ENTEST GROUP, INC. - Quarter Report: 2019 November (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended November 30, 2019

or

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

	For the transition period from _________________ to _________________

Commission File Number 333-154989

ENTEST GROUP, INC.

(Exact name of registrant as specified in its charter)

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

No. 911 Bao’an Book City

Xinqiao Street Central Road, Bao’an District, Shenzhen, China

(Address of principal executive offices)

(Zip Code)

86 13709631109

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). [X] Yes [ ] No

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

49,171,083 shares of common stock as of January 20, 2020

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		4

Item 1.	Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		6
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		9
Item 4.	Controls and Procedures		9

PART II - OTHER INFORMATION			10

Item 1.	Legal Proceedings		10
Item 1A.	Risk Factors		10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		10
Item 3.	Defaults Upon Senior Securities		10
Item 4.	Mine Safety Disclosures		11
Item 5.	Other Information		11
Item 6.	Exhibits		11

SIGNATURES			12

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ENTEST GROUP, INC.

INDEX TO UNAUDITED INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED NOVEMBER 30, 2019

		Page

Balance Sheets		F-2

Statements of Operations		F-3

Statements of Stockholders’ Deficit		F-4

Statements of Cash Flows		F-6

Notes to Financial Statements		F-7

ENTEST GROUP, INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	November 30,			August 31,
	2019			2019
Assets
Current assets
Cash	$	—		$	—
Total current assets		—			—

Total Assets	$	—		$	—

Liabilities And Stockholders' Deficit
Current liabilities
Accounts payable and accrued expenses	$	12,371		$	11,474
Due to related party		38,292			21,197
Total current liabilities		50,663			32,671

Total liabilities		50,663			32,671

Stockholders' Deficit
Series AA Preferred stock: 100,000 shares authorized; $0.0001 par value 667 shares issued and outstanding		—			—
Series AAA Preferred stock: 300,000 shares authorized; $0.0001 par value 534 shares issued and outstanding		—			—
Series B Preferred stock: 4,400,000 shares authorized; $0.0001 par value 728,073 shares issued and outstanding		73			73
Non-Voting Convertible Preferred stock: 3,000,000 shares authorized; $1.00 par value; 1,001,533 shares issued and outstanding		1,001,533			1,001,533
Common stock: 500,000,000 shares authorized; $0.0001 par value 49,171,083 shares issued and outstanding		4,917			4,917
Additional paid in capital		9,025,314			9,025,314
Accumulated deficit		(10,082,500	)		(10,064,508	)
Total stockholders' deficit		(50,663	)		(32,671	)
Total Liabilities and Stockholder's Deficit		—			—

The accompanying Notes are an integral part of these unaudited interim financial statements.

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ENTEST GROUP, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)


		For the Three Months Ended November 30,
		2019			2018

Revenue	$	—		$	—

Operating expenses:
Professional fees		17,992			2,439
General and administration		—			11,615
Total operating expenses		17,992			14,054

Operating loss		(17,992	)		(14,054	)

Other income (expense):
Rental income		—			28,000
Gain on write off of accounts payable		—			23,629
Gain on disposition of Zander		—			188,589
Refund on amount previously paid		—			1,289
Loss on disposition Entest Biomedical		—			(6,947	)
Interest expense		—			(495	)
Total other income (expense)		—			234,065

Net income (loss)	$	(17,992	)	$	220,011

Basic income (loss) per common share	$	(0.00	)	$	0.00
Diluted income (loss) per common share	$	(0.00	)	$	0.00

Weighted average number of common shares outstanding
Basic		49,171,083			49,171,083
Diluted		49,171,083			179,240,304

The accompanying Notes are an integral part of these unaudited interim financial statements.

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ENTEST GROUP, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)

For the Three Months Ended November 30, 2019

													Non-Voting
													Convertible
	Series AA Preferred				Series AAA Preferred				Series B Preferred				Preferred Convertible Preferred				Common Stock				Additional
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Paid In Capital		Accumulated Deficit			Total
Balance August 31, 2019		667	$	—		534	$	—		728,073	$	73		1,001,533	$	1,001,533		49,171,083	$	4,917	$	9,025,314	$	(10,064,508	)	$	(32,671	)

Net loss for the period		—		—		—		—		—		—		—		—		—		—		—		(17,992	)		(17,992	)
Balance November 30, 2019		667	$	—		534	$	—		728,073	$	73		1,001,533	$	1,001,533		49,171,083	$	4,917	$	9,025,314	$	(10,082,500	)	$	(50,663	)

F-4

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For the Three Months Ended November 30, 2018

													Non-Voting Convertible
	Series AA Preferred				Series AAA Preferred				Series B Preferred				Preferred Convertible Preferred				Common Stock				Additional Paid In		Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance - August 31, 2018		667	$	—		534	$	—		728,009	$	73		1,001,533	$	1,001,533		49,171,083	$	4,917	$	9,003,892	$	(10,256,126	)	$	(245,711	)

Contributed Capital		—		—		—		—		—		—		—		—		—		—		21,422		—			21,422
Net income for the period		—		—		—		—		—		—		—		—		—		—		—		220,011			220,011
Balance - November 30, 2018		667	$	0		534	$	—		728,009	$	73		1,001,533	$	1,001,533		49,171,083	$	4,917	$	9,025,314	$	(10,036,115	)	$	(4,278	)

The accompanying Notes are an integral part of these unaudited interim financial statements.

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ENTEST GROUP, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

		For the
		Three Months Ended
		November 30,
		2019		2018

Cash Flows from Operating Activities:
Net income (loss)	$	(17,992	)	$	220,011
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Loss on disposition Entest Biomedical		—			6,947
Gain on disposition of Zander		—			(188,589	)
Net cash received for divestiture of Entest Biomedical		—			1,937
Gain on write off of accounts payable		—			(23,629	)
Changes in operating assets and liabilities:
Increase in accrued rental income receivable		—			(12,000	)
Increase in accounts payable and accrued expenses		897			1,180
Decrease in unearned rental income		—			(7,730	)
Net cash used in operating activities		(17,095	)		(1,873	)

Cash Flows from Financing Activities:
Contributed capital		—			1,821
Repayment of bank overdraft		—			(66	)
Proceeds from related parties		17,095			—
Net cash provided by financing activities		17,095			1,755

Net increase (decrease) in cash		—			(118	)
Cash at Beginning of Period		—			267
Cash at End of Period	$	—		$	149

Supplemental Cash Flow Information:
Cash paid for interest	$	—		$	—
Cash paid for taxes	$	—		$	—

Supplemental Disclosure of Non-Cash Financing Activity:
Debt satisfied through contributed capital	$	—		$	19,601

The accompanying Notes are an integral part of these unaudited interim financial statements.

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ENTEST GROUP, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION, DESCRIPTION OF BUSINESS, AND GOING CONCERN

Entest Group, Inc. (the “Company” or “Entest”) was incorporated in the State of Nevada on September 24, 2008 as JB Clothing Corporation. On July 12, 2009, the Company changed its name to EntestBioMedical, Inc. On February 12, 2018 the Company changed its name from EntestBioMedical, Inc. to Entest Group, Inc.

The Company’s current business strategy is to acquire an operating company seeking the perceived advantages of being a publicly held corporation. No assurance can be given that such an acquisition shall occur or, if such an acquisition were to occur, it would occur on terms and conditions beneficial to the Company or its shareholders.

Change of Control

On November 15, 2018, David Koos, Regen BioPharma Inc., Bostonia Partners Inc., Sherman Family Trust, Dunhill Ross Partners Inc., Bio-Technology Partners Business Trust (collectively, the “Sellers”) and Peiwen Yu (the “Buyer”) entered into a stock purchase agreement (the “SPA”), pursuant to which the Sellers agreed to sell and the Buyer agreed to purchase an aggregate of 23,733,334 shares of common stock, 667 shares of Series AA preferred stock, 534 shares of Series AAA preferred stock and 1,001,533 shares of Non-Voting Preferred Stock of Entest from the Seller for an aggregate purchase price of $325,000. The closing of the transactions contemplated by the SPA occurred on November 27, 2018. The purchase price was paid out of the Buyer’s personal funds.

As of the date of the transaction, Entest had 49,170,472 shares of common stock, 728,073 shares of Series B Preferred Stock, 667 shares of Series AA Preferred Stock, 534 shares of Series AAA Preferred Stock and 1,001,533 shares of Non-Voting Convertible Preferred Stock outstanding. The securities purchased pursuant to the SPA represent 48.3% of the outstanding shares of common stock, 90% of the outstanding shares of common stock assuming the conversion of the Non-Voting Convertible Preferred Stock on the execution date of the SPA and 94% of the voting power of Entest.

As contemplated by the SPA, in November 2018, David Koos resigned as Chairman, Chief Executive Officer, President, Acting Chief Financial Officer and Secretary of Entest and Peiwen Yu became as a director, Chief Executive Officer and President of Entest. Pursuant to the SPA, in November 2018, Mr. Koos also resigned as a director of the Company upon compliance by Entest with information statement delivery requirements pursuant to Rule 14f-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Going Concern and Liquidity Considerations

The accompanying unaudited interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any revenues since the change of control and disposition of its subsidiaries and has an accumulated deficit of $10,082,500. These factors among others raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due.

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors.

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of November 30, 2019 and the results of operations, statements of changes in stockholders’ deficit and cash flows for the periods presented. The results of operations for the period ended November 30, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited interim financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2019 filed with the Securities and Exchange (the “SEC”) on December 20, 2019.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company had $0 in cash and cash equivalents as of both November 30, 2019 and August 31, 2019.

Fair Value Measurements

As defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The Company's financial instruments consist of cash, prepaid expense, accounts payable, and due to related parties. The carrying amounts of these financial instruments approximate fair value due to either length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.

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Basic and Diluted Net Income (Loss) per Common Share

Management computes basic and diluted earnings (loss) per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.

The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings per share ("EPS") calculations.

	Three Months Ended
	November 30,
	2019			2018
Numerator:
Net income (loss)	$	(17,992	)	$	220,011
Earnings allocated to participating securities		—			—
Income (loss) available to common stockholders	$	(17,992	)	$	220,011

Denominator:
Weighted-average shares of common stock		49,171,083			49,171,083
Dilutive effect of convertible instruments		—			130,069,221
Diluted weighted-average of common stock		49,171,083			179,240,304

Net income (loss) per common share:
Basic	$	(0.00	)	$	0.00
Diluted	$	(0.00	)	$	0.00

For the three months ended November 30, 2019, the convertible instruments are anti-dilutive and therefore, have been excluded from earnings (loss) per share.

For the three months ended November 30, 2018, diluted earnings per share is calculated using net income available to common stockholders divided by the diluted weighted average number of common shares outstanding during each period determined using the if-converted method.

Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation.The reclassification has no effect onpreviously reported results of operations or cash flows.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued and their potential effect on our financial statements. The Company's management believes that these recent pronouncements will not have a material effect on the Company's unaudited condensed financial statements.

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NOTE 3. RELATED PARTY TRANSACTIONS

During the period ended November 30, 2019, the Company’s sole officer advanced to the Company an amount of $17,095 for the payment of operating expenses on behalf of the Company. As of November 30, 2019 and August 31, 2019, the Company was obligated to the officer, for an unsecured, non-interest bearing demand loan with a balance of $38,292 and $21,197, respectively.

NOTE 4. STOCKHOLDERS’ EQUITY

Authorized Stock

The Company is authorized to issue an aggregate of 500,000,000 shares of common stock with a par value of $0.0001, 5,000,000 shares of preferred stock with a par value of $0.0001, and 3,000,000 shares of non-voting convertible preferred stock with a par value of $1.00. Each share of common stock entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.

Series AA Preferred Stock

The Company is authorized to issue 100,000 shares of Series AA Preferred Stock at a par value of $0.0001 per share.As of November 30, 2019, and August 31, 2019, 667 shares of Series AA Preferred Stock were issued and outstanding.

Series B Preferred Stock

The Company is authorized to issue 4,400,000 shares of Series B Preferred Stock at a par value of $0.0001 per share.As of November 30, 2019, and August 31, 2019, 728,073 shares of Series B Preferred Stock were issued and outstanding.

Series AAA Preferred Stock

The Company is authorized to issue 300,000 shares of Series AAA Preferred Stock at a par value of $0.0001 per share.As of November 30, 2019, and August 31, 2019, 534 shares of Series AAA Preferred Stock were issued and outstanding.

Non-Voting Convertible Preferred Stock

The Company is authorized to issue 3,000,000 shares of Non-Voting Convertible Preferred Stock at a par value of $1.00 per share.

On October 2, 2018, the Company amended Article 4 of its Articles of Incorporation to change the conversion features of the Company’s Non -Voting Convertible Preferred Stock. The Conversion Price changed from being equal to the greater of $0.01 per share or seventy percent (70%) of the lowest closing bid price of its shares of common stock (the “Closing Price”) on its principal trading market or exchange for the five (5) trading days immediately preceding written receipt by the corporation of the holder’s intent to convert to being equal to the greater of (i) $0.001 per share and (ii) seventy percent (70%) of the lowest Closing Price for the five (5) trading days immediately preceding written receipt by the corporation of the holder’s intent to convert.

As of November 30, 2019, and August 31, 2019, 1,001,533 shares of Non-Voting Convertible Preferred Stock were issued and outstanding.

Common Shares

The Company is authorized to issue 500,000,000 shares of Common Stock at a par value of $0.0001 per share.As of November 30, 2019, and August 31, 2019, 49,171,083 shares of Common Stock were issued and outstanding.

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NOTE 5. DECONSOLIDATION OF ZANDER THERAPEUTICS, INC.

On June 18, 2015,Entest established Zander Therapeutics, Inc. (“Zander”), a then wholly owned subsidiary.

On May 5, 2018, The Company declared the distribution on a pro rata basis as a dividend in kind of 3,000,000 of the common shares of Zander Therapeutics, Inc., par value $0.0001 to:

(a) Holders of record of the outstanding common shares of the Company as of the record date, which is May 30, 2018.

(b) Holders of record of the shares of any outstanding series of the preferred shares of the Company as of the record date, which is May 30, 2018.

Shareholders of the Company shall receive one (1) share of common stock of Zander Therapeutics, Inc. for each 17 shares of the Company’s common and/or preferred stock held as of the record date for such dividend. The distribution of the 3,000,000 common shares of Zander Therapeutics, Inc. to the common and preferred shareholders of the Company occurred on June 11, 2018 (“Distribution Date”).

As a result of the payment of the abovementioned property dividend, the Company’s percentage of ownership of Zander fell below 50% resulting in the deconsolidation of Zander as of the Distribution Date. As of the Distribution Date, all assets and liabilities attributable to Zander were derecognized by the Company. The Company recognized a $10,034 gain as a result of the deconsolidation. The Property dividend may be deemed to have occurred with a related party as the recipients were shareholders of Entest, including the then Chairman and Chief Executive Officer of Entest and Regen Biopharma, Inc. which was a company under common control with Entest.

The Company’s remaining shares of Zander, which consisted of 5,000,000 shares of Zander’s Series M Preferred Stock (“Zander M Stock”) were accounted for under Equity Method as of the Distribution Date until November 29, 2018. The Zander M Stock was carried a Fair Value and the carrying value was increased by the Company’s proportionate share of earnings of Zander and decreased by cash dividends paid by Zander as well as the Company’s proportionate share of losses of Zander up to the carrying value. As of August 31, 2018, the carrying value of the Zander M Stock was decreased by the Company’s proportionate share of the losses of Zander, amounted to $0. As of August 31, 2018, Entest beneficially owned 34.82% of the share equity of Zander.

During the quarter ended November 30, 2018, the Company divested itself of the Zander M Stock as satisfaction of $179,318 of interest accrued but unpaid owed by the Company and $9,270 of unearned rental payments made to the Company. As the Zander M Stock had a carrying value of $0, the Company recognized a gain of $188,589 on the disposition during the three months ended November 30, 2018.

NOTE 6. DISPOSITION OF ENTEST BIOMEDICAL, INC., A CALIFORNIA CORPORATION

During the quarter ended November 30, 2018 the Company divested itself of Entest Biomedical, Inc., a California corporation and wholly owned subsidiary, for consideration consisting of $2,000 paid by an entity controlled by the Company’s then Chairman and Chief Executive Officer, David R. Koos, as full consideration for Entest Biomedical Inc. as well as any and all furniture, fixtures and equipment owned by the Company which has a carrying amount of $0.

The Company recognized a loss of $6,947 on the disposition based on the difference between the net assets of Entest Biomedical, Inc. and consideration received.

Cash derecognized in divestiture	$	(63	)
Accrued rent receivable derecognized in divestiture	$	(12,000	)
Liabilities derecognized in divestiture	$	3,116

Consideration received in divestiture	$	2,000
Loss recognized in divestiture	$	(6,947	)

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NOTE 7. INCOME TAXES

The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

The income tax provision for the periods ended November30, 2019 and 2018, consists of the following:

	November 30,			November 30,
	2019			2018
Net income (loss)	$	(17,992	)	$	220,011
Effective tax rate		21	%		21	%
Income tax expense (benefit)		(3,778	)		46,202
Less: valuation allowance		3,778			(46,202	)
Income tax expense (benefit)	$	—		$	—

Net deferred tax assets consist of the following components as of November 30, 2019 and August 31, 2019:

	November 30,			August 31,
	2019			2019
Net operating loss carryforwards	$	9,741		$	5,963
Valuation allowance		(9,741	)		(5,963	)
Net deferred tax asset	$	—		$	—

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law including lowering the corporate tax rate from 34% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets and liabilities recorded on our balance sheet. The Company has completed the accounting for the effects of the Act during the period ended May 31, 2019. Given that current deferred tax assets are offset by a full valuation allowance, these changes will have no impact on the balance sheet.

At November 30, 2019and August 31, 2019, the Company had $46,385 and $28,393 respectively of the U.S. net operating losses (the “U.S. NOLs”), which begin to expire beginning in 2029. NOLs generated in tax years prior to July 31, 2018, can be carryforward for twenty years, whereas NOLs generated after July 31, 2018 can be carryforward indefinitely.

The NOL carry forwards are subject to certain limitations due to the change in control of the Company pursuant to Internal Revenue Code Section 382. The Company will not able to carryover the NOL generated before November 27, 2018 to offset future income due to the change of control in November 2018 (see Note 1).

NOTE 8. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date which the financial statements were available to be issued. All subsequent events requiring recognition as of November 30, 2019 have been incorporated into these financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”

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

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Entest Group, Inc., unless otherwise indicated.

General Overview

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

On July 10, 2009 we abandoned our efforts in the field of active/leisure fashion design clothing when we acquired 100% of the share capital of EntestBioMedical, Inc., a California corporation, (“Entest CA”) from Bio-Matrix Scientific Group, Inc. (“BMSN”) for consideration consisting of 10,000,000 shares of the common stock of the Company and the cancellation of 10,000,000 shares of the Company owned and held by Mr. Rick Plote. On July 12, 2009, the Company changed its name to EntestBioMedical, Inc.

On June 18, 2015 Entest established Zander Therapeutics, Inc., a then wholly owned subsidiary. Zander was established to engage primarily in the development and commercialization of veterinary medical therapies which we intend to license from other entities as well as develop internally

The Company changed its name to Entest Group, Inc. on February 12, 2018.

On May 5, 2018, the Company declared the distribution on a pro rata basis as a dividend in kind of 3,000,000 of the common shares of Zander Therapeutics, Inc., par value $0.0001.

Shareholders of the Company received one (1) common share of Zander Therapeutics, Inc. for each 17 common and/or preferred shares of the Company held as of the record date. The distribution of the 3,000,000 common shares of Zander Therapeutics, Inc. to the common and preferred shareholders of the Company occurred on June 11, 2018.

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As a result of the payment of the abovementioned property dividend, the Company’s percentage of ownership of Zander fell below 50% resulting in the deconsolidation of Zander and during the quarter ended November 30, 2018, the Company divested itself of its Zander stock.

On November 15, 2018, David Koos, Regen BioPharma Inc., Bostonia Partners Inc., Sherman Family Trust, Dunhill Ross Partners Inc., Bio-Technology Partners Business Trust (collectively, the “Sellers”) and Peiwen Yu (the “Buyer”) entered into a stock purchase agreement (the “SPA”), pursuant to which the Sellers agreed to sell and the Buyer agreed to purchase an aggregate of 23,733,334 shares of common stock, 667 shares of Series AA preferred stock, 534 shares of Series AAA preferred stock and 1,001,533 shares of Non-Voting Preferred Stock of Entest from the Seller for an aggregate purchase price of $325,000. The closing of the transactions contemplated by the SPA occurred on November 27, 2018.

As contemplated by the SPA, in November 2018, David Koos resigned as Chairman, Chief Executive Officer, President, Acting Chief Financial Officer and Secretary of Entest and Peiwen Yu became as a director, Chief Executive Officer and President of Entest.

Our principal executive offices are located at No. 911 Bao’an Book City, Xinqiao Street Central Road, Bao’an District, Shenzhen, China. Our telephone number is 86137 0963 1109. We do not have a corporate website.

Currently we do not have any subsidiaries.

We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.

Our Current Business

Our company currently does not have any operations and has not actively conducted any operations for the quarter ended November 30, 2019. Our company’s business plan for the next 12 months and beyond such time is to seek new business opportunities or to engage in a business combination with an unidentified company. The analysis of new business opportunities will be undertaken by or under the supervision of our company’s management. As of the date of this filing, our company has not entered into any definitive agreement with any party, nor have there been any specific discussions with any potential business combination candidate regarding business opportunities for our company. There can be no assurance that our company will be able to identify and acquire any business entity. Even if we successfully acquire a business entity, there is no assurance that we can generate revenue and become profitable.

Results of Operations

We have not conducted any active operations during the period ended November 30, 2019. No revenue has been generated by us within such period. It is unlikely we will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance. It is management’s assertion that these circumstances raises substantial doubt about our ability to continue as a going concern. Our plan of operation for the next twelve months shall be to locate suitable acquisition candidates.

For the three months ended November 30, 2019 compared with the three months ended November 30, 2018:

The following summary of our results of operations should be read in conjunction with our financial statements for the three months ended November 30, 2019, which are included herein.

Our operating results for the quarter ended November 30, 2019 and the quarter ended November 30, 2018 and the changes between those periods for the respective items are summarized as follows:

	Three Months Ended
	November 30,
	2019			2018			Changes ($)
Operating expenses	$	17,992		$	14,054		$	3,938
Other (income) expense	$	—		$	(234,065	)	$	234,065
Net income (loss)	$	(17,992	)	$	220,011		$	(238,003	)

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We have not conducted any operations during the quarter ended November 30, 2019. Revenues from operations were $0 for the quarter ended November 30, 2019 and 2018.

For the quarter ended November 30, 2019, operating expenses of $17,992, consisted solely of professional fees.

The net loss for the quarter ended November 30, 2019 was $17,992.

For the quarter ended November 30, 2018, operating expenses of $14,054, consisted of professional fees of $2,439 and general and administrative expenses of $11,615.

For the quarter ended November 30, 2018, other income of $234,065 consisted of rental income of $28,000, gain on write off of accounts payable of $23,629, gain on disposition of Zander Therapeutics, Inc. of $188,589, refund on amount previously paid of $1,289, and loss on disposition Entest Biomedical Inc. of $6,947, and interest expenses of $495.

The net income for the quarter ended November 30, 2018, was $220,011.

The decrease in net income for the quarter ended November 30, 2019, as compared to the same quarter ended November 30, 2018, was primarily due to other income realized, from the ceasing of prior operations, disposition of subsidiaries and change of control during the first quarter ended November 30, 2018.

Liquidity and Capital Resources

Working Capital

	November 30, 2019			August 31, 2019			Changes ($)
Cash	$	—		$	—		$	—
Working capital deficit	$	(50,663	)	$	(32,671	)	$	17,992
Total assets	$	—		$	—		$	—
Total liabilities	$	50,663		$	32,671		$	17,992
Total stockholders’ deficit	$	(50,663	)	$	(32,671	)	$	(17,992	)

The increase in working capital deficit was primarily attributed to increase in current liabilities. As of November 30, 2019, our current and total liabilities increased by $17,992, from $32,671, as of August 31, 2019, to $50,663. The increase in liabilities is attributable to the increase in due to related party of $17,095, accounts payable and accrued liabilities of $897. As of November 30, 2019, and August 31, 2019, our current assets were $0.

Cash Flows

	Three Months Ended
	November 30,
	2019			2018			Changes ($)
Cash flows used in operating activities	$	(17,095	)	$	(1,873	)	$	(15,222	)
Cash flows provided by (used in) investing activities	$	—		$	—		$	—
Cash flows provided by financing activities	$	17,095		$	1,755		$	15,340
Net change in cash during period	$	—		$	(118	)	$	118

Cash Flow from Operating Activities

The net cash used in operating activities for the quarter ended November 30, 2019 was attributed to a net loss of $17,992, offset by an increase in accounts payable and accrued liabilities of $897.

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The net cash used in operating activities for the quarter ended November 30, 2018 was attributed to the gain on write off accounts payable of $23,629, gain on disposition of Zander Therapeutics, Inc. of $188,589 and a net change in operating assets and liabilities of $18,550, partially offset by net income $220,011.

Cash Flow from Investing Activities

During the three months ended November 30, 2019 and 2018, our Company did not have any investing activities.

Cash Flow from Financing Activities

The net cash provided by financing activities for the three months ended November 30, 2019 was attributed to the proceed from the related party of $17,095.

The net cash provided by financing activities for the three months ended November 30, 2018 was attributed to the proceeds from contributed capital of $1,821, offset by repayment of bank overdraft of $66.

As of November 30, 2019 and August 31, 2019, we had no cash.

We believe that we will not be able to satisfy our cash requirements over the next twelve months. The Company seeks to acquire an operating company seeking the perceived advantages of being a publicly held corporation. No assurance can be given that such an acquisition shall occur or, if such an acquisition were to occur, it would occur on terms and conditions beneficial to the Company or its shareholders. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan of seeking a combination with a private operating company. In addition, the Company anticipates that it will be dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

Critical Accounting Policies and Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation, stock-based compensation and the valuation allowance relating to the Company’s deferred tax assets.

Off-Balance Sheet Arrangements

As of November 30, 2019, we do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act that is designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit 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 procedure include, without limitations, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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Pursuant to Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of Peiwen Yu, our Principal Executive Officer/Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Our Principal Executive Officer/Principal Financial Officer has concluded that our disclosure controls and procedures were not effective at this reasonable assurance level as of the period covered by this report.

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended November 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.

Item 1A. Risk Factors

As a “smaller reporting company”, we are not required to provide the information required by this Item.

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

None.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Description
(31)		Rule 13a-14 (d)/15d-14d) Certifications
31.1*		Section 302 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(32)		Section 1350 Certifications
32.1*		Section 906 Certification by the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
101*		Interactive Data File
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

____________

* Filed herewith.

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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.

		ENTEST GROUP, INC.
		(Registrant)

Dated: January 21, 2020		/s/ Peiwen Yu
		Peiwen Yu
		President, Chief Executive Officer and Director
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)