) was filed in the U.S. District Court Southern District of the State of new York against the Company, the Company’s Chairman and Does 1-50 by Star city Capital, LLC (“Plaintiff”) alleging securities fraud, common law fraud, negligent misrepresentation, breach of fiduciary duties and breach of contract in connection with the issuance of . The Plaintiff is also request declaratory relief from the Court.

The action arises from the issuance and subsequent cancellation of 103,030,303 of the company’s common shares in satisfaction of $17,000 of convertible indebtedness of the Company held by the Plaintiff. The Plaintiff alleges that a cancellation notice sent by them to the Company’s transfer agent was meant to instruct the Transfer Agent simply to cancel the physical certificate in order that an equivalent number of shares may be transferred via DWAC to the Plaintiff’s stockbroker for the benefit of the Plaintiff. DWAC is the acronym for Deposit/Withdrawal At Custodian. The DWAC transaction system run by The Depository Trust Company (a.k.a. DTC or CEDE & CO) permits brokers and custodial banks, the DTC participants, to request the movement of shares to or from the issuer’s transfer agent electronically. A DWAC results in the crediting or debiting of shares to or from DTC’s book-entry account on the records of the issuer maintained by the transfer agent.

The Company believes that the cancellation notice sent by the Plaintiff clearly represents a cancellation of the conversion notice itself.

The convertible indebtedness held by the Plaintiff is convertible at Holder’s demand into the common shares of the Company’s stock 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 and the Plaintiff had agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. There can be no assurance that a subsequent conversion notice for the same amount of indebtedness issued by the Plaintiff would convert into 103,030,303 of the company’s common shares.

Although the Company believes this legal action has no merit, it is not possible to predict the ultimate outcome of this legal action.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

On July 1, 2014 the Company Issued 45,000,000 Common Shares (“Shares”) for consideration of $100,000.

 

The Shares were issued pursuant to Section 4(a) (2) of the Securities Act of 1933, as amended (the “Act”). No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares. A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares. The funds received were utilized for general corporate purposes. 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

  

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

Item 5. OTHER INFORMATION

 

None

 

Item 6. EXHIBITS

  

31.1 Certification of Chief Executive Officer
31.2 Certification of Acting Chief Financial Officer
32.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Acting Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
10.1 Note receivable from Entest Biomedical, Inc.
 

 

 
 

   

SIGNATURES

 

In accordance with the requirements of the Exchange Act, Bio-Matrix Scientific Group Inc. caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  Bio-Matrix Scientific Group, Inc.
   
Date: August 11, 2014  By: /s/ David R. Koos
    David R. Koos
Chief Executive Officer