Rivulet Media, Inc. - Quarter Report: 2009 June (Form 10-Q)

a6034168.htm

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report under Section 13 or 15 (d) of

Securities Exchange Act of 1934

For Period ended June 30, 2009

Commission File Number 0-32201

BIO-MATRIX SCIENTIFIC GROUP, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	33-0824714
(State of Incorporation)	(I.R.S. Employer Identification No.)

8885 Rehco Road, San Diego, California	92121
(Address of Principal Executive Offices)	(Zip Code)

(619) 398-3517

(Registrant's telephone number, including area code)

Check whether the registrant (1) has filed all reports required to be filed by

Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding

12 months (or for such shorter period that the registrant was required to file

such reports), and (2) has been subject to such filing requirements for the past

90 days. Yes x No o

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

There were 40,284,977 shares of Common Stock outstanding as of June 30, 2009.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARIES

(A Development Stage Company)

Condensed Consolidated Balance Sheets

	as of			as of
	June 30, 2009			September 30, 2008
	(unaudited)			(Audited)
ASSETS

CURRENT ASSETS
Cash	$	30,938		$	8,410
Securities Available for sale					550,000
Pre-paid Expenses		31,400			49,258


Total Current Assets		62,338			607,668

PROPERTY & EQUIPMENT (Net of Accumulated Depreciation)		538,868			538,868

Other Assets		25,507			21,307

TOTAL ASSETS	$	626,713		$	1,167,843

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	169,215		$	89,974
Notes Payable		337,218			111,459
Due to Shareholder		100,000
Accrued Payroll		271,500			150,000
Accrued Payroll taxes		24,782			29,998
Accrued Interest		67,551			24,323
Accrued expenses		5,000			30,000
Current Portion of Convertible Note		503,400
Current Portion of Note to Affiliated party		1,000


Total Current Liabilities		1,479,666			435,754

LONG TERM LIABILITIES
Convertible Note (Less Current Portion)					503,400
Note to Affiliated Party (Less Current Portion)					500,000

TOTAL LIABILITIES		1,479,666			1,439,154

STOCKHOLDERS' EQUITY
Preferred Stock ($.0001 par value)
20,000,000 shares authorized; 5,668,547 and 3,050,478		307			567
issued and outstanding as of September 30, 2008 and June 30, 2009
Series AA Preferred Stock ($0.0001 par value)
100,000 shares authorized, 4852 issued and outstanding
as of September 30, 2008 and June 30, 2009
Series B Preferred($0.0001 par value) 2,000,000 shares authorized, 0 issued and outstanding as of September 30, 2008,		73
725,409 issued and outstanding as of June 30, 2009
Common Stock, ($.0001 par value)
80,000,000 shares authorized; 24,870,869 and 40,284,977
shares issued and outstanding as of September 30, 2008 and June 30, 2008		4,027			2,488
Additional paid in Capital		8,589,935			7,631,648
Contributed Capital		499,000
Accumulated Other Comprehensive Income					50,000
Deficit accumulated during the development stage		(9,946,297	)		(7,956,014	)


Total Stockholders' Equity (Deficit)	$	(852,955	)	$	(271,311	)

TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY	$	626,713		$	1,167,843

The Following Condensed Notes are an integral part of these Financial Statements

Bio Matrix Scientific Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Operations

	3 Months Ended			3 Months Ended			9 Months ended			9 months Ended			From Inception
	June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008			(August 2, 2005)
	(unaudited)			(unaudited)			(unaudited)			(unaudited			through
													June 30, 2009
													(unaudited)
REVENUES

Sales	$	-		$	-		$	-		$	-		$	-

Total Revenues		0			0			0			0			0

COSTS AND EXPENSES
Research and Development		36,248			57,388			116,023			128,763			773,930
General and administrative		267,693			263,372			777,292			714,023			4,192,496
Depreciation and amortization											453			2,668

Consulting and professional fees		85,985			721,814			551,574			1,000,579			4,310,106
Impairment of goodwill & intangibles														34,688


Total Costs and Expenses		389,926			1,042,574			1,444,889			1,843,818			9,313,888



OPERATING LOSS		(389,926	)		(1,042,574	)		(1,444,889	)		(1,843,818	)		(9,313,888	)

OTHER INCOME & (EXPENSES)


Interest Expense		(31,354	)		(20,872	)		(87,401	)		(42,865	)		(174,749	)
Interest Income														306

Other income		30,000						30,000			100			30,100
Loss on sale of Available for Sale Securities								(487,900	)					(487,900	)
Other Expense		(92	)					(92	)					(166	)


Total Other Income & (Expenses)		(1,446	)		(20,872	)		(545,393	)		(42,765	)		(632,409	)


NET INCOME (LOSS)	$	(391,372	)	$	(1,063,446	)	$	(1,990,282	)	$	(1,886,583	)	$	(9,946,297	)



Loss attributable to common shareholders	$	(391,372	)	$	(1,063,446	)	$	(1,990,282	)	$	(1,886,583	)


BASIC AND DILUTED EARNINGS (LOSS) PER SHARE		(0.01	)		(0.04	)		(0.07	)		(0.08	)


WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		34,525,105			23,696,781			29,327,540			23,525,620

The Following Condensed Notes are an integral part of these Financial Statements

Bio Matrix Scientific Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statements of Cash Flow

							From August 2, 2005
							(Inception)
	9 months ended			9 months Ended			through
	June 30, 2009			June 30, 2008			June 30, 2009
	(unaudited)			(unaudited)			(unaudited)



OPERATING ACTIVITIES

Net Income (loss)	$	(1,990,282	)	$	(1,886,583	)	$	(9,946,297	)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:

Depreciation expense					453			2,667
Stock issued for compensation to employees								910,342

Stock issued for services rendered by consultants		369,460			782,432			3,690,674
Stock issued for interest		50,544			17,296			89,112
Changes in operating assets and liabilities:

(Increase) decrease in receivables					(113	)

(Increase) decrease in prepaid expenses		31,896			(60,338	)		(17,362	)

Increase (Decrease) in Accounts Payable		79,241			49,393			169,215
Increase (Decrease) in Accrued Expenses		120,476			158,805			(54,755	)


Net Cash Provided by (Used in) Operating Activities		(1,338,665	)		(938,542	)		(4,726,905	)

INVESTING ACTIVITIES


( Increase) Decrease in Deposits		(4,200	)		1,785			(25,507	)

Purchases of fixed assets					(164,393	)		(541,536	)

(Additions) Decreases to Securities Available for Sale		500,000						0


Net Cash Provided by (Used in) Investing Activities		495,800			(162,608	)		(567,043	)

FINANCING ACTIVITIES


Preferred Stock issued for cash		57			272			339
Common stock issued for cash		158						1,631
Common Stock issued for Debt		216,716						216,716
Common Stock issued for Accrued Salaries		120,000						120,000


Additional paid in Capital		202,701			787,114			1,530,919
Principal borrowings on notes and Convertible Debentures		225,759			(1,330	)		6,679
Increase (Decrease) Due to Shareholder		100,000						100,000

Convertible notes					503,400			503,400
Contributed Capital		499,000						499,000

Increase (Decrease) in Bank Overdraft					(11,534	)		0
Net borrowings from related parties								1,195,196
Increase (Decrease) in Notes from Affilliated party		(499,000	)					1,000



Net Cash Provided by (Used in) Financing Activities		865,391			1,277,922			4,174,880



Net Increase (Decrease) in Cash		22,526			176,772			30,938

Cash at Beginning of Period		8,410			44,110			0



Cash at End of Period	$	30,938		$	220,882		$	30,938


Supplemental Cash Flow Disclosures:
Significant non-cash activities:
Stock issued to cancel debt								2,044,592
Preferred stock issued for stock dividend								108
Total								2,044,700


The Following Condensed Notes are an integral part of these Financial Statements

BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to condensed consolidated Financial Statements

As of June 30, 2009

NOTE 1 - BASIS OF PRESENTATION

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

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated interim financial statements be read in conjunction with the financial statements of the Company for the period ended September 30, 2008 and notes thereto included in the Company's 10-KSB annual report. The Company follows the same accounting policies in the preparation of interim reports.

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

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of $9,946,297 during the period from August 2, 2005 (inception) through June 30, 2009. This condition raises substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management plans to raise additional funds through debt or equity offerings. Management has yet to decide what type of offering the Company will use or how much capital the Company will raise. There is no guarantee that the Company will be able to raise any capital through any type of offerings.

NOTE 3. INCOME TAXES

As of June 30, 2009

Deferred tax assets:
Net operating tax carry forwards	$	3,494,719
Other		-0-
Gross deferred tax assets		3,494,719
Valuation allowance		(3,494,719	)

Net deferred tax assets	$	-0-

As of June 30, 2009 the Company has a Deferred Tax Asset of $3,494,719 completely attributable to net operating loss carry forwards of approximately $9,984,913 ( which expire 20 years from the date the loss was incurred) consisting of

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

(b) $9,946,297 attributable to Bio Matrix Scientific Group, Inc. a Nevada corporation (“BMSG”).

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

NOTE 4. RELATED PARTY TRANSACTION

On May 8, 2009 the Company issued 226,540 of its common shares to Bombardier Pacific Ventures, Inc. (“Bombardier”) , a company controlled by David Koos, our Chairman and CEO, in satisfaction of $11,067 in accrued interest owed to Bombardier by the Company.

On May 8, 2009 the Company issued 1,341,500 of its common shares to Bombardier in satisfaction of $67075 owed to Bombardier by the Company.

As of June 30, 2009, the Company is indebted in the amount of $182,089 to Bombardier. These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.

As of June 30, 2009, the Company is also indebted the amount of $1,000 to Bombardier. This amount, along with accrued simple interest at 10%, is due and payable on November 29, 2009.

As of June 30, 2009, the Company is indebted in the amount of $11, 390 to Bombardier. These amounts are callable at par plus any accrued and unpaid interest by the upon five days written notice, and bears simple interest at 15% maturing, for each amount lent, within one year of issuance.

On June 22, 2009 the Company issued 4,000,000 shares of common stock in satisfaction of $120,000 in accrued salary owed to David Koos.

NOTE 5. STOCK TRANSACTIONS

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

Common Stock

On April 21, 2009 the Company issued 800,000 shares of common stock to Preferred Shareholders in exchange for 800,000 shares of preferred stock.

On April 21, 2009 the Company issued 325,000 shares of common stock for services valued at $42,250

On April 24, 2009 the Company issued 53,496 shares of common stock in satisfaction of $6,196 of accrued interest.

On May 8, 2009 the Company issued 226, 540 of its common shares in satisfaction of $11,067 in accrued interest owed by the Company.

On May 8, 2009 the Company issued 1,341,500 of its common shares in satisfaction of $67075 owed by the Company.

On May 8, 2009 the Company issued 461,200 of its common shares in satisfaction of $6984 owed by the Company.

On May 8, 2009 the Company issued 543,767 of its common shares in satisfaction of $28,116 owed by the Company.

On May 8, 2009 the Company issued 234,460 of its common shares in satisfaction of $11,423 owed by the Company.

On May 8, 2009 the Company issued 543,767 of its common shares in satisfaction of $28,116 owed by the Company.

On May 8, 2009 the Company issued 62,360 of its common shares in satisfaction of $3,118 owed by the Company.

On May 15, 2009 the Company issued 780,000 shares of common stock to Preferred Shareholders in exchange for 780,000 shares of preferred stock.

On June 8, 2009 the Company issued 94,000 shares of common stock to Preferred Shareholders in exchange for 94,000 shares of preferred stock

On June 22, 2009 the Company issued 200,000 shares of common stock for services valued at $14,000

On June 22, 2009 the Company issued 4,000,000 shares of common stock in satisfaction of $120,000 in accrued salary owed to an officer.

NOTE 6. PREFERRED STOCK DIVIDEND

On May 15, 2009 the Company paid a dividend of one Series B Preferred Share for every fifty common or preferred shares held of record as of May 5, 2009.

NOTE 7. STOCKHOLDERS' EQUITY

The stockholders' equity section of the Company contains the following classes of capital stock as of June 30, 2009:

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

3,050,478 Preferred shares issued and outstanding.

4,852 Series AA Preferred Shares issued and outstanding

725,409 Series B Preferred Shares issued and outstanding

· Common stock, $ 0.0001 par value; 80,000,000 shares authorized: 40,284,977 shares issued and outstanding.

NOTE 8. COMMITMENTS AND CONTINGENCIES

On October 7, 2008, a Complaint (“Complaint”) was filed in the District Court of Clark County Nevada against the Company, the Company’s Chairman, and Freedom Environmental Services, Inc. (collectively “Defendants”) by Princeton Research, Inc. (“Princeton”) seeking to recover unspecified General damages in excess of $10,000, unspecified specific damages, an order from the court declaring that the defendants fraudulently conveyed assets from BMXP to the Company, attorney’s fees and cost of suit based on allegations that the sale of Bio Matrix Scientific Group, Inc., a Nevada corporation, to the Company as well as the name change and cessation of operations of Freedom Environmental Services, Inc constitute a breach of contract by , fraudulent conveyance by, and unjust enrichment of the Defendants. On November 11, 2008 the company filed a Motion to Dismiss or in the Alternative an Order requiring Princeton to provide a more definitive statement of the allegations contained in the Complaint. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters. Accordingly, the Company has not recorded any expense or liability for potential amounts associated with these claims.

NOTE 9. CONVERTIBLE DEBENTURES

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

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

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

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

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

the holder may convert the Convertible Debenture, in whole but not in part, into the Company’s common shares at the conversion rate of $0.15 per Share.

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

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

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

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

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

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

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

On January 8, 2008, the Company sold $18,400 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $18,400 to one purchaser.

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

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

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

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

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

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

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

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

On January 18, 2008, the Company sold $100,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $100,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010.

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

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

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

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

Flow Cytometer (4 Color) (BD Facscanto)

Laboratory computer system/also for enrollments/storage tracking

Hematology Analyzer (celldyne 1800)(ABBOTT)

Laminar Flow Hood 4 ft ( Clean hood) (2)

Bench top centrifuges (2) refrigerated

Small equipment (lab set-up)

Microscope

Tube heat sealers (2 ea)

Barcode printer and labeling device

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

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

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

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

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

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

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

NOTE 10. SUBSEQUENT EVENTS

On July 10, 2009 JB Clothing Corporation (“JBCC”) acquired Entest Biomedical, Inc. (“Entest”) a California corporation and wholly owned subsidiary of the Company, from the Company for consideration consisting of (a) the issuance to the Company of 10,000,000 newly issued common shares of JBCC and (b) the return by Mr. Rick Plote of 10,000,000 shares of JBCC’s common stock previously issued to him to JBCC for cancellation. With the return of ten million shares of JBCC’s common stock held by Mr. Plote, the Company has become JBCC’s largest single stockholder owning 71% of the share capital of JBCC and Entest has become a wholly owned subsidiary of JBCC.

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

CERTAIN FORWARD-LOOKING INFORMATION

Information provided in this Quarterly report on Form 10Q may contain forward-looking statements within the meaning of Section 21E or Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's expectations or beliefs, including, but not limited to, statements concerning future and operating results, statements concerning industry performance, the Company's operations, economic performance, financial conditions, margins and growth in sales of the Company's products, capital expenditures, financing needs, as well assumptions related to the forgoing. For this purpose, any statements contained in this Quarterly Report that are not statement of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including the Company's most recent Form 10KSB for the year ended September 30, 2008. All references to” We”, “Us”, “Company” or the “Company” refer to Bio-Matrix Scientific Group, Inc.

Material Changes in Financial Condition:

As of June 30, 2009, we had cash on hand of $30,938 and as of September 30, 2008 we had cash on hand of $8,410.

The increase in cash on hand of approximately 267% is primarily attributable to borrowings and sales of our securities.

As of December 31, 2008 we had Securities Available for Sale of $0 as of September 30, 2008 we had Securities Available for Sale of $550,000.

The decrease in Securities Available for Sale of 100% is primarily attributable to the liquidation of 1,000,000 common shares of Freedom Environmental Services, Inc. These shares comprised the Company’s entire portfolio of Securities Available for Sale.

As of June 30, 2009, we had prepaid expenses of $31,400 and as of September 30, 2008 we had prepaid expenses of $49,258.

The decrease in prepaid expenses of approximately 36% is primarily attributable to the recognition of expenses from September 30, 2008 to May 31, 2009 of approximately $37,776 of a prepaid 12 month Contract entered into on March 21, 2008 offset primarily by prepayment of $7,018 of interest expense and $14,000 of consulting expenses.

As of June 30, 2009 we had Other Assets of $25,507 and as of September 30, 2008 we had Other Assets of $21,307.

The increase in Other Assets of approximately 20% is attributable to a security deposit on additional office space.

As of June 30, 2009 we had Accounts Payable of $169,215 and as of September 30, 2008 we had Accounts Payable of $89,974.

The increase in Accounts Payable of approximately 88% is primarily attributable to an increase in outstanding obligations to outside contractors.

As of June 30, 2009 we had Notes Payable of $337,218 and as of September 30, 2008 we had Notes Payable of $111,459.

The increase in Notes Payable of approximately 200 % is attributable to increased borrowing to cover operational costs.

As of June 30, 2009 we had Accrued Payroll of $271,500 and as of September 30, 2008 we had Accrued Payroll of $150,000.

The increase in Accrued Payroll of approximately 81% is primarily attributable to increases in employee compensation which have accrued and have not yet been paid.

As of June 30, 2009 we had Accrued Expenses of $5,000 and as of September 30, 2008 we had Accrued Expenses of $30,000.

The decrease in Accrued Expenses of approximately 500% is primarily attributable to the forgiveness of $30,000 of accrued expenses offset by $5,000 of accrued expenses incurred pursuant to the Company’s license agreement with the Regents of the University of California

On September 29, 2008, the Company purchased 1,000,000 of the common shares of Freedom Environmental Services, Inc. (“FESI shares”) from Bombardier Pacific Ventures, Inc. (“Bombardier”), a company controlled by David Koos, our Chairman and CEO, for consideration consisting of a Promissory Note (“Note”) in the principal amount of $500,000 issued by BMSN to Bombardier, resulting in an amount owed pursuant to the Note of $500,000 as of September 30, 2008.

Pursuant to the terms and conditions of the Note, the entire principal amount of $500,000 together with accrued simple interest of 10% per annum, is due and payable to Bombardier on November 29, 2009.

On December 21, 2008 Bombardier modified the Promissory Note with BMSN. Bombardier agreed to accept $1,000 en lieu of the original $500,000 payment owed by the Company to Bombardier for the purchase of FESI shares. This resulted in a decrease of $499,000 of the amount due pursuant to the Note as of June 30, 2009, a decrease of approximately 99% from September 30, 2008.

Amounts Due to Shareholder were $100,000 as of June 30, 2009 as opposed to $-0- as of September 30, 2008. This increase is attributable to funds of $100,000 advanced to the company by a non affiliate shareholder in anticipation of structuring a transaction at some future date.

Material Changes in Results of Operations

Revenues were -0- for the quarter ending June 30, 2009 and -0- for the same quarter ending June 30, 2008. Net losses were $ 391,372 for the three months ended June 30, 2009 and $1,063,446 for the same period ended June 30, 2008, a decrease of approximately 63%.

This decrease in Net Losses is primarily attributable to decreased professional and consulting fees incurred by us.

Revenues were -0- for the nine month period ending June 30, 2009 and -0- for the comparable period ending June 30, 2008. Net Losses were $1,990,282 for the nine months ended June 30, 2009 and $ 1,886,583 for the same period ended June 30, 2008, an increase of approximately 5%.

This increase in Net Losses is primarily attributable to a $487,000 loss realized by the Company related to the company’s sale of 1,000,000 common shares of Freedom Environmental Services, Inc. and increased interest expenses attributable to increases in Company indebtedness incurred in order to fund Company operations. offset primarily by decreased increased professional and consulting fees.

Liquidity and Capital Resources

As of June 30, 2009, we had $30,938 cash on hand and current liabilities of $1,479,666 such liabilities consisting of Accounts Payable, Notes Payable, Accrued Payroll Taxes, Amounts due to Shareholder, Convertible Notes, Note due to Affiliated Party, Accrued Expenses and Accrued Interest.

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

At this time, we plan to fund our financial needs through operating revenues (which cannot be assured) and, if required, through equity private placements of common stock. (No plans, terms, offers or candidates have yet been established and there can be no assurance that the company will be able to raise funds on terms favorable to us or at all.) We cannot assure that we will be successful in obtaining additional financing necessary to implement our business plan. We have not received any commitment or expression of interest from any financing source that has given us any assurance that we will obtain the amount of additional financing in the future that we currently anticipate. For these and other reasons, we are not able to assure that we will obtain any additional financing or, if we are successful, that we can obtain any such financing on terms that may be reasonable in light of our current circumstances.

We were not party to any material commitments for capital expenditures as of the end of the quarter ended June, 2009.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Controls over Financial Reporting

In connection with the evaluation of the Company's internal controls during the period commencing on April 1, 2009 and ending June 30, 2009, David Koos, who is both the Company's Principal Executive Officer and Principal Financial Officer has determined that there were no changes to the Company's internal controls over financial reporting that have been materially affected, or is reasonably likely to materially effect, the Company's internal controls over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

On October 7, 2008, a Complaint (“Complaint”) was filed in the District Court of Clark County Nevada against the Company, the Company’s Chairman, and BMXP (currently named Freedom Environmental Services, Inc.) (collectively “Defendants”) by Princeton Research, Inc. (“Princeton”) seeking to recover unspecified General damages in excess of $10,000, unspecified specific damages, an order from the court declaring that the defendants fraudulently conveyed assets from BMXP to the Company, attorney’s fees and cost of suit based on allegations that the sale of BMSG to the Company as well as the name change and cessation of operations of BMXP constitute a breach of contract by , fraudulent conveyance by, and unjust enrichment of the Defendants. The Company believes that the allegations in the complaint are without merit and intends to vigorously defend its interests in this matter. At this time, it is not possible to predict the ultimate outcome of these matters.

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

On April 21, 2009 the Company issued 800,000 shares of common stock to Preferred Shareholders in exchange for 800,000 shares of preferred stock.