UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



FORM 10-Q



|[X]   | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|----- | ---------------------------------------------------------------------------------------
|      |                                                                                        
|      | For the quarterly period ended June 30, 2012                                           
|      |                                                                                        
|[   ] | Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934       
|      |                                                                                        
|      | For the transition period from  to  __________                                         
|      |                                                                                        
|      | Commission File Number: 333-148922                                                     



Amarantus BioSciences, Inc..

(Exact name of registrant
as specified in its charter)



|Delaware                                                                           | 26-0690857                       
|---------------------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or organization)                     | (IRS Employer Identification No.)
|                                                                                   |                                  
|675 Almanor Ave., Sunnyvale,
    CA                                                | 94085                            
|(Address of principal executive offices)                                           | (Zip Code)                       
|                                                                                   |                                  
|Registrant’s telephone number, including area code:(408) 737-2734                 
|                                                                                  
|_________________________________________________________________                 
|(Former name, former address and former fiscal year, if changed since last report)



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



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



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.



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



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



State the number
of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:108,241,988
common shares as ofAugust 17, 2012.

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Table of Contents






TABLE OF CONTENTS



|PART I - FINANCIAL INFORMATION
|------------------------------
|                              
|Item 1:                       
|Item 2:                       
|Item 3:                       
|Item 4:                       
|PART II - OTHER INFORMATION   
|Item 1:                       
|Item 1A:                      
|Item 2:                       
|Item 3:                       
|Item 4:                       
|Item 5:                       
|Item 6:                       



2


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PART I - FINANCIAL INFORMATION



Item 1.	 Financial Statements



|Our financial statements included in this Form 10-Q are as follows:
|-------------------------------------------------------------------
|F-1                                                                
|F-2                                                                
|F-3                                                                
|F-4                                                                



These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions
to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating
results for the interim period ended June 30, 2012 are not necessarily indicative of the results that can be expected for the full
year.

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AMARANTUS BIOSCIENCES, INC.

(A Development Stage Company)

BALANCE SHEETS (UNAUDITED)

AS OF JUNE 30, 2012 AND DECEMBER 31, 2011



|                                                                                                                                                                                                                                    |  | June 30, 2012 |            | December 31, 2011
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -----------------
|ASSETS                                                                                                                                                                                                                              |  |               |            |                  
|CURRENT ASSETS:                                                                                                                                                                                                                     |  |               |            |                  
|Cash and cash equivalents                                                                                                                                                                                                           |  | $             | 6,648      |                  
|Prepaid expenses and other current assets                                                                                                                                                                                           |  |               | 546,931    |                  
|Total current assets                                                                                                                                                                                                                |  |               | 553,579    |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|PROPERTY AND EQUIPMENT - Net                                                                                                                                                                                                        |  |               | 12,581     |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|OTHER ASSETS                                                                                                                                                                                                                        |  |               | 419,643    |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|TOTAL ASSETS                                                                                                                                                                                                                        |  | $             | 985,803    |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                                               |  |               |            |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|CURRENT LIABILITIES:                                                                                                                                                                                                                |  |               |            |                  
|Accounts payable                                                                                                                                                                                                                    |  | $             | 2,434,137  |                  
|Accrued liabilities                                                                                                                                                                                                                 |  |               | 125,167    |                  
|Related Party liabilities                                                                                                                                                                                                           |  |               | 222,230    |                  
|Note Payable                                                                                                                                                                                                                        |  |               | 150,000    |                  
|Current portion of warrant liability                                                                                                                                                                                                |  |               | 254,855    |                  
|Current portion of derivative liability                                                                                                                                                                                             |  |               | 97,082     |                  
|Current portion of convertible promissory notes                                                                                                                                                                                     |  |               | 1,168,819  |                  
|Total current liabilities                                                                                                                                                                                                           |  |               | 4,452,290  |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|STOCK WARRANT LIABILITY                                                                                                                                                                                                             |  |               | —          |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|DERIVATIVE LIABILITY – Net of current portion                                                                                                                                                                                       |  |               | —          |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|CONVERTIBLE PROMISSORY NOTES - Net of current portion                                                                                                                                                                               |  |               | —          |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|Total liabilities                                                                                                                                                                                                                   |  |               | 4,452,290  |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|COMMITMENTS AND CONTINGENCIES (Note 9)                                                                                                                                                                                              |  |               | —          |                  
|                                                                                                                                                                                                                                    |  |               |            |                  
|STOCKHOLDERS’ DEFICIT:                                                                                                                                                                                                              |  |               |            |                  
|Convertible preferred stock, $0.001 par value - authorized, 10,000,000  shares, 250,000 shares designated as Series A, par value $0.001, 250,000 shares issued and outstanding as of June 30, 2012 and none as of December 31, 2011 |  |               | 250        |                  
|Common stock, $0.001 par value - authorized 250,000,000 shares; issued and outstanding 106,979,345 shares at June 30, 2012 and, 80,836,592 shares at December 31, 2011                                                              |  |               | 106,979    |                  
|Additional paid-in capital                                                                                                                                                                                                          |  |               | 5,465,371  |                  
|Deficit accumulated during the development stage                                                                                                                                                                                    |  |               | (9,039,087 | )                
|                                                                                                                                                                                                                                    |  |               |            |                  
|Total stockholders’ deficit                                                                                                                                                                                                         |  |               | (3,466,487 | )                
|                                                                                                                                                                                                                                    |  |               |            |                  
|TOTAL                                                                                                                                                                                                                               |  | $             | 985,803    |                  



See notes to financial statements.

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AMARANTUS BIOSCIENCES, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE AND SIX MONTH PERIODS ENDED
JUNE 30, 2012 AND 2011, AND

FOR THE PERIOD FROM JANUARY 14, 2008 (DATE
OF INCEPTION) TO JUNE 30, 2012



|                                                         |  | (Unaudited)        |             | (Unaudited)        |  | (Unaudited)      |            | (Unaudited)      |  | (Unaudited)        
|-------------------------------------------------------- |  | ------------------ | ----------- | ------------------ |  | ---------------- | ---------- | ---------------- |  | -------------------
|                                                         |  | Three Months Ended |             | Three Months Ended |  | Six Months Ended |            | Six Months Ended |  | (Date of Inception)
|                                                         |  | June 30 , 2012     |             | June 30 , 2011     |  | June 30 , 2012   |            | June 30 , 2011   |  | to June 30, 2012   
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|NET REVENUES                                             |  | $                  | —           |                    |  | $                | —          |                  |  | $                  
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|OPERATING EXPENSES:                                      |  |                    |             |                    |  |                  |            |                  |  |                    
|Research and development                                 |  |                    | 359,829     |                    |  |                  | 522,416    |                  |  |                    
|General and administrative                               |  |                    | 574,853     |                    |  |                  | 562,914    |                  |  |                    
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|Total costs and expenses                                 |  |                    | 934,682     |                    |  |                  | 1,085,330  |                  |  |                    
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|LOSS FROM OPERATIONS                                     |  |                    | (934,682    | )                  |  |                  | (1,085,330 | )                |  |                    
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|INTEREST & OTHER INCOME (EXPENSE)                        |  |                    |             |                    |  |                  |            |                  |  |                    
|Interest Expense                                         |  |                    | (111,932    | )                  |  |                  | (166,477   | )                |  |                    
|Other Income (Expense)                                   |  |                    | —           |                    |  |                  | —          |                  |  |                    
|Change in fair value of warrant & derivative liabilities |  |                    | 51,287      |                    |  |                  | 125,137    |                  |  |                    
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|Total interest & other income (expense)                  |  |                    | (60,645     | )                  |  |                  | (41,340    | )                |  |                    
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|NET LOSS                                                 |  | $                  | (995,327    | )                  |  | $                | (1,126,670 | )                |  | $                  
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|NET LOSS PER SHARE, BASIC                                |  | $                  | (0.01       | )                  |  | $                | (0.02      | )                |  | $                  
|                                                         |  |                    |             |                    |  |                  |            |                  |  |                    
|COMMON SHARES OUTSTANDING - BASIC                        |  |                    | 101,415,191 |                    |  |                  | 54,930,650 |                  |  |                    



See notes to financial statements.

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AMARANTUS BIOSCIENCES, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOWS
(UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND
2011, AND

FOR THE PERIOD FROM JANUARY 14, 2008 (DATE
OF INCEPTION) TO JUNE 30, 2012



|                                                                            |  |                  |            |                  |  | (Unaudited)        
|--------------------------------------------------------------------------- |  | ---------------- | ---------- | ---------------- |  | -------------------
|                                                                            |  |                  |            |                  |  | Period From        
|                                                                            |  | (Unaudited)      |            | (Unaudited)      |  | January 14, 2008   
|                                                                            |  | Six Months Ended |            | Six Months Ended |  | (Date of Inception)
|                                                                            |  | June 30, 2012    |            | June 30, 2011    |  | to June 30, 2012   
|                                                                            |  |                  |            |                  |  |                    
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |                  |            |                  |  |                    
|Net loss for the period                                                     |  | $                | (2,312,658 | )                |  | $                  
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                  |            |                  |  |                    
|Depreciation and amortization                                               |  |                  | 5,808      |                  |  |                    
|Gain on disposal of equipment                                               |  |                  | —          |                  |  |                    
|Stock-based compensation                                                    |  |                  | 1,400,760  |                  |  |                    
|Non-cash interest expense related to warrants and derivatives               |  |                  | —          |                  |  |                    
|Non-cash interest expense related to convertible notes                      |  |                  | 158,206    |                  |  |                    
|Change in fair value of warrant and derivative liabilities                  |  |                  | (205,171   | )                |  |                    
|Gain on settlement of convertible note and warrants                         |  |                  | —          |                  |  |                    
|Changes in operating assets and liabilities:                                |  |                  |            |                  |  |                    
|Prepaid expenses and other current assets                                   |  |                  | (84,721    | )                |  |                    
|Accounts payable                                                            |  |                  | 720,128    |                  |  |                    
|Accrued liabilities                                                         |  |                  | 50,578     |                  |  |                    
|Related party liabilities                                                   |  |                  | —          |                  |  |                    
|Net cash used in operating activities                                       |  |                  | (267,070   | )                |  |                    
|                                                                            |  |                  |            |                  |  |                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |  |                  |            |                  |  |                    
|Purchases of property and equipment                                         |  |                  | —          |                  |  |                    
|Net cash used in investing activities                                       |  |                  | —          |                  |  |                    
|                                                                            |  |                  |            |                  |  |                    
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |  |                  |            |                  |  |                    
|Proceeds from borrowings                                                    |  |                  | 272,848    |                  |  |                    
|Repayment of borrowings                                                     |  |                  | —          |                  |  |                    
|Proceeds from issuance of common stock                                      |  |                  | —          |                  |  |                    
|Proceeds from the issuance of stock options                                 |  |                  | —          |                  |  |                    
|Proceeds from issuance of convertible preferred stock                       |  |                  | —          |                  |  |                    
|Costs of financings                                                         |  |                  | —          |                  |  |                    
|Proceeds from sale of warrant                                               |  |                  | —          |                  |  |                    
|Net cash provided by financing activities                                   |  |                  | 272,848    |                  |  |                    
|                                                                            |  |                  |            |                  |  |                    
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        |  |                  | 5,778      |                  |  |                    
|CASH AND CASH EQUIVALENTS - Beginning of period                             |  |                  | 870        |                  |  |                    
|                                                                            |  |                  |            |                  |  |                    
|CASH AND CASH EQUIVALENTS - End of period                                   |  | $                | 6,648      |                  |  | $                  
|                                                                            |  |                  |            |                  |  |                    
|NONCASH INVESTING AND FINANCING ACTIVITIES:                                 |  |                  |            |                  |  |                    
|Exchange of convertible promissory notes for preferred stock                |  | $                | —          |                  |  | $                  
|Issuance of warrants to investors                                           |  | $                | —          |                  |  | $                  
|Bifurcation of derivatives embedded in convertible notes                    |  | $                | —          |                  |  | $                  
|Preferred stock warrants reclassified from liabilities to equity            |  | $                | 2,032      |                  |  | $                  
|Issuance of convertible notes in lieu of payment of payable                 |  | $                | 284,313    |                  |  | $                  
|Dividend to founder for assumption of debts                                 |  | $                | —          |                  |  | $                  



See notes to financial statements.

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Table of Contents


AMARANTUS
BIOSCIENCES, INC.

NOTES
TO FINANCIAL STATEMENTS



1. GENERAL



Amarantus BioSciences, Inc. (the “Company”)
was incorporated on January 14, 2008 in the state of Delaware. The Company is a development stage biopharmaceutical drug development
company dedicated to discovering and sourcing high-potential bioscience platform technologies and developing them towards commercialization.
Through June 30, 2012, the Company has been primarily engaged in biotechnology research and development and raising capital.



2. DEVELOPMENT STAGE AND GOING CONCERN



The Company’s activities since inception
have consisted principally of acquiring product and technology rights, raising capital, and performing research and development.
Accordingly, the Company is considered to be in the development stage as of June 30, 2012, as defined by the Financial Accounting
Standard Board, or FASB, Accounting Standard Codification, or ASC 915. Successful completion of the Company’s development
programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things,
its ability to access potential markets; secure financing, develop a customer base; attract, retain and motivate qualified personnel;
and develop strategic alliances. As of June 30, 2012, the Company has been funded by equity and debt financings. Although management
believes that the Company will be able to successfully fund its operations, there can be no assurance that the Company will be
able to do so or that the Company will ever operate profitably.



The Company expects to continue to incur substantial
losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete
certain research and development activities and clinical studies. Further, the Company’s product candidates will require
regulatory approval prior to commercialization. These activities may span many years and require substantial expenditures to complete
and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans
to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from
product sales.



The accompanying financial statements have
been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which contemplate
continuation of the Company as a going concern. As of June 30, 2012, the Company had cash and cash equivalents of $6,648. During
the three months ended June 30, 2012, the Company incurred a net loss of $995,327 and had negative cash flows from operating
activities of $267,070. In addition, the Company had an accumulated deficit of $9,039,087 at June 30, 2012. The Company believes
its current capital resources are not sufficient to support its operations. Management intends to continue its research efforts
and to finance operations of the Company through debt or equity financings. Management plans to seek additional debt and/or equity
financing for the Company through private or public offerings or through a business combination or strategic partnership. There
can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. These
matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



3. SIGNIFICANT ACCOUNTING POLICIES



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

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Table of Contents


Certain Significant Risks and Uncertainties -
The Company participates in a global dynamic highly competitive industry and believes that changes in any of the following areas
could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: ability
to obtain future financing; advances and trends in new technologies and industry standards; regulatory approval and market acceptance
of the Company’s products; development of the necessary manufacturing capabilities and to obtain adequate resources of necessary
materials; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual
property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary
to support its growth.



Concentration of Credit Risk -
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents.
The Company places its cash and cash equivalents with domestic financial institutions that are federally insured within statutory
limits.



Cash and Cash Equivalents - The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.



Property and Equipment - Property
and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives as follows:



|Equipment              |  |  | 3 years | 
|---------------------- |  |  | ------- | 
|Computer equipment     |  |  | 2 years | 
|Furniture and fixtures |  |  | 3 years | 



The Company reviews the carrying value of long-lived
assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying
value may not be fully recoverable. There have been no such impairments.



Property and equipment at June 30, 2012 and
December 31, 2011, consisted of the following:



|                              |  | June 30, |          | December 31,
|----------------------------- |  | -------- | -------- | ------------
|                              |  | 2012     |          | 2011        
|Equipment                     |  | $        | 34,851   |             
|Computer equipment            |  |          | 3,179    |             
|Furniture and fixtures        |  |          | 2,363    |             
|                              |  |          | 40,393   |             
|Less accumulated depreciation |  |          | (27,812  | )           
|Property and equipment - net  |  | $        | 12,581   |             
|                              |  |          |          |             
|                              |  |          | June 30, |             
|                              |  |          | 2012     |             
|Depreciation Expense:         |  |          |          |             
|Three months ended            |  | $        | 2,904    |             
|Six months ended              |  |          | 5,809    |             
|Inception to Date             |  |          | 31,562   |             





Revenue Recognition -The
Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic
No. 13, "Revenue Recognition" ("SAB 104"), is when revenue is realized or realizable and earned, there
is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable,
and collectability is reasonably assured.



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Table of Contents


The Company accounts for milestones related
to research and development activities in accordance with the milestone method of revenue recognition of Accounting Standards Codification
Topic 605-28, under which consideration contingent on the achievement of a substantive milestone is recognized in its entirety
in the period when the milestone is achieved. A milestone is considered to be substantive when it meets all of the following criteria:
the milestone is commensurate with either the performance required to achieve the milestone or the enhancement of the value of
the delivered items resulting from the performance required to achieve the milestone; the milestone relates solely to past performance;
and, the milestone is reasonable relative to all of the deliverables and payment terms within the agreement.



To date, the Company has only received research
grant revenue and contract revenue. Research grant revenue and contract revenue is recognized as the Company provides the services
stipulated in the underlying agreement based on the time and expenditures incurred, and all milestones required in the agreement
have been met.  Amounts received in advance of services provided are recorded as deferred revenue and amortized as revenue
when the services are provided and the milestones are met.  The Company received and recognized total research grant
revenue of $-0- for both the three months ended June 30, 2012 and 2011, respectively, as the Company incurred all of the qualifying
expenses and all applicable milestones were met. See Note 5 to the financial statements for further information on the research
grant revenue received and recognized to date.



Research and Development Expenditures -
Research and development expenses consist of personnel costs, including salaries, benefits and stock-based compensation, materials
and supplies, licenses and fees, and overhead allocations consisting of various administrative and facilities related costs. Research
and development activities are also separated into three main categories: research, clinical development, and biotechnology development.
Research costs typically consist of preclinical and toxicology costs. Clinical development costs include costs for Phase 1 and
2 clinical studies. Biotechnology development costs consist of expenses incurred in connection with product formulation and analysis.
The Company charges research and development costs, including clinical study costs, to expense when incurred, consistent with the
guidance of FASB ASC 730, Research and Development.



Stock-Based Compensation - Stock-based
compensation is measured at the grant date based on the fair value of the award. The fair value of the award that is ultimately
expected to vest is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting
period. The expense recognized for the portion of the award that is expected to vest has been reduced by an estimated forfeiture
rate. The forfeiture rate is determined at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates.



Expected Term — The expected
term of options represents the period that the Company’s stock-based awards are expected to be outstanding based on the simplified
method provided in Staff Accounting Bulletin No. 110, Certain Assumptions Used in Valuation Methods.



Expected Volatility — As
the Company has limited stock price history, expected volatility has been estimated based on the volatilities of similar companies
that are publicly traded.



Risk-Free Interest Rate —
The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent
remaining term.



Expected Dividend — The Company
has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore,
used an expected dividend yield of zero in the valuation model.



The Company recognizes fair value of stock
options granted to nonemployees as stock-based compensation expense over the period in which the related services are received.



Stock Warrants - Certain warrants
to purchase the Company’s stock are classified as liabilities in the balance sheets. These warrants are subject to remeasurement
at each balance sheet date, and any change in fair value is recognized as a component of other income (expense). Other warrants
to purchase the Company’s convertible preferred stock are classified as equity in the balance sheet and are not subject to
remeasurement.

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Derivative Liability - Certain
derivatives embedded within convertible promissory notes have been bifurcated and recorded as derivatives in the balance sheets
because they are not clearly and closely related. These derivatives are subject to remeasurement at each balance sheet date, and
any change in fair value is recognized as a component of other income (expense).



Income Taxes - The Company accounts
for income taxes using the liability method whereby deferred tax asset and liability account balances are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce
deferred tax assets to their estimated realizable value.



In evaluating the ability to recover its deferred
income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing
tax planning, and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines
that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would
make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, in the event that all
or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance
would be charged to earnings in the period such determination is made.



The Company recognizes the tax benefit from
uncertain tax positions in accordance with GAAP, which prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s tax return.



Fair Value of Financial Instruments -The
carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable, and accrued liabilities approximates
their value due to the short-term maturities of such instruments.



Net income (loss) per share attributable
to Amarantus common stockholders

Basic net income (loss) per share attributable
to Amarantus common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted
average number of shares outstanding for the period. In accordance with FASB ASC 260, because there was a net loss for the period,
zero incremental shares were included for diluted earnings per share because the effect would be anti-dilutive .



Recently Adopted Accounting Guidance



Variable Interest Entities.In
June 2009, the FASB issued new accounting guidance relating to consolidation of variable interest entities (“VIEs”),
which amends the current accounting guidance for determining whether an entity is a VIE and defining the primary beneficiary. This
guidance also requires additional disclosures relating to involvement with a VIE. We adopted this guidance during the first quarter
of our fiscal 2010. The adoption of this guidance did not have a material effect on our Financial Statements and disclosures.



Fair Value Measurements. In January
2010, the FASB issued new accounting guidance requiringadditional disclosures about the different classes of assets
and liabilities measured at fair value, valuation techniques and inputs used, the activity in Level 3 fair value measurements,
and the transfers between Levels 1 and 2. It also clarified guidance around disaggregation and disclosures of inputs and valuation
techniques for Level 2 and Level 3 fair value measurements. The current guidance is effective beginning with the first quarter
of our fiscal 2010, except for the new disclosures relating to the Level 3 reconciliation, which was effective for the first quarter
of our fiscal 2011. Refer to Note 6 – Fair Value Measurements for our Company’s fair value measurements and disclosures.

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Recently Issued Accounting Pronouncements



In May 2011, the FASB issued updated accounting
guidance to amend existing requirements for fair value measurements and disclosures. The guidance expands the disclosure requirements
around fair value measurements categorized in Level 3 of the fair value hierarchy and requires disclosure of the level in the fair
value hierarchy of items that are not measured at fair value but whose fair value must be disclosed. It also clarifies and expands
upon existing requirements for fair value measurements of financial assets and liabilities as well as instruments classified in
shareholders’ equity. The guidance is effective for annual and interim periods beginning after December 15, 2011. The
implementation of this guidance is not expected to have a material impact on the Company’s consolidated financial position,
results of operations or cash flows.



In June 2011, the FASB issued guidance concerning
the presentation of Comprehensive Income in the financial statements. Entities will have the option to present the total of comprehensive
income, the components of net income and the components of other comprehensive income either in a single continuous statement of
comprehensive income or in two separate, but consecutive statements. The disclosure requirements are effective for annual and interim
periods beginning after December 15, 2011 and should be retrospectively applied. The implementation of this guidance is not
expected to have any impact on the Company’s consolidated financial position, results of operations or cash flows.



In September 2011,
the FASB issued guidance on annual and interim goodwill impairment tests.An entity may now first assess qualitative
factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying
amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350,
Intangibles-Goodwill and Other. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. The new
guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15,
2011. The implementation of this guidance is not expected to have a material impact on the Company’s
consolidated financial position, results of operations or cash flows.



4. AGREEMENT AND PLAN OF MERGER



On May 25, 2011, the Company entered into an
Agreement and Plan of Merger (the Merger Agreement”) with Amarantus Biosciences, Inc., a privately held Delaware corporation
(Amarantus”), and JKIK Acquisition Corp. (Acquisition Sub”), our newly formed wholly-owned Delaware subsidiary. In
connection with the closing of this merger transaction, Amarantus merged with and into Acquisition Sub (the Merger”) on May
25, 2011, with the filing of articles of merger with the Delaware Secretary of State.



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In addition, pursuant to the terms and conditions
of the Merger Agreement:





| | · | Each share of Amarantus common stock and each share of Amarantus preferred stock issued and outstanding immediately prior to the closing of the Merger was converted into the right to receive a pro-rata portion of a total of 1,820,000 shares of our common stock. As a result, the shareholders of Amarantus received 1,820,000 newly issued shares of our common stock.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Our board of directors was reconstituted to consist of Martin D. Cleary, Chairman, together with Dr. John W. Commissiong, Gerald E. Commissiong, Arnold T. Grisham, Robert L. Harris, and Eugene Mancino, who prior to the Merger were the directors of Amarantus.                                                                                                          
| | · | Our sole officer and director immediately prior to the Merger, Richard Douglas, resigned from the board and from all offices.                                                                                                                                                                                                                                               
| | · | Our board appointed Martin D. Cleary as our Chief Executive Officer, Dr. John Commissiong as our Chief Scientific Officer, Gerald E. Commissiong as our Chief Operating Officer, and Marc E. Faerber as our Chief Financial Officer, Treasurer, and Secretary.                                                                                                              
| | · | In connection with the Merger, our former sole officer and director immediately prior to the Merger, Richard Douglas, received a transfer of all assets and agreed to assume all liabilities related to our pre-merger business.                                                                                                                                            
| | · | Following the closing of the merger, Mr. Douglas canceled and returned all 10,000,000 shares of his common stock.                                                                                                                                                                                                                                                           
| | · | Following the closing of the merger, in a separate transaction, we authorized a forward split of 25 shares for each share of our common stock issued and outstanding at the time of the split.                                                                                                                                                                              
| | · | Following the closing of the merger, our board of directors and shareholders approved a change in the name of the company to Amarantus BioSciences, Inc.”                                                                                                                                                                                                                   
| | · | As a result, following these events, there were 67,000,000 shares of our common stock issued and outstanding.                                                                                                                                                                                                                                                               
| | · | In connection with the Merger, we adopted Amarantus’ 2008 Stock Plan and confirmed all options issued thereunder.  In addition, we adopted and assumed certain convertible notes and warrants issued by Amarantus prior to the Merger.                                                                                                                                      
| | · | Amarantus provided customary representations and warranties and complied with standard closing conditions, including approval of the Merger by its voting stockholders.                                                                                                                                                                                                     



Expenses incurred with the merger were $26,186
and have been recorded as part of Stockholders’ Equity.



The Merger is being accounted for as a reverse
recapitalization. Reverse recapitalization accounting applies when a non-operating public shell company (Jumpkicks) acquires a
private operating company (Amarantus) and the owners and management of the private operating company have actual or effective voting
and operating control of the combined company. A reverse recapitalization is equivalent to the issuance of stock by the private
operating company for the net monetary assets of the public shell corporation accompanied by a recapitalization with accounting
similar to that resulting from a reverse acquisition, except that no goodwill or other intangible assets are recorded. In the Merger
transaction, Jumpkicks qualifies as a non-operating public shell company because all pre-merger business assets and liabilities
were transferred to and assumed by the sole officer and director of Jumpkicks, prior to the completion of the Merger. The reverse
recapitalization accounting is attributable to a long-held position of the staff of the Securities and Exchange Commission as the
acquisition of a non-operating public shell company does not qualify as a business for business combination purposes, as described
in Accounting Standards Codification Topic 805, Business Combinations.



Complete information regarding the merger was
included in our Form 8K/A filed on June 3, 2011.



5. MICHAEL J. FOX FOUNDATION GRANT



In April 2010, the Company was awarded a grant
from the Michael J. Fox Foundation for Parkinson’s Research (“MJFF”). Pursuant to the MJFF grant, the Company
performed research related to comparison and analysis of certain genes in rodent models of Parkinson’s disease. The grant
provided for the reimbursement of expenses as incurred up to a maximum of $370,716, payable in two installments with targeted payments
in April 2010 and October 2010, and it established two milestones. During the three months ended March 31, 2011, the Company achieved
certain milestones and received payment and recorded revenue of $178,308. To date, through June 30, 2012, the Company has received
a total of $370,716 from the MJFF.

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6. FAIR VALUE MEASUREMENTS



Assets and liabilities recorded at fair value
in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair
value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation
of these assets or liabilities are as follows:



Level 1 — Inputs that
are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other
than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through
correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 — Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities
and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the
measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to
the model.



The Company’s financial assets and liabilities
that are measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, by level within the fair value
hierarchy, are as follows:



|Fair Value Measurements at June 30, 2012
|----------------------------------------
|                                        
|Warrant Liability                       
|Derivative Liability                    
|Total                                   



|                                            
|--------------------------------------------
|Fair Value Measurements at December 31, 2011
|                                            
|Warrant Liability                           
|Derivative Liability                        
|Total                                       





The following table provides a summary
of changes in the fair value of the Company’s Level 3 financial liability mentioned above for the year ended December 31,
2011, for the period ended June 30, 2012 and for the period from January 14, 2008 (date of inception) to June 30, 2012:



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|                                       | Warrant   |          | Derivative |  |      
|-------------------------------------- | --------- | -------- | ---------- |  | -----
|                                       | Liability |          | Liability  |  | Total
|January 14, 2008 (date of inception)   | $         | -        |            |  | $    
|Issuance of warrants                   |           | 52,665   |            |  |      
|Issuance of convertible notes          |           |          |            |  |      
|Changes in fair value                  |           | (15,960  | )          |  |      
|                                       |           |          |            |  |      
|December 31, 2008                      |           | 36,705   |            |  |      
|Changes in fair value                  |           | (1,692   | )          |  |      
|                                       |           |          |            |  |      
|December 31, 2009                      |           | 35,013   |            |  |      
|Issuance of warrants                   |           | 3,680    |            |  |      
|Issuance of convertibles notes         |           |          |            |  |      
|Reclassification of warrants to equity |           | (37,110  | )          |  |      
|Cancellation of warrants               |           | (65,082  | )          |  |      
|Changes in fair value                  |           | 67,915   |            |  |      
|                                       |           |          |            |  |      
|December 31, 2010                      | $         | 4,416    |            |  | $    
|Issuance of warrants                   |           | 314,835  |            |  |      
|Issuance of convertible notes          |           |          |            |  |      
|Changes in fair value                  |           | (35,320) |            |  |      
|                                       |           |          |            |  |      
|December 31, 2011                      | $         | 283,931  |            |  | $    
|Issuance of warrants                   |           |          |            |  |      
|Issuance of convertible notes          |           |          |            |  |      
|Changes in fair value                  |           | (27,045  | )          |  |      
|Reclassification of warrants to equity |           | (2,032   | )          |  |      
|                                       |           |          |            |  |      
|June 30, 2012                          | $         | 254,854  |            |  | $    



The valuation
of the convertible stock warrant liability is discussed inNote 8.



7. ACCRUED LIABILITIES



Accrued liabilities at June 30, 2012 and December 31,
2011, consisted of the following:



|                                          |  | June 30, |         | December 31,
|----------------------------------------- |  | -------- | ------- | ------------
|                                          |  | 2012     |         | 2011        
|Accrued compensation and related benefits |  | $        | 18,746  |             
|Accrued interest                          |  |          | 106,421 |             
|Total                                     |  | $        | 125,167 |             



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8. CONVERTIBLE PROMISSORY NOTES AND DERIVATIVE LIABILITY



The Company owes the principal amount of $230,000
to a total of six (6) investors who were issued Convertible Promissory Notes under the terms of a Convertible Promissory Note Agreement
dated December 13, 2010 and amended on March 23, 2011 as follows:



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 100,000          |  | 12-13-10   | 12-13-12     
|$ | 25,000           |  | 4-11-11    | 4-11-13      
|$ | 35,000           |  | 4-15-11    | 4-15-13      
|$ | 10,000           |  | 4-22-11    | 4-22-13      
|$ | 50,000           |  | 4-27-11    | 4-27-13      
|$ | 10,000           |  | 6-6-11     | 6-6-13       



These notes bear interest at a rate of 5% per annum, with all principal
and accrued interest payable on the maturity date. Principal and unpaid accrued interest due under these notes shall be automatically
converted into our equity securities at the closing of our next equity financing in which the gross proceeds exceed $1,000,000
(the Next Equity Financing”), based on a conversion price equal to one-third of the price per share of the stock sold to
outside investors in the Next Equity Financing. If the Next Equity Financing does not occur on or before the maturity date, the
principal and unpaid accrued interest can be converted at our option into shares of our most recently closed equity financing,
based on a conversion price equal to one-third of the price per share of the most recently closed equity financing.



In addition, we previously owed the principal
sum of $41,537 to Molecular Medicine Research Institute (MMRI”), who was issued a series of Convertible Promissory Notes
under the terms of a Note and Warrant Purchase Agreement as follows:



|  | Principal Amount | Issue Date | Maturity Date |                                                        
|- | ---------------- | ---------- | ------------- | -------------------------------------------------------
|$ | 16,037           | 11-1-10    | 11-1-12       | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 12-1-10    | 12-1-12       | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 1-1-11     | 1-1-13        | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 2-1-11     | 2-1-13        |                                                        
|$ | 4,250            | 3-1-11     | 3-1-13        |                                                        
|$ | 4,250            | 4-1-11     | 4-1-13        |                                                        
|$ | 4,250            | 5-1-11     | 5-1-13        |                                                        







These notes bear interest at a rate of 5% per
annum, with all principal and accrued interest payable on demand by the holder on or after the maturity date. Principal and unpaid
accrued interest due under these notes shall be converted, at the option of the holder, into our equity securities at the closing
of our next equity financing in which the gross proceeds exceed $1,000,000 (the Next Equity Financing”), based on a conversion
price equal to the price per share of the stock sold to outside investors in the Next Equity Financing. If the Next Equity Financing
does not occur on or before the maturity date, the principal and unpaid accrued interest can be converted at our option into a
new class of Preferred Stock, with the conversion price per share to be based upon a pre-money valuation of the company at that
time of $2,000,000. These notes also include 20% warrant coverage which expire seven years from the date of the note. In June 2012,
$24,537 of the note principal plus accrued interest was assigned to a new investor. Along with this assignment the warrants associated
with these specific notes have been cancelled.



We are currently party to a Sponsored Research Agreement with MMRI
under which we are provided office and laboratory space, use of research equipment, and other items within MMRI’s research
facility in exchange for a monthly Sponsor Research Fee. The notes detailed above, in conjunction with certain warrants to purchase
stock, were issued in payment of 50% of the respective monthly fees due under this agreement.

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In addition, we owe the principal sum of $12,240 to The Parkinson’s
Institute, which was issued a Convertible Promissory Note under the terms of a Note and Warrant Purchase Agreement dated August
25, 2010. This note bears interest at a rate of 5% per annum, with all principal and accrued interest payable on demand by the
holder on or after the maturity date of August 25, 2012. Principal and unpaid accrued interest due under this note shall be automatically
converted into our equity securities at the closing of our next equity financing in which the gross proceeds exceed $1,000,000
(the Next Equity Financing”), based on a conversion price equal to the price per share of the stock sold to outside investors
in the Next Equity Financing. If the Next Equity Financing does not occur on or before the maturity date, the principal and unpaid
accrued interest can be converted at our option into a new class new class of Preferred Stock, with the conversion price per share
to be based upon a pre-money valuation of the company at that time of $2,000,000. In addition the note holder has warrant coverage
equal to 5% of the note principal with a warrant exercise price equal to the next equity financing per share price, and expiration
seven years from the date of the note. In June 2012, $12,240 of the note principal plus accrued interest was assigned to a new
investor. Along with this assignment the warrants associated with these notes have been cancelled.



On June, 2012, we entered into a convertible note agreement with
an investor for a principal amount of $39,831. This note bears an interest rate of 12% per annum, compounded monthly, and has a
maturity date of June 5, 2013. The note holder has the option to convert the note into common stock at any time, conversion at
55% of the lowest trading price over the prior three trading days from the date of conversion. We have the option to prepay note
at any time in the amount of 150% of the principal and unpaid accrued interest. This note represents the assignment of the Parkinson’s
Institute note and the 12-1-10 and 1-1-11 MMRI notes discussed earlier.



Also, in June 2012, we entered into a convertible note agreement
with an investor for a principal amount of $21,500. This note This note bears an interest rate of 12% per annum and has a maturity
date of January 6, 2013. The note holder has the option to convert the note into common stock at any time, conversion at 55% of
the average of the three lowest trading prices over the prior ten trading days from the date of conversion. We have the option
to prepay note at any time in the amount of 150% of the principal and unpaid accrued interest within the first ninety days.



We also owe the principal sum of $500,000 to
a total of ten (10) investors who were issued Secured Convertible Promissory Notes under the terms of a Senior Secured Convertible
Promissory Note Agreement dated December 28, 2010, as amended May 20, 2011 as follows:



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 125,000          |  | 12-28-10   | 12-6-11      
|$ | 62,500           |  | 12-28-10   | 12-6-11      
|$ | 100,000          |  | 4-15-11    | 12-6-11      
|$ | 25,000           |  | 4-18-11    | 12-6-11      
|$ | 25,000           |  | 5-13-11    | 12-6-11      
|$ | 50,000           |  | 5-19-11    | 12-6-11      
|$ | 25,000           |  | 5-24-11    | 12-6-11      
|$ | 25,000           |  | 5-24-11    | 12-6-11      
|$ | 31,250           |  | 6-7-11     | 12-6-11      
|$ | 31,250           |  | 6-9-11     | 12-6-11      



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Principal and interest,
accrued at the rate of 5% per annum, are due and payable on December 6, 2011, unless earlier converted into equity securities
of the company. Principal and unpaid accrued interest shall be converted, at the option of the holder, into equity securities of
the company at the closing of our next equity financing in which gross aggregate proceeds to the Company exceed $1,750,000 and
the Company registers its stock for sale pursuant to the Securities and Exchange Act of 1934. The conversion price shall be equal
to one-third of the price per share of this financing. If this financing does not occur on or before the maturity date, the principal
and unpaid accrued interest can be converted, at the option of the holders of a majority of the aggregate principal amount of the
senior secured convertible promissory notes, into common stock of the Company. These notes were formerly secured by collateral
consisting of substantially all assets of the company. Under the May 20, 2011 amendment to the Senior Secured Convertible Promissory
Note Agreement, this security interest was terminated. Under the terms of the agreement as amended, we may not incur any indebtedness
for borrowed money except pursuant to an agreement that provides that repayment of such indebtedness will be subordinated to repayment
of the Notes. In addition, we may not encumber any of our property during such time as the Notes remain due and owing. As provided
in the amendment the note holders have warrant coverage equal to 100% of the note principal at an exercise price equal to 100%
of that to outside investors in the closing of the next equity financing of $1,175,000, but not to be less than $0.60 per share.
The warrants expire five years from the date of the next equity financing closing. We are currently in default on these notes.See footnote 9 Commitments and Contingencies for further information.



During the twelve months ended December 31,
2011, the Company issued convertible promissory notes to various investors for aggregate proceeds of $90,000. Principal and interest
on these convertible notes, accrued at the rate of 6% per annum, are due and payable 180 days from the issuance date, unless earlier
converted into equity securities of the Company, at the option of the Holder of the promissory note. Conversion of the principal
and interest will be at either $0.10 or $0.20 per share. In addition, the Company issued warrants to the note holders to purchase
a number of shares of capital stock issued to investors at the equivalent to 100% of the principal amount of the notes divided
by the respective price per share of the stock which the principal of the note converts at. The warrants expire one year from the
date of the note. During the six month ended June 30, 2012, $57,000 of these convertible notes converted to Company Common shares.



|  | Principal Amount |  |  | Issue Date |  |  | Maturity Date |  |   | Converted to Equity |  |  | Conversion Date
|- | ---------------- |  |  | ---------- |  |  | ------------- |  | - | ------------------- |  |  | ---------------
|$ | 21,000           |  |  | 7-28-11    |  |  | 1-24-12       |  | $ | 21,000              |  |  | February 2012  
|$ | 21,000           |  |  | 7-28-11    |  |  | 1-24-12       |  | $ | 21,000              |  |  | February 2012  
|$ | 10,000           |  |  | 8-16-11    |  |  | 2-12-12       |  | $ |                     |  |  |                
|$ | 20,000           |  |  | 8-18-11    |  |  | 2-14-12       |  |   |                     |  |  |                
|$ | 5,000            |  |  | 9-6-11     |  |  | 3-4-12        |  | $ | 5,000               |  |  | February 2012  
|$ | 5,000            |  |  | 9-9-11     |  |  | 3-7-12        |  | $ | 5,000               |  |  | February 2012  
|$ | 3,000            |  |  | 9-26-11    |  |  | 3-24-12       |  |   |                     |  |  |                
|$ | 5,000            |  |  | 11-2-11    |  |  | 4-30-12       |  | $ | 5,000               |  |  | February 2012  



During the period October, 2011 through June 30, 2012, the Company
issued convertible promissory notes to various investors for aggregate proceeds of $211,750. Principal and interest on these convertible
notes, accrue at the rate of 6% per annum, are due and payable 180 days from the issuance date, unless earlier converted into equity
securities of the Company, at the option of the Holder of the promissory note. Conversion of the principal and interest will be
at either $0.02 or $0.05 per share.



|  | Principal Amount |  |  | Issue Date |  |  | Maturity Date |  |   | Converted to Equity |  |  | Conversion Date
|- | ---------------- |  |  | ---------- |  |  | ------------- |  | - | ------------------- |  |  | ---------------
|$ | 5,000            |  |  | 10-27-11   |  |  | 4-24-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 10,000           |  |  | 11-23-11   |  |  | 5-21-12       |  |   |                     |  |  |                
|$ | 30,000           |  |  | 11-30-11   |  |  | 5-28-12       |  | $ | 30,000              |  |  | February 2012  
|$ | 10,000           |  |  | 12-8-11    |  |  | 6-5-12        |  | $ | 10,000              |  |  | February 2012  
|$ | 5,000            |  |  | 12-14-11   |  |  | 6-11-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 5,000            |  |  | 12-30-11   |  |  | 6-27-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 100,000          |  |  | 1-17-12    |  |  | 7-15-12       |  |   |                     |  |  |                
|$ | 3,750            |  |  | 2-21-12    |  |  | 8-19-12       |  | $ | 3,750               |  |  | February 2012  
|$ | 25,000           |  |  | 4/2/12     |  |  | 9/29/12       |  | $ | 25,000              |  |  | April 012      
|$ | 5,000            |  |  | 5/18/12    |  |  | 11/14/12      |  | $ |                     |  |  |                
|$ | 13,000           |  |  | 6/6/12     |  |  | 12/3/12       |  |   |                     |  |  |                
|  |                  |  |  |            |  |  |               |  |   |                     |  |  |                



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In March, 2012, $9,500 of convertible note
principle was issued as part of a unit debt instrument which consisted of a return on investment (“ROI”) agreement
and a convertible promissory note in return for $10,000. The ROI has a redemption value of $10,500 due on demand and the convertible
promissory note is for $9,500, non-interest bearing, due September 20, 2012, and is convertible to common shares after six months
from the date of the note at a conversion price that is 50% of the lowest trading price over the 20 prior trading dates from the
date of conversion notice.



During the six months ended June 30, 2012,
the Company issued two convertible promissory notes to one investor totaling $39,325 Principal and interest on these convertible
notes accrue at the rate of 12% per annum. The holder of the note can convert the note to common shares of the Company at any at
50% of lowest trading bid price for prior twenty trading days before conversion. Both notes were converted to on the same day as
the issuance date.



|  | Principal Amount | Issue Date | Maturity Date |   | Converted to Equity | Conversion Date
|- | ---------------- | ---------- | ------------- | - | ------------------- | ---------------
|$ | 15,000           | 3/9/12     | 10-27-12      | $ | 15,000              | 3/9/12         
|$ | 24,325           | 5/4/12     | 11/4/12       | $ | 24,250              | 5/4/12         



During the six months ended June 30, 2012,
the Company issued four convertible promissory notes to one investor totaling $91,500. Principal and interest on these convertible
notes accrue at the rate of 8% per annum. The holder of the note can convert the note to common shares of the Company any time
after the initial 180 days of the note at a conversion price that is a percentage of an average of the market low over for a certain
number days over a greater number of prior number of trading days from the date of notice to convert.



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 37,500           |  | 2-7-12     | 10-27-12     
|$ | 17,000           |  | 3/19/12    | 12-21-12     
|$ | 13,000           |  | 5/3/12     | 2/7/13       
|$ | 24,000           |  | 6/13/12    | 3/15/13      



In January, 2012, a vendor convertible their
trade account to convertible promissory notes for the amount due them at the time of the note plus future billings, amounting to
$244,988. These notes accrue interest at 8.5% and have the option to convert to common stock at any time by the note holder, at
a conversion price of $0.11 per share. These notes are payable upon demand.



A number of Company’s convertible notes
contain embedded derivatives wherein their automatic conversion, which is contingent upon a future equity raise, can accelerate
the realization of the expected payout for each note. This feature creates the possibility of a greater than expected return for
the note holder and thus a higher than expected liability for the Company. The value of this feature was estimated for each note
using the probability expected return method, in which the payout of distinct potential early conversion scenarios was discounted
to the present using the expected IRR of the note and compared with the present value of the note if held to maturity. Probabilities
were applied to the value of early conversion in each scenario to arrive at a probability weighted value of the early conversion
feature.



As of June 30, 2012
and December 31, 2011, the fair value of the derivative liability was $97,082and $140,706,
respectively. The changes in fair value for the three month periods ended June 30, 2012 and June 30, 2011 of $37,064 and
$ 122,194 respectively,and for the six month periods ended June 30, 2012 and June 30, 2011 of $178,126 and 1$60,454 respectively,
and the period from January 14, 2008 (date of inception) to June 30, 2012 of $85,473 have
been recorded in the accompanying statements of operations as a component of other income (expense).

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9. COMMITMENTS AND CONTINGENCIES



Commitments — The Company
leases its main office facility and a second facility for research in Sunnyvale, CA under sublease agreements that provide for
month-to-month extensions by the Company.



Rent expense for the three months ended June
30, 2012 and June 30, 2011 was $10,078 and $31,037, respectively, and for the six months ended June 30, 2012 and June 30, 2011
rent expense was $19,414 and $61,489, respectively. For the period from January 14, 2008 (date of inception) to June 30, 2012,
rent expense was $267,168



Effective November 1, 2011 the Company entered
into a consulting agreement where the consultant is to receive a stock option for common stock of 500,000 shares, fully vested,
to be priced upon the Board of Directors approving such grant.



Contingencies — From time
to time, the Company may become involved in litigation. On January 6, 2012 the Company was served a summons regarding the filing
of a lawsuit (Complaint for Breach of Contract, Specific Performance and Common Counts) against the Company by a former consultant
to the Company, Peter Freeman v. Amarantus BioSciences, Inc. The Company intends to defend ourselves vigorously. The Company is
unable to predict the likelihood of an unfavorable outcome or estimate its potential liability, if any, and no provision has been
made in its financial statements for this matter.



In addition the Company is in default on payment
of certain Convertible Notes that were due as of December 6, 2011 and is also late with regard to making payments to various trade
account vendors for goods and services received, of which some accounts are currently with collection agencies and could possibly
result in lawsuits with the Company.



The Company agreed to compensate certain vendors for services rendered
contingent upon the occurrence of future financings as follows:



|Future financing with proceeds of at least
|------------------------------------------
|                                          
|$                                         
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          
|                                          



The Company incurred various obligations related
to the original acquisition of its intellectual property around the time the Company was founded. These transactions are described
more fully below in Note 16, including a reference to contingent obligations reflected in the financial statements.



10. COMMON STOCK



The Company’s Certificate of Incorporation,
as amended, authorizes the Company to issue 250,000,000 shares of $0.001 par value common stock. Common stockholders are entitled
to dividends when and if declared by the Board of Directors. The holder of each share of common stock is entitled to one vote.
As of June 30, 2012, no dividends had been declared.



Common stock that the Company had reserved
for issuance at June 30, 2012, is as follows:



|Exercise and conversion of common stock warrants                    |  | 1,743,056 | 
|------------------------------------------------------------------- |  | --------- | 
|Stock options outstanding                                           |  | 1,829,030 | 
|Stock options available for future grants under the 2008 Stock Plan |  | 1,535,876 | 
|                                                                    |  |           | 
|Total shares of common stock reserved                               |  | 5,107,962 | 



F-16


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As of June 30, 2012 the Company had outstanding
$1,305,488 of convertible note principal. These convertible notes, along with related accrued interest, convert upon the Next Equity
Financing or at the option of the note holder as follows:



$17,000 of convertible debt principal have
interest at 5% and warrants equivalent to 20% of the principal balance, respectively, and convert upon the next equity financing.



$500,000 and $230,000 of convertible note principal
and related accrued interest convert at two-thirds the price per share of the Next Equity Financing and the $500,000 of convertible
note principal have warrants equivalent to 100% of the principal balance and the $230,000 of convertible note principal have no
warrants attached.



$211,750 of convertible note principal having
interest at 6%, can convert at prices ranging from $0.02 to $0.10 per share at anytime at the option of the note holder, and have
no warrants. As of June 30, 2012, $83,750 of the principal of this $211,750 convertible debt has converted to common shares.



$90,000 of convertible note principal having
interest at 6%, can convert at $0.10 or $0.20 per share at anytime at the option of the note holder and warrants equivalent to
100%. As of June 30, 2012, $57,000 of the principal of this $90,000 convertible debt has converted to common shares.



$244,988 of convertible note principal, having
an interest rate of 8.5%. no warrants, can convert at $0.11 per share at anytime at the option of the note holder.



$91,500 of convertible note principal, having
and interest rate of 8%, no warrants, can convert at 50-55% of the average of the two-three lowest trading days of the prior 10-60
trading days, there is a 180 day waiting period before the holder has the option to convert to common shares.



$9,500 of convertible note principle was issued
as part of a unit debt instrument which consisted of a return on investment (“ROI”) agreement and a convertible promissory
note in return for $10,000. The ROI has a redemption value of $10,500 due on demand and the convertible promissory note is for
$9,500, non-interest bearing, due September 20, 2012, and is convertible to common shares after six months from the date of the
note at a conversion price that is 50% of the lowest trading price over the 20 prior trading dates from the date of conversion
notice. The common share effect of the convertible debt is not included in the above schedule since the number of shares will not
be determinable until the Next Equity Financing. (See Note 8)



$30,000 of convertible note principal, having interest of 12% per
annum, compounded monthly, can convert any time at the option of the note holder, conversion at 55% of the lowest trading price
over the prior three trading days from the date of conversion.



$21,500 of convertible note principal, having interest of 12% per
annum, can convert anytime at the option of the note holder, can convert at 55% of the average of the three lowest trading prices
over the prior ten trading days from the date of conversion.



The common share effect of the warrants related
to the following convertible debt has been included in the above schedule.



During the six months ended
June 30, 2012 the Company issued $1,258,412 worth of common stock to various consultants for services and it paid $54,442 of trade
accounts payable with shares of common stock in settlement of the trade debt.



F-17


Table of Contents


11.
STOCK OPTION PLAN



The Company’s Board of Directors has
approved the 2008 Stock Plan (the “Plan”). Under the Plan, the Board of Directors may grant up to 10,742,127 shares
of incentive stock options, nonqualified stock options, or stock awards to eligible persons, including employees, nonemployees,
members of the Board of Directors, consultants, and other independent advisors who provide services to the Company. In general,
options are granted with an exercise price equal to the fair value of the underlying common stock on the date of the grant. Options
generally have a contractual life of 10 years and vest over periods ranging from being fully vested as of the grant dates
to four years.



|                                                          |               | Outstanding Options
|--------------------------------------------------------- | ------------- | -------------------
|                                                          |               |                    
|                                                          | Shares        |                    
|                                                          | Available for | Number of          
|                                                          | Grant         | Shares             
|Balance - January 14, 2008                                |               |                    
|(date of inception)                                       |               |                    
|                                                          |               |                    
|Shares added to the plan                                  |               | 6,085,136          
|                                                          |               |                    
|Balance - December 31, 2008                               |               | 6,085,136          
|                                                          |               |                    
|Balance - December 31, 2009                               |               | 6,085,136          
|                                                          |               |                    
|Shares added to the plan                                  |               | 4,656,991          
|                                                          |               |                    
|Options granted (weighted average fair values of $0.0237) |               | (3,206,494         
|                                                          |               |                    
|Balance - December 31, 2010                               |               | 7,535,633          
|                                                          |               |                    
|Shares added to the plan                                  |               |                    
|                                                          |               |                    
|Options granted (weighted average fair value of $0.0237)  |               |                    
|Employee                                                  |               | (4,610,422         
|Non-Employee                                              |               | (3,601,407         
|                                                          |               |                    
|Cancelled Shares                                          |               | 2,212,071          
|                                                          |               |                    
|Options exercised                                         |               |                    
|                                                          |               |                    
|Balance   - December 31, 2011                             |               | 1,535,875          
|                                                          |               |                    
|Options vested-                                           |               |                    
|June 30,2012                                              |               | 6,698,179          
|                                                          |               |                    
|Options vested and expected to vest-                      |               |                    
|June 30, 2012                                             |               | 7,951,362          



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Table of Contents


Stock-based compensation expense for the three
and six month periods ended June 30, 2012 and June 30, 2011, and the period from January 14, 2008 (date of inception) to June
30, 2011, is classified in the statements of operations as follows:



|                           |  |              |       |              |   |              |  |              |   | Period From      
|-------------------------- |  | ------------ | ----- | ------------ | - | ------------ |  | ------------ | - | -----------------
|                           |  | Three        |       | Three        |   | Sixe         |  | Six          |   | January 14, 2008 
|                           |  | Months Ended |       | Months Ended |   | Months Ended |  | Months Ended |   | Date of Inception
|                           |  | June 30,     |       | June 30,     |   | June 30,     |  | June 30,     |   | to June 30,      
|                           |  | 2012         |       | 2011         |   | 2012         |  | 2011         |   | 2012             
|Research and development   |  | $            | 1,794 |              | $ | 429,144      |  |              | $ | 6,926            
|General and administrative |  |              | 4,484 |              |   | 68,628       |  |              |   | 12,134           
|                           |  |              |       |              |   |              |  |              |   |                  
|Total                      |  | $            | 6,278 |              | $ | 497,772      |  |              | $ | 19,060           



At June 30, 2012, there was a total of $23,111
of unrecognized compensation cost, net of estimated forfeitures, related to non-vested stock option awards, which is expected to
be recognized over a weighted-average period of approximately 2.0 years.



The fair value of the Company’s stock-based
awards during the year ended December 31, 2011, and the period from January 14, 2008 (date of inception) to June 30,
2012, was estimated using the following weighted-average assumptions:



|                            |  |              |      |            |  | Period From        
|--------------------------- |  | ------------ | ---- | ---------- |  | -------------------
|                            |  |              |      |            |  | January 14, 2008   
|                            |  | Period Ended |      | Year Ended |  | (Date of Inception)
|                            |  | June 30,     |      | June 30,   |  | to June 30,        
|                            |  | 2012         |      | 2011       |  | 2012               
|                            |  |              |      |            |  |                    
|Weighted-average volatility |  |              | 71.0 | %          |  |                    
|Expected term (in years)    |  |              | 5    |            |  |                    
|Expected dividends          |  |              | None |            |  |                    
|Risk-free interest rate     |  |              | 0.72 | %          |  |                    



12. SEGMENT REPORTING



The Company operates in one reportable segment.
The Company's Chief Executive Officer, who is considered to be the chief operating decision maker, manages the Company's operations
as a whole and reviews financial information presented on a this basis, for purposes of evaluating financial performance and allocating
resources.



13. RELATED-PARTY TRANSACTIONS



The Company was co-founded in 2008 by Mr. Gerald
Commissiong and Dr. John Commissiong under the original name of CNS Protein Therapeutics, Inc. (“CNS”), and changed
its name to Amarantus BioSciences, Inc. in 2010. Dr. Commisiong is currently the Chief Scientific Officer, a member of the
Board of Directors (appointed in March 2011) and majority shareholder of the Company. Mr. Gerald Commissiong is currently
the Chief Operating Officer, a member of the Board of Directors, and a significant shareholder of the Company. Dr. Commissiong
also founded Neurotrophics, Inc., a Canadian company, in 2003. In 2007, Neurotrophics established an agreement with EMS Development
Group to acquire the intellectual property rights to a protein compound, mesencephalic astrocyte-derived neurotrophic factor (“MANF”),
from Prescient Neuropharma Co. MANF was discovered by Dr. Commissiong while working for Prescient in 2002, as a drug candidate
with promising therapeutic properties for treatment of syndromes such as Parkinson’s Disease.



F-19


Table of Contents


EMS received $59,000 in 2007 in funding from
Neurotrophics to purchase the MANF intellectual property rights. Prior to this payment, Neurotrophics received a total of $100,000
in investments from certain outside parties. The same investors provided $100,000 in funding to CNS in 2008, and CNS renegotiated
and assumed the $100,000 convertible note investment made into Neurotrophics. The investors directed Neurotrophics and EMS to assign
the MANF intellectual property rights to CNS and CNS agreed to assume certain other liabilities related to the technology transfer.
CNS will compensate these creditors on a future date mutually agreeable between the parties., In addition, CNS agreed to compensate
EMS for its assistance in acquiring the rights to MANF by making installment payments in an aggregate amount of up to $95,000.



The technology transfer transaction created
a contingent liability for the Company. Legal counsel to the Company has advised that transfers of assets out of the usual course
of business, referred to under applicable Canadian law as “bulk sales”, must comply with certain rules in order to
avoid a potential voiding of the sale or transfer, making the purchaser liable to unpaid trade creditors, or creating an encumbrance
on the assets transferred or sold. The transfer of the MANF rights by Neurotrophics to CNS may impose such obligations on CNS,
as a purchaser. Counsel further advised that upon payment in full of all of the Neurotrophics debts outstanding as of March 5,
2008, no action can be successfully maintained to void or set aside the transfer of the MANF rights to CNS, and thus to the Company.



To remedy this contingent liability, CNS agreed
to compensate Neurotrophics to repay its creditors on a future date mutually agreeable between the parties, and agreed to assume
debts owed to John Commissiong and Gerald Commissiong by Neurotrophics.



The Company has recorded a total of $287,462
and $222,230 as of December 2010 and 2011, respectively in obligations reflecting this liability in its financial statements. The
Company recorded the assumption of the Neurotrophics debts as a distribution in 2008.



In February 2011, the Company and Neurotrophics
agreed to enter into two agreements regarding compensation for the March 5, 2008 transfer of the rights to MANF and issued notes
in the amounts of $222,083 and $59,319, in favor of Neurotrophics and John and Gerald Commissiong, respectively. These notes bear
interest at the rate of 2% per annum, and have maturity dates of March 5, 2015 and December 30, 2015, respectively. The loans
may be repaid at the Company’s option on or before the maturity dates in the form of common stock of the Company at the then
fair market value.



In October 2010, the Company entered into an
agreement with the founders, Gerald Commissiong and John Commissiong, where they will receive a 2.5% (1.25% each for Gerald Commissiong
and John Commissiong) Royalty from the gross commercial revenue of patents derived from the Company’s proprietary
PhenoGuard platform technology, including patents associated with the MANF Protein and related Gene.



The Company obtained the services of its Chairman
Martin D. Cleary through a consulting agreement. During the years ended December 31, 2010, 2011, and the period from January 14,
2008 (date of inception) to October 23rd, 2011, consulting services of $200,000, $200,000, and $479,166, respectively are included
in the statement of operations. This agreement also includes a change of control clause whereby the Company shall pay Mr. Cleary
a bonus of 5% of the gross proceeds to the Company resulting from the change of control. Upon his election and in his sole discretion,
and in lieu of the change of control bonus, the Company shall issue to him shares of the Company’s common stock equal to
2.5% of the Company’s fully diluted capitalization as of the date of termination of the agreement.



In March 2012, a former and an existing Board
of Director member converted a Convertible Promissory Note in the amount of $21,000, each plus accrued interest. This resulted
in 217,280 shares of Common Stock to be issued to each party.



F-20


Table of Contents


14. SUBSEQUENT EVENTS



The Company evaluated subsequent events through the date its financial
statements were available for issuance. The Company determined that the financial statements were available for issuance on August
20th, 2012.



On January 16, 2012 the Company entered into
a License Agreement with Power3 Medical Products, Inc (“Power3”) to license the NuroPro diagnostic test for Parkinson's
disease to Amarantus BioSciences (the "License"). As part of the License, Amarantus was granted an option to acquire
the Parkinson's Intellectual Property, and a right of first refusal to acquire the entire diagnostic platform for neurodegenerative
diseases (collectively the "IP").   On March 7th, 2012 the IP was assigned to Neogenomics Inc. (“Neogenomics”)
to satisfy a judgment made in September 2011 against Power3 in the name of Neogenomics as it pertained to a note payable to Neogenomics
by Power3 that was in default. This judgment was not disclosed by Power3 to Amarantus at the time of the License Agreement; this
lack of disclosure was in violation of the representations and warranties made by Power3 to Amarantus in the License Agreement. On
March 15th, 2012, Power3 filed for Chapter 7 bankruptcy without notifying Amarantus of the status of the judgement in
favor of Neogenomics, or the transfer of the IP to Neogenomics. Upon learning of the events stated above, Amarantus immediately put
NeoGenomics on notice of the licensing agreement entered into with Power3 in order to provide equitable defenses in the event NeoGenomics
makes an infringement claim against Amarantus. Amarantus is currently reviewing its legal options with respect to material misrepresentations
made by the Executive Officers of Power3 at the time of the Licensing Agreement. Amarantus had initiated discussions with Neogenomics
to acquire the IP related to the assignment made by the Receiver and expects those discussions to continue throughout the Power3's
bankruptcy process. At this point the Company does not know how long the bankruptcy process may take. In August, 2012, the Company
learned through a letter from the Trustee that the IP now belongs to the bankruptcy estate of Power3, and the Trustee has provided
notice to the Patent and Trademark Office of the change in ownership back to Pwer3. Further the Trustee indicated in the letter
that the Power3 estate is in a position to substantially comply with Power3’s pre-bankruptcy License Agreement with Amarantus,
and has put forth a proposal which the Company in reviewing.



Effective July 31, 2012, Martin D. Cleary resigned
from his position as director and the Chairman of our Board of Directors. Also effective July 31, 2012, Eugene Mancino resigned
from his position as a director. There was no known disagreement with Mr. Cleary or Mr. Mancino on any matter relating to the Company’s
operations, policies, or practices.



In July, 2012, the
Board of Directors designated 2,500,000 shares of the 10,000,000 shares of authorized Preferred Stock as Series B Convertible Preferred
Stock (“Series B”). The Series B stock have a par value of $0.001 per share, have no liquidation rights or rights to
a dividend, has a conversion feature of fifty shares of Common stock for each share of Series B, Series B cannot convert to Common
second until the second annual anniversary of the designation of the Series B Preferred, or a change in control occurs (defined
as a 50% change in the voting power of the outstanding shares occurs).The holders of Series B shall be entitled to vote
along with the Common Shares, at the same rate as if the Series B shares have been fully converted into Common Shares.



Further in July, 2012, the Board of Directors
adopted a new stock plan, the Management, Employee, Advisor and Director Preferred Stock Option Plan – 2012 Series B Convertible
Preferred Stock Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Management, Employees, Advisors and Directors and to promote the success of
the Company’s business. Certain current and former Management, Employees, Advisors and Directors were awarded a total of
1,250,000 options to purchase Series B Preferred shares on July 15th, 2012.

F-21


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Item 2.	 Management’s Discussion
and Analysis of Financial Condition and Results of Operations



Forward-Looking Statements



Certain statements, other than purely historical information, including
estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions
upon which those statements are based, are forward-looking statements.” These forward-looking statements generally are identified
by the words believes,” project,” expects,” anticipates,” estimates,” intends,” strategy,”
plan,” may,” will,” would,” will be,” will continue,” will likely result,” and similar
expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties
which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the
actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our
operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory
changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties
should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.



Overview



Amarantus BioSciences, Inc. is a California-based development-stage
biotechnology company founded in January 2008. We focus on developing our intellectual property and proprietary technology to develop
drug candidates to treat human disease. We own the intellectual property rights to a therapeutic protein known as Mesencephalic-Astrocyte-derived
Neurotrophic Factor (MANF”).



MANF is a protein that corrects protein misfolding. Protein misfolding
is one of the major causes of apoptosis (cell death). This property provides a compelling rationale for the research and development
of MANF-based products as therapeutics for human disease. Our lead MANF product development effort is centered on a therapy for
Parkinson’s disease.



We also own an inventory of 88 cell lines that we refer to as PhenoGuard
Cell Lines. MANF was the first therapeutic protein discovered from a PhenoGuard Cell Line. We believe that we may identify additional
therapeutic proteins from its inventory of PhenoGuard Cell Lines.



Principal Products



Our philosophy is to acquire in-license, discover and develop biologics
with the potential to address critically important biological pathways involved in human disease. Since our inception, we have
been focused on developing MANF as a therapeutic for Parkinson’s disease, and other apoptosis-related disorders. Our business
plans are focused in these specific areas:



- Development of MANF to treat Parkinson’s
disease

- Development of MANF to treat other
apoptosis-related disorders

- Exploration of our PhenoGuard
Cell Lines for therapeutic protein discovery

- Evaluation of external drug candidates
for potential in-licensure or acquisition



MANF: Overview



We own the intellectual property rights to a novel therapeutic protein
called MANF acquired from EMS Development Group in 2008. MANF is a novel, endogenous, evolutionally conserved and widely expressed
secreted human protein. We believe that MANF is the first of a new class of therapeutic proteins that are secreted in response
to stressful physiological conditions in the body. MANF is believed to have mechanisms of action that are fundamentally different
from other therapeutic proteins; MANF decreases the activity of apoptosis-causing enzymes, corrects protein misfolding and increases
neurotransmitter release.

4


Table of Contents


MANF: Development Plan



We will focus on developing MANF as a therapeutic protein for Parkinson’s
disease with the intention of gaining Investigational New Drug Status with the FDA in order to initiate human clinical studies
in the United States. We will gather further information on additional MANF applications and will evaluate product development
programs as data becomes available.



For the next 12 months, we will focus our product development efforts
on the completion of experiments in non-human primate models of Parkinson’s disease. This will provide the experimental rationale
for moving forward into human clinical studies for the treatment of Parkinson’s disease.



Parkinson’s Disease Overview



Parkinson’s disease (PD) is a severe neurological disorder
characterized by tremor, muscle rigidity, and an inability to walk with a steady gait. PD was first reported by James Parkinson
in 1817. It is currently widely accepted that PD is primarily associated with the degeneration of a specific set of dopaminergic
(DA) neurons in the human brain located in the midbrain. According to the NIH, symptoms begin to appear when 60-80% of these DA
neurons have become dysfunctional or have died. Humans have roughly 1 million of these critical DA neurons in the midbrain that
play a vital role in controlling motor functions such as walking, stability and overall muscle control. DA neurons release the
neurotransmitter dopamine, which plays a critical role in motor function. When a person is diagnosed with PD, roughly 600,000 to
800,000 of these DA neurons have already degenerated or have died. The remaining DA neurons continue to degenerate as PD progresses
until such a time when there aren’t enough DA neurons left for the body to function. PD progresses at different rates in
different patients. Ultimately, every patient becomes incapable of functioning independently at a certain point in the progression
of his or her PD. According to the NIH, it is estimated that at least 500,000 people are afflicted with this disorder in the United
States. PD generally affects patients later in life, with an average onset age of 60. NIH estimates the total cost to the nation
exceeds $6 billion annually.



Parkinson’s Disease Market



According to a 2008 report generated by DataMonitor, there are over
1.5 million PD in the United States, Western Europe and Japan. It is widely accepted that with the increasing trend towards a longer
lifespan coupled with the baby-boomer population approaching retirement, the incidence of Parkinson’s disease is likely to
double by in the next 20 years.



Deep Brain Stimulation



Deep brain stimulation (DBS) is a surgical procedure used to treat
the symptoms associated with Parkinson’s disease.  At present, the procedure is used only for patients whose symptoms
cannot be adequately controlled with medications. DBS uses a surgically implanted, battery-operated medical device called a neurostimulator,
which is similar to a heart pacemaker and approximately the size of a stopwatch, to deliver electrical stimulation to targeted
areas in the brain that control movement.



Unlike previous surgeries for PD, DBS minimizes tissue damage by
focusing on neura pathways. Instead the procedure blocks electrical signals from targeted areas in the brain. Thus, if newer, more
promising treatments develop in the future, the DBS procedure can be reversed. Stimulation from the neurostimulator is adjustable
without further surgical intervention. Although most patients still need to take medication after undergoing DBS, many patients
experience considerable reduction of their PD symptoms and are able to greatly reduce their medications.  The amount of reduction
varies from patient to patient but can be considerably reduced in most patients.



Competition: Disease-modifying Treatment in Development



There are several disease-modifying treatments under development
seeking to address the key unmet medical need in Parkinson’s disease treatment.

5


Table of Contents


A. MedGenesis licensed GDNF protein rights from Amgen in January
2010. GDNF is a promising disease-modifying therapy for Parkinson’s Disease.

B. Ceregene reported Phase II data in 2010 of their neurturin
gene therapy, showing improvement in Parkinson’s symptoms (UPDRS) at 18 months vs. placebo. Genzymed licensed ex-US rights
to this product. Ceregene is currently planning an additional Phase II study.

C. Amsterdam Molecular has a preclinical GDNF gene therapy
program under an exclusive license from Amgen for GDNF in gene therapy.

MANF is belongs to this category of therapies. Effective disease
modifying treatments that become commercially available would dramatically affect the PD market, shifting the market from symptomatic
drugs in favor of new disease modifying treatments and potentially growing the overall market



Manufacture of GMP quality MANF



We will outsource the manufacturing of the MANF Parkinson’s
Disease product to a Contract Manufacturing Organization (“CMO”), with special capabilities to manufacture biological
drug candidates for submission and clinical testing under Food & Drug Administration (“FDA”) guidelines.



Distribution & Marketing



We intend to develop its drug candidates and utilize its deep industry
connections to effect partnering transactions with biopharmaceutical drug companies seeking to strategically fortify pipelines
and fund the costly clinical development required to achieve successful commercialization. As such, we do not anticipate selling
products directly into the marketplace; rather we will effect partnering transaction which will give us a distribution and marketing
partner to sell our products into the marketplace, allowing the us to focus on the research and product development which represent
our core competencies.



Regulatory Compliance



Drug Development and distribution in the biotechnology and pharmaceutical
industries in the United States is heavily regulated by the FDA. These regulations and policies relate to the safety and efficacy
of drug candidates being developed for the US market. These regulations and policies are continually being updated to reflect the
current state of the art in our understanding of science and human biology. The Affordable Healthcare for America Act passed in
2010 is an example of how the landscape in the healthcare and biotechnology space is continually evolving and subject to significant
political influence.



The FDA imposed requirements represent a critical component to the
overall development plan for Amarantus’ drug development candidates. Management will use all resources available to it to
ensure that the Company develops its drug candidates in compliance with all applicable laws and regulations.



Intellectual Property



1. EU MANF Composition of Matter Patent

2. US MANF Composition of Matter Patent Application

3. US MANF Method of Use Patent Application

4. EU MANF Method of Use Patent Application

5. Japanese Method of Use Patent Application

6. Canadian Method of Use Patent Application

7. Chinese MANF Method of Use Patent Application

8. Indian MANF Method of Use Patent Application

9. Brazilian MANF Method of Use Patent Application

10. PCT Neurodegenerative disorders Method of Use Patent Application

6


Table of Contents


Personnel



We currently have three (3) employees/consultants. Our current internal
departments include Business Development, Finance, Research & Development and Administration. We are led by a management team
that includes an engineer, a scientist, an accountant and an executive. We intend to expand our management team as operations ramp
up to include additional technical staff required to achieve our business objectives.



Expected Changes In Number of Employees, Plant, and Equipment



We do not currently plan to purchase specific additional physical
plant and significant equipment within the immediate future. We do not currently have specific plans to change the number of our
employees during the next twelve months.



Results of Operations For Amarantus Biosciences, Inc. For The
Three Months Ended June 30, 2012 and June 30, 2011



During the three months ended June 30, 2012, Amarantus generated
no revenue and incurred $934,682 in operating expenses, resulting in a loss from operations of $934,682. Operating expenses consisted
of research and development costs of $359,829 and general and administrative expenses of $574,853. During the three months ended
June 30, 2012, Amarantus incurred interest expense of $111,932 and other income of $51,287 related to a change in fair value of
warrant and derivative liabilities. Amarantus’ net loss for the three months June 30, 2012 was $995,327. Stock based compensation
accounted for $343,903 of the $995,327 net loss for the three months ended June 30, 2012.



During the three months ended June 30, 2011, Amarantus generated
no revenue and incurred $1,085,330 in operating expenses, resulting in a loss from operations of $1,085,330. Operating expenses
consisted of research and development costs of $522,416 and general and administrative expenses of $562,914. During the three months
ended June 30, 2011, Amarantus incurred interest expense of $166,477 and other income of $125,137 related to a change in fair value
of warrant and derivative liabilities. Amarantus’ net loss for the three months June 30, 2011 was $1,126,670. Stock compensation
of $497,772 was included in the $1,126,670 of net loss for the three months ended June 30, 2011.



Results of Operations For Amarantus Biosciences, Inc. For The
Six Months Ended June 30, 2012 and June 30, 2011



During the six months ended June 30, 2012, Amarantus generated no
revenue and incurred $2,300,447 in operating expenses, resulting in a loss from operations of $2,300,447. Operating expenses consisted
of research and development costs of $435,745 and general and administrative expenses of $1,864,702. During the six months ended
June 30, 2012, Amarantus incurred interest expense of $217,382 and other income of $205,171 related to a change in fair value of
warrant and derivative liabilities. Amarantus’ net loss for the six months June 30, 2012 was $2,312,658. Stock compensation
accounted for $1,400,760 of the $2,312,658 net loss for the six months ended June 30, 2012.



During the six months ended June 30, 2011, Amarantus generated $178,308
of revenue and incurred $1,740,992 in operating expenses, resulting in a loss from operations of $1,562,684. Operating expenses
consisted of research and development costs of $765,486 and general and administrative expenses of $975,506. During the six months
ended June 30, 2011, Amarantus incurred interest expense of $230,345, other income of $163,181 related to a change in fair value
of warrant and derivative liabilities. Amarantus’ net loss for the six months June 30, 2011 was $1,629,848. Stock compensation
accounted for $83,603 of the $1,629,848 net loss for the six months ended June 30, 2011.



Inflation adjustments have had no material impact on the Company.

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Off-balance-sheet arrangements



Pursuant to the terms of certain contractual agreements, we have
agreed to compensate certain vendors for services rendered contingent upon the occurrence of future financings. These transactions
are described more fully under Liquidity and Capital Resources, below, and in Note 12 to our financial statements. These obligations
are not reflected in our accounts and represent an off balance sheet liability contingent upon achieving the respective funding
levels specified in the relevant agreements.



Liquidity and Capital Resources



As of June 30, 2012, we had current assets in the amount of $553,579
consisting of $6,648 in cash and cash equivalents and $546,931 in prepaid expenses and other current assets. As of June 30, 2012,
we had current liabilities in the amount of $4,452,290, consisting of $2,434,137 in accounts payable, $125,167 in accrued liabilities,
$222,230 in related party liabilities, $150,000 in notes payable, $254,855 in current portion of warrant liability, $97,082 in
the current portion of derivative liabilities, and $1,168,819 in the current portion of convertible promissory notes. As of June
30, 2012, we had a working capital deficit in the amount of $3,898,711.



The Company owes the principal amount of $230,000
to a total of six (6) investors who were issued Convertible Promissory Notes under the terms of a Convertible Promissory Note Agreement
dated December 13, 2010 and amended on March 23, 2011 as follows:



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 100,000          |  | 12-13-10   | 12-13-12     
|$ | 25,000           |  | 4-11-11    | 4-11-13      
|$ | 35,000           |  | 4-15-11    | 4-15-13      
|$ | 10,000           |  | 4-22-11    | 4-22-13      
|$ | 50,000           |  | 4-27-11    | 4-27-13      
|$ | 10,000           |  | 6-6-11     | 6-6-13       



These notes bear interest at a rate of 5% per annum, with all principal
and accrued interest payable on the maturity date. Principal and unpaid accrued interest due under these notes shall be automatically
converted into our equity securities at the closing of our next equity financing in which the gross proceeds exceed $1,000,000
(the Next Equity Financing”), based on a conversion price equal to one-third of the price per share of the stock sold to
outside investors in the Next Equity Financing. If the Next Equity Financing does not occur on or before the maturity date, the
principal and unpaid accrued interest can be converted at our option into shares of our most recently closed equity financing,
based on a conversion price equal to one-third of the price per share of the most recently closed equity financing.



In addition, we previously owed the principal
sum of $41,537 to Molecular Medicine Research Institute (MMRI”), who was issued a series of Convertible Promissory Notes
under the terms of a Note and Warrant Purchase Agreement as follows:



|  | Principal Amount | Issue Date | Maturity Date |                                                        
|- | ---------------- | ---------- | ------------- | -------------------------------------------------------
|$ | 16,037           | 11-1-10    | 11-1-12       | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 12-1-10    | 12-1-12       | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 1-1-11     | 1-1-13        | Note principal and accrued interest assigned June, 2012
|$ | 4,250            | 2-1-11     | 2-1-13        |                                                        
|$ | 4,250            | 3-1-11     | 3-1-13        |                                                        
|$ | 4,250            | 4-1-11     | 4-1-13        |                                                        
|$ | 4,250            | 5-1-11     | 5-1-13        |                                                        



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These notes bear interest at a rate of 5% per annum, with all principal and accrued interest payable on demand by the holder on
or after the maturity date. Principal and unpaid accrued interest due under these notes shall be converted, at the option of the
holder, into our equity securities at the closing of our next equity financing in which the gross proceeds exceed $1,000,000 (the
Next Equity Financing”), based on a conversion price equal to the price per share of the stock sold to outside investors
in the Next Equity Financing. If the Next Equity Financing does not occur on or before the maturity date, the principal and unpaid
accrued interest can be converted at our option into a new class of Preferred Stock, with the conversion price per share to be
based upon a pre-money valuation of the company at that time of $2,000,000. These notes also include 20% warrant coverage which
expire seven years from the date of the note. In June 2012, $24,537 of the note principal plus accrued interest was assigned to
a new investor. Along with this assignment the warrants associated with these specific notes have been cancelled.



We are currently party to a Sponsored Research Agreement with MMRI
under which we are provided office and laboratory space, use of research equipment, and other items within MMRI’s research
facility in exchange for a monthly Sponsor Research Fee. The notes detailed above, in conjunction with certain warrants to purchase
stock, were issued in payment of 50% of the respective monthly fees due under this agreement.



In addition, we owe the principal sum of $12,240 to The Parkinson’s
Institute, which was issued a Convertible Promissory Note under the terms of a Note and Warrant Purchase Agreement dated August
25, 2010. This note bears interest at a rate of 5% per annum, with all principal and accrued interest payable on demand by the
holder on or after the maturity date of August 25, 2012. Principal and unpaid accrued interest due under this note shall be automatically
converted into our equity securities at the closing of our next equity financing in which the gross proceeds exceed $1,000,000
(the Next Equity Financing”), based on a conversion price equal to the price per share of the stock sold to outside investors
in the Next Equity Financing. If the Next Equity Financing does not occur on or before the maturity date, the principal and unpaid
accrued interest can be converted at our option into a new class new class of Preferred Stock, with the conversion price per share
to be based upon a pre-money valuation of the company at that time of $2,000,000. In addition the note holder has warrant coverage
equal to 5% of the note principal with a warrant exercise price equal to the next equity financing per share price, and expiration
seven years from the date of the note. In June 2012, $12,240 of the note principal plus accrued interest was assigned to a new
investor. Along with this assignment the warrants associated with these notes have been cancelled.



On June, 2012, we entered into a convertible note agreement with
an investor for a principal amount of $39,831. This note bears an interest rate of 12% per annum, compounded monthly, and has a
maturity date of June 5, 2013. The note holder has the option to convert the note into common stock at any time, conversion at
55% of the lowest trading price over the prior three trading days from the date of conversion. We have the option to prepay note
at any time in the amount of 150% of the principal and unpaid accrued interest. This note represents the assignment of the Parkinson’s
and MMRI notes discussed earlier.



Also, in June 2012, we entered into a convertible note agreement
with an investor for a principal amount of $21,500. This note This note bears an interest rate of 12% per annum and has a maturity
date of January 6, 2013. The note holder has the option to convert the note into common stock at any time, conversion at 55% of
the average of the three lowest trading prices over the prior ten trading days from the date of conversion. We have the option
to prepay note at any time in the amount of 150% of the principal and unpaid accrued interest within the first ninety days.



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We also owe the principal sum of $500,000 to
a total of ten (10) investors who were issued Secured Convertible Promissory Notes under the terms of a Senior Secured Convertible
Promissory Note Agreement dated December 28, 2010, as amended May 20, 2011 as follows:



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 125,000          |  | 12-28-10   | 12-6-11      
|$ | 62,500           |  | 12-28-10   | 12-6-11      
|$ | 100,000          |  | 4-15-11    | 12-6-11      
|$ | 25,000           |  | 4-18-11    | 12-6-11      
|$ | 25,000           |  | 5-13-11    | 12-6-11      
|$ | 50,000           |  | 5-19-11    | 12-6-11      
|$ | 25,000           |  | 5-24-11    | 12-6-11      
|$ | 25,000           |  | 5-24-11    | 12-6-11      
|$ | 31,250           |  | 6-7-11     | 12-6-11      
|$ | 31,250           |  | 6-9-11     | 12-6-11      



Principal and interest,
accrued at the rate of 5% per annum, are due and payable on December 6, 2011, unless earlier converted into equity securities
of the company. Principal and unpaid accrued interest shall be converted, at the option of the holder, into equity securities of
the company at the closing of our next equity financing in which gross aggregate proceeds to the Company exceed $1,750,000 and
the Company registers its stock for sale pursuant to the Securities and Exchange Act of 1934. The conversion price shall be equal
to one-third of the price per share of this financing. If this financing does not occur on or before the maturity date, the principal
and unpaid accrued interest can be converted, at the option of the holders of a majority of the aggregate principal amount of the
senior secured convertible promissory notes, into common stock of the Company. These notes were formerly secured by collateral
consisting of substantially all assets of the company. Under the May 20, 2011 amendment to the Senior Secured Convertible Promissory
Note Agreement, this security interest was terminated. Under the terms of the agreement as amended, we may not incur any indebtedness
for borrowed money except pursuant to an agreement that provides that repayment of such indebtedness will be subordinated to repayment
of the Notes. In addition, we may not encumber any of our property during such time as the Notes remain due and owing. As provided
in the amendment the note holders have warrant coverage equal to 100% of the note principal at an exercise price equal to 100%
of that to outside investors in the closing of the next equity financing of $1,175,000, but not to be less than $0.60 per share.
The warrants expire five years from the date of the next equity financing closing. We are currently in default on these notes.See footnote 9 Commitments and Contingencies for further information.



During the twelve months ended December 31,
2011, the Company issued convertible promissory notes to various investors for aggregate proceeds of $90,000. Principal and interest
on these convertible notes, accrued at the rate of 6% per annum, are due and payable 180 days from the issuance date, unless earlier
converted into equity securities of the Company, at the option of the Holder of the promissory note. Conversion of the principal
and interest will be at either $0.10 or $0.20 per share. In addition, the Company issued warrants to the note holders to purchase
a number of shares of capital stock issued to investors at the equivalent to 100% of the principal amount of the notes divided
by the respective price per share of the stock which the principal of the note converts at. The warrants expire one year from the
date of the note. During the six month ended June 30, 2012, $57,000 of these convertible notes converted to Company Common shares.



|  | Principal Amount |  |  | Issue Date |  |  | Maturity Date |  |   | Converted to Equity |  |  | Conversion Date
|- | ---------------- |  |  | ---------- |  |  | ------------- |  | - | ------------------- |  |  | ---------------
|$ | 21,000           |  |  | 7-28-11    |  |  | 1-24-12       |  | $ | 21,000              |  |  | February 2012  
|$ | 21,000           |  |  | 7-28-11    |  |  | 1-24-12       |  | $ | 21,000              |  |  | February 2012  
|$ | 10,000           |  |  | 8-16-11    |  |  | 2-12-12       |  | $ |                     |  |  |                
|$ | 20,000           |  |  | 8-18-11    |  |  | 2-14-12       |  |   |                     |  |  |                
|$ | 5,000            |  |  | 9-6-11     |  |  | 3-4-12        |  | $ | 5,000               |  |  | February 2012  
|$ | 5,000            |  |  | 9-9-11     |  |  | 3-7-12        |  | $ | 5,000               |  |  | February 2012  
|$ | 3,000            |  |  | 9-26-11    |  |  | 3-24-12       |  |   |                     |  |  |                
|$ | 5,000            |  |  | 11-2-11    |  |  | 4-30-12       |  | $ | 5,000               |  |  | February 2012  



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During the period October, 2011 through June 30, 2012, the Company issued convertible promissory notes to various investors for
aggregate proceeds of $211,750. Principal and interest on these convertible notes, accrue at the rate of 6% per annum, are due
and payable 180 days from the issuance date, unless earlier converted into equity securities of the Company, at the option of the
Holder of the promissory note. Conversion of the principal and interest will be at either $0.02 or $0.05 per share.



|  | Principal Amount |  |  | Issue Date |  |  | Maturity Date |  |   | Converted to Equity |  |  | Conversion Date
|- | ---------------- |  |  | ---------- |  |  | ------------- |  | - | ------------------- |  |  | ---------------
|$ | 5,000            |  |  | 10-27-11   |  |  | 4-24-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 10,000           |  |  | 11-23-11   |  |  | 5-21-12       |  |   |                     |  |  |                
|$ | 30,000           |  |  | 11-30-11   |  |  | 5-28-12       |  | $ | 30,000              |  |  | February 2012  
|$ | 10,000           |  |  | 12-8-11    |  |  | 6-5-12        |  | $ | 10,000              |  |  | February 2012  
|$ | 5,000            |  |  | 12-14-11   |  |  | 6-11-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 5,000            |  |  | 12-30-11   |  |  | 6-27-12       |  | $ | 5,000               |  |  | February 2012  
|$ | 100,000          |  |  | 1-17-12    |  |  | 7-15-12       |  |   |                     |  |  |                
|$ | 3,750            |  |  | 2-21-12    |  |  | 8-19-12       |  | $ | 3,750               |  |  | February 2012  
|$ | 25,000           |  |  | 4/2/12     |  |  | 9/29/12       |  | $ | 25,000              |  |  | April 012      
|$ | 5,000            |  |  | 5/18/12    |  |  | 11/14/12      |  | $ |                     |  |  |                
|$ | 13,000           |  |  | 6/6/12     |  |  | 12/3/12       |  |   |                     |  |  |                



In March, 2012, $9,500 of convertible note
principle was issued as part of a unit debt instrument which consisted of a return on investment (“ROI”) agreement
and a convertible promissory note in return for $10,000. The ROI has a redemption value of $10,500 due on demand and the convertible
promissory note is for $9,500, non-interest bearing, due September 20, 2012, and is convertible to common shares after six months
from the date of the note at a conversion price that is 50% of the lowest trading price over the 20 prior trading dates from the
date of conversion notice.



During the six months ended June 30, 2012,
the Company issued two convertible promissory notes to one investor totaling $39,325 Principal and interest on these convertible
notes accrue at the rate of 12% per annum. The holder of the note can convert the note to common shares of the Company at any at
50% of lowest trading bid price for prior twenty trading days before conversion. Both notes were converted to on the same day as
the issuance date.



|  | Principal Amount | Issue Date | Maturity Date |   | Converted to Equity | Conversion Date
|- | ---------------- | ---------- | ------------- | - | ------------------- | ---------------
|$ | 15,000           | 3/9/12     | 10-27-12      | $ | 15,000              | 3/9/12         
|$ | 24,30            | 5/4/12     | 11/4/12       | $ | 24,250              | 5/4/12         



During the six months ended June 30, 2012,
the Company issued four convertible promissory notes to one investor totaling $91,500. Principal and interest on these convertible
notes accrue at the rate of 8% per annum. The holder of the note can convert the note to common shares of the Company any time
after the initial 180 days of the note at a conversion price that is a percentage of an average of the market low over for a certain
number days over a greater number of prior number of trading days from the date of notice to convert.



|  | Principal Amount |  | Issue Date | Maturity Date
|- | ---------------- |  | ---------- | -------------
|$ | 37,500           |  | 2-7-12     | 10-27-12     
|$ | 17,000           |  | 3/19/12    | 12-21-12     
|$ | 13,000           |  | 5/3/12     | 2/7/13       
|$ | 24,000           |  | 6/13/12    | 5/13/12      



In January, 2012, a vendor convertible their
trade account to convertible promissory notes for the amount due them at the time of the note plus future billings, amounting to
$244,988. These notes accrue interest at 8.5% and have the option to convert to common stock at any time by the note holder, at
a conversion price of $0.11 per share. These notes are payable upon demand.

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A number of Company’s convertible notes
contain embedded derivatives wherein their automatic conversion, which is contingent upon a future equity raise, can accelerate
the realization of the expected payout for each note. This feature creates the possibility of a greater than expected return for
the note holder and thus a higher than expected liability for the Company. The value of this feature was estimated for each note
using the probability expected return method, in which the payout of distinct potential early conversion scenarios was discounted
to the present using the expected IRR of the note and compared with the present value of the note if held to maturity. Probabilities
were applied to the value of early conversion in each scenario to arrive at a probability weighted value of the early conversion
feature.



As of June 30, 2012
and December 31, 2011, the fair value of the derivative liability was $97,082and $140,706,
respectively. The changes in fair value for the three month periods ended June 30, 2012 and June 30, 2011 of $37,064 and
$ 122,194 respectively,and for the six month periods ended June 30, 2012 and June 30, 2011 of $178,126 and 1$60,454 respectively,
and the period from January 14, 2008 (date of inception) to June 30, 2012 of $85,473 have
been recorded in the accompanying statements of operations as a component of other income (expense).



In connection with certain liabilities incurred in connection with
our June 5, 2008 acquisition of the intellectual property rights to the MANF protein compound, we have an outstanding Promissory
Note issued as follows:



|Note Payable To:    |   | Amount  |  | Due Date
|------------------- | - | ------- |  | --------
|Neurotrophics, Inc. | $ | 222,083 |  | 3-5-15  



This note bears interest at the rate of 2% per annum.



On October 4, 2011 we received short-term financing in the amount
of $150,000 under a Promissory Note issued to Dr. Samuel Herschkowitz as follows:



|Note Payable To:    |   | Amount  |  | Due Date
|------------------- | - | ------- |  | --------
|Samuel Herschkowitz | $ | 150,000 |  | 4-1-12  



The balance due under the Note
bears interest at the rate of twenty percent (20%) per year. In addition, in conjunction with the Promissory Note, Dr.
Herschkowitz received an equity bonus of 2,054,794 shares of common stock. As security for our obligations under the note, we
have pledged in favor of the note holder 8,219,178 shares of common stock. We are currently in default under this note. In
April 2012, a third party acquired the note becoming the new note holder. As part of this transaction the 8,219,178 shares of
common stock were returned to the company. Other terms of the new note are being negotiated.



We will need to raise significant financing in order to continue
to operate and execute our business plan. It will cost roughly $1,000,000 to complete our next major milestone. Additionally, we
will need ongoing operating capital to retain employees, pay creditors and ongoing expenses, as well as execute non-core aspects
of our business plan, which management believes will yield significant value to its shareholders.



The success of our business plan during the next 12 months and beyond
is contingent upon us generating sufficient revenue to cover our costs of operations, or upon us obtaining additional financing.
Should our revenues b e less than anticipated, or should our expenses be greater than anticipated, then we may seek to obtain business
capital through the use of private equity fundraising or shareholders loans. We do not have any formal commitments or arrangements
for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing
will be available to us on acceptable terms, or at all. Similarly, there can be no assurance that we will be able to generate sufficient
revenue to cover the costs of our business operations. We will use all commercially-reasonable efforts at its disposal to raise
sufficient capital to run its operations on a go forward basis.

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We were founded in 2008 to advance novel therapies for human disease. We were seeking to raise capital
from new investors when the financial-collapse of 2008 resulted in a prolonged depression. This financial collapse dramatically
altered the financing environment for biotechnology companies seeking to access the capital markets to obtain financing to advance
their research and development activities. The trend of difficult access to the capital markets has continued through to the current
fundraising environment and has been evidenced by reduced pricing and lower capital raises in many biotechnology-related initial
public offerings.



We have been successful in raising convertible note financing from
various individual investors over the last several months. This is an encouraging trend that we expect to continue as we continue
operations. We will use commercially-reasonable efforts going forward to raise equity financing and other financing instruments
to raise sufficient capital to continue operations and meet our major milestones.



Off Balance Sheet Arrangements



Pursuant to the terms of certain contractual agreements, we have
agreed to compensate certain vendors for services rendered contingent upon the occurrence of future financings. These transactions
are described more fully under Liquidity and Capital Resources, below, and in Note 9 to our financial statements. These obligations
are not reflected in our accounts and represent an off balance sheet liability contingent upon achieving the respective funding
levels specified in the relevant agreements.



Going Concern



We are a development stage company engaged in biotechnology research
and development. We have suffered recurring losses from operations since inception, have a working capital deficit, and have generated
negative cash flow from operations. For these reasons, our auditors have raised a substantial doubt about our ability to continue
as a going concern.



Critical Accounting Policies



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



Certain Significant Risks and Uncertainties -
The Company participates in a global dynamic highly competitive industry and believes that changes in any of the following areas
could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: ability
to obtain future financing; advances and trends in new technologies and industry standards; regulatory approval and market acceptance
of the Company’s products; development of the necessary manufacturing capabilities and to obtain adequate resources of necessary
materials; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual
property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary
to support its growth.



Concentration of Credit Risk -
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents.
The Company places its cash and cash equivalents with domestic financial institutions that are federally insured within statutory
limits.



Cash and Cash Equivalents - The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

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Property and Equipment - Property and equipment are stated at cost and are depreciated on a straight-line basis over
their estimated useful lives as follows:



|Equipment              |  |  | 3 years | 
|---------------------- |  |  | ------- | 
|Computer equipment     |  |  | 2 years | 
|Furniture and fixtures |  |  | 3 years | 





The Company reviews the carrying value of long-lived assets, including
property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value may not be
fully recoverable. There have been no such impairments.



Revenue Recognition -The
Company recognizes revenue when the earnings process is complete, which under SEC Staff Accounting Bulletin No. 104, Topic
No. 13, "Revenue Recognition" ("SAB 104"), is when revenue is realized or realizable and earned, there
is persuasive evidence a revenue arrangement exists, delivery of goods or services has occurred, the sales price is fixed or determinable,
and collectability is reasonably assured.



The Company accounts for milestones related
to research and development activities in accordance with the milestone method of revenue recognition of Accounting Standards Codification
Topic 605-28, under which consideration contingent on the achievement of a substantive milestone is recognized in its entirety
in the period when the milestone is achieved. A milestone is considered to be substantive when it meets all of the following criteria:
the milestone is commensurate with either the performance required to achieve the milestone or the enhancement of the value of
the delivered items resulting from the performance required to achieve the milestone; the milestone relates solely to past performance;
and, the milestone is reasonable relative to all of the deliverables and payment terms within the agreement.



Research and Development Expenditures -
Research and development expenses consist of personnel costs, including salaries, benefits and stock-based compensation, materials
and supplies, licenses and fees, and overhead allocations consisting of various administrative and facilities related costs. Research
and development activities are also separated into three main categories: research, clinical development, and biotechnology development.
Research costs typically consist of preclinical and toxicology costs. Clinical development costs include costs for Phase 1 and
2 clinical studies. Biotechnology development costs consist of expenses incurred in connection with product formulation and analysis.
The Company charges research and development costs, including clinical study costs, to expense when incurred, consistent with the
guidance of FASB ASC 730, Research and Development.



Stock-Based Compensation - Stock-based compensation
is measured at the grant date based on the fair value of the award. The fair value of the award that is ultimately expected to
vest is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.
The expense recognized for the portion of the award that is expected to vest has been reduced by an estimated forfeiture rate.
The forfeiture rate is determined at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ
from those estimates.



Expected Term — The expected term of options represents
the period that the Company’s stock-based awards are expected to be outstanding based on the simplified method provided in
Staff Accounting Bulletin No. 110, Certain Assumptions Used in Valuation Methods.



Expected Volatility — As the Company has limited
stock price history, expected volatility has been estimated based on the volatilities of similar companies that are publicly traded.



Risk-Free Interest Rate — The Company bases the
risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.



Expected Dividend — The Company has never declared
or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected
dividend yield of zero in the valuation model.



The Company recognizes fair value of stock options granted to nonemployees
as stock-based compensation expense over the period in which the related services are received.

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Table of Contents


Stock Warrants - Certain warrants to purchase the Company’s
stock are classified as liabilities in the balance sheets. These warrants are subject to remeasurement at each balance sheet date,
and any change in fair value is recognized as a component of other income (expense). Other warrants to purchase the Company’s
convertible preferred stock are classified as equity in the balance sheet and are not subject to remeasurement.



Derivative Liability - Certain
derivatives embedded within convertible promissory notes have been bifurcated and recorded as derivatives in the balance sheets
because they are not clearly and closely related. These derivatives are subject to remeasurement at each balance sheet date, and
any change in fair value is recognized as a component of other income (expense).



Income Taxes - The Company accounts
for income taxes using the liability method whereby deferred tax asset and liability account balances are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce
deferred tax assets to their estimated realizable value.



In evaluating the ability to recover its deferred
income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing
tax planning, and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines
that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would
make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, in the event that all
or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance
would be charged to earnings in the period such determination is made.



The Company recognizes the tax benefit from
uncertain tax positions in accordance with GAAP, which prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s tax return.



Fair Value of Financial Instruments -The
carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable, and accrued liabilities approximates
their value due to the short-term maturities of such instruments.



Net income (loss) per share attributable to Amaratus common stockholders



Basic net income (loss) per share attributable to Amarantus common
stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of
shares outstanding for the period. In accordance with FASB ASC 260, because there was a net loss for the period, zero incremental
shares were included for diluted earnings per share because the effect would be antidilutive .



Recently Issued Accounting Pronouncements



Our management has considered all recent accounting pronouncements
issued since the last audit of our financial statements. Our management believes that these recent pronouncements will not have
a material effect on our financial statements.



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Item 3.	 Quantitative and Qualitative Disclosures About Market
Risk



A smaller reporting company is not required to provide the information
required by this Item.



Item 4.	 Controls and Procedures



We carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30,
2012.  This evaluation was carried out under the supervision and with the participation of Gerald Commissiong, our Chief
Executive Officer, and Marc E. Faerber, our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures were ineffective as of the
end of the period covered, due to the following material weaknesses which are indicative of many small companies with small staff:
(i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting
and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles
and Securities and Exchange Commission guidelines.  Management anticipates that such disclosure controls and procedures
will not be effective until the material weaknesses are remediated.  We will be unable to remediate the material weakness
in our disclosure controls and procedures until we can hire additional employees. As of June 30, 2012, we did not have sufficient
funds to hire another employee. There have been no changes in our internal controls over financial reporting during the quarter
ended June 30, 2012.



Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act
are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed
in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer
and Chief Financial Officer, to allow timely decisions regarding required disclosure.



Limitations on the Effectiveness of Internal Controls



Our management does not expect that our disclosure
controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. 
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because
of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of
two or more people, or by management override of the internal control. The design of any system of controls also is based in part
upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions,
or the degree of compliance with the policies or procedures may deteriorate.

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PART II - OTHER INFORMATION



Item 1.	 Legal Proceedings



On January 6, 2012 the Company was served a summons regarding the
filing of a lawsuit (Complaint for Breach of Contract, Specific Performance and Common Counts) against the Company by a former
consultant to the Company, Peter Freeman v. Amarantus Biosciences, Inc. The Company intends to defend ourselves vigorously. The
Company is unable to predict the likelihood of an unfavorable outcome or estimate its potential liability, if any, and no provision
has been made in its financial statements for this matter.



In addition the Company is in default on payment of certain Convertible
Notes that were due as of December 6, 2011 and is also late with regard to making payments to various trade account vendors for
goods and services received, of which some accounts are currently with collection agencies and could possibly result in lawsuits
with the Company.



Power3 Medical Products, Inc. (“Power3”) entered into
a License Agreement with Amarantus BioSciences, Inc. (“our”, “us”, or “we”) on January
16, 2012 to, among other things, license the NuroPro diagnostic test for Parkinson's disease to us (the "Agreement").
As part of the Agreement, we were granted an option to acquire certain intellectual property, and a right of first refusal to acquire
certain intellectual property (collectively the "IP").  We recently found out the Agreement was entered into at
a time when Power3 may not have had the authority to enter into the Agreement.



On June 26th, 2012, we became aware of a previously undisclosed
legal dispute between Power3 and NeoGenomics, Inc. ("NeoGenomics") where certain intellectual property assets of Power3
were placed into receivership in September 2011 in the State of Texas as a result of an unpaid note to NeoGenomics. On June
15, 2012 Power3 filed for Chapter 7 bankruptcy.  However, on June 7th, 2012, the receiver sold, among other things, Power3's
IP to NeoGenomics.  Although this sale may be considered a preference in the Power3 Bankruptcy, at this time NeoGenomics may
have title to certain intellectual property of Power3.



On April 12, 2012 our representatives appeared at
bankruptcy related meeting of creditors of Power3.   Ira Goldknopf, the President of Power3,
testified for Power3.  In the meeting it was discussed, among other things, that (i) Power3 had not transferred
any of ourstock, other than providing $25,000 worth of our stock to its attorney; (ii) that another entity may
own a portion of the IP; (iii) NeoGenomics was not a secured creditor when they credit bid their claim in the receivership;
and (iv) the status of the license and ownership of the IP is still in question.



In August, 2012, the Company learned that the IP now belongs to
the bankruptcy estate, and the Trustee has provided notice to the Patent and Trademark Office of the change in ownership. Further
the Trustee willing to work with Amarantus with complying with Power 3’s original agreement with Amarantus, and has put forth
a proposal which the Company in reviewing.



We are continuing to review our legal options with respect
to the material misrepresentations made by the officers of Power3 and our rights in the IP.



On April 17, 2012 the Company was served a summons regarding the
filing of a lawsuit (Complaint for Breach of Contract, Account Stated, and Reasonable Value) against the Company by Trinet HR,
a former payroll services provider to the Company, Trinet HR v. Amarantus Biosciences, Inc. The suit is for a total of $12,196
allegedly owed for services previously provided to the Company.



Item 1A: Risk Factors



A smaller reporting company is not required to provide the information
required by this Item.



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



None

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Item 3. Defaults upon Senior Securities



None



Item 4. Mine Safety Disclosures



None



Item 5. Other Information







In July, 2012, our
Board of Directors designated 2,500,000 shares of the 10,000,000 shares of our authorized Preferred Stock as Series B Convertible
Preferred Stock (“Series B”). The Series B stock has a par value of $0.001 per share, has no liquidation rights or
rights to a dividend, and has a conversion feature of fifty shares of Common stock for each share of Series B, Series B cannot
convert to Common until the second annual anniversary of the designation of the Series B Preferred, or a change in control occurs
(defined as a 50% change in the voting power of the outstanding shares occurs).The holders of Series B shall be entitled
to vote along with the Common Shares, at the same rate as if the Series B shares have been fully converted into Common Shares.



Further, in July, 2012, our Board of Directors adopted a new stock plan, the Management, Employee, Advisor
and Director Preferred Stock Option Plan – 2012 Series B Convertible Preferred Stock Plan. The purposes of this Plan are
to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive
to Management, Employees, Advisors and Directors and to promote the success of our business. Certain current and former Management,
Employees, Advisors and Directors were awarded a total of 1,250,000 options to purchase Series B Preferred shares on July 15th,
2012.



Item 6. Exhibits



|Exhibit Number | Description of Exhibit                                                                                                                                                       
|-------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            | Certificate Of Designation                                                                                                                                                   
|31.1           | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|31.2           | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                            
|32.1           | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|99.1           | Management, Employee, Advisor and Director Preferred Stock Option Plan – 2012 Series B Convertible Preferred Stock Plan                                                      



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|      | Amarantus BioSciences, Inc.                                                                                                                                                                                          
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                      
|Date: | August 20, 2012                                                                                                                                                                                                      
|      |                                                                                                                                                                                                                      
|      | By: /s/ Gerald E. Commissiong
        Gerald E. Commissiong
        Title:Chief Executive Officer and Director
        
        By: /s/ Marc E. Faerber
        Marc E. Faerber
        Title:Chief Financial Officer





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