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

CERTAIN FORWARD-LOOKING INFORMATION

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

Material Changes in Financial Condition:

As of March 31, 2009, we had cash on hand of $6,621 and as of September 30, 2008 we had cash on hand of $8,410 .

The decrease in cash on hand of approximately 21% is primarily attributable to payments of operating expenses.

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

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

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As of March 31, 2009, we had prepaid expenses of $29,011 and as of September 30, 2008 we had prepaid expenses of $49,258.

The decrease in prepaid expenses of approximately 41% is primarily attributable to the recognition of expenses from September 30, 2008 to March 31, 2009 of approximately $37,776 of a prepaid 12 month Contract entered into on March 21, 2008

As of March 31, 2009 we had Other Assets of $25,507 and as of September 30, 2008 we had Other Assets of $21,307.

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

As of March 31, 2009 we had Accounts Payable of $63,037 and as of September 30, 2008 we had Accounts Payable of $89,974.

The decrease in Accounts Payable of approximately 30% is primarily attributable to payments of outstanding obligations to outside contractors and payments of outstanding invoices.

As of March 31, 2009 we had Notes Payable of $330,539 and as of September 30, 2008 we had Notes Payable of $111,459.

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

As of March 31, 2009 we had Accrued Payroll of $306,000 and as of September 30, 2008 we had Accrued Payroll of $150,000.

The increase in Accrued Payroll of approximately 100% is primarily attributable to increases in employee compensation which have accrued and have not yet been paid.

As of March 31, 2009 we had Accrued Expenses of $35,000 and as of September 30, 2008 we had Accrued Expenses of $30,000.

The increase in Accrued Expenses of approximately 17% is primarily attributable to an expense incurred yet not paid as of December 31, 2008 of $5,000 incurred pursuant to the Company's license agreement with the Regents of the University of California

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

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

On December 21, 2008 Bombardier modified the Promissory Note with BMSN. Bombardier agreed to accept $1,000 en lieu of the original $500,00 payment owed by the Company to Bombardier for the purchase of FESI shares. This resulted in a decrease of $499,000 of the amount due pursuant to the Note as of March 31, 2009, a decrease of approximately 99% from September 30, 2008.

Amounts Due to Shareholder were $50,000 as of March 31, 2009 as opposed to $-0- as of September 30, 2008. This increase is attributable to funds of $50,000 advanced to the company by a non affiliate shareholder in anticipation of structuring a transaction at some future date.

Material Changes in Results of Operations

Revenues were -0- for the quarter ending March 31, 2009 and -0- for the same quarter ending March 31, 2008. Net losses were $ 1, 210,188 for the three months ended March 31, 2009 and $417,325 for the same period ended march 31, 2008, an increase of approximately 189%.

This increase in Net Losses is primarily attributable to (a) $487,000 loss realized by the Company related to the company's sale of 1,000,000 common shares of Freedom Environmental Services, Inc. (b) increased professional and consulting fees primarily attributable to business development activities performed for the Company by outside parties and (c) increased interest expenses attributable to increases in Company indebtedness incurred in order to fund Company operations.

Revenues were -0- for the six month period ending March 31, 2009 and -0- for the comparable period ending March 31, 2008. Net Losses were for $1,598,910 the six months ended March 31, 2009 and $823, 137 for the same period ended March 31, 2008 , an increase of approximately 94%.

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

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Liquidity and Capital Resources

As of March 31, 2009 , we had $6,621 cash on hand and current liabilities of $1,371,834 such liabilities consisting of Accounts Payable, Notes Payable, Accrued Payroll Taxes, Amounts due to Shareholder, Accrued Expenses and Accrued Interest.

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

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

We were not party to any material commitments for capital expenditures as of the end of the quarter ended March 31, 2009.