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United States Securities and Exchange Commission

Washington, D.C.  20549

 

Form 10-K/A

(Amendment No. 1)

 

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

 

For the fiscal year ending August 31, 2012

 

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

 

For the transition period from ___________ to ___________.

 

Commission file number: 333-154989

 

ENTEST BIOMEDICAL, INC.

(Name of small business issuer in its charter)

 

Nevada   26-3431263
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

4700 Spring Street, Suite 304, La Mesa, California, 91942

(Address of Principal executive offices)

 

Issuer’s telephone number: ( 619) 702-1404

 

_______________

 

Securities registered under Section 12(b) of the “Exchange Act” None

 

Securities registered under Section 12(g) of the Exchange Act: None

 

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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
Large accelerated filer ☐ Accelerated filer ☐ Non accelerated filer ☐
Smaller reporting Company ☑  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐   No ☑

 

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

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $528,715

 

As of January 25, 2013 Entest BioMedical, Inc. had 446,519,900 common shares outstanding, 3,201,397 Series B Preferred shares outstanding, and 5,000 Series AA preferred shares outstanding and 75,000 Non Voting Convertible Preferred shares outstanding.

 

Explanatory Note

 

The sole purpose of this Amendment to the Registrant’s Annual Report on Form 10-K for the period ended August 31, 2012 is to include the proper dates for the Signature page and the Exhibits.

 

 
 

 

In this annual report, the terms “Entest BioMedical, Inc.. ”, “Entest”,  “Company”, “we”, or “our”, unless the context otherwise requires, mean Entest BioMedical, Inc., a Nevada corporation, and its subsidiary.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This annual report on Form 10-K and other reports that we file with the SEC contain statements that are considered forward-looking statements.  Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this annual report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions. These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward looking statements. Any or all of the forward-looking statements in this annual report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements.  The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:

 

·   dependence on key personnel;
·   competitive factors;
·   degree of success of research and development programs
·   the operation of our business; and
·   general economic conditions

 

These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this annual report.

 

 
 

 

PART I

 

Item 1. Business

 

We were incorporated in the State of Nevada on September 24, 2008 as JB Clothing Corporation.  Until July 10, 2009, our principal business objective was the offering of active/leisure fashion design clothing.

 

On July 10, 2009 we abandoned our efforts in the field of active/leisure fashion design clothing when we acquired 100% of the share capital of Entest BioMedical, Inc., a California corporation, (“Entest CA”) from Bio-Matrix Scientific Group, Inc. (“BMSN”) 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 Mr. Rick Plote.

 

As a result of this transaction, the former stockholder of Entest CA held approximately 70% 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 Entest CA under the purchase method of accounting, and was treated as a recapitalization with Entest CA as the acquirer. As of November 1, 2011 the former stockholder of Entest CA held approximately 48% of the outstanding common shares of the Company.

 

Upon acquisition of Entest CA, we abandoned our efforts in the field of active/leisure fashion design clothing.  Our business is currently the business of Entest CA, and we currently intend to develop and commercialize therapies, medical devices and medical testing procedures. On July 12, 2009 we adopted the name of Entest CA when we changed our name to Entest BioMedical, Inc.

 

The Company’s current strategy is to develop and commercialize therapies, medical devices and medical testing procedures for the veterinary market.  It is believed by the Company that any required regulatory approvals can be obtained much more rapidly with regard to products and services developed for the veterinary market and that the achievement of successful clinical trials and commercialization of such products and services may allow the company to enter into collaborations with larger pharmaceutical companies for the purpose of developing and commercializing these products and services for human usage.

 

The process by which a new drug is approved for use in humans within the United States generally begins prior to submission of the IND (Investigational New Drug Application) with the FDA.

 

Prior to submission of the IND, the sponsor of the drug compound under development must test the drugs on laboratory animals (preclinical testing) in order that toxicity may be determined and efficacy may be demonstrated. The results of such preclinical testing is crucial in determining whether or not the sponsor may proceed onto clinical trials on human beings and preclinical testing is required to be performed on multiple species.

 

Drug studies in humans can begin only after an IND is reviewed by the FDA and a local institutional review board (IRB). The board is a panel of scientists and non-scientists in hospitals and research institutions that oversees clinical research.

 

IRBs approve the clinical trial protocols, which describe the type of people who may participate in the clinical trial, the schedule of tests and procedures, the medications and dosages to be studied, the length of the study, the study's objectives, and other details. IRBs make sure the study is acceptable, that participants have given consent and are fully informed of their risks, and that researchers take appropriate steps to protect patients from harm.

 

After trial protocols have been approved the sponsor moves on to Phase I clinical trials (to determine safety and toxicity in a small number of volunteers) and, if Phase 1 studies don't reveal unacceptable toxicity, Phase II and Phase III clinical trials to determine effectiveness.

 

The process by which a new drug is approved for veterinary  use within the United States generally begins with the sponsor researching  and developing  the new compound and conducting  initial (“pilot”) studies on it for a specific use in a specific animal species (called the “target animal” species) If the results of the pilot studies are promising and there is a potential market for the drug, the drug sponsor contacts The US Food and Drug Administration’s Center for Veterinary Medicine (CVM) to officially begin the drug approval process by opening an Investigational New Animal Drug (“INAD”) file.  Information is submitted regarding Chemistry, Manufacturing, and Controls; Effectiveness; Target Animal Safety; Human Food Safety(if applicable); Environmental Impact (if applicable) and Labeling in support of the NADA (New Animal Drug Application) which is submitted by the sponsor for approval by the FDA.

 

With the exception of a biologic product which can be classified as a medical device,  Biologics developed for human use generally are undergo the same path to FDA approval as  for drugs. Biologics classified as medical devices may, in most instance, be subject to premarket approval by the FDA. Medical devices intended for veterinary use are not subject to premarket approval by the FDA.

 

Veterinary Biologics are regulated by the U.S. Department of Agriculture (USDA)  which is authorized, under the 1913 Virus-Serum-Toxin Act as amended by the 1985 Food Security 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 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.

 

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.

 

It is the Company’s opinion that factors such as the lack of need for multispecies pre clinical testing, smaller subject size in efficacy testing (subjects generally  in the hundreds for veterinary equivalent of Phase III clinical trials as opposed to generally  in the thousands for Phase III clinical trials for drug compounds for use in humans), lack of the requirement for premarket approval  for medical devices intended for veterinary use should generally lead to a shorter timeframe for approval by the appropriate regulators of drugs, biologics, and medical devices intended for veterinary use as opposed to drugs, biologics, and medical devices intended for human use.

 

The Company is currently focusing its efforts and allocating its resources towards:

(a) The development and commercialization of ImenVax™, a therapeutic cancer vaccine for use in canines

 

(b) The acquisition of veterinary clinics

 

The Company is attempting to acquire currently existing veterinary clinics so that it may benefit from:

(a) Cash flow generated from operations during the development stage of the Company’s products and services,

(b) Utilization of the clinics for clinical testing,

(c) Utilization of the clinics as a distribution channel for the Company’s products and services.

On January 4, 2011, 2010, Entest CA acquired from Pet Pointers, Inc. ( a California corporation doing business as McDonald Animal Hospital) and Dr. Gregory McDonald DVM all the goodwill from Dr. McDonald and assets of Pet Pointers, Inc 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 which conducts business under the name McDonald Animal Hospital.

Consideration for the acquisition consisted of:

I. $70,000 in cash

II. $210,000 of the common shares of the Company 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 sellers to be paid in monthly installments of $1,500 per month

IV. Payment of no more than $25,000 to additional creditors of the sellers to be paid in monthly installments of $825 per month

V. Payment of $50,000 to Dr. McDonald on the first business day of the fourth month following the closing of the acquisition (“Closing”)

The Company also became obligated to make payment to Dr. McDonald of that number of shares of common stock of the Company’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 acquired generates gross sales in excess of $700,000.

The payment of $50,000 due to Dr. McDonald was satisfied by the Company through the issuance of 143,000 of our common shares to Dr. Gregory McDonald on August 29, 2011.

Dr. McDonald was terminated from his position as Managing Licensee and Supervising Veterinarian of the McDonald Animal Hospital on March 30, 2012.

On October 10, 2012 a Complaint (“Complaint”) was filed in the Superior Court of the State of California against the Company and David Koos by McDonald, a former employee of the Company, alleging breach of contract and breach of the covenant of good faith and dealing in connection with the assumption of lease obligations by the Company in connection with the acquisition of the assets of Pet Pointers, Inc breach of contract and breach of the covenant of good faith and dealing in connection with an employment agreement enters into with McDonald inc connection with the Acquisition, breach of contract in connection with the Acquisition purchase agreement, breach of the covenant of good faith and dealing in connection with the Acquisition purchase agreement, implied indemnity in connection to amounts owed by McDonald to Anthony and Judi Marinelli, the Internal Revenue Service, and the California Franchise Tax Board, intentional misrepresentation, negligent misrepresentation , failure to pay wages and violations of Sections 2802, 203, and 2806 of the California Labor Code. The Complaint sought judgment for nominal damages, actual damages, compensatory damages, lost wages, compensation, expenses wage benefits and penalties pursuant to California Labor Code Sections 203 et al, 2802 and 2806, indemnification, accrued interest, punitive damages, costs of suit and attorney’s fees.

On November 28, 2012 the “Company executed an agreement (“Agreement”) with Gregory McDonald ("McDonald"), Pet Pointers, Inc. ("Pet Pointer") whereby Mc Donald and Pet Pointer would acquire from the Company all assets ( with the exception of cash and accounts receivable) utilized by the Company in the operation of the McDonald Animal Hospital, a full service veterinary clinic owned and operated by the Company and located in Santa Barbara, California (“McDonald Asset Sale”).

As consideration to the Company for the assets acquired, McDonald and Pet Pointers provided to the Company a General release whereby McDonald and Pet Pointer waive, release and discharge the Company and their respective assignees, officers, directors, shareholders, boards, owners, employees, attorneys, agents, trustors, trustees, beneficiaries, heirs, successors, and representatives from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses including:

(1) All claims relating to the Complaint.

(2) Those amounts owed by McDonald to Anthony and Judi Marinelli which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

(3) Those amounts owed by McDonald to the Internal Revenue Service which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

(4) Those amounts owed by McDonald to the California Franchise Tax Board which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

Assets disposed of pursuant to the Agreement include approximately $4,897 of Property Plant and Equipment net of accumulated depreciation as well as all inventory held at the McDonald Animal Hospital.

Assets disposed of pursuant to the Agreement also include

(i) Essentially all intellectual property, including computer software, utilized in connection with the operation of the McDonald Animal Hospital

(ii) All telephone numbers, fax numbers, service marks, trademarks, trade names, fictitious business names, websites, business email addresses, vendor lists, promotional materials, vendor records and any and all business records including, but not limited to, such items stored in computer memories, microfiche, paper record or by any other means relevant to the operation of the McDonald Animal Hospital.

(iii) All customer lists, customer contacts, and any and all customer records that are related to the McDonald Animal Hospital.

As a result of the agreement, the Company anticipates recording a non-cash pre-tax charge for the impairment of goodwill recorded in connection with the acquisition of the McDonald Animal Hospital of approximately $405,000 for the quarter ended November 30, 2012.

Pursuant to the Agreement, the Company became obligated to make payment of $13,000 within five days of the Closing of the Agreement as such term is defined in the Agreement.

Pursuant to the Agreement, the Company agrees to waive, release and discharge McDonald and Pet Pointer from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses.

Pursuant to the Agreement, the Company agrees not to engage in a competing business within a 5 mile radius of the property currently housing the McDonald Animal Hospital for three years.

The acquisition of existing veterinary clinics / hospitals remains an integral part of the Company’s business plan. At this time, the company is seeking to identify and acquire veterinary practices existing and operating within the areas of San Diego, California and Orange County, California .The Company believes that these areas are close enough in proximity the Company’s headquarters to allow ease of interaction with the Company's management . In addition, the Company believes owning and operating veterinary clinics within the San Diego, California and Orange County , California areas will provide greater convenience for persons involved with the Company's research and development activities who may be required to utilitize those facilities. The company is currently in discussions with entities it believes can expedite local clinic acquisitions.

The Company has not undertaken any discussions with any pharmaceutical companies regarding the commercialization of any products under development. None of the Company’s products have been approved by any regulatory body for marketing within the United States or anywhere else. No assurance can be given that all or any of the Company’s currently planned products will ever be commercialized. Therapies which are veterinary biologics may be administered to patients of veterinary clinics that may be acquired 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. 

 

Principal Products and Services

 

The Company is currently focusing its research and development efforts toward the successful development and commercialization of the ImenVax family of canine cancer vaccines as well as the acquisition of existing veterinary clinics / hospitals to be utilized as potential distribution channels for its ImenVax family of canine cancer vaccines. 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 the Company from current operations. 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 the Company, is a therapeutic for canine cancer which involves isolating tumor cells from the patient and then placing the cells into a cell implant device that is inserted subcutaneously into the patient.  The resulting expression of tumor antigens from the device is intended to generate an anti-tumor immune response. The implant chamber device provokes immune responses to the tumor cells isolated from the patient’s own tumor through a process known as indirect presentation. Tumor cells implanted in the device are exposed to conditions that are distinct from the tumor’s environment from which they were isolated. This altered environment allows for anti-tumor responses that are not ordinarily observed in the natural tumor progression.

 

The cells are :

 

1) Isolated from the tumor and freed from the natural tumor microenvironment

2) Subjected to an initial ischemic condition of hypoxia that induces increased antigen expression

3) Allowed to repopulate within the device in a context that facilitates extended release of tumor antigens.

 

The device utilized is comprised of a 0.4 micron inner membrane to retain the implanted cells and an

outer 5 micron membrane that allows blood vessels to form on the surface to enhance biocompatibility. The outer membrane is held in place by a polyester mesh. The membranes are sonically sealed using a polyester mesh insert.

 

The device contains a surface architecture that promotes vascularization in-vivo. There is an initial ischemic phase that may additionally influence the tumor cell growth characteristics and genetic regulation of the tumor cells.

 

It is hypothesized that shortly after implantation, the expression of immunosuppressive molecules is down regulated while the release of antigens is maintained, thus allowing immune responses to occur that would normally be suppressed.

 

The Antigens that are released from the implanted device are taken up by antigen presenting cells (APC).

It is believed that the APCs will be trained to recognize the cancer cells and alert the body’s immune response, activating antibodies and T cells to destroy the tumor cells.

 

The Company is currently conducting a ten dog safety study to Evaluate ImenVax™ I for the Treatment of Canine Oral Melanoma and determine adverse effects, if any. As of May 17, 2012 three dogs suffering from oral melanoma have been administered the therapy with no dog suffering any material adverse reaction.

 

Inclusion in the Safety Study is limited to ten dogs with histologically confirmed canine oral melanoma with a Studied Karnofsky performance status of one or less. The subject are required to be over  eight kg with measurable tumor lesions by caliper or imaging, either primary or metastatic,  that may or may not have had prior non-immunological-based therapy. No concurrent NSAID therapy is allowed and previous use of immune-based therapies is not permitted. Subjects are required to  have a two month life expectancy, and, not have any disease or condition (other than the cancer)  that would preclude living for 3 to 6 months.

 

Toxicity is evaluated prior to, and after, treatment and monthly for  a period of 3 months. To date, subjects have been recruited solely from patients of the McDonald Animal Hospital in order that the therapy may be administered 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. To date, 3 dogs have been enrolled in the safety study with none exhibiting any adverse effects. The Company estimates that an additional $100,000 will be required to be expended to complete the safety study.

 

Subsequent to completion of the safety study and pending favorable results, the Company plans to offer ImenVax™ I to its own patients 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 subject to the successful acquisition of one or more veterinary clinics by the Company.

 

ImenVax II

 

Also in early stage development by the Company is a version of ImenVax called ImenVax II which utilizes cell lines for sustained release of immunologically relevant cytokines for maximum anti-tumor immune responses. It is believed by the Company 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 II is designed to function in a manner similar to ImenVax™ I. However, In order to further potentiate the tumor antigen specific immune responses, the Company intends to include adjuvant cytokine(s) along with tumor cells into the implantation device.   The adjuvants can be added through cytokine expressing cell line. The implantation device to be utilized for administering ImenVax II is expected to be substantially similar to that utilized in administering ImenVax™ I.

 

ImenVax III

 

ImenVax III is intended to function by harnessing the ability of placental extracts to combat canine cancers. ImenVax™III is intended to treat existing tumors through stimulation of 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.

 

Xenogeneic (from different species) antigen induced immunity has been shown to break self tolerance and capable of engendering immune responses against the endogenous counterpart self-antigen. The use of xenogeneic placental derived agents such as VEGF (vascular endothelial growth factor) has demonstrated regression of soft tissue sarcomas in dogs (Kamstock D, Elmslie R, Thamm D, Dow S. 2007. Evaluation of a xenogeneic VEGF vaccine in dogs with soft tissue sarcoma. 56(8): 1299-309).  

 

ImenVax III is intended to be an off the shelf formulation , manufactured under GMP,  which shall harness the power of trophoblasts (cells forming the outer layer of a blastocyst, which provide nutrients to the embryo and develop into a large part of the placenta) derived  from human placental tissue to combat canine cancers . No tissue processing is required for the administration of the ImenVax III therapy as opposed to I and II as no cellular material from the patient is utilized.

 

ENT-576

 

ENT-576 is a proprietary therapy being developed by the Company for the treatment of Chronic Obstructive Pulmonary Disease (COPD) such therapy comprising of:

 

a) extracting a therapeutic number of cells from a tissue containing in part a stem cell population;

b) processing said population of cells derived from said tissue so as to concentrate said stem cell population;

c) systemic re-administration of said cell population into the same patient; and

d) exposing the patient lung to a sufficient intensity and frequency of laser irradiation necessary to augment therapeutic activity of said cells in said patient suffering from COPD. The Company has also considered  utilizing an FDA approved biochemical drug to produce the desired augmentation of therapeutic activity.

 

A therapeutic intervention in COPD would require addressing the issues of inflammation and regeneration. Although approaches such as administration of bone marrow stem cells or fat derived cellular components have both regenerative and anti-inflammatory activity in animal models, the Company feels  that the  need to enhance their potency for clinical applications can be addressed through the usage of low level lasers which studies have demonstrated  may induce growth factor production, inhibit  inflammation and  stimulate angiogenesis.

 

There can be no assurance that approvals required will be obtained for any of the Company’s current therapies under development, or that if such approvals are obtained that the Company will be able to effectively market its therapies. There can be no assurance given that actual costs and timeframes related to commercialization for any proposed product will not deviate materially from the Company’s estimation. Currently, none of the Company’s products under development may be administered or marketed in the United States or outside of the United states except pursuant to an exemption from relevant regulation. The Company does not anticipate conducting further research and development related to ENT-576™ until completion of the Safety Study due to limited resources available to the Company.

 

Distribution methods of the products or services:

 

The Company 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 if and when such clinics are acquired
  (c) utilization of contract sales organizations

 

On October 19, 2011 the Company entered into an agreement with RenovoCyte  LLC and Medistem Inc. (“Agreement”)  whereby the Company shall provide research services to RenovoCyte  LLC in connection with a ten dog pilot study to determine the safety and effectiveness of the utilization of stem cell therapy for the treatment of arthritis in animals (“Pilot Study”). The term of the Agreement is from October 19, 2011 until the earlier of the completion of the Pilot Study or October 19, 2015 unless terminated by RenovoCyte LLC due to an event of force majeure exceeding a period of 4 months. As consideration for providing services pursuant to the Agreement, the Company shall enjoy joint publishing rights with regards to the results of the Pilot Study.  Canine mesenchymal multipotent stem cell injections to be utilized during the course of the Pilot Study shall be provided to the Company by RenovoCyte LLC at no cost to the Company.

 

As of January 26, 2013 there have been 8 canine patients treated through the Pilot Study.

 

Competitive business conditions and Entest's competitive position in the industry and methods of competition

 

We are recently formed and have yet to achieve 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 to serve as distribution channels for the products and services we produce. 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, we have 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. Brian Koos is the brother of David R. Koos, the Company’s Chairman, President and CEO.

 

Dr. Koos serves as a member of the Advisory Board pursuant to an agreement by and between the Company and Bio-Matrix Scientific Group, Inc. entered into on June 19, 2009 whereby the Bio-Matrix Scientific Group, Inc assigned its rights to the services of Dr. Koos to the Company for consideration to Bio-Matrix Scientific Group of $10,000. Those rights included the services of Dr. Koos as a member of the Company’s Advisory Board for a period ending April 8, 2014.

 

 

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. Josephs serves as a member of the Advisory Board at will and at the pleasure of the Board of Directors of the Company. There is no binding agreement by and between the Company and Dr. Josephs regarding membership on the Advisory Board.

 

 

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. Carrier serves as a member of the Advisory Board at will and at the pleasure of the Board of Directors of the Company. There is no binding agreement by and between the Company and Dr. Carrier regarding membership on the Advisory Board

 

 

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. Lin serves as a member of the Advisory Board at will and at the pleasure of the Board of Directors of the Company. There is no binding agreement by and between the Company and Dr. Lin regarding membership on the Advisory Board.

 

 

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.

 

Dr. Bogin serves as a member of the Advisory Board at will and at the pleasure of the Board of Directors of the Company. There is no binding agreement by and between the Company and Dr. Bogin regarding membership on the Advisory Board.

 

 

Brenda S. Phillips, D.V.M.

 

Dr. Phillips is a veterinary oncologist and co owner of Veterinary Specialty Hospital of San Diego. She received her Doctor of Veterinary Medicine in 1992 from Michigan State University, College of Veterinary Medicine.

 

Dr. Phillips agreed on January 6, 2011 to serve as a member of the Advisory Board for a period of 24 months. In connection with that agreement, Dr. Phillips received 10,000 common shares of the Company.

 

The U.S. market for veterinary services is highly fragmented. According to the American Veterinary Medical Association, there were more than 51,000 veterinarians practicing at the end of 2009. The principal factors in a pet owner’s decision as to which veterinarian to use include convenient location and hours, personal recommendations, reasonable fees and quality of care. In order to be competitive in the animal healthcare industry, we intend to direct our marketing efforts related to clinics , if and when they may be acquired, toward increasing the number of annual visits from existing clients through customer education efforts and toward attracting new clients through local print advertising campaigns.

 

 
 

 

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

 

Entest has not been granted any patents. Entest is not currently party to any royalty agreements.  Entest is not party to any binding labor contracts.

 

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.

 

In the event that a veterinary clinic or clinics can be acquired, the Company plans to attempt to distribute ImenVax™ I 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.

 

ENT-576™ can be considered a “combination product” whose primary mode of action is through animal stem cells (a veterinary biologic) It is intended that the Company will obtain a U.S. Veterinary Biologics Establishment License and a U.S. Veterinary Biologics Product License from the U.S. Department of Agriculture. ENT-576™ can also be administered without license if administered in accordance with the safe harbor provided by 9 CFR 107.1.

 

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. The Company 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, where the Company is focusing its acquisition efforts ,  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 on research and development activities

 

During the fiscal year ended August 31, 2012 we expended $5,798 on research and development activities.

 

Costs and effects of compliance with environmental laws (federal, state and local);

 

Entest has not incurred any unusual or significant costs to remain in compliance with any environmental laws and does 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 January 26, 2013, Entest has _____ employees of which _____ are full time.

 

Item 2. Properties

 

On November 1, 2011, the Company entered into an agreement to lease approximately 2,320 square feet of office space beginning December 1, 2011 for a period of five years.

 

Rent to be charged to the Company pursuant to the lease is as follows:

 

$2,996 per month for the period beginning December 1, 2011 and ending November 30, 2012

$3,116 per month for the period beginning December 1, 2012 and ending November 30, 2013

$3,241 per month for the period beginning December 1, 2013 and ending November 30, 2014

$3,371 per month for the period beginning December 1, 2014 and ending November 30, 2015

$3,506 per month for the period beginning December 1, 2015 and ending November 30, 2016

 

This property is utilized as office space. The Company believes that the foregoing property is adequate to meet its current needs. While it is anticipated that the Company will require access to laboratory facilities in the future, the Company believes that access to such facilities are available from a variety of sources.

 

Item 3. Legal Proceedings

 

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 BMSN. by 18KT.TV LLC (“Plaintiffs”) seeking to recover general damages from the Company. in excess of $125,000. The Complaint alleges breach of contract and unjust enrichment relating to an investor relations contract executed by the Company and Craig Fischer (on behalf of 18KT.TV LLC). The Complaint also seeks similar damages from BMSN. 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 May 24, 2012, a Complaint (“Complaint”) was filed in the U.S. Bankruptcy Court for the District of Oregon against the Company by Titterington Veterinary Services Inc. (“TVS”). The Complaint is an adversary proceeding filed by TVS arising from TVS’s bankruptcy case currently pending in U.S. Bankruptcy Court for the District of Oregon. The Complaint alleges Breach of Contract resulting from the Company’s alleged failure to pay certain expenses the Company was required to pay pursuant to an agreement with TVS, Dr. Ronald Titterington, DVM and Dr. Kathy Snell, DVM (“TVS Agreement”). TVS is seeking a judgment and money award against the Company in an amount to be proven at trial which TVS estimates in the Complaint to be up to $50,000. TVS is also seeking a judgment and order against the Company to provide an accounting of all revenues received by the Company pursuant to the TVS Agreement, all expenses paid, unpaid, and due and owing  pursuant to the TVS Agreement as well as a revenue share which TVS claims is due them pursuant to the TVS Agreement. TVS is also seeking a judgment requiring the Company to turn over a sum of money equal to expenses the Company was obligated to pay pursuant to the TVS Agreement. TVS is also seeking attorney’s fees and expenses.  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 and an outcome unfavorable to the Company may have a material adverse effect on the Company. On September 19, 2012 the Plaintiff’s Claim for Relief for turnover and an accounting under 11 U.S.C. § 542 and the Plaintiff's Claim for Relief for attorney fees were dismissed with prejudice and , as per the claim of breach of contract, the proceeding was transferred to the United States Bankruptcy Court for the District of Southern California for all further proceedings.

 

On October 10, 2012 a Complaint(“Complaint”) was filed in the Superior Court of the State of California against the Company and David Koos by Dr. Gregory McDonald, a former employee of the Company, alleging breach of contract and breach of the covenant of good faith and dealing in connection with the assumption of lease obligations by the Company in connection with the acquisition of the assets of Pet Pointers, Inc (“Acquisition”) (Note 9) breach of contract and breach of the covenant of good faith and dealing in connection with an employment agreement enters into with Dr. McDonald inc connection with the Acquisition, breach of contract in connection with the Acquisition purchase agreement, breach of the covenant of good faith and dealing in connection with the Acquisition purchase agreement, implied indemnity in connection to amounts owed by Dr. McDonald to Anthony and Judi Marinelli, the Internal Revenue Service, and the California Franchise Tax Board, intentional misrepresentation, negligent misrepresentation , failure to pay wages and violations of Sections 2802, 203, and 2806 of the California Labor Code. The Complaint seeks judgment for nominal damages, actual damages, compensatory damages, lost wages, compensation, expenses wage benefits and penalties pursuant to California Labor Code Sections 203 et al, 2802 and 2806, indemnification, accrued interest, punitive damages, costs of suit and attorney’s fees.

On November 28, 2012, a settlement of the aforementioned Complaint, the “Company executed an agreement (“Agreement”) with Gregory McDonald ("McDonald"), Pet Pointers, Inc. ("Pet Pointer") whereby Mc Donald and Pet Pointer would acquire from the Company all assets ( with the exception of cash and accounts receivable) utilized by the Company in the operation of the McDonald Animal Hospital (“McDonald Asset Sale”).

As consideration to the Company for the assets acquired, McDonald and Pet Pointers provided to the Company a General release whereby McDonald and Pet Pointer waive, release and discharge the Company and their respective assignees, officers, directors, shareholders, boards, owners, employees, attorneys, agents, trustors, trustees, beneficiaries, heirs, successors, and representatives from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses including:

(1) All claims relating to the Complaint.

(2) Those owed by McDonald to Anthony and Judi Marinelli which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc

(3) Those amounts owed by McDonald to the Internal Revenue Service which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc

(4) Those amounts owed by McDonald to the California Franchise Tax Board which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc

Assets disposed of pursuant to the Agreement include all Property Plant and Equipment as well as all inventory held at the McDonald Animal Hospital.

Assets disposed of pursuant to the Agreement also include:

(i) Essentially all intellectual property, including computer software, utilized in connection with the operation of the McDonald Animal Hospital

(ii) All telephone numbers, fax numbers, service marks, trademarks, trade names, fictitious business names, websites, business email addresses, vendor lists, promotional materials, vendor records and any and all business records including, but not limited to, such items stored in computer memories, microfiche, paper record or by any other means relevant to the operation of the McDonald Animal Hospital.

(iii) All customer lists, customer contacts, and any and all customer records that are related to the McDonald Animal Hospital.

On January 15, 2013 the Company received from Asher Enterprises, Inc.(“Asher”) a written demand for payment of $189,000 ( representing 150% of the outstanding principal balance) plus accrued interest at the Default rate of interest which is 22% per annum. The Demand stems from Asher’s assertion that the Company has defaulted on provisions in two Convertible Notes in the principal amounts of $63,000 per note issued by the Company to Asher as a result of the Company’s failure to comply with the reporting requirements of the Securities and Exchange Act of 1934. Collectively the amount of $189,000 plus accrued interest at the Default rate of interest which is 22% per annum may be referred to as the Default Amount

 

Pursuant to the terms and conditions of the two notes, in the Event that the Company fails to pay the Default Amount within five business days of written notice that such amount is due and payable, then the Asher shall have the right at any time, so long as the Company remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Company, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Company equal to the Default Amount divided by the Conversion Price then in effect pursuant to the terms and conditions of the notes.

 

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. 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.

 

The Company’s authorized capital stock consists of 2,000,000,000 shares of common stock with a par value $0.001, and 5,000,000 shares of preferred stock with a par value $0.001 per share.  As of November 1, 2011 there are 20,890,501 shares of common stock issued and outstanding and 5,000 shares of Series AA preferred stock issued and outstanding.

 

(a) Our common stock is traded on the OTCQB Tier of OTC Markets under the symbol "ENTB”. Prior to August 11, 2009 there was no established trading market for our common stock.  From August 11, 2009 to February 23, 2011 our common stock traded primarily on the OTCBB.  Below is the range of high and low bid information for our common equity for each quarter within the last two fiscal years. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

September 1, 2011 to August 31, 2012   High     Low  
First Quarter   $ 0.598     $ 0.1387  
Second Quarter     0.100       0.03  
Third Quarter     0.034       0.0017  
Fourth Quarter   $ 0.0225     $ 0.0025  
September 1, 2010 to August 31, 2011   High     Low  
First Quarter   $ 0.30     $ 0.52  
Second Quarter     4.190       1.250  
Third Quarter     2.900       1.180  
Fourth Quarter   $ 1.1730     $ 0.390  

 

Holders

 

As of August 31, 2012 there were approximately 339 holders of our Common Stock.

 

Dividends

 

No cash dividends were paid during the fiscal year ending August 31, 2012. We do not expect to declare cash dividends in the immediate future. On March 6, 2012 a dividend of 3,201,397 shares of Series B Preferred Stock was paid to the Company’s common shareholders of record as of February 21, 2012.

 

Recent Sales of Unregistered Securities

 

For the Fiscal Year Ended August 31, 2012:

 

Shares issued for Services:

 

On October 7, 2011 the Company issued 50,000 shares of common stock (“Shares”) to a consultant for services rendered.

 

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

 

On November 22, 2011 the Company issued 18,333 shares of common stock (“Shares”) to a consultant for services rendered.

 

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

 

On January 10 , 2012 the Company issued 27,499 shares of common stock (“Shares”) to a consultant for services rendered.

 

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

 

On February 26, 2012 the Company issued 174,663 shares of common stock (“Shares”) to a consultant for services rendered.

 

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

 

On March 14, 2012 the Company issued 3,000,000 shares of its common stock (“Shares”) to the order of Capital Path Securities LLC for acting as the Company’s exclusive advisor and placement agent in connection with the Equity Purchase Agreement and Registration Rights Agreement entered into by and between the Company and Southridge Partners II, LP (“Southridge”) on February 27, 2012.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management.  No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

On April 3, 2012 the Company issued 50,000,000 shares of common stock (“Shares”) to David R. Koos as a bonus.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

David Koos may not offer to sell, sell, transfer, pledge or otherwise dispose of the Bonus Shares prior to April 2, 2017 (“Restricted Period”).

 

In the event that, prior to the expiration of the Restricted Period, David Koos voluntarily ceases to be employed at the Company or is terminated for cause the Shares shall be forfeited.

 

On April 3, 2012 the Company issued 27,000,000 shares of common stock (“Shares”) to seven employees as bonuses.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

No employee may offer to sell, sell, transfer, pledge or otherwise dispose of the Bonus Shares prior to April 2, 2017 (“Restricted Period”).

 

In the event that, prior to the expiration of the Restricted Period, any employee voluntarily ceases to be employed at the Company or is terminated for cause his or her Shares shall be forfeited.

 

On April 3, 2012 the Company issued 15,000,000 shares of common stock (“Shares”) to Joseph G. Vaini as bonus.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

Joseph G. Vaini may not offer to sell, sell, transfer, pledge or otherwise dispose of the Shares prior to April 2, 2017 (“Restricted Period”).

 

In the event that, prior to the expiration of the Restricted Period, Joseph G. Vaini declines to provide if requested to provide, or is unable to provide if requested to provide, consulting services to the Company of a nature that have been customarily provided by Joseph G. Vaini to the Company the Shares shall be forfeited.

 

On March 27, 2012 the Company issued 75,000 shares of its nonvoting convertible preferred stock to Southridge in accordance with the terms of the Equity Purchase Agreement entered into by and between the Company and Southridge on February 27, 2012..

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

Shares issued for Intangible Assets:

 

On November 11, 2011 the Company issued 2,500,000 shares of common stock (“Shares”) in connection with rights to receive future revenues of a Utah veterinary clinic.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

A legend was placed on the certificate that evidences the Shares stating that the Shares have not been registered under the Act and setting forth or referring to the restrictions on transferability and sale of the Shares.

 

Shares Issued for Debt:

 

On November 28, 2011 the Company issued 134,983 shares of common stock (“Shares”) in satisfaction of $12,000 principal amount of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On December 12, 2011 the Company issued 258,824 shares of common stock (“Shares”) in satisfaction of $11,000 principal amount of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On December 19, 2011 the Company issued 338,983 shares of common stock (“Shares”) in satisfaction of $12,000 principal amount of Convertible Notes Payable

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management.  No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On January 27, 2012 the Company issued 227,963 shares of common stock (“Shares”) in satisfaction of $7,500 principal amount of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management.  No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

On February 3, 2012 the Company issued 528,821 shares of common stock (“Shares”) in satisfaction of $15,000 principal amount of Convertible Notes Payable.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

On February 16, 2012 the Company issued 721,154 shares of common stock (“Shares”) in satisfaction of $15,000 principal amount of Convertible Notes Payable.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

On March 7, 2012 the Company issued 2,322,695 shares of common stock (“Shares”) in satisfaction of $32,750 of Convertible Notes Payable.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

On March 21, 2012 the Company issued 1,886,195 shares of common stock in satisfaction of $25,200 of Convertible Notes Payable.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

On March 26, 2012 the Company issued 3,017,502 shares of common stock (“Shares”) in satisfaction of $24,650 of Convertible Notes Payable.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 2, 2012 the Company issued 1,675.111 shares of common stock (“Shares”) in satisfaction of $7,538 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 3, 2012 the Company issued 1,590, 909 shares of common stock (“Shares”) in satisfaction of $7,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 10, 2012 the Company issued 5,555,555 shares of common stock (“Shares”) in satisfaction of $10,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 12, 2012 the Company issued 4,722,222 shares of common stock (“Shares”) in satisfaction of $8,500 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 13, 2012 the Company issued 8,250,000 shares of common stock (“Shares”) in satisfaction of $14,850 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 16, 2012 the Company issued 11,250,000 shares of common stock (“Shares”) in satisfaction of $18,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 18, 2012 the Company issued 1,250,000 shares of common stock (“Shares”) in satisfaction of $2,000 of Convertible Notes Payable

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 19, 2012 the Company issued 2,724,968 shares of common stock (“Shares”) in satisfaction of $4,300 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 24, 2012 the Company issued 4,005,787 shares of common stock (“Shares”) in satisfaction of $6,922 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On May 1, 2012 the Company issued 8,000,000 shares of common stock (“Shares”) in satisfaction of $12,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On May 3, 2012 the Company issued 7,142, 857 shares of common stock (“Shares”) in satisfaction of $10,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On May 7, 2012 the Company issued 6,250,000 shares of common stock (“Shares”) in satisfaction of $10,000 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On May 9, 2012 the Company issued 5,000,000 shares of common stock (“Shares”) in satisfaction of $500 of principal indebtedness of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On June 20, 2012 the company issued 19,054,140 common shares (“Shares”) in satisfaction of $75,842 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On June 25, 2012 the company issued 1,808,172 common shares (“Shares”) in satisfaction of $6,627 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On August 9, 2012 the Company issued 15,976,380 common shares (“Shares”) in satisfaction of $19,880 of Convertible Notes Payable.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On October 17, 2012 the Company issued 23,000,000 common shares (“Shares”) in satisfaction of $19,320 of outstanding convertible indebtedness.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On October 22, 2012 the Company issued 10,810,811 common shares(“Shares”) in satisfaction of $8,000 of outstanding convertible indebtedness.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

Shares issued for interest:

 

On January 27, 2012 the Company issued 51,672 common shares (“Shares”) in satisfaction of $1,700 of interest accrued but unpaid.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 10, 2012 the Company issued 833,333 common shares (“Shares”) in satisfaction of $1,500 of interest accrued but unpaid.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 18, 2012 the Company issued 875,000 common shares (“Shares”) in satisfaction of $1,400 of interest accrued but unpaid.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On May 9, 2012 the Company issued 1,300,000 common shares (“Shares”) in satisfaction of $1,300 of interest accrued but unpaid.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

Shares issued pursuant to Contractual Obligations:

 

On April 11, 2012 the Company issued 1029679 common shares (“Shares”) pursuant to contractual obligations contained in certain convertible notes outstanding.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 11, 2012 the Company issued 2,306,275 common shares (“Shares”) pursuant to contractual obligations contained in certain convertible notes outstanding.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On April 13, 2012 the Company issued 2,430,753 common shares (“Shares”) pursuant to contractual obligations contained in certain convertible notes outstanding.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

On August 2, 2012 the Company issued 1,536,948 common shares (“Shares”) pursuant to contractual obligations contained in certain convertible notes outstanding.

 

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The shares were sold directly through our management. No commission or other consideration was paid in connection with the sale of the shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.

 

Issuance of Convertible Debentures:

 

On October 25, 2011, the Company issued a convertible promissory note in the amount of $32,500. The note bears an interest rate of eight percent (8%), matures on July 27, 2012 and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.

 

The securities were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The securities were sold directly through our management. No commission or other consideration was paid in connection with the sale of the securities. There was no advertisement or general solicitation made in connection with this Offer and Sale of securities.

 

The note contained a provision that until such time as the shares of common stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of common stock issuable upon conversion of the note  that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a restrictive legend.

 

On December 19, 2011, the Company issued a convertible promissory note in the amount of $37,500. The note bears an interest rate of eight percent (8%), matures on September 21, 2012 and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.

 

The securities were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The securities were sold directly through our management. No commission or other consideration was paid in connection with the sale of the securities. There was no advertisement or general solicitation made in connection with this Offer and Sale of securities.

 

The note contained a provision that until such time as the shares of common stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of common stock issuable upon conversion of the note  that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a restrictive legend.

 

On December 20, 2011 the Company amended the terms of $30,000 in existing debt as follows:

 

(a)  Due and payable December 31, 2012

(b)  Simple interest of 10% from December 20, 2011 to the date the debt is fully converted or paid in full 

(c)  Convertible into the common stock of the Company at the option of the holder at a 50% discount from the average of the lowest three Trading Prices  for the common stock during the 10 trading day period ending one Trading Day prior to the date the conversion notice is sent by the holder. "Trading Price" means the closing bid price on the applicable trading market as reported by a reliable reporting service.

 

On February 28, 2012 the Company amended the terms of  $85,500 in existing principal indebtedness as well as 3,710  of interest accrued but unpaid to be as follows:

 

The aggregate indebtedness of $89,210 shall bear simple interest, be payable upon demand of the holder, and be convertible into the common shares of the company at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion date, as reported by Bloomberg. provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.

 

On April 16, 2012 the Company issued a convertible promissory note in the amount of $42,500 which was received April 21, 2012. The note bears an interest rate of eight percent (8%), matures on January 18, 2013. and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.

 

The securities were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The securities were sold directly through our management. No commission or other consideration was paid in connection with the sale of the securities. There was no advertisement or general solicitation made in connection with this Offer and Sale of securities.

 

The note contained a provision that until such time as the shares of common stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of common stock issuable upon conversion of the note  that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a restrictive legend.

 

On June 15, 2012 the Company amended the terms of $102,349 in existing principal indebtedness as follows:

 

The Aggregate Indebtedness of $102,349 is convertible at Holder’s option at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.

 

On July 26, 2012, the Company issued a convertible note in the principal amount of $63,000 to Asher Enterprises, Inc. The Note bears interest at the rate of 8% per annum and matures on April 30, 2013. The Note is convertible any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note into common stock of the Company, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 Trading Day period prior to conversion as Trading Day is defined in the Note.

 

The securities were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The securities were sold directly through our management. No commission or other consideration was paid in connection with the sale of the securities. There was no advertisement or general solicitation made in connection with this Offer and Sale of securities.

 

The note contained a provision that until such time as the shares of common stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of common stock issuable upon conversion of the note  that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a restrictive legend.

 

On August 21, 2012 the Company amended the terms of $59,000 in existing principal indebtedness as follows:

 

The Aggregate Indebtedness of $59,000 is convertible at Holder’s option at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 10 trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock

 

On September 20, 2012 the Company issued a convertible promissory note in the amount of $63,000 cash from which was received September 27, 2012. The note bears an interest rate of eight percent (8%), matures on June 25, 2013. and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a thirty nine percent (39%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.

 

The securities were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The securities were sold directly through our management. No commission or other consideration was paid in connection with the sale of the securities. There was no advertisement or general solicitation made in connection with this Offer and Sale of securities.

 

The note contained a provision that until such time as the shares of common stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of common stock issuable upon conversion of the note  that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a restrictive legend.

 

Use of Proceeds, Registered Offering

 

The Company has filed a registration statement on Form S-1 under the Securities Act of 1933 registering for resale up to 37,640,314 shares of our common stock by Southridge which are Put Shares that may be put to Southridge pursuant to an Equity Purchase Agreement dated as of June 1, 2012 by and between Southridge and the Company (“June Purchase Agreement”). The Registration Statement was declared effective by the United States Securities and Exchange Commission on August 27, 2012.

 

The June Purchase Agreement with Southridge provides that Southridge is committed to purchase up to $10 million of our common stock. We may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the June Purchase Agreement.

 

We will not receive any proceeds from the sale of the common stock offered through this prospectus by Southridge. However, we will receive proceeds from any sale of the common stock under the Purchase Agreement to Southridge

 

Between September 4, 2012 and September 17, 2012 the Company sold 26,802,465 common shares to Southridge for the gross amount of $50,000 pursuant to the June Purchase Agreement. The proceeds were utilized as follows:

 

(1)$20,000 was utilized to pay debt due to Southridge
(2)$2,500 was paid to Capital Path Securities who acted as placement agent
(3)$27,500 was utilized for working capital purposes

 

On October 2 , 2012 the Company sold 10,837,849 common shares to Southridge for the gross amount of $14,300 pursuant to the June Purchase Agreement. Total gross proceeds of $14,300 were utilized to pay $14,300 of debt due to Southridge by the Company.

 
 

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. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

As of August 31, 2012, we had Trade Accounts Receivable of $ 2,268 and as of August 31, 2011 we had Trade Accounts Receivable of $3,135.

 

The decrease in Trade Accounts Receivable of approximately 27% is attributable to successful collection of $867 of delinquent payments due from a client of the McDonald Animal Hospital.

 

As of August 31, 2012 we had Due from an Affiliate of $39,140 and as of August 31, 2011 we had Due from an Affiliate of $0.

 

The increase in Due from an Affiliate is primarily attributable to the reclassification of $59,500 of rental expenses prepaid to a shareholder of the Company to a non interest bearing liability of the shareholder due at the demand of the Company as well as $240 in expenses paid by the Company for the benefit of the shareholder offset by a payment made to the company during the twelve months ended August 31, 2012 of $20,600.

 

As of August 31, 2012, we had a balance of $13,000 in Current Portion of Prepaid Expenses compared to August 31, 2011 where the balance totaled $62,200.

 

The decrease in Current Portion of Prepaid Expenses of approximately 79% was primarily attributable to the reclassification of rental expenses prepaid to a shareholder of the Company to a non interest bearing liability of the shareholder due at the demand of the Company.

 

As of August 31, 2012, the balance in Non-Current Portion of Prepaid Expenses totaled $0 compared to the August 31, 2011 balance of $10,300.

 

The decrease in the Non-Current Portion of Prepaid Expenses was primarily attributable to the applicable portion of Prepaid Rent being reallocated from a non-current asset to a current asset.

 

As of August 31, 2012, we had Deposits in the amount of $1,151  and as of August 31, 2011 we had Deposits of $0..

 

The decrease in Deposits of 100% is attributable to deposits sent by the Company to San Diego Gas and Electric Company to be being applied toward utility charges incurred by the Company.

 

As of August 31, 2012, we had Accounts Payable of $74,574 and as of August 31, 2011 we had Accounts Payable of  $27,564 .

 

The increase in Accounts Payable of approximately 170 % is primarily attributable to s primarily attributable to increases in outstanding obligations of the Company incurred in the course of business as well as the incurring by the Company of $20,199 in payables pursuant to that agreement entered into by and between the Company and Titterington Veterinary Services, Inc., Dr. Ronald Titterington and Dr. Kathy Snell.

 

As of August 31, 2012 we had Notes Payable of $225,362 and as of August 31, 2011 we had Notes payable of $159,911.

 

The increase in Notes Payable of approximately 40% is primarily attributable to a combination of additional borrowings by the Company incurred in order to fund operations and the reclassification of $57,500 of accrued salary to Notes Payable as a result of assignment of the rights to that payment to a third party offset by the reclassification of approximately $280,559 of indebtedness to Convertible Notes payable.

 

As of August 31, 2012 we had Convertible Notes Payable (net of unamortized discount resulting from a beneficial conversion feature) totaling $121,495 and as of August 31, 2011 we had Convertible Notes Payable (net of unamortized discount resulting from a beneficial conversion feature) totaling $42,430. .

 

The increase in Convertible Notes Payable (net of unamortized discount resulting from a beneficial conversion feature) of approximately 86% is primarily attributable to:

 

The issuance of $456,059 in convertible debentures through a combination of initial issuances and modifications of the terms and conditions of existing securities

 

The recognition of $380,480 of interest expense attributable to amortizations of discounts recognized

 

Offset by:

 

$369,059 in principal amount of convertible indebtedness converted into common stock

$37,500 in convertible debt prepaid by the Company

$350,915 of discounts on Convertible Notes recognized

 

As of August 31, 2012 we had Accrued Expenses of $119,726 and As of August 31, 2011, we had Accrued Expenses of $67, 206

 

The increase in accrued expenses of approximately 78% is primarily attributable to:

 

(a) $15,239 in net interest accrued

(b) $44,500 in net additions to salaries accrued but unpaid

 

offset by $7219 net reductions in accrued tax expenses

 

Material Changes in Results of Operations

 

Revenues were $426,252 for the twelve months ended August 31, 2012. Revenues were $349,141 for the twelve months ended August 31, 2011. Net Losses were $1,889,563 for the twelve months ended August 31, 2012 and $951,783 for the same period ended August 31, 2011.

 

The increase in Net Losses of approximately 98% is primarily attributable to:

 

(a)Increase in Cost of Revenue of $29,894
(b)Increase in rental costs of $18,216
(c)Increase in Consultant’s Expenses of $268,522
(d)Loss on early extinguishment of Debt recognized in the amount of $18,647
(e)Increase in Expenses incurred pursuant to that agreement entered into by and between the Company and Titterington Veterinary Services, Inc., Dr. Ronald Titterington and Dr. Kathy Snell.
(f)Impairment of intangible Assets recognized in the amount of $683,333
(g)Increases in Interest Expense attributable to amortization of discount in the amount of $364,052
(h)Expenses incurred resulting from shares issued pursuant to contractual obligations in the amount of $23,868
(i)Expenses paid for through the issuance of Preferred shares in the amount of $75,000 such expenses being incurred in connection with that Equity Purchase Agreement entered into by and between the Company and Southridge on February 27, 2012.

 

Offset by :

 

A decrease in Research and Development Expenses of $103,265

A decrease in general and Administrative Expenses of $231,185

An increase in other income recognized of $94,850 attributable to cancellation of stock previously issued for services

Recognition of $187,699 in revenue realized as a result of that agreement entered into by and between the Company and Titterington Veterinary Services, Inc., Dr. Ronald Titterington and Dr. Kathy Snell.

 

All operating revenues realized by the Company re primarily derived through provision of Veterinary Services by the McDonald Animal Hospital. The increases in Total Revenues for the twelve months ended August 31,2012 as compared to the twelve months ended August 31 , 2011 is partially attributable to the fact that the acquisition of the assets of Pet Pointers, Inc. by the Company through which the Company acquired the McDonald Animal Hospital, had not occurred until January 4, 2011.

 

As of August 31, 2012 we had $42,737 cash on hand and current liabilities of $549,157 (exclusive of convertible debt discount attributable to a beneficial conversion feature) such liabilities consisting of Accounts Payable, Notes Payable, Convertible Notes Payable, Amounts due to Affiliates / Others and Accrued Expenses.

 

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.

 

We currently plan to raise additional funds primarily by offering securities for cash and acquiring existing veterinary clinics with the ability to generate cash flow to fund operations.

 

There is no guarantee that we will be able to raise any capital through any type of offerings. We can provide no assurance that we can acquire veterinary clinics which can generate sufficient cash flow to neither fund our operations nor can any assurance be made that we can acquire one or more additional veterinary clinics in the near future or at all. We cannot assure that we will be successful in obtaining additional financing necessary to implement our business plan. We have not received any commitment or expression of interest from any financing source that has given us any assurance that we will obtain the amount of additional financing in the future that we currently anticipate. For these and other reasons, we are not able to assure that we will obtain any additional financing or, if we are successful, that we can obtain any such financing on terms that may be reasonable in light of our current circumstances.

 

As of January 26, 2013 we are not party to any binding agreements which would commit Entest to any material capital expenditures.

 

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. Financial Statements and Supplementary Data

 

FINANCIAL STATEMENTS

 

 

 

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of

Entest BioMedical Inc.

 

We have audited the accompanying balance sheets of Entest BioMedical, Inc. as of August 31, 2012, and the related statements of income, stockholders’ equity (deficit), and cash flows for the one-year period ended August 31, 2012. Entest BioMedical, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we 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 were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Entest BioMedical, Inc. as of August 31, 2012, and the related statements of income, stockholders’ equity (deficit), and cash flows for the year ended August 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Seale and Beers, CPAs

 

Seale and Beers, CPAs

Las Vegas, Nevada

January 25, 2012

 

50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

 
 

To: The Board of Directors and Stockholders

Entest BioMedical, Inc.

 

I have audited the accompanying consolidated balance sheet of Entest BioMedical, Inc. as of August 31, 2011 and 2010 and the related statements of operations, stockholders’ equity and cash flows for the years ended August 31, 2011 and 2010, and for the period from inception (August 22, 2008) to August 31, 2011. 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.

 

Except as discussed in the following paragraph, 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 Entest BioMedical, Inc. as of August 31, 2011 and 2010 and the results of its operations and changes in stockholders equity and cash flows for the years ended August 31, 2011 and 2010, and the period from inception (August 22, 2008) to August 31, 2011 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 Note 4 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 8.  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

October 31, 2011 

 
 

ENTEST BIOMEDICAL, INC.    
Consolidated Balance Sheet    
    As of As of
    August 31, August 31,
    2012 2011
ASSETS      
Current Assets    
Cash $ 42,737 $ 43,901
Trade accounts receivable, less allowance for uncollectable accounts    
of $0 and $0 at February 29, 2012 and August 31, 2011 respectively 2,268 3,135
Inventory 10,298 7,986
Due from Affiliate 39,140 0
Current Portion of Prepaid Expenses 13,000 62,200
Employee Receivable 4,349 4,349
Total Current Assets 111,792 121,571
       
Property & Equipment (Net of Accumulated Depreciation) 8,832 17,293
Goodwill   405,000 405,000
Intangible Assets (Net of Accumulated Amortization) 1,052 1,828
       
       
Non Current Portion of Prepaid Expenses   10,300
Deposits 1,151 0
       
       
TOTAL ASSETS $ 527,827 $ 555,992
       
LIABILITES AND STOCKHOLDERS' EQUITY    
Current Liabilities    
Accounts Payable $ 74,574 $ 27,564
Notes Payable 225,362 159,911
Convertible notes payable, net of discount 121,495 42,430
Due to Other 8,000 8,000
Accrued Expenses 119,726 67,206
Total Current Liabilities 549,157 305,111
       
Notes Payable 36,469 79,143
       
TOTAL LIABILITIES 585,626 384,254
       
STOCKHOLDERS' EQUITY    
Common Stock, $0.001 par value, authorized 1,000,000,000 shares;    
issued and outstanding 223,492,927 shares    
as of August 31, 2012 and August 31, 2011 respectively 223,493 20,838
Preferred Stock , $0.001 par value 5,000,000 shares authorized,    
0 shares issued and outstanding as of August 31,2012 and August 31, 2011   0
Series AA Preferred Stock, $0.001 par value 100,000 shares authorized,    
5,000 shares issued and outstanding at August 31, 2012 and    
as of August 31, 2011 5 5
Series B Preferred
$0.001 par value, 4,400,000 shares authorized, 3,201,397 and 0    
issued and outstanding as of August 31, 2012 and August 31, 2011 3,201  0 
NonVoting Convertible Preferred
$1 par value, 200,000 shares authorized, 75,000 and 0    
issued and outstanding as of August 31, 2012 and August 31, 2011  75,000  0
Additional Paid in Capital 3,030,642 1,619,330
Contributed Capital 274,162 274,162
Accumulated Deficit (3,664,302) (1,742,597)
       
Total Stockholders' Equity (57,799) 171,738
       
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 527,827 $ 555,992

 

The Accompanying Notes are an integral part of these Financial Statements

 

 
 

ENTEST BIOMEDICAL INC.    
Consolidated Statement of Operations    
    For the For the
      Year Ended Year Ended
      August 31 August 31
      2012 2011
REVENUES      
Revenues from Veterinary Services $ 419,336 $ 349,141
Online Revenues 6,916  
TOTAL REVENUE   426,252 349,141
         
Cost of Revenue 119,299 89,405
GROSS PROFIT   306,953 259,736
         
COSTS AND EXPENSES    
Research and Development 5,798 109,063
Rent Costs 126,812 108,596
General and Administrative 562,424 793,609
Incorporation Costs    
Consultant's Expenses 428,040 159,518
Miscellaneous Expenses    
Total Costs and Expenses 1,123,074 1,170,786
         
OPERATING LOSS   (816,121) (911,050)
         
OTHER INCOME AND EXPENSE    
Other Income 94,949 99
Loss on Early Extinguishment of Debt (18,647)  
Income generated from revenue 187,699  
Share Agreement    
Expenses incurred from Revenue    
Share Agreement (145,362)  
Loss on Impairment of intangible assets (683,333)  
Interest Expense (29,400) (24,404)
Interest Expense attributable to    
amortization of discount (380,480) (16,428)
Expense attributable to issuance    
of shares pursuant to contractual obligation  (23,868)  
Expense attributable to issuance of    
Non Voting Convertible Preferred    
Shares in connection with Stock    
Purchase Agreement (75,000)  
TOTAL OTHER INCOME AND EXPENSE (1,073,442) (40,733)
         
LOSS BEFORE INCOME TAXES (1,889,563) (951,783)
Income Taxes 0 0
         
NET LOSS     (1,889,563) (951,783)
Beneficial conversion feature    
attributable to issuance of NonVoting    
Preferred Stock (32,142)  
NET LOSS available to    
common shareholders (1,921,705) (951,783)
         
BASIC AND DILUTED    
LOSS PER SHARE   $ (0.02) $ (0.05)
         
WEIGHTED AVERAGE 94,990,042 19,895,368
NUMBER OF COMMON    
SHARES OUTSTANDING    

 

The Accompanying Notes are an integral part of these Financial Statements

 
 

 

Entest BioMedical, Inc.
Consolidated Statement of Stockholders' Equity
For the Fiscal Years Ended August 31, 2011 and August 31, 2012
 
                    Non Voting             Accumulated    
                    Convertible             Deficit    
          Series AA     Series B   Preferred     Additional   Contrib-   during the    
  Common   Preferred     Preferred         Paid-in   uted   Development    
  Shares   Amount   Shares   Amount Shares Amount Shares Amount   Capital   Capital   Stage   Total
                                       
Balances, August 31, 2010 17,553,040   $ 17,553                   $ 537,415   $ 15,104   $ (790,814)   $ (220,742)
Common Shares issued for Cash 2,217,600   2,217                   215,383   -   -   217,600
Common Shares issued for Debt 781,712   780                   340,387   -   -   341,167
Common Shares issued to Consultants 74,383   74                   121,967   -   -   122,041
Common Stock issued to employees 163,766   164                   303,235   -   -   303,399
Restricted Stock Awards issued to employee 50,000   50                   (50)   -   -   -
Restricted Stock Award Compensation                                      
expense recognized -   -                   10,000   -   -   10,000
Discount on Convertible Debt recognized -   -                   88,998   -   -   88,998
Increases in Contributed capital -   -                   -   259,058   -   259,058
Preferred Stock issued for Accrued compensation         5,000   5           1,995           2,000
Net Loss Year ended August 31, 2011                                 (951,783)   (951,783)
                                       
Balances, August 31, 2011 20,840,501   $ 20,838   5,000   $ 5           $1,619,330   $274,162   $(1,742,597)   $171,738
Common Shares issued for services 3,272,000   3,269                   168,481           171,750
Common Shares issued for intangible assets 2,500,000   2,500                   697,500           700,000
Discount on Convertible Note Recognized                         350,915           350,915
Common Shares issued for debt 113,695,700   113,695                   261,264           374,959
Cancellation of Common Shares Issued (90,000)   (83)                   (86,687)           (86,687)
Restricted Stock Award to employees 77,000,000   77,000                   (77,000)           0
Restricted Stock Award to consultant 15,000,000   15,000                   (15,000)           0
Restricted Stock Award compensation                                      
Expense Recognized                         58,491           58,491
Series B Preferred Dividend paid               3,201,39 3,201       (3,201)           0
Issuance of Non Voting Convertible                                      
Preferred Shares                   75,000 75,000               75,000
Recognition of Beneficial Conversion Feature                         32,142           32,142
Non Voting Convertible Preferred Shares                                      
Shares issued pursuant to Contractual Obligations 6,274,726   6,274                   17,594           23,868
Cancellation of Restricted Stock Award to Employee (15,000,000)   (15,000)                   6,813           (8,187)
Net Loss Year ended August 31, 2012                                 (1,889,563)   (1,890,259)
Beneficial Conversion Feature Deemed Dividend                                 (32,142)   (32,142)
Balance August 31, 2012 223,492,927   223,493   5,000   5 3,201,39 3,201 75,000 75,000   3,030,642   274,162   (3,664,302)   (57,799)

 

The Accompanying Notes are an integral part of these Financial Statements

 

 
 

ENTEST BIOMEDICAL, INC.  
Consolidated Statement of Cash Flows  
  For the For the  
  Year ended Year ended  
  August 31 August 31  
  2012 2011  
OPERATING ACTIVITIES      
Net (loss) $ (1,889,563) $ (951,783)  
Adjustments to reconcile net loss to net cash used      
by operating activities:      
Depreciation Expense 8,461 5,591  
Amortization Expense 776 505  
Stock issued as Compensation to Employees 48,681 55,399  
Stock issued as Compensation to Consultants 181,540 122,007  
Change in operating assets and liabilities:      
(Increase) Decrease in Trade Accounts Receivable 867 (3,135)  
(Increase) Decrease in Inventory (2,312) (7,986)  
(Increase) Decrease in Employee Receivable   (2,953)  
Increase (Decrease) in Accounts Payable 47,010 6,222  
(Increase)Decrease in Due to Other      
(Increase) Decrease in Prepaid Expenses 59,500 10,100  
(Increase) Decrease in Due from Affiliate (39,140)    
(Increase) Decrease in Deposits (1,151) 1,059  
Increase(Decrease) in amortization of intangibles 16,667    
Increase (Decrease) in Accrued Expenses 52,520 (60,889)  
(Increase)Decrease on gain realized on cancellation      
of stock (94,937)    
Increase(Decrease) in Loss on Impairment      
of Intangible Assets 683,333    
       
Net Cash Provided Used in Operating Activities (927,748) (825,863)  
       
INVESTING ACTIVITIES      
Purchase/Sale of Equipment 0 (22,884)  
Net cash Provided by (Used in) Investing Activities 0 (22,884)  
       
FINANCING ACTIVITIES      
(Increase) Decrease in Goodwill from acquisition   (195,000)  
Stock issued in Payment of Debt      
Increase (Decrease) in Common stock issued for cash   217,600  
(Increase) Decrease in Intangible Assets (net)   (2,299)  
Increase (Decrease) in Common stock issued      
for expenses 104,768    
Increase (Decrease) in Due to Affiliate   8,000  
Increase (Decrease) in Due to Shareholder      
Increase (Decrease) in Notes Payable 470,901 516,085  
Increase (Decrease) in Contributed Capital   259,058  
Increase (Decrease) in Additional paid in Capital 350,915 88,998  
Net Cash Provided by Financing Activities 926,584 892,442  
       
Net Increase in Cash (1,164) 43,695  
       
Cash at Beginning of Period 43,901 206  
       
       
Cash at End of Period $ 42,737 $ 43,901  
       
       
       
Supplemental Disclosure of Noncash investing and financing activities:    
       
  12 Months ended August 31, 2012 12 Months ended August 31, 2011
Stock issued in payment of Debt $369,059 $391,167  
Stock issued in Acquisition of McDonald Animal Hospital   $210,000  
Stock issued pursuant to Titterington Agreement $700,000    
       

The Accompanying Notes are an integral part of these Financial Statements

 
 

 

Entest BioMedical, Inc.

Notes to Consolidated Financial Statements

As of August 31, 2012

 

 

NOTE 1.  ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Entest BioMedical Inc. (the “Company”) was incorporated in the State of Nevada on September 24, 2008 as JB Clothing Corporation.  Until July 10, 2009, the Company’s principal business objective was the offering of active/leisure fashion design clothing.

 

On July 10, 2009 the Company abandoned its efforts in the field of active/leisure fashion design clothing when it acquired 100% of the share capital of Entest BioMedical, Inc., a California corporation, (“Entest CA”).

 

The Company’s current business consists of the development and commercialization of immunotherapeutic therapies for the veterinary market as well as the acquisition and operation of veterinary hospitals.

 

 

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 an August 31 fiscal  year-end. The Company recognizes revenue from services and product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Product sales and service revenues are recorded when the products are delivered and title passes to customers. The customer’s credit card is authorized and charged, or checks/cash are received at the time the services are rendered, thereby providing reasonable assurance of collectability.

 

B. PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the accounts of  Entest CA, the Company’s wholly owned subsidiary. Significant inter-company transactions have been eliminated.

 

C. USE OF ESTIMATES

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

D. CASH EQUIVALENTS

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

E. PROPERTY AND EQUIPMENT

 

Property and equipment are recorded at cost. Maintenance and repairs are expensed in the year in which they are incurred. Property and equipment consist of Office Equipment, medical Equipment and Computer Equipment. Expenditures that enhance the value of property and equipment are capitalized. All property and equipment is depreciated utilizing the Straight Line Method for a period of thirty months , such period being estimated by the Company to represent the useful life of the assets. For the Fiscal Year ended August 31, 2012 the Company incurred depreciation expense of $8,461 and for the Fiscal Year ended August 31, 2011 the Company incurred depreciation expense of $5,591. No depreciation has been recognized in connection with one piece of computer equipment which has yet to be put into service.

Property Plant and Equipment          
               
Acquisition Cost     Estimated useful Life (Months) Total
Office Equipment       30     3,235
Medical Equipment     30     17,523
Computer Equipment     30     2,126
Subtotal             22,884
Less Accumulated Depreciation         (14,052)
Total             8,832

 

F. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Fair value is the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  A fair value hierarchy requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

 

Level 1:  Quoted prices in active markets for identical assets or liabilities

 

Level 2:  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;  quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

 

Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company’s financial instruments as of August 31, 2012 consisted of $261,831, of Notes Payable, $121,495 of Convertible Notes payable (net of discount), $8,000 due to TheraCyte, Inc, $4,349 of Employee Receivables and $39,140 due from an affiliate. The fair value of all of the Company’s financial instruments as of September 30, 2012 were valued according to the Level 3 input. The carrying amount  of the financial instruments is equal to the fair value as determined by the Company.

 

The Company has determined that there are no Level 1 or Level 2 inputs for determining the fair value of the Company’s financial instruments. Fair value was determined by the Company utilizing its own assumptions and estimation. There were no transfers between levels for the period presented.

 

G. INCOME TAXES

 

The Company accounts for income taxes using the liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

 

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of August 31, 2011 and 2010, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

 

The Company generated a deferred tax credit through net operating loss carry forward.  However, a valuation allowance of 100% has been established.

 

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

 

H.  BASIC EARNINGS (LOSS) PER SHARE

 

 The Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 260, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of ASC 260 effective from inception. Basic net loss per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding. All convertible debt has an anti-dilutive effect on the EPS , therefore Diluted earnings per share are the same as basic earnings per share.

 

NOTE 3.  RECENT ACCOUNTING PRONOUNCEMENTS

 

On May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." The amendments in this update generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The amendments in this update are to be applied prospectively. The amendments are effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

 

In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." This update was amended in December 2011 by ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05." This update defers only those changes in update 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in update 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. ASU No. 2011-05 and 2011-12 are effective for fiscal years (including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

 

In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.

 

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies.  Due to the tentative and preliminary nature of those proposed standards, the Company’s management has not determined whether implementation of such standards would be material to its financial statements.

 

NOTE 4.  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 $3,664,302 during the period from August 22, 2008 (inception) through August 31, 2012. 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 primarily by offering securities for cash. Management has raised $197,500 net of legal expenses in the twelve months ended August 31, 2012 through the issuance of convertible notes. The Company has also raised $261,475 from other borrowings during the twelve month ended August 31, 2012.

 

On June 1, 2012 the Company entered into an Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership ("Southridge").

 

Under the terms of the June Purchase Agreement, Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares"). During the term of the Purchase Agreement, the Company may at any time deliver a "put notice" to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to 91% of the average of the two lowest Closing Prices during the Valuation Period as such capitalized terms are defined in the Agreement.

 

The number of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.

 

Any sale of Shares pursuant to the June Agreement is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of those Shares.

 

June Agreement shall terminate (i) on the date on which Southridge shall have purchased Shares pursuant to this Agreement for an aggregate Purchase Price of $10,000,000, or (ii) on the date occurring 24 months from the date on which the June Agreement was executed and delivered by the Company and Southridge.

 

The Company has also agreed to pay the following to Capital Path Securities LLC for acting as the Company’s exclusive advisor and placement agent in connection with the June Purchase Agreement a  cash placement fee of 5% of funds received by the Company through the sale of Shares to Southridge as such funds are received by the Company.

 

On June 12, 2012 a registration statement on form S-1 was filed with the United States Securities and Exchange Commission registering 46,238,705 shares of the Company’s   common stock that will be put to Southridge pursuant to the June Agreement which was declared effective by the United States Securities and Exchange Commission on August 27, 2012.

 

There is no guarantee that the Company will be able to raise additional capital through offerings.

 

NOTE 5.  NOTES PAYABLE 

 

As of August 31, 2012

 

 

Current :

 
Bio Technology Partners Business Trust 13500
Venture Bridge Advisors, Inc. 32508
Southridge Partners II LLP 40000
Sherman Family Trust 79000
Officer Loans (Note 6) 30,180
Current portion of amounts to be paid on  
behalf of Gregory McDonald and Pet Pointers, Inc. (Note 10  ) 30174
8% Convertible Notes (Note14 ) 105,500
10% Convertible Note (Note 14) 59000
Total: 389862
   
Long Term:  
Long Term portion of amounts to be paid on  
behalf of Gregory McDonald and  
Pet Pointers, Inc. (Note 10  ) 36469
Total: 36469

 

Both of Bio Technology Partners Business Trust and Venture Bridge Advisors have provided lines of credit to the Company in the amount of $200,000 each or so much thereof as may be disbursed to, or for the benefit of the Company by Lender in Lender's sole and absolute discretion. The unpaid principal of these lines of credit bear simple interest at the rate of ten percent per annum. Interest is calculated based on the principal balance as may be adjusted from time to time to reflect additional advances or payments made hereunder. Principal balance and accrued interest shall become due and payable in whole or in part at the demand of the Lender. The Sherman Family Trust has provided a line of credit to the Company in the amount of $____ or so much thereof as may be disbursed to, or for the benefit of the Company by Lender in Lender's sole and absolute discretion. The unpaid principal of this line of credit bears simple interest at the rate of ten percent per annum. Interest is calculated based on the principal balance as may be adjusted from time to time to reflect additional advances or payments made hereunder. Principal balance and accrued interest shall become due and payable in whole or in part at the demand of the Lender. $40,000 loaned to the Company by Southridge Partners II LLP bears no stated interest rate and is payable at the demand of Southridge Partners II LLP.

 

 NOTE 6.  RELATED PARTY TRANSACTIONS

 

During the quarter ended November 30, 2011 David Koos made loans to the Company totaling $8,400. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum.

 

During the quarter ended February 29, 2012 David Koos made loans to the Company totaling $7,550. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum.

 

During the quarter ended February 29, 2012 David Koos granted to the Sherman Family Trust, an irrevocable trust for the benefit of Blossom Sherman, all rights to and interest in $25,956 in unpaid indebtedness owed by the Company (bearing simple interest at a rate of 15% per annum and due and payable at the demand of the holder) as well as $3,051 in unpaid interest owed by the Company.

 

During the quarter ended May 31, 2012 David Koos made loans to the Company in the amount of  $13,625. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum

 

As of August 31, 2012 the Company remains indebted to David R. Koos in the principal amount of $30,180 due and payable at the demand of David  Koos and bearing simple interest at a rate of 15% per annum

 

As of August 31 , 2012 Bio-Matrix Scientific Group, Inc. (“BMSN”) , a major shareholder of the Company, is indebted to the Company in the amount of $39,140. This amount is non interest bearing and is due at the demand of the Company.

 

NOTE 7.  INCOME TAXES

 

       
As of August 31, 2012    
     
Deferred tax assets:    
Net operating tax carry forwards $ 1,250,503   
Other   -0-   
Gross deferred tax assets   1,250,503   
Valuation allowance   (1,250,503)  
       
Net deferred tax assets $ -0-   

 

As of  August 31 ,2012  the Company has a Deferred Tax Asset of $1,250,503 completely attributable to net operating loss carry forwards of approximately $3,677,949  (which expire 20 years from the date the loss was incurred) consisting of:

 

(a) $ 13,647 of Net Operating Loss carry forwards acquired in the reverse acquisition of Entest BioMedical, Inc., a California corporation, and

(b) $ 3,664,302  of Net Operating Loss carry forwards attributable to Entest BioMedical, Inc.

 

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. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. In addition, the reverse acquisition in which Entest BioMedical, Inc. was involved in 2009 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 recorded a valuation allowance reducing all deferred tax assets to $ -0-.

 

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

 

NOTE 8.  ACQUISITION OF ENTEST CA

 

On July 10, 2009 the Company acquired 100% of Entest CA, a California corporation and wholly owned subsidiary of the Company, from BMSN for consideration consisting of (a) the issuance to BMSN 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.

 

NOTE 9.  ACQUISITION OF THE ASSETS OF PET POINTERS, INC.

 

On January 4, 2011Entest CA 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 Company’s  common shares 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”)

 

NOTE 10. COMMITMENTS AND CONTINGECIES

 

On November 1, 2011, the Company entered into an agreement to lease approximately 2,320 square feet of office space beginning December 1, 2011 for a period of five years.

 

Rent to be charged to the Company pursuant to the lease is as follows:

 

$2,996 per month for the period beginning December 1, 2011 and ending November 30, 2012

$3,116 per month for the period beginning December 1, 2012 and ending November 30, 2013

$3,241 per month for the period beginning December 1, 2013 and ending November 30, 2014

$3,371 per month for the period beginning December 1, 2014 and ending November 30, 2015

$3,506 per month for the period beginning December 1, 2015 and ending November 30, 2016

 

This property is utilized as office space. The Company believes that the foregoing property is adequate to meet its current needs. While it is anticipated that the Company will require access to laboratory facilities in the future, the Company believes that access to such facilities are available from a variety of sources.

 

On January 4, 2011, as part of the asset purchase agreement with the Company and Gregory McDonald and Pet Pointers, Inc., the Company pays on behalf of Gregory McDonald and Pet Pointers monthly rent of $7,526 to Anthony Marinelli for the terms indicated in the Gregory McDonald / Pet Pointers lease.  These payments are not obligations of the Company but, are payments the Company agreed to make on behalf of Gregory McDonald and Pet Pointers as part of the Asset Purchase Agreement.

 

On January 4, 2011, as part of the asset purchase agreement with the Company and Gregory McDonald on behalf of Pet Pointers, Inc., the Company pays on behalf of Gregory McDonald and Pet Pointers monthly payments of $1,500 to Anthony and Judi Marinelli towards the extinguishment of a total note of $78,000. These payments are payments the Company agreed to make on behalf of Gregory McDonald and Pet Pointers.

 

On January 4, 2011, as part of the asset purchase agreement with the Company and Gregory McDonald on behalf of Pet Pointers, Inc., the Company pays on behalf of Gregory McDonald and Pet Pointers an installment agreement due to the Franchise Tax Board in the amount of $11,405 with monthly payments of $400. These payments are payments the Company agreed to make on behalf of Gregory McDonald and Pet Pointers.

 

On January 4, 2011, as part of the asset purchase agreement with the Company and Gregory McDonald on behalf of Pet Pointers, Inc., the Company pays on behalf of Gregory McDonald and Pet Pointers an installment agreement due to the Internal Revenue Service in the amount of $13,595 with monthly payments of $425. These payments are payments the Company agreed to make on behalf of Gregory McDonald and Pet Pointers.

 

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 BMSN. by 18KT.TV LLC (“Plaintiffs”) seeking to recover general damages from the Company. in excess of $125,000. The Complaint alleges breach of contract and unjust enrichment relating to an investor relations contract executed by the Company and Craig Fischer (on behalf of 18KT.TV LLC). The Complaint also seeks similar damages from BMSN. 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 May 24, 2012, a Complaint (“Complaint”) was filed in the U.S. Bankruptcy Court for the District of Oregon against the Company by Titterington Veterinary Services Inc. (“TVS”). The Complaint is an adversary proceeding filed by TVS arising from TVS’s bankruptcy case currently pending in U.S. Bankruptcy Court for the District of Oregon. The Complaint alleges Breach of Contract resulting from the Company’s alleged failure to pay certain expenses the Company was required to pay pursuant to an agreement with TVS, Dr. Ronald Titterington, DVM and Dr. Kathy Snell, DVM (“TVS Agreement”). TVS is seeking a judgment and money award against the Company in an amount to be proven at trial which TVS estimates in the Complaint to be up to $50,000. TVS is also seeking a judgment and order against the Company to provide an accounting of all revenues received by the Company pursuant to the TVS Agreement, all expenses paid, unpaid, and due and owing  pursuant to the TVS Agreement as well as a revenue share which TVS claims is due them pursuant to the TVS Agreement. TVS is also seeking a judgment requiring the Company to turn over a sum of money equal to expenses the Company was obligated to pay pursuant to the TVS Agreement. TVS is also seeking attorney’s fees and expenses.  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 and an outcome unfavorable to the Company may have a material adverse effect on the Company. On September 19, 2012 the Plaintiff’s Claim for Relief for turnover and an accounting under 11 U.S.C. § 542 and the Plaintiff's Claim for Relief for attorney fees were dismissed with prejudice and , as per the claim of breach of contract, the proceeding was transferred to the United States Bankruptcy Court for the District of Southern California for all further proceedings.

 

On October 10, 2012 a Complaint(“Complaint”) was filed in the Superior Court of the State of California against the Company and David Koos by Dr. Gregory McDonald, a former employee of the Company, alleging breach of contract and breach of the covenant of good faith and dealing in connection with the assumption of lease obligations by the Company in connection with the acquisition of the assets of Pet Pointers, Inc (“Acquisition”) (Note 9) breach of contract and breach of the covenant of good faith and dealing in connection with an employment agreement enters into with Dr. McDonald inc connection with the Acquisition, breach of contract in connection with the Acquisition purchase agreement, breach of the covenant of good faith and dealing in connection with the Acquisition purchase agreement, implied indemnity in connection to amounts owed by Dr. McDonald to Anthony and Judi Marinelli, the Internal Revenue Service, and the California Franchise Tax Board, intentional misrepresentation, negligent misrepresentation , failure to pay wages and violations of Sections 2802, 203, and 2806 of the California Labor Code. The Complaint seeks judgment for nominal damages, actual damages, compensatory damages, lost wages, compensation, expenses wage benefits and penalties pursuant to California Labor Code Sections 203 et al, 2802 and 2806, indemnification, accrued interest, punitive damages, costs of suit and attorney’s fees.

 

There were no other legal proceedings against the Company with respect to matters arising in the ordinary course of business. The Company is not involved in any other litigation either as plaintiffs or defendants, and has no knowledge of any threatened or pending litigation against the Company.

 

On June 1, 2012 the Company entered into an Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership ("Southridge").

 

Under the terms of the June Purchase Agreement, Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares"). During the term of the Purchase Agreement, the Company may at any time deliver a "put notice" to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to 91% of the average of the two lowest Closing Prices during the Valuation Period as such capitalized terms are defined in the Agreement.

 

The number of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.

 

Any sale of Shares pursuant to the June Agreement is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of those Shares.

 

June Agreement shall terminate (i) on the date on which Southridge shall have purchased Shares pursuant to this Agreement for an aggregate Purchase Price of $10,000,000, or (ii) on the date occurring 24 months from the date on which the June Agreement was executed and delivered by the Company and Southridge.

 

The Company has also agreed to pay the following to Capital Path Securities LLC for acting as the Company’s exclusive advisor and placement agent in connection with the June Purchase Agreement a  cash placement fee of 5% of funds received by the Company through the sale of Shares to Southridge as such funds are received by the Company.

 

NOTE 11. NON VOTING CONVERTIBLE PREFERRED STOCK

 

On March 27, 2012 the company issued to Southridge 75,000 shares of its nonvoting convertible preferred stock to Southridge in accordance with the terms of an Equity Purchase Agreement entered into by and between the Company and Southridge which was terminated at the Company’s option on June 1, 2012 (“February Purchase Agreement”).

 

Non Voting Convertible Preferred Stock is convertible at the option of the holder into shares of the Company’s common stock at a conversion price equal to seventy percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding written receipt by the Company of the holder’s intent to convert.

 

“CLOSING PRICE" shall mean the closing bid price for the Company’s common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.

 

“PRINCIPAL MARKET" shall mean the principal trading exchange or market for the Company’s common stock.

 

“TRADING DAY” shall mean a day on which the Principal Market shall be open for business.

 

The issuance of 75,000 shares of the Company’s nonvoting convertible preferred stock to Southridge resulted in recognition of a beneficial conversion feature in the amount of $32,142.Accordingly, the Company recorded a deemed dividend on the 75,000 shares of the Company’s nonvoting convertible preferred stock of $32,142.

 

NOTE 12. DIVIDEND OF SERIES B PREFERRED SHARES

 

On March 6, 2012 a dividend of 3, 201,397 shares of Series B Preferred Stock was paid to the Company’s common shareholders of record as of February 21, 2012.

 

NOTE 13. STOCKHOLDERS EQUITY

 

The stockholders' equity section of the Company contains the following classes of capital stock as of August 31, 2012:

 

Common Stock:

 

$0.001 par value, 1,000,000,000 shares authorized 222,791,778 shares issued and outstanding as of August 31, 2012.

 

Preferred Stock:

 

$0.001 par value 5,000,000 shares authorized of 100,000 shares authorized is authorized as Series AA Preferred Stock , $001 par value of which 5,000 shares are issued and outstanding  as of  February 29, 2012  and 4,400,000 is authorized as Series B Preferred Stock of which 3, 201,397  shares are issued and outstanding as of August 31, 2012.

 

Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (collectively, a “Liquidation”), before any distribution or payment shall be made to any of the holders of Common Stock or any other series of preferred stock, the holders of Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital, surplus or earnings, an amount equal to $0.10 per share of Series B Preferred Stock (the “Liquidation Amount”) plus all declared and unpaid dividends thereon, for each share of Series B Preferred Stock held by them.

 

If, upon any Liquidation, the assets of the Company shall be insufficient to pay the Liquidation Amount, together with declared and unpaid dividends thereon, in full to all holders of Series B Preferred Stock, then the entire net assets of the Company shall be distributed among the holders of the Series B Preferred Stock, ratably in proportion to the full amounts to which they would otherwise be respectively entitled and such distributions may be made in cash or in property taken at its fair value (as determined in good faith by the Board), or both, at the election of the Board..

 

Non Voting Convertible Preferred Stock having a $1.00 par value:

 

200,000 shares authorized of which 75, 000 shares are issued and outstanding as of August 31, 2102.

 

Non Voting Convertible Preferred Stock shall convert at the option of the holder into shares of the corporation’s common stock at a conversion price equal to seventy percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding written receipt by the corporation of the holder’s intent to convert.

 

“CLOSING PRICE" shall mean the closing bid price for the corporation’s common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.

 

“PRINCIPAL MARKET" shall mean the principal trading exchange or market for the corporation’s common stock.

 

“TRADING DAY” shall mean a day on which the Principal Market shall be open for business.

 

NOTE 14.  CONVERTIBLE DEBENTURES

 

On May 20, 2011, the Company issued a convertible promissory note in the amount of $42,500 which was received May 26, 2011. The note bears an interest rate of eight percent (8%), matures on February 23, 2012 and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a forty two percent (42%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial conversion feature of $16,398 which has been amortized under the Interest Method. $42,500 of the principal amount due and $1700 in accrued interest has been converted into 1,012,425 shares of the common stock of the Company.

 

On July 5, 2011, the Company issued a convertible promissory note (the “Second Note”) in the principal amount of $37,500. The Second Note, which matures April 11, 2012, bears interest at the rate of 8% per annum. At any time after 180 days from the execution of the Second Note, the Second Note is convertible into shares of the Company’s common stock at the election of Asher at a conversion price equal to a 45% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. The issuance of the note amounted in a beneficial conversion feature of $37,500 which is amortized under the Interest Method. $37,500 of the principal amount due and $1500 in accrued interest has been converted into 6,193,242 shares of the common stock of the Company.

 

On August 29, 2011, the Company issued a convertible promissory note (the “Third Note”) in the principal amount of $35,000. The Third Note, which matures May 25, 2012, bears interest at the rate of 8% per annum. At any time after 180 days from the execution of the Third Note, the Third Note is convertible into shares of the Company’s common stock at the election of Asher at a conversion price equal to a 45% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. The issuance of the note amounted in a beneficial conversion feature of $35,000 which is amortized under the Interest Method. . $35,000 of the principal amount due and $1400 in accrued interest has been converted into 21,708,333 shares of the common stock of the Company.

 

On October 25, 2011, the Company issued a convertible promissory note in the amount of $32,500. The note bears an interest rate of eight percent (8%), matures on July 27, 2012 and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial conversion feature of $7,634 which is amortized under the Interest Method. $32,500 of the principal amount due and $1300 in accrued interest has been converted into 24,635,165 shares of the common stock of the Company.

 

On December 19, 2011, the Company issued a convertible promissory note in the amount of $37,500. The note bears an interest rate of eight percent (8%), matures on September 21, 2012 and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial conversion feature of $37,500 which is amortized under the Interest Method. The principal balance and $1,500 in accrued interest was satisfied by a payment of $57,647.

 

On December 20, 2011 the Company amended the terms of $30,000 in existing debt as follows:

 

(a)  Due and payable December 31, 2012

(b)  Simple interest of 10% from December 20, 2011 to the date the debt is fully converted or paid in full

(c)  Convertible into the common stock of the Company at the option of the holder at a 50% discount from the average of the lowest three Trading Prices  for the common stock during the 10 trading day period ending one Trading Day prior to the date the conversion notice is sent by the holder. "Trading Price" means the closing bid price on the applicable trading market as reported by a reliable reporting service.

 

The amendment of the note amounted in a beneficial conversion feature of $16,153 which was fully amortized by February 29, 2012. The entire principal balance of the convertible note was converted into 1,249,975 shares of the common stock of the Company prior to February 29, 2012.

 

On February 28, 2012 the Company amended the terms of  $85,500 in existing principal indebtedness as well as 3,710  of interest accrued but unpaid to be as follows:

 

The aggregate indebtedness of $89,210 shall bear simple interest, be payable upon demand of the holder, and be convertible into the common shares of the company at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion date, as reported by Bloomberg. provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The amendment of the note amounted in a beneficial conversion feature of $59,473 which was fully amortized by February 29, 2012. This aggregate indebtedness was converted into 21,307,702 of the company’s common shares.

 

On April 16, 2012 the Company issued a convertible promissory note in the amount of $42,500 which was received April 21, 2012. The note bears an interest rate of eight percent (8%), matures on January 18, 2013. and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a fifty two percent (52%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial conversion feature of $11,805 which is amortized under the Interest Method.

 

On June 15, 2012 the Company amended the terms of $102,349 in existing principal indebtedness as follows:

 

The Aggregate Indebtedness of $102,349 is convertible at Holder’s option at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 5 trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance of the note amounted in a beneficial conversion feature of $102,349 which is immediately amortized . This aggregate indebtedness was converted by the Holders into 36,838,692 shares of the Company’s common stock.

 

On July 26, 2012, the Company issued a convertible note in the principal amount of $63,000 to Asher Enterprises, Inc. The Note bears interest at the rate of 8% per annum and matures on April 30, 2013. The Note is convertible any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note into common stock of the Company, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 Trading Day period prior to conversion as Trading Day is defined in the Note. The issuance of the note amounted in a beneficial conversion feature of $63,000 which is amortized under the Interest Method.

 

On August 21, 2012 the Company amended the terms of $59,000 in existing principal indebtedness as follows:

 

The Aggregate Indebtedness of $59,000 is convertible at Holder’s option at a conversion price per share equal to 60% (the “Discount”) of the lowest closing bid price for the Company’s common stock during the 10 trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”); provided that if the closing bid price for the common stock on the date in which the conversion shares are deposited into Holder’s brokerage account and confirmation has been received that Holder may execute trades of the conversion shares ( Clearing Date) is lower than the Closing Bid Price, then the purchase price for the conversion shares shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price (“Bonus Shares”). The company has agreed on a limitation on conversion equal to 9.99% of the Company’s outstanding common stock. The issuance of the note amounted in a beneficial conversion feature of $53,000 which was immediately amortized .

 

NOTE 16. STOCK TRANSACTIONS

 

During the twelve months ended August 31, 2012 the Company issued 113,695,700 Common Shares in satisfaction of $374,959 in debt and accrued interest.

 

During the twelve months ended August 31, 2012 the Company issued 3,272,000 Common Shares for services rendered valued at $171,750.

 

During the twelve months ended August 31, 2012 the Company issued 2,500,000 Common shares for acquisition of intangible assets valued at $700,000.

 

During the twelve months ended August 31, 2012 the Company issued 6,274,726 Common Shares valued at $23,868 pursuant to contractual obligations contained in certain convertible notes outstanding.

 

During the twelve months ended August 31, 2012 the Company issued 75,000 shares of its Non Voting Convertible Preferred Stock for services rendered valued at $75,000.

 

On December 26, 2011 an employee of the Company consented to the cancellation of 15,000 common shares previously issued as compensation.

 

On December 29, 2011 75,000 common shares previously issued to the company’s former Chief Financial Officer were returned for cancellation by the Company. Of that amount 40,000 were subject to forfeiture and are cancelled pursuant to those forfeiture provisions at the company’s option and the company’s former Chief Financial Officer has consented to cancellation of the remaining 35,000 common shares.

 

During the Quarter ended May 31, 2012 a dividend of 3, 201,397 shares of Series B Preferred Stock was paid to the Company’s common shareholders of record as of February 21, 2012.

On April 3, 2012 the Company issued 50,000,000 shares of common stock to David R. Koos, the Company’s Chief Executive Officer, as a restricted stock award (“Bonus Shares”).David Koos may not offer to sell, sell, transfer, pledge or otherwise dispose of the Bonus Shares prior to April 2, 2017 (“Restricted Period”). In the event that, prior to the expiration of the Restricted Period, David Koos voluntarily ceases to be employed at the Company or is terminated for cause the Shares shall be forfeited.

On April 3, 2012 the Company issued 27,000,000 shares of common stock to seven employees as a restricted stock award (“Bonus Shares”).No employee may offer to sell, sell, transfer, pledge or otherwise dispose of the Bonus Shares prior to April 2, 2017 (“Restricted Period”).In the event that, prior to the expiration of the Restricted Period, any employee voluntarily ceases to be employed at the Company or is terminated for cause his or her Shares shall be forfeited.

On April 3, 2012 the Company issued 15,000,000 shares of common stock to a consultant as a restricted stock award (“Bonus Shares”).The recipient may not offer to sell, sell, transfer, pledge or otherwise dispose of the Shares prior to April 2, 2017 (“Restricted Period”). In the event that, prior to the expiration of the Restricted Period, the recipient declines to provide if requested to provide, or is unable to provide if requested to provide, consulting services to the Company of a nature that have been customarily provided by the recipient to the Company the Shares shall be forfeited.

On August 2, 2012 an employee of the Company consented to the cancelation of 15,000,000 common shares issued to her as a Restricted Stock Award.

 

NOTE 17. SUBSEQUENT EVENTS

 

Between September 4, 2012 and September 17, 2012 the Company sold 26,802,465 common shares to Southridge for the gross amount of $50,000 pursuant to the June Purchase Agreement.

 

On September 21 , 2012 the Company paid $20,000 of indebtedness due to Southridge.

 

On September 20, 2012 the Company issued a convertible promissory note in the amount of $63,000 cash from which was received September 27, 2012. The note bears an interest rate of eight percent (8%), matures on June 25, 2013. and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a thirty nine percent (39%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date.

 

On October 2 , 2012 the Company sold 10,837,849 common shares to Southridge for the gross amount of $14,300 pursuant to the June Purchase Agreement. Total gross proceeds of $14,300 were utilized to pay $14,300 of debt due to Southridge by the Company.

 

On October 17, 2012 the Company issued 23,000,000 common shares in satisfaction of $19,320 of outstanding convertible indebtedness.

 

On October 17, 2012 the Company amended its certificate of incorporation in order to authorize 2,000,000,000 shares of Common Stock

 

On October 22, 2012 the Company issued 10,810,811 common shares in satisfaction of $8,000 of outstanding convertible indebtedness.

On November 28, 2012 the “Company executed an agreement (“Agreement”) with Gregory McDonald ("McDonald"), Pet Pointers, Inc. ("Pet Pointer") whereby Mc Donald and Pet Pointer would acquire from the Company all assets ( with the exception of cash and accounts receivable) utilized by the Company in the operation of the McDonald Animal Hospital, a full service veterinary clinic owned and operated by the Company and located in Santa Barbara, California (“McDonald Asset Sale”). 

On October 10, 2012 a Complaint (“Complaint”) was filed in the Superior Court of the State of California against the Company and David Koos by McDonald, a former employee of the Company, alleging breach of contract and breach of the covenant of good faith and dealing in connection with the assumption of lease obligations by the Company in connection with the acquisition of the assets of Pet Pointers, Inc breach of contract and breach of the covenant of good faith and dealing in connection with an employment agreement enters into with McDonald inc connection with the Acquisition, breach of contract in connection with the Acquisition purchase agreement, breach of the covenant of good faith and dealing in connection with the Acquisition purchase agreement, implied indemnity in connection to amounts owed by McDonald to Anthony and Judi Marinelli, the Internal Revenue Service, and the California Franchise Tax Board, intentional misrepresentation, negligent misrepresentation , failure to pay wages and violations of Sections 2802, 203, and 2806 of the California Labor Code. The Complaint sought judgment for nominal damages, actual damages, compensatory damages, lost wages, compensation, expenses wage benefits and penalties pursuant to California Labor Code Sections 203 et al, 2802 and 2806, indemnification, accrued interest, punitive damages, costs of suit and attorney’s fees. 

As consideration to the Company for the assets acquired, McDonald and Pet Pointers provided to the Company a General release whereby McDonald and Pet Pointer waive, release and discharge the Company and their respective assignees, officers, directors, shareholders, boards, owners, employees, attorneys, agents, trustors, trustees, beneficiaries, heirs, successors, and representatives from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses including:

(1) All claims relating to the Complaint.

(2) Those owed by McDonald to Anthony and Judi Marinelli which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011. The balance due on this obligation as of December 5, 2012 was $55,000.

(3) Those amounts owed by McDonald to the Internal Revenue Service which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011. The balance due on this obligation as of December 5, 2012 was $6,369.69.

(4) Those amounts owed by McDonald to the California Franchise Tax Board which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011. The balance due on this obligation as of December 5, 2012 was $3,474.

Assets disposed of pursuant to the Agreement include approximately $4,897 of Property Plant and Equipment net of accumulated depreciation as well as all inventory held at the McDonald Animal Hospital. 

Assets disposed of pursuant to the Agreement also include 

(i) Essentially all intellectual property, including computer software, utilized in connection with the operation of the McDonald Animal Hospital.

(ii) All telephone numbers, fax numbers, service marks, trademarks, trade names, fictitious business names, websites, business email addresses, vendor lists, promotional materials, vendor records and any and all business records including, but not limited to, such items stored in computer memories, microfiche, paper record or by any other means relevant to the operation of the McDonald Animal Hospital.

(iii) All customer lists, customer contacts, and any and all customer records that are related to the McDonald Animal Hospital. 

As a result of the agreement, the Company anticipates recording a non-cash pre-tax charge for the impairment of goodwill recorded in connection with the acquisition of the McDonald Animal Hospital of approximately $405,000 for the quarter ended November 30, 2012. 

Pursuant to the Agreement, the Company is obligated to make payment of $13,000 within five days of the Closing of the Agreement as such term is defined in the Agreement. 

Pursuant to the Agreement, the Company agrees to waive, release and discharge McDonald and Pet Pointer from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses.

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


(a) On September 27, 2012 the Board of Directors of . (the “Registrant” or the “Company”) approved of the dismissal of John Kinross-Kennedy, CPA (“Kennedy”) as the Registrant’s independent registered public accounting firm.

 

Kennedy’s  report of the Company’s financial statements for the fiscal years ended August 31, 2011 and  August 31, 2010  did not contain any adverse opinion or disclaimer of opinion, nor was modified as to uncertainty, audit scope, or accounting principles. The audit reports prepared by Kennedy for the fiscal years ending August 31, 2011 and August 31, 2010 contained a paragraph with respect to the Company's ability to continue as a going concern.

 

During the Registrant's two most recent fiscal years and the subsequent interim periods thereto there were no disagreements with Kennedy, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Kennedy’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the Registrant's financial statements.

 

On September 27, 2012, the Board of Directors of the Registrant, acting as the Registrant's Audit Committee, approved the engagement of Anton and Chia, LLP as its independent auditor. On same date, September 27, 2012, the accounting firm of Anton and Chia, LLP was engaged as the Registrant's new independent registered public accounting firm.

 

(b) On December 4, 2012 the Board of Directors of Entest BioMedical, Inc. (the “Registrant” or the “Company”) approved of the dismissal of Anton and Chia, LLP (“Anton”) as the Registrant’s independent registered public accounting firm.

 

Since September 27, 2012 (the date on which Anton has been engaged as the Registrant’s independent registered public accounting firm) Anton has neither reviewed nor completed an audit of any of the financial statements of the Registrant.  Therefore, no reports of Anton  on the Registrant’s financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles as no such reports have been prepared. The Company  disagreed with the conclusion arrived at by Anton while performing audit procedures for the year ended August 31, 2012 that    the Company had not appropriately accounted for the conversion features of  convertible notes payable and that the Company had not appropriately accounted for certain  equity transactions.  The accounting treatment for the conversion features of convertible notes payable was discussed   by Anton and the sole Director of the Company and the Company has authorized Anton to respond fully to the inquiries of the successor accountant concerning the subject matter of all disagreements.

 

On December 4, 2012, the Board of Directors of the Registrant, acting as the Registrant's Audit Committee, approved the engagement of Seale and Beers, Certified Public Accountants LLC (“S&B”) as its independent auditor. On same date, December 4, 2012, the accounting firm of S&B was engaged as the Registrant's new independent registered public accounting firm.

 

Item 9A. Controls and Procedures

 

a) Evaluation of disclosure controls and procedures.

 

The principal executive officer and principal financial officer have evaluated the Company’s disclosure controls and procedures as of August 31, 2012. Based on this evaluation, they have 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 is the Company’s CEO and acting CFO. He  functions  as 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 August 31, 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 August 31, 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 August 31, 2012 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 10. Directors, Executive Officers and Corporate Governance

 

On June 19, 2009 the Board of Directors of  the Company elected David R. Koos, 52,  a director of the Company and appointed Dr. Koos President, Chief Executive Officer, Secretary, Chief Financial Officer, Principal Accounting Officer of the Company.

 

Dr. Koos resigned as Chief Financial Officer on March 31, 2010 and assumed the position of Acting Chief Financial Officer and Principal Accounting Officer on August 8, 2011 upon the resignation of Tammy L. Reynolds who served as Chief Financial Officer from the period from March 31, 2010 to August 8, 2011.

 

Dr. Koos has served as Chairman, CEO, President, Secretary, and Acting CFO of the BMSN since June 19, 2006, and as Chairman CEO, President, Secretary, and Acting CFO of Entest CA since August 22, 2008

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:

 

     
Position: Company Name: Employment Dates:
     
Chairman, President, CEO and Acting CFO

Bio-Matrix Scientific Group, Inc.*

 

June 14, 2006 (Chairman) to Present

June 19, 2006 (President, CEO and Acting CFO)

June 19, 2006 (Secretary) to Present

Chairman, CEO, Secretary & Acting CFO  Frezer Inc. May 2, 2005 to February 2007
Chairman, CEO & Acting CFO

 BMXP Holdings, Inc.

 

December 6, 2004 to June 2008
Managing Director & President Cell Source Research Inc. December 5, 2001 to Present
Managing Director & President Venture Bridge Inc. November 21, 2001 to Present
Chairman of the Board of Directors, CFO & Secretary

Cell Bio-Systems Inc.

(New York)

July 17, 2003 to December 1, 2003
Registered Representative Amerivet Securities Inc.** March 31, 2004 to February 2008

 

* As of January 28,2012 Bio-Matrix Scientific Group Inc. owned 10,000,000 common shares of the company

 

** 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.

 

Code of Ethics

 

On November 11, 2009 we adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002

 

Director Independence

 

Audit Committee and Audit Committee Financial Expert

 

The sole member of the Company’s board of Directors may not be considered independent as he is also its sole 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 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 the Board of Directors  of the Company are the same people, 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 of the Board of Directors.

 

Executive Compensation

 

SUMMARY COMPENSATION TABLE

 

                     
Name and Principal Position Year

Salary

($)

Bonus

($)

Stock

Awards

($)

Restricted

Stock Awards

 

($)

Option

Awards

($)

Non Equity

Incentive

Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings

($)

All

Other

Compensation

($)

Total

($)

                     

David Koos

Chairman, President and CEO

 From September 1, 2011 to  August 31, 2012 $120,000* 0 0 400,000***** 0 0 0 0 $520,000
                     

David Koos

Chairman, President and CEO

 From September 1, 2010 to  August 31, 2011 $208,000**** 0 $2,000** 0 0 0 0 0 $210,558
                     

Tammy Reynolds,

 Former CFO and  Director

(resigned from all positions

with  the Company

effective August  8,2011

 From September1, 2010 to August 31, 2011 $65,961 0 $47,000 $50,000*** 0 0 0 0 $162,961

 

* Includes $102,000 in salary earned by David Koos which was accrued but unpaid for the fiscal year ended August 31, 2011

 

***** On  April 3, 2012 the Company issued 50,000,000 shares of common stock to David R. Koos as a restricted stock award (“Bonus Shares”).

 

David Koos may not offer to sell, sell, transfer, pledge or otherwise dispose of the Bonus Shares prior to April 2, 2017 (“Restricted Period”).

 

In the event that, prior to the expiration of the Restricted Period, David Koos voluntarily ceases to be employed at the Company or  is  terminated for cause the Shares shall be forfeited.

 

 

** represents 5,000 shares of the Company’s Series AA Preferred Stock

 

**** Includes 190,558 in salary earned by David Koos which was accrued but unpaid for the fiscal year ended August 31, 2011

 

***The Company and Ms. Reynolds had agreed that Ms. Reynolds shall receive:

  a) Compensation of $70,000 per annum for her services as Chief Financial Officer.
  b) Fifty Thousand Dollars worth of the Common Shares of the Company (“Compensation Shares”) to be granted to Ms. Reynolds upon the completion of twelve months employment as CFO of the Company under the condition that80% of the Compensation Shares (“Restricted Comp Shares”) may not be sold, transferred, assigned, pledged or otherwise encumbered or disposed of by Ms. Reynolds (“Transfer Restriction”) except as follows:

 

Upon the expiration of one year from the date of the grant of the Compensation Shares, Transfer Restrictions shall no longer apply to 25% of the Restricted Comp Shares.

 

Upon the expiration of two years from the date of the grant of the Compensation Shares, Transfer Restrictions shall no longer apply to an additional 25% of the Restricted Comp Shares.

 

Upon the expiration of three years from the date of the grant of the Compensation Shares, Transfer Restrictions shall no longer apply to an additional 25% of the Restricted Comp Shares

 

Upon the expiration of four years from the date of the grant of the Compensation Shares, Transfer Restrictions shall no longer apply to an additional 25% of the Restricted Comp Shares.

 

As Ms. Reynolds is no longer employed as CFO of the Company, any Restricted Comp Shares still subject to Transfer Restrictions shall be forfeited by the Ms. Reynolds, and ownership of the Restricted Comp Shares shall be transferred back to the Company.  As such, 80% of the restricted Stock Award paid to Ms Reynolds during the fiscal year ended August 31, 2011 is subject to forfeiture. Ms. Reynolds is currently not party to a written employment agreement with the Company.

 

On December 29, 2011 75,000 common shares previously issued to Ms. Reynolds  were returned for cancellation by the Company. Of that amount 40,000 were  subject to forfeiture and were cancelled pursuant to those forfeiture provisions at the company’s option and Ms. Reynolds has consented to cancellation of the remaining 35,000 common shares.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth information known to the Company with respect to the beneficial ownership of each class of the Company’s capital stock as of January 28, 2013 for (1) each person known by the Company to beneficially own more than 5% of each class of the Company’s voting securities, (2) each executive officer, (3) each of the Company’s directors and (4) all of the Company’s executive officers and directors as a group. As of November 1, 2011 the Company had 20,890, 501  common shares outstanding and 5,000 Series AA Preferred Shares outstanding

 

 Based on 446,539,900 shares issued and outstanding as of August 9, 2012 (Except as otherwise indicated)  

 

       
Title of Class Name and Address of Beneficial Owner

Amount and Nature

 of Beneficial Owner

Percent of Class
Common

David R. Koos*

C/o Entest Bio Medical Inc., Inc

4700 SPRING STREET, SUITE 203, LA MESA, CALIFORNIA, 91942

60,000,000 13.4%
       
Common All Officers and Directors As a Group 60,000,000 13.4%

 

*Includes 10,000,000 common shares owned by Bio-Matrix Scientific Group, Inc. (David Koos is CEO, President and Chairman of Bio-Matrix Scientific Group, Inc.).

 

Based on 3,201,397 shares issued and outstanding as of  January 28, 2012

 

       
Title of Class Name and Address of Beneficial Owner

Amount and Nature

 of Beneficial Owner

Percent of Class
       
       
       
Series B Preferred

David R. Koos*

C/o Entest Bio Medical Inc., Inc

4700 SPRING STREET, SUITE 203, LA MESA, CALIFORNIA, 91942

1250000 39%
       
Series B Preferred

National Financial Services, LLC

200 Liberty Street

New York NY 10281

201,585 6.2%
Series B Preferred

Sleezer family Trust

c/o Charles Sleezer

12550 Carson Street

Hawaiian Gardens, CA

687,500 21.4%
Series B Preferred

Ronald J. Titterington and Kathy Snell

3880 W 11th Street

Eugene Oregon

312,500 9.7%
Series B Preferred All Officers and Directors as a Group* 1250000 39%

 

*Includes 1,250,000 Series B Preferred  shares owned by Bio-Matrix Scientific Group, Inc. (David Koos is CEO, President and Chairman of Bio-Matrix Scientific Group, Inc.).

 

Based on 5,000 shares issued and outstanding as of  January 28, 2012

 

       
Title of Class Name and Address of Beneficial Owner

Amount and Nature

 of Beneficial Owner

Percent of Class
Series AA Preferred Shares

David R. Koos

C/o Entest Bio Medical Inc., Inc

4700 SPRING STREET, SUITE 203, LA MESA, CALIFORNIA, 91942

5,000 100%
Series AA Preferred Shares

All Officers and Directors

As a Group

5,000 100%

 

 

Based on 75,000 shares issued and outstanding as of January 28, 2012

 

       
Title of Class Name and Address of Beneficial Owner

Amount and Nature

 of Beneficial Owner

Percent of Class
NonVoting Convertible Preferred Shares

 Southridge Partners II LLP(1)

90 Grove Street

Ridgefield CT

75,000 100%
 

All Officers and Directors

As a Group

 

(1)  Stephen Hicks possesses voting power and investment power over 75,000 NonVoting Convertible Preferred Shares held by Southridge.

0 0%
             

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

During the quarter ended November 30, 2011 David Koos made loans to the Company totaling $8,400. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum.

 

During the quarter ended February 29, 2012 David Koos made loans to the Company totaling $7,550. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum.

 

During the quarter ended February 29, 2012 David Koos granted to the Sherman Family Trust, an irrevocable trust for the benefit of Blossom Sherman, all rights to and interest in $25,956 in unpaid indebtedness owed by the Company (bearing simple interest at a rate of 15% per annum and due and payable at the demand of the holder) as well as $3,051 in unpaid interest owed by the Company.

 

During the quarter ended May 31, 2012 David Koos made loans to the Company in the amount of  $13,625. These loans are due and payable at the demand of David  Koos and bear simple interest at a rate of 15% per annum

 

As of August 31, 2012 the Company remains indebted to David R. Koos in the principal amount of $30,180 due and payable at the demand of David  Koos and bearing simple interest at a rate of 15% per annum

 

As of August 31 , 2012 Bio-Matrix Scientific Group, Inc. (“BMSN”) , a major shareholder of the Company, is indebted to the Company in the amount of $39,140. This amount is non interest bearing and is due at the demand of the Company.

 

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 the 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.

 

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 communication with management

 

Item 14. Principal Accounting Fees and Services

 

The following table sets forth the aggregate fees billed to us by John Kinross-Kennedy, CPA during the period beginning September 1, 2010 and ending August 31, 2011:

 

Audit Fees   $ 4,600  
Audit Related Fees     400  
Tax Fees      0  
All Other Fees     2,800  
    $ 7,800  

 

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. In 2010 these fees were primarily derived from review of financial statements in the Company's Form 10Q Reports.

 

All Other Fees: Audit of the financial statements of Pet Pointers, Inc.

 

The following table sets forth the aggregate fees billed to us by John Kinross-Kennedy, CPA during the period beginning September 1, 2011 and ending August 31, 2012:

 

Audit Fees   $ 4,000  
Audit Related Fees     1,300  
Tax Fees      0  
         
    $ 5,300  

 

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. In 2012 these fees were primarily derived from review of financial statements in the Company's Form 10Q Reports.

 

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 the independence John Kinross-Kennedy.

 

Item 15. Exhibit Index

  

EXHIBIT INDEX

  

Exhibit No. Description
3(i)(a) Articles of Incorporation
3(ii)(b) Bylaws
10.1 ( c) Agreement by and Between David Koos and the Company
10.2 (Incorporated by Reference to Exhibit 10.2 of the Company’s Form S-1 filed June 12, 2012) Terms of Employment Agreement by and between the Company and Tammy Reynolds
10.3 (d) August 2010 Agreement by and between the Company and TheraCyte, Inc.
10.3 (e) Asset Purchase Agreement by and between the Company, Dr. Gregory McDonald and Pet Pointers
10.4 (f) Exhibit A to Asset Purchase Agreement by and between the Company, Dr. Gregory McDonald and Pet Pointers
10.5 (g) Exhibit B to Asset Purchase Agreement by and between the Company, Dr. Gregory McDonald and Pet Pointers
10.6 (h) CRO Agreement by and between the Company and RenovoCyte LLC
3(i)(2)(i) Certificate of Designations Series AA Preferred Stock
10.7(j) 8% ASHER NOTE $42,500
10.8(k) 8% ASHER NOTE $37,500
10.9(l) 8% ASHER NOTE $35,000
10.10(m) 8% ASHER NOTE $32,500
3(i)(3) (n) Amendment to Certificate of Incorporation dated June 4, 2009
3(ii)(2) (o) Bylaws of Entest BioMedical, inc., a California corporation and wholly owned subsidiary of the Registrant
3(i)(4) (p) Certificate of Incorporation of Entest BioMedical, inc., a California corporation and wholly owned subsidiary of the Registrant
10.11(q) 8% ASHER NOTE $37,500
3(i)(5) ( r) Certificate of Designations Series B  Preferred Stock
3(i) (6)(s) Amendment to Certificate of Incorporation
10.12 (t) Equity purchase Agreement, Southridge Feb 27, 2012
10.13(u) Registration Rights Agreement, Southridge
10.14(Incorporated by Reference to Exhibit 10.14 of the Company’s Form S-1 filed June 12, 2012) Line of Credit Promissory Note December 1, 2010 Bio Technology Partners Business Trust
10.15(Incorporated by Reference to Exhibit 10.15 of the Company’s Form S-1 filed June 12, 2012) Line of Credit Promissory Note December 1, 2010  Venture Bridge Advisors, Inc.
10.16(Incorporated by Reference to Exhibit 10.16 of the Company’s Form S-1 filed June 12, 2012) Line of Credit Promissory Note December 1, 2010  Bombardier Pacific ventures
10.17(Incorporated by Reference to Exhibit 10.17 of the Company’s Form S-1 filed June 12, 2012) Line of Credit Promissory Note December 1, 2010  David Koos
3(i)(7) (v) Amendment to Certificate of Incorporation
10.18(Incorporated by Reference to Exhibit 10.18 of the Company’s Form S-1 filed June 12, 2012) Agreement amending terms of outstanding Debt by the Company
10.19(Incorporated by Reference to Exhibit 10.19 of the Company’s Form S-1 filed June 12, 2012) Agreement amending terms of outstanding Debt by the Company
10.20(Incorporated by Reference to Exhibit 10.20 of the Company’s Form S-1 filed June 12, 2012) Agreement amending terms of outstanding Debt by the Company
10.21(w) Form of Bonus Share Agreement
5.1 Opinion Regarding Legality
14 (y) Code of Ethics
10.24 (aaaa) Assignment dated June 15, 2009 by and between Entest BioMedical, Inc. and  Bio-Matrix Scientific Group, Inc.
10.22 (z) Lease
3(i)(8) (aa) Text of Amendment to Certificate of Incorporation
10.23(aaa) 8% ASHER NOTE $42,500
10.24 (aaaa) Assignment dated June 15, 2009 by and between Entest BioMedical, Inc. and  Bio-Matrix Scientific Group, Inc.
10.25(Incorporated by Reference to Exhibit 10.25 of the Company’s Form S-1 filed June 12, 2012) Advisory Board Letter Agreement
10.26 (aaaaa) Equity Purchase Agreement Southridge June 1 2012
10.27(Incorporated by Reference to Exhibit 10.27 of the Company’s Form S-1 filed June 12, 2012) Amendment to Registration Rights Agreement
10.28(Incorporated by Reference to Exhibit 10.28 of the Company’s Form S-1 filed June 12, 2012) Termination Letter February 27 Equity Purchase Agreement

 

 

 
Exhibit No. Description
10.29(zzzzzzzz1) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY
10.30(zzzzzzzz2) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY
10.31(zzzzzzzz3) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY
10.32(zzzzzzzz4) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY
10.33(zzzzzzzz5) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY
10.34(zzzzzzzz6) AGREEMENT AMENDING TERMS OF OUTSTANDING DEBT BY THE COMPANY

10.35 ( incorporated by Reference to Exhibit 10.35 of the company’s amended Form S-1

Filed August 17,2012)

ASHER NOTE $63,000

10.36( incorporated by Reference to Exhibit 10.36 of the company’s amended Form S-1

Filed August 17,2012)

TERMS OF COMPENSATION DAVID KOOS

 

 

 

10.38 (incorporated by reference to Exhibit 10.1 Of the Company’s 8-K filed December 12, 2012 )   Settlement Agreement with G. McDonald
3.i (8) (Incorporated by Reference to Exhibit 3 (i) of the Company’s 8-K filed October 19, 2012  
10.39 Line of Credit Promissory Note Sherman family Trust
31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  
32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002  

 

(a) Incorporated by Reference to Exhibit 3(1) of the Company's Form S-1 Filed  November 4, 2008
(b) Incorporated by Reference to Exhibit 3(2) of the Company's Form S-1 Filed  November 4, 2008
(c) Incorporated by Reference to Exhibit 10(1) of the Company's Form10-K  Filed  November 17, 2009
(d) Incorporated by Reference to Exhibit 10(1) of the Company's Form10-K  Filed  November 16, 2010
(e) Incorporated by Reference to Exhibit 10(1) of the Company's Form 8-K Filed December 17, 2010
(f) Incorporated by Reference to Exhibit 10(2) of the Company's Form 8-K Filed December 17, 2010
(g) Incorporated by Reference to Exhibit 10(3) of the Company's Form 8-K Filed December 17, 2010
(h) Incorporated by Reference to Exhibit 10(3) of the Company's Form 8-K Filed October 24, 2011
(i) Incorporated by Reference to Exhibit 3(i) of the Company's Form 8-K Filed June 10, 2011
(j) Incorporated by Reference to Exhibit 10(9) of the Company's Form 10-K  filed November 3 2011
(k) Incorporated by Reference to Exhibit 10(10) of the Company's Form 10-K  filed November 3 2011
(l) Incorporated by Reference to Exhibit 10(11) of the Company's Form 10-K  filed November 3 2011
(m) Incorporated by Reference to Exhibit 10(12) of the Company's Form 10-K  filed November 3 2011
(n) Incorporated by Reference to Exhibit 3(i) (2)of the Company's Form 8-K Filed June 10, 2011
(o) Incorporated by Reference to Exhibit 3(ii) of the Company's Form 8-K Filed June 10, 2011
(p) Incorporated by Reference to Exhibit 3(i) of the Company's Form 8-K Filed June 10, 2011
(q) Incorporated by Reference to Exhibit 10.1 of the Company's Form 10-Q Filed January 11, 2012
( r) Incorporated by Reference to Exhibit 3(i) of the Company's Form 8-K Filed February 9, 2012
(s) Incorporated by Reference to Exhibit (3)(i) of the Company's Form 10-Q Filed February 9, 2012
(t) Incorporated by Reference to Exhibit 10.1 of the Company's Form 10-Q Filed February 9, 2012
(u) Incorporated by Reference to Exhibit 10.2 of the Company's Form 10-Q Filed February 9, 2012
(v) Incorporated by Reference to Exhibit 3(i) of the Company's Form 8-K Filed March 22, 2012
(w) Incorporated by Reference to Exhibit 10.1 of the Company's Form 8-K Filed April 5, 2012
(x) Filed as Exhibit 5.1
(y) Incorporated by Reference to Exhibit 14 of the Company's Form10-K  Filed  November 17, 2009
(z) Incorporated by Reference to Exhibit 10.1 of the Company's Form 10-Q Filed March 28, 2012
(aa) Incorporated by Reference to Exhibit 3(i) of the Company's Form 8-K Filed April 25, 2012
(aaa) Incorporated by Reference to Exhibit 10 of the Company's Form 8-K Filed April 25, 2012
(aaaa) Incorporated by Reference to Exhibit 10.2 of the Company's Form 8-K Filed July 10, 2009
(aaaaa) Incorporated by Reference to Exhibit 10.1 of the Company's Form 8-K Filed June 4, 2012

 
(zzzzzzzz1) Incorporated by Reference to Exhibit 10.1 of the Company's Form 10-Q Filed July 23, 2012
(zzzzzzzz2) Incorporated by Reference to Exhibit 10.2 of the Company's Form 10-Q Filed July 23, 2012
(zzzzzzzz3) Incorporated by Reference to Exhibit 10.3 of the Company's Form 10-Q Filed July 23, 2012
(zzzzzzzz4) Incorporated by Reference to Exhibit 10.4 of the Company's Form 10-Q Filed July 23, 2012
(zzzzzzzz5) Incorporated by Reference to Exhibit 10.5 of the Company's Form 10-Q Filed July 23, 2012
(zzzzzzzz6) Incorporated by Reference to Exhibit 10.6 of the Company's Form 10-Q Filed July 23, 2012

 

 
 

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.

 

 

      Entest BioMedical, Inc.
       
    By: /s/ David R. Koos
      Name: David R. Koos
     

Title: President, Chairman, Chief Executive Officer

      Date: February 1, 2013

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 1, 2013.

 

    By: /s/ David R. Koos
      Name: David R. Koos
      Title: President, Chairman of the Board of Directors, Chief Executive Officer, Acting Chief Financial Officer
      Date: February 1, 2013