Notes
to Financial Statements
As
of June 30, 2016
The
accompanying unaudited interim condensed consolidated financial statements of Regen Biopharma , Inc. (“Regen” or “the
Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America
and the rules of the United States Securities and Exchange Commission (“SEC”), and should be read in conjunction with
the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K
for the year ended September 30, 2015. In general, interim disclosures do not repeat those contained in the annual statements.
In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of
financial position and the results of operations for the interim periods presented have been reflected herein. The results of
operations for interim periods are not necessarily indicative of the results to be expected for the full year.
NOTE
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
Company was organized April 24, 2012 under the laws of the State of Nevada. The Company is a controlled subsidiary of Bio-Matrix
Scientific Group, Inc, (“BMSN”) a Delaware corporation.
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.
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.
C.
CASH EQUIVALENTS
The
Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
D.
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.
E.
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.
F.
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, 2016 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.
G.
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.
H.
ADVERTISING
Costs
associated with advertising are charged to expense as incurred. Advertising expenses were $0 for the three months ended June 30,
2016 and $0 for the three months ended June 30, 2015.
NOTE
2.
RECENT ACCOUNTING PRONOUNCEMENTS
In
June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial
reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments
in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities.
The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement
for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder
equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the
entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other
entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted
this standard.
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.
In
May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition
standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard
eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based
approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting
periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted
for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this
pronouncement, however it believes that there will be no material effect on the consolidated financial statements.
In
June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting
for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service
Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service
period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation —
Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation
cost would be recognized over the required service period, if it is probable that the performance condition will be achieved.
The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods.
Early adoption is permitted. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects
of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.
In
August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern
(Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally
accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing
financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under
this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes
imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30,
Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent,
there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the
amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events.
The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however,
at the current period, management does not believe that it has met the conditions which would subject these financial statements
for additional disclosure.
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.
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. GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated
net losses of $ 17,778,660 during the period from April 24, 2012 (inception) through June 30, 2016. 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. Management has yet to decide what type of offering the Company
will use or how much capital the Company will raise. During the quarter ended June 30, 2016 the Company raised $329,750 through
the issuance of equity securities for cash and $50,000 through the issuance of convertible debentures.
During
the nine months ended June 30, 2016 the Company raised $1,154,751 through the issuance of equity securities for cash and $150,000
through the issuance of convertible debentures.
NOTE
4. NOTES PAYABLE
|
|
June
30, 2016
|
|
|
|
|
|
David
Koos ( Note 8)
|
|
|
50
|
|
Bio
Technology Partners Business Trust
|
|
|
17,000
|
|
Bostonia
Partners
|
|
|
242,300
|
|
Blackbriar
Partners (Note 8)
|
|
|
10,097
|
|
Notes
payable
|
|
$
|
269,447
|
|
$50
lent to the Company by David Koos. is due and payable at the demand of the holder and bears simple interest at a rate of 15% per
annum.
$17,000
lent to the Company by Bio Technology Partners Business Trust. is due and payable at the demand of the holder and bears simple
interest at a rate of 10% per annum.
$60,000
lent to the Company by Bostonia Partners is due and payable September 16, 2016 and bears simple interest at a rate of 10% per
annum
$59,000
lent to the Company by Bostonia Partners is due and payable September 22, 2016 and bears simple interest at a rate of 10% per
annum.
$20,000
lent to the Company by Bostonia Partners is due and payable February 19, 2017 and bears simple interest at a rate of 10% per annum.
$30,000
lent to the Company by Bostonia Partners is due and payable February 24, 2017 and bears simple interest at a rate of 10% per annum.
$10,000
lent to the Company by Bostonia Partners is due and payable March 8, 2017 and bears simple interest at a rate of 10% per annum.
$63,300
lent to the Company by Bostonia Partners is due and payable May 10 2017 and bears simple interest at a rate of 10% per annum.
$3,000
lent to the Company by Blackbriar Partners is due and payable February 19, 2017 and bears simple interest at a rate of 10% per
annum.
$7,097
lent to the Company by Blackbriar Partners is due and payable May 9, 2017 and bears simple interest at a rate of 10% per annum.
NOTE 5.
CONVERTIBLE NOTES PAYABLE
On
March 8, 2016 (“Issue date”) the Company issued a Convertible Note (“Note”) in the face amount of $100,000
for consideration consisting of $100,000 cash. The Note pays simple interest in the amount of 8% per annum . The maturity of the
Note is three years from the issue date.
The
Lender shall have the right from time to time to convert all or a part of the outstanding and unpaid principal amount of this
Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified pursuant
to the following terms and conditions:
(a)
For the period beginning on the Issue Date and ending 365 days subsequent to the Issue Date (“Year 1”) a 50% discount
to the lowest Trading Price (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 or ten cents per share (whichever is greater).
(b)
For the period beginning one day subsequent to the final day of Year One and ending 365 days subsequent to Year One (“Year
2”) a 35% discount to the lowest Trading Price (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 or ten cents per share (whichever
is greater).
(c)
For the period beginning one day subsequent to the final day of Year 2 and ending 365 days subsequent to Year 2 (“Year 3”)
a 25% discount to the lowest Trading Price (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 or ten cents per share (whichever is greater).
(d)
“Trading Price” means the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the
“OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Lender (i.e.
Bloomberg) or, if the OTCQB is not the principal trading market for such security, the closing bid price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security
is available in any of the foregoing manners, 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 Lender. “Trading Day” shall mean any day on which the Common Stock is tradable for any period
on the OTCQB, or 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 by such Reporting Service.
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
Company shall have the right, exercisable on not less than five (5) Trading Days prior written notice to the Lender, to prepay
the outstanding Note in part or in full, including outstanding principal and accrued interest.
Upon
closing of a Transaction Event the Lender shall receive 0 .10% ( one tenth of one percent)of the consideration actually received
by the Company from an unaffiliated third party as a result of the closing of a Transaction Event.
“Transaction
Event” shall mean either of:
(a)
The sale by the Company of the Company’s proprietary NR2F6 intellectual property to an unaffiliated third party
(b)
The granting of a license by the Company to an unaffiliated third party granting that unaffiliated third party the right to develop
and/or commercialize the Company’s proprietary NR2F6 intellectual property
The
issuance of the Note amounted in a beneficial conversion feature of $42,600 which is amortized under the Interest Method over
the life of the Note. As of June 30, 2016 the unamortized discount on the convertible notes outstanding is $ 38,165. As of June
30, 2016 $100,000 of the principal amount of the Note remains outstanding.
The
amount by which the Note’s as converted value exceeds the principal amount as of June 30, 2016 is $10,000.
On
April 6, 2016 (“Issue date”) the Company issued a Convertible Note (“Note”) in the face amount of $50,000
for consideration consisting of $50,000 cash. The Note pays simple interest in the amount of 8% per annum . The maturity of the
Note is three years from the issue date.
The
Lender shall have the right from time to time to convert all or a part of the outstanding and unpaid principal amount of this
Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified pursuant
to the following terms and conditions:
(a)
For the period beginning on the Issue Date and ending 365 days subsequent to the Issue Date (“Year 1”) a 50% discount
to the lowest Trading Price (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 or ten cents per share (whichever is greater).
(b)
For the period beginning one day subsequent to the final day of Year One and ending 365 days subsequent to Year One (“Year
2”) a 35% discount to the lowest Trading Price (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 or ten cents per share (whichever
is greater).
(c)
For the period beginning one day subsequent to the final day of Year 2 and ending 365 days subsequent to Year 2 (“Year 3”)
a 25% discount to the lowest Trading Price (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 or ten cents per share (whichever is greater).
(d)
“Trading Price” means the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the
“OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Lender (i.e.
Bloomberg) or, if the OTCQB is not the principal trading market for such security, the closing bid price of such security on the
principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security
is available in any of the foregoing manners, 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 Lender. “Trading Day” shall mean any day on which the Common Stock is tradable for any period
on the OTCQB, or 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 by such Reporting Service.
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
Company shall have the right, exercisable on not less than five (5) Trading Days prior written notice to the Lender, to prepay
the outstanding Note in part or in full, including outstanding principal and accrued interest.
Upon
closing of a Transaction Event the Lender shall receive 0 .10% ( one tenth of one percent)of the consideration actually received
by the Company from an unaffiliated third party as a result of the closing of a Transaction Event.
“Transaction
Event” shall mean either of:
(a)
The sale by the Company of the Company’s proprietary NR2F6 intellectual property to an unaffiliated third party
(b)
The granting of a license by the Company to an unaffiliated third party granting that unaffiliated third party the right to develop
and/or commercialize the Company’s proprietary NR2F6 intellectual property
The
issuance of the Note amounted in a beneficial conversion feature of $9,900 which is amortized under the Interest Method over the
life of the Note. As of June 30, 2016 the unamortized discount on the convertible note outstanding is $ 9,132. As of June 30,
2016 $50,000 of the principal amount of the Note remains outstanding.
The
amount by which the Note’s as converted value exceeds the principal amount as of June 30, 2016 is $5,000.
NOTE 6.
NOTES RECEIVABLE
|
|
June
30, 2016
|
Entest
Biomedical, Inc. (Note 8)
|
|
$
|
12,051
|
|
|
|
|
|
|
Notes
Receivable
|
|
$
|
12,051
|
|
$12,051
lent by the Company to Entest Biomedical, Inc. is due and payable at the demand of the holder and bear simple interest at a rate
of 10% per annum.
NOTE
7. INCOME TAXES
As
of June 30, 2016
Deferred
tax assets:
|
|
|
|
|
Net
operating tax carry forwards
|
|
$
|
6,044,744
|
|
Other
|
|
|
-0-
|
|
Gross
deferred tax assets
|
|
|
6,044,744
|
|
Valuation
allowance
|
|
|
(6,044,744)
|
|
Net
deferred tax assets
|
|
$
|
-0-
|
|
As
of June 30, 2016 the Company has a Deferred Tax Asset of $6,044,744 ompletely attributable to net operating loss carry forwards
of approximately $17,778,660 (which expire 20 years from the date the loss was incurred).
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. As a result, the Company has recorded a valuation allowance reducing all deferred tax assets to 0.
Income
tax is calculated at the 34% Federal Corporate Rate.
NOTE
8. RELATED PARTY TRANSACTIONS
As
of June 30, 2016 the Company has received capital contributions from Bio Matrix Scientific Group, Inc (“BMSN”) , a
corporation under common control with the Company and which possesses the majority of the voting power of the shares outstanding
of the company, totaling $728,658 and has issued 50,010,000 common shares to BMSN for aggregate consideration of $20,090.
The
Company utilizes approximately 2,300 square feet of office space at 4700 Spring Street, Suite 304, La Mesa California, 91941 subleased
to the Company by Entest BioMedical, Inc. on a month to month basis beginning October 1, 2014. The Chief Executive Officer of
Entest Biomedical Inc. is David R. Koos who also serves as the Chief Executive Officer of the Company’s parent and the Company. The
sublease is on a month to month basis and rent payable to Entest Biomedical, Inc. by Regen Biopharma Inc is equal to $5,000 per
month.
As
of June 30, 2016 Entest Biomedical Inc. is indebted to the Company in the amount of $12,051. $12,051 lent by the Company to Entest
Biomedical, Inc. is due and payable at the demand of the holder and bear simple interest at a rate of 10% per annum.
As
of June 30, 2016 the Company is indebted to David R. Koos in the amount of $50. $50 lent to the Company by Koos is due and payable
at the demand of the holder and bear simple interest at a rate of 10% per annum.
As
of June 30, 2016 the Company is indebted to Blackbriar Partners in the amount of $10,097. $3,000 lent to the Company by Blackbriar
Partners is due and payable February 29, 2017 and bears simple interest at a rate of 10% per annum. $7,097 lent to the Company
by Blackbriar Partners is due and payable May 9, 2017 and bears simple interest at a rate of 10% per annum. David R. Koos, the
Chairman and Chief Executive Officer of the Company, also serves as the Chairman and CEO of Blackbriar Partners.
On
June 23, 2015 the Company entered into an agreement (“Agreement”) with Zander Therapeutics, Inc. ( “Zander”)
whereby The Company granted to Zander an exclusive worldwide right and license for the development and commercialization of certain
intellectual property controlled by The Company (” License IP”) for non-human veterinary therapeutic use for a term
of fifteen years. Zander is a wholly owned subsidiary of Entest Biomedical, Inc.
Pursuant
to the Agreement, Zander shall pay to The Company one-time, non-refundable, upfront payment of one hundred thousand US dollars
($100,000) as a license initiation fee which must be paid within 90 days of June 23, 2015 and an annual non-refundable payment
of one hundred thousand US dollars ($100,000) on the first anniversary of the effective date of the Agreement and each subsequent
anniversary.
The
abovementioned payments may be made, at Zander’s discretion, in cash or newly issued common stock of Zander or in common
stock of Entest BioMedical Inc. valued as of the lowest closing price on the principal exchange upon which said common stock trades
publicly within the 14 trading days prior to issuance.
Pursuant
to the Agreement, Zander shall pay to The Company royalties equal to four percent (4%) of the Net Sales , as such term is defined
in the Agreement, of any Licensed Products, as such term is defined in the Agreement, in a Quarter.
Pursuant
to the Agreement, Zander will pay The Company ten percent (10%) of all consideration (in the case of in-kind consideration, at
fair market value as monetary consideration) received by Zander from sublicensees ( excluding royalties from sublicensees based
on Net Sales of any Licensed Products for which The Company receives payment pursuant to the terms and conditions of the Agreement).
Zander
is obligated pay to The Company minimum annual royalties of ten thousand US dollars ($10,000) payable per year on each anniversary
of the Effective Date of this Agreement, commencing on the second anniversary of June 23, 2015. This minimum annual royalty is
only payable to the extent that royalty payments made during the preceding 12-month period do not exceed ten thousand US dollars
($10,000).
The
Agreement may be terminated by The Company:
If
Zander has not sold any Licensed Product by ten years of the effective date of the Agreement or Zander has not sold any Licensed
Product for any twelve (12) month period after Zander’s first commercial sale of a Licensed Product.
The
Agreement may be terminated by Zander with regard to any of the License IP if by five years from the date of execution of the
Agreement a patent has not been granted by the United States patent and Trademark Office to The Company with regard to that License
IP.
The
Agreement may be terminated by Zander with regard to any of the License IP if a patent that has been granted by the United States
patent and Trademark Office to The Company with regard to that License IP is terminated.
The
Agreement may be terminated by either party in the event of a material breach by the other party.
On
September 28, 2015 Zander caused to be issued to the Company 8,000,000 of the common shares of Entest Biomedical, Inc in satisfaction
of one hundred thousand US dollars ($100,000) to be paid to the Company by Zander as a license initiation fee. Regen Biopharma,
Inc. recognized revenue of $192,000 equivalent to the fair value of 8,000,000 of the common shares of Entest Biomedical, Inc as
of the date of issuance.
David
R. Koos serves as sole officer and director of both Zander and Entest Biomedical, Inc. and also serves as Chairman and Chief Executive
Officer of The Company.
NOTE
9. COMMITMENTS AND CONTINGENCIES
The
Company utilizes approximately 2,300 square feet of office space at 4700 Spring Street, Suite 304, La Mesa California, 91941 subleased
to the Company by Entest BioMedical, Inc. on a month to month basis beginning October 1, 2014. The Chief Executive Officer of
Entest Biomedical Inc. is David R. Koos who also serves as the Chief Executive Officer of the Company’s parent and the Company. The
sublease is on a month to month basis and rent payable to Entest Biomedical, Inc. by Regen Biopharma Inc is equal to $5,000 per
month.
NOTE
10. STOCKHOLDERS’ EQUITY
The
stockholders’ equity section of the Company contains the following classes of capital stock as of June 30, 2016:
Common
stock, $ 0.0001 par value; 500,000,000 shares authorized: 134,548,138 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.
Preferred
Stock, $0.0001 par value, 800,000,000 shares authorized of which 600,000 is designated as Series AA Preferred Stock: 30,000 shares
issued and outstanding as of June 30, 2016 and 300,000,000 is designated Series A Preferred Stock of which 127,666,697 shares
are outstanding as of June 30, 2016.
The
abovementioned shares authorized pursuant to the Company’s certificate of incorporation may be issued from time to time
without prior approval of the shareholders. The Board of Directors of the Company 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, restrictions, options, conversion
rights and other special or relative rights of any series of the Stock that may be desired.
Series
AA Preferred Stock
On
September 15, 2014 the Company filed a CERTIFICATE OF DESIGNATION (“Certificate of Designations”) with the Nevada
Secretary of State setting forth the preferences rights and limitations of a newly authorized series of preferred stock designated
and known as “Series AA Preferred Stock” (hereinafter referred to as “Series AA Preferred Stock”).
The
Board of Directors of the Company have authorized 600,000 shares of the Series AA Preferred Stock, par value $0.0001. 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 (10,000). Except as otherwise required by law holders of Common Stock, other series of Preferred issued by the Corporation,
and Series AA Preferred Stock shall vote as a single class on all matters submitted to the stockholders.
Series
A Preferred Stock
On
January 15, 2015 the Company filed a CERTIFICATE OF DESIGNATION (“Certificate of Designations”) with the Nevada Secretary
of State setting forth the preferences rights and limitations of a newly authorized series of preferred stock designated and known
as “Series A Preferred Stock” (hereinafter referred to as “Series A Preferred Stock”).
The
Board of Directors of the Company have authorized 300,000,000 shares of the Series A Preferred Stock, par value $0.0001. With
respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series A Preferred Stock shall be
entitled to cast that number of votes which is equivalent to the number of shares of Series A Preferred Stock owned by such holder
times one . Except as otherwise required by law holders of Common Stock, other series of Preferred issued by the Corporation,
and Series A Preferred Stock shall vote as a single class on all matters submitted to the stockholders.
Holders
of the Series A Preferred Stock will be entitled to receive, when, as and if declared by the board of directors of the Company
(the “Board”) out of funds legally available therefore, non-cumulative cash dividends of $0.01 per quarter. In the
event any dividends are declared or paid or any other distribution is made on or with respect to the Common Stock , the holders
of Series A Preferred Stock as of the record date established by the Board for such dividend or distribution on the Common Stock
shall be entitled to receive, as additional dividends (the “Additional Dividends”) an amount (whether in the form
of cash, securities or other property) equal to the amount (and in the form) of the dividends or distribution that such holder
would have received had each share of the Series A Preferred Stock been one share of the Common Stock, such Additional Dividends
to be payable on the same payment date as the payment date for the Common Stock.
Upon
any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (collectively, a “Liquidation”),
before any distribution or payment shall be made to any of the holders of Common Stock or any other series of preferred stock,
the holders of Series A Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are
capital, surplus or earnings, an amount equal to $0.01 per share of Series A Preferred (the “Liquidation Amount”)
plus all declared and unpaid dividends thereon, for each share of Series A Preferred held by them.
If,
upon any Liquidation, the assets of the Company shall be insufficient to pay the Liquidation Amount, together with declared and
unpaid dividends thereon, in full to all holders of Series A Preferred, then the entire net assets of the Company shall be distributed
among the holders of the Series A Preferred, ratably in proportion to the full amounts to which they would otherwise be respectively
entitled and such distributions may be made in cash or in property taken at its fair value (as determined in good faith by the
Board), or both, at the election of the Board.
11.
INVESTMENT SECURITIES
On
September 28, 2015 Zander Theraputics, Inc. caused to be issued to Regen Biopharma, Inc. 8,000,000 of the common shares of Entest
Biomedical, Inc in satisfaction of one hundred thousand US dollars ($100,000) to be paid to Regen Biopharma, Inc. by Zander Theraputics,
Inc as a license initiation fee.
The
common shares of Entest Biomedical, Inc described above constitute the Company’s sole investment securities as of June 30,
2016.
|
8,000,000
|
|
|
Common
Shares of Entest Biomedical, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Total
Unrealized Losses in Other Comprehensive Income
|
|
|
|
Net
Unrealized Gain or (Loss) realized during the quarter ended June 30, 2016
|
|
$
|
192,000
|
|
|
$
|
$80,000
|
|
|
|
(112,000
|
)
|
|
|
23,200
|
|
NOTE
10. STOCK TRANSACTIONS
Common
Stock
On
May 9, 2016 the Company issued 700,000 of its Common Shares in satisfaction of $14,000 of principal indebtedness.
On
May 23, 2016 the Company issued 1,000,000 of its Common Shares for cash consideration of $12,500.
On
June 6, 2016 the Company issued 3,500,000 of its Common Shares for cash consideration of $118,750.
On
June 15, 2016 the Company issued 1,095,000 of its Common Shares for cash consideration of $13,687.
Series
A Preferred Stock
On
April 7, 2016 the Company issued 1,000,000 shares of its Series A Preferred stock in satisfaction of $10,000 of principal indebtedness.
On
April 7, 2016 Regen Biopharma, Inc. (“Regen”) issued 10,000,000 shares of Regen’s Series A Preferred Stock (“Shares”)
to David Koos, Regen’s Chief Executive Officer, as consideration for efforts expended by Koos with regards to addressing
all clinical hold issues identified by the United States Food and Drug Administration (FDA) related to Regen’s Investigational
New Drug Application for HemaXellerate..
On
April 7, 2016 Regen Biopharma, Inc. (“Regen”) issued 10,000,000 shares of Regen’s Series A Preferred Stock (“Shares”)
to Harry Lander , Regen’s President and Chief Scientific Officer, as consideration for efforts expended by Lander with regards
to addressing all clinical hold issues identified by the United States Food and Drug Administration (FDA) related to Regen’s
Investigational New Drug Application for HemaXellerate.
On
April 7, 2016 Regen Biopharma, Inc. (“Regen”) issued 10,000,000 shares of Regen’s Series A Preferred Stock (“Shares”)
to Todd Caven , Regen’s Chief Financial Officer, as consideration for efforts expended by Caven with regards to addressing
all clinical hold issues identified by the United States Food and Drug Administration (FDA) related to Regen’s Investigational
New Drug Application for HemaXellerate
On
May 23, 2016 the Company issued 3,000,000 shares of its Series A Preferred stock for cash consideration of $37,500.
On
June 6, 2016 the Company issued 5,500,000 shares of its Series A Preferred stock for cash consideration of $106,250.
On
June 15, 2016 the Company issued 3,285,000 shares of its Series A Preferred stock for cash consideration of $41,062.