424B3 1 zander052418prospectus.htm 424B3

Filed Pursuant to Rule 424(b)(3)

Registration No: 333-220790

 

 

PROSPECTUS

 

DATED MAY 30, 2018

 

ZANDER THERAPEUTICS, INC.

 

3,000,000 Shares of Common Stock

 

 

You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus is correct as of any time after its date.

 

We are furnishing this prospectus to the common and preferred shareholders of Entest Group, Inc. (formerly Entest Biomedical, Inc. ) a Nevada corporation. This prospectus relates to the distribution on a pro rata basis as a dividend in kind of 3,000,000 of our common shares, par value $0.0001, currently owned by Entest Group, Inc (“ENTB”) to:

 

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

 

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

SHAREHOLDERS OF ENTB SHALL RECEIVE 1 COMMON SHARE OF ZANDER THERAPEUTICS, INC. FOR EACH 17 COMMON AND/OR PREFERRED SHARES OF ENTB HELD AS OF THE RECORD DATE WHICH IS MAY 30, 2018 ASSUMING ENTB ISSUES NO ADDITIONAL COMMON OR PREFERRED SHARES AFTER APRIL 23, 2018, WHICH CANNOT BE ASSURED

Shareholders of ENTB will receive a proportionate allocation of the shares to be distributed in relation to the total number of common and or/preferred shares to which they are shareholders of record as of the record date. The record date is May 30, 2018 (“Record Date”). The distribution of the 3,000,000 common shares of Zander Therapeutics, Inc. to the common and preferred shareholders of ENTB will occur on June 11, 2018 (“Distribution Date”). No fractional shares will be distributed. Where the distribution to the shareholder would result in a fractional share, that distribution will be rounded down to the nearest whole share amount. As of the date of this document, no public market exists for the common shares of Zander Therapeutics, Inc.

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We anticipate applying for trading of our common stock on the over the counter bulletin board (OTC BB) or the OTCQB Tier operated by OTC Markets Group , however, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize. The distribution is not conditioned on a public market materializing for our common shares.

 

We are considered an “Emerging Growth Company” under Section 101(a) of the Jumpstart Our Business Startups Act as we are an issuer that had total annual gross revenues of less than $1 billion during our most recently completed fiscal year.


This investment involves a high degree of risk. You should purchase shares only if you can afford a complete loss. See “Risk Factors” beginning on page 11.

 

Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

The date of this prospectus is May 30, 2018.

 

 

 

 

 

 

 

 

 

 

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Contents

 

PROSPECTUS SUMMARY 4
ABOUT THIS OFFERING 6
SUMMARY FINANCIAL AND OPERATING INFORMATION 7
EXEMPTIONS UNDER JUMPSTART OUR BUSINESS STARTUPS ACT 10
RISK FACTORS 11
FORWARD LOOKING STATEMENTS 16
USE OF PROCEEDS 16
DETERMINATION OF OFFERING PRICE 16
DILUTION 17
DISTRIBUTING SECURITY HOLDER 17
PLAN OF DISTRIBUTION 18
TAX MATTERS 18
DESCRIPTION OF SECURITIES TO BE REGISTERED 19
INTERESTS OF NAMED EXPERTS AND COUNSEL 20
BUSINESS 21
PROPERTIES 30
LEGAL PROCEEDINGS 30
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 30
FINANCIAL STATEMENTS 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 105
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 109
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 109
TRANSACTIONS WITH RELATED PERSONS 111
CORPORATE GOVERNANCE 114
SUMMARY COMPENSATION TABLES 115
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 118
AVAILABLE INFORMATION 120
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES. 120

 

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PROSPECTUS SUMMARY

 

This summary highlights certain information contained elsewhere in this prospectus. Because it is a summary, it may not contain all of the information that is important to you. Before investing in our common stock, you should read this entire prospectus carefully, especially the sections entitled “Risk Factors” beginning on page 11 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 105 , as well our financial statements and related notes included elsewhere in this prospectus. In this prospectus, the terms “Zander Therapeutics, Inc” “Zander ” “Company,” “we,” “us” and “our” refer to Zander Therapeutics , Inc.. In this prospectus, the terms “Entest Group”, “Entest Biomedical” “Entest” and “ENTB” refer to Entest Group, Inc. (formerly Entest Biomedical, Inc.)

 

About Us

 

We were incorporated June 18, 2015 under the laws of the State of Nevada. We are a majority owned subsidiary of Entest Group, Inc. ( formerly Entest Biomedical, Inc,), a Nevada corporation. We intend to engage primarily in the development and commercialization of veterinary medical therapies which we intend to license from other entities as well as develop internally. As of December 15, 2017, we have not licensed, developed or commercialized any existing veterinary medical therapies, however we have licensed intellectual properties from Regen Biopharma, Inc., a company under common control with us, and these intellectual properties comprise the therapeutic concept behind ZAN-100 and ZAN-200, two therapies in early stage development by the Company.

 

NR2F6

Both of Zander’s products under development will operate through either inhibition or activation by small (low molecular weight) molecules of the nuclear receptor NR2F6. Nuclear receptors are a class of proteins found within cells that are responsible for sensing certain other molecules. In response, these receptors work with other proteins to regulate the expression of specific genes.

ZAN-100

ZAN-100 is intended to be a veterinary cancer therapy. In the opinion of the Company, the studies performed by Hermann-Kleiter et al. (The Nuclear Orphan Receptor NR2F6 Is a Central Checkpoint for Cancer Immune Surveillance. Cell Reports 12, 2072–2085 (2015)) demonstrate that the inhibition of NR2F6 in T cells may yield anti-cancer benefits in small animals. The studies indicate that, in the presence of NR2F6, T cell activation is limited within the tumor microenvironment. The Company believes that inhibition of NR2F6 removes a barrier to the animal’s own immune system’s ability to attack cancer cells. ZAN-100 is intended to be a small molecule therapy whose mode of action will be the inhibition of NR2F6.

 

High throughput screening assays conducted for Regen Biopharma, Inc. (the licensor of the intellectual property which forms the basis for the Company’s products in development) between July and September of 2016 on thirty thousand compounds yielded four newly discovered small molecule compounds which (a) can bind to the relevant structure in a cellular system and (b) show evidence of the ability to modulate the effects of NR2F6.

ZAN-200

ZAN-200 is intended to be a veterinary arthritis therapy. Rheumatoid arthritis is an immune-mediated disease. This means it is caused by an overreaction of the immune system. In rheumatoid arthritis, the body mistakes some of its own protein for foreign protein. It then makes antibodies against its own protein. In the opinion of the Company, suppression of the immune system through activation of NR2F6 in those immune cells would be an effective therapy. ZAN-200 is intended to operate by activating NR2F6 in the animals’ immune cells.

 

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Ex-vivo assays were performed using immune cells from five dog blood samples. Data derived from those tests demonstrated the ZAN-200 may inhibit T cell activation and production of cytokines, particularly IL-17 and IL-2. IL-17 and IL-2 have been shown to create inflammatory responses leading to arthritic conditions.

We have filed applications with the United States Patent and Trademark Office for patent protection with respect to internally developed intellectual property covering our products in development. As of December 15, 2017 no patent protection has been granted to any intellectual property developed by Zander.

We generated net losses of $875,660 during the period from June 18, 2015 (inception) through December 31, 2017. This condition raises substantial doubt about our ability to continue as a going concern. Our continuation as a going concern is dependent on our ability to meet our obligations, to obtain additional financing as may be required and ultimately to attain profitability. Our auditor's report dated September 5, 2017 expressed substantial doubt about our ability to continue as a going concern.

As of December 31, 2017 we had $ 721,242  cash on hand and current liabilities of $112,297 .Although we feel we will be able to satisfy our cash requirements over the next twelve months, we also feel that we shall be required to seek additional financing in the future. We currently plan to raise additional funds primarily by 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.

For the period beginning on June 23, 2015 and ending on March 9, 2018 the Company’s activities have been primarily focused upon the development and undertaking of preclinical research with regard to the development of therapies related to inhibition or activation of NR2F6.

The Company estimates that it will require $1,500,000 to complete medicinal chemistry studies with regards to the Company’s products in development. Medicinal chemistry is the process by which trained chemists modify a starting compound (called a parent compound) in an effort to optimize its characteristics such as binding affinity and toxicity profile. The Company estimates that it will require an additional require an additional $1,500,000 to complete pre-clinical studies with regards to the Company’s products in development. Pre-clinical studies refer to detailed cellular and animal studies that measure the toxic effects of the drug, how long it stays in the blood stream, efficacy, where it goes in the body and the best way to formulate and deliver the drug. The Company estimates that it will require a further additional $2,000,000 to complete studies required in order that New Animal Drug Applications (NADA) may be submitted to the United States Food and Drug Administration (FDA) with regards to the Company’s products in development. NADA-enabling studies include using the drug in its final commercial manufactured form in the target animals of interest to show efficacy in the field and to look for toxicity. The NADA must also include information on the drug's chemistry; composition and component ingredients; manufacturing methods, facilities, and controls; proposed labeling; analytical methods for residue detection and analysis if applicable; an environmental assessment; and other information. The sponsor of a new animal drug is responsible for submitting all appropriate data to establish effectiveness and safety. If the drug product is intended for use in a food-producing animal, residues in food products must also be established as safe for human consumption. FDA review of the NADA submitted by drug sponsors is extremely detailed and comprehensive.

No assurance may be given that ZAN-100, ZAN-200 or any new animal drug product which the Company may develop will be approved by the FDA to be marketed and sold. Regulatory authorities in countries outside of the United States and Europe also have requirements for approval of veterinary drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval in any other country

The foregoing statements that are not historical facts, including statements about Zander’s plans, beliefs or expectations, are forward-looking statements. These statements are based on plans, estimates and projections at the time Zander made the original statement, and you should not place undue reliance on them as these plans, estimates and projections may be subject to change. Forward-looking statements involve inherent risks and uncertainties and Zander cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement.

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ABOUT THIS OFFERING

 

Shares Issued   On June 11, 2018 ENTB will issue to all ENTB common and preferred shareholders of record on the Record Date ( May 30, 2018) a pro rata distribution of 3,000,000 common shares of Zander Therapeutics, Inc., Inc. owned by ENTB. Shareholders of ENTB shall receive 1 common share of Zander Therapeutics, Inc. for every 17 shares of ENTB common and/or preferred owned as of the Record Date. No fractional shares will be distributed. Where the distribution to the shareholder would result in a fractional share, that distribution will be rounded down to the nearest whole share amount.
     
Distribution Date  

June 11, 2018

 

U.S. Federal Income Tax Consequences of the Distribution   Herman Pettegrove, attorney at law, who acted as special legal counsel to the Company in regards to this distribution, opined that no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder as a result of the Distribution; The aggregate tax basis of the Shares distributed and Entest securities  held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the Entest securities  held by the U.S. Holder immediately before the Distribution, allocated between the Shares  and the Entest securities in proportion to their relative fair market values on the date of the Distribution. Distributees should consult with a tax professional with regards to the tax impact of this distribution ( See page 18)
     
Secondary Market   There is currently no existing public market  for the common shares of the Company

 

Dividend Policy   The Company does not anticipate payment of dividends to shareholders in the foreseeable future.
     
Appraisal Rights   Holders of ENTB common and preferred shares have no dissenters’ rights of appraisal in connection with this distribution of the Company’s common shares.

 

Reason for the Distribution   It is hoped that the distribution will establish the Company as an independent publicly traded corporation, which we believe will meaningfully enhance its industry market perception, provide greater growth opportunities for us, and provide us with greater opportunities to pursue financing of our operations.  
     
Relationship between ENTB and the Company subsequent to the Distribution.  

ENTB will own approximately 36.34% of the outstanding shares of the Company following the distribution. The sole officer and director of ENTB, David Koos will also be Chairman, CEO and sole director of the Company following the distribution.

 

ENTB and Management of the Company combined will own approximately 57.294 % of the Company and will control approximately 62.714% of the voting power of the Company following the distribution.

 

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An investment in our common stock involves a high degree of risk.  Risk factors include, but are not limited to, our limited operating history, the fact that we do not own our own laboratory or manufacturing facilities, serious doubt over our ability to continue as a going concern, the early stage of development of our products as well as the regulatory climate of the industry in which we compete. In addition, no public market currently exists for shares of our common stock, nor may a public market ever exist, and trading in our common shares, should a public market develop, will most likely be subject to the “penny stock” rules. For a more comprehensive discussion of Risk Factors related to our common shares see “Risk Factors” beginning on page 11.

 

SUMMARY FINANCIAL AND OPERATING INFORMATION

 

The following selected financial information is derived from our Financial Statements appearing elsewhere in this Prospectus and should be read in conjunction with our Financial Statements, including the notes thereto, appearing elsewhere in this Prospectus.

 

   As of
   March  31, 2018
Selected Balance Sheet Information:     
Cash  $674,259 
Current assets  $763,866 
Total Assets  $763,866 
Current liabilities  $24,824 
Total liabilities  $24,824 
Total stockholders' equity (deficit)  $739,042 

 

  

 

For the Quarter ended

March 31, 2018

  For the Quarter Ended March 31, 2017
Selected Statement of Operations Information:          
Revenues  $0    0 
Gross profit   0    0 
Total operating expenses   395,156    62,401 
Operating income (loss)   (395,156)   (62,401)
Net income (loss) to common shareholders  $(397,292)  $(63,030)
Basis and diluted earnings (loss) per common share  $(0.109)  $(0.062)
Weighted average common shares outstanding basic and diluted   3,640,792    1,011,237 

 

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   As of
   December 31, 2017
Selected Balance Sheet Information:     
Cash  $721,242 
Current assets  $721,284 
Total Assets  $721,284 
Current liabilities  $112,297 
Total liabilities  $112,297 
Total stockholders' equity (deficit)  $608,988 

 

  

 

For the Quarter ended

December 31, 2017

  For the Quarter Ended December 31, 2016
Selected Statement of Operations Information:          
Revenues  $0    0 
Gross profit   0    0 
Total operating expenses   162,770    57,932 
Operating income (loss)   (162,770)   (57,932)
Net income (loss) to common shareholders  $(166,637)  $(58,480)
Basis and diluted earnings (loss) per common share  $(0.39)  $(58,480)
Weighted average common shares outstanding basic and diluted   4,221,188    1 

 

 

   As of
  

September 30, 2017

(as restated)

Selected Balance Sheet Information:     
Cash  $53,833 
Current assets  $53,879 
Total Assets  $53,879 
Current liabilities  $236,506 
Total liabilities  $236,506 
Total stockholders' equity (deficit)  $(182,627)

 

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For the Quarter ended

September 30, 2017

(as restated)

 

For the Quarter Ended September 30, 2016

(as restated)

Selected Statement of Operations Information:          
Revenues  $0    0 
Gross profit   0    0 
Total operating expenses   122,396    55,538 
Operating income (loss)   (122,396)   (55,538)
Net income (loss) to common shareholders  $(127,228)  $(55,640)
Basis and diluted earnings (loss) per common share  $(0.36)  $(55,640)
Weighted average common shares outstanding basic and diluted   3,548,660    1 

 

   As of
  

June 30, 2017

(as restated)

Selected Balance Sheet Information:     
Cash  $96,005 
Current assets  $96,005 
Total Assets  $96,005 
Current liabilities  $227,250 
Total liabilities  $227,250 
Total stockholders' equity (deficit)  $(131,244)

 

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For the Year ended

June 30, 2017

(as restated)

 

For the Year Ended June 30, 2016

(as restated)

Selected Statement of Operations Information:          
Revenues  $0    0 
Gross profit   0    0 
Total operating expenses   257,336    214,662 
Operating income (loss)   (257,336)   (214,662)
Net income (loss) to common shareholders  $(260,085)  $(214,662)
Basis and diluted earnings (loss) per common share  $(0.261)  $(214,662)
Weighted average common shares outstanding basic and diluted   996,297    1 

 

EXEMPTIONS UNDER JUMPSTART OUR BUSINESS STARTUPS ACT

 

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act.

An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As an emerging growth company:

 

we are permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;
we are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;
we are permitted to provide less extensive disclosure about our executive compensation arrangements; and
we are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements.

We may take advantage of these provisions for up to five years subsequent to the effective date of this registration statement or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) December 31 of the fiscal year that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, or the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

We hereby elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1).

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RISK FACTORS

 

An investment in our common stock involves a high degree of risk.  You should carefully consider the risks described below as well as other information provided to you in this prospectus, including information in the section of this document entitled “Information Regarding Forward Looking Statements.”  If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common stock could decline, and you may lose all or part of your investment. The following discussion and analysis should be read in conjunction with the other financial information and consolidated financial statements and related notes appearing in this prospectus.

 

Risks Related to our Business

 

WE HAVE A LIMITED OPERATING HISTORY UPON WHICH AN EVALUATION OF OUR PROSPECTS CAN BE MADE.

 

The Company was incorporated June 18, 2015 and has only been pursuing its current business plan since June 23, 2015. The Company has never generated positive cash flow from operations. Due to the early stage of our development, limited financial and other historical data is available for investors to evaluate whether we will be able to fulfill our business strategy and plans.  Further, financial and other limitations may force us to modify, alter, or significantly delay the implementation of such plans.   We may incur substantial losses in the future, making it extremely difficult to implement our business plans and strategies and sustain our then current level of operations.  Furthermore, no assurances can be given that our strategy will result in an improvement in operating results or that our operations will become profitable.

 

THERE IS SUBSTANTIAL DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.

 

Our auditor’s report dated September 5, 2017 expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing concern.  Because obtaining investment capital in not certain, we may not have the funds necessary to continue our operations.   Our ability to meet our operating needs depends in large part on our ability to secure third party financing.  We cannot provide any assurances that we will be able to obtain financing.  

 

THE COMPANY DOES NOT CURRENTLY OWN OR OPERATE ANY LABORATORY OR MANUFACTURING FACILITIES, THE COMPANY CAN PROVIDE NO ASSURANCE THAT THE USAGE OF SUCH FACILITIES CAN BE OBTAINED ON TERMS FAVORABLE TO THE COMPANY

 

The Company does not currently own or operate any laboratory or manufacturing facilities. As a result, we may outsource certain functions, tests and services to Contract Research Organizations (“CROs”), veterinary institutions and collaborators as well as outsourcing manufacturing to collaborators and/or contract manufacturers. We may also engage a CRO to run all aspects of a clinical trial on our behalf. There is no assurance that such individuals or organizations will be able to provide the functions, tests, or services as agreed upon or in a quality fashion or on terms favorable to the Company. Any failure to do so could cause us to suffer significant delays in the development of our products.

 

WE ARE IN THE EARLY STAGES OF DEVELOPING OUR PRODUCTS, THE EFFECTIVENESS OF WHICH ARE UNPROVEN.

 

The Company is currently in the early stage of developing ZAN-100 and ZAN-200. No assurance can be given that either ZAN-100 or ZAN-200 will prove effective for their intended purpose.

 

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WE ARE RELIANT ON REGEN BIOPHARMA, INC. WITH REGARD TO THE PROSECUTION OF RIGHTS TO PATENTS, PATENT APPLICATIONS, KNOW-HOW AND OTHER INTELLECTUAL PROPERTY RELATING TO INTELLECTUAL PROPERTY TO WHICH WE HAVE BEEN GRANTED AN EXCLUSIVE WORLDWIDE RIGHT AND LICENSE TO DEVELOP AND COMMERCIALIZE FOR NON-HUMAN VETERINARY THERAPEUTIC USE (“REGEN LICENSE”).

Pursuant to the agreement between the Company and Regen Biopharma, Inc (“Regen”) for the grant of the Regen License; Regen shall have the right and the obligation to prosecute all Patents included within the Regen License at its cost and expense. Regen has sole responsibility and control of legal action relating to claims of infringement with respect to intellectual property licensed to Zander pursuant to the Regen License. If Regen fails to adequately maintain, prosecute or protect these intellectual property rights our business and prospects could suffer substantial harm.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL TO CARRY OUT OUR BUSINESS PLAN.

To date, the Company’s operations have not generated cash flow sufficient to fund our capital requirements and there can be no assurance given that the Company’s operations will do so in the future. To date, the Company has generated no cash flow from operations and there can be no assurance given that the Company’s operations will do so in the future. As of December 31, 2017 the Company has cash of $721,242 which is sufficient to enable the Company to operate over the subsequent six months. There is no guarantee that we will be able to access additional capital at rates and on terms which are attractive to us, if at all.  Without the additional funding needed to fund our growth we may not be able to grow as planned.

 

WE RELY ON HIGHLY SKILLED PERSONNEL AND, IF WE ARE UNABLE TO RETAIN OR MOTIVATE KEY PERSONNEL OR HIRE QUALIFIED PERSONNEL, WE MAY NOT BE ABLE TO GROW EFFECTIVELY.

 

Our performance largely depends on the talents and efforts of highly skilled individuals. Competition in our industry for qualified employees is intense.  In addition, our compensation arrangements may not always be successful in attracting new employees and retaining and motivating our existing employees.  Our continued ability to compete effectively depends on our ability to attract new employees and to retain and motivate our existing employees.

THE COMPANY DOES NOT MAINTAIN CERTAIN INSURANCE, INCLUDING ERRORS AND OMISSIONS INSURANCE.

 

The Company has limited capital and, therefore, does not currently have a policy of insurance against liabilities arising out of the negligence of its officers and directors and/or deficiencies in any of its business operations.  Even assuming that the Company obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made against the Company, its officers and directors, or its business operations or products.  Any such liability which might arise could be substantial and may exceed the assets of the Company.  

 

IN THE FUTURE WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY RIGHTS CLAIMS, WHICH ARE COSTLY TO DEFEND, COULD REQUIRE US TO PAY DAMAGES AND COULD LIMIT OUR ABILITY TO SELL SOME OF OUR PRODUCTS.

 

Although we have not been subject to any intellectual property litigation or infringement claims, we may be in the future, which could cause us to incur significant expenses to defend such claims, divert management’s attention or prevent us from manufacturing, selling or using some aspect of our products.  If we chose or are forced to settle such claims, we may be required to pay for a license to certain rights, paying royalties on both a retrospective and prospective basis, and/or cease our manufacturing and sale of certain products that are alleged to be infringing.  Future infringement claims against us by third parties may adversely impact our business, financial condition and results of operations.

 

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WE ARE SUBJECT TO NUMEROUS LAWS AND REGULATIONS, FAILURE TO COMPLY WITH THOSE LAWS AND REGULATIONS MAY ADVERSELY IMPACT OUR BUSINESS.

In the United States, new animal drugs must be approved by the United States Food and Drug Administration (FDA) before being sold and marketed to the public. Zander will be required to obtain approval from the FDA in order to market and sell ZAN-100, ZAN-200 or any new animal drug product which the Company may develop. The new animal drug approval process is complicated. Before a new animal drug may receive FDA approval, the sponsor must establish that the new animal drug is safe and effective. Drug sponsors must submit a New Animal Drug Application (NADA) along with supporting data, including all adverse effects associated with the drug's use. The NADA must also include information on the drug's chemistry; composition and component ingredients; manufacturing methods, facilities, and controls; proposed labeling; analytical methods for residue detection and analysis if applicable; an environmental assessment; and other information. The sponsor of a new animal drug is responsible for submitting all appropriate data to establish effectiveness and safety. If the drug product is intended for use in a food-producing animal, residues in food products must also be established as safe for human consumption. FDA review of the NADA submitted by drug sponsors is extremely detailed and comprehensive. No assurance may be given that ZAN-100, ZAN-200 or any new animal drug product which the Company may develop will be approved by the FDA to be marketed and sold. Regulatory authorities in countries outside of the United States and Europe also have requirements for approval of veterinary drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval in any other country

NO APPROVAL HAS BEEN GRANTED BY THE FDA FOR THE MARKETING AND SALE OF ZAN-100

 

A New Animal Drug Application for ZAN-100 has not been submitted to the FDA. No approval has been granted by the FDA for the marketing and sale of ZAN-100.

 

NO APPROVAL HAS BEEN GRANTED BY THE FDA FOR THE MARKETING AND SALE OF ZAN-200

 

A New Animal Drug Application for ZAN-200 has not been submitted to the FDA. No approval has been granted by the FDA for the marketing and sale of ZAN-200.

 

THE COMPANY CAN PROVIDE NO ASSURANCE THAT IT WILL BE ABLE TO SELL OR LICENSE ANY PRODUCT UNDER DEVELOPMENT OR WHICH WE MAY DEVELOP IN THE FUTURE.

We can provide no assurance that the Company will be able to sell or license any product which we may develop or that, if such product is sold or licensed, such sale or license will be on terms favorable to the Company.

WE HAVE NOT OBTAINED PATENT PROTECTION FOR OUR INTELLECTUAL PROPERTY.

 

The Company has not obtained patent protection on any of its intellectual property.  Although the Company plans on attempting to obtain patents on its products and services, there can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction of substantially similar products.

 13 

 

LIABILITY OF DIRECTORS FOR BREACH OF DUTY OF CARE IS LIMITED. OUR BYLAWS INDEMNIFY MEMBERS OF OUR BOARD OF DIRECTORS, OUR OFFICERS, EMPLOYEES, AND AGENTS AND PERSONS WHO FORMERLY HELD SUCH POSITIONS, AND THE LEGAL REPRESENTATIVES OF ANY OF THEM, TO THE FULLEST EXTENT LEGALLY PERMISSIBLE UNDER THE GENERAL CORPORATION LAW OF THE STATE OF NEVADA AGAINST ANY OR ALL EXPENSE, LIABILITY AND LOSS REASONABLY INCURRED IN DEFENDING A CIVIL OR CRIMINAL ACTION, SUIT OR PROCEEDING TO WHICH ANY SUCH PERSON SHALL HAVE BECOME SUBJECT BY REASON OF HIS HAVING HELD SUCH A POSITION OR HAVING ALLEGEDLY TAKEN OR OMITTED TO TAKE ANY ACTION IN CONNECTION WITH SUCH POSITION.

 

According to Nevada law (NRS 78.138(7)), all Nevada corporations limit the liability of directors and officers, including acts not in good faith. Our stockholders’ ability to recover damages for fiduciary breaches may be reduced by this statute. In addition our Bylaws indemnify members of the board of directors, our officers, employees, and agents and persons who formerly held such positions, and the legal representatives of any of them, to the fullest extent legally permissible under the general corporation law of the state of Nevada against any or all expense, liability and loss reasonably incurred in defending a civil or criminal action, suit or proceeding to which any such person shall have become subject by reason of his having held such a position or having allegedly taken or omitted to take any action in connection with such position.

 

THE REPORTING REQUIREMENTS OF BEING AN INDEPENDENT PUBLIC COMPANY WILL INCREASE OUR OVERALL OPERATING COSTS AND SUBJECT US TO INCREASED REGULATORY RISK.

As an independent public company, we will be subject to the reporting requirements of the Securities and Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002. The various financial reporting, legal, corporate governance and other obligations associated with being an independent public company require us to incur significant expenditures and place additional demands on our management, administrative, operational, and finance resources. If we are unable to comply with these requirements in a timely and effective manner, we and/or our executive officers may be subject to sanctions by the United States Securities and Exchange Commission and our ability to raise additional funds in the future maybe impaired and ultimately affect our business.

 

OUR OFFICERS AND DIRECTOR SERVE IN SIMILAR CAPACITIES WITH OTHER ORGANIZATIONS WHICH PRESENTS POSSIBLE TIME CONFLICTS.

 

David R. Koos our Chairman of the Board of Directors, Chief Executive Officer, Secretary and Treasurer also concurrently serves as the sole officer and director of Entest Group, Inc., the sole officer and director of Bio Matrix Scientific Group, Inc. and as a Director and Chief Executive Officer of Regen Biopharma, Inc. Todd Caven, our Chief Financial Officer, also concurrently serves as Chief Financial Officer of Regen Biopharma, Inc and serves in an executive capacity at Rock Ridge Enterprises LLC and Saguaro Capital Partner LLC. Harry Lander, our president and Chief Scientific Officer serves in equivalent positions at Regen Biopharma, Inc.

 

Risks Related to an Investment in Our Common Stock

 

WE DO NOT PLANT TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.

 

We currently intend to retain all future earnings for use in the operation and expansion of our business. We do not intend to pay any cash dividends in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.  There is no assurance that stockholders will be able to sell shares when desired.

 

NO PUBLIC MARKET CURRENTLY EXISTS FOR SHARES OF OUR COMMON STOCK, NOR MAY A PUBLIC MARKET EVER EXIST AND OUR SHARES ARE ILLIQUID.

 

There is currently no public market for our securities and you may not be able to liquidate your investment since there is no assurance that a public market will develop for our common stock or that our common stock will ever be approved for trading on a recognized exchange. Our shares are not and have not been listed or quoted on any exchange or quotation system.

 

 14 

 

 

“PENNY STOCK” RULES MAY MAKE BUYING OR SELLING OUR COMMON STOCK DIFFICULT.

 

Trading in our securities, should a public market develop, will most likely be subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. Broker-dealers who sell penny stocks to certain types of investors are required to comply with the Commission’s regulations concerning the transfer of penny stocks. These regulations require broker- dealers to:

 

  Make a suitability determination prior to selling a penny stock to the purchaser;

 

  Receive the purchaser’s written consent to the transaction; and

 

  Provide certain written disclosures to the purchaser.

 

These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

 

CONCENTRATED CONTROL RISKS; SHAREHOLDERS COULD BE UNABLE TO CONTROL OR INFLUENCE KEY CORPORATE ACTIONS OR EFFECT CHANGES IN THE COMPANY’S BOARD OF DIRECTORS OR MANAGEMENT

 

Subsequent to the distribution of 3,000,000 of the Company’s common shares to common and preferred shareholders of ENTB, management of the Company and ENTB collectively shall own 6,500,000 Series M Preferred shares of the Company, 1,382,574 common shares of the Company and 200 Series AA Preferred Shares of the Company. David Koos, the Chairman and Chief Executive Officer of the Company, is also the sole officer and director of ENTB and shall have voting control over Series M Preferred shares owned by ENTB. In addition, David Koos will control 1,382,574 common shares of the Company and 200 shares of the Company’s Series AA Preferred stock . Each holder of Series AA Preferred Stock is entitled to cast that number of votes which is equivalent to the number of shares of Series AA Preferred Stock owned by such a holder times ten thousand. Collectively, management shall control 62.714% of the voting power of the Company based on shares outstanding as of April 23, 2018. Management therefore has the power to make many major decisions regarding our affairs, including decisions regarding whether or not to issue stock and for what consideration. Investors in this offering will have limited control over matters requiring approval by our security holders, including the election of directors, whether or not to sell all or substantially all of our assets and for what consideration and whether or not to authorize more stock for issuance or otherwise amend our charter or bylaws.

 

BECAUSE WE HAVE ELECTED TO DEFER COMPLIANCE WITH NEW OR REVISED ACCOUNTING STANDARDS PURSUANT TO SECTION 102(b)(1) OF THE JOBS ACT OUR FINANCIAL STATEMENT DISCLOSURE MAY NOT BE COMPARABLE TO SIMILAR COMPANIES.   

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act. This allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of our election, our financial statements may not be comparable to companies that comply with public company effective dates. .

 15 

 

 

FUTURE ISSUANCE OF SECURITIES MAY HAVE A DILUTING FACTOR ON EXISTING AND FUTURE SHAREHOLDERS.

 

The Company plans to meet cash needs through selling its securities for cash. The issuance of any additional shares of common stock or convertible securities in a subsequent offering could be substantially dilutive to stockholders of our common stock. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. Holders of our shares of common stock have no preemptive rights as a matter of law that entitle them to purchase their pro-rata share of any offering or shares of any class or series. The market price of our common stock could decline as a result of additional sales of shares of our common stock or the perception that such sales could occur.

  

FORWARD LOOKING STATEMENTS

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS PROSPECTUS

 

This prospectus contains forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. These statements may be found under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

 

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

 

The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as the result of new information, future events, or otherwise. 

 

USE OF PROCEEDS

 

We will not receive any proceeds from the distribution of our common stock

 

DETERMINATION OF OFFERING PRICE

 

No consideration will be paid for the shares of common stock distributed in the spin-off.  The proposed offering price of the common shares to which this registration statement pertains is $0.0001 and has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(f) of the Securities Act of 1933, on the basis of the book value of such securities computed as of the latest practicable date prior to the date of filing the registration statement

 16 

 

DILUTION

 

We have determined that there is no substantial disparity between the public offering price and the effective cash cost to officers, directors, promoters and affiliated persons of common equity in the Company acquired by them in transactions during the past five years, or which they have the right to acquire.

 

DISTRIBUTING SECURITY HOLDER

 

We are furnishing this prospectus to the common and preferred shareholders of Entest Group, Inc ( formerly Entest Biomedical, Inc. ) a Nevada corporation. This prospectus relates to the distribution on a pro rata basis as a dividend in kind of 3,000,000 of our common shares, par value $0.0001, currently owned by Entest Biomedical, Inc (“ENTB”) to:

 

  (a) Holders of record of the outstanding common shares of ENTB as of May 30, 2018

 

  (b) Holders of record of the shares of any outstanding series of the preferred shares of ENTB as of May 30, 2018.

Shareholders of ENTB will receive a proportionate allocation of the shares to be distributed in relation to the total number of common and or/preferred shares to which they are shareholders of record as of the record date ( fractional shares will be rounded down to the nearest whole share). The record date is May 30, 2018 (“Record Date”). The distribution of the 3,000,000 common shares of Zander Therapeutics, Inc. to the common and preferred shareholders of ENTB will occur on June 11, 2018 (“Distribution Date”)

Name 

Shares

Beneficially

Owned

Prior to

The Distribution

 

Shares to be

Distributed

 

Amount

Beneficially

Owned Before

Distribution

 

Percent

Beneficially

Owned After

Distribution

   Common  Common  Common  Common
Entest Group, Inc.   3,000,001    3,000,000    63.05%  Nil
    Series M Preferred    Series M Preferred    Series M Preferred   Series M Preferred
Entest Group, Inc.   5,000,000    0    55.56%  55.56%

 

 17 

 

 

Name 

Shares

Beneficially

Owned

Prior to

The Distribution

 

Shares to be

Distributed

 

Amount

Beneficially

Owned Before

Distribution

 

Percent

Beneficially

Owned After

Distribution

   Common  Common  Common  Common
Entest Group, Inc.and Management of Zander   3,000,001    3,000,000    63.05%   29.04%
    Series M Preferred    Series M Preferred    Series M Preferred    Series M Preferred 
Entest Group, Inc. and Management of Zander   6,500,000    0    72%   72%
    Series AA Preferred    Series AAPreferred    Series AA Preferred    Series AAPreferred 
Entest Group, Inc. and Management of Zander   200    200    100%   100%

 

The above includes 200 shares of the Company’s Series AA Preferred stock currently owned by David Koos. The above includes 896,541 shares of the Company to be distributed to David Koos ( the Company’s Chairman and Chief Executive Officer) in the Distribution. The above includes 4,411 shares of the Company to be distributed to Bio Matrix Scientific Group, Inc. in the Distribution. The above includes 481,520 shares of the Company to be distributed to Regen Biopharma, Inc. in the Distribution. Bio Matrix Scientific Group, Inc. and Regen Biopharma, Inc. are controlled by David Koos.

PLAN OF DISTRIBUTION

 

The distribution will be effected through a pro rata property dividend to common and preferred shareholders of ENTB. Fractional shares will be rounded down to the nearest whole share The number of shares each ENTB common or preferred shareholder will be entitled to receive in the distribution will depend on how many common and preferred shares are issued and outstanding as of the Record Date which is May 30, 2018. Assuming ENTB issues no additional common or preferred shares after April 23, 2018, which cannot be assured, each ENTB common and preferred shareholder of record as of the Record Date will receive one common share of Zander Therapeutics, Inc. each seventeen common and/or preferred shares of ENTB held of record as of that date. No fractional shares will be distributed. Where the distribution to the shareholder would result in a fractional share, that distribution will be rounded down to the nearest whole share amount. The Distribution Date will be June 11, 2018.

 

ENTB will pay all expenses incident to the registration and distribution of the shares of our common stock to which this prospectus pertains. Expenses are expected to be minimal.

 

The purpose of the distribution is in order to establish the Company as an independent publicly traded corporation, which we believe will meaningfully enhance its industry market perception, provide greater growth opportunities for us, and provide us with greater opportunities to pursue financing of our operations. No consideration will be paid by ENTB shareholders for the shares of Common Stock to be distributed .

 

TAX MATTERS

Herman Pettegrove, attorney at law, who has acted as special legal counsel with regards to this Distribution, has opined that for U.S. federal income tax purposes:

 

no gain or loss will be recognized by, or be includible in the income of, a U.S. Holder as a result of the Distribution;
the aggregate tax basis of the Shares distributed and Entest securities  held by each U.S. Holder immediately after the Distribution will be the same as the aggregate tax basis of the Entest securities  held by the U.S. Holder immediately before the Distribution, allocated between the Shares  and the Entest securities in proportion to their relative fair market values on the date of the Distribution and

 

the holding period of the Shares  received by each U.S. Holder will include the holding period of their Entest securities , provided that such Entest securities are held as a capital asset on the date of the Distribution.

 

 18 

 

 

A “U.S. Holder” is a beneficial owner of Entest securities that is, for U.S. federal income tax purposes:

 

an individual who is a citizen or a resident of the United States;
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust if a court within the United States is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or, in the case of a trust that was treated as a domestic trust under law in effect before 1997, a valid election is in place under applicable Treasury Regulations.

This opinion does not address any U.S. state or local or foreign tax consequences of the Distribution. This opinion does not discuss all tax considerations that may be relevant to Distributees in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws. This opinion is not binding on the IRS or the courts, and no assuarance may be given that the IRS or a court will not take a contrary position

 

DESCRIPTION OF SECURITIES TO BE REGISTERED

 

The stockholders' equity section of the Company contains the following classes of capital stock as April 23, 2018:

 

Common stock, $ 0.0001 par value; 100,000,000 shares authorized: 4,758,001 shares issued and outstanding.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Common Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Common Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

Preferred Stock, $0.0001 par value, 50,000,000 shares authorized of which 10,000,000 is designated as Series M Preferred Stock and 1,000,000 is designated Series AA Preferred Stock: 9,000,000 shares of Series M Preferred Stock are issued and outstanding as of December 15, 2017 and 200 shares of Series AA Preferred Stock are issued and outstanding as of December 15, 2017.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series M Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series M Preferred Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series M Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

 19 

 

 

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series AA Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series AA Preferred Stock owned by such holder times ten thousand (10,000).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series AA Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

This prospectus relates to the distribution on a pro rata basis as a dividend in kind of 3,000,000 of our common shares, par value $0.0001, currently owned by ENTB to:

 

  (a) Holders of record of the outstanding common shares of ENTB as of the record date

  (b) Holders of record of the shares of any outstanding series of the preferred shares of ENTB as of the record date.

 

 

Shareholders of ENTB will receive a proportionate allocation of the shares to be distributed in relation to the total number of common and or/preferred shares to which they are shareholders of record as of the record date. The record date is May 30, 2018 (“Record Date”). The distribution of the 3,000,000 common shares of Zander Therapeutics,,Inc. to the common and preferred shareholders of ENTB will occur June 11, 2018 (“Distribution Date”).

 

All shares being registered under this prospectus are common shares. The transfer agent for our common shares is:

Securities Transfer Corporation

2591 Dallas Parkway Suite 102

Frisco, Texas 75034

Phone - 469-633-0101

FAX 469-633-0088

 

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The audited financial statements of the Company included in this prospectus and in the registration statement have been audited by AMC Auditing

 

William Aul, our independent legal counsel, has provided an opinion on the validity of our common stock.

 

Herman Pettegrove, Attorney at Law, has provided an opinion regarding the tax implications of the distribution.

 

 20 

 

BUSINESS

 

We were incorporated June 18, 2015 under the laws of the State of Nevada. We are a majority owned subsidiary of Entest Group, Inc. ( formerly Entest Biomedical, Inc, ) a Nevada corporation. We intend to engage primarily in the development and commercialization of veterinary medical therapies which we intend to license from other entities as well as develop internally. As of December 15, 2017 we have not licensed, developed or commercialized any existing veterinary medical therapies, however we have licensed certain intellectual properties from Regen Biopharma, Inc. , a company under common control with us, and these intellectual properties comprise the therapeutic concept behind ZAN-100 and ZAN-200, two therapies in early stage development by the Company.

License Granted By Regen Biopharma, Inc.

 

On June 23, 2015 Regen Biopharma, Inc. (“Regen”) entered into an agreement (“Agreement”) with The Company whereby Regen granted to The Company an exclusive worldwide right and license for the development and commercialization of certain intellectual property controlled by Regen for non-human veterinary therapeutic use for a term of fifteen years. The Agreement was amended on September 12, 2017 to grant an exclusive worldwide right and license for the development and commercialization of all intellectual property controlled by Regen exclusive of trademarks (“License IP”) for non-human veterinary therapeutic use. The Agreement was further amended on December 15, 2017 excluding intellectual property licensed to Regen by Benitec Australia, Ltd from the license grant to the Company as well as rights to US Patent #8389708 and US Patent #8263571.

 

Pursuant to the Agreement, The Company shall pay to Regen a one-time, non-refundable, upfront payment of one hundred thousand US dollars ($100,000) as a license initiation fee which must be paid within 90 days of June 23, 2015 and an annual non-refundable payment of one hundred thousand US dollars ($100,000) on July 15th, 2016 and each subsequent anniversary of the effective date of the Agreement.

 

The abovementioned payments may be made, at The Company’s discretion, in cash or newly issued common stock of The Company or in common stock of ENTB valued as of the lowest closing price on the principal exchange upon which said common stock trades publicly within the 14 trading days prior to issuance.

 

Pursuant to the Agreement, The Company shall pay to Regen royalties equal to four percent (4%) of the Net Sales, as such term is defined in the Agreement, of any Licensed Products, as such term is defined in the Agreement, in a Quarter.

 

Pursuant to the Agreement, The Company will pay Regen ten percent (10%) of all consideration (in the case of in-kind consideration, at fair market value as monetary consideration) received by The Company from sublicensees (excluding royalties from sublicensees based on Net Sales of any Licensed Products for which Regen receives payment pursuant to the terms and conditions of the Agreement).

 

The Company is obligated pay to Regen minimum annual royalties of ten thousand US dollars ($10,000) payable per year on each anniversary of the Effective Date of this Agreement, commencing on the second anniversary of June 23, 2015. This minimum annual royalty is only payable to the extent that royalty payments made during the preceding 12-month period do not exceed ten thousand US dollars ($10,000).

 21 

 

The Agreement may be terminated by Regen:

If The Company has not sold any Licensed Product by ten years of the effective date of the Agreement or The Company has not sold any Licensed Product for any twelve (12) month period after The Company’s first commercial sale of a Licensed Product.

The Agreement may be terminated by The Company with regard to any of the License IP if by five years from the date of execution of the Agreement a patent has not been granted by the United States patent and Trademark Office to Regen with regard to that License IP.

The Agreement may be terminated by The Company with regard to any of the License IP if a patent that has been granted by the United States patent and Trademark Office to Regen with regard to that License IP is terminated.

The Agreement may be terminated by either party in the event of a material breach by the other party.

The Chairman and Chief Executive Officer of Regen is David R. Koos who also serves as the Chairman and Chief Executive Officer of the Company.

The President of Regen is Harry Lander who also serves as President of the Company.

The Chief Financial Officer of Regen is Todd Caven who also serves as Chief Financial Officer of the Company.

On September 28, 2015 ENTB issued 8,000,000 of its common shares to Regen on behalf of the Company in satisfaction of the license initiation fee.

 

During the quarter ended November 30, 2016 ENTB paid $17,000 to Regen on behalf of the Company as a partial payment of the July 15th, 2016 liability.

On May 30, 2017 the ENTB issued 83,000 shares of its Non Voting Convertible Preferred Stock on behalf of the Company to Regen of $83,000 of the July 15th, 2016 liability.

On July 24th, 2017 ENTB issued 102,852 shares of its Non Voting Convertible Preferred Stock on behalf of Zander to Regen in satisfaction of a $100,000 anniversary fee and $2,852 of minimum royalties payable by Zander Therapeutics pursuant to the Agreement.

 

On December 7, 2017 the Company paid $30,000 to Regen to be applied against minimum royalties which may become due over the course of the Agreement

 

On December 8, 2017 the Company paid $3,000 to Regen to be applied against minimum royalties which may become due over the course of the Agreement

 

 22 

 

 

On December 13, 2017 the Company paid $25,000 to Regen to be applied against minimum royalties which may become due over the course of the Agreement.

 

On January 10, 2018 the Company paid $15,000 to Regen to be applied against minimum royalties which may become due over the course of the Agreement.

 

On January 18, 2018 the Company paid $5,000 to Regen to be applied against minimum royalties which may become due over the course of the Agreement.

 

On February 7, 2018 Zander and Regen executed an agreement whereby the June 2018 Anniversary Fee due pursuant to the Agreement would be reduced to $90,000 if paid on or before February 10, 2018

 

On February 8, 2018 Zander paid Regen $90,000 in early satisfaction of the June 2018 Anniversary Fee due pursuant to the Agreement.

 

As of March 31, 2018 there are no outstanding amounts currently due and payable by Zander pursuant to the Agreement.

 

Principal Products and Services

 

NR2F6

Both of Zander’s products under development will operate through either inhibition or activation by small (low molecular weight) molecules of the nuclear receptor NR2F6. Nuclear receptors are a class of proteins found within cells that are responsible for sensing certain other molecules. In response, these receptors work with other proteins to regulate the expression of specific genes.

ZAN-100

The Company has begun development of the ZAN-100 veterinary drug line. ZAN-100 is intended to be a veterinary cancer therapy. In the opinion of the Company, the studies performed by Hermann-Kleiter et al. (The Nuclear Orphan Receptor NR2F6 Is a Central Checkpoint for Cancer Immune Surveillance. Cell Reports 12, 2072–2085 (2015)) demonstrate that the inhibition of NR2F6 in T cells may yield anti-cancer benefits in small animals. The studies indicate that, in the presence of NR2F6, T cell activation is limited within the tumor microenvironment. The Company believes that inhibition of NR2F6 removes a barrier to the animal’s own immune system’s ability to attack cancer cells. ZAN-100 is intended to be a small molecule therapy whose mode of action will be the inhibition of NR2F6.

ZAN-200

The Company has begun development of the ZAN-200 veterinary drug line. ZAN-200 is intended to be a veterinary arthritis therapy. Rheumatoid arthritis is an immune-mediated disease. This means it is caused by an overreaction of the immune system. In rheumatoid arthritis, the body mistakes some of its own protein for foreign protein. It then makes antibodies against its own protein. In the opinion of the Company, suppression of the immune system through activation of NR2F6 in those immune cells would be an effective therapy. ZAN-200 is intended to operate by activating NR2F6 in the animals’ immune cells.

Development Conducted to Date

High Throughput Screening Assay

Initial high throughput screening assays were performed in July to September of 2016 by the contract research organization Proteros, GMBH for Regen Biopharma, Inc. This assay is based on Regen Biopharma Inc.’s screening assay whereby the full-length or ligand-binding domain of NR2F6 Reporter gene assays are used to screen for compounds that modulate gene expression via binding to nuclear hormone receptors. Transfer of this assay to ChemDiv, Inc., another contract research organization, by Regen Biopharma, Inc. was effected in January, 2017.

 

In molecular biology, a reporter gene is a gene that researchers attach to a regulatory sequence of another gene of interest in bacteria, cell culture, animals or plants. Certain genes are chosen as reporters because the characteristics they confer on organisms expressing them are easily identified and measured, or because they are selectable markers. Reporter genes are often used as an indication of whether a certain gene has been taken up by or expressed in the cell or organism population.

 

 23 

 

 

High Throughput Screens (HTS) are recent scientific methods in which hundreds of thousands of experimental samples are subjected to simultaneous testing under given conditions. Through this process one can rapidly identify active compounds, antibodies, or genes that modulate a particular biomolecular pathway. The results of these experiments provide starting points for drug design and for understanding the interaction or role of a particular biochemical process in biology.

 

HTS performed on behalf of Regen Biopharma, Inc. have been ongoing as of September 9, 2016. As of September 9, 2016 four newly discovered small molecule compounds which (a) can bind to the relevant structure in a cellular system and (b) show evidence of the ability to modulate activity of NR2F6 have been discovered.

 

Results of any studies conducted by Regen Biopharma, Inc. are being made available to Zander Theraputics, Inc.for use in veterinary drug development and commercialization.

 

Ex Vivo Assay

 

Ex-vivo assays were performed using immune cells from canine blood samples from five dogs. The samples were treated with compound at various concentrations and the supernatant assayed for the presence of various cytokines using ELISA-based assays. Enzyme-linked immunosorbent assay (ELISA is a biochemical technique used mainly in immunology to detect the presence of an antibody or an antigen in a sample). These assays were commenced in May, 2017 and are ongoing as of September 9, 2017.

 

Data derived from the five dog study indicated that the ZAN-200 series drugs could inhibit T cell activation and production of cytokines, particularly IL-17 and IL-2. IL-17 and IL-2 have been shown to create inflammatory responses leading to arthritic conditions.

The Company estimates that it will require $1,500,000 to complete medicinal chemistry studies with regards to the Company’s products in development. Medicinal chemistry is the process by which trained chemists modify a starting compound (called a parent compound) in an effort to optimize its characteristics such as binding affinity and toxicity profile. The Company estimates that it will require an additional require an additional $1,500,000 to complete pre-clinical studies with regards to the Company’s products in development. Pre-clinical studies refer to detailed cellular and animal studies that measure the toxic effects of the drug, how long it stays in the blood stream, efficacy, where it goes in the body and the best way to formulate and deliver the drug. The Company estimates that it will require a further additional $2,000,000 to complete studies required in order New Animal Drug Applications (NADA) may be submitted to the United States Food and Drug Administration (FDA) with regards to the Company’s products in development. NADA-enabling studies include using the drug in its final commercial manufactured form in the target animals of interest to show efficacy in the field and to look for toxicity. 

Distribution methods of the products or services:

 

It is anticipated that Zander will enter into licensing and/or sublicensing agreements with outside entities in order that Zander may obtain royalty income on the products and services which it may develop and commercialize.

 

 24 

 

 

Competitive business conditions and Zander's competitive position in the industry and methods of competition

 

We are recently formed and have yet to achieve revenues or profits.  The veterinary pharmaceutical industry in which we intend to compete are highly competitive and characterized by rapid technological advancement. Many of our competitors have greater resources than we do.

 

We intend to be competitive by utilizing the services and advice of individuals that we believe have expertise in their field in order that we can concentrate our resources on projects in which products and services in which we have the greatest potential to secure a competitive advantage  may be developed and commercialized .

 

To that effect, we have entered into nonemployee consulting agreements with individuals who we believe have a high level of expertise in their professional fields and who have agreed to provide counsel and assistance to us in (a) determining the viability of proposed projects (b) obtaining financing for projects and (c) obtaining the resources required to initiate and complete a project in the most cost effective and rapid manner.

 

These individuals are as follows:

 

Brian Devine

 

Mr. Brian Devine has agreed to act as Chairman of the Company’s Business Advisory Board.

 

Mr. Devine has served as Chairman Emeritus of Petco Holdings, Inc. from March 2016 to October 2016, Chairman of the Board of Directors of Petco Animal Supplies Stores, Inc. from 1994 until March 2016 and as President and Chief Executive Officer of PETCO Animal Supplies, Inc. from 1990 until 2004.

On June 21, 2017 Zander entered into an agreement (“Agreement”) with Mr. Brian Devine whereby Mr. Devine shall serve as Chairman of Zander’s Business Advisory Board.

The term of the Agreement shall commence on June 23, 2017 and shall expire on June 23, 2020. The term of the Agreement may be extended by mutual agreement.

Pursuant to the Agreement:

(a)Mr. Devine shall, for so long as he remains a member of the Business Advisory Board, meet with Zander upon written request, at dates and times mutually agreeable to Candidate and Zander, to discuss any matter involving Zander or its Subsidiaries
(b)Identify and introduce to Zander persons to serve as members of Zander's Business Advisory Board ("Advisory Candidates").
(c)Identify and introduce to Zander potential purchasers of Zander's securities.

Pursuant to the Agreement:

(i)Mr. Devine received 500,000 of the common shares of Zander.
(ii)In the event that an Advisory Candidate identified and introduced by Mr. Devine to Zander serves as a member of the Business Advisory Board of Zander, Mr. Devine shall receive, ten business days subsequent to the completion of 12 months service by the Advisory Candidate as a member of the Business Advisory Board of Zander, a fee paid in the common shares of Zander, equal to 5% of any shares of Zander issued to the Advisory Candidate.

 25 

 

 

Dr. Thomas Donnelly, DVM

 

Dr. Thomas Donnelly has agreed to act as a Senior Veterinary Advisor to the Company. Dr. Donnelly is a board-certified specialist in the field of laboratory animal medicine, an Adjunct Associate Professor at Tufts University Cummings School of Veterinary Medicine and a Professor at Ecole Nationale Veterinaire d’Alfort, a French public institution of scientific research and higher education in veterinary medicine.

 

On August 7, 2017 Zander entered into an agreement (“Agreement”) with Dr. Donnelly whereby Dr. Donnelly shall serve as Senior Veterinary Advisor to the Company. The term of the Agreement shall be from August 17, 2017 and shall expire on August 16, 2018. The term of this Agreement may be extended by mutual consent.

Pursuant to the Agreement:

(a)Dr. Donnelly shall advise Zander on various nominal matters regarding veterinary ''Nominal" is defined as periodic conversations in which Dr. Donnelly is asked for a referral to an appropriate researcher on a specific topic or input on research data Zander is developing.
(b)In the event Dr. Donnelly is requested to provide research services, such services will be negotiated separately between Dr. Donnelly and the Company.

As consideration for his services pursuant to this Agreement, Dr. Donnelly received 500,000 of the Company’s Series M Preferred Shares on August 21, 2017.

Dr. Donnelly is also party to another agreement between ENTB and Dr. Donnelly (“ENTB Agreement”) whereby Dr. Donnelly shall provide similar services to Zander as those to be provided under the Agreement.

Consideration pursuant to the ENTB Agreement was 100,000 shares of the Series B Preferred Stock of ENTB (“Compensation Shares”).Within 30 business days subsequent to the effective date of a Registration Statement filed under the Securities Act of 1933, as amended, registering common shares of Zander (“Zander Registration Statement”) Donnelly shall have the right to exchange up to the total number of the Compensation Shares issued pursuant to the terms and conditions of the ENTB Agreement for an equivalent number of the common shares of Zander Therapeutic, Inc. six months subsequent to the date that the Zander Registration Statement is declared effective by the United States Securities and Exchange Commission. The term of the ENTB Agreement is March 1, 2017 to February 29, 2018.

Dr. Thomas Ichim, PhD Senior Research Consultant

Dr. Thomas Ichim has agreed to act as Senior Research Consultant to the Company. Dr. Ichim has served as a director and as President of Creative Medical Technology, Inc. since February 2016, and has served Chief Scientific Officer of Creative Medical Technology Holdings, Inc. since March 2017. Between 2007 and 2015 Dr. Ichim served as Chief Science Officer, Chief Executive Officer, President, and member of the Board of Directors of MediStem Inc., a San Diego-based company engaged in development of endometrial regenerative cells which was acquired in 2014 by Intrexon Corporation. From 2004 until 2007 he served as program manager for biorasi LLC, a clinical research organization. Between October 2012 and September 2015 Dr. Ichim served as Chief Scientific Officer and Director of research at Regen Biopharma, Inc., a company under common control with Zander. Thomas Ichim serves at will and is not party to a consulting contract with the Company.

Debbie Dorsee Director of Business Development

Ms. Debbie Dorsee has agreed to act as Director of Business Development for the Company. Ms. Dorsee is the founder and principal officer of the Dorsee Company, a San Diego based public relations firm. Debbie Dorsee serves at will and is not party to a consulting contract with the Company.

Dr. Linda L. Black, DVM, PhD

Dr. Linda L. Black has agreed to act as a Senior Veterinary Advisor to the Company. 

 26 

 

On March 20, 2017 ENTB entered into an agreement (“Agreement”) with Dr. Black whereby Dr. Black shall serve as Senior Veterinary Advisor to the Company. The term of the Agreement shall be from March 20 2017 and shall expire on March 2018. The term of this Agreement may be extended by mutual consent.

Pursuant to the Agreement:

(a)Dr. Black shall advise Zander on various nominal matters regarding veterinary ''Nominal" is defined as periodic conversations in which Dr. Donnelly is asked for a referral to an appropriate researcher on a specific topic or input on research data Zander is developing.
(b)In the event Dr. Black is requested to provide research services, such services will be negotiated separately between Dr. Black and the Company.
(c)As consideration of the performance of services pursuant to this Agreement, Black shall receive 100,000 shares of the Series B Preferred Stock of ENTB (“Compensation Shares”).Within 30 business days subsequent to the effective date of a Registration Statement filed under the Securities Act of 1933, as amended, registering common shares of Zander (“Zander Registration Statement”) Black shall have the right to exchange up to the total number of the Compensation Shares issued pursuant to the terms and conditions of this Agreement for an equivalent number of the common shares of Zander Therapeutic, Inc. six months subsequent to the date that the Zander Registration Statement is declared effective by the United States Securities and Exchange Commission.

Dr. Black currently serves as Chief Operating Officer and Vice President of Clinical Science for Medicus Biosciences, a biotech company focused on drug delivery for ophthalmology, advanced wound healing, osteoarthritis, and regenerative medicine applications both veterinary and non-veterinary.

On June 20th, 2017 the Company issued 500,000 of the Company’s Series M Preferred shares as consideration for services provided by Dr. Black to the Company.

Jonathan Baell, Ph.D.

 

On August 16th 2017 Professor Jonathan Baell entered into an agreement (“Agreement”) with the Company whereby, pursuant to the Agreement:

(a)Baell shall advise Zander on various nominal matters regarding veterinary. ''Nominal" is defined as periodic conversations in which Baell is asked for a referral to an appropriate researcher on a specific topic or input on research data Zander is developing.
(b)In the event Baell is requested to provide research services, such services will be negotiated separately between Baell and the Company.

 

The term of the Agreement is from August 17, 2017 to August 18, 2018. Baell was issued 400,000 of the Company’s Series M Preferred stock pursuant to the terms of the Agreement. 100,000 of the Company’s Series M Preferred stock was issued to Baell prior to entering into the Agreement.

 

Prof. Jonathan Baell, Ph.D. is a Larkins Fellow, Co-Director of the Australian Translational Medicinal Chemistry Facility and an National Health and Medical Research Council Senior Research Fellow at Monash Institute of Pharmaceutical Sciences (MIPS) located in Australia.

 

 27 

 

 

Robin Gasser Ph.D., BVM, DVM, DVSc

 

On August 7th 2017 Professor Robin Gasser entered into an agreement (“Agreement”) with the Company whereby, pursuant to the Agreement:

(a)Gasser shall advise Zander on various nominal matters regarding veterinary ''Nominal" is defined as periodic conversations in which Gasser is asked for a referral to an appropriate researcher on a specific topic or input on research data Zander is developing.
(b)In the event Gasser is requested to provide research services, such services will be negotiated separately between Gasser and the Company.

The term of the Agreement is from August 17, 2017 to August 18, 2018. Gasser was issued 500,000 of the Company’s Series M Preferred stock pursuant to the terms of the Agreement.

 

Prof. Gasser is a Professor at the University of Melbourne Faculty of Veterinary Science and serves as President of the Australian Society for Parasitology

Sources and availability of raw materials and the names of principal suppliers

 

The supplies and materials required to conduct our operations are available through a wide variety of sources and may be obtained through a wide variety of sources.

 

Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration

 

Other than that license granted by Regen to the Company whereby Regen granted to the Company an exclusive worldwide right and license for the development and commercialization of intellectual property controlled by Regen for non-human veterinary therapeutic use for a term of fifteen years, the Company has not been granted any license to develop and commercialize any third party intellectual property.

 

The Company has been granted no patents. Certain intellectual property licensed to the Company by Regen has been granted patent protection (“Patented IP”). The Patented IP is as follows:

US Patent #9091696

MODULATION OF NR2F6 AND METHODS AND USES THEREOF

The application provides methods of modulating NR2F6 in a cell or animal in need thereof by administering an effective amount of a NR2F6 modulator.

The Patent granted is a Utility patent

The Patent expires on November 16, 2029.The product candidates to which US Patent #9091696 relates include ZAN 100 and ZAN 200.

 

The Company has no trademarks.

 

The Company is not party to any binding labor contracts.

 

 28 

 

 

Need for any government approval of principal products or services, effect of existing or probable governmental regulations on the business

 

The Center for Veterinary Medicine (“CVM”) at the United States Food and Drug Administration (“FDA”) regulates animal pharmaceuticals under the Food, Drug and Cosmetics Act. Our current proposed products are animal pharmaceuticals regulated by the CVM. Manufacturers of animal health pharmaceuticals must show their products to be safe, effective and produced by a consistent method of manufacture. The new animal drug approval process is complicated. Before a new animal drug may receive FDA approval, the sponsor must establish that the new animal drug is safe and effective. Drug sponsors must submit a New Animal Drug Application (NADA) along with supporting data, including all adverse effects associated with the drug's use. The NADA must also include information on the drug's chemistry; composition and component ingredients; manufacturing methods, facilities, and controls; proposed labeling; analytical methods for residue detection and analysis if applicable; an environmental assessment; and other information. The sponsor of a new animal drug is responsible for submitting all appropriate data to establish effectiveness and safety. If the drug product is intended for use in a food-producing animal, residues in food products must also be established as safe for human consumption. FDA review of the NADA submitted by drug sponsors is extremely detailed and comprehensive. The CVM’s basis for approving a drug application is documented in a Freedom of Information Summary. . We will be required to conduct post-approval monitoring of FDA approved pharmaceutical products and to submit reports of product quality defects, adverse events or unexpected results to the CVM’s Surveillance and Compliance group. No assurance may be given that ZAN-100, ZAN-200 or any new animal drug product which the Company may develop will be approved by the FDA to be marketed and sold. Regulatory authorities in countries outside of the United States and Europe also have requirements for approval of veterinary drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval in any other country.

Amount spent during the three months ended March 31, 2018 and March 31, 2017, December 31, 2017 and December 31, 2016, the three months ended September 30, 2017 and September 30, 2016 and the fiscal year ended June 30, 2017 and June 30, 2016 on research and development activities.

 

During the three months ended March 31 2018 and 2017 the Company spent $311, 821 and $27,424 on Research and Development, respectfully.

 

During the three months ended December 31 , 2017 and 2016 the Company spent $27,424 and $29,924 on Research and Development, respectfully.

 

During the three months ended September 30, 2017 and September 30, 2016 the Company spent $27,575 and $27,425 on Research and Development, respectfully.

 

During the fiscal years ended June 30, 2017 and June 30, 2016 the Company spent $124,600 and $100,225 on Research and Development, respectfully.

 

Costs and effects of compliance with environmental laws (federal, state and local);

 

Zander has not incurred any unusual or significant costs to remain in compliance with any environmental laws and does not expect to incur any unusual or significant costs to remain in compliance with any environmental laws in the foreseeable future.

 

 29 

 

  

Number of total employees and number of full-time employees

 

As of March 12, 2018, Zander has 3 employees of which each of them devote an average of 25 hours a week to the affairs of the Company

 

PROPERTIES

 

The Company utilizes approximately 2,300 square feet of office space at 4700 Spring Street, Suite 304, La Mesa California, 91941provided to the Company by ENTB on a month to month basis free of charge. The property is utilized as office space. We believe that the foregoing properties are adequate to meet our current needs for office space.

 

LEGAL PROCEEDINGS

 

There are no material pending legal proceedings to which the Company is a party or of which any of the Company’s property is the subject.

 

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

There has never been and there currently is no public market for our securities. We anticipate applying for trading of our common stock on the over the counter bulletin board (OTC BB) or the OTCQB Tier operated by OTC Markets Group , however, we can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize.

 

The stockholders' equity section of the Company contains the following classes of capital stock as April 23, 2018:

 

Common stock, $ 0.0001 par value; 100,000,000 shares authorized: 4,758,001 shares issued and outstanding.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Common Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Common Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

Preferred Stock, $0.0001 par value, 50,000,000 shares authorized of which 10,000,000 is designated as Series M Preferred Stock and 1,000,000 is designated Series AA Preferred Stock: 9,000,000 shares of Series M Preferred Stock are issued and outstanding as of December 15, 2017 and 200 shares of Series AA Preferred Stock are issued and outstanding as of December 15, 2017.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series M Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series M Preferred Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series M Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

 30 

 

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series AA Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series AA Preferred Stock owned by such holder times ten thousand (10,000).

As of April 23, 2018 there were 8 holders of our Common Stock. 

 31 

 

 

FINANCIAL STATEMENTS

 

Zander Therapeutics, Inc          
BALANCE SHEET          
    As of     As of 
    March 31, 2018    June 30, 2017 
    (unaudited)    (as restated) 
           
CURRENT ASSETS          
    674,259    96,005 
Prepaid Expenses, Related Parties   89,569      
Prepaid Expenses   38    0 
Total Current Assets   763,866    96,005 
Total Assets   763,866    96,005 
LIABILITIES          
Current Liabilities:          
Due to Shareholder, Related Party        0 
Notes Payable, Related Party   11,441    119,089 
Accrued Expenses, Related Parties   12,565    107,343 
Accrued Expenses   818    818 
Total Current Liabilities   24,824    227,250 
Total Liabilities   24,824    227,250 
           
STOCKHOLDER'S EQUITY          
Common Stock, Authorized 100,000,000, $0.0001 Par Value          
4,758,001 shares and 3,008,001 shares issued and outstanding as of March 31, 2018   476    301 
and June 30, 2017 respectively          
Preferred Stock, $0.0001 par value  Authorized  50,000,000 as of June 30, 2017 and March 31, 2018          
Series M Preferred Stock, $0.0001 par,  Authorized 10,000,000 as of June 30, 2017 and March 31,2018   900    750 
9,000,00 shares and 7,500,000 shares outstanding as of March 31, 2018 and June 30, 2017 Respectively          
Common Stock subscribed for but unissued , 0 and 100,000 shares as of March 31, 2018 and June 30, 2017 respectively   0    100,000 
Series AA Preferred Stock, $0.0001 par, Authorized 1,000,000 and 0 as of March 31, 2018 and December 31, 2017, respectfully          
200 and 0 shares outstanding as of March 31, 2018 and June 30, 2017 , respectfully   0      
Additional Paid In Capital   1,620,689    120,814 
Contributed Capital, Related Party   389,930    228,687 
Retained Deficit   (1,272,953)   (581,796)
Total Stockholder's Equity   739,042    (131,244)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY   763,866    96,005 
           
The Accompanying Notes are an Integral Part of These Financial Statements

 

 32 

 

Zander Therapeutics, Inc.            
STATEMENT OF OPERATIONS            
(unaudited)            
  Three Months ended  Three Months ended  Nine Months Ended  Nine Months Ended
  March 31 2018  March 31 2017  March 31 2018  March 31 2017
TOTAL REVENUES            
COSTS AND EXPENSES            
Research and Development:                    
License Fees Due to Related Party   21,821    27,424    76,670    82,273 
Contract Research Fees   290,000         290,000      
Consulting Costs             150    2,500 
Total Research and Development   311,821    27,424    366,820    84,773 
General and Administrative:                    
General and Administrative, Paid By Related Party   18,000    18,000    54,000    54,000 
General and Administrative   1,992         8,127      
Total General and Administrative   19,992    18,000    62,127    54,000 
Rent, Paid By Related Party   9,348    8,988    27,444    29,109 
Consulting:                    
Consulting Costs, Paid by Related Party             79,799      
Consulting Costs   54,995    7,989    145,131    7,989 
Total Consulting   54,995    7,989    224,930    7,989 
                     
Total Costs and Expenses   396,156    62,401    681,321    175,871 
OPERATING LOSS   (396,156)   (62,401)   (681,321)   (175,871)
OTHER INCOME AND EXPENSES                    
Interest Expense, Related Party   (1,136)   (629)   (9,835)   (1,279)
Interest Expense                    
Total Other Income ( Expenses)   (1,136)   (629)   (9,835)   (1,279)
NET INCOME (LOSS)   (397,292)   (63,030)   (691,156)   (177,150)
Income Taxes   0    0    0    0 
NET INCOME (LOSS)   (397,292)   (63,030)   (691,156)   (177,150)
BASIC AND FULLY DILUTED                    
EARNINGS (LOSS) PER SHARE   (0.109)   (0.062)   (0.167)   (0.537)
WEIGHTED AVERAGE NUMBER OF COMMON                    
SHARES OUTSTANDING   3,640,792    1,011,237    4,138,038    329,671 
                     
The Accompanying Notes are an Integral Part of These Financial Statements

 33 

 

Zander Therapeutics, Inc.          
STATEMENT OF CASH FLOWS          
(unaudited)          
          
   9 Months Ended    Nine Months Ended 
    March 31, 2018    March 31, 2017 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Income (Loss)   (691,156)   (177,150)
Adjustments to reconcile net Income (loss) to net cash          
Stock Issued for Expenses   162    0 
Changes in Operating Assets and Liabilities          
Increase (Decrease) in Accrued Expenses   (94,776)   66,551 
(Increase) Decrease in Prepaid Expenses   (89,568)     
Net Cash provided by (used) in Operating Activities   (875,338)   (110,598)
CASH FLOWS FROM FINANCING ACTIVITIES          
Common Stock Issued for Cash   1,400,000    0 
Increase (Decrease) in Contributed Capital   161,241    83,109 
Increase (Decrease) in Notes Payable   (107,649)   29,989 
Net Cash provided by (used) in Financing Activities   1,453,592    113,098 
           
Net Increase (Decrease) in Cash   578,254    2,500 
           
Cash at Beginning of Period   96,005    0 
Cash at End of Period   674,259    2,500 
           
Supplemental Disclosure of Noncash investing and financing activities:     
Common Shares issued , Previously subscribed and paid for   100,000      
 
The Accompanying Notes are an Integral Part of These Financial Statements

 

 34 

 

 

ZANDER THERAPEUTICS, INC.

Notes to Financial Statements

As of March 31, 2018

 

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Zander Therapeutics , Inc. (“Company”) was organized June 18, 2015 under the laws of the State of Nevada. The Company is a majority subsidiary of Entest Biomedical, Inc., a Nevada corporation.

 

The Company intends to engage primarily in the development of veterinary medical applications which we intend to license from other entities as well as develop internally.

 

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 a June 30year-end.

 

B. 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.

 

C. CASH EQUIVALENTS

 

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

   

D. PROPERTY AND EQUIPMENT

 

Property and equipment are recorded at cost. Maintenance and repairs are expensed in the year in which they are incurred. Expenditures that enhance the value of property and equipment are capitalized.

 

E. 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

 35 

 

 

F. 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 March 31, 2018 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.

 

G.  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.

 

H. ADVERTISING

 

Costs associated with advertising are charged to expense as incurred. Advertising expenses were $0 for the quarters ended December 31, 2016 and December 31, 2017.

 

I. RESEARCH AND DEVELOPMENT COSTS

 

Research and development expenses relate primarily to the cost of discovery and research programs. Research and development costs are charged to expense as incurred. Research and development expenses consist mainly of License Fees paid to Regen Biopharma, Inc, fees paid to Contract Research Organizations (“CRO”) conducting studies on the Company’s behalf, and fees paid to consultants conducting research studies.

 

License Fees paid to Regen Biopharma, Inc. are accrued over the course of the reporting period. The Companies make payments to CROs based on agreed-upon terms and the Company generally accrues expenses based on services performed or over the term of the agreement, as applicable The term of research activities performed by CRO’s on behalf of the Company during the quarter did not exceed the quarter.

J. STOCK BASED COMPENSATION

 

Stock issued for Non-Employee Services

 

Stock Based compensation to non-employees is accounted for in accordance with ASC 505-50. ASC 505-50 requires entities to account for non-employee equity transactions based on either the fair value of the services received or the fair value of the equity instrument issued utilizing whichever measurement is most reliable. .During the quarter ended December 31, 2017 no securities were issued as stock based compensation to non employees.

 

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In determining the Fair Value of shares issued as compensation, the Company takes into account factors including the financial condition of the Company at the time of grant , the Company’s lack of profitability, the frequency and amount of cash sales of the Company’s stock, and the Company’s negative working capital as of the time of grant.

 

Pursuant to ASC 505-50-30-11 an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:

i.   The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and

 

ii.   The date at which the counterparty’s performance is complete.

 

Stock issued for Employee Compensation

 

Stock based compensation to employees is accounted for at the award’s fair value at grant, less the amount (if any) paid by the award recipient.

 

In determining the Fair Value of shares issued as compensation, the Company takes into account factors including the financial condition of the Company at the time of grant , the Company’s lack of profitability, the frequency and amount of cash sales of the Company’s stock, and the Company’s negative working capital as of the time of grant.

 

NOTE 2 .  RECENT ACCOUNTING PRONOUNCEMENTS

 

June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as "Development Stage Entities" (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard.

 

The following accounting standards updates were recently issued and have not yet been adopted by the Company. These standards are currently under review to determine their impact on the Company’s consolidated financial position, results of operations, or cash flows.

 

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

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In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met the conditions which would subject these financial statements for additional disclosure.

 

NOTE 3. 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 $ 1,272,953 during the period from June 18, 2015 (inception) through March 31, 2018. 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 by 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. During the quarter ended March 31, 2018 the Company raised $500,000 from the sale of 350,000 common shares for cash.

 

NOTE 4. INCOME TAXES

 

As of March 31, 2018

 

Deferred tax assets:   
Net operating tax carry forwards  $267,320 
Other   -0- 
Gross deferred tax assets   267,320 
Valuation allowance   (267,320)
Net deferred tax assets  $-0- 

 

As of  March 31, 2018 the Company has a  Deferred Tax Asset of  $267,320 completely attributable to net operating loss carry forwards  of approximately $1,272,953   ( which expire 20 years from the date the loss was incurred) .

 

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, if as a result of a stock transfer or a reorganization, a corporation undergoes an “ownership change,” Code Section 382 limits the corporation’s right to use its NOLs each year thereafter to an annual percentage of the fair market value of the corporation at the time of the ownership change (the “Section 382 Limitation”).

 

 38 

 

 

A corporation is considered to undergo “an ownership change” if, as a result of changes in the stock ownership by “5-percent shareholders” or as a result of certain reorganizations, the percentage of the corporation’s stock owned by those 5-percent shareholders increases by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any time during the prior three-year testing period. Five-percent shareholders are persons who hold 5% or more of the stock of a corporation at any time during the testing period as well as certain groups of shareholders (based typically on whether they acquired their shares in a single offering or exchange transaction) who are not individually 5-percent shareholders.

As the Company will require cash infusions in order to implement its business plan, and as it is probable, although not guaranteed, that such funding needs may be met through the sale of equity securities to “5-percent shareholders”, the Company recognized a valuation allowance equal to the deferred Tax Asset and the Company recorded a valuation allowance reducing all deferred tax assets to 0.

 

Income tax is calculated at the 21% Federal Corporate Rate.

 

NOTE 5. NOTES PAYABLE

 

   As of December 31, 2017
Entest Biomedical, Inc. ( Note 6)  $11,441 

 

$11,441 lent to the Company by Entest Biomedical,Inc. is due and payable at the demand of the holder and bears simple interest at a rate of 10% per annum.

 

As of March 31, 2018 Entest Biomedical, Inc. owned 58.1% of the share capital and 50.7 % of the voting power of the Company. David R. Koos serves as Chairman and Chief Executive Officer of both Entest Biomedical,Inc. and the Company.

 

NOTE 6. RELATED PARTY TRANSACTIONS

The Company utilizes approximately 2,300 square feet of office space at 4700 Spring Street, Suite 304, La Mesa California, 91941provided to the Company by Entest BioMedical, Inc. on a month to month basis free of charge. The Chief Executive Officer of Entest Biomedical Inc. is David R. Koos who also serves as the Chief Executive Officer of the Company.

As of March 31, 2018 the Company has received capital contributions from Entest Biomedical, Inc. totaling $389,930

On June 23, 2015 Regen Biopharma, Inc. ( “Regen”) entered into an agreement (“Agreement”) with The Company whereby Regen granted to The Company an exclusive worldwide right and license for the development and commercialization of certain intellectual property controlled by Regen (“ License IP”) for non-human veterinary therapeutic use for a term of fifteen years.

 

Pursuant to the Agreement, The Company shall pay to Regen one-time, non-refundable, upfront payment of one hundred thousand US dollars ($100,000) as a license initiation fee which must be paid within 90 days of June 23, 2015 and an annual non-refundable payment of one hundred thousand US dollars ($100,000) on July 15th, 2016 and each subsequent anniversary of the effective date of the Agreement

 

The abovementioned payments may be made, at The Company’s discretion, in cash or newly issued common stock of The Company or in common stock of Entest BioMedical Inc. valued as of the lowest closing price on the principal exchange upon which said common stock trades publicly within the 14 trading days prior to issuance.

 

Pursuant to the Agreement, The Company shall pay to Regen royalties equal to four percent (4%) of the Net Sales , as such term is defined in the Agreement, of any Licensed Products, as such term is defined in the Agreement, in a Quarter.

 

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Pursuant to the Agreement, The Company will pay Regen ten percent (10%) of all consideration (in the case of in-kind consideration, at fair market value as monetary consideration) received by The Company from sublicensees ( excluding royalties from sublicensees based on Net Sales of any Licensed Products for which Regen receives payment pursuant to the terms and conditions of the Agreement).

 

The Company is obligated pay to Regen minimum annual royalties of ten thousand US dollars ($10,000) payable per year on each anniversary of the Effective Date of this Agreement, commencing on the second anniversary of June 23, 2015. This minimum annual royalty is only payable to the extent that royalty payments made during the preceding 12-month period do not exceed ten thousand US dollars ($10,000).

 

The Agreement may be terminated by Regen:

If The Company has not sold any Licensed Product by ten years of the effective date of the Agreement or The Company has not sold any Licensed Product for any twelve (12) month period after The Company’s first commercial sale of a Licensed Product.

The Agreement may be terminated by The Company with regard to any of the License IP if by five years from the date of execution of the Agreement a patent has not been granted by the United States patent and Trademark Office to Regen with regard to that License IP.

The Agreement may be terminated by The Company with regard to any of the License IP if a patent that has been granted by the United States patent and Trademark Office to Regen with regard to that License IP is terminated.

The Agreement may be terminated by either party in the event of a material breach by the other party.

The Chairman and Chief Executive Officer of Regen is David R. Koos who also serves as the Chairman and Chief Executive Officer of the Company.

The President of Regen is Harry Lander who also serves as President of the Company.

The Chief Financial Officer of Regen is Todd Caven who also serves as Chief Financial Officer of the Company.

On July 24, 2017 Entest Biomedical, Inc. issued 102,852 of its Non Voting Convertible Preferred Stock to Regen in satisfaction of $102,852 of liabilities incurred pursuant to the Agreement.

During the quarter ended December 31, 2017 the Company paid $58,000 to Regen , such amounts to be applied toward minimum royalties which become due and payable pursuant to the Agreement. 

During the quarter ended March 31, 2018 the Company paid $20,000 to Regen, such amounts to be applied toward minimum royalties which become due and payable pursuant to the Agreement. 

On February 7, 2018 Regen and Zander agreed to a 10% reduction of Zander’s June 2018 Annual Anniversary Fee obligation if Zander pays such fee on or before February 10, 2018. $90,000 was paid by Zander in satisfaction of the June 2018 Annual Anniversary Fee during the quarter ended March 31, 2018

On March 1, 2017 the Company issued 3,000,000 common shares to Entest Biomedical, Inc. Consideration rendered to the Company by Entest Biomedical, Inc. consisted of payment by Entest Biomedical, Inc. on behalf of the Company of a license initiation fee of $100,000 owed by the Company to Regen and incorporation costs of $1,115 borne by Entest Biomedical, Inc. on behalf of the Company . 

On June 15, 2017 the Company issued 5,000,000 Series M Preferred Shares to Entest Biomedical, Inc. in consideration of services rendered.

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to David Koos in consideration of services rendered

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to Todd Caven in consideration of services rendered.

 40 

 

 

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to Harry Lander in consideration of services rendered

On September 15, 2017 the Company issued 200 of the Series AA Preferred Shares of the Company to the Company’s Chief Executive Officer in consideration of services rendered.

$11,441 owed by the Company to Entest Biomedical,Inc. as of December 31, 2017 is due and payable at the demand of the holder and bears simple interest at a rate of 10% per annum.

 

During the year ended June 30, 2017 the Company made principal payments of $69,000 to Entest Biomedical Inc. During the quarter ended September 30, 2017 the Company made principal payments of $23,000 to Entest Biomedical, Inc.

During the quarter ended December 31, 2017 the Company made principal payments of $97,500 to Entest Biomedical, Inc.

During the quarter ended March 31, 2018 the Company made principal payments of $90,000 to Entest Biomedical, Inc.

 

As of March 31, 2018 the Company owes $12,565 of accrued interest to Entest Biomedical, Inc.

 

The Company has recognized $9,348 of rental expenses for the three months ended March 31, 2018. This expense is equal to 100% of the rent paid by Entest Biomedical, Inc. for space occupied by the Company. The Company estimates that the cost that would have been incurred if the Company had operated as an unaffiliated entity during the period would have been identical.

 

The Company has recognized $18,000 of General and Administrative expenses paid by a related party during the quarter ended March 31, 2018. This expense is equal to 60% of the salary expense incurred by Entest Biomedical, Inc. for the salary of David R. Koos, the Company’s Chief Executive Officer. It is estimated by the Company that 60% of David Koos’ professional time during the quarter ended December 31, 2017 was spent on activities which benefitted the Company. The Company estimates that the cost that would have been incurred if the Company had operated as an unaffiliated entity during the period would have been in the range of $18,000 to $30,000

NOTE 7. STOCKHOLDERS' EQUITY

 

The stockholders' equity section of the Company contains the following classes of capital stock as March 31, 2018:

 

Common stock, $ 0.0001 par value; 100,000,000 shares authorized: 4,758,001 shares issued and outstanding.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Common Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Common Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

Preferred Stock, $0.0001 par value, 50,000,000 shares authorized of which

(a) 10,000,000 is designated as Series M Preferred Stock: 9,000,000 shares of Series M Preferred Stock are issued and outstanding as of March 31, 2018

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series M Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series M Preferred Stock owned by such holder times one (1).

 41 

 

 

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series M Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

(b) 1,000,000 is designated as Series AA Preferred Stock: 200 shares of Series AA Preferred Stock are issued and outstanding as of March 31, 2018,

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series AA Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series AA Preferred Stock owned by such holder times 10,000 (10,000).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series AA Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

NOTE 8. STOCK TRANSACTIONS

On February 5, 2018, Zander issued 100,000 of its common shares for consideration of $200,000.

On February 27, 2018, Zander issued 150,000 of its common shares for consideration of $300,000

NOTE 9. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

 

Subsequent to the original issuance of Zander’s annual financial statements for the periods ended June 30, 2016 and June 30, 2017 the Company determined that the following revisions are required:

For the Fiscal Year Ended June 30, 2016:

 

  (a) The inclusion in Retained Deficit of $1348 of Rental Expenses incurred by Entest Biomedical, Inc. benefitting the Company and $2,400 of salary expense incurred by Entest Biomedical, Inc. benefitting the Company

 

  (b) The inclusion in retained deficit of $2185 representing expense related to License Fees due to a Related Party

 

  (c) Accrual of expenses relating to Licensing Fees Due to a Related Party resulting in the recognition of $100006 of expense attributable to Licensing Fees Due to a related party during the fiscal year ended June 30, 2016.

 

  (d) The reclassification of $101,118 Due to Shareholder as Due to Shareholder Related Party

 

  (e) The recognition during the year ended June 30, 2016 of :

 

  (a) $41,532 of Rental Expense incurred by Entest Biomedical, Inc. benefitting Zander

 

  (b) $72,000 of Salary Expense incurred by Entest Biomedical, Inc. benefitting Zander

 

  (f) The reclassification of $905 of General and Administrative expenses paid on behalf of Zander by Entest Biomedical, Inc. as General and Administrative Expenses paid by Related Party

 

  (g) Reclassification of increases Due to Shareholder in the Statement of Cash Flows as a noncash investing and financing activity

 

For the Fiscal Year Ended June 30, 2017:

 

  (a) The reclassification of 119,089 of Notes Payable as Notes Payable, Related Party

 

  (b) The reclassification of $107,343 of Accrued Expenses as Accrued Expenses , Related Party

 

  (c) The accrual of $110,000 of Licensing Fees due to a Related Party correcting an overstatement of total Research and Development Expenses recognized over the period from $224,600 to $124,600

 

  (d) The reclassification of $2,000 of Research and Development Costs as Consulting Costs

 

  (e) The reclassification of $12,600 of Research and Development Costs as Contract Research Fees

 

  (f) The reclassification of $650 of General and Administrative Costs as Stock Payments to Related Party

 

  (g) The recognition of $72,000 of Salary Expense incurred by Entest Biomedical, Inc. benefitting Zander

 

  (h) The recognition of $38,502 of Rental Expense incurred by Entest Biomedical, Inc. benefitting Zander

 

  (i) Reclassification of decreases in Due to Shareholder in the Statement of Cash Flows as a noncash investing and financing activity

 

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ZANDER THERAPEUTICS, INC.         
BALANCE SHEET
As of June 30, 2017
         
   As originally presented  Adjustments  As restated
CURRENT ASSETS               
Cash   96,005         96,005 
                
Total Current Assets   96,005         96,005 
                
Total Assets   96,005         96,005 
LIABILITIES               
Current Liabilities:               
Notes Payable   119,089    (119,089)   0 
Notes Payable, Related Party   0    119,089    119,089 
Accrued Expenses, Related Parties   0    107,343    107,343 
Accrued Expenses   105,749    104,931    818 
Total Liabilities   224,838         227,250 
                
STOCKHOLDER'S EQUITY               
                
Common Stock, Authorized 100,000,000, $0.0001 Par Value 3,008,001 shares issued and outstanding as of June 30, 2017   301         301 
Preferred Stock, $0.0001 par value  Authorized  50,000,000 as of June 30 2017               
Series M Preferred Stock, $0.0001 par,  Authorized 10,000,000 as of June 30, 2017 0 shares and 7,500,000 shares outstanding as of June 30, 2016 and June 30, 2017 Respectively   750         750 
Common Stock subscribed for but unissued , 0 and 100,000 shares as of June 30, 2016 and 2017 respectively   100,000         100,000 
Additional Paid In Capital   120,814         120,814 
Contributed Capital, Related Party   905    227,782    228,687 
Retained Deficit   (351,603)   (230,193)   (581,796)
Total Stockholder's Equity   (128,833)        (131,244)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY   96,005         96,005 

 

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Zander Therapeutics, Inc          
BALANCE SHEET          
    As of     As of 
    

December 31,

2017

    June 30, 2017 
    (unaudited)    (as restated) 
CURRENT ASSETS          
    721,242    96,005 
Prepaid Expenses   42    0 
Total Current Assets   721,284    96,005 
Total Assets   721,284    96,005 
LIABILITIES          
Current Liabilities:          
Due to Shareholder, Related Party        0 
Notes Payable, Related Party   101,441    119,089 
Accrued Expenses, Related Parties   10,038    107,343 
Accrued Expenses   818    818 
Total Current Liabilities   112,297    227,250 
Total Liabilities   112,297    227,250 
           
STOCKHOLDER'S EQUITY          
Common Stock, Authorized 100,000,000, $0.0001 Par Value          
4,508,001 shares and 3,008,001 shares issued and outstanding as of December 31, 2017   451    301 
and June 30, 2017 respectively          
Preferred Stock, $0.0001 par value  Authorized  50,000,000 as of June 30, 2017 and December 31, 2017          
Series M Preferred Stock, $0.0001 par,  Authorized 10,000,000 as of June 30, 2017 and December 31, 2017   900    750 
9,000,00 shares and 7,500,000 shares outstanding as of December 31, 2017 and June 30, 2017 Respectively          
Common Stock subscribed for but unissued , 0 and 100,000 shares as of December 31, 2017 and June 30, 2017 respectively   0    100,000 
Series AA Preferred Stock, $0.0001 par, Authorized 0 and 1,000,000 as of June  30, 2017 and December 31, 2017, respectfully          
200 and 0 shares outstanding as of December 31, 2017 and June 30, 2017 , respectfully          
Additional Paid In Capital   1,120,714    120,814 
Contributed Capital, Related Party   362,582    228,687 
Retained Deficit   (875,660)   (581,796)
Total Stockholder's Equity   608,988    (131,244)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY   721,284    96,005 
           
The Accompanying Notes are an Integral Part of These Financial Statements

 44 

 

 

Zander Therapeutics, Inc                    
STATEMENT OF OPERATIONS                    
(unaudited)                    
   Three Months ended     Three Months ended     Six Months Ended     Six Months Ended  
   December 31, 2017    December 31, 2016    December 31, 2017    

December 31,

2016

 
TOTAL REVENUES   0    0    0    0 
COSTS AND EXPENSES                    
Research and Development:                    
License Fees Due to Related Party   27,424    27,424    54,849    54,849 
Consulting Costs   0    2,500    150    2,500 
Total Research and Development   27,424    29,924    54,999    57,349 
General and Administrative:                    
General and Administrative, Paid By Related Party   18,000    18,000    36,000    36,000 
General and Administrative   2,979         6,135    0 
Total General and Administrative   20,979    18,000    42,135    36,000 
Rent, Paid By Related Party   9,108    10,008    18,096    20,121 
Consulting:                    
Consulting Costs, Paid by Related Party   31,141    0    79,799    0 
Consulting Costs   74,117    0    90,136    0 
Total Consulting   105,258    0    169,935    0 
                     
Total Costs and Expenses   162,770    57,932    285,165    113,470 
                     
OPERATING LOSS   (162,770)   (57,932)   (285,165)   (113,470)
OTHER INCOME AND EXPENSES                    
Interest Expense, Related Party   (3,867)   (548)   (8,699)   (650)
Interest Expense                    
Total Other Income ( Expenses)   (3,867)   (548)   (8,699)   (650)
NET INCOME (LOSS)   (166,637)   (58,480)   (293,864)   (114,120)
Income Taxes   0    0    0    0 
NET INCOME (LOSS)   (166,637)   (58,480)   (293,864)   (114,120)
BASIC AND FULLY DILUTED                    
EARNINGS (LOSS) PER SHARE   (0.039)   (58,480)   (0.076)   (114,120)
WEIGHTED AVERAGE NUMBER OF COMMON                    
SHARES OUTSTANDING   4,221,188    1    3,883,411    1 
                     
The Accompanying Notes are an Integral Part of These Financial Statements

 45 

 

Zander Therapeutics, Inc      
STATEMENT OF CASH FLOWS      
(unaudited)      
       
    Six Months Ended    Six Months Ended 
    December 31, 2017    December 31, 2016 
    (unaudited)    (unaudited) 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Income (Loss)   (293,864)   (114,120)
Adjustments to reconcile net Income (loss) to net cash          
Stock Issued for Expenses   158    0 
Changes in Operating Assets and Liabilities          
Increase (Decrease) in Accrued Expenses   (97,303)   38,498 
Net Cash provided by (used) in Operating Activities   (391,009)   (75,621)
CASH FLOWS FROM FINANCING ACTIVITIES          
Common Stock Issued for Cash   900,000      
Increase (Decrease) in Contributed Capital   133,895    56,121 
Increase (Decrease) in Notes Payable   (17,649)   22,000 
Net Cash provided by (used) in Financing Activities   1,016,246    78,121 
           
Net Increase (Decrease) in Cash   625,237    2,500 
           
Cash at Beginning of Period   96,005    0 
Cash at End of Period   721,242    2,500 
           
Supplemental Disclosure of Noncash investing and financing activities:
Common Shares issued , Previously subscribed and paid for   100,000      
           
The Accompanying Notes are an Integral Part of These Financial Statements

 

 46 

 

 

ZANDER THERAPEUTICS, INC.

Notes to Financial Statements

As of December 31, 2017

 

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Zander Therapeutics , Inc. (“Company”) was organized June 18, 2015 under the laws of the State of Nevada. The Company is a majority subsidiary of Entest Biomedical, Inc., a Nevada corporation.

 

The Company intends to engage primarily in the development of veterinary medical applications which we intend to license from other entities as well as develop internally.

 

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 a June 30year-end.

 

B. 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.

  

C. CASH EQUIVALENTS

 

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

   

D. PROPERTY AND EQUIPMENT

 

Property and equipment are recorded at cost. Maintenance and repairs are expensed in the year in which they are incurred. Expenditures that enhance the value of property and equipment are capitalized.

 

E. 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

 

 47 

 

 

F. 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 December 31,2017 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.

 

G.  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.

 

H. ADVERTISING

 

Costs associated with advertising are charged to expense as incurred. Advertising expenses were $0 for the quarters ended December 31, 2016 and December 31, 2017.

 

I. RESEARCH AND DEVELOPMENT COSTS

 

Research and development expenses relate primarily to the cost of discovery and research programs. Research and development costs are charged to expense as incurred. Research and development expenses consist mainly of License Fees paid to Regen Biopharma, Inc, fees paid to Contract Research Organizations (“CRO”) conducting studies on the Company’s behalf, and fees paid to consultants conducting research studies.

 

License Fees paid to Regen Biopharma, Inc. are accrued over the course of the reporting period. The Companies make payments to CROs based on agreed-upon terms and the Company generally accrues expenses based on services performed or over the term of the agreement, as applicable. During the quarter ended December 31, 2017 no services were performed by CROs . The term of research activities performed by a consultant on behalf of the Company during the quarter did not exceed the quarter.

 

J. STOCK BASED COMPENSATION

 

Stock issued for Non-Employee Services

 

Stock Based compensation to non-employees is accounted for in accordance with ASC 505-50. ASC 505-50 requires entities to account for non-employee equity transactions based on either the fair value of the services received or the fair value of the equity instrument issued utilizing whichever measurement is most reliable. .During the quarter ended December 31, 2017 no securities were issued as stock based compensation to non employees.

 

 48 

 

 

In determining the Fair Value of shares issued as compensation, the Company takes into account factors including the financial condition of the Company at the time of grant , the Company’s lack of profitability, the frequency and amount of cash sales of the Company’s stock, and the Company’s negative working capital as of the time of grant.

 

Pursuant to ASC 505-50-30-11 an issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date:

i.The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); and
ii.The date at which the counterparty’s performance is complete.

 

Stock issued for Employee Compensation

 

Stock based compensation to employees is accounted for at the award’s fair value at grant, less the amount (if any) paid by the award recipient.

 

In determining the Fair Value of shares issued as compensation, the Company takes into account factors including the financial condition of the Company at the time of grant , the Company’s lack of profitability, the frequency and amount of cash sales of the Company’s stock, and the Company’s negative working capital as of the time of grant.

 

NOTE 2 .  RECENT ACCOUNTING PRONOUNCEMENTS

 

June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as "Development Stage Entities" (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity's financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard.

 

The following accounting standards updates were recently issued and have not yet been adopted by the Company. These standards are currently under review to determine their impact on the Company’s consolidated financial position, results of operations, or cash flows.

 

In May 2014, FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The revenue recognition standard affects all entities that have contracts with customers, except for certain items. The new revenue recognition standard eliminates the transaction-and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. Early adoption is not permitted for public entities. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

 49 

 

 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met the conditions which would subject these financial statements for additional disclosure.

 

NOTE 3. 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 $ 875,660 during the period from June 18, 2015 (inception) through December 31, 2017. 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 by 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.

 

NOTE 4. INCOME TAXES

 

As of December 31, 2017

 

Deferred tax assets:   
Net operating tax carry forwards  $297,724 
Other   -0- 
Gross deferred tax assets   297,724 
Valuation allowance   (297,724)
Net deferred tax assets  $-0- 

 50 

 

  

As of  December 31 ,  2017 the Company has a  Deferred Tax Asset of  $297,724 completely attributable to net operating loss carry forwards  of approximately $875,660   ( which expire 20 years from the date the loss was incurred) .

 

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, if as a result of a stock transfer or a reorganization, a corporation undergoes an “ownership change,” Code Section 382 limits the corporation’s right to use its NOLs each year thereafter to an annual percentage of the fair market value of the corporation at the time of the ownership change (the “Section 382 Limitation”).

A corporation is considered to undergo “an ownership change” if, as a result of changes in the stock ownership by “5-percent shareholders” or as a result of certain reorganizations, the percentage of the corporation’s stock owned by those 5-percent shareholders increases by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any time during the prior three-year testing period. Five-percent shareholders are persons who hold 5% or more of the stock of a corporation at any time during the testing period as well as certain groups of shareholders (based typically on whether they acquired their shares in a single offering or exchange transaction) who are not individually 5-percent shareholders.

 

As the Company will require cash infusions in order to implement its business plan, and as it is probable, although not guaranteed, that such funding needs may be met through the sale of equity securities to “5-percent shareholders”, the Company recognized a valuation allowance equal to the deferred Tax Asset and the Company recorded a valuation allowance reducing all deferred tax assets to 0.

 

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

 

NOTE 5. NOTES PAYABLE

 

   As of December 31, 2017
Entest Biomedical, Inc. ( Note 6)  $101,441 

 

$101,441 lent to the Company by Entest Biomedical,Inc. is due and payable at the demand of the holder and bears simple interest at a rate of 10% per annum.

 

As of December 31, 2017 Entest Biomedical, Inc. owned 59.22% of the share capital and 51.5 % of the voting power of the Company. David R. Koos serves as Chairman and Chief Executive Officer of both Entest Biomedical,Inc. and the Company.

 

NOTE 6. RELATED PARTY TRANSACTIONS

The Company utilizes approximately 2,300 square feet of office space at 4700 Spring Street, Suite 304, La Mesa California, 91941provided to the Company by Entest BioMedical, Inc. on a month to month basis free of charge. The Chief Executive Officer of Entest Biomedical Inc. is David R. Koos who also serves as the Chief Executive Officer of the Company.

As of December 31, 2017 the Company has received capital contributions from Entest Biomedical, Inc. totaling $362,582

On June 23, 2015 Regen Biopharma, Inc. ( “Regen”) entered into an agreement (“Agreement”) with The Company whereby Regen granted to The Company an exclusive worldwide right and license for the development and commercialization of certain intellectual property controlled by Regen (“ License IP”) for non-human veterinary therapeutic use for a term of fifteen years.

 

 51 

 

 

Pursuant to the Agreement, The Company shall pay to Regen one-time, non-refundable, upfront payment of one hundred thousand US dollars ($100,000) as a license initiation fee which must be paid within 90 days of June 23, 2015 and an annual non-refundable payment of one hundred thousand US dollars ($100,000) on July 15th, 2016 and each subsequent anniversary of the effective date of the Agreement

 

The abovementioned payments may be made, at The Company’s discretion, in cash or newly issued common stock of The Company or in common stock of Entest BioMedical Inc. valued as of the lowest closing price on the principal exchange upon which said common stock trades publicly within the 14 trading days prior to issuance.

 

Pursuant to the Agreement, The Company shall pay to Regen royalties equal to four percent (4%) of the Net Sales , as such term is defined in the Agreement, of any Licensed Products, as such term is defined in the Agreement, in a Quarter.

 

Pursuant to the Agreement, The Company will pay Regen ten percent (10%) of all consideration (in the case of in-kind consideration, at fair market value as monetary consideration) received by The Company from sublicensees ( excluding royalties from sublicensees based on Net Sales of any Licensed Products for which Regen receives payment pursuant to the terms and conditions of the Agreement).

 

The Company is obligated pay to Regen minimum annual royalties of ten thousand US dollars ($10,000) payable per year on each anniversary of the Effective Date of this Agreement, commencing on the second anniversary of June 23, 2015. This minimum annual royalty is only payable to the extent that royalty payments made during the preceding 12-month period do not exceed ten thousand US dollars ($10,000).

The Agreement may be terminated by Regen:

If The Company has not sold any Licensed Product by ten years of the effective date of the Agreement or The Company has not sold any Licensed Product for any twelve (12) month period after The Company’s first commercial sale of a Licensed Product.

The Agreement may be terminated by The Company with regard to any of the License IP if by five years from the date of execution of the Agreement a patent has not been granted by the United States patent and Trademark Office to Regen with regard to that License IP.

The Agreement may be terminated by The Company with regard to any of the License IP if a patent that has been granted by the United States patent and Trademark Office to Regen with regard to that License IP is terminated.

The Agreement may be terminated by either party in the event of a material breach by the other party.

The Chairman and Chief Executive Officer of Regen is David R. Koos who also serves as the Chairman and Chief Executive Officer of the Company.

The President of Regen is Harry Lander who also serves as President of the Company.

The Chief Financial Officer of Regen is Todd Caven who also serves as Chief Financial Officer of the Company.

On July 24, 2017 Entest Biomedical, Inc. issued 102,852 of its Non Voting Convertible Preferred Stock to Regen in satisfaction of $102,852 of liabilities incurred pursuant to the Agreement.

During the quarter ended December 31, 2017 the Company paid $58,000 to Regen , such amounts to be applied toward minimum royalties which become due and payable pursuant to the Agreement. 

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On March 1, 2017 the Company issued 3,000,000 common shares to Entest Biomedical, Inc. Consideration rendered to the Company by Entest Biomedical, Inc. consisted of payment by Entest Biomedical, Inc. on behalf of the Company of a license initiation fee of $100,000 owed by the Company to Regen and incorporation costs of $1,115 borne by Entest Biomedical, Inc. on behalf of the Company .

On June 15, 2017 the Company issued 5,000,000 Series M Preferred Shares to Entest Biomedical, Inc. in consideration of services rendered.

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to David Koos in consideration of services rendered

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to Todd Caven in consideration of services rendered.

On June 15, 2017 the Company issued 500,000 Series M Preferred Shares to Harry Lander in consideration of services rendered

On September 15, 2017 the Company issued 200 of the Series AA Preferred Shares of the Company to the Company’s Chief Executive Officer in consideration of services rendered.

$101,441 owed by the Company to Entest Biomedical,Inc. as of December 31, 2017 is due and payable at the demand of the holder and bears simple interest at a rate of 10% per annum.

 

During the year ended June 30, 2017 the Company made principal payments of $69,000 to Entest Biomedical Inc. During the quarter ended September 30, 2017 the Company made principal payments of $23,000 to Entest Biomedical, Inc.

 

During the quartet ended December 31, 2017 the Company made principal payments of $97,500 to Entest Biomedical, Inc.

 

As of December 31, 2017 the Company owes $10,778 of accrued interest to Entest Biomedical, Inc.

 

The Company has recognized $9,108 of rental expenses for the three months ended December 31, 2017. This expense is equal to 100% of the rent paid by Entest Biomedical, Inc. for space occupied by the Company. The Company estimates that the cost that would have been incurred if the Company had operated as an unaffiliated entity during the period would have been identical.

 

The Company has recognized $18,000 of General and Administrative expenses paid by a related party during the quarter ended December 31, 2017. This expense is equal to 60% of the salary expense incurred by Entest Biomedical, Inc. for the salary of David R. Koos, the Company’s Chief Executive Officer. It is estimated by the Company that 60% of David Koos’ professional time during the quarter ended December 31, 2017 was spent on activities which benefitted the Company. The Company estimates that the cost that would have been incurred if the Company had operated as an unaffiliated entity during the period would have been in the range of $18,000 to $30,000.

 

NOTE 7. STOCKHOLDERS' EQUITY

 

The stockholders' equity section of the Company contains the following classes of capital stock as December 31, 2017:

 

Common stock, $ 0.0001 par value; 100,000,000 shares authorized: 4,508,001 shares issued and outstanding.

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Common Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Common Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Common Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

 53 

 

Preferred Stock, $0.0001 par value, 50,000,000 shares authorized of which

(a)10,000,000 is designated as Series M Preferred Stock: 9,000,000 shares of Series M Preferred Stock are issued and outstanding as of December 31, 2017,

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series M Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series M Preferred Stock owned by such holder times one (1).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series M Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

(b) 1,000,000 is designated as Series AA Preferred Stock: 200 shares of Series AA Preferred Stock are issued and outstanding as of December 31, 2017,

With respect to each matter submitted to a vote of stockholders of the Corporation, each holder of Series AA Preferred Stock shall be entitled to cast that number of votes which is equivalent to the number of shares of Series AA Preferred Stock owned by such holder times 10,000 (10,000).

On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series AA Preferred Stock shall receive, out of assets legally available for distribution to the Company's stockholders, a ratable share in the assets of the Corporation.

NOTE 8. STOCK TRANSACTIONS

 

On October 30, Zander issued 900,000 of its common shares for consideration of $900,000

NOTE 9. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

 

Subsequent to the original issuance of Zander’s annual financial statements for the periods ended June 30, 2016 and June 30, 2017 the Company determined that the following revisions are required:

For the Fiscal Year Ended June 30, 2016:

 

(a)The inclusion in Retained Deficit of $1348 of Rental Expenses incurred by Entest Biomedical, Inc. benefitting the Company and $2,400 of salary expense incurred by Entest Biomedical, Inc. benefitting the Company
(b)The inclusion in retained deficit of $2185 representing expense related to License Fees due to a Related Party
(c)Accrual of expenses relating to Licensing Fees Due to a Related Party resulting in the recognition of $100006 of expense attributable to Licensing Fees Due to a related party during the fiscal year ended June 30, 2016.
(d)The reclassification of $101,118 Due to Shareholder as Due to Shareholder Related Party
(e)The recognition during the year ended June 30, 2016 of :
(a)$41,532 of Rental Expense incurred by Entest Biomedical, Inc. benefitting Zander
(b)$72,000 of Salary Expense incurred by Entest Biomedical, Inc. benefitting Zander
(f)The reclassification of $905 of General and Administrative expenses paid on behalf of Zander by Entest Biomedical, Inc. as General and Administrative Expenses paid by Related Party
(g)Reclassification of increases Due to Shareholder in the Statement of Cash Flows as a noncash investing and financing activity

 

 54 

 

 

For the Fiscal Year Ended June 30, 2017:

 

(a)The reclassification of 119,089 of Notes Payable as Notes Payable, Related Party
(b)The reclassification of $107,343 of Accrued Expenses as Accrued Expenses , Related Party
(c)The accrual of $110,000 of Licensing Fees due to a Related Party correcting an overstatement of total Research and Development Expenses recognized over the period from $224,600 to $124,600
(d)The reclassification of $2,000 of Research and Development Costs as Consulting Costs
(e)The reclassification of $12,600 of Research and Development Costs as Contract Research Fees
(f)The reclassification of $650 of General and Administrative Costs as Stock Payments to Related Party
(g)The recognition of $72,000 of Salary Expense incurred by Entest Biomedical, Inc. benefitting Zander
(h)The recognition of $38,502 of Rental Expense incurred by Entest Biomedical, Inc. benefitting Zander
(i)Reclassification of decreases in Due to Shareholder in the Statement of Cash Flows as a noncash investing and financing activity

 

Subsequent to the original issuance of Zander’s quarterly financial statements for the periods ended September 30, 2016 and September 30, 2017 the Company determined that the following revisions are required:

 

For the Quarter Ended September 30, 2016:

 

(a)Accrual of expenses relating to Licensing Fees Due to a Related Party resulting in the recognition of $27,425 of expense attributable to Licensing Fees Due to a related party during the quarter ended September 30, 2016.
(b)Accrual of $102 of Interest Expense Payable to a related party during the quarter ended September 30, 2016.
(c)Recognition in the Statement of Cash Flow of increases of $10.527 of Accrued Expenses and $22,000 of Notes Payable

For the Quarter Ended September 30, 2017:

(a)Accrual of expenses relating to Licensing Fees Due to a Related Party resulting in the recognition of $27,425 of expense attributable to Licensing Fees Due to a related party during the quarter ended September 30, 2017.

 55 

 

ZANDER THERAPEUTICS, INC.         
BALANCE SHEET         
   As of  Adjustments  As of
   June 30, 2017     June 30, 2017
         (as restated)
ASSETS         
CURRENT ASSETS               
Cash   96,005         96,005 
                
Total Current Assets   96,005         96,005 
                
Total Assets   96,005         96,005 
LIABILITIES               
Current Liabilities:               
Notes Payable   119,089    (119,089)   0 
Notes Payable, Related Party   0    119,089    119,089 
Accrued Expenses, Related Parties   0    107,343    107,343 
Accrued Expenses   105,749    104,931    818 
Total Liabilities   224,838         227,250 
                
STOCKHOLDER'S EQUITY               
Common Stock, Authorized 100,000,000, $0.0001 Par Value               
3,008,001 shares issued and outstanding as of June 30, 2017   301         301 
Preferred Stock, $0.0001 par value  Authorized  50,000,000 as of June 30 2017               
Series M Preferred Stock, $0.0001 par,  Authorized 10,000,000 as of June 30, 2017   750         750 
0 shares and 7,500,000 shares outstanding as of June30, 2016 and June 30, 2017 Respectively               
Common Stock subscribed for but unissued , 0 and 100,000 shares as of June 30, 2016 and 2017 respectively   100,000         100,000 
Additional Paid In Capital   120,814         120,814 
Contributed Capital, Related Party   905    227,782    228,687 
Retained Deficit   (351,603)   (230,193)   (581,796)
Total Stockholder's Equity   (128,833)        (131,244)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY   96,005         96,005 

 56 

 

NOTE 10. SUBSEQUENT EVENTS 

On February 5, 2018, Zander issued 100,000 of its common shares for consideration of $200,000.

On February 27, 2018, Zander issued 150,000 of its common shares for consideration of $300,000.

 

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Zander Therapeutics, Inc      
BALANCE SHEET      
   As of  As of
   September 30, 2017  June 30, 2017
   (unaudited)  (as restated)
ASSETS  (as restated)   
CURRENT ASSETS          
Cash   53,833    96,005 
Prepaid Expenses   46    0 
Total Current Assets   53,879    96,005 
Total Assets   53,879    96,005 
LIABILITIES          
Current Liabilities:          
Due to Shareholder, Related Party        0 
Notes Payable, Related Party   198,941    119,089 
Accrued Expenses, Related Parties   36,747    107,343 
Accrued Expenses   818    818 
Total Current Liabilities   236,506    227,250 
Total Liabilities   236,506    227,250 
           
STOCKHOLDER'S EQUITY          
Common Stock, Authorized 100,000,000, $0.0001 Par Value          
3,608,001 shares and 3,008,001 shares issued and outstanding as of September 30, 2017   360    301 
and June 30, 2017 respectively          
Preferred Stock, $0.0001 par value  Authorized  50,000,000 as of June 30, 2017 and September 30, 2017          
Series M Preferred Stock, $0.0001 par,  Authorized 10,000,000 as of June 30, 2017 and September 30 2017   900    750 
9,000,00 shares and 7,500,000 shares outstanding as of September 30, 2017 and June 30, 2017 Respectively          
Common Stock subscribed for but unissued , 0 and 100,000 shares as of September 30, 2017 and June 30, 2017 respectively   0    100,000 
Series AA Preferred Stock, $0.0001 par, Authorized 1,000,000 and 0 as of September 30, 2017 and June 30, 2017, respectfully          
200 and 0 shares outstanding as of September 30, 2017 and June 30, 2017 , respectfully          
Additional Paid In Capital   220,804    120,814 
Contributed Capital, Related Party   304,333    228,687 
Retained Deficit   (709,024)   (581,796)
Total Stockholder's Equity   (182,627)   (131,244)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY   53,879    96,005 
           
The Accompanying Notes are an Integral Part of These Financial Statements

 58 

 

Zander Therapeutics, Inc      
Statement of Operations      
(unaudited)      
   Three Months ended  Three Months Ended
   September 30, 2017  September 30, 2016
   (as restated)  (as restated)
TOTAL REVENUES   0    0 
COSTS AND EXPENSES          
Research and Development:          
License Fees Due to Related Party   27,425    27,425 
Consulting Costs   150    0 
Total Research and Development   27,575    27,425 
General and Administrative:          
General and Administrative, Paid By Related Party   18,000    18,000 
General and Administrative   3,156    0 
Total General and Administrative   21,156    18,000 
Rent, Paid By Related Party   8,988    10,113 
Consulting:          
Consulting Costs, Paid by Related Party   48,658    0 
Consulting Costs   16,019    0 
Total Consulting   64,677    0 
           
Total Costs and Expenses   122,396    55,538 
           
           
OPERATING LOSS   (122,396)   (55,538)
OTHER INCOME AND EXPENSES          
Interest Expense, Related Party   (4,832)   (102)
Interest Expense        0 
Total Other Income ( Expenses)   (4,832)   (102)
NET INCOME (LOSS)   (127,228)   (55,640)
Income Taxes   0    0 
NET INCOME (LOSS)   (127,228)