Notes
to Condensed Consolidated Financial Statements
As
of October 31, 2019
The
accompanying unaudited interim condensed financial statements of Bio-Matrix Scientific Group , Inc. ( “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 Form 10 filed with the SEC on Form 10, as amended, for the year
ended July 31, 2019. 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. The condensed balance sheet at July 31,
2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes
required by generally accepted accounting principles in the U.S. for complete financial statements
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.
On
July 31, 2019 the Company acquired 100% of the share capital of Pine Hills, Inc. (“Acquisition”), a Wyoming corporation,
for consideration consisting of:
8,160,000,000
common shares of the Company issued to Heather Cassady, the sole shareholder of Pine Hills, Inc. (“Pine Hills Shareholder”)
The
agreement that the sole officer and director of the Company shall resign and the Company shall appoint the nominees of the Pine
Hills Shareholder to serve as Chairman of the Company, Chief Executive Officer of the Company, Chief Financial Officer of the
Company, Secretary of the Company and Treasurer of the Company.
The
cancellation by the Company of all outstanding shares of Series AA and Series AA Preferred stock of the Company.
Upon
completion of the Acquisition, the Pine Hills shareholder owned approximately 54% 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 Pine Hills,
Inc. and was treated as a recapitalization with Pine Hills Inc. as the acquirer.
The
Company, through its wholly owned subsidiary Pine Hills, Inc., provides services consisting of data storage and the archiving
of corporate documents.
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 July 31 year-end.
B.
PRINCIPLES OF CONSOLIDATION
The
consolidated financial statements include the accounts of Bio-Matrix Scientific Group, Inc., a Delaware corporation and Pine Hills
Inc., a Wyoming corporation and 100% owned subsidiary.
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.
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.
E.
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 October 31, 2019 the Company had no uncertain tax positions,
and will continue to evaluate for uncertain positions in the future.
F.
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.
There were no Common Stock Equivalents as of October 31, 2019
H.
INVESTMENT SECURITIES
The
Company measures equity investments (except those accounted for under the equity method and those that result in consolidation
of the investee) at fair value and recognizes any changes in fair value in net income.
I.
REVENUE RECOGNITION
During
the period beginning with inception (February 7, 2019) and ending October 31, 2019 the Company recognized revenue in accordance
with ASC 606. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s)
with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4:
Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity
satisfies a performance obligation.
In
order to achieve the core principle of ASC 606, the Company applies the following steps with regard to recognition of revenue:
Step
1: Identify the contract(s) with a customer.
Step
2: Identify the performance obligations in the contract.
Step
3: Determine the transaction price.
Step
4: Allocate the transaction price to the performance obligations in the contract.
Step
5: Recognize revenue when the Company satisfies a performance obligation.
During
the quarter ending October 31, 2019 the Company recognized revenue of $9,023. Revenue was generated by the providing of long term
data storage services and data backup services to customers. Revenues from contracts with customers are recognized when: (i) persuasive
evidence of an arrangement exists; (ii) services have been completed; (iii) the price is fixed or determinable; and (iv) collectability
is reasonably assured. These terms are typically met upon the invoicing of services. Payment is typically due immediately upon
submission of invoice. Invoices are submitted once all performance obligation have been met by the Company. Performance obligations
are considered to have been met by the Company once all services contracted to be rendered have been provided. The Company has
not provided warranties of any kind to customers during the quarter ended October 31, 2019. The Company has determined that for
the quarter ending October 31, 2019 revenues recognized were identically similar in regard to nature, amount, timing, and uncertainty
of revenues that disaggregation was not required. Pricing of services during the period was determined by Pine Hill’s Chief
Technology Officer based on the officer’s sole determination taking into account factors including level of expertise required
to complete the task and time required to complete the task. Performance obligations in regards to Long Term data and document
storage are considered completed when all of paper documents are digitized ( if applicable) and an appropriate storage scenario
( including cloud, external hard drives, or offsite servers) for the client’s needs has been identified and implemented.
Performance
obligations in regards to data backup services are considered completed when an optimum frequency of data archival activities
as well as optimal security levels to be utilized by the customer are established in consultation with the Company.
All
revenue earned during the period was attributable to contracts with customers. The Company determined that all contracts entered
into during the period are substantially similar in regard to factors to be considered as per ASC 606-10-50-5. During quarter
ended October 31, 2019 all performance obligations required of the Company pursuant to contracts with customers entered into by
the Company were completed within the period. During the quarter ended October 31, 2019 all consideration due to the Company pursuant
to contracts with customers was paid to the Company within the period. The customer is determined to have control of the services
to be provided once services have been completed.
NOTE
2 . RECENT ACCOUNTING PRONOUNCEMENTS
In
January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition
and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires that equity investments (except those accounted
for under the equity method of accounting or those that result in consolidation of the investee) are to be measured at fair value
with changes in fair value recognized in net income. The Company has adopted ASU 2016-01 effective the fiscal year ending 2019.
This guidance is not expected to have a material impact on the Company’s financial statements.
In
May 2014, the FASB, in conjunction with the International Accounting Standards Board ("IASB"), issued ASU No. 2014-09,
"Revenue from Contracts with Customers" (ASC 606), which supersedes the existing revenue recognition requirements under
U.S. GAAP and eliminates industry-specific guidance. The new revenue recognition standard provides a five step analysis of transactions
to determine when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those
goods or services. The Company has adopted ASC 606 since inception ( February 7, 2019).
On
February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2016-02, Leases (Topic 842). The ASU requires organizations that lease assets, referred to as "lessees," to recognize
on the consolidated statement of financial position the rights and obligations created by those leases. The ASU also requires
disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash
flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information
about the amounts recorded in the consolidated financial statements. The ASU on leases became effective for public companies for
fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has not adopted the
provisions of this ASU. This guidance is not expected to have a material impact on the Company’s financial statements.
In
June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based
Payment Accounting. This ASU is intended to simplify aspects of share-based compensation issued to non-employees by making the
guidance consistent with the accounting for employee share-based compensation. This ASU is effective for annual periods beginning
after December 15, 2018 and interim periods within those annual periods, with early adoption permitted. We adopted the provisions
of this ASU in the fiscal year ended 2019. This guidance is not expected to have a material impact on the Company’s 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 has
generated net losses of $1,606,705 during the period from February 7, 2019 (inception) through October 31, 2019. 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 and 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.
NOTE
4. ACQUISITION OF PINE HILLS, INC.
On
July 31, 2019 the Company consummated the acquisition of 100% of the outstanding shares of Pine Hills , Inc. for consideration
consisting of the following:
8,160,000,000
common shares of the Company issued to Heather Cassady, the sole shareholder of Pine Hills, Inc. (“Pine Hills Shareholder”)
The
resignation of the sole officer and director of the Company, David R. Koos
The
appointment of Heather Cassady as Chairman of the Company.
The
appointment of Timothy Foat to the positions of Chief Executive Officer of the Company, Chief Financial Officer of the Company,
Secretary of the Company and Treasurer of the Company.
The
cancellation by the Company of all outstanding shares of Series AA and Series AA Preferred stock of the Company.
The
acquisition of Pine Hills, Inc. (“PHI”) was accounted for as a reverse merger in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). Under this method of accounting, the Company was treated
as the “acquired” company for accounting purposes. This determination was primarily based on PHI’s equity holders
having a majority of the voting power of the combined company, PHI. comprising the ongoing operations of the combined entity,
PHI comprising a majority of the governing body of the combined company, and senior management selected by the former majority
shareholder of PHI comprising the senior management of the combined company.
The
following assets and liabilities of the Company were recognized in connection with the reverse merger as of July 31, 2019:
Assets:
|
Cash:
|
|
$
|
340
|
|
Accrued Interest Receivable:
|
|
$
|
6,884
|
|
|
|
|
|
|
Investment Securities
with a Fair Value of
|
|
$
|
48,199
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Accounts Payable of
|
|
$
|
295
|
|
Notes Payable of
|
|
$
|
67,392
|
|
The
completion of the reverse merger resulted in the Company recognizing a one time noncash charge of $1,574,225 resulting from the
aggregate of:
15,
616,865, 172 Common Shares of the Company recognized in the reverse merger at par value ($0.0001)
2,025,846
Preferred Shares of the Company recognized in the reverse merger at par value ($0.0001)
724,222
of the Series B Preferred Shares of the Company recognized in the reverse merger at par value ($0.0001)
a
noncashcharge of $12,483 representing the net liabilities recognized in the reverse merger.
NOTE
5. ACCRUED INTEREST RECEIVABLE
Accrued
Interest Receivable recognized in the reverse merger consists of $6,884 of interest earned but not received due to the Company
by Regen Biopharma, Inc. and recognized in the reverse merger. Accrued Interest Receivable of $6,884 is due at the demand of the
Company.
NOTE
6. NOTES PAYABLE AND NOTES PAYABLE RELATED PARTIES
Notes
Payable as of October 31, 2019 consist of the following:
David
Koos
|
|
$
|
18,992
|
|
Blackbriar
Partners
|
|
$
|
48,400
|
|
BST
Partners
|
|
$
|
7,200
|
|
Total
|
|
$
|
74,592
|
|
$18,992
due to David Koos bears no interest and is due and payable at the demand of the Holder
$48,400
due to Blackbriar Partners bears no interest and is due and payable at the demand of the Holder
$1,000
due to BST Partners bears simple interest at 10% per annum. Both principal and accrued interest are due and payable on August
12, 2020
$6,200
due to BST Partners bears simple interest at 10% per annum. Both principal and accrued interest are due and payable on October
8, 2020
Notes
Payable to Related Parties as of October 31, 2019 consist of the following:
Bostonia
Partners, Inc.
|
|
$
|
10,100
|
|
$10,000
due to Bostonia Partners, Inc. bears simple interest at 10% per annum. Both principal and accrued interest are due and payable
on August 22, 2020
$100
due to Bostonia Partners, Inc. bears simple interest at 10% per annum. Both principal and accrued interest are due and payable
on August 29, 2020
Mr.
Timothy Foat, Chief Executive Officer of the Company, Chief Financial Officer of the Company,
Secretary of the Company and Treasurer of the Company is sole officer and Director of Bostonia Partners, Inc
NOTE
7. SHAREHOLDER’S EQUITY
The
stockholders' equity section of the Company contains the following classes of capital stock as of October 31, 2019:
Preferred
stock, $0.0001 par value; 20,000,000 shares authorized:
2,025,760
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.
0
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.
0
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 AAA Preferred Stock shall
be entitled to cast that number of votes which is equivalent to the number of shares of Series AAA Preferred Stock owned by such
holder times one hundred thousand (100,0000).
On
any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series AAA 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.
724,198
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; 16,000,000,000 shares authorized: 15,616,865,172 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).
NOTE
8. RELATED PARTY TRANSACTIONS
During
the period commencing from inception and ending October 31, 2019 a company controlled by the Company’s Chief Executive Officer
made capital contributions of $630 to the Company.
Bostonia
Partners, Inc., a company controlled by the Company’s Chief Executive Officer, has loaned the Company an aggregate principal
amount of $10,100 during the quarter ended October 31, 2019 ( Note 6)
The
Company utilizes office space free of charge provided by a company controlled by the Company’s Chief Executive Officer.
NOTE
9. INVESTMENT SECURITIES
On
July 31, 2019 the Company recognized 66,667 of the common shares of Entest Group, Inc. acquired in the reverse merger.
On
July 31, 2019 the Company recognized 29,076,665 of the common shares of Regen Biopharma, Inc. acquired in the reverse merger.
On
July 31, 2019 the Company recognized 2,907,665 of the Series A Preferred shares of Regen Biopharma, Inc. acquired in the reverse
merger.
On
July 31, 2019 the Company recognized 4,411 of the common shares of Zander Therapeutics, Inc. acquired in the reverse merger.
On
July 31, 2019 the Company recognized 5,000 of the Series M Preferred Shares of Zander acquired in the reverse merger
On
July 31, 2019 the Company recognized 8,333 of the Preferred Series B shares of of Entest Group, Inc. acquired in the reverse merger.
The
abovementioned constitute the Company’s sole investment securities as of October 31, 2019.
As
of October 31, 2019
66,667
Common Shares of Entest Group, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
1,133
|
|
|
$
|
1,426
|
|
|
$
|
293
|
|
|
$
|
293
|
|
29,076,665
Common Shares of Regen Biopharma, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
17,446
|
|
|
$
|
23,261
|
|
|
$
|
5,815
|
|
|
$
|
5,815
|
|
290,766
Series A Preferred Shares of Regen Biopharma, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
29,076
|
|
|
|
8,141
|
|
|
$
|
(20,935
|
)
|
|
$
|
(20,935
|
)
|
4,411
Common Shares of Zander Therapeutics, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
254
|
|
|
$
|
71
|
|
|
$
|
(184
|
)
|
|
$
|
(184
|
)
|
5,000 Series
M Preferred Shares of Zander Therapeutics, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
289
|
|
|
$
|
80
|
|
|
$
|
(209
|
)
|
|
$
|
(209
|
)
|
8,333
Series B Preferred Shares of Entest Group, Inc.
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair
Value
|
|
|
|
Change
in Fair Value for the Quarter ended October 31 2019
|
|
|
|
Change
in Fair Value for the period from Inception (2/7/1019) to 10/31/2019
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
NOTE
10: SUBSEQUENT EVENTS
Management
has evaluated subsequent events through the date of issuance noting no material subsequent events to report.