Notes to Financial
Statements
As of December 31,
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, 2016. 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 December 31, 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 quarter ended December 31, 2016 .
I. REVENUE RECOGNITION
Sales of products
and related costs of products sold are recognized when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred;
(iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. These terms are typically met upon the
prepayment or invoicing and shipment of products.
The Company determines
the amount and timing of royalty revenue based on its contractual agreements with intellectual property licensees. The Company
recognizes royalty revenue when earned under the terms of the agreements and when the Company considers realization of payment
to be probable. Where royalties are based on a percentage of licensee sales of royalty-bearing products, the Company recognizes
royalty revenue by applying this percentage to the Company’s estimate of applicable licensee sales. The Company bases this
estimate on an analysis of each licensee’s sales results. Where warranted, revenue from licensees for contractual obligations
such as License Initiation Fees are recognized upon satisfaction of all conditions required to be satisfied in order for that revenue
to have been earned by the Company.
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 August2014, 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 $
7,477,271 during the period from April 24, 2012 (inception) through December 31, 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 year ended September 30, 2016 the Company raised $1,254,751 through the
issuance of equity securities for cash and $300,000 through the issuance of convertible debentures. During the quarter ended December
31, 2016 the Company raised $585,000 through the issuance of equity securities for cash and $240,000 through the issuance of convertible
debentures.
NOTE 4. NOTES PAYABLE
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December 31, 2016
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David Koos ( Note 8)
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50
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Bostonia Partners
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68,588
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Notes payable
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$
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68,638
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$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.
$5,288 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.
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 December 31, 2016 the unamortized discount on the convertible notes outstanding is $ 31,085. As of December 31, 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 December 31, 2016 is $0.
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 December 31, 2016 the unamortized discount on the convertible note outstanding is $ 7,495. As of December 31, 2016 $50,000
of the principal amount of the Note remains outstanding.
On August 26, 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 10% per annum . The maturity of the Note is one year
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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than three (3) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 32,739. As of December 31, 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 December 31, 2016 is :
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(a)
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$278,000 if the entire principal amount is converted into common stock
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(b)
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$209,600 if the entire principal amount is converted into Series A Preferred stock
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On September 8, 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 10% per annum . The maturity of the Note is one year
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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than three (3) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 34,657. As of December 31, 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 December 31, 2016 is :
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(a)
|
$278,000 if the entire principal amount is converted into common stock
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(b)
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$209,600 if the entire principal amount is converted into Series A Preferred stock
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On September 20, 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 10% per annum . The maturity of the Note is one year
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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than three (3) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 36,164. As of December 31, 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 December 31, 2016 is :
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(a)
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$278,000 if the entire principal amount is converted into common stock
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(b)
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$209,600 if the entire principal amount is converted into Series A Preferred stock
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On October 7, 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 10% per annum . The maturity of the Note is two 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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance
of the Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of
the Note. As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 44,178. As of December 31,
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 December 31, 2016 is :
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(a)
|
$278,000 if the entire principal amount is converted into common stock
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|
(b)
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$209,600 if the entire principal amount is converted into Series A Preferred stock
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On October 31, 2016
(“Issue date”) the Company issued a second 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 10% per annum . The maturity of the Note
is two 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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 45,821. As of December 31, 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 December 31, 2016 is :
|
(a)
|
$278,000 if the entire principal amount is converted into common stock
|
|
(b)
|
$209,600 if the entire principal amount is converted into Series A Preferred stock
|
On October 31, 2016
(“Issue date”) the Company issued a third 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 10% per annum . The maturity of the Note is two 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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 45,821. As of December 31, 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 December 31, 2016 is :
|
(a)
|
$278,000 if the entire principal amount is converted into common stock
|
|
(b)
|
$209,600 if the entire principal amount is converted into Series A Preferred stock
|
On October 31, 2016
(“Issue date”) the Company issued a fourth 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 10% per annum . The maturity of the Note
is two 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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.0125 per share.
The Company shall
have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $50,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 45,821. As of December 31, 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 December 31, 2016 is :
|
(a)
|
$278,000 if the entire principal amount is converted into common stock
|
|
(b)
|
$209,600 if the entire principal amount is converted into Series A Preferred stock
|
On December 22, 2016
(“Issue date”) the Company issued a fifth Convertible Note (“Note”) in the face amount of $40,000 for consideration
consisting of $40,000 cash. The Note pays simple interest in the amount of 10% per annum . The maturity of the Note is one year
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 and/or Series A Preferred Stock, as such Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Company into which such Stock shall hereafter be changed or reclassified at a conversion
price of $0.01 per share.
The Company shall
have the right, exercisable on not less than ten (10) Trading Days prior written notice to the Lender, to prepay the outstanding
Note in part or in full, including outstanding principal and accrued interest.
The issuance of the
Note amounted in a beneficial conversion feature of $40,000 which is amortized under the Interest Method over the life of the Note.
As of December 31, 2016 the unamortized discount on the convertible note outstanding is $ 39,013. As of December 31, 2016 $40,000
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 December 31, 2016 is :
|
(a)
|
$288,000 if the entire principal amount is converted into common stock
|
|
(b)
|
$219,600 if the entire principal amount is converted into Series A Preferred stock
|
NOTE 6. NOTES
RECEIVABLE
|
|
December 31, 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 December
31, 2016
Deferred tax assets:
|
|
|
|
Net operating tax carry forwards
|
|
$
|
2,542,272
|
Other
|
|
|
-0-
|
Gross deferred tax assets
|
|
|
2,542,272
|
Valuation allowance
|
|
|
(2,542,272)
|
Net deferred tax assets
|
|
$
|
-0-
|
As of December 31,
2016 the Company has a Deferred Tax Asset of $2,542,272 completely attributable to net operating loss carry forwards of approximately
$7,477,271 (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 December 31,
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 December 31,
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 December 31,
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.
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 July 15
th
, 2016 and each subsequent anniversary of the effective date of the Agreement.
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.
During the quarter ended September 30, 2016 Zander paid
$17,000 to the Company as a partial payment of the July 15
th,
2016 liability
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 December 31, 2016:
Common stock, $ 0.0001 par value;
500,000,000 shares authorized: 145,412,605 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 December 31, 2016 and 300,000,000 is designated Series A Preferred Stock of which 147,966,697 shares are outstanding as of
December 31, 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 December 31, 2016.
As of December 31, 2016:
|
8,000,000
|
|
|
Common Shares of Entest Biomedical, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis
|
|
|
|
Fair Value
|
|
|
|
Total Unrealized Gains in Other Comprehensive Income
|
|
|
|
Net Unrealized Gain or (Loss) realized during the quarter ended December 31, 2016
|
|
$
|
192,000
|
|
|
$
|
$312,000
|
|
|
|
120,000
|
|
|
|
200,000
|
|
NOTE 12. STOCK
TRANSACTIONS
Common Stock
On November 8, 2016
the Company sold 5,000,000 of its Common Shares for consideration of $112,500.
On November 9, 2016
the Company sold 500,000 of its Common Shares for consideration of $12,500.
On December 19, 2016
the Company sold 7,700,000 of its Common Shares for consideration of $142,500
Series A Preferred
Stock
On November 8, 2016
the Company sold 5,000,000 of its Series A Preferred Shares for consideration of $112,500.
On November 9, 2016
the Company sold 500,000 of its Series A Preferred Shares for consideration of $12,5000
On December 19, 2016
the Company sold 9,700,000 of its Series A Preferred Shares for consideration of $ 167,500
Cancellation of
Officer Shares
On December 27, 2016
Todd Caven, the Company’s Chief Financial Officers, agreed to the cancellation of 7,500,000 of his personally owned Common
Shares of the Company. No consideration was paid to Mr. Caven for this cancellation.
On December 30, 2016
Todd Caven, the Company’s Chief Financial Officers, agreed to the cancellation of 2,500,000 of his personally owned Series
A Preferred Shares of the Company. No consideration was paid to Mr. Caven for this cancellation.
NOTE 13. CHANGES
AFFECTING COMPARIBILITY
Within the Company’s
Statement of Cash Flows for the Quarters Ended December 31, 2015 and 2016 the line item entitled “Increase (Decrease) in
Additional paid in Capital” which represents Restricted Stock Award compensation expense recognized for the periods on Restricted
Stock Awards issued to employees is presented as an adjustment to reconcile net loss to net cash used in operating activities.
The Company’s previously released Statement of Cash Flows for the Quarter Ended December 31, 2015 presented the same line
item as a financing activity. Management has determined that such presentation does not best reflect the nature of the expense
incurred and has adjusted the prior period accordingly.
NOTE 14. RESTATEMENT
OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Subsequent to the
original issuance of Regen’s financial statements for the quarterly period ended December 31, 2016 the Company determined
that the recognition of $ 1,950,120 of expenses recognized during the period resulting from the issuance for less than fair value
of equity securities should not have been recognized.
The following tables
reflect the corrections:
REGEN BIOPHARMA , INC.
|
|
|
|
|
|
|
BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
As of
|
|
|
|
December 31, 2016
|
|
Adjustments
|
|
December 31, 2016
|
|
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Restated
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
220,718
|
|
|
|
|
|
|
|
220,718
|
|
|
Accounts Receivable
|
|
|
83,000
|
|
|
|
|
|
|
|
83,000
|
|
|
Note Receivable
|
|
|
12,051
|
|
|
|
|
|
|
|
12,051
|
|
|
Prepaid Expenses
|
|
|
61,011
|
|
|
|
|
|
|
|
61,011
|
|
|
Accrued Interest Receivable
|
|
|
2,878
|
|
|
|
|
|
|
|
2,878
|
|
|
Due from Former Employees
|
|
|
15,000
|
|
|
|
|
|
|
|
15,000
|
|
|
Total Current Assets
|
|
|
394,658
|
|
|
|
|
|
|
|
394,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale Securities
|
|
|
312,000
|
|
|
|
|
|
|
|
312,000
|
|
|
Total Other Assets
|
|
|
312,000
|
|
|
|
|
|
|
|
312,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
|
706,658
|
|
|
|
|
|
|
|
706,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank Overdraft
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
Accounts payable
|
|
|
163,927
|
|
|
|
|
|
|
|
163,927
|
|
|
Notes Payable
|
|
|
68,638
|
|
|
|
|
|
|
|
68,638
|
|
|
Accrued payroll taxes
|
|
|
3,677
|
|
|
|
|
|
|
|
3,677
|
|
|
Accrued Interest
|
|
|
54,841
|
|
|
|
|
|
|
|
54,841
|
|
|
Accrued Rent
|
|
|
20,000
|
|
|
|
|
|
|
|
20,000
|
|
|
Accrued Payroll
|
|
|
349,496
|
|
|
|
|
|
|
|
349,496
|
|
|
Due to Shareholder
|
|
|
25,000
|
|
|
|
|
|
|
|
25,000
|
|
|
Convertible Notes Payable
|
|
|
47,425
|
|
|
|
|
|
|
|
47,425
|
|
|
Total Current Liabilities
|
|
|
733,004
|
|
|
|
|
|
|
|
733,004
|
|
|
Long Term Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes Payable
|
|
|
129,776
|
|
|
|
|
|
|
|
129,776
|
|
|
Total Long Term Liabilities
|
|
|
129,776
|
|
|
|
|
|
|
|
129,776
|
|
|
Total Liabilities
|
|
|
862,779
|
|
|
|
|
|
|
|
862,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock ($.0001 par value) 500,000,000 shares authorized; 145,412,605 issued and outstanding as of December 31, 2016 and 139,712,605 shares issued and outstanding September 30, 2016
|
|
|
14,540
|
|
|
|
|
|
|
|
14,540
|
|
|
Preferred Stock, 0.0001 par value, 800,000,000 authorized as of September 30, 2016 and December 31, 2016 respectively
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Preferred 300,000,000 authorized, 147,966,697 and 135,266,697 outstanding as of December 31, 2016 and September 30, 2016 respectively
|
|
|
14,797
|
|
|
|
|
|
|
|
14,797
|
|
|
Series AA Preferred $0.0001 par value 600,000 authorized and 30,000 outstanding as of December 31, 2016 and September 30, 2016
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
Additional Paid in capital
|
|
|
21,714,779
|
|
|
|
(15,271,627
|
)
|
|
|
6,443,152
|
|
|
Contributed Capital
|
|
|
728,658
|
|
|
|
|
|
|
|
728,658
|
|
|
Retained Earnings (Deficit) accumulated during the development stage
|
|
|
(22,748,898
|
)
|
|
|
15,271,627
|
|
|
|
(7,477,271
|
)
|
|
Accumulated Other Comprehensive Income
|
|
|
120,000
|
|
|
|
|
|
|
|
120,000
|
|
|
Total Stockholders' Equity (Deficit)
|
|
|
(156,121
|
)
|
|
|
|
|
|
|
(156,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
706,658
|
|
|
|
|
|
|
|
706,658
|
|
|
REGEN BIOPHARMA , INC.
|
|
|
|
|
|
|
STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Adjustments
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Restated)
|
|
|
REVENUES
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
|
|
|
42,694
|
|
|
|
|
|
|
|
42,694
|
|
|
General and Administrative
|
|
|
242,758
|
|
|
|
|
|
|
|
242,758
|
|
|
Consulting and Professional Fees
|
|
|
233,128
|
|
|
|
|
|
|
|
233,128
|
|
|
Rent
|
|
|
15,000
|
|
|
|
|
|
|
|
15,000
|
|
|
Total Costs and Expenses
|
|
|
533,580
|
|
|
|
|
|
|
|
533,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
|
(533,580
|
)
|
|
|
|
|
|
|
(533,580
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME & (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
|
300
|
|
|
|
|
|
|
|
300
|
|
|
Other Income
|
|
|
31,846
|
|
|
|
|
|
|
|
31,846
|
|
|
Refunds of amounts previously paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
(11,923
|
)
|
|
|
|
|
|
|
(11,923
|
)
|
|
Interest Expense attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Discount
|
|
|
(61,102
|
)
|
|
|
|
|
|
|
(61,102
|
)
|
|
Loss on issuance of common shares for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
less than fair value
|
|
|
(1,950,120
|
)
|
|
|
1,950,120
|
|
|
|
0
|
|
|
Preferred shares issued pursuant to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contractual obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL OTHER INCOME (EXPENSE)
|
|
|
(1,990,999
|
)
|
|
|
|
|
|
|
(40,879
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
(2,524,579
|
)
|
|
|
|
|
|
|
(574,459
|
)
|
|
BASIC AND FULLY DILUTED EARNINGS (LOSS) PER SHARE
|
|
|
(0.018
|
)
|
|
|
|
|
|
|
(0.004
|
)
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
143,596,121
|
|
|
|
|
|
|
|
143,596,121
|
|
|
|
|
|
|
|
|
|
REGEN BIOPHARMA , INC.
|
|
|
|
|
|
|
STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31,
|
|
|
|
Quarter Ended December 31,
|
|
|
2016
|
|
Adjustments
|
|
2016
|
|
|
|
|
|
|
(Restated)
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
|
(2,524,579
|
)
|
|
|
1,950,120
|
|
|
|
(574,459
|
)
|
Adjustments to reconcile net Income to net cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Interest expense attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization of Discount
|
|
|
61,102
|
|
|
|
|
|
|
|
61,102
|
|
Increase in issuance of stock below fair value
|
|
|
1,950,120
|
|
|
|
(1,950,120
|
)
|
|
|
0
|
|
Increase in Additional Paid in Capital
|
|
|
5,240
|
|
|
|
|
|
|
|
5,240
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in Accounts Payable
|
|
|
(76,832
|
)
|
|
|
|
|
|
|
(76,832
|
)
|
(Increase) Decrease in Accounts Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) Decrease in Notes Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) Decrease in Interest Receivable
|
|
|
(300
|
)
|
|
|
|
|
|
|
(300
|
)
|
Increase (Decrease) in Bank Overdraft
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in accrued Expenses
|
|
|
72,060
|
|
|
|
|
|
|
|
72,060
|
|
(Increase) Decrease in Prepaid Expenses
|
|
|
8,894
|
|
|
|
|
|
|
|
8,894
|
|
(Increase) Decrease in Due from Former Employee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities
|
|
|
(504,295
|
)
|
|
|
|
|
|
|
(504,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock issued for Cash
|
|
|
267,500
|
|
|
|
|
|
|
|
267,500
|
|
Preferred Stock issued for Cash
|
|
|
292,500
|
|
|
|
|
|
|
|
292,500
|
|
Increase in Contributed Capital
|
|
|
0
|
|
|
|
|
|
|
|
0
|
|
Increase (Decrease) in Notes Payable
|
|
|
(74,809
|
)
|
|
|
|
|
|
|
(74,809
|
)
|
Increase in Convertible Notes payable
|
|
|
240,000
|
|
|
|
|
|
|
|
240,000
|
|
Increase (Decrease) in Due to Shareholder
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
(25,000
|
)
|
Net Cash Provided by (Used in) Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700,191
|
|
|
|
|
|
|
|
700,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash
|
|
|
195,896
|
|
|
|
|
|
|
|
195,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at Beginning of Period
|
|
|
24,822
|
|
|
|
|
|
|
|
24,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at End of Period
|
|
|
220,718
|
|
|
|
|
|
|
|
220,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Noncash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares Issued for Debt
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Preferred Shares Issued for Debt
|
|
|
0
|
|
|
|
|
|
|
|
|
|
Cash Paid for Interest
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Accompanying Notes are an Integral Part of These Financial Statements
|
REGEN BIOPHARMA, INC.
|
STATEMENT OF COMPREHENSIVE INCOME
|
(unaudited)
|
|
|
Quarter Ended December 31
|
|
|
2016 adjustments
|
|
2016
|
|
|
|
|
|
|
(Restated)
|
Net Income (Loss)
|
|
$
|
(2,524,579
|
)
|
|
$
|
1,950,120
|
|
|
$
|
(574,459
|
)
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gains on Securities
|
|
|
200,000
|
|
|
|
|
|
|
|
200,000
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Losses on Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Comprehensive Income (Loss)
|
|
|
200,000
|
|
|
|
|
|
|
|
200,000
|
|
Comprehensive Income
|
|
$
|
(2,324,579
|
)
|
|
|
|
|
|
|
(374,459
|
)
|
NOTE 15. SUBSEQUENT
EVENTS
On January 5, 2017
the Company sold 1,000,000 of its Common Shares for consideration of $12,500
On January 5, 2017
the Company sold 1,000,000 of its Series A Preferred Shares for consideration of $ 12,500
On January 10, 2017 Regen Biopharma,
Inc. (“Regen”) 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 M Preferred Stock" (hereinafter referred to as "Series M Preferred Stock").
The Board of Directors of Regen
have authorized 300,000,000 shares of the Series M Preferred Stock, par value $0.0001. With respect to each matter submitted to
a vote of stockholders of Regen, each holder of Series M Preferred Stock shall be entitled to cast that number of votes which is
equivalent to the number of shares of Series M Preferred Stock owned by such holder times one. Except as otherwise required by
law holders of Common Stock, other series of Preferred issued by Regen, and Series M Preferred Stock shall vote as a single class
on all matters submitted to the stockholders.
The holders of Series M Preferred
Stock shall be entitled receive dividends, when, as and if declared by the Board of Directors in accordance with Nevada Law, in
its discretion, from funds legally available therefore
On any voluntary or involuntary
liquidation, dissolution or winding up of Regen, the holders of the Series M Preferred Stock shall receive, out of assets legally
available for distribution to Regen’s stockholders, a ratable share in the assets of Regen.