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 March 31, 2011





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  o      No x





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





[   ]  Large accelerated filer
[   ]  Accelerated filer[   ]  Non-accelerated filer
[X]  Smaller reporting company





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   o No   x





There were 72,189,747 shares of Common Stock outstanding as of  June 17, 2011.














PART I—FINANCIAL INFORMATION


Item 1. Financial Statements.





BIO-MATRIX SCIENTIFIC GROUP, INC.A Development Stage CompanyCONSOLIDATED BALANCE SHEET








March 31, 2011


September 30, 2010(unaudited)ASSETSCash

$
433


$
306Prepaid Expenses


39,925



40,425Employee Receivable


0



1,396Cash in Escrow


0Total Current Assets


40,358



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


538,869



538,869Other Assets


4,200



26,566Investment in Entest


41,898,162Total Assets

$
42,481,589


$
607,562LIABILITIES AND STOCKHOLDERS' EQUITYAccounts Payable


130,507



251,528Notes Payable


112,869



247,669Accrued Payroll


477,000



444,500Accrued Payroll Taxes


23,780



27,298Accrued Interest


129,579



145,426Accrued Expenses


5,000



5,000Convertible Note Payable


313,701



333,400Due to Shareholder


0Due to Affiliate


73,500Current portion, note payable to affiliated party


1,000



1,000Total Current Liabilities


1,266,936



1,455,821Total Liabilities


1,266,936



1,455,821Preferred Stock ($.0001 par value) 20,000,000 shares authorized; 1,963,821 issued and outstanding as of March  31, 2011 and September 30, 2010 respectively


197



197Series B Preferred Shares ($.0001 par value) 2,000,000 shares authorized;  725,409 issued and outstanding as of March 31, 2011 and September 30, 2010


73



73Common Stock ($.0001 par value 80,000,000 shares authorized; 72,189,747 and 70,404,033 shares issued and outstanding as of March 31, 2011 and September 30 , 2010 respectively


7,218



7,040Additional Paid in Capital


11,498,731



10,931,758Contributed Capital


509,355



509,355Retained Earnings (Deficit) accumulated during the development stage


29,837,878



(11,989,566
)Equity in Earnings (Losses) of Entest BioMedical, Inc.


(101,838
)Deficit attributable to noncontrolling interest in subsidiary


(536,961
)


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


41,214,653



(848,259
)Total Liabilities and Shareholders' Equity (Deficit)

$
42,481,589


$
607,562





The accompanying Notes are an integral part of these Financial Statements


2





BIO-MATRIX SCIENTIFIC GROUP, INC.


(A Development Stage Company)


Consolidated Statements of Operations


(Unaudited)





Quarter Ended


Quarter Ended


Six Months Ended


Six Months Ended


From Inception (August 2,2005)March 31, 2011


March 31, 2010


March 31, 2011


March 31, 2010


to March 31, 2011REVENUES

$
-


$
-


$
-


$
-


$
-COST AND EXPENSESResearch and Development






128,254



51,286



172,749



1,255,171General and Administrative


100,697



348,337



385,392



593,271



5,940,445Depreciation and Amortization


















2,668Consulting and Professional Fees


5,290



27,656



32,236



55,385



4,779,258Impairment of Goodwill and Intangibles


















34,688Total Costs and Expenses


105,987



404,247



468,914



821,405



12,012,230OPERATING LOSS


(105,987
)


(404,247
)


(464,914
)


(821,405
)


(12,012,230
)OTHER INCOME & (EXPENSES)Interest Expense


(14,019
)


(26,726
)


(34,212
)


(58,170
)


(329,918
)Interest Income


















306Other Income


146,791







146,791







176,891Gain on deconsolidation of Entest BioMedical


42,182,649







42,182,649







42,182,649Loss on sale of Available for Sale Securities


















(487,900
)Other Expense


















(166
)Other Losses attributable to  Entest BioMedical, Inc.


(228,715
)






(228,715
)






(228,715
)Total Other Income & (Expense)


42,086,706



(26,726
)


42,066,513



(58,170
)


41,313,147NET INCOME (LOSS)


41,980,719



(430,973
)


41,597,599



(879,575
)


29,300,917(NET INCOME) LOSS attributable tononcontrolling interest


112,525



41,293



229,845



94,047



536,961NET INCOME (LOSS)


42,093,244







41,827,444







29,837,878Equity in NET INCOME (LOSS) of Entest BioMedical


(101,838
)






(101,838
)






(101,838
)NET INCOME (LOSS) available to Common Shareholders


41,991,406



(389,680
)


41,725,606



(785,528
)


29,736,040BASIC AND DILUTED EARNINGS (LOSS) PER SHARE


0.589



(0.0077
)


0.58921



(0.0164
)WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING


71,237,366



47,811,201



70,816,121



47,811,201





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)




For the Six Months Ended


For The Six Months Ended


From Inception

(August 2,2005)March 31. 2011


March 31, 2010


to March 31, 2011CASH FLOWS FROM OPERATING ACTIVITIESNet Income (loss)

$
41,725,606


$
(785,528
)

$
29,736,040Adjustments to reconcile net Income to net cash(used in) provided by operating activities:Depreciation expense










2,667Stock issued for compensation to employees


71,440



179,835



1,186,342Stock issued for services rendered by consultants


62,400



47,000



4,083,134Stock issued for prepaid expenses






13,665



313,665Stock issued for interest


6,821



30,269



138,547Changes in operating assets and liabilities:(Increase) decrease in prepaid expenses


500



54,156



(39,925
)Increase (Decrease) in Accounts Payable


(121,021
)


(101,574
)


130,508Increase (Decrease) in Accrued Expenses


13,135



(133,705
)


665,300Increase (Decrease) in Other Comprehensive Income










(50,000
)(Increase) Decrease in Employee Receivable


1,396







0Increase (Decrease) in Due to Affiliate


73,500







73,500Non cash increase in Investment in Entest


(42,000,000
)






(42,000,000
)Loss attributable to Non Controlling interest insubsidiary


(229,845
)


(94,047
)


(536,961
)Equity in Loss of Entest


101,838







101,838Net Cash Provided by (Used in) Operating Activities


(294,230
)


(789,929
)


(6,195,345
)CASH FLOWS FROM INVESTING ACTIVITIES( Increase) Decrease in Other Assets


22,366



(1,059
)


(4,200
)Purchases of fixed assets










(541,536
)Purchase of Other AssetsPreferred Stock retiredPreferred Stock sold for cash(Additions) Decreases to Securities Available for SaleNet Cash Provided by (Used in) InvestingActivities


22,366



(1,059
)


(545,736
)CASH FLOWS FROM FINANCING ACTIVITIESPreferred Stock issued for cash










339Common stock issued for cash










1,630Common Stock issued for Debt


89,992



939,345



1,296,053Common Stock issued for Accrued Salaries






304,500



424,500Common Stock issued for expensesCommon stock issued in mergerAdditional paid in Capital


336,498



5,000



2,017,417Principal borrowings on Convertible Debentures


(19,699
)


(170,000
)


313,701Principal borrowings (repayments) on notes andConvertible Debentures


(134,800
)


(354,836
)


932,325(Increase) Decrease in Securities available for SaleContributed Capital










509,353Net Borrowings From Related Parties










1,195,196Increase (Decrease) in Notes from Affiliated party










1,000Net Cash Provided by (Used in) FinancingActivities


271,991



774,009



6,741,514Net Increase (Decrease) in Cash


127



(17,000
)


433Cash at Beginning of Period


306



17,750



0Cash at End of Period

$
433


$
750


$
433





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 March 31, 2011








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. Exclusive of a gain recognized by the Company as a result of the deconsolidation of Entest BioMedical, Inc. (“Entest”) on February 4, 2011 of $42,182,649 the Company generated net losses of $12,881,732 (including $536,961 in net losses attributable to non-controlling interest in Entest BioMedical, Inc.) during the period from August 2, 2005 (inception) through March 31, 2011. 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.





NOTE 3. INCOME TAXES





As of March 31, 2011Deferred 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 March 31 , 2011 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  pre deconsolidation results of Entest BioMedical, Inc. a Nevada corporation which is approximately 49% owned by the Company as of  March 31, 2011.





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.


5


NOTE 4. RELATED PARTY TRANSACTION





Between  January 1, 2011 and  March 31, 2011  David Koos, the Company’s CEO, made loans to the Company totaling  S10,104  dollars. The total amount owed by the Company to Mr. Koos as of  March 31, 2011 is $28,964. The Company is also indebted as of March 31, 2011 to Bombardier Pacific Ventures, a company controlled by Mr. Koos, in the amount of $49,963. 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.





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





NOTE 6. STOCKHOLDERS' EQUITY





The stockholders' equity section of the Company contains the following classes of capital stock as of  March 31, 2011:





* 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: 72,189,747 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.





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.





6


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





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





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





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





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





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





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





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





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





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





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





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





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





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





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





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





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





7


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.





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.





8


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.





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





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 is currently in the process of negotiating a potential settlement with the Plaintiffs.  At this time, it is not possible to predict the ultimate outcome of these matters,





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





NOTE 9. DECONSOLIDATION OF ENTEST BIOMEDICAL, INC.





Effective February 4, 2011 the Company’s ownership of Entest BioMedical, Inc. fell to approximately 49%. and commencing February 4, 2011 the Company’s financial statements reflect the Company’s ownership of Entest under the equity method of accounting. A gain of $42,182,649 was recognized in accordance with ASC 810-10-40-5. Fair value of the Company’s investment in Entest BioMedical, Inc. resulting from deconsolidation was calculated utilizing Level 1 inputs in accordance with ASC 820.





NOTE 10. SUBSEQUENT EVENTS




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













9


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 March 31, 2011 we had cash on hand of $433  and as of September 30, 2010  we had cash on hand of $306..





The increase in cash on hand of approximately 41% is primarily attributable to borrowings.





As of March 31, 2011 we had Employee Receivable of $0  and as of September 30, 2010  we had Employee Receivable of $1, 396.





The decrease in Employee Receivable of 100% is primarily attributable to   de-recognition of assets of Entest BioMedical, Inc. as a result of  the deconsolidation of Entest BioMedical, inc. on February 4, 2011.





As of March 31, 2011 we had Other Assets $4,200   and as of September 30, 2010  we had Other Assets of $26,566.





The decrease in Other Assets  of approximately 84%  is primarily attributable to the recognition of an expense of  $21,307 resulting from the loss of the Company’s security deposit (lease on former facility) as well as de-recognition of $1,059 in deposits attributable to Entest BioMedical, Inc..





As of March 31, 2011 we had an Investment in Entest of $41,898,162 and as of September 30, 2010 we had an Investment in Entest of $0.





The increase of 100% is attributable the recognition of a gain of $42,182, 649 resulting from the deconsolidation of Entest BioMedical, Inc. offset by equity of $101,838 in the net losses of Entest BioMedical for the period beginning February 4, 2011 and ending March 31, 2011.





As of March 31, 2011 we had Accounts Payable of $130,507 and as of September 30, 2010 we had Accounts Payable of $251,528.





This decrease of approximately 48% is primarily attributable to the elimination of $146,791 of payables attributable to the lease on our former facility as well as the de-recognition of $38, 975 of payables resulting from the deconsolidation of Entest BioMedical, Inc offset by liabilities incurred in the ordinary cost of business.





As of March 31, 2011 we had Notes Payable of $112,869  and as of September 30, 2010 we had Notes Payable of $247, 669.





This decrease of approximately 54% is primarily attributable to the de-recognition of $246,428 in Notes Payable attributable to Entest BioMedical, Inc. resulting from the deconsolidation of Entest BioMedical, Inc offset by additional net borrowings incurred by us  of approximately $21,750.





As of March 31, 2011 we had Accrued Payroll of $477,000  and as of September 30, 2010 we had Accrued Payroll of $444,500





This increase of approximately 7% is primarily attributable to increases in employee compensation which have accrued and have not yet been paid of approximately $150,000 offset by the de-recognition  of $235,558 of accrued payroll attributable to the deconsolidation of Entest BioMedical, Inc. .





As of March 31,2011 we had Accrued Payroll Taxes  of $23, 780 and as of September 30, 2010 we had Accrued Payroll Taxes  of $27,298.





This decrease of approximately 13% is primarily attributable to the de-recognition of Accrued Payroll Taxes attributable to Entest BioMedical, Inc. resulting from the  deconsolidation of Entest BioMedical, Inc.





As of March 31,2011 we had Accrued Interest of $129,579 and as of September 30, 2010 we had Accrued Interest of $145,426.





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This decrease of approximately 11% is primarily attributable to the reclassification of $30,301 in accrued interest on Convertible Notes outstanding as principal in connection with a change in ownership of $200,000 in face value of convertible notes with interest of $30,301 having been accrued, the payment of $6,821 of accrued interest by the issuance of issued 1,785,714 common shares in full satisfaction of $50,000 face value of convertible debentures and interest accrued thereon, as well as the de-recognition of  any accrued interest attributable to Entest BioMedical, Inc. resulting from the deconsolidation of Entest BioMedical, Inc.





As of March 31,2011 we had $73,500 Due to Affiliate and as of September 30, 2010 we had no such amounts due .





The amounts Due to Affiliate are attributable to the recognition of rent prepaid by Entest BioMedical, inc. to the Company recognized as a result of the deconsolidation of Entest BioMedical, Inc.





As of March 31, 2011 we had $313, 701 in Convertible Notes payable  and as of September 30, 2010 we had $333, 400 in  Convertible Notes payable.





This decrease of approximately 6% is primarily attributable to the issuance of issued 1,785,714 common shares in full satisfaction of $50,000 face value of convertible debentures and interest accrued thereon offset by the reclassification of $30,301 in accrued interest on Convertible Notes outstanding as principal in connection with a change in ownership of $200,000 in face value of convertible notes with interest of $30,301 having been accrued





Material Changes in Results of Operations





Revenues were -0- for the quarter ending March 31, 2011  and -0- for the same quarter ending March 31, 2010. Net Income was $41,991, 006 for the three months ended March 31, 2011  and the Company incurred net losses of $389,680 for the same quarter ending march 31, 2010 .





The increase from net losses of $389,680 to net income of $41,991, 006 was primarily attributable to:





(a)
A noncash recognized as a result of the deconsolidation of Entest BioMedical of $42,182,649


(b)
Other income of $146,791 recognized as a resulting from the confirmation in writing from the Company’s former landlord informing  the Company 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


Partially offset by $338,044 of losses attributable to the Company and equity in Losses of Entest BioMedical, Inc.





Revenues were -0- for the six months ending March 31, 2011 and -0- for the same period ending March 31, 2010. Net Income was $41,725, 606 for the six months ended March 31, 2011 and the Company incurred net losses of $785,528 for the same period ending March 31, 2010.





The increase from net losses of $785,528 to net income of $41,725,608 was primarily attributable to:





(a)
A noncash recognized as a result of the deconsolidation of Entest BioMedical of $42,182,649


(b)
Other income of $146,791 recognized as a resulting from the confirmation in writing from the Company’s former landlord informing  the Company 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


Partially offset by $603,834 of losses attributable to the Company and equity in Losses of Entest BioMedical, Inc.




Liquidity and Capital Resources





As of March 31, 2011, we had $433  cash on hand and current liabilities of $1,266,936  such liabilities consisting of Accounts Payable, Notes Payable, Accrued Payroll Taxes, Convertible Notes, Amounts due to Affiliated Party, Accrued Expenses  and Accrued Interest.





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 equity private placements of common stock. (No plans, terms, offers or candidates have yet been established and there can be no assurance that the company will be able to raise funds on terms favorable to us or at all.) We cannot assure that we will be successful in obtaining additional financing necessary.  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 March 31, 2011.





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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 January 1, 2011 and ending March 31, 2011, 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.





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





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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 OfficerDate: June 19,2011







































































































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