Rivulet Media, Inc. - Quarter Report: 2010 February (Form 10-Q)

biomat10q282010.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 December 31, 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 47,091,708 shares of Common Stock outstanding as of December 31, 2009.

PART I—FINANCIAL INFORMATION

BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet

	December 31, 2009			September 30, 2009
	(unaudited)

ASSETS

CURRENT ASSETS
Cash	$	1,788		$	17,750
Securities Available for sale					0
Pre-paid Expenses		332,646			333,398


Total Current Assets		334,434			351,148

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

Other Assets		25,507			25,507

TOTAL ASSETS	$	898,809		$	915,523


LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES
Accounts payable	$	349,509		$	227,377
Bank Overdraft		1,358
Notes Payable		391,343			397,322
Accrued Payroll		412,500			342,000
Accrued Payroll taxes		24,798			24,044
Accrued Interest		116,355			84,911
Accrued expenses		5,000			5,000
Current portion of Convertible Note		503,400			503,400
Current portion of Note to Affiliated Party		1,000			1,000
Total Current Liabilities		1,805,263			1,585,054

LONG TERM LIABILITIES
Convertible Note		0			0
Note to Affiliated Party		0			0

TOTAL LIABILITIES		1,805,263			1,585,054

STOCKHOLDERS' EQUITY
Preferred Stock ($.0001 par value
20,000,000 shares authorized; 2,975,478		300			300
issued and outstanding as of September 30, 2009 and December 31, 2009
Series AA Preferred Stock ($0.0001 par value)
100,000 shares authorized, 4852 issued and outstanding
as of September 30, 2009 and December 31, 2009
Series B Preferred Shares ($0.0001 par value) 2,000,000 shares authorized, 725, 409 issued and outstanding as of September 30, 2009 and December 31, 2009		73			73
Common Stock, ($.0001 par value)
80,000,000 shares authorized; 47,091,708 and 43,728,375
shares issued and outstanding as of December 31, 2009 and September 30, 2009		4,709			4,371

Additional paid in Capital		9,576,042			9,364,701

Contributed capital		499,000			499,000

Accumulated Other Comprehensive Income (Loss)
Deficit accumulated during the development stage		(10,839,828	)		(10,443,980	)
Deficit attributable to noncontrolling interest in subsidiary		(146,749	)		(93,995	)

Total Stockholders' Equity (Deficit)		(906,453	)		(669,530	)


TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY	$	898,809		$	915,523

The following Notes are an integral part of these Financial Statements

BIO-MATRIX SCIENTIFIC GROUP, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations


	Quarter Ended			Quarter Ended			From Inception
	December 31, 2009			December 31, 2008			(August 2, 2005)
	(unaudited)			(unaudited)			through
							December 31, 2009
							(unaudited)
REVENUES
Sales
Sales	$	-		$	-		$	-
								0
Total Revenues		0			0			0

COSTS AND EXPENSES
Research and Development		44,495			43,628			831,552
General and administrative		344,934			257,204			4,766,018
Depreciation and amortization								2,668
Consulting and professional fees
Consulting and professional fees		27,729			62,300			4,658,119
Impairment of goodwill & intangibles								34,688


Total Costs and Expenses		417,158			363,132			10,293,045



OPERATING LOSS
OPERATING LOSS		(417,158	)		(363,132	)		(10,293,045	)

OTHER INCOME & (EXPENSES)


Interest Expense
Interest Expense		(31,444	)		(25,590	)		(235,872	)
Interest Income								306
Other income
Other income								30,100
Loss on sale of Available for Sale Securities								(487,900	)
Other Expense								(166	)

Total Other Income & (Expenses)
Total Other Income & (Expenses)		(31,444	)		(25,590	)		(693,532	)

NET INCOME (LOSS)

	$	(448,602	)	$	(388,722	)	$	(10,986,577	)

(NET INCOME) LOSS attributable to
noncontrolling interest in Entest BioMedical, Inc		52,754						146,749
Net Loss attributable to common shareholders
	$	(395,848	)	$	(388,722	)	$	(10,839,828	)

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE


		(0.009	)		(0.015	)

Weighted Average Shares Outstanding		45,369,136			25,257,809

The Following Notes are an Integral Part of these Financial Statements

Bio-matrix Scientific Group, Inc. and Subsidiaries

(A Development Stage Company)

Consolidated Statement of Cash Flow



	Three Months Ended	Three Months Ended	Inception (August 2, 2005) to
	December 31, 2009	December 31, 2008	December 31, 2009
	(unaudited)	(unaudited)	(unaudited)



CASH FLOWS FROM OPERATING ACTIVITIES


Net Income (loss)	$ (395,848)	$ (388,722)	$ (10,839,828)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation expense			2,667

Stock issued for compensation to employees	103,476		1,038,543

Stock issued for services rendered by consultants	5,000	3,333	3,978,734
Stock issued for prepaid expenses			300,000
Stock issued for interest			101,430
Changes in operating assets and liabilities:
(Increase) decrease in receivables

(Increase) decrease in prepaid expenses	752	24,601	(332,646)

Increase (Decrease) in Accounts Payable	122,132	33,361	349,509

Increase (Decrease) in Accrued Expenses	102,698	60,469	588,600

Increase (Decrease) in Other Comprehensive Income			(50,000)

Loss attributable to Non Controlling interest in subsidiary	(52,754)		(146,749)

Net Cash Provided by (Used in) Operating Activities	(114,544)	(233,677)	(5,009,740)


CASH FLOWS FROM INVESTING ACTIVITIES


( Increase) Decrease in Deposits		(4,200)	(25,507)
Purchases of fixed assets			(541,536)

(Additions) Decreases to Securities Available for Sale			50,000

Net Cash Provided by (Used in) Investing Activities		(4,200)	(517,043)


CASH FLOWS FROM FINANCING ACTIVITIES


Preferred Stock issued for cash		15	339
Common stock issued for cash			1,630
Common Stock issued for Debt	98,200		314,916
Common Stock issued for Accrued Salaries			120,000


Additional paid in Capital	5,000	17,902	1,680,919
Principal borrowings on notes and Convertible Debentures	(5,979)	225,350	1,210,799
Increase (Decrease) Due to Shareholder
Convertible notes			503,400

Contributed Capital		499,000	499,000
Increase (Decrease) in Bank Overdraft	1,358		1,358

Net borrowings from related parties			1,195,196
Increase (Decrease) in Notes from Affiliated party		(499,000)	1,000

Net Cash Provided by (Used in) Financing Activities	98,579	243,267	5,528,557





Net Increase (Decrease) in Cash	(15,962)	5,390	1,788


Cash at Beginning of Period	17,750	8,410	0


Cash at End of Period	$ 1,788	$ 13,796	$ 1,788



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 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 December 31, 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, 2009 and notes thereto included in the Company's 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

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

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company generated net losses of $10,986,577 (including $146,749 in net losses attributable to noncontrolling interest in Entest BioMedical, Inc.) during the period from August 2, 2005 (inception) through December 31, 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.

The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management plans to raise additional funds by obtaining governmental and nongovernmental grants as well as offering securities for cash. Management has yet to decide what type of offering the Company will use or how much capital the Company will raise. There is no guarantee that the Company will be able to raise any capital through any type of offerings. Management can give no assurance that any governmental or nongovernmental grant will be obtained by the Company despite the Company’s best efforts.

NOTE 3. INCOME TAXES

As of December 31 ,2009

Deferred tax assets:
Net operating tax carry forwards	$	3,748,656
Other		-0-
Gross deferred tax assets		3,748,656
Valuation allowance		(3,748,656))

Net deferred tax assets	$	-0-

As of December 31, 2009 the Company has a Deferred Tax Asset of $3,748,656 completely attributable to net operating loss carry forwards of approximately $11,025,193 (which expire 20 years from the date the loss was incurred) consisting of

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

(b) $10,986,577 attributable to the Company, Bio-matrix Scientific Group, Inc, a wholly owned Nevada corporation which shares the name of the Company and Entest BioMedical, Inc. a Nevada corporation which is 57% owned by the Company

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 October 5, 2009 Entest BioMedical, Inc. issued 3,040 common shares to David Koos, the company’s CEO, as consideration for services rendered valued at $4,560.

Between October 1, 2009 and December 31, 2009 Bombardier Pacific Ventures (“Bombardier”), a company controlled by David Koos, made net loans to the Company totaling $38,686. 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 December 31, 2009 the Company is indebted to Bombardier in the amount of $212,477.

NOTE 5. STOCK TRANSACTIONS

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

On October 19, 2009 the Company issued 50,000 shares of common stock for services valued at $5,000.

On November 16, 2009 the Company issued 3,273,333 shares of common stock in satisfaction of $98,200 of principal indebtedness.

On December 31, 2009 the company issued 40,000 shares of common stock as a contingent payment for services previously rendered.

Entest BioMedical, Inc. Stock Transactions:

On September 10, 2009, Entest BioMedical, Inc. sold 500,000 of its common shares to an investor for consideration of $50,000. $45,000 of the proceeds was paid to the Company to be applied to rental payments due to the Company over the course a sublease agreement between the Company and Entest BioMedical, Inc.

On October 5, 2009 Entest BioMedical, inc. issued 3,040 common shares to David Koos as consideration for services rendered valued at $4,560.

NOTE 6. STOCKHOLDERS' EQUITY

The stockholders' equity section of the Company contains the following classes of capital stock as of December 31, 2009:

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

2,975,478 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: 47,091,798 shares issued and outstanding

NOTE 7. 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. On December 18, 2009 the attorney for Princeton contacted the Company to inform the company that Princeton wishes to dismiss the case with prejudice with each party being responsible for its own costs.

NOTE 8. 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 January18, 2008, the Company sold $100,000 face value convertible debenture (“Convertible Debenture”) for an aggregate purchase price of $100,000 to one purchaser. Interest on the Convertible Debenture shall accrue at a rate of 14% per annum based on a 365 day year. The Company shall pay simple interest to the holder on the aggregate unconverted and then outstanding principal amount of this Convertible Debenture at the rate of 14% per annum, payable on the maturity Date, which is January 12, 2010

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

(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 9. SUBSEQUENT EVENTS

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

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

CERTAIN FORWARD-LOOKING INFORMATION

Information provided in this Quarterly report on Form 10Q may contain forward-looking statements within the meaning of Section 21E or Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's expectations or beliefs, including, but not limited to, statements concerning future and operating results, statements concern industry performance, the Company's operations, economic performance, financial conditions, margins and growth in sales of the Company's products, capital expenditures, financing needs, as well assumptions related to the forgoing. For this purpose, any statements contained in this Quarterly Report that are not statement of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based on current expectations and involve various risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including the Company's most recent Form 10Kfor the year ended September 30, 2009. All references to” We”, “Us”, “Company” or the “Company” refer to Bio-Matrix Scientific Group, Inc.

Material Changes in Financial Condition:

As of December 31, 2009, we had cash on hand of $1,788 and as of September 30, 2009 we had cash on hand of $17,750.

The increase in cash on hand of approximately 90% is primarily attributable to cash expended to pay for operations.

As of December 31, 2009 we had Accounts Payable of $349,509 and as of September 30, 2009 we had Accounts Payable of $227,377.

The increase in Accounts Payable of approximately 53% is primarily attributable to an increase in outstanding obligations to outside contractors.

As of December 31, 2009 we had Accrued Payroll of $412,500 and as of September 30, 2008 we had Accrued Payroll of $342,000.

The increase in Accrued Payroll of approximately 20% is primarily attributable to increases in employee compensation which have accrued and have not yet been paid.

Material Changes in Results of Operations

Revenues were -0- for the quarter ending December 31, 2009 and -0- for the same quarter ending December 31, 2008. Net losses were $ 395,848 for the three months ended December 31, 2009 and $388,722 for the same period ended December 31, 2008, an increase of approximately 2%.

This increase in Net Losses is primarily attributable to

(a)

increased general and administrative and income expenses incurred by us offset by

(b)

decreased .professional and consulting fees incurred by us as well as $52, 754 in Net Losses in the quarter ended December 31, 2009 attributable to noncontrolling interest in Entest BioMedical, Inc.

Liquidity and Capital Resources

As of December 31, 2009, we had $1,788 cash on hand and current liabilities of $1,805,263.

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

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

We were not party to any material commitments for capital expenditures as of the end of the quarter ended December 31, 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 October 1, 2009 and ending December 31, 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 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 Holdings, Inc. (now Freedom Environmental Services, Inc.) 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. On December 18, 2009 the attorney for Princeton contacted the Company to inform the company that Princeton wishes to dismiss the case with prejudice with each party being responsible for its own costs.

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

On October 19, 2009 the Company issued 50,000 shares of common stock for services valued at $5,000.

The offer and sale of the shares of common stock was exempt from the registration provisions of the Securities Act of 1933, as amended, by reason of Section 4(2) thereof

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

A legend was placed on the certificate that evidences the shares of Common Stock stating that the shares of Common Stock have not been registered under the Securities Act of 1933, as amended (“Act”) and setting forth or referring to the restrictions on transferability and sale of the shares of Common Stock.

On November 16, 2009 the Company issued 3,273,333 shares of common stock in satisfaction of $98,200 of principal indebtedness.

The offer and sale of the shares of common stock was exempt from the registration provisions of the Act by reason of Section 4(2) thereof.

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

On December 31, 2009 the company issued 40,000 shares of common stock as a contingent payment for services previously rendered.

The offer and sale of the shares of common stock was exempt from the registration provisions of the Act by reason of Section 4(2) thereof.

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

The offer and sale of the shares of common stock was exempt from the registration provisions of the Act by reason of Section 4(2) thereof.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

31.1	Certification of Chief Executive Officer

31.2	Certification of Acting Chief Financial Officer

32.1	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of Acting Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	Bio- Matrix Scientific Group, Inc.
	a Delaware corporation

By:	/s/ David R. Koos
	David R. Koos
	Chief Executive Officer
	Date: February 8, 2010