SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-Q





Quarterly Report under Section 13 or 15 (d) of


Securities Exchange Act of 1934





For Period ended December 31, 2010





Commission File Number 0-32201







BIO-MATRIX SCIENTIFIC GROUP, INC.


(Exact name of registrant as specified in its charter)





DELAWARE
33-0824714(State of Incorporation)
(I.R.S. Employer Identification No.)4700 Spring Street, Suite 203, La Mesa, California
91942(Address of Principal Executive Offices)
(Zip Code)





(619) 398-3517


(Registrant's telephone number, including area code)








Check 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 [X]








Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes [   ]   No [X]






There were 72,189,747 shares of Common Stock outstanding as of March 10, 2011.





























PART I—FINANCIAL INFORMATION





BIO-MATRIX SCIENTIFIC GROUP, INC.A Development Stage CompanyCONSOLIDATED BALANCE SHEETDecember 31, 2010


September 30, 2010ASSETS

(unaudited)CURRENT ASSETSCash

$
100,845


$
306Prepaid Expenses


47,215



40,425Employee Receivable


1,396



1,396Cash in Escrow


20,000Total Current Assets


169,456



42,127PROPERTY & EQUIPMENT (Net of Accumulated Depreciation)


538,869



538,869OTHER ASSETS


26,566



26,566TOTAL ASSETS

$
734,891


$
607,562LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts Payable


303,740



251,528Notes Payable


267,394



247,669Accrued Payroll


590,558



444,500Accrued Payroll Taxes


27,161



27,298Accrued Interest


165,617



145,426Accrued Expenses


5,000



5,000Convertible Note Payable


333,400



333,400Due to TheraCyte


10,000Due to Shareholder


100,000Current portion, note payable to affiliated party


1,000



1,000Total Current Liabilities


1,803,870



1,455,821STOCKHOLDERS EQUITY (DEFICIT)Preferred Stock ($.0001 par value) 20,000,000 shares authorized; 1,963,821 issues and outstanding as of December 31, 2010 and September 30, 2010 respectively


197



197Series B Preferred Shares ($.0001 par value) 2,000,000 shares authorized;  725,409 issues and outstanding as of December 31, 2010 and September 30, 2010


73



73Common Stock ($.0001 par value 80,000,000 shares authorized; 70,404,033 shares issued and outstanding as of December 31, 2010 and September 30 , 2010 respectively


7,040



7,040Additional Paid in Capital


11,094,158



10,931,758Contributed Capital


509,355



509,355Deficit accumulated during the development stage


(12,255,366
)


(11,989,566
)Deficit attributable to non-controlling interest in subsidiary


(424,436
)


(307,116
)Total Stockholders' Equity (Deficit)


(1,068,979
)


(848,259
)TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$
734,891


$
607,562








The accompanying Notes are an integral part of these Financial Statements


2











A Development Stage Company

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)From Inception(August 2, 2005)throughDecember 31, 2010


December 31, 2009


December 31, 2010REVENUES

$
-


$
-


$
-COST AND EXPENSESResearch and Development


51,286



44,495



1,255,171General and Administrative


284,695



344,934



5,839,748Depreciation and Amortization










2,668Consulting and Professional Fees


26,946



27,729



4,773,968Impairment of Goodwill and Intangibles










34,688Total Costs and Expenses


362,927



417,158



11,906,243OPERATING LOSS


(362,927
)


(417,158
)


(11,906,243
)OTHER INCOME & (EXPENSES)Interest Expense


(20,193
)


(31,444
)


(315,899
)Interest Income










306Other Income










30,100Loss on sale of Available for Sale Securities










(487,900
)Other Expense










(166
)Total Other Income & (Expense)


(20,193
)


(31,444
)


(773,559
)NET INCOME (LOSS)


(383,120
)


(448,602
)


(12,679,802
)(NET INCOME) LOSS attributable tononcontrolling interest in Entest BioMedical, Inc.


117,320



52,754



424,436NET LOSS attributable to common shareholders


(265,800
)


(395,848
)


(12,255,366
)BASIC AND DILUTED EARNINGS (LOSS)

$
(0.00378
)

$
(0.009
)PER SHAREWeighted Average Shares Outstanding


70,404,033



45,369,136








The accompanying Notes are an integral part of these Financial Statements


3





BIO-MATRIX SCIENTIFIC GROUP, INC.A Development Stage CompanyCONSOLIDATED STATEMENT OF CASH FLOWS





(unaudited)From inception(unaudited)


(unaudited)


(August 2, 2005)Quarter ended


Quarter ended


throughDecember 31, 2010


December 31, 2009


December 31, 2010CASH FLOWS FROM OPERATING ACTIVITIESNet Income (loss)

$
(265,800
)

$
(395,848
)

$
(12,255,366
)Adjustments to reconcile net loss to net cash(used in) provided by operating activities:Depreciation expense










2,667Stock issued for compensation to employees






103,476



1,114,902Stock issued for services rendered by consultants


62,400



5,000



4,083,134Stock issued for prepaid expenses










313,665Stock issued for interest










131,726Changes in operating assets and liabilities:(Increase) decrease in prepaid expenses


(6,790
)


752



(47,215
)Increase (Decrease) in Accounts Payable


52,212



122,132



303,741Increase (Decrease) in Accrued Expenses


166,112



102,698



818,277Increase (Decrease) in Other Comprehensive Income










(50,000
)Increase (Decrease) in Due to TheraCyte


10,000







10,000(Increase) Decrease in Employee Receivable










(1,396
)Loss attributable to Non Controlling interest in subsidiary


(117,320
)


(52,754
)


(424,436
)Net Cash Provided by (Used in) Operating Activities


(99,186
)


(114,544
)


(6,000,301
)CASH FLOWS FROM INVESTING ACTIVITIES( Increase) Decrease in Other Assets










(26,566
)Purchases of fixed assets










(541,536
)Purchase of Other AssetsPreferred Stock retiredPreferred Stock sold for cashIncrease in Cash in Escrow


(20,000
)






(20,000
)(Additions) Decreases  to Securities Available for SaleNet Cash Provided by (Used in) Investing Activities


(20,000
)






(588,102
)CASH FLOWS FROM FINANCING ACTIVITIESPreferred Stock issued for cash










339Common stock issued for cash










1,630Common Stock issued for Debt






98,200



1,206,061Common Stock issued for Accrued Salaries










424,500Common Stock issued for expensesAdditional paid in Capital


100,000



5,000



1,780,919Principal borrowings on Convertible Debentures










333,400Principal borrowings (repayments) on notes and Convertible Debentures


19,725



(5,979
)


1,086,850(Increase) Decrease in Securities available for Sale










50,000Increase in amounts Due to Shareholder


100,000







100,000Contributed Capital










509,353Net Borrowings From Related Parties










1,195,196Increase in Bank Overdraft






1,358Increase (Decrease) in Notes from Affiliated party










1,000Net Cash Provided by (Used in) Financing Activities


219,725



98,579



6,689,248Net Increase (Decrease) in Cash


100,539



(15,962
)


100,845Cash at Beginning of Period


306



17,750



0Cash at End of Period


100,845



1,788



100,845




Supplemental  Cash Flow Disclosures:Significant non-cash activities:


1,206,061Stock issued to cancel debt


108Preferred stock issued for stock dividend


1,206,169




The accompanying Notes are an integral part of these Financial Statements


4





BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARY


(A Development Stage Company)


Notes to condensed consolidated Financial Statements


As of December 31, 2010








NOTE 1. BASIS OF PRESENTATION





The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.





These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated interim financial statements be read in conjunction with the financial statements of the Company for the period ended September 30, 2010 and notes thereto included in the Company's 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.





Results of operations for the interim periods are not indicative of annual results.




NOTE 2. GOING CONCERN





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of $12,255,366 (including $424,436 in net losses attributable to non-controlling interest in Entest BioMedical, Inc.) during the period from August 2, 2005 (inception) through December 31, 2010. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.





Management plans to raise additional funds by offering securities for cash. Management has yet to decide what type of offering the Company will use or how much capital the Company will raise. There is no guarantee that the Company will be able to raise any capital through any type of offerings. Management also plans to acquire one or more operating veterinary clinics in order to generate cash flow to fund research and development. Management can give no assurance that any such clinics can be acquired on terms favorable to the Company, if at all, and if acquired whether such clinics would generate cash flow sufficient to fund the Company’s operations.





NOTE 3. INCOME TAXES





As of December 31 ,2010Deferred tax assets:Net operating tax carry forwards

$
4,179,953Other


-0-Gross deferred tax assets


4,179,953Valuation allowance


(4,179,953)Net deferred tax assets

$
-0-





As of December 31 , 2010 the Company has a Deferred Tax Asset of $4,179,953 completely attributable to net operating loss carry forwards  of approximately $12,293,982  ( which expire 20 years from the date the loss was incurred) consisting  of





(a) $38,616, of Net Operating Loss Carry forwards acquired in the reverse acquisition of BMSG and


(b) $12,255,366  attributable to the Company, Bio-Matrix Scientific Group, Inc (BMSG), a wholly owned Nevada corporation which shares the name of the Company and Entest BioMedical, Inc. a Nevada corporation which is approximately 51% owned by the Company as of November 30, 2010.





5


Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry forwards are expected to be available to reduce taxable income. The achievement of required future taxable income is uncertain. In addition, the reverse acquisition of BMSG has resulted in a change of control. Internal Revenue Code Sec 382 limits the amount of income that may be offset by net operating loss (NOL) carryovers after an ownership change. As a result, the Company has the Company recorded a valuation allowance reducing all deferred tax assets to 0.





NOTE 4. RELATED PARTY TRANSACTION





Between October 1, 2010 and December 31, 2010 Bombardier Pacific Ventures (“Bombardier”), a Company controlled by David Koos, the Company’s CEO,  made loans to the Company totaling  396  dollars . The total amount owed by the Company to Bombardier as of December 31, 2010 is $49,063. These loans and any accrued interest are due and payable at the demand of Bombardier and bear simple interest at the rate of 15% per annum.





Between October l 1, 2010 and December 31, 2010 David Koos, the Company’s CEO, made loans to the Company totaling 2,023 dollars. The total amount owed by the Company to Mr. Koos as of December 31, 2010 is $18,860. These loans and any accrued interest are due and payable at the demand of Mr. Koos and bear simple interest at the rate of 15% per annum.





Between September 1, 2010 and November 30, 2010, Bombardier made loans to Entest BioMedical, Inc. (“Entest”) totaling $7,326. The total amount owed by Entest to Bombardier as of November 30, 2010 is $87,797. These loans and any accrued interest are due and payable at the demand of Bombardier and bear simple interest at the rate of 15% per annum.





As of November 30, 2010, Entest is also indebted to David Koos in the amount of $42,786. These loans and any accrued interest are due and payable at the demand of David R. Koos and bear simple interest at the rate of 15% per annum.





NOTE 5. STOCK TRANSACTIONS





Transactions, other than employees' stock issuance, are in accordance with paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair value of the consideration received. Transactions with employees' stock issuance are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, or whichever is more readily determinable.





On October 7, 2010 Entest sold 2,000,000 common shares (“Shares”) to an individual investor for consideration consisting of $100,000.





On November 17, 2010 Entest issued 45,000 common shares (“Shares”) to contractors and consultants as consideration for services rendered.





On November 30, 2010 Entest issued 10,000 common shares (“Shares”) to a consultant as consideration for services rendered.





NOTE 6. STOCKHOLDERS' EQUITY





The stockholders' equity section of the Company contains the following classes of capital stock as of June 30, 2010:





* Preferred stock, $ 0.0001 par value; 20,000,000 shares authorized:


1,963,821 Preferred shares issued and outstanding.


4,852 Series AA Preferred Shares issued and outstanding.


725,409 Series B Preferred Shares issued and outstanding.





* Common stock, $ 0.0001 par value; 80,000,000 shares authorized: 70,404,033 shares issued and outstanding.





NOTE 7. CONVERTIBLE DEBENTURES





On November 14, 2007 the Company sold a $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $50,000 to one purchaser.





Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is November 14, 2009.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended, filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of the common stock of the Company  by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           the Selling Shareholder Registration Statement has been withdrawn by the Company, the holder may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at the conversion rate of $0.15 per Share.


6


Subsequent to any conversion, the holder  shall have the right, upon written demand to Company (“Registration Demand”), to cause Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





On November 30, 2007, the Company sold $75,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $75,000 to one purchaser.





Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is November 14, 2009.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended,  filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of  the Company’s  common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           the Selling Shareholder Registration Statement has been withdrawn by the Company.





The holder may convert the Convertible Debenture, in whole but not in part, into the Company’s   common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder  shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





On January 8, 2008, the Company sold $18,400 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $18,400 to one purchaser.  Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year.  The Company   shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is December 28, 2009.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended,  filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of  our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           the Selling Shareholder Registration Statement has been withdrawn by the Company.





The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





On January 18, 2008, the Company sold $200,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $200,000 to one purchaser.  Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year.  The Company   shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended,  filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of  our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           the Selling Shareholder Registration Statement has been withdrawn by the Company.


7


The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.25 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





On January18, 2008, the Company sold $100,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $100,000 to one purchaser.   Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year.  The Company   shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended,  filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of  our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           the Selling Shareholder Registration Statement has been withdrawn by the Company.





The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.25 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





The Company shall agree to the granting of a Lien to the Holder against collateral which the Company owns or intends to purchase, namely:





Flow Cytometer (4 Color) (BD Facscanto)Laboratory computer system/also for enrollments/storage trackingHematology Analyzer (celldyne 1800)(ABBOTT)Laminar Flow Hood 4 ft ( Clean hood) (2)Bench top centrifuges (2) refrigeratedSmall equipment (lab set-up)MicroscopeTube heat sealers (2 ea)Barcode printer and labeling device





On February 15, 2008, the Company sold $50,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $50,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year.  The Company   shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is February 15, 2010.





At any time subsequent to the expiration of a six month period since either of:





(i)           that Registration Statement, as amended,  filed with the SEC on Form SB-2 relating to the sale of an aggregate of 17,195,263 shares of  our common stock by certain selling shareholders (the “Selling Shareholders Registration Statement”) has been declared effective by the SEC or





(ii)           The Selling Shareholder Registration Statement has been withdrawn by the Company.





The holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion price of $0.10 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





8


On March 3, 2008 the Selling Shareholder’s Registration Statement was withdrawn by the Company.





On March 3, 2008, the Company sold $10,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $10,000 to one purchaser.   Interest on the Convertible Debenture shall accrue at a rate of 12% per annum based on a 365 day year.  The Company   shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 12% per annum, payable on the maturity Date, which is March 3, 2010.





At any time subsequent to the expiration of a six month period from March 3, 2008, the holder may convert the Convertible Debenture, in whole but not in part, into our common shares at the conversion rate of $0.15 per Share (“Conversion Shares”).





Subsequent to any conversion, the holder shall have the right, upon written demand to the Company (“Registration Demand”), to cause the Company, within ninety days of the Registration Demand, to prepare and file with the United States securities and Exchange Commission (“SEC”) a Registration Statement in order that the Conversion Shares may be registered under the Securities Act of 1933, as amended, and use its reasonable best efforts to cause that Registration Statement to be declared effective by the SEC. There is no penalty to the Company in the event the registration Statement is not declared effective by the SEC.





On February 2, 2010 the Company issued 1,433,333 common shares in full satisfaction of a $100,000 face value of convertible debentures bearing interest at 14% per annum.





On February 10, 2010 the Company issued 3,000,000 shares of common stock in satisfaction of $30,000 owed by the Company to holders of the Company’s convertible debentures bearing interest at 12% per annum.





On March 31, 2010 the Company issued 4,000,000 shares of common stock in satisfaction of $40,000 owed by the Company to holders of the Company’s convertible debentures bearing interest at 12% per annum.





NOTE 8. COMMITMENTS AND CONTINGENCIES





On August 3, 2005, BMSG entered into an agreement to lease a 14,562 square foot facility for use as a cellular storage facility at a rate of $18,931 per month. The lease is for a period of five years commencing on December 1, 2005 and expiring on November 30, 2010. The lease contains a renewal option enabling the Company to renew the lease for an additional five years. There are no contingent payments which the Company is required to make. As of November 30, 2010, the Company elected not to renew the lease and is currently utilizing 3,000 square feet of office space in La Mesa California at a rate of $4,176 per month.





On August 16, 2010 a  Complaint  (“Complaint”)  was filed  in the Superior Court of the State of California, County of San Diego Central Division  against the Company,  the Company’s Chairman,   Freedom Environmental Services, Inc. and the BMXP Holdings Inc.  Shareholder’s Business Trust, a Nevada Business Trust (collectively “Defendants”) by Princeton Research, Inc. and Jan Vandersande  (collectively “Plaintiffs”) seeking to recover general damages in excess of $25,000, punitive damages in excess of $25,000 and attorney’s fees. The Complaint alleges breach of fiduciary duty of loyalty, fraud and deceit in connection with the late distribution of  shares of the Company to beneficiaries  of the BMXP Holdings Inc.  Shareholder’s Business Trust. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter.  At this time, it is not possible to predict the ultimate outcome of these matters,





NOTE 9. SUBSEQUENT EVENTS





On January 3, 2011 Entest issued 25,000 common shares (“Shares”) to its CFO as consideration for services rendered.





On January 3, 2011 Entest issued 13,000 common shares (“Shares”) to employees as consideration for services rendered.




On January 3, 2011 Entest issued 38,712 common shares (“Shares”) in satisfaction of $39,989 of principal and interest indebtedness.





On January 4, 2011 Entest issued 9,383 common shares (“Shares”) to a consultant for services rendered.





On January 4, 2011 Entest issued 102,766 common shares (“Shares”) for the purchase of Pet Pointers, Inc. dba McDonald Animal Hospital.





On January 26, 2011 Entest sold 200,000 common shares (“Shares”) to an individual investor for consideration consisting of $100,000.





On February 4, 2011 Entest issued 10,000 common shares (“Shares”) to a consultant for services rendered.





On February 4, 2011 Entest issued 5,000 common shares (“Shares”) to a consultant for services rendered.





On February 17, 2011 the Company  issued 1,785,714 common shares in satisfaction of $50,000 face value of convertible debentures.





9


On February 3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania against the Company, the Company’s Chairman and Entest. by 18KT.TV LLC (“Plaintiffs”). The Complaint is seeking damages from the Company and Entest in excess of $125,000 and alleges breach of contract, unjust enrichment and breach of implied in fact contract by the Company and Entest in connection with agreements entered into with the plaintiffs by both the Company and Entest.





The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.





On January 4, 2011,  Entest BioMedical, Inc. (“Entest CA”), a California corporation and a wholly owned subsidiary of  Entest BioMedical, Inc., a Nevada corporation (the “Company”) acquired from Pet Pointers, Inc., a California corporation doing business as McDonald Animal Hospital (“Seller”), and Dr. Gregory McDonald DVM (“McDonald”) all the goodwill from McDonald and assets of Seller except cash and accounts receivables used in connection with the operation of a veterinary medical clinic located at 225 S. Milpas Street, Santa Barbara, CA 93103 (the "Business").





Consideration for the acquisition consisted of:




I.
$70,000 in cashII.
$210,000 of the common shares of Entest  valued at the closing price per share as of January 4, 2011III.
Payment of no more than $78,000 to a creditor of the Seller to be paid in monthly installments of $1,500 per monthIV.
Payment of no more than $25,000 to additional creditors of the Seller to be paid in monthly installments of $825 per monthV.
Payment of $50,000 to
 
 Entest is also obligated to make payment to McDonald of that number of shares of common  stock of  Entest  valued at the closing bid price of the trading day immediately prior to issuance which shall equal $70,000 upon completion of the first calendar year during the Employment Period (as such period is defined in the employment agreement entered into between McDonald and Entest CA dated December 31, 2010 ) in which the Business generates gross sales in excess of $700,000.





Pursuant to the Employment Agreement, Entest CA shall employ McDonald to:





I.
be the Managing Licensee and Supervising Veterinarian of the Business and manage the BusinessII.
assist Entest CA  in identifying and employing one or more additional veterinariansIII.
assist Entest CA in the identification and acquisition of additional veterinary clinics andIV.
assist  Entest  CA in development of  Entest’s immuno-therapeutic cancer vaccine for canines














of $700,000, McDonald  shall be entitled to receive a bonus of:





(i) 7.14% of the annual gross collections in excess of $700,000 achieved by the Business during that period in the form of a cash payment.





(ii) 5% of the annual gross collections in excess of $700,000 achieved by the Business  during that period in the form of shares of common stock of Entest valued at the closing bid price of the trading day immediately prior to issuance.





On January 24, 2011 the Company’s former landlord informed the Company in writing that no further payment is required to be made by the Company for outstanding rental liabilities, resulting in the elimination of $146,791 of Payables owed by the Company.





On April 2011, the Company sold equipment resulting in a loss on sale of equipment of approximately $531,569.








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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





CERTAIN FORWARD-LOOKING INFORMATION





Information provided in this Quarterly report on Form 10Q may contain forward-looking statements within the meaning of Section 21E or Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's expectations or beliefs, including, but not limited to, statements concerning future and operating results, statements concern industry performance, the Company's operations, economic performance, financial conditions, margins and growth in sales of the Company's products, capital expenditures, financing needs, as well assumptions related to the forgoing. For this purpose, any statements contained in this Quarterly Report that are not statement of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including the Company's most recent Form 10Kfor the year ended September 30, 2010. All references to” We”, “Us”,  “Company” or the “Company” refer to Bio-Matrix Scientific Group, Inc.





Material Changes in Financial Condition:





As of December 31, 2010, we had cash on hand of $100,845 and as of September 30, 2010 we had cash on hand of $ 306.





The increase in cash on hand of approximately 32,800 % is primarily attributable to additional borrowings by the Company and $100,000 deposited by a shareholder with Entest BioMedical, Inc.  in contemplation of a future transaction.





As of December 31, 2010 we had Prepaid Expenses of $47,215 and as of September 30, 2010 we had Prepaid Expenses of $40,425


The increase in Prepaid Expenses of approximately 17% is primarily attributable to the prepayment of $6,790 in consulting services by Entest BioMedical, Inc.





As of December 31, 2010 we had $20,000 cash in Escrow and as of September 30, 2010 we had $0 cash in Escrow.





The increase in Cash in Escrow is attributable to the deposit of $20,000 into an escrow account made by Entest BioMedical, Inc.  in contemplation of the acquisition of the business of Pet Pointers, Inc. .





As of December 31, 2010 we had Accounts Payable of $303,740 and as of September 30, 2010 we had Accounts Payable of $251,528.





The increase in Accounts Payable of approximately 21% is primarily attributable to an increase in outstanding rental related payables as well as an increase in obligations incurred by Entest BioMedical, Inc. in the course of conducting its operations.





As of December 31, 2010 we had Accrued Payroll of $590,558 and as of September 30, 2010 we had Accrued Payroll of $444,500.





The increase in Accrued Payroll of approximately33% is primarily attributable to employee compensation accrued but not yet been paid.





As ofDecember 31, 2010 we had Accrued Interest of $165,617 and as of September 30, 2010 we had Accrued Interest of $145,426.





The increase in  Accrued Interest  of approximately14% is primarily attributable to increases of the amount of  interest payments on Notes Payable accrued but not yet paid.





As ofDecember 31, 2010 we had  $10,000 Due to TheraCyte  and as of September 30, 2010 we had $0 Due to TheraCyte





The amount Due to TheraCyte is attributable to amounts due and  payable to TheraCyte, Inc. pursuant to an agreement entered into between Entest BioMedical, Inc. and TheraCyte, Inc.





As ofDecember 31, 2010 we had $100,000 Due to Shareholder  and as of September 30, 2010 we had $0 Due to Shareholder





The amount Due to Shareholder  is attributable to $100,000 deposited by a shareholder with Entest BioMedical, Inc.  in contemplation of a future transaction.





Material Changes in Results of Operations





Revenues were -0- for the quarter ending December 31, 2010 and -0- for the same quarter ending December 31, 2009. Net losses were  $265,800  for the three months ended December 31, 2010 and $395,848  for the same period ended December 31, 2009, a decrease of approximately 33%.


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This increase   in Net Losses is primarily attributable to decreased general and administrative expenses incurred by us as well as an increase in the loss attributable to noncontrolling interest in Entest BioMedical, Inc. of $64,566 for the three months  ended December 31, 2010 from the same period ended 2009.





Liquidity and Capital Resources





As of December 31, 2010, we had $100,845 cash on hand and current liabilities of $1,803,870.





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 feel we will not be able to satisfy its cash requirements over the next twelve months and shall be required to seek additional financing.


At this time, we plan to fund our financial needs through grant funding (which cannot be assured), through cash flow generated through veterinary clinics which have been acquired  by ENTB or  may be acquired by ENTB  (the generation of sufficient cash flow from which  cannot be assured)   and, if required, through equity private placements of common stock. (No material plans, terms, offers or candidates have yet been established and there can be no assurance that the Company will be able to raise funds on terms favorable to us or at all.)





We cannot assure that we will be successful in obtaining financing necessary to implement our business plan.  We have not received any commitment or expression of interest from any financing source that has given us any assurance that we will obtain the amount of additional financing in the future that we currently anticipate.  For these and other reasons, we are not able to assure that we will obtain any additional financing or, if we are successful, that we can obtain any such financing on terms that may be reasonable in light of our current circumstances.





We were not party to any material commitments for capital expenditures as of the end of the quarter ended December 31, 2010.





Item 3. Quantitative and Qualitative Disclosures About Market Risk





As a smaller reporting company, as defined by Rule 229.10(f) (1) of Regulation S-K, we are not required to provide the information required by this Item. We have chosen to disclose, however, that we have not engaged in any transactions, issued or bought any financial instruments or entered into any contracts that are required to be disclosed in response to this item.





Item 4. Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of David Koos, who is the Company's Principal Executive Officer/Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company's disclosure control objectives. The Company's Principal Executive Officer/Principal Financial Officer has concluded that the Company's disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the period covered.





Changes in Internal Controls over Financial Reporting





In connection with the evaluation of the Company's internal controls during the period commencing on October 1, 2010 and ending December 31, 2010, David Koos, who is both the Company's Principal Executive Officer and Principal Financial Officer has determined that there were no changes to the Company's internal controls over financial reporting that have been materially affected, or is reasonably likely to materially effect, the Company's internal controls over financial reporting.





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PART II—OTHER INFORMATION





Item 1. Legal Proceedings.





On August 16, 2010 a  Complaint  (“Complaint”)  was filed  in the Superior Court of the State of California, County of San Diego Central Division  against the Company,  the Company’s Chairman,   Freedom Environmental Services, Inc. and the BMXP Holdings Inc.  Shareholder’s Business Trust, a Nevada Business Trust (collectively “Defendants”) by Princeton Research, Inc. and Jan Vandersande  (collectively “Plaintiffs”) seeking to recover general damages in excess of $25,000, punitive damages in excess of $25,000 and attorney’s fees. The Complaint alleges breach of fiduciary duty of loyalty, fraud and deceit in connection with the late distribution of shares of the Company to beneficiaries of the BMXP Holdings Inc.  Shareholder’s Business Trust. The Company is in the process of negotiating a settlement agreement with the Plaintiffs with the intention of avoiding protracted disputes, uncertainties, and litigation with their attendant inconveniences and expenses.




On February 3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania against the Company, the Company’s Chairman and Entest by 18KT.TV LLC (“Plaintiffs”). The Complaint is seeking damages from the Company and Entest in excess of $125,000 and alleges breach of contract, unjust enrichment and breach of implied in fact contract by the Company and Entest in connection with agreements entered into with the plaintiffs by both the Company and Entest.





The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.





Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.





On February 17, 2011 the Company issued 1,785,714 shares of common stock (“Shares”) in satisfaction of $50,000 face value of convertible debentures.





The Offer and Sale of the Shares was exempt from the registration provisions of the Securities Act of 1933 (the “Act”), by reason of Section 4(2) thereof.





The Shares were offered directly through the management. No underwriters were retained to serve as placement agents. No commission or other consideration was paid in connection with the sale of the Shares. There was no advertisement or general solicitation made in connection with this Offer and Sale of Shares.





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





Item 3. DEFAULTS UPON SENIOR SECURITIES





None.





Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





Item 5. OTHER INFORMATION





None.





Item 6. EXHIBITS





31.1
Certification of Chief Executive Officer31.2
Certification of Acting Chief Financial Officer32.1
Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.32.2
Certification of Acting Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.





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SIGNATURES





In accordance with the requirements of the Exchange Act, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





Bio- Matrix Scientific Group, Inc.a Delaware corporationBy:
/s/ David R. KoosDavid R. KoosChief Executive Officer and principal Financial OfficerDate: May 26, 2011






















































































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