Item 1. Business
We were organized October 6, 1998, under the laws of the State of Delaware as Tasco International, Inc.
We are in the development stage. Through our subsidiary, Entest BioMedical, Inc. (ENTB) a Nevada corporation, we intend to develop and commercialize therapies, medical devices and medical testing procedures for the veterinary market and acquire and operate veterinary clinics. ENTB’s current business model involves acquiring veterinary clinics / hospitals to be utilized as potential distribution channels for its immuno-therapeutic cancer vaccine for canines (dogs) which is currently in development. The Company believes that, in addition to serving as distribution channels for the Company’s immuno-therapeutic cancer vaccine for canines, these clinics will be able to generate revenue for ENTB from current operations. As of September 30, 2010 we owned approximately 57% of the issued and outstanding shares of ENTB.
Developments since October 1, 2009:
Since October 1, 2009, ENTB has focused its efforts and allocated its resources towards the development and commercialization of ImenVax ( a therapeutic cancer vaccine for use in canines) and the acquisition of veterinary clinics.
On August 18, 2010 ENTB executed an agreement with TheraCyte, Inc. (“TheraCyte Agreement”) whereby:
1.
TheraCyte, Inc. will provide up to 25 TheraCyte implantable cell encapsulation devices (the “Devices”) to ENTB solely for use by ENTB in a ten dog safety study to determine safety of the utilization of the Devices in veterinary cancer applications (the “Safety Study”).
2.
During the Safety Study, the parties agree to negotiate in good faith a license and supply agreement whereby TheraCyte would agree to supply Devices to Entest exclusively for use in Entest’s therapy for veterinary cancer (“Therapy”), and would grant to Entest a non-exclusive, non-transferable, license to use TheraCyte’s existing patents, trade secrets and know-how related to the Devices (“Licensed Technology”) in connection with the Therapy, using Devices exclusively supplied by TheraCyte (“Veterinary License and Supply Agreement”).
Pursuant to the TheraCyte Agreement, ENTB is obligated to:
(a)
issue to TheraCyte, Inc. 20,000 of the common shares of ENTB
(b)
pay $10,000 to TheraCyte
The proposed terms and conditions of the Veterinary License and Supply Agreement are:
(a)
The issuance of 100,000 shares of ENTB’s common stock upon execution of the Veterinary License and Supply Agreement,
(b)
The issuance of 100,000 shares of ENTB’s common stock upon ENTB achieving an aggregate of $5,000,000 in total revenues,
(c)
The issuance of 100,000 shares of ENTB’s common stock upon ENTB achieving an aggregate of $10,000,000 in total revenues,
(d)
an 8% royalty to be paid to TheraCyte by ENTB on Net Therapy Sales (defined as sales of ENTB’s veterinary cancer treatments) during the term of the Veterinary License and Supply Agreement,
(e)
A purchase price of $350 per Device manufactured and sold by TheraCyte to ENTB.
The execution of the Veterinary License and Supply Agreement is subject to ENTB and TheraCyte, Inc. agreeing upon mutually acceptable terms and conditions and the favorable completion of the Safety Study. No assurance can be given as to whether the Veterinary License and Supply Agreement will be executed within the timeframes specified by the TheraCyte Agreement nor can any assurance be given contemplated the Veterinary License and Supply Agreement will be executed at all.
On January 4, 2011, 2010, Entest BioMedical, Inc. (“Entest CA”), a California corporation and a wholly owned subsidiary of ENTB, acquired from Pet Pointers, Inc., a California corporation doing business as McDonald Animal Hospital (“Seller”), and Dr. Gregory McDonald DVM (“McDonald”) all the goodwill from McDonald and assets of Seller except cash and accounts receivables used in connection with the operation of a veterinary medical clinic located at 225 S. Milpas Street, Santa Barbara, CA 93103 (the "Business").
Consideration for the acquisition consisted of:
I. $70,000 in cash
II. $210,000 of the common shares of ENTB valued at the closing price per share as of January 4, 2011
III. Payment of no more than $78,000 to a creditor of the Seller to be paid in monthly installments of $1,500 per month
IV. Payment of no more than $25,000 to additional creditors of the Seller to be paid in monthly installments of $825 per month
V. Payment of $50,000 to McDonald on the first business day of the fourth month following the closing of the acquisition (“Closing”)
ENTB is also obligated to make payment to McDonald of that number of shares of common stock of ENTB’s common stock valued at the closing bid price of the trading day immediately prior to issuance which shall equal $70,000 upon completion of the first calendar year during the Employment Period (as such period is defined in the employment agreement entered into between McDonald and Entest CA dated December 31, 2010) in which the Business generates gross sales in excess of $700,000.
On February 14, 2011 ENTB, Herman H. Pettegrove, Esq. (“Escrow Agent”), Noah’s Ark Starr Animal Hospital, Inc. (“Noah”) and Dr. Barbara Starr, DVM (“Starr”) executed an Escrow Agreement (“Escrow Agreement”) pursuant to which ENTB was to have deposited 100,000 of its common shares (“Initial Deposit”) with the Escrow Agent in contemplation of the purchase of substantially all assets of Noah by ENTB. On April 26, 2011 ENTB, Noah and Starr discontinued negotiations regarding an acquisition and Escrow was terminated.
On February 17, 2011 ENTB entered into a Letter of Intent with Riverdale Animal Hospital, Charlinda Animal Hospital, Culver Pet Clinic (collectively the “Clinics”) and Dr. Asaf A. Qadeer, DVM, MPVM (“Qadeer”) regarding the contemplated purchase of substantially all assets of the Clinics by ENTB for total consideration of $700,000 to be paid through a combination of newly issued common stock, cash, and assumption of debt (“Contemplated Transaction”).
The LOI also contemplates entering into an employment agreement with Qadeer (“Employment Agreement”) whereby Qadeer would be paid a salary to be mutually agreed to by the Parties to manage the veterinary businesses which would be purchased in the Contemplated Transaction and would be entitled to receive:
(a) a cash bonus equal to 5% of the annual gross collections achieved by the Clinic in excess of $900,000;
(b) a stock bonus equal to 5% of the annual gross collections achieved by the Clinic in excess of $900,000;
The transaction contemplated by the LOI is subject to the execution of one or more definitive agreements upon mutually acceptable terms and conditions. The provisions of the LOI are non-binding on all parties with the exception of provisions regarding (a) deposit of 200,000 shares of ENTB’s stock into an escrow account to serve as collateral for the proposed acquisition , (b) duties to negotiate in good faith, (c) duty of the Clinics and Qadeer to not entertain any offers to purchase the Clinics during the term of this LOI, (d) disclaimer of liabilities and (e) choice of governing law and venue. No assurance can be given as to whether the contemplated transaction will occur within the timeframes specified by the LOI nor can any assurance be given the contemplated transaction will occur at all.
Principal Products and Services
Through ENTB, the Company is currently focusing its research and development efforts toward the successful development and commercialization of the ImenVax™ family of canine cancer vaccines. It is anticipated by the Company that data collected from canine cancer treatment will provide support for eventual use of this therapy in humans and such therapy may be developed and commercialized by the Company in collaboration with larger and better capitalized pharmaceutical companies.
ImenVax™ I
ImenVax™ I, currently under development by ENTB, is a therapeutic for canine cancer which utilizes the patient’s own tumor cells to induce the immune system to attack the remaining tumor cells. Tumor cells extracted from the patient are loaded into an implantable device where the tumor antigens are released to induce an anti-tumor response which kills the remaining tumors in the patient. The device is comprised of a chamber that includes a porous membrane wall that prevents the implanted cells from escaping the device but allows the tumor cells to survive and shed cancer antigens into the patient. The exposure of tumor specific antigens to the patient’s immune cells will stimulate anti-cancer immune responses.
ImenVax™ II
ENTB is also developing a version of ImenVax™ called ImenVax™ II utilizing cell lines for sustained release of immunologically relevant cytokines for maximum anti-tumor immune responses. It is believed by ENTB that this controlled release of cytokines will act as an adjuvant to be combined with patient’s tumor cells (antigens) within an implantable membrane encapsulation device.
ImenVax™ III
ImenVax™ III is a canine cancer vaccine under development by ENTB which does not require tumor processing. ImenVax™ III treats existing tumors through stimulating immune responses to: a) kill tumor cells directly; b) indirectly kill tumor cells by cutting off the tumor blood supply; and c) block the ability of the tumor to suppress the immune system. ImenVax™ III’s primary mode of action is generated through trophoblasts derived from human placental tissue.
ENTB, through the McDonald Animal Hospital , also offers general medical and surgical services for companion animals.
Distribution methods of the products or services:
The Company, thorough ENTB, intends to distribute its products and services through several channels including:
(a)
utilization of an internal sales force to market directly to veterinary professionals
(b)
distribution through acquired veterinary clinics
(c)
utilization of contract sales organizations
Competitive business conditions and competitive position in the industry and methods of competition
Both the Company and ENTB have yet to achieve significant revenues or profits. The animal health pharmaceutical and biologics industries in which we intend to compete are highly competitive and characterized by rapid technological advancement. Many of our competitors have greater resources than we do. Also, The companion animal healthcare industry (e.g. veterinary hospitals and veterinarians) although highly fragmented is also highly competitive.
We intend to be competitive by acquiring veterinary hospitals through ENTB to serve as distribution channels for the products and services ENTB produces. We also intend to be competitive by utilizing the services and advice of individuals that we believe have expertise in their field in order that we can concentrate our resources on projects in which products and services in which we have the greatest potential to secure a competitive advantage may be developed and commercialized .
To that effect, ENTB has established a Scientific Advisory Board of (the Advisory Board) comprised of individuals who we believe have a high level of expertise in their professional fields and who have agreed to provide counsel and assistance to us in (a) determining the viability of proposed projects (b) obtaining financing for projects and (c) obtaining the resources required to initiate and complete a project in the most cost effective and rapid manner. The members of the Advisory Board have also agreed to act as consultants on a project by project basis in addition to other services they may provide under any other contractual obligations to us.
Members of the Advisory Board include as follows:
Dr. Brian Koos, MD:
Dr. Brian Koos is Professor and Vice Chair at Obstetrics and Gynecology at the David Geffen School of Medicine at UCLA, Professor at the Brain Research Institute at the UCLA School of Medicine, and Director of the Maternal-Fetal Medicine Fellowship (UCLA). Dr. Koos received his MD from Loma Linda University School of Medicine.
Dr. Steven Josephs, PhD:
Dr. Josephs is currently serving as Executive Manager and Chief Scientific Officer of TherInject LLC, a company involved in the development of pharmaceuticals to be utilized for the treatment of cancer. Dr. Josephs has 34 years of experience in research and clinical product development and production for biologics, gene therapy and medical devices.
Dr. Josephs has previously served as Director of Research and Development for Therapheresis, Inc, Head of Virology and Senior Research Scientist for Baxter Healthcare Corporation, and Director of Molecular Biology at Universal Biotechnology, Inc where Dr. Josephs directed a group performing contract molecular biology services for government and private industry.
Dr. Josephs has also worked for the National Cancer Institute where his duties included studies of the human T-cell leukemia virus as well as sequence determination and functional analyses of HIV. Dr. Josephs is the co-discoverer of human herpesvirus-6, the etiologic agent of Roseola.
Dr. Josephs holds a B.A. in Chemistry, a Ph.D. in Chemistry and has been granted a Professional Certificate in Drug Development and an ADMET process certificate by the University of California, San Diego. Dr. Josephs has also earned a Master of Science in Science Teaching.
Dr. Ewa Carrier, MD:
Dr. Carrier is Associate Professor of Clinical Medicine and Pediatrics, University of California San Diego
Blood and Marrow Transplant Program.
Dr. Carrier has served as principal investigator for the following clinical protocols:
Protocol For The Use of AMD3100 to Mobilize Peripheral Blood Stem Cells For Collection and Transplantation - Emergency Compassionate Use, Single Patient IND.
Erythropoietic Differentiation of Human ES Cells.
CTLA-4 Blockade with MDX-010 to Induce Graft-Versus-Malignancy Effects Following Allogeneic Hematopoietic Stem Cell Transplantation. (NCI Protocol Number P-6082) (closed to accrual).
Phase 3 Randomized, Open-label Clinical Trial of Tanespimycin (KOS-953) plus Bortezomib Compared to
Bortezomib Alone in Patients with Multiple Myeloma in First Relapse [Protocol KAG-301] [Protocol Version 21-JUL-2007]
Autologous Stem Cell Transplant for Myasthenia Gravis.
Collection of Bone Marrow from Patients with Multiple Myeloma for Study of New Therapies.
A Pilot Study of High-Dose Immunosuppression and Autologous Stem Cell Infusion in Patients with Systemic Lupus
Erythematosus Refractory to Conventional Therapy (closed to accrual).
Autologous Stem Cell Transplant for Myasthenia Gravis - a retrospective analysis.
Dr Carrier has served as co investigator for the following clinical protocols:
Pilot Study of Allogeneic Peripheral Blood Progenitor Cell Transplantation in Patients with Chemotherapy-Refractory or Poor- Prognosis Metastatic Breast Cancer.
Pilot Study of a Non-Myeloablative Preparative-Regimen for Allogeneic Peripheral Blood Progenitor Cell Transplantation in Patients with Chronic Myeloid and Lymphoid Malignancies.
Phase II Study of a Non-Myeloablative Preparative-Regimen for Allogeneic Hematopoietic Cell Transplantation From Matched Unrelated Donors in Patients with Chronic Myeloid and Lymphoid Malignancies.
A Phase II Study of Tumor-Specific Idiotype (Id) and Soluble GM-CSF Vaccination Following Autologous Peripheral Blood Stem Cell Transplantation in Patients with Low-Grade Non-Hodgkin's Lymphomas.
Phase II Study of FavId (Tumor-Specific Idiotype-KLH) and Soluble GM-CSF Immunotherapy in Patients with Stable or Progressive Grade 1 or 2 Follicular B-Cell Lymphomas [FavId01].
Phase II Trial of Rituxan® plus FavId™ (Tumor-Specific Idiotype-KLH) and GM-CSF Immunotherapy in Patients with Grade 1 or 2 Follicular B-Cell Lymphoma [FavId-04].
Dr. Feng Lin, MD:
Dr. Lin is the Director of Research and Development of Entest BioMedical, Inc. and has previously served as Director of Research and Development of Bio-Matrix Scientific Group, Inc., the Company’s largest shareholder.
Previously, Dr. Lin was a Senior Research Scientist, Research & Development with Inovio BC, San Diego and Postdoctoral Fellow in Burnham Institute for Medical Research, La Jolla.
Dr. Lin received his M.D. from Central South University Xiangya School of Medicine, Changsha, China, and received a M.S. Biochemistry & Molecular Biology and a Ph.D. Hematology & Physiology from the same institution.
Dr. Vladimir I. Bogin, MD, ABIM:
Dr. Bogin is currently the President and CEO of Cromos Pharma, a contract research organization that specializes in biopharmaceutical clinical outsourcing into Russia and Eastern Europe. From 2008 to 2009 he served as Director of Boehringer Ingelheim (a privately held pharmaceutical company) where he was in charge of the phase IV program for Dabigatran Etexilate.
Dr. Bogin studied medicine at the Yale University School of Medicine and the University of Rochester School of Medicine and Dentistry.
Sources and availability of raw materials and the names of principal suppliers
The supplies and materials required to conduct our operations are available through a wide variety of sources and may be obtained through a wide variety of sources.
Sources and availability of raw materials and the names of principal suppliers;
The supplies and materials required to conduct our operations are available through a wide variety of sources and may be obtained through a wide variety of sources.
Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration
We have not been granted any patent. ENTB claims the right to use the trademark ImenVax for pharmaceutical products for the prevention and treatment of cancer in animals; vaccine adjuvants for use on animals; Vaccines for animals and veterinary vaccines and has filed an application with the United States Patent and Trademark Office to register this trademark.
On August 18, 2009, we entered into an agreement (“Agreement”) with TherInject, LLC, a California Limited Liability Company (“TherInject”) and Dr. Stephen Josephs, PhD.
Pursuant to the Agreement TherInject and Dr. Josephs shall assist the Company in:
(a) the acquisition, manufacture and sale of medical devices utilized for the therapeutic delivery of cells, proteins and/or amino acids including immuno isolation devices(“Medical Delivery Devices”):
(b) establishing a tumor banking facility
(c) the development and marketing of a therapeutic cancer vaccine utilizing the medical device of for initial use in veterinary applications (“Cancer Vaccine”).
Pursuant to the Agreement, the Company is obligated to pay to TherInject yearly royalty payments equal to 2.5% of revenues generated by the Company as a result of:
The Company’s operation of a Tumor Banking facility, provided that such Tumor banking activities have occurred as a direct result of TherInject material contributions pursuant to this Agreement
Sales by the Company of Medical Delivery devices, provided that such sales have occurred as a direct result of TherInject material contributions pursuant to the Agreement
Sales by the Company of the Cancer Vaccine, provided that the development and marketing of such Cancer Vaccine has occurred as a direct result of TherInject material contributions pursuant to this Agreement.
The Company is currently party to no labor agreements.
Need for any government approval of principal products or services, effect of existing or probable governmental regulations on the business
ImenVax I and ImenVax II are Veterinary Biologics. The U.S. Department of Agriculture (USDA) is authorized under the 1913 Virus-Serum-Toxin Act to ensure that all veterinary biologics produced in, or imported into, the United States are not worthless, contaminated, dangerous, or harmful. The Veterinary Biologics Program of the USDA's Animal and Plant Health Inspection Service (“APHIS”) oversees the veterinary biologics industry in the United States.
Domestic manufacturers of veterinary biologics, for domestic use or for export, are required to possess a valid U.S. Veterinary Biologics Establishment License and an individual U.S. Veterinary Biologics Product License for each product produced for sale.
Prior to being granted a U.S. Veterinary Biologics Product License, the applicant must submit detailed information including test reports and research data sufficient to establish purity, safety, potency and efficacy of the product, an Outline of Production, and information regarding labeling and facilities that are to be used in preparation.
Prior to being granted a U.S. Veterinary Biologic Establishment License, the applicant must submit detailed information regarding the facilities and the qualifications of key personnel and must submit to an inspection of the facilities by the Center for Veterinary Biologics, a division of the USDA. To qualify for an establishment license, an applicant also must qualify for at least one product license.
ENTB plans to attempt to distribute ImenVax I through its currently owned and operated veterinary clinic and also through any other clinic which may be acquired by ENTB, if any, prior to licensure under the exemption provided by 9 CFR 107.1, which exempts a veterinary biologic from Federal regulation if the product was manufactured by veterinarians AND intended solely for use with their clients' animals under a veterinarian-client-patient (VCP) relationship.
ImenVax III can be considered a combination product whose primary mode of action is generated through trophoblasts derived from human placental tissue. Entest will be required to obtain approval from the US Food and Drug Administration (FDA) in order to market ImenVax III. Entest will apply for an Investigational New Animal Drug exemption (INAD) in order that the product may be shipped for testing and trials and will submit a New Animal Drug Application for ImenVax™ III.
The practice of veterinary medicine is primarily subject to State regulation. ENTB’s currently owned clinic as well as any clinics which ENTB may acquire in the future will be required to comply with the statutes rules and regulations of the State in which an acquired veterinary clinic is located. Within the State of California, in which ENTB currently owns and operates one veterinary clinic and in which ENTB intends to attempt to purchase additional veterinary clinics, the practice of veterinary medicine is primarily governed pursuant to The California Veterinary Medicine Practice Act (CA Bus.& Prof. Code § 4800 et seq.).
Amount spent during the last fiscal year research and development activities
During the fiscal year ended September 30, 2010 we expended $416, 828 on research and development activities.
Costs and effects of compliance with environmental laws (federal, state and local);
We have not incurred any unusual or significant costs to remain in compliance with any environmental laws and do not expect to incur any unusual or significant costs to remain in compliance with any environmental laws in the foreseeable future.
Number of total employees and number of full-time employees .
As of May 10, 2011 , exclusive of Entest, we have one employee who is full time.
Item 2.
Item 2. Properties .
The Company leases approximately 3,000 square feet of office space at 4700 Spring Street, Suite 203, La Mesa California, 91942. The Company subleases this space to Entest, which is currently utilizing the space as office space. We believe that the foregoing properties are adequate to meet our current needs.
Item 3.
Item 3. Legal Proceedings.
On August 16, 2010 a Complaint (“Complaint”) was filed in the Superior Court of the State of California, County of San Diego Central Division against the Company, the Company’s Chairman, Freedom Environmental Services, Inc. and the BMXP Holdings Inc. Shareholder’s Business Trust, a Nevada Business Trust (collectively “Defendants”) by Princeton Research, Inc. and Jan Vandersande (collectively “Plaintiffs”) seeking to recover general damages in excess of $25,000, punitive damages in excess of $25,000 and attorney’s fees. The Complaint alleges breach of fiduciary duty of loyalty, fraud and deceit in connection with the late distribution of shares of the Company to beneficiaries of the BMXP Holdings Inc. Shareholder’s Business Trust. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.
On February 3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania against the Company, the Company’s Chairman and Entest. by 18KT.TV LLC (“Plaintiffs”). The Complaint is seeking damages from the Company and Entest in excess of $125,000 and alleges breach of contract, unjust enrichment and breach of implied in fact contract by the Company and Entest in connection with agreements entered into with the plaintiffs by both the Company and Entest.
On or about May 2, 2011 all counts in the complaint were dismissed with prejudice with the exception of one count of breach of contract against the Company and one count of breach of contract against Entest.
The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock is a "penny stock," as defined in Rule 3a51-1 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its sales person in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that the broker-dealer, not otherwise exempt from such rules, must make a special written determination that the penny stock is suitable for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure rules have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. So long as the common stock of the Company is subject to the penny stock rules, it may be more difficult to sell common stock of the Company.
Our common stock is currently traded on the OTC Market under the symbol "BMSN". Prior to January 2011 the primary market for the Company’s common shares was the OTCBB. Prior to September 5, 2006 our Common Stock traded under the symbol "THII". Below is the range of high and low bid information for our common equity for each quarter within the last two fiscal years as reported by Commodity Systems Inc. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Holders
As of March 10,2011 there were approximately 442 holders of our Common Stock.
Dividends
No cash dividends were paid during the fiscal year ending September 30, 2008. We do not expect to declare cash dividends in the immediate future.
Recent Sales of Unregistered Securities
On February 17, 2011 the Company issued 1,785,714 shares of common stock (“Shares”) in satisfaction of $50,000 face value of convertible debentures.
The Offer and Sale of the Shares was exempt from the registration provisions of the Securities Act of 1933 (the “Act”), by reason of Section 4(2) thereof.
The Shares were offered directly through the management. No underwriters were retained to serve as placement agents. No commission or other consideration was paid in connection with the sale of the Shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.
A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares
Item 6.
Item 6. Selected Financial Data
As we are a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
As of September 30, 2010, we had $306 cash on hand and current liabilities of $1,455,841 such liabilities consisting of Accounts Payable, Notes Payable, Accrued Payroll Taxes, Accrued Interest and other Accrued Expenses Convertible Notes Payable.
As of September 30, 2009, we had $17,750 cash on hand and current liabilities of $1,585,054 such liabilities consisting of Accounts Payable, Notes Payable, Accrued Payroll Taxes, Accrued Interest and other Expenses and Convertible Notes Payable.
We feel we will not be able to satisfy its cash requirements over the next twelve months and shall be required to seek additional financing.
At this time, we plan to fund our financial needs through grant funding (which cannot be assured), through cash flow generated through veterinary clinics which have been acquired by ENTB or may be acquired by ENTB (the generation of sufficient cash flow from which cannot be assured) and, if required, through equity private placements of common stock. (No plans, terms, offers or candidates have yet been established and there can be no assurance that the Company will be able to raise funds on terms favorable to us or at all.)
We cannot assure that we will be successful in obtaining financing necessary to implement our business plan. We have not received any commitment or expression of interest from any financing source that has given us any assurance that we will obtain the amount of additional financing in the future that we currently anticipate. For these and other reasons, we are not able to assure that we will obtain any additional financing or, if we are successful, that we can obtain any such financing on terms that may be reasonable in light of our current circumstances.
Sources of liquidity for us for the fiscal year ended September 30, 2009 consisted primarily of
(a)
the sale of equity securities of the Company and its subsidiary generating cash proceeds of approximately $347,916
(b)
Net borrowings of approximately $285,863
Sources of liquidity for us for the fiscal year ended September 30, 2010 consisted primarily of
(a)
the sale of equity securities of the Company’s subsidiary generating cash proceeds of approximately $5,000
(b)
Increases to Contributed Capital of the Company of approximately $10,353
(c)
Net cash borrowings of $236,064 by the Company as well as net borrowings of $156,567 by the Company’s subsidiary
Revenues were -0- for the year ended September 30, 2010 and -0- for the year ended September 30, 2009. Net losses were $1,545,586 for the year ended September 30, 2010 and $ 2,487,965 for the same period ended September 30, 2009, a decrease of approximately 37 %.
This decrease in Net Losses is primarily attributable to decreases in Consulting and Professional Fees of $755,266 and decreases in losses on sale of available for sale securities of $487,900.
As of May 10, 2011 we are not party to any binding agreements which would commit us to any material capital expenditures.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As we are a smaller reporting company, as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: The Board of Directors and Stockholders
Bio-Matrix Scientific Group Inc.
I have audited the accompanying consolidated balance sheet of Bio-Matrix Scientific Group Inc. as of September 30, 2010 and 2009 and the related statements of operations, stockholders’ equity and cash flows for the years ended September 30, 2010 and 2009, and the period from inception (August 2, 2005) to September 30, 2010. These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but do not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Bio-Matrix Scientific Group Inc. as of September 30, 2010 and 2009 and the results of its operations and changes in stockholders’ equity and cash flows for the years ended September 30, 2010 and 2009, and the period from inception (August 2, 2005) to September 30, 2010 in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the Company is a going concern. As discussed in Notes 2 and 6 to the financial statements, the Company has not generated income and has accumulated losses. This raises substantive doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/ s / John Kinross-Kennedy
John Kinross-Kennedy
Certified Public Accountant
Irvine, California
May 6, 2011
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
The accompanying Notes are an integral part of these Financial Statements
BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to consolidated Financial Statements
As of September 30, 2010
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Bio-Matrix Scientific Group, Inc. (“Company”) was organized October 6, 1998, under the laws of the State of Delaware as Tasco International, Inc.
The Company is in the development stage. 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, 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 Bio-Matrix Scientific Group, Inc 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 Bio-Matrix Scientific Group, Inc under the purchase method of accounting, and was treated as a recapitalization with Bio-Matrix Scientific Group, Inc. as the acquirer. Accordingly, the financial statements have been prepared to give retroactive effect to August 2, 2005 (date of inception), of the reverse acquisition completed on July 3, 2006, and represent the operations of Bio-Matrix Scientific Group, Inc.
Bio-Matrix Scientific Group, Inc. (“BMSG”) is a development stage company which, through its wholly owned subsidiary Entest BioMedical, Inc.( a Nevada corporation) intends to (a) develop and commercialize therapies, medical devices and medical testing procedures and (b) engage in the operation of veterinary clinics.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted a September 30, year-end.
B. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Bio-Matrix Scientific Group, inc., a Delaware corporation, Bio-Matrix Scientific Group Inc. (“BMSG”) a Nevada corporation and a wholly owned subsidiary, and Entest BioMedical, Inc., (“Entest”) a majority owned subsidiary under common control and a Nevada corporation. Significant inter-company transactions have been eliminated. As of August 31, 2010 (the fiscal year end of Entest) the Company owned approximately 56% of the outstanding share capital of Entest. As of November 30, 2010 the Company owns approximately 51% of the outstanding share capital of Entest
C. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
D. DEVELOPMENT STAGE
The Company is a development stage company that devotes substantially all of its efforts in the development of its plan to operate in the field of the development, manufacture and marketing of medical devices and the operation of cellular storage facilities, specifically stem cell banking facilities.
E. CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
F. INVESTMENTS IN MARKETABLE SECURITIES
Investments in marketable securities are composed of available-for-sale securities. The Company’s investments are categorized as available-for-sale and recorded at estimated fair value, based on quoted market prices, or financial models if quoted market prices are unavailable. Increases and decreases in fair value are recorded as unrealized gains and losses in Other Comprehensive Income. Realized gains and losses and declines in fair value judged to be other-than-temporary are included in the Consolidated Statement of Operations as a Gain/ (loss) on sale of investment.
G. 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.
The Company has depreciated property and equipment by the straight-line method over the useful life.
H. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
I. BASIC EARNINGS (LOSS) PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of SFAS No. 128 effective October 6, 1998 (inception).
Basic net loss per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS
In February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events (ASC Topic 855), Amendments to Certain Recognition and Disclosure Requirements.” This Standard update requires a SEC Filer to (1) evaluate subsequent events through the date that the financial statements are issued or available to be issued, (2) defines “SEC Filer” as an entity that is required to file or furnish its financial statements with either the SEC or, with respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section, (3) not be bound to disclosing the date through which subsequent events have been evaluated, (4) note the definition of public entity is not longer defined nor necessary for Topic 855, (5) note the scope of the reissuance disclosure requirements is refined to include revised financial statements only. These Updates are effective for interim or annual periods ending after June 15, 2010. ASU No. 2010-09 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In January 2010, the FASB issued ASU No. 2010-08, “Technical Corrections to various Topics.” This Standard is being updated to eliminate outdated or inconsistent GAAP standards and to clarify the Boards original intent mainly with regards to derivatives and hedging. This is effective for the first reporting period (including interim periods) beginning after issuance. ASU No. 2010-08 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” related to ASC Topic 820-10. This update requires new disclosures to; transfers in or out of Levels 1 and 2, activity in Level 3fair value measurements, Level of disaggregation, and disclosures about inputs and valuation techniques. This amendment will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU No. 2010-06 has no impact on the Company’s results of operations, financial condition or cash flows.
In January 2010, the FASB issued ASU No. 2010-01, amends SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles.” This Standard codified in ASC 105 is being modified to include the authoritative and non-authoritative levels of GAAP. This amendment is effective for financial statements issued for interim and annual periods ending after September 15, 2009. ASU No. 2010-01 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In January, 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The standard amends ASC Topic 820, Fair Value Measurements and Disclosures to require additional disclosures related to transfers between levels in the hierarchy of fair value measurement. The standard does not change how fair values are measured. The standard is effective for interim and annual reporting periods beginning after December 15, 2009. As a result, it is effective for the Company in the first quarter of fiscal year 2010. The Company does not believe that the adoption of ASU 2010-06 will have a material impact on consolidated its financial statements.
In June 2009, the FASB issued new guidance which is now part of ASC 105-10 (formerly Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). ASC 105-10 replaces FASB Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles", and establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles. ASC 105-10 is effective for interim and annual periods ending after September 15, 2009. The adoption of ASC 105-10 did not have a material impact on the Company’s financial statements.
In June 2009, the FASB amended ASC 810 (formerly Statement of Financial Accounting Standards No.167, Amendments to FASB Interpretation No. 46(R)). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. ASC 810 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company will adopt ASC 810 in fiscal 2010. The Company does not expect that the adoption of ASC 810 will have a material impact on its financial statements.
In June 2009, the FASB amended ASC 860, (formerly SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140). ASC 860 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. ASC 860 is effective for fiscal years beginning after November 15, 2009. The Company will adopt ASC 860 in fiscal 2010. The Company does not expect that the adoption of ASC 860 will have a material impact on its financial statements.
In May 2009, the FASB issued new guidance for accounting for subsequent events. The new guidance, which is now part of ASC 855-10, Subsequent Events (formerly, SFAS No. 165, Subsequent Events) is consistent with existing auditing standards in defining subsequent events as events or transactions that occur after the balance sheet date but before the financial statements are issued or are available to be issued, but it also requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. The new guidance defines two types of subsequent events: “recognized subsequent events” and “non-recognized subsequent events.” Recognized subsequent events provide additional evidence about conditions that existed at the balance sheet date and must be reflected in the Company’s financial statements. Non-recognized subsequent events provide evidence about conditions that arose after the balance sheet date and are not reflected in the financial statements of a company. Certain non-recognized subsequent events may require disclosure to prevent the financial statements from being misleading. The new guidance was effective on a prospective basis for interim or annual periods ending after June 15, 2009. The Company adopted the provisions of ASC 855-10 as required.
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment as of September 30, 2010 consists of the following:
Depreciation expenses were $0 and $ 0 for the year ended September 30, 2010 and September 30, 2009, respectively. With the exception of one computer which is fully depreciated, no property and equipment has yet to be utilized in production therefore no depreciation shall be recognized until usage commences.
NOTE 5. OPTIONS AND WARRANTS
As of September 30, 2010 the Company has no outstanding exercisable warrants or options.
NOTE 6. 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 $ 12,296,682 (including $307,116 of Net Losses attributable to noncontrolling interest in Entest) during the period from August 2, 2005 (inception) through September 30, 2010. 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 obtaining governmental and nongovernmental grants as well as 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. There is no guarantee that the Company will be able to raise any capital through any type of offerings. Management can give no assurance that any governmental or nongovernmental grant will be obtained by the Company despite the Company’s best efforts. Management also plans to acquire one or more operating veterinary clinics in order to generate cash flow to fund research and development. Management can give no assurance that any such clinics can be acquired on terms favorable to the Company, if at all, and if acquired whether such clinics would generate cash flow sufficient to fund the Company’s operations.
NOTE 7. INCOME TAXES
As of September 30, 2010 the Company has a Deferred Tax Asset of $4,317,153 completely attributable to net operating loss carry forwards of approximately $12,335298 ( which expire 20 years from the date the loss was incurred) consisting of
(a) $38,616, of Net Operating Loss Carry forwards acquired in the reverse acquisition of BMSG and
(b) $12,296, 682 attributable to Bio-Matrix Scientific Group, Inc. a Delaware corporation, BMSG and Entest
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry forwards are expected to be available to reduce taxable income. The achievement of required future taxable income is uncertain. In addition, the reverse acquisition of BMSG has resulted in a change of control. Internal Revenue Code Sec 382 limits the amount of income that may be offset by net operating loss (NOL) carryovers after an ownership change. As a result, the Company has the Company recorded a valuation allowance reducing all deferred tax assets to 0.
NOTE 8. RELATED PARTY TRANSACTIONS
On July 3, 2006, the Company acquired 100% of the share capital of BMSG from BMXP Holdings, Inc., formerly named Bio-Matrix Scientific Group, Inc. in a reverse acquisition.
David R. Koos, the Chairman, CEO and President of the Company, at the time of the acquisition was the Chairman and Chief Executive Officer of BMXP Holdings Inc. as well as beneficial owner of 24% of the share capital of BMXP Holdings, Inc. Brian Pockett, Vice President, COO and Director of the Company at the time of the acquisition was Chief Operating Officer, Managing Director and a Director of BMXP Holdings Inc. as well as beneficial owner of 14% of the share capital of BMXP Holdings, Inc.
On October 11, 2006, the Company entered into an Agreement with BMXP Holdings, Inc (“BMXP”) (“Agreement”) pursuant to which the Company issued to BMXP 1,462,570 common shares of the Company on or prior to October 12, 2006. This issuance will constitute full satisfaction of the amount of $1,191,619 plus any accrued and unpaid interest, owed to BMXP by the Company.
As further consideration to BMXP for entering into this Agreement and abiding by the terms and conditions thereof, at any time within a period of 365 days from the date of the Agreement, BMXP shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States Securities and Exchange Commission (“SEC”) a registration statement to register under the Securities Act of 1933, as amended, 11,462,570 common shares of the Company (including the shares issued pursuant to this Agreement) owned by BMXP (“Registerable Securities”), in order that the Registerable Securities may be distributed to BMXP shareholders on a pro rata basis ( based on their ownership of common shares of the Company as of a Record Date to be determined by BMXP), and use its reasonable best efforts to cause that registration statement to be declared effective by the SEC. This right may also be exercised by any entity to which BMXP has transferred ownership of the Registerable Securities in trust for the BMXP Record Shareholders.
On April 4, 2007 - 985,168 shares of the Company’s common stock were issued to Bombardier Pacific Ventures in full satisfaction of $246,292 owed by the Company to Bombardier Pacific Ventures. David R. Koos, the Company’s Chairman of the Board of Directors, President, CEO, Secretary, and Acting CFO is the sole beneficial owner of Bombardier Pacific Ventures.
On July 30, 2007, the Company issued 566,217 common shares to Bombardier Pacific Ventures in satisfaction of the principal amount of $141,554 owed by the Company to Bombardier Pacific Ventures. David R. Koos, the Company’s Chairman of the Board of Directors, President, CEO, Secretary, and Acting CFO, is the sole beneficial owner of Bombardier Pacific Ventures.
On July 3, 2008, the Company issued 4,852 shares of Series AA Preferred Stock (“AA Stock”) to David R. Koos, the Company’s Chairman, President and CEO pursuant to the following terms and conditions:
A) In the event that Koos voluntarily resigns as either President or CEO of the Company prior to July 3, 2018 the AA Stock shall be returned to the Company.
B) In the event of the death of Koos prior to July 3, 2018 the AA Stock shall be returned to the Company.
C) Upon the expiration of a continuous period of two hundred forty (240) calendar days during which Koos is unable to perform his material duties as President or CEO due to physical or mental incapacity the AA Stock shall be returned to the Company.
D) Upon Koos’ conviction in a court of competent jurisdiction for a felony or any crime involving fraud or misrepresentation the AA Stock shall be returned to the Company.
The AA Stock issued to Koos are the only shares of Series AA Preferred Stock outstanding as of July 15, 2008.
On September 29, 2008, the Company purchased 1,000,000 of the common shares of Freedom Environmental Services, Inc. (“FESI shares”) from Bombardier for consideration consisting of a Promissory Note (“Note”) in the principal amount of $500,000 issued by BMSN to Bombardier.
Pursuant to the terms and conditions of the Note, the entire principal amount of $500,000 together with accrued simple interest of 10% per annum, is due and payable to Bombardier on November 29, 2009.
On December 21, 2008 Bombardier modified the Promissory Note with BMSN. Bombardier agreed to accept $1,000 en lieu of the original $500,000 payment owed by the Company to Bombardier for the purchase of FESI shares
On March 2, 2009 the Company issued 1,000,000 of its common shares to Bombardier in satisfaction of $100,000 owed to Bombardier by the Company.
On May 8, 2009 the Company issued 1,341,500 of its common shares to Bombardier in satisfaction of $67,075 owed to Bombardier by the Company. On May 8, 2009 the Company issued 226,540 of its common shares to Bombardier Pacific Ventures, Inc. (“Bombardier”), a company controlled by David Koos, our Chairman and CEO, in satisfaction of $11,067 in accrued interest owed to Bombardier by the Company.
On June 15, 2009 the Company entered into an agreement (“Agreement”) with Entest whereby BMSN will make available the services of Dr. Brian Koos to Entest. Pursuant to this Agreement Dr. Koos will:
(i) Advise Entest in determining specific studies and time-lines that are needed
(a) to establish the clinical usefulness of a Screening Test for Gestational Diabetes licensed by the Company from the Regents of the University of California (the "Screening Test") and
(b) to create a new rapid analysis method for screening large populations (collectively, the "Technology").
(ii) Advise Entest in:
(a) the design and completion of the specific studies that demonstrate the clinical usefulness of the Screening Test and
(b) establishing and validating a new method for rapid screening of large populations.
The Term of the Agreement is 5 years. The Company is obligated to compensate BMSN in the amount of $10,000 pursuant to this Agreement.
Dr. Brian Koos is currently a professor of Obstetrics and Gynecology at the David Geffen School of Medicine at UCLA and also serves on Entest’s Scientific Advisory Board
On June 22, 2009 the Company issued 4,000,000 shares of common stock in satisfaction of $120,000 in accrued salary owed to David Koos.
On October 5, 2009 Entest BioMedical, Inc. issued 3,040 common shares to David Koos, the company’s CEO, as consideration for services rendered valued at $4,560.
On March 31, 2010 the Company issued 3,593,268 shares of common stock (“Shares”) to Bombardier Pacific Ventures, Inc., an entity controlled by the Company’s Chairman and CEO, in satisfaction of $251,529 of debt owed by the Company to Bombardier Pacific Ventures.
On March 31, 2010 the Company issued 4,454,994 shares of common stock to David Koos, the Company’s Chairman and CEO, in satisfaction of $304,500 in accrued salary owed by the Company to David Koos.
As of September 30, 2010, the Company is indebted in the amount of $16,836 to David Koos. These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.
As of September 30, 2010, the Company is indebted in the amount of $48,666 to Bombardier (exclusive of the FESI Note). These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.
As of September 30, 2010, Entest is indebted in the amount of $83,621 to Bombardier. These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.
As of September 30, 2010, Entest is indebted in the amount of $57,760 to David Koos. These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.
The Company is currently party to a sublease agreement with Entest whereby Entest shall sublease approximately 3,000 square feet of office space from BMSN for a term of 3 years commencing July 2009 for consideration consisting of monthly rental payments of $4,100 per month
NOTE 9. PREFERRED STOCK OFFERINGS
On December 31, 2008 the Company issued 75,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.15 per share, for consideration consisting of $11,250. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
On December 31, 2008 the Company issued 66,670 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,667. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
On December 31, 2008 the Company issued 33,330 shares of the Company’s Preferred Stock for consideration consisting of services rendered valued at $3,333.
On January 7, 2009 the Company issued 67,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,700. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
On January 14, 2009 the Company issued 25,000 shares of preferred stock for par value.
On February 3, 2009 the Company issued 63,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,300. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
On February 13, 2009 the Company issued 200,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.15 per share, for consideration consisting of $30,000. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
On February 25, 2009 the Company issued 66,667 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.9 per share, for consideration consisting of $6,000. As an additional incentive to purchase the Units and not as a characteristic, right or designation of the Preferred Stock. The Company has also entered into agreements with the abovementioned recipient of Units whereby the Company has agreed to exchange, at any time subsequent to six months from issuance at the demand of the purchaser, any and all Preferred Shares owned by that purchaser through either the purchase of the Units or exercise of the Warrants into an equivalent number of shares of the Company’s common stock.
NOTE 10. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.
October 1, 2008 to December 31, 2008
Common Stock
On December 2, 2008 the Company issued 1,099,999 shares of common stock to Preferred Shareholders in exchange for 1,099,000 shares of the Company’s Preferred Stock which was subsequently retired.
On December 3, 2008 the Company issued 133,124 shares of common stock to holders of the Company’s Convertible Debentures in satisfaction of $ 26,263 of accrued interest and to prepay $7,018 of interest.
Preferred Stock
On December 2, 2008 the Company issued 1,099,999 shares of common stock to Preferred Shareholders in exchange for 1,099,000 shares of the Company’s Preferred Stock which was subsequently retired.
On December 31, 2008 the Company issued 75,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.15 per share, for consideration consisting of $11,250.
On December 31, 2008 the Company issued 66,670 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,667.
On December 31, 2008 the Company issued 33,330 shares of the Company’s Preferred for consideration consisting of services rendered valued at $3,333.
January 1, 2009 to March 31, 2009
Common Stock
On January 7, 2009 the Company issued 1,400,000 shares of common stock for services valued at $210,000
On January 14, 2009 the Company issued 1,300,000 shares of common stock for consideration of $104,998.
On January 15, 2009 the Company issued 35,000 shares of common stock for consideration of $7,000
On January 15, 2009 the Company issued 100,000 shares of common stock for services valued at $20,000
On January 21, 2009 the Company issued 37,925 shares of common stock for services valued at $11,377
On January 21, 2009 the Company issued 35,000 shares of common stock for consideration of $7,000
On January 27, 2009 the Company issued 27,450 shares of common stock to Preferred Shareholders in exchange for 27,450 shares of preferred stock.
On January 24, 2009 the Company issued 200,000 of common stock for services valued at $36,000.
On January 28, 2009 the Company issued 10,000 shares of common stock for consideration of $2,000.
On March 3, 2009 the Company issued 1,000,000 common shares in satisfaction of $100,000 of debt.
On March 10, 2009 the Company issued 214,286 shares of common stock to Preferred Shareholders in exchange for 214,286 shares of preferred stock.
On March 13, 2009 the Company issued 250,000 shares of common stock to Preferred Shareholders in exchange for 250,000 shares of preferred stock.
On March 13, 2009 the Company issued 200,000 shares of common stock for consideration of $20,000
On March 31, 2009 the Company issued 250,000 of common stock for services valued at $25,000
Preferred Stock
On January 7, 2009 the Company issued 50,000 shares of preferred stock for services valued at $7,500.
On January 7, 2009 the Company issued 67,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,700.
On January 14, 2009 the Company issued 25,000 shares of preferred stock for par value.
On January 27, 2009 the Company issued 27,450 shares of common stock to Preferred Shareholders in exchange for 27,450 shares of preferred stock which was retired.
On February 3, 2009 the Company issued 63,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.10 per share, for consideration consisting of $6,300.
On February 13, 2009 the Company issued 200,000 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.15 per share, for consideration consisting of $30,000.
On February 25, 2009 the Company issued 66,667 units (“Units”), each unit consisting of one share of the Company’s Preferred Stock and one Preferred Stock Purchase Warrant (“Warrant”) exercisable for a period of three months from the date of issuance into one share of the Company’s Preferred Stock at $0.9 per share, for consideration consisting of $6,000.
On March 10, 2009 the Company issued 214,286 shares of common stock to Preferred Shareholders in exchange for 214,286 shares of preferred stock.
On March 13, 2009 the Company issued 250,000 shares of common stock to Preferred Shareholders in exchange for 250,000 shares of preferred stock.
April 1, 2009 to June 30, 2009
On April 21, 2009 the Company issued 800,000 shares of common stock to Preferred Shareholders in exchange for 800,000 shares of preferred stock.
On April 21, 2009 the Company issued 325,000 shares of common stock for services valued at $42,250
On April 24, 2009 the Company issued 53,496 shares of common stock in satisfaction of $6,196 of accrued interest.
On May 8, 2009 the Company issued 226, 540 of its common shares in satisfaction of $11,067 in accrued interest owed by the Company.
On May 8, 2009 the Company issued 1,341,500 of its common shares in satisfaction of $67075 owed by the Company.
On May 8, 2009 the Company issued 461,200 of its common shares in satisfaction of $6984 owed by the Company.
On May 8, 2009 the Company issued 543,767 of its common shares in satisfaction of $28,116 owed by the Company.
On May 8, 2009 the Company issued 234,460 of its common shares in satisfaction of $11,423 owed by the Company.
On May 8, 2009 the Company issued 543,767 of its common shares in satisfaction of $28,116 owed by the Company.
On May 8, 2009 the Company issued 62,360 of its common shares in satisfaction of $3,118 owed by the Company.
On May 15, 2009 the Company issued 780,000 shares of common stock to Preferred Shareholders in exchange for 780,000 shares of preferred stock.
On June 8, 2009 the Company issued 94,000 shares of common stock to Preferred Shareholders in exchange for 94,000 shares of preferred stock
On June 22, 2009 the Company issued 200,000 shares of common stock for services valued at $14,000
On June 22, 2009 the Company issued 4,000,000 shares of common stock in satisfaction of $120,000 in accrued salary owed to an officer.
July 1, 2009 to September 30, 2009
On July 20, 2009 the Company issued 68,398 shares of common stock in satisfaction of $12,318 of accrued interest.
On July 20, 2009 the Company issued 75,000 shares of common stock to Preferred Shareholders in exchange for 75,000 shares of preferred stock.
On August 20, 2009 the Company issued 2,500,000 shares of common stock as prepayment of $300,000 of expenses.
On August 20, 2009 the Company issued 700,000 shares of common stock for services valued at $84,000.
On September 8, 2009 the Company issued 100,000 shares of common stock for services valued at $9,060.
Stock Transactions: Entest
On August 3, 2009, Entest sold 1,000,000 of its common shares to an investor at a price of $0.10 per share. Entest permitted the investor to credit $100,000 that the investor had deposited with the Company (“BMSN Deposit”) towards the share purchase. As a result of this transaction, the BMSN Deposit was credited by BMSN to the Company and was applied as follows:
a)
$10,000 was applied to satisfy consideration due to the Company from Entest in connection with the Company providing to Entest the services of Dr. Brian Koos
b)
90,000 will be applied to rental payments due to the Company over the course a sublease agreement between the Company and Entest.
On August 8, 2009 the Entest issued a Restricted Stock Award of 2,000,000 of its common shares to David Koos, Entest’s CEO (“Koos Award”). The Koos Award
a)
may not be transferred or hypothecated until the expiration of a six month period from the issuance date (“Vesting Date”) and
b)
is subject to forfeiture in the event that Koos shall cease serving as Chief Executive Officer of Entest prior to the Vesting Date
On August 31, 2009 Entest issued 50,000 of its common shares to a consultant as consideration for services rendered valued at $200,000.
On September 10, 2009, Entest sold 500,000 of its common shares to an investor for consideration of $50,000. $45,000 of the proceeds was paid to the Company to be applied to rental payments due to the Company over the course a sublease agreement between the Company and Entest.
October 1, 2009 to March 31, 2010
On October 19, 2009 the Company issued 50,000 shares of common stock for services valued at $5,000.
On November 16, 2009 the Company issued 3,273,333 shares of common stock in satisfaction of $98,200 of principal indebtedness.
On December 31, 2009 the Company issued 40,000 shares of common stock as a contingent payment for services previously rendered.
Entest BioMedical, Inc. Stock Transactions:
On September 10, 2009, Entest sold 500,000 of its common shares to an investor for consideration of $50,000. $45,000 of the proceeds was paid to the Company to be applied to rental payments due to the Company over the course a sublease agreement between the Company and Entest BioMedical, Inc.
During the nine months ended June 30, 2010:
The Company issued 350,000 shares of common stock for services valued at $47,000.
The Company issued 3,273,333 shares of common stock in satisfaction of $98,200 of principal indebtedness.
The Company issued 40,000 shares of common stock as a contingent payment for services previously rendered.
The Company issued 229,607 shares of common stock in satisfaction of $30,269 of accrued interest.
The Company issued 1,433,333 common shares in full satisfaction of a $100,000 face value of convertible debentures bearing interest at 14% per annum.
The Company issued 1,011,657 shares of common stock to Preferred Shareholders in exchange for 1,011,657 shares of preferred stock.
The Company issued 3,000,000 shares of common stock in satisfaction of $30,000 owed by the Company to holders of the Company’s convertible debentures.
The Company issued 2,511,546 of its common shares in satisfaction of $288,828 of rental expenses.
The Company issued 3,593,268 shares of common stock to Bombardier Pacific Ventures, Inc., in satisfaction of $251,529 of debt owed by the Company to Bombardier Pacific Ventures.
The Company issued 6,777,920 shares of common stock in satisfaction of $234,454 of debt owed by the Company to various note holders and holders of the Company’s convertible debentures.
The Company issued 4,454,994 shares of common stock to David Koos, the Company’s Chairman and CEO, in satisfaction of $304,500 in accrued salary owed by the Company to David Koos.
During the nine months ended May 31, 2010, Entest.:
Sold 500,000 common shares for $50,000 of which $45,000 was deposited with BMSN to be applied to rental payments due to the Company over the course of sublease agreement between the Company and Entest BioMedical, Inc.
Issued 3,040 common shares to David Koos as consideration for services rendered valued at $4,560.
NOTE 11. SERIES B PREFERRED STOCK DIVIDEND
On May 15, 2009 the Company paid a dividend of one Series B Preferred Share for every fifty common or preferred shares held of record as of May 5, 2009.
NOTE 12. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes of capital stock as of September 30, 2010:
* Preferred stock, $ 0.0001 par value; 20,000,000 shares authorized:
1,963,821 Preferred shares issued and outstanding.
4,852 Series AA Preferred Shares issued and outstanding
725,409 Series B Preferred Shares issued and outstanding
Common stock, $ 0.0001 par value; 80,000,000 shares authorized: 70,404,033 shares issued and outstanding.
NOTE 13. COMMITMENTS AND CONTINGENCIES
On August 3, 2005, BMSG entered into an agreement to lease a 14,562 square foot facility for use as a cellular storage facility at a rate of $18,931 per month. The lease is for a period of five years commencing on December 1, 2005 and expiring on November 30, 2010. The lease contains a renewal option enabling the Company to renew the lease for an additional five years. There are no contingent payments which the Company is required to make. As of November 30, 2010, the Company elected not to renew the lease and is currently utilizing 3,000 square feet of office space in La Mesa California at a rate of $4,176 per month.
On August 16, 2010 a Complaint (“Complaint”) was filed in the Superior Court of the State of California, County of San Diego Central Division against the Company, the Company’s Chairman, Freedom Environmental Services, Inc. and the BMXP Holdings Inc. Shareholder’s Business Trust, a Nevada Business Trust (collectively “Defendants”) by Princeton Research, Inc. and Jan Vandersande (collectively “Plaintiffs”) seeking to recover general damages in excess of $25,000, punitive damages in excess of $25,000 and attorney’s fees. The Complaint alleges breach of fiduciary duty of loyalty, fraud and deceit in connection with the late distribution of shares of the Company to beneficiaries of the BMXP Holdings Inc. Shareholder’s Business Trust. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters,
NOTE 14. CONVERTIBLE DEBENTURES
On November 14, 2007 the Company sold a $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $50,000 to one purchaser.
Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is November 14, 2009.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of the common stock of the Company by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) the Selling Shareholder Registration Statement has been withdrawn by the Company,
the holder may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at the conversion rate of $0.15 per Share.
Subsequent to any conversion, the holder shall have the right, upon written demand to Company (“Registration Demand”), to cause Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On November 30, 2007, the Company sold $75,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $75,000 to one purchaser.
Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is November 14, 2009.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of the Company’s common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) the Selling Shareholder Registration Statement has been withdrawn by the Company.
The holder may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January 8, 2008, the Company sold $18,400 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $18,400 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is December 28, 2009.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) the Selling Shareholder Registration Statement has been withdrawn by the Company.
The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January 18, 2008, the Company sold $200,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $200,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) the Selling Shareholder Registration Statement has been withdrawn by the Company.
The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.25 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On January18, 2008, the Company sold $100,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $100,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) the Selling Shareholder Registration Statement has been withdrawn by the Company.
The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.25 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
The Company shall agree to the granting of a Lien to the Holder against collateral which the Company owns or intends to purchase, namely:
Flow Cytometer (4 Color) (BD Facscanto)
Laboratory computer system/also for enrollments/storage tracking
Hematology Analyzer (celldyne 1800)(ABBOTT)
Laminar Flow Hood 4 ft ( Clean hood) (2)
Bench top centrifuges (2) refrigerated
Small equipment (lab set-up)
Microscope
Tube heat sealers (2 ea)
Barcode printer and labeling device
On February 15, 2008, the Company sold $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $50,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is February 15, 2010.
At any time subsequent to the expiration of a six month period since either of:
(i) that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or
(ii) The Selling Shareholder Registration Statement has been withdrawn by the Company.
The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.10 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On March 3, 2008 the Selling Shareholder’s Registration Statement was withdrawn by the Company.
On March 3, 2008, the Company sold $10,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $10,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is March 3, 2010.
At any time subsequent to the expiration of a six month period from March 3, 2008, the holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).
Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.
On February 2, 2010 the Company issued 1,433,333 common shares in full satisfaction of a $100,000 face value of convertible debentures bearing interest at 14% per annum.
On February 10, 2010 the Company issued 3,000,000 shares of common stock in satisfaction of $30,000 owed by the Company to holders of the Company’s convertible debentures bearing interest at 12% per annum.
On March 31, 2010 the Company issued 4,000,000 shares of common stock in satisfaction of $40,000 owed by the Company to holders of the Company’s convertible debentures bearing interest at 12% per annum.
NOTE 15: ACQUISITION OF BIO-MATRIX SCIENTIFIC GROUP (NEVADA).
On June 14, 2006, the Company and Bio-Matrix Scientific Group, Inc., a Delaware corporation (the “Seller”) entered into a Stock Purchase Agreement (the “Acquisition Agreement”).
Under the terms of the Acquisition Agreement and pursuant to a separate Escrow Agreement between the Company and the Seller, The Company delivered to the Escrow Agent the sum of 10,000,000 shares of the Company's common stock and other corporate and financial records and the Seller delivered to the Escrow Agent 25,000 shares of the common stock of BSMG., a Nevada corporation (the “Subsidiary”). As a part of the transaction and pursuant to the terms of the Acquisition Agreement and Stock Cancellation Agreement between the parties and John Lauring, the Company's former Chairman and Chief Executive Officer, John Lauring returned 10,000,000 shares of the Company held and owned by him for cancellation.
On June 14, 2006, the Company's officers and directors resigned their positions and elected Dr. David R. Koos and Mr. Brian Pockett as in-coming Directors of the Registrant. Following their election and the reconstruction of the Board of Directors, the Registrant's Board of Directors elected Dr. David R. Koos as Chief Executive Officer and President and Mr. Brian Pockett as Chief Operating Officer and Vice President on June 19, 2006.
On July 3, 2006, the Acquisition Agreement closed and Company acquired the twenty-five thousand (25,000) shares of the Common Stock of the Subsidiary from the Seller in exchange for the payment of the purchase price of 10,000,000 shares of the common stock of the Company and the 10,000,000 shares of the Company owned and held by John Lauring were returned to the Company for cancellation. At that time, the Escrow Agent released all stock certificates and certain other corporate and financial books and records held pursuant to the Escrow Agreement.
As a result of the Acquisition Agreement, the Subsidiary became a wholly owned subsidiary of the Company and the Seller became the holder of approximately 78.24% of the outstanding common stock of the Registrant. For financial accounting purposes, this acquisition was a reverse acquisition of the Company by Bio-Matrix Scientific Group, Inc under the purchase method of accounting, and was treated as a recapitalization with Bio-Matrix Scientific Group, Inc. as the acquirer.
NOTE 16. ACQUISITION OF ENTEST
On July 10, 2009 Entest (then called JB Clothing Corporation) acquired Entest BioMedical, Inc. (“Entest CA”) a California corporation and wholly owned subsidiary of the Company, from the Company for consideration consisting of (a) the issuance to the Company of 10,000,000 newly issued common shares of Entest and (b) the return by Mr. Rick Plote of 10,000,000 shares of Entest’s common stock previously issued to him by Entest for cancellation. With the return of ten million shares of Entest’s common stock held by Mr. Plote, the Company has become Entest’s largest single stockholder, currently owning 57% of the share capital of Entest as of September 30, 2009 and Entest CA has become a wholly owned subsidiary of Entest. . As of August 31, 2010 (the fiscal year end of Entest) the Company owned approximately 56% of the outstanding share capital of Entest. As of November 30, 2010 the Company owns approximately 51% of the outstanding share capital of Entest. Since the acquisition, Entest has amended its charter to change its name to Entest BioMedical, Inc.
NOTE 17. 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 which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
Level 1: Quoted prices in active markets for identical assets or liabilities
Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s financial instruments as of September 30, 2010 consisted of $247,669 of Notes Payable, $333, 400 of Convertible Debentures and $1, 396 of Employee Receivables. The fair value of all of the Company’s financial instruments as of September 30, 2010 were valued according to the Level 2 input. The carrying amount of the financial instruments is equal to the fair value as determined by the Company.
NOTE 18. SUBSEQUENT EVENTS
On October 7, 2010 Entest sold 2,000,000 common shares (“Shares”) to an individual investor for consideration consisting of $100,000.
On November 17, 2010 Entest issued 45,000 common shares (“Shares”) to contractors and consultants as consideration for services rendered.
On November 30, 2010 Entest issued 10,000 common shares (“Shares”) to a consultant as consideration for services rendered.
On January 3, 2011 Entest issued 25,000 common shares (“Shares”) to its CFO as consideration for services rendered.
On January 3, 2011 Entest issued 13,000 common shares (“Shares”) to employees as consideration for services rendered.
On January 3, 2011 Entest issued 38,712 common shares (“Shares”) in satisfaction of $39,989 of principal and interest indebtedness.
On January 4, 2011 Entest issued 9,383 common shares (“Shares”) to a consultant for services rendered.
On January 4, 2011 Entest issued 102,766 common shares (“Shares”) for the purchase of Pet Pointers, Inc. dba McDonald Animal Hospital.
On January 26, 2011 Entest sold 200,000 common shares (“Shares”) to an individual investor for consideration consisting of $100,000.
On February 4, 2011 Entest issued 10,000 common shares (“Shares”) to a consultant for services rendered.
On February 4, 2011 Entest issued 5,000 common shares (“Shares”) to a consultant for services rendered.
On February 17, 2011 Entest issued 1,785,714 common shares in satisfaction of $50,000 face value of convertible debentures.
On February 3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania against the Company, the Company’s Chairman and Entest. by 18KT.TV LLC (“Plaintiffs”). The Complaint is seeking damages from the Company and Entest in excess of $125,000 and alleges breach of contract, unjust enrichment and breach of implied in fact contract by the Company and Entest in connection with agreements entered into with the plaintiffs by both the Company and Entest.
On or about May 2, 2011 all counts in the complaint were dismissed with prejudice with the exception of one count of breach of contract against the Company and one count of breach of contract against Entest.
The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.
On January 4, 2011, 2010 Entest BioMedical, Inc. (“Entest CA”), a California corporation and a wholly owned subsidiary of Entest BioMedical, Inc., a Nevada corporation (the “Company”) acquired from Pet Pointers, Inc., a California corporation doing business as McDonald Animal Hospital (“Seller”), and Dr. Gregory McDonald DVM (“McDonald”) all the goodwill from McDonald and assets of Seller except cash and accounts receivables used in connection with the operation of a veterinary medical clinic located at 225 S. Milpas Street, Santa Barbara, CA 93103 (the "Business").
Consideration for the acquisition consisted of:
I. $70,000 in cash
II. $210,000 of the common shares of Entest valued at the closing price per share as of January 4, 2011
III. Payment of no more than $78,000 to a creditor of the Seller to be paid in monthly installments of $1,500 per month
IV. Payment of no more than $25,000 to additional creditors of the Seller to be paid in monthly installments of $825 per month
V. Payment of $50,000 to McDonald on the first business day of the fourth month following the closing of the acquisition (“Closing”)
Entest is also obligated to make payment to McDonald of that number of shares of common stock of Entest valued at the closing bid price of the trading day immediately prior to issuance which shall equal $70,000 upon completion of the first calendar year during the Employment Period (as such period is defined in the employment agreement entered into between McDonald and Entest CA dated December 31, 2010 ) in which the Business generates gross sales in excess of $700,000.
Pursuant to the Employment Agreement, Entest CA shall employ McDonald to:
I. be the Managing Licensee and Supervising Veterinarian of the Business and manage the Business
II. assist Entest CA in identifying and employing one or more additional veterinarians
III. assist Entest CA in the identification and acquisition of additional veterinary clinics and
IV. assist Entest CA in development of Entest’s immuno-therapeutic cancer vaccine for canines
The Term of the Employment Agreement shall commence upon the Closing of the Asset Purchase Agreement , shall expire three years from that date, and may be extended by mutual agreement (“Employment Period”). Pursuant to the Employment Agreement McDonald is to receive $4,167 dollars per month in salary. Upon completion of any fiscal year during the Employment Period in which the
Business generates net sales (gross sales less any returns and / or charge backs) in excess
of $700,000, McDonald shall be entitled to receive a bonus of:
(i) 7.14% of the annual gross collections in excess of $700,000 achieved by the Business during that period in the form of a cash payment.
(ii) 5% of the annual gross collections in excess of $700,000 achieved by the Business during that period in the form of shares of common stock of Entest valued at the closing bid price of the trading day immediately prior to issuance.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
In connection with a change of accountant,
(a)
During the Company’s two most recent fiscal years and any subsequent interim period preceding such resignation, declination or dismissal there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report.
(b)
There was no reportable event as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K
Item 9A.
Item 9A. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures.
The principal executive officer and principal financial officer has evaluated the Company’s disclosure controls and procedures as of September 30, 2010. Based on this evaluation, he has concluded that the disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. David Koos, the Company’s CEO and Acting CFO, functions as both the Company’s principal executive officer and principal financial officer.
b) Management’s annual report on internal control over financial reporting.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) promulgated under the Securities and Exchange Act of 1934. Rule 13a-15(f) defines internal control over financial reporting as follows:
“The term internal control over financial reporting is defined as a process designed by, or under the supervision of, the issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the financial statements.”
The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only a reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.
The Company’s management assessed the effectiveness of its internal control over financial reporting as of September 30, 2010 based on the framework in “Internal Control over Financial Reporting - Guidance for Smaller Public Companies (2006) issued by the Committee of Sponsoring Organizations of the Treadway Commission.” Based on its assessment, management believes that, as of September 30, 2010, the Company’s internal control over financial reporting is effective.
Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report. This exemption for smaller reporting companies provided under the temporary rules referenced above has been made permanent under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
(c) There have been no changes during the quarter ended September 30, 2010 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
Item 9B.
Item 9B. Other Information.
Not applicable.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
David Koos has served as Chairman, CEO, President, Secretary, and Acting CFO of the BMSN since June 19, 2006, Chairman CEO, President, Secretary, and Acting CFO of Entest Bio since August 22, 2008 and Chairman , President, Chief Executive Officer, Secretary, Chief Financial Officer, Principal Accounting Officer of Entest since June 19, 2009.
Education:
DBA - Finance (December 2003)
Atlantic International University
Ph.D. - Sociology (September 2003)
Atlantic International University
MA - Sociology (June 1983)
University of California - Riverside, California
Five Year Employment History:
* Amerivet Securities Inc. has not been active during the period as the Chief Executive Officer was on deployment in Iraq through the U.S. Army Reserves.
Section 16(a) Beneficial Ownership Compliance.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Such persons are further required by SEC regulation to furnish us with copies of all Section 16(a) forms (including Forms 3, 4 and 5) that they file. Based solely on our review of the copies of such forms received by us with respect to fiscal year 2010, or written representations from certain reporting persons, we believe all of our directors and executive officers met all applicable filing requirements, except as described in this paragraph:
David Koos, an officer and director of the Company, filed three late Form 4s in which five transactions were not reported on a timely basis.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to our Directors, officers and employees. The Code is filed as Exhibit A of our Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed with the Commission on August 11, 2006 . A written copy of the Code will be provided upon request at no charge by writing to our Chief Executive Officer, David Koos, at:
DAVID KOOS, PHD
BIO-MATRIX SCIENTIFIC GROUP, INC.
4700 SPRING STREET, SUITE 203, LA MESA, CALIFORNIA, 91942
Director Independence
Audit Committee and Audit Committee Financial Expert
The Company’s sole Director may not be considered independent as he is also an officer. The Company is not a "listed company" under Securities and Exchange Commission (“SEC”) rules and is therefore not required to have an audit committee comprised of independent directors. The Company does not currently have an audit committee, however, for certain purposes of the rules and regulations of the SEC and in accordance with the Sarbanes-Oxley Act of 2002, the Company’s Board of Directors is deemed to be its audit committee and as such functions as an audit committee and performs some of the same functions as an audit committee including: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; and (3) engaging outside advisors. The Board of Directors has determined that its sole member is able to read and understand fundamental financial statements and has substantial business experience that results in that member's financial sophistication. Accordingly, the Board of Directors believes that its member has the sufficient knowledge and experience necessary to fulfill the duties and obligations that an audit committee would have.
Nominating and Compensation Committees
The Company does not have standing nominating or compensation committees, or committees performing similar functions. The board of directors believes that it is not necessary to have a compensation committee at this time because the functions of such committee are adequately performed by the board of directors. The board of directors also is of the view that it is appropriate for the Company not to have a standing nominating committee because the board of directors has performed and will perform adequately the functions of a nominating committee. The Company is not a "listed company" under SEC rules and is therefore not required to have a compensation committee or a nominating committee.
Shareholder Communications
There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. Currently, the entire board of directors decides on nominees, on the recommendation of any member of the board of directors followed by the board’s review of the candidates’ resumes and interview of candidates. Based on the information gathered, the board of directors then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee.
Because management and directors of the Company are the same person, the Board of Directors has determined not to adopt a formal methodology for communications from shareholders on the belief that any communication would be brought to the board of directors’ attention by virtue of the co-extensive capacities served by David Koos.
Executive Compensation
** Does not include $312,000 in Accrued Compensation outstanding as of September 30, 2009.
*** includes four million of our common shares issued to David Koos on June 22, 2009 and a Restricted Stock Award of 2,000,000 common shares of Entest issued to David Koos on August 8, 2009 (“Koos Award”).
The Koos Award
(a)may not be transferred or hypothecated until the expiration of a six month period from the issuance date (“Vesting Date”) and
b) is subject to forfeiture in the event that Koos shall cease serving as Chief Executive Officer of Entest prior to the Vesting Date.
David Koos is not party to an executed employment agreement. From April 2007 until October 2008 we had agreed to compensate David Koos $12,000 per month for his services, exclusive of any bonuses or benefits. From October of 2008 to the present, we have agreed to compensate David Koos $25,000 per month for his services, exclusive of any bonuses or benefits. The majority of this compensation has been accrued.
**** Does not include $414,500 in Accrued Compensation outstanding as of September 30, 2010.
***** Includes issued 4,454,994 shares of the common stock of the Company as well as 3040 of the common shares of Entest
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information as of the close of business on March 10, 2011, concerning shares of our common stock beneficially owned by (i) each director; (ii) each named executive officer; (iii) by all directors and executive officers as a group; and (iv) each person known by the Company to own beneficially more than 5% of the outstanding shares of common stock.
Based on 72,189,747 shares issued and outstanding as of March 10, 2011
(a) Includes 4,159,085 shares owned by Bombardier Pacific Ventures Inc., which is wholly owned by David Koos and 104,160 shares owned AFN Trust for which David Koos serves as Trustee.
The following table sets forth information as of the close of business on March 10, 2011, concerning shares of our preferred stock beneficially owned by (i)each director; (ii) each named executive officer; (iii) by all directors and executive officers as a group; and (iv) each person known by the Company to own beneficially more than 5% of the outstanding shares of preferred stock.
Based on 1,925,846 shares issued and outstanding as of March 10, 2011
(a)
Includes 458,503 Preferred Shares owned by BMXP Holdings Shareholder Business Trust. David R. Koos is the Trustee of BMXP Holdings Shareholder Business Trust. (b) Includes 62,056 shares owned by Bombardier Pacific Ventures Inc., which is wholly owned by David Koos and AFN Trust for which David Koos serves as Trustee .
The following table sets forth information as of the close of business on March 10,2011 concerning shares of our Series B preferred stock beneficially owned by (i)each director; (ii) each named executive officer; (iii) by all directors and executive officers as a group; and (iv) each person known by the Company to own beneficially more than 5% of the outstanding shares of Series B preferred stock.
Based on 724,222 shares issued and outstanding as of March 10, 2011
(a)
Includes 9,171 Preferred Shares owned by BMXP Holdings Shareholder Business Trust. David R. Koos is the Trustee of BMXP Holdings Shareholder Business Trust. (b) Includes 58,935 shares owned by Bombardier Pacific Ventures Inc., which is wholly owned by David Koos and 836 shares owned by AFN Trust for which David Koos serves as Trustee
The following table sets forth information as of the close of business on March 10,2011 concerning shares of our Series AA Preferred stock beneficially owned by (i) each director; (ii) each named executive officer; (iii) by all directors and executive officers as a group; and (iv) each person known by the Company to own beneficially more than 5% of the outstanding shares of Series AA Preferred stock.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
On March 31, 2010 the Company issued 3,593,268 shares of common stock (“Shares”) to Bombardier Pacific Ventures, Inc., an entity controlled by the Company’s Chairman and CEO, in satisfaction of $251,529 of debt owed by the Company to Bombardier Pacific Ventures.
On March 31, 2010 the Company issued 4,454,994 shares of common stock to David Koos, the Company’s Chairman and CEO, in satisfaction of $304,500 in accrued salary owed by the Company to David Koos.
Director Independence
Audit Committee and Audit Committee Financial Expert
The Company’s sole Director may not be considered independent as he is also an officer. The Company is not a "listed company" under Securities and Exchange Commission (“SEC”) rules and is therefore not required to have an audit committee comprised of independent directors. The Company does not currently have an audit committee, however, for certain purposes of the rules and regulations of the SEC and in accordance with the Sarbanes-Oxley Act of 2002, the Company’s Board of Directors is deemed to be its audit committee and as such functions as an audit committee and performs some of the same functions as an audit committee including: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; and (3) engaging outside advisors. The Board of Directors has determined that its sole member is able to read and understand fundamental financial statements and has substantial business experience that results in that member's financial sophistication. Accordingly, the Board of Directors believes that its member has the sufficient knowledge and experience necessary to fulfill the duties and obligations that an audit committee would have.
Nominating and Compensation Committees
The Company does not have standing nominating or compensation committees, or committees performing similar functions. The board of directors believes that it is not necessary to have a compensation committee at this time because the functions of such committee are adequately performed by the board of directors. The board of directors also is of the view that it is appropriate for the Company not to have a standing nominating committee because the board of directors has performed and will perform adequately the functions of a nominating committee. The Company is not a "listed company" under SEC rules and is therefore not required to have a compensation committee or a nominating committee.
Shareholder Communications
There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. Currently, the entire board of directors decides on nominees, on the recommendation of any member of the board of directors followed by the board’s review of the candidates’ resumes and interview of candidates. Based on the information gathered, the board of directors then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee.
Because management and directors of the Company are the same person, the Board of Directors has determined not to adopt a formal methodology for communications from shareholders on the belief that any communication would be brought to the board of directors’ attention by virtue of the co-extensive capacities served by David Koos.
Item 14.
Item 14. Principal Accounting Fees and Services.
The following table sets forth the aggregate fees billed by Moore and Associates, Chartered.
Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements.
Audit Related Fees: Aggregate fees billed for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees” above.
All services listed were pre-approved by the Board of Directors, functioning as the Audit Committee in accordance with Section 2(a) 3 of the Sarbanes-Oxley Act of 2002.
The Board has considered whether the services described above are compatible with maintaining the independent accountant's independence and has determined that such services have not adversely affected Moore and Company, Chartered’s independence.
The following sets forth the aggregate fees billed by Seale and Beers, CPAs:
Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements.
Audit Related Fees: Aggregate fees billed for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees” above.
All services listed were pre-approved by the Board of Directors, functioning as the Audit Committee in accordance with Section 2(a) 3 of the Sarbanes-Oxley Act of 2002.
The Board has considered whether the services described above are compatible with maintaining the independent accountant's independence and has determined that such services have not adversely affected Seale and Beers, CPAs’ independence.
The following sets forth the aggregate fees billed by John Kinross Kennedy, CPA:
Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements.
Audit Related Fees: Aggregate fees billed for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees” above.
All services listed were pre-approved by the Board of Directors, functioning as the Audit Committee in accordance with Section 2(a) 3 of the Sarbanes-Oxley Act of 2002.
The Board has considered whether the services described above are compatible with maintaining the independent accountant's independence and has determined that such services have not adversely affected John Kinross Kennedy, CPA’s independence.
PART IV
Item 15.
Item 15. Exhibit Index
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bio-Matrix Scientific Group, Inc.
By:
/s/ David R. Koos
Name: David R. Koos
Title: Chairman, Chief
Executive Officer, President, Acting Chief Financial Officer
Date: May 10, 2011
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ David R. Koos
David R. Koos
Chairman of the Board
May 10, 2011