ENTEST GROUP, INC. - FORM 10-Q

Attached files

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EX-31.2 - EXHIBIT 31.2 - ENTEST GROUP, INC.	entb062813exh312.htm
EXCEL - IDEA: XBRL DOCUMENT - ENTEST GROUP, INC.	Financial_Report.xls
EX-32.2 - EXHIBIT 32.2 - ENTEST GROUP, INC.	entb062813exh322.htm
EX-32.1 - EXHIBIT 32.1 - ENTEST GROUP, INC.	entb062813exh321.htm
EX-31.1 - EXHIBIT 31.1 - ENTEST GROUP, INC.	entb062813exh311.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended February 28, 2013

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No. 333-154989

ENTEST BIOMEDICAL, INC.

(Exact name of small business issuer as specified in its charter)


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

4700 Spring Street, St 304, La Mesa, California 91942

(Address of Principal Executive Offices)

619 702 1404

(Issuer’s telephone number)

None

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

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☑

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

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


☐ Large accelerated filer	☐ Accelerated filer

☐ Non-accelerated filer	☑ Smaller reporting company

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of June 26, 2013 there were 539,129,405 shares of common stock were issued and outstanding.

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

Transitional Small Business Disclosure Format (Check One) Yes ☐ No ☑

ENTEST BIOMEDICAL, INC.
( A Development Stage Company)
Consolidated Balance Sheet
		As of	As of
		February 28, 2013	August 31, 2012

		(unaudited)
ASSETS
Current Assets
	Cash	5,221	42,737
	Trade accounts receivable, less allowance for uncollectable accounts
	of $0 and $0 at February 28, 2013 and August 31, 2012 respectively		2,268
	Inventory		10,298
	Due from Affiliate	34,895	39,140
	Current Portion of Prepaid Expenses	13,000	13,000
	Employee Receivable		4,349
Total Current Assets		53,116	111,792

Property & Equipment (Net of Accumulated Depreciation)		1,919	8,832
Goodwill			405,000
Intangible Assets (Net of Accumulated Amortization)		654	1,052


	Non Current Portion of Prepaid Expenses
	Deposits		1,151


TOTAL ASSETS		55,689	527,827

LIABILITES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts Payable	90,774	74,574
	Notes Payable	213,680	225,362
	Convertible notes payable, net of discount	119,000	121,495
	Due to Other	8,000	8,000
	Accrued Expenses	180,394	119,726
Total Current Liabilities		611,848	549,157

	Notes Payable		36,469

TOTAL LIABILITIES		611,848	585,626

STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value, authorized 2,000,000,000 shares;
	issued and outstanding 223,492,927 and 450,321,089shares
	as of August 31, 2012 and February 28, 2013 respectively	450,320	223,493
Preferred Stock , $0.001 par value 5,000,000 shares authorized,
	0 shares issued and outstanding as of August 31, 2012 and February 28, 2013
	Series AA Preferred Stock, $0.001 par value 100,000 shares authorized,
	5,000 shares issued and outstanding at August 31, 2012 and
	as of February 28, 2013	5	5
	Series B Preferred	3,201	3,201
	$0.001 par value, 4,400,000 shares authorized, 3,201,397
	issued and outstanding as of August 31, 2012 and February 28, 2013
	NonVoting Convertible Preferred	51,400	75,000
	$1 par value, 200,000 shares authorized, 75,000 and 51,400
	issued and outstanding as of August 31, 2012 and February 28, 2013
Additional Paid in Capital		3,181,902	3,030,642
Contributed Capital		274,162	274,162
Accumulated Deficit		(4,517,149)	(3,664,302)

Total Stockholders' Equity		(556,159)	(57,799)

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		55,689	527,827


The accompanying Notes are an integral part of these Financial Statements

ENTEST BIOMEDICAL INC.
( A Development Stage Company)
Consolidated Statement of Operations
		For the Quarter ended February 28, 2013 (unaudited)	For the Quarter ended February 29, 2012 (unaudited)	For the Six Months ended February 28, 2013 (unaudited)	For the Six Months ended February 29, 2012 (unaudited)	From inception(August 22, 2008) to February 28, 2013 (unaudited)


TOTAL REVENUE		0	0	0	0

COSTS AND EXPENSES
	Research and Development				5,798	145,794
	Rent Costs	9,348	33,988	18,336	46,516	190,264
	General and Administrative	77,321	100,134	180,814	177,151	1,633,981
	Incorporation Costs					408
	Consultant's Expenses	20,256	86,320	74,740	136,524	813,151
	Miscellaneous Expenses					78
	Total Costs and Expenses	106,925	220,442	273,890	365,989	2,783,676

OPERATING LOSS		(106,925)	(220,442)	(273,890)	(365,989)	(2,783,676)

OTHER INCOME AND EXPENSE
	Other Income	1,040	86,750	1,040	86,762	96,088
	Loss on dercognition of assets due to divestiture			(22,906)		(22,906)
	Loss on Early Extinguishment of Debt					(18,647)
	Income generated from revenue Share Agreement		187,699		187,699	187,699
	Expenses incurred from Revenue Share Agreement		(130,054)		(130,054)	(145,362)
	Loss on Impairment of intangible assets		(683,333)		(683,333)	(683,333)
	Interest Expense	(7,648)	(8,375)	(17,315)	(15,477)	(78,194)
	Interest Expense attributable to amortization of discount	(37,100)	(119,618)	(99,004)	(168,113)	(495,912)
	Loss on Impairment of Goodwill			(405,000)		(405,000)
	Gain on dercognition of Liabilities due to Divestiture			61,168		61,168
	Expense attributable to issuance of common shares below par value	(7,049)		(56,343)		(56,343)
	Expense attributable to issuance of shares pursuant to contractual obligation	(6,043)		(6,043)		(29,911)
	Expense attributable to issuance of Non Voting Convertible Preferred Shares in connection with Stock Purchase Agreement					(75,000)
TOTAL OTHER INCOME AND EXPENSE		(56,800)	(666,931)	(544,403)	(722,516)	(1,665,653)

LOSS BEFORE INCOME TAXES		(163,725)	(887,373)	(818,293)	(1,088,505)	(4,449,329)

NET LOSS						(4,449,329)
	Beneficial conversion feature attributable to issuance of NonVoting Preferred Stock					(32,142)

	NET LOSS from continuing Operations	(163,725)	(887,373)	(818,293)	(1,088,505)	(4,481,471)

	Net Income (Loss) from discontinued operations	(3,344)	1,084	(34,554)	5,850	(35,678)

	NET LOSS available to common shareholders	(167,069)	(886,289)	(852,847)	(1,082,655)	(4,517,149)

	BASIC AND DILUTED EARNINGS (LOSS) PER SHARE	(0.001)	(0.04)	(0.002)	(0.05)

	WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	209,583,620	24,373,484	367,412,566	22,883,784


	The accompanying Notes are an integral part of these Financial Statements

ENTEST BIOMEDICAL, INC.
( A Development Stage Company)
Consolidated Statement of Cash Flows

			For the Six Months	For the Six Months	From inception
			ended	ended	until
			February 28, 2013	February 28, 2012	February 28, 2013
			(unaudited)	(unaudited)	(unaudited)



	OPERATING ACTIVITIES
	Net (loss)		(818,293)	(1,088,505)	(4,449,329)
	Adjustments to reconcile net loss to net cash used by operating activities:
		Depreciation Expense	2,073	4,193	16,125
		Amortization Expense	386	389	1,633
		Stock issued as Compensation to Employees	49,600		611,680
		Stock issued as Compensation to Consultants	12,000	83,501	520,142
		Preferred Stock issued for accrued compensation			2,000
	Change in	operating assets and liabilities:
		(Increase) Decrease in Trade Accounts Receivable	2,268	867	0
		(Increase) Decrease in Inventory	10,298		0
		(Increase) Decrease in Employee Receivable	4,349		0
		Increase (Decrease) in Accounts Payable	16,199	50,233	90,773
		(Increase)Decrease in Due to Other
		(Increase) Decrease in Prepaid Expenses		59,500	(13,000)
		(Increase) Decrease in Due from Affiliate	4,245	(59,740)	(34,895)
		(Increase) Decrease in Deposits	1,151		0
		Increase(Decrease) in amortization of intangibles		16,667	16,667
		Increase (Decrease) in Accrued Expenses	60,667	(2,671)	180,392
		(Increase) Decrease on gain realized on cancellation of stock		(86,750)	(94,937)
		Increase(Decrease) in Loss on Impairment of Intangible Assets		683,333	683,333

		Net Cash Provided Used in Operating Activities	(655,057)	(338,983)	(2,469,416)

	INVESTING ACTIVITIES
		Purchase/Sale of Equipment
			0	0	(22,884)
		Net cash Provided by (Used in) Investing Activities	0	0	(22,884)

	FINANCING ACTIVITIES
		(Increase) Decrease in Goodwill from acquisition	405,000		0
		Noncash Loss on derecognition of assets	4,840		4,840
		Expenses incurred resulting from issuance of stock for less than par	56,344		56,343
		Increase (Decrease) in Common stock issued for cash	64,300		431,900
		(Increase) Decrease in Intangible Assets (net)			(2,299)
		Increase (Decrease) in Common stock issued for expenses	7,743		112,566
		Increase (Decrease) in Due to Affiliate			8,000
		Increase (Decrease) in Due to Shareholder
		Increase (Decrease) in Notes Payable	50,868	254,963	1,144,421
		Increase (Decrease) in Contributed Capital			274,161
		Increase (Decrease) in Additional paid in Capital	63,000	122,190	503,267
		Net Cash Provided by Financing Activities	652,095	377,153	2,533,199
	DISCONTINUED OPERATION
		Profit(Loss) from discontinued operations	(34,554)	5,850	(35,678)
		Net Increase in Cash	(37,516)	44,020	5,221

		Cash at Beginning of Period	42,737	43,901	0


		Cash at End of Period	5,221	87,921	5,221

Supplemental Disclosure of Noncash investing and financing activities:


Stock issued in payment of Debt			$101,500	$72,500	$861,726
Stock issued in Acquisition of McDonald Animal Hospital					$210,000
Stock issued pursuant to Titterington Agreement				$700,000	$700,000

The accompanying Notes are an integral part of these Financial Statements

Entest BioMedical, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

As of February 28, 2013

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 Entest BioMedical, Inc. (“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 August 31, 2012 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. ORGANIZATION AND DESCRIPTION OF BUSINESS

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

On July 10, 2009 the Company abandoned its efforts in the field of active/leisure fashion design clothing when it acquired 100% of the share capital of Entest BioMedical, Inc., a California corporation, (“Entest CA”).

The Company’s current business consists of the development and commercialization of immunotherapeutic therapies for the veterinary market as well as the acquisition and operation of veterinary hospitals.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. BASIS OF ACCOUNTING

The financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted an August 31 fiscal year-end. The Company recognizes revenue from services and product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable, and collectability is reasonably assured. Product sales and service revenues are recorded when the products are delivered and title passes to customers. The customer’s credit card is authorized and charged, or checks/cash are received at the time the services are rendered, thereby providing reasonable assurance of collectability.

B. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Entest CA, the Company’s wholly owned subsidiary. Significant inter-company transactions have been eliminated.

C. USE OF ESTIMATES

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

D. CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

E. PROPERTY AND EQUIPMENT

As of February 28, 2013 Property and Equipment consists of $1,919 of Computer equipment. No depreciation expense has been recorded with regards to this equipment as it has yet to be put into service

F. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial instruments as of February 28, 2013 consisted of $213,680, of Notes Payable, $119,000 of Convertible Notes payable (net of discount), $8,000 due to TheraCyte, Inc. and $34,895 due from an affiliate. The fair value of all of the Company’s financial instruments as of February 28, 2013 were valued according to the Level 3 input. The carrying amount of the financial instruments is equal to the fair value as determined by the Company.

The Company has determined that there are no Level 1 or Level 2 inputs for determining the fair value of the Company’s financial instruments. Fair value was determined by the Company utilizing its own assumptions and estimation. There were no transfers between levels for the period presented.

G. INCOME TAXES

The Company accounts for income taxes using the liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of August 31, 2011 and February 28, 2013 the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

The Company generated a deferred tax credit through net operating loss carry forward. However, a valuation allowance of 100% has been established.

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

H. BASIC EARNINGS (LOSS) PER SHARE

The Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 260, "Earnings Per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of ASC 260 effective from inception. Basic net loss per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding. All convertible debt has an anti-dilutive effect on the EPS, therefore Diluted earnings per share are the same as basic earnings per share.

NOTE 4. RECENT ACCOUNTING PRONOUNCEMENTS

On May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." The amendments in this update generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The amendments in this update are to be applied prospectively. The amendments are effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." This update was amended in December 2011 by ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05." This update defers only those changes in update 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in update 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. ASU No. 2011-05 and 2011-12 are effective for fiscal years (including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.

In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, the Company’s management has not determined whether implementation of such standards would be material to its financial statements.

NOTE 5. 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 $4,517,149 during the period from August 22, 2008 (inception) through February 28, 2013. 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 primarily by offering securities for cash. The Company has also raised $51,192 from borrowings during the three months ended February 28, 2013.

On June 1, 2012 the Company entered into an Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership ("Southridge").

Under the terms of the June Purchase Agreement, Southridge will purchase, at the Company's election, up to $10,000,000 of the Company's registered common stock (the "Shares"). During the term of the Purchase Agreement, the Company may at any time deliver a "put notice" to Southridge thereby requiring Southridge to purchase a certain dollar amount of the Shares. Simultaneous with the delivery of such Shares, Southridge shall deliver payment for the Shares. Subject to certain restrictions, the purchase price for the Shares shall be equal to 91% of the average of the two lowest Closing Prices during the Valuation Period as such capitalized terms are defined in the Agreement.

The number of Shares sold to Southridge shall not exceed the number of such shares that, when aggregated with all other shares of common stock of the Company then beneficially owned by Southridge, would result in Southridge owning more than 9.99% of all of the Company's common stock then outstanding. Additionally, Southridge may not execute any short sales of the Company's common stock.

Any sale of Shares pursuant to the June Agreement is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of those Shares.

June Agreement shall terminate (i) on the date on which Southridge shall have purchased Shares pursuant to this Agreement for an aggregate Purchase Price of $10,000,000, or (ii) on the date occurring 24 months from the date on which the June Agreement was executed and delivered by the Company and Southridge.

The Company has also agreed to pay the following to Capital Path Securities LLC for acting as the Company’s exclusive advisor and placement agent in connection with the June Purchase Agreement a cash placement fee of 5% of funds received by the Company through the sale of Shares to Southridge as such funds are received by the Company.

On June 12, 2012 a registration statement on form S-1 was filed with the United States Securities and Exchange Commission registering 46,238,705 shares of the Company’s common stock that will be put to Southridge pursuant to the June Agreement which was declared effective by the United States Securities and Exchange Commission on August 27, 2012.

During the quarter ended November 30, 2012 the Company sold 37,640, 604 common shares for total consideration of $64,300 pursuant to the June Agreement.

NOTE 6. NOTES PAYABLE

As of February 28, 2013

Notes Payable:

Bio Technology Partners Business Trust	$	13,550
The Sherman Family Trust	$	98,200
Officer Loans (Note 7)	$	63,772
Venture Bridge Advisors	$	32,458
Southridge Partners II LLP	$	5,700
Total	$	213,680

Convertible Notes Payable

8% Convertible Notes Payable (Note 14) $126,000

Both of Bio Technology Partners Business Trust and Venture Bridge Advisors have provided lines of credit to the Company in the amount of $200,000 each or so much thereof as may be disbursed to, or for the benefit of the Company by Lender in Lender's sole and absolute discretion. The unpaid principal of these lines of credit bear simple interest at the rate of ten percent per annum. Interest is calculated based on the principal balance as may be adjusted from time to time to reflect additional advances or payments made hereunder. Principal balance and accrued interest shall become due and payable in whole or in part at the demand of the Lender. The Sherman Family Trust has provided a line of credit to the Company in the amount of $700,000 or so much thereof as may be disbursed to, or for the benefit of the Company by Lender in Lender's sole and absolute discretion. The unpaid principal of this line of credit bears simple interest at the rate of ten percent per annum. Interest is calculated based on the principal balance as may be adjusted from time to time to reflect additional advances or payments made hereunder. Principal balance and accrued interest shall become due and payable in whole or in part at the demand of the Lender. $5,700 owed by the Company to Southridge Partners II LLP bears no stated interest rate and is payable at the demand of Southridge Partners II LLP.

NOTE 7. RELATED PARTY TRANSACTIONS

During the quarter ended February 28, 2013 David Koos made loans to the Company totaling $31,992. These loans are due and payable at the demand of David Koos and bear simple interest at a rate of 15% per annum.

As of February 28, 2013 the Company remains indebted to David R. Koos in the principal amount of $63,772 due and payable at the demand of David Koos and bearing simple interest at a rate of 15% per annum

As of August 31 , 2012 Bio-Matrix Scientific Group, Inc. (“BMSN”) , a major shareholder of the Company, is indebted to the Company in the amount of $34,895. This amount is non interest bearing and is due at the demand of the Company.

NOTE 8. INCOME TAXES


As of February 28, 2013
Deferred tax assets:
Net operating tax carry forwards	$	1,540,471
Other		-0-
Gross deferred tax assets		1,540,471
Valuation allowance		(1,540,471	)
Net deferred tax assets	$	-0-

As of February 28,2013 the Company has a Deferred Tax Asset of $1,540,471 completely attributable to net operating loss carry forwards of approximately $4,530,796 (which expire 20 years from the date the loss was incurred) consisting of:

(a) $ 13,647 of Net Operating Loss carry forwards acquired in the reverse acquisition of Entest BioMedical, Inc., a California corporation, and

(b) $ 4,517,149 of Net Operating Loss carry forwards attributable to Entest BioMedical, Inc.

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. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. In addition, the reverse acquisition in which Entest BioMedical, Inc. was involved in 2009 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 recorded a valuation allowance reducing all deferred tax assets to $ -0-.

Income tax is calculated at the 34% Federal Corporate Rate.

NOTE 9. ACQUISITION OF ENTEST CA

On July 10, 2009 the Company acquired 100% of Entest CA, a California corporation and wholly owned subsidiary of the Company, from BMSN for consideration consisting of (a) the issuance to BMSN of 10,000,000 newly issued common shares of Entest and (b) the return by Mr. Rick Plote of 10,000,000 shares of Entest’s common stock previously issued to him by Entest for cancellation.

NOTE 10. ACQUISITION OF THE ASSETS OF PET POINTERS, INC.

On January 4, 2011Entest CA acquired from Pet Pointers, Inc., a California corporation doing business as McDonald Animal Hospital (“Seller”), and Dr. Gregory McDonald DVM (“McDonald”) all the goodwill from McDonald and assets of Seller except cash and accounts receivables used in connection with the operation of a veterinary medical clinic located at 225 S. Milpas Street, Santa Barbara, CA 93103 (the "Business").

Consideration for the acquisition consisted of:

I. $70,000 in cash

II. $210,000 of the Company’s common shares valued at the closing price per share as of January 4, 2011

III. Payment of no more than $78,000 to a creditor of the Seller to be paid in monthly installments of $1,500 per month

IV. Payment of no more than $25,000 to additional creditors of the Seller to be paid in monthly installments of $825 per month

V. Payment of $50,000 to McDonald on the first business day of the fourth month following the closing of the acquisition (“Closing”).

NOTE 11. DISPOSITION OF THE ASSETS OF PET POINTERS, INC.

On November 28, 2012 the “Company executed an agreement (“Agreement”) with Gregory McDonald ("McDonald"), Pet Pointers, Inc. ("Pet Pointer") whereby Mc Donald and Pet Pointer would acquire from the Company all assets ( with the exception of cash and accounts receivable) utilized by the Company in the operation of the McDonald Animal Hospital, a full service veterinary clinic owned and operated by the Company and located in Santa Barbara, California (“McDonald Asset Sale”).

On October 10, 2012 a Complaint (“Complaint”) was filed in the Superior Court of the State of California against the Company and David Koos by McDonald, a former employee of the Company, alleging breach of contract and breach of the covenant of good faith and dealing in connection with the assumption of lease obligations by the Company in connection with the acquisition of the assets of Pet Pointers, Inc breach of contract and breach of the covenant of good faith and dealing in connection with an employment agreement enters into with McDonald inc connection with the Acquisition, breach of contract in connection with the Acquisition purchase agreement, breach of the covenant of good faith and dealing in connection with the Acquisition purchase agreement, implied indemnity in connection to amounts owed by McDonald to Anthony and Judi Marinelli, the Internal Revenue Service, and the California Franchise Tax Board, intentional misrepresentation, negligent misrepresentation , failure to pay wages and violations of Sections 2802, 203, and 2806 of the California Labor Code. The Complaint sought judgment for nominal damages, actual damages, compensatory damages, lost wages, compensation, expenses wage benefits and penalties pursuant to California Labor Code Sections 203 et al, 2802 and 2806, indemnification, accrued interest, punitive damages, costs of suit and attorney’s fees.

As consideration to the Company for the assets acquired, McDonald and Pet Pointers provided to the Company a General release whereby McDonald and Pet Pointer waive, release and discharge the Company and their respective assignees, officers, directors, shareholders, boards, owners, employees, attorneys, agents, trustors, trustees, beneficiaries, heirs, successors, and representatives from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses including:

(1) All claims relating to the Complaint.

(2) Those owed by McDonald to Anthony and Judi Marinelli which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

(3) Those amounts owed by McDonald to the Internal Revenue Service which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

(4) Those amounts owed by McDonald to the California Franchise Tax Board which the Company became obligated to pay on McDonald’s behalf pursuant to the asset purchase agreement entered into between the Company and Gregory McDonald and Pet Pointers, Inc on January 4, 2011.

Assets disposed of pursuant to the Agreement include approximately $4,840 of Property Plant and Equipment net of accumulated depreciation as well as all inventory held at the McDonald Animal Hospital.

Assets disposed of pursuant to the Agreement also include

(i) essentially all intellectual property, including computer software, utilized in connection with the operation of the McDonald Animal Hospital

(ii) All telephone numbers, fax numbers, service marks, trademarks, trade names, fictitious business names, websites, business email addresses, vendor lists, promotional materials, vendor records and any and all business records including, but not limited to, such items stored in computer memories, microfiche, paper record or by any other means relevant to the operation of the McDonald Animal Hospital.

(iii) All customer lists, customer contacts, and any and all customer records that are related to the McDonald Animal Hospital.

As a result of the agreement, the Company recorded a non-cash pre-tax charge for the impairment of goodwill recorded in connection with the acquisition of the McDonald Animal Hospital of approximately $405,000 for the quarter ended November 30, 2012.

Pursuant to the Agreement, the Company is obligated to make payment of $13,000 within five days of the Closing of the Agreement as such term is defined in the Agreement.

Pursuant to the Agreement, the Company agrees to waive, release and discharge McDonald and Pet Pointer from all known and unknown claims, demands, causes of action, attorney's fees, costs, or expenses.

NOTE 12. COMMITMENTS AND CONTINGECIES

On November 1, 2011, the Company entered into an agreement to lease approximately 2,320 square feet of office space beginning December 1, 2011 for a period of five years.

Rent to be charged to the Company pursuant to the lease is as follows:

$2,996 per month for the period beginning December 1, 2011 and ending November 30, 2012

$3,116 per month for the period beginning December 1, 2012 and ending November 30, 2013

$3,241 per month for the period beginning December 1, 2013 and ending November 30, 2014

$3,371 per month for the period beginning December 1, 2014 and ending November 30, 2015

$3,506 per month for the period beginning December 1, 2015 and ending November 30, 2016

This property is utilized as office space. The Company believes that the foregoing property is adequate to meet its current needs. While it is anticipated that the Company will require access to laboratory facilities in the future, the Company believes that access to such facilities are available from a variety of sources.

On February 3, 2011, a Complaint (“Complaint”) was filed in the U.S. District Court Middle District of the State of Pennsylvania against the Company, the Company’s Chairman and BMSN by 18KT.TV LLC (“Plaintiffs”) seeking to recover general damages from the Company. in excess of $125,000. The Complaint alleges breach of contract and unjust enrichment relating to an investor relations contract executed by the Company and Craig Fischer (on behalf of 18KT.TV LLC). The Complaint also seeks similar damages from BMSN. 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.

On March 1, 2013 a SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (“Agreement”) was entered into by and between the Plaintiffs and the Company.

Pursuant to the Agreement:

(a) The Plaintiffs irrevocably release and forever unconditionally discharge the Company of and from any and all actions, causes of action, suits, claims, debts, dues, accounts, bonds, covenants, charges, complaints, contracts, agreements, promises, judgments and demands whatsoever, in law or in equity.

(b) The Company irrevocably releases and forever unconditionally discharges the Plaintiffs of and from any and all actions, causes of action, suits, claims, debts, dues, accounts, bonds, covenants, charges, complaints, contracts, agreements, promises, judgments and demands whatsoever, in law or in equity.

(c) The Company shall cause to be issued to 18KT.TV LLC 41,000,000 of the Company’s newly issued restricted common shares.

On May 24, 2012, a Complaint (“Complaint”) was filed in the U.S. Bankruptcy Court for the District of Oregon against the Company by Titterington Veterinary Services Inc. (“TVS”). The Complaint is an adversary proceeding filed by TVS arising from TVS’s bankruptcy case currently pending in U.S. Bankruptcy Court for the District of Oregon. The Complaint alleges Breach of Contract resulting from the Company’s alleged failure to pay certain expenses the Company was required to pay pursuant to an agreement with TVS, Dr. Ronald Titterington, DVM and Dr. Kathy Snell, DVM (“TVS Agreement”). TVS is seeking a judgment and money award against the Company in an amount to be proven at trial which TVS estimates in the Complaint to be up to $50,000. TVS is also seeking a judgment and order against the Company to provide an accounting of all revenues received by the Company pursuant to the TVS Agreement, all expenses paid, unpaid, and due and owing pursuant to the TVS Agreement as well as a revenue share which TVS claims is due them pursuant to the TVS Agreement. TVS is also seeking a judgment requiring the Company to turn over a sum of money equal to expenses the Company was obligated to pay pursuant to the TVS Agreement. TVS is also seeking attorney’s fees and expenses. 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 and an outcome unfavorable to the Company may have a material adverse effect on the Company. On September 19, 2012 the Plaintiff’s Claim for Relief for turnover and an accounting under 11 U.S.C. § 542 and the Plaintiff's Claim for Relief for attorney fees were dismissed with prejudice and , as per the claim of breach of contract, the proceeding was transferred to the United States Bankruptcy Court for the District of Southern California for all further proceedings.

There were no other legal proceedings against the Company with respect to matters arising in the ordinary course of business. The Company is not involved in any other litigation either as plaintiffs or defendants, and has no knowledge of any threatened or pending litigation against the Company.

On June 1, 2012 the Company entered into an Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership ("Southridge").

Any sale of Shares pursuant to the June Agreement is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of those Shares.

NOTE 13. STOCKHOLDERS EQUITY

The stockholders' equity section of the Company contains the following classes of capital stock as of February 28, 2013:

Common Stock:

$0.001 par value, 2,000,000,000 shares authorized 450,321,089 shares issued and outstanding as of February 28, 2013.

Preferred Stock:

$0.001 par value 5,000,000 shares authorized of 100,000 shares authorized is authorized as Series AA Preferred Stock , $.001 par value of which 5,000 shares are issued and outstanding as of February 28, 2013 and 4,400,000 is authorized as Series B Preferred Stock of which 3,201,397 shares are issued and outstanding as of February 28, 2013.

Upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (collectively, a “Liquidation”), before any distribution or payment shall be made to any of the holders of Common Stock or any other series of preferred stock, the holders of Series B Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital, surplus or earnings, an amount equal to $0.10 per share of Series B Preferred Stock (the “Liquidation Amount”) plus all declared and unpaid dividends thereon, for each share of Series B Preferred Stock held by them.

If, upon any Liquidation, the assets of the Company shall be insufficient to pay the Liquidation Amount, together with declared and unpaid dividends thereon, in full to all holders of Series B Preferred Stock, then the entire net assets of the Company shall be distributed among the holders of the Series B Preferred Stock, ratably in proportion to the full amounts to which they would otherwise be respectively entitled and such distributions may be made in cash or in property taken at its fair value (as determined in good faith by the Board), or both, at the election of the Board..

Non Voting Convertible Preferred Stock having a $1.00 par value:

200,000 shares authorized of which 51,400 shares are issued and outstanding as of February 28, 2013.

Non Voting Convertible Preferred Stock shall convert at the option of the holder into shares of the corporation’s common stock at a conversion price equal to 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.

“CLOSING PRICE" shall mean the closing bid price for the corporation’s common stock on the Principal Market on a Trading Day as reported by Bloomberg Finance L.P.

“PRINCIPAL MARKET" shall mean the principal trading exchange or market for the corporation’s common stock.

“TRADING DAY” shall mean a day on which the Principal Market shall be open for business.

NOTE 14. CONVERTIBLE DEBENTURES

As of February 28, 2013 the Company has outstanding $126,000 in convertible notes payable bearing simple interest at 8% per annum.

On July 26, 2012, the Company issued a convertible note in the principal amount of $63,000 to Asher Enterprises, Inc. The Note bears interest at the rate of 8% per annum and matures on April 30, 2013. The Note is convertible any time during the period beginning on the date which is one hundred eighty (180) days following the date of the Note into common stock of the Company, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 Trading Day period prior to conversion as Trading Day is defined in the Note. The issuance of the note amounted in a beneficial conversion feature of $63,000 which is amortized under the Interest Method.

On September 20, 2012 the Company issued a convertible promissory note in the amount of $63,000 cash from which was received September 27, 2012. The note bears an interest rate of eight percent (8%), matures on June 25, 2013. and may be converted after 180 days from execution of this note for shares of the Company’s common stock. The note may be converted at a thirty nine percent (39%) discount to the average of the lowest 3 closing bid prices of the common stock during the 10 trading days prior to the conversion date. The issuance of the note amounted in a beneficial conversion feature of $63,000 which is amortized under the Interest Method.

NOTE 15. STOCK TRANSACTIONS

During three months ended November 30, 2012 the Company issued 149,458,892 Common Shares in satisfaction of $101,500 in convertible debt.

During three months ended November 30, 2012 the Company issued 3,035,894 Common Shares in satisfaction of $1,700 in Accrued Interest.

During the three months ended November 30, 2012 the Company issued 37,640,314 Common Shares pursuant to the June Purchase Agreement for consideration of $64,300.

During three months ended February 28, 2013 the Company issued 6,043,651 Common Shares pursuant to contractual obligations incurred as a result of the issuance of certain convertible notes payable.

During three months ended February 28, 2013 the Company issued 30,649,351 Common Shares pursuant to a conversion of $23,600 of Non Voting Convertible Preferred Shares

NOTE 16. SUBSEQUENT EVENTS

On March 12, 2013 41,000,000 Common Shares were issued to 18KT.TV LLC pursuant to SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (Note 12).

On March 13, 2013 the Company issued 3,011,583 Common Shares pursuant to a conversion of $7,800 of Non Voting Convertible Preferred Shares.

The terms and conditions of $126,000 of convertible debentures issued by the Company (“ENTB Convertible Notes”) (Note 14) defined “Event of Default” as follows:

The Borrower fails to pay the principal hereof or interest thereon when due on the Note, whether at maturity, upon acceleration or otherwise.

The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of the Note,

The Borrower breaches any material covenant or other material term or condition contained in the Note and any collateral documents including and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection with the Note shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to the Note.

The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCQB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

The Borrower shall fail to comply with the reporting requirements of the Securities and Exchange Act of 1934; and/or the Borrower shall cease to be subject to the reporting requirements of the Securities and Exchange Act of 1934.

Any dissolution, liquidation, or winding up of Borrower or any substantial portion of the Borrower’s business.

Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether now or in the future).

The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of the Note and until the Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

The Company’s failure to file timely quarterly and annual reports required under the Securities and Exchange Act of 1934 constituted an Event of Default. In an Event of Default occurring as a result of failure to comply with the reporting requirements of the Securities and Exchange Act of 1934 , the Notes shall become immediately due and payable (“Mandatory Prepayment Date”) and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of

(A)

(i) 150% times the sum of the then outstanding principal amount of the Note plus accrued and unpaid interest on the unpaid principal amount of the Note to the date of payment plus

(ii) Default Interest at the rate of 22% per annum

(B)

“Parity Value” of the Default Sum to be prepaid, where parity value means the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price.

In the event that the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

The Company had obtained a waiver from the holder of the ENTB Convertible Notes whereby , in the event that the Company would have become current in its reporting obligations under the Securities and Exchange Act of 1934 (“Exchange Act”) by March 22, 2013, the abovementioned penalties would not be applied to the Company by the Holder of the ENTB Convertible Notes. As the Company failed to file all reports required by March 22, 2013 the abovementioned penalties may be applied by the Holder of the ENTB Convertible Notes.

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 10K for the year ended August 31, 2012. All references to” We”, “Us”, “Company” or the “Company” refer to Entest BioMedical, Inc.

Material Changes in Financial Condition

As of February 28, 2013, we had Cash on Hand of $5,221 and as of August 31, 2012 we had Cash on Hand of $42,737.

The decrease in Cash on Hand of approximately 87 % is primarily attributable to expenses incurred by the Company in the operation of its business primarily offset by funds received by the Company as a result of net borrowings.

As of February 28, 2013, we had Trade Accounts Receivable of $0 and as of August 31, 2012 we had Trade Accounts Receivable of $2,268.

The decrease in Trade Accounts Receivable of 100% is attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

As of February 28, 2013, we had Inventory of $0 and as of August 31, 2012 we had Inventory of $10,298.

The decrease in Inventory of 100% is attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

As of February 28, 2013 we had Due from an Affiliate of $34,895 and as of August 31, 2012 we had Due from an Affiliate of $39,140.

The decrease in Due from an Affiliate of approximately 11% is attributable to the payment of $5,000 to the Company by Bio Matrix Scientific Group, Inc offset by the payment by the Company of $755 in expenses on behalf of Bio Matrix Scientific Group, Inc during the period

As of February 28, 2013 we had an Employee Receivable of $0 and as of August 31, 2012 we had an Employee Receivable of $4,349.

The decrease in Employee Receivable of 100% is attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

As of February 28, 2013 we had Property & Equipment (Net of Accumulated Depreciation) of $1,919 and as of August 31, 2012 we had Property & Equipment (Net of Accumulated Depreciation) of $ 8,832.

The decrease in Property & Equipment (Net of Accumulated Depreciation) of approximately 78% was primarily attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital.

As of February 28, 2013 we had a Goodwill of $0 and as of August 31, 2012 we had an Goodwill of $405,000.

The decrease in Goodwill of 100% is attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

As of February 28, 2013 we had Intangible Assets of $654 and as of August 31, 2012 we had Intangible Assets of $1,052.

The decrease in Intangible Assets of approximately 39% is primarily attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital as well as the recognition of depreciation expense.

As of February 28, 2013 we had Deposits of $0 and as of August 31, 2012 we had Deposits of $1,151 .

The decrease in Deposits of 100% is primarily attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

As of February 28, 2013 we had Accounts Payable of $90,774 and as of August 31, 2012 we had Accounts Payable of $74,574.

The increase in Accounts Payable of approximately 21% is primarily attributable to increases in outstanding obligations of the Company incurred in the course of business.

As of February 28, 2012 we had Notes Payable of $213,680 and as of August 31, 2012 we had Notes Payable (Including Long Term Portion of Notes payable) of $261,831.

The decrease in Notes Payable of approximately 5% is primarily attributable to the elimination of certain obligations pursuant to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital offset by loans to the Company during the six months ended February 28, 2013 totaling $52,792.

As of February 38, 2012 we had Convertible Notes Payable (net of unamortized discount) of $119,000 and as of August 31, 2012 we had Convertible Notes Payable (net of unamortized discount) of $121,495.

This decrease of approximately 39% is primarily attributable to:

(a)

Settlement of $101,500 of Convertible Debt through the issuance of common stock offset by

(b)

The issuance on September 20, 2012 of a convertible note in the amount of $63,000

(c)

The recognition of $99,004 Interest Expense attributable to amortization of discount

As of February 28, 2013 we had Accrued Expenses of $180,394 and as of August 31, 2012 we had Accrued Expenses of $119,726.

The increase in Accrued Expenses of approximately 51% is primarily attributable to:

	(a)	Accrual of $45,500 in salary owed to the Company’s CEO over the course of the six months
	(b)	Accrual of $71,315 of interest expense incurred over the course of the six months

Offset by:

Satisfaction of $1,700 of accrued interest through the issuance of the Company’s common stock.

Net reductions in accrued payroll tax expenses of $537

Material Changes in Results of Operations

Revenues from continuing operations were $0 for the three months ended February 28, 2013 and -0- for the three months ended February 29, 2012. Net losses from continuing operations were $163,725 for the three months ended February 28, 2013 and $887,373 for the same period ended 2012.

The decrease in Net Losses from continuing operations of approximately 81% is primarily attributable to :

(a)

Decreases in rental expenses of approximately 72%

(b)

Decreases in General and Administrative expenses of approximately 23%

(c)

Decreases in consulting expenses of approximately 77%

(d)

The recognition of $130, 054 during the quarter ended February 29, 2012 of expenses incurred pursuant to that agreement entered into by and between the Company and Titterington Veterinary Services, Inc, Dr. Ronald Titterington and Dr. Kathy Snell.

(e)

The recognition of a loss on impairment of intangible assets during the quarter ended February 29, 2012 of $683,333 resulting from the termination of that agreement entered into by and between the Company and Titterington Veterinary Services, Inc, Dr. Ronald Titterington and Dr. Kathy Snell.

(f)

Decreases in interest expenses of approximately 9%

(g)

Decreases in interest expenses attributable to amortization of discount attributable to Beneficial Conversion Features of approximately 69%

(h)

Other Income of $86,750 resulting from the cancellation of securities issued as compensation during the three months ended February 29, 2012.

(i)

$187,699 of income recognized during the quarter ended February 29, 2012 pursuant to that agreement entered into by and between the Company and Titterington Veterinary Services, Inc, Dr. Ronald Titterington and Dr. Kathy Snell

Offset by:

(a)

(b)

$7,049 of expenses incurred as a result of issuance of securities below par value during the quarter ended February 28, 2013

(c)

$6,043 of expenses incurred during the quarter ended February 28, 2013 resulting from common shares issued pursuant to contractual obligations contained in certain convertible notes outstanding.

Revenues from continuing operations were $0 for the six months ended February 28, 2013 and -0- for the three months ended February 29, 2012. Net losses from continuing operations were $818,293 for the six months ended February 28, 2013 and $1,088,505 for the six months ended February 29, 2012.

The decrease in Net Losses from continuing operations of approximately 25% is primarily attributable to :

(a)

Research and Development expenses incurred during the six months ended February 29, 2012 of $5,798

(b)

Decreases in rental expenses of approximately 61%

(c)

(d)

(e)

Decreases in interest expenses attributable to amortization of discount attributable to Beneficial Conversion Features of approximately 69%

(f)

A onetime gain of $61,168 attributable to liabilities derecognized in the disposition of the McDonald Animal Hospital recognized during the quarter ended November 30, 2012.

(g)

Other Income of $86,750 resulting from the cancellation of securities issued as compensation during the three months ended February 29, 2012.

Offset by:

(a)

(b)

$56,343 of expenses incurred as a result of issuance of securities below par value during the six months ended February 28, 2013

(c)

$6,043 of expenses incurred during the quarter ended February 28, 2013 resulting from common shares issued pursuant to contractual obligations contained in certain convertible notes outstanding.

(d)

Other Income of $86,750 resulting from the cancellation of securities issued as compensation during the three months ended February 29, 2012.

(e)

Recognition of a $22,906 one time loss on assets disposed of in the disposition of the McDonald Animal Hospital during the quarter ended November 30, 2012.

(f)

Recognition of a Goodwill impairment charge of $405,000 attributable to the disposition as of November 30, 2012 of certain assets related to the McDonald Animal Hospital

Liquidity and Capital Resources

As of February 28, 2012 we had $5,221 cash on hand and current liabilities of $611,848 (exclusive of convertible debt discount attributable to a beneficial conversion feature) such liabilities consisting of Accounts Payable, Notes Payable, Convertible Notes Payable, Amounts due to Affiliates / Others and Accrued Expenses.

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.

We currently plan to raise additional funds primarily by obtaining governmental and non-governmental grants , offering securities for cash and acquiring existing veterinary clinics with the ability to generate cash flow to fund operations.

We have yet to decide what type of offering we will use or how much capital we will raise. There is no guarantee that we will be able to raise any capital through any type of offerings. We can give no assurance that any governmental or non-governmental grant will be obtained by us despite our best efforts. 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.

On June 1, 2012 the Company entered into an Equity Purchase Agreement (the "June Purchase Agreement") with Southridge Partners II, LP, a Delaware limited partnership ("Southridge").

Any sale of Shares pursuant to the June Agreement is subject to a Registration Statement filed under the Securities Act of 1933 remaining effective for the sale by Southridge of those Shares.

During the quarter ended November 30, 2012 the Company sold 37,640, 604 common shares for total consideration of $64,300 pursuant to the June Agreement.

We were not party to any material commitments for capital expenditures as of the end of the quarter ended February 28, 2013.

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 December 1, 2012 and ending on February 28, 2013, 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.

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

On December 5, 2012 the Company issued 6,043,651 common shares (“Shares”) pursuant to contractual obligations contained in certain convertible notes outstanding.

The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. No underwriters were retained to serve as placement agents for the sale. The Shares were sold directly through our management. 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.

On February 15, 2013 the Company issued 30,649,351 Common Shares (“Shares”) pursuant to a conversion of $23,600 of Non Voting Convertible Preferred Shares.

On March 12, 2013 41,000,000 Common Shares (“Shares”) were issued to 18KT.TV LLC pursuant to a SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE by and between 18KT.TV LLC and the Company.

On March 13, 2013 the Company issued 3,011,583 Common Shares (“Shares”) pursuant to a conversion of $7,800 of Non Voting Convertible Preferred Shares.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Reserved

None.

Item 5. Other Information

None.

Item 6. Exhibits

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


	Entest BioMedical, Inc.
	a Nevada corporation

By:	/s/ David R. Koos
	David R. Koos
	Chief Executive Officer
	Date: June 28, 2013

Attached files

ENTEST GROUP, INC. Reports

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