U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2011~~2012

Commission file number: 000-54347

ENTEROLOGICS, INC.

(Exact name of registrant as specified in its charter)

Nevada		80-0504940
(State of incorporation)		(I.R.S. Employer Identification No.)

Enterologics, Inc.

1264 University Avenue West, Suite 404

St. Paul, Minnesota 55104

(Address of principal executive offices)

Telephone: (516) 303-8181

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.0001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x (Do not check if a smaller reporting company)

Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, ~~2011~~2012, the last business day of the registrant’s most recently complete second fiscal quarter was: $43,~~520~~689,~~410~~856.

As of ~~April~~March 928, ~~2012~~2013, 35 37,~~413~~163,391 shares of the issuer’s common stock were issued and outstanding.

Documents Incorporated By Reference: None

TABLE OF CONTENTS

		Page
PART I
Item 1	Business		3
Item 1A	Risk Factors		14
Item IB	Unresolved Staff Comments		2314
Item 2	Properties		2314
Item 3	Legal Proceedings		2314
Item 4	Mine Safety Disclosures		2314
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		2415
Item 6	Selected Financial Data		2617
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2617
Item 7A	Quantitative and Qualitative Disclosures About Market Risk		2920
Item 8	Financial Statements and Supplementary Data		30F-1
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		4421
Item 9A	Controls and Procedures		4421
Item 9B	Other Information		4522
PART III
Item 10	Directors, Executive Officers and Corporate Governance		4623
Item 11	Executive Compensation		4725
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		4826
Item 13	Certain Relationships and Related Transactions, and Director Independence		4926
Item 14	Principal Accountant Fees and Services		5028
PART IV
Item 15	Exhibits and Financial Statement Schedules		5129
SIGNATURES			5331

PART I

Item 1. Business.

As used in this Annual Report on Form 10-K (this “Report”), references to the “Company,” the “Registrant,” “we,” “our” or “us” refer to Enterologics, Inc., unless the context otherwise indicates.

Forward-Looking Statements

This Report contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.

Corporate Background

Overview

We are an early stage, pre-revenue company involved in the development of live biotherapeutic products for gastrointestinal disorders that we believe are poorly addressed by current therapies. Key examples include pouchitis, irritable bowel syndrome, Crohn’s disease, ulcerative colitis and Clostridium difficile infections. We intend to license or acquire technology to build a product pipeline based on producing probiotic bacteria in novel, shelf-stable, high potency formulations that are delivered orally. Unlike probiotic bacteria that are sold over-the-counter as dietary supplements or in food products such as yogurt, we intend to develop products to meet the exacting standards necessary to gain FDA approval as prescription drugs. We have identified a series of candidate probiotics that we plan to transform into proprietary, live biotherapeutic products following a rigorous development template that includes comprehensive characterization, full genomic sequencing and dosage form optimization. In keeping with this plan, we have acquired our first probiotic product, E. coli M17, which has already achieved several of the goals in our development template, in connection with our acquisition in September 2011 of BioBalance Corp. and BioBalance LLC, as described below. In addition to being well-characterized, E. coli M17 has an active Investigational New Drug application (“IND”) with the FDA for the indication of chronic pouchitis. The IND for E. coli M17 will permit the Company to initiate its first clinical trial, as soon as manufacturing is re-established in a qualified facility and adequate financing is in place. We have not generated any revenues to date.

Because E. coli M17 is a probiotic, it must be produced in a dosage form with adequate shelf life so that it remains viable at the time of administration to a patient. Preservation of probiotics is a complex challenge and many products marketed over the counter are labeled with the number of live cells (colony forming units, or cfu) per dose at the time of manufacture, but not at the time of administration. We believe that based upon testing by independent laboratories many products fall short of the label quantity at the time of purchase. For a probiotic to be approved as a biologic drug, a dose form that provides adequate potency and stability is essential.

In May 2011 we entered into a development agreement with Universal Stabilization Technologies, Inc., a Delaware company (“UST”) to evaluate its probiotic stabilization technology. We have a right of first refusal to enter into a license agreement with UST for a unique preservation/stabilization bacterial “vitrification” process that we believe is superior to conventional freeze-drying techniques and can be applied to a wide variety of bacterial strains, rendering them in a state of “suspended animation” until they are administered. The process is proprietary and includes the use of stabilizing materials, including sugars, that prevent the formation of damaging ice crystals during a vacuum drying process. We currently plan to exercise our right to license the UST preservation technology provided that we have the necessary financing to do so and the technology performs as expected during our evaluation period, which will be completed in May 2012, because we presently believe that commercializing a shelf-stable product will offer a competitive advantage in the market. 3

UST License

On January 12, 2011, we entered into a letter of intent with UST pursuant to which we were granted a right of first refusal until May 15, 2012 to enter into a definitive license agreement for the exclusive, worldwide license to develop, manufacture, use, sublicense, market and sell UST’s patents, patent applications, know-how and trade secrets relating to its preservation/stabilization of E. coli bacteria. The license is intended to specifically cover E. coli bacteria when used as a probiotic and to exclude use as a system for delivering vaccine materials to the gastrointestinal tract. Such agreement will expire on the later of (i) 20 years or (ii) the last to expire patent included in the licensed intellectual property. ~~From~~UST ~~January~~agreed ~~15, 2011~~ to ~~May~~extend ~~15,~~their ~~2012~~obligation ~~UST will~~ not to negotiate with, or entertain or consider offers from, any third party with respect to the same terms of the letter of intent until April 30, 2013.

In May 2011 we entered into a development agreement with Universal Stabilization Technologies, Inc., a Delaware company (“UST”) to evaluate its probiotic stabilization technology. We have a right of first refusal to enter into a license agreement with UST for a unique preservation/stabilization bacterial “vitrification” process that we believe is superior to conventional freeze-drying techniques and can be applied to a wide variety of bacterial strains, rendering them in a state of “suspended animation” until they are administered. The process is proprietary and includes the use of stabilizing materials, including sugars, that prevent the formation of damaging ice crystals during a vacuum drying process. We currently plan to exercise our right to license the UST preservation technology provided that we have the necessary financing to do so and the technology performs as expected during our evaluation period. Testing results obtained to date confirm the value of the technology for extending the shelf-life of our E. coli M17 probiotic in a dry form. Based on these results, we believe that the technology will enable us to produce a shelf-stable, dry dosage form of E. coli M17 for clinical testing purposes. We plan to undertake this work as soon as the technology license agreement is executed.

Upon execution of the license agreement, we will be required to issue 100,000 shares of our common stock to UST and to pay CA$75,000 as license issue and technology transfer fees. In addition, we will be obligated to pay UST CA$50,000 for each new patent granted, minimum annual license payments of CA$25,000 until the first FDA approval of the biologics license application (“BLA”) and CA$50,000 following the approval of the BLA, with annual payments increasing by CA$25,000 thereafter to a maximum of CA$100,000 for a orphan drug and CA$150,000 for a drug for a larger indication market. We will also be required to make royalty payments of up to 3% on net sales of the licensed products sold by us or our sublicensees. Our right to sublicense under the license agreement is subject to UST’s approval, which will not be unreasonably withheld. In the event that we receive other than cash consideration from a sublicense, we will be required to pay 20% of the fair market value of such consideration to UST and in the case of equity, 20% of shares issued. All amounts required to be paid to UST by us will be made in Canadian dollars, at UST’s request. We will be required to cover any currency conversion and bank transfer costs up to 1% of the total payment.

On or about May 15, 2011, we entered into a one-year non-binding development agreement for UST to conduct suitability studies and protocols to produce data demonstrating the suitability of its stabilization technology to produce a thermostable, commercially viable formulation of an E. coli probiotic satisfying ~~our~~ their specifications. We have made monthly payments of CA$8,333 (which amount may be increased depending on the scope of the work) to UST pursuant to the agreement. We will recommence making such monthly payments on May 1, 2013. In lieu of cash payments for the first four months of 2013, we issued UST 200,000 shares of common stock. Our right to enter into a definitive license agreement with UST will terminate if we fail to make such monthly payments. ~~While~~ ~~the~~The development program has proceeded according to plan, ~~there~~and ~~are~~as nostated ~~assurances~~earlier, ~~that~~the UST’s ~~technology~~preservation ~~will perform as expected. If such~~ technology ~~fails~~has toextended ~~perform~~the toshelf-life of our ~~expectations,~~E. wecoli ~~may~~M17 ~~not~~probiotic ~~enter~~in ~~into~~ a ~~license~~dry ~~agreement~~form. ~~with~~While ~~UST~~the ortechnology ifhas ~~such~~performed ~~technology~~to ~~performs~~our expectations, there can be no guarantee that we will have the resources to enter into a license agreement with UST and we may lose all of the payments made to UST.

BioBalance Acquisition

On September 6, 2011, we completed our acquisition of all of the shares of BioBalance Corp., a Delaware corporation (“BioBalance”), and its wholly owned subsidiary BioBalance LLC, from New York Health Care, Inc., a New York corporation (“NYHC”), the sole owner of BioBalance, pursuant to a stock purchase agreement entered into on June 20, 2011 (the “Stock Purchase Agreement”). In connection with the completion of the acquisition and in consideration for the shares acquired, we paid NYHC $300,000 in cash at closing and issued to NYHC (i) 393,391 shares of common stock and (ii) a three-year promissory note in the original principal amount of $100,000. The note bears interest at the rate of 5% per annum, payable semi-annually, with the principal amount payable in three equal annual installments of $33,333.33 commencing on September 6, 2012. If there is an event of default under the note, interest will accrue at 10%. We have the right to prepay the note, in whole or in part, at any time without premium or penalty. In connection with the acquisition, we assumed $25,000 of certain liabilities of BioBalance and BioBalance LLC.

The Stock Purchase Agreement required that NYHC be the sole owner of BioBalance. Accordingly, BioBalance purchased from Yitz Grossman his 33 1/3% membership interest in BioBalance LLC pursuant to a membership interest purchase agreement (the “Membership Purchase Agreement”) in consideration for the indemnification of Mr. Grossman for up to $75,000 in legal fees incurred by him, and not otherwise reimbursed, as a result of his prior activities on behalf of NYHC. Mr. Grossman is the husband of Lisa Grossman, our Secretary and significant shareholder. As a result, of the closing of the stock acquisition, we own 100% of both BioBalance and BioBalance LLC.

This acquisition provides us with the intellectual property to develop and test biotherapeutic agents for the treatment of various gastrointestinal disorders.

Probiotics and Live Biotherapeutics

Probiotics are live microorganisms (in most cases, bacteria) that are similar to beneficial microorganisms found in the human gut. They are also called "friendly bacteria" or "good bacteria." One widely used definition, developed by the World Health Organization and the Food and Agriculture Organization of the United Nations, is that probiotics are "live microorganisms, which, when administered in adequate amounts, confer a health benefit on the host." (For example, see http://www.who.int/foodsafety/publications/fs_management/en/probiotics.pdf). Microorganisms are tiny living ~~organisms—such~~organismssuch as bacteria, viruses, and ~~yeasts—that~~yeaststhat can be seen only under a microscope.

Probiotics are available in foods and dietary supplements (for example, capsules, tablets, and powders) and in some other forms as well. Examples of foods containing probiotics are yogurt, fermented and unfermented milk, miso, tempeh, and some juices and soy beverages. In probiotic foods and supplements, the bacteria may have been present originally or added during preparation. Some probiotic foods date back to ancient times, such as fermented foods and cultured milk products.

Most probiotics are bacteria similar to those naturally found in people's guts, especially in those of breastfed infants (who have natural protection against many diseases). Most often, the bacteria come from two groups, Lactobacillus or Bifidobacterium. Within each group, there are different species (for example, Lactobacillus acidophilus and Bifidobacterium bifidus), and within each species, different strains (or varieties). Other bacterial groups in which probiotic strains have been identified include Bacillus, E. coli, Enterococcus, and Streptococcus. A few common probiotics, such as Saccharomyces boulardii, are yeasts, which are different from bacteria.

Probiotics generally have a very short life-span. Water, acid and oxygen are harmful to probiotics and most die or cease to function after a short period of time after extraction from the source. A reduction of these naturally-occurring organisms due to poor eating habits, stress, or the use of antibiotic drugs or other factors may disrupt the natural equilibrium of the body and could lead to a variety of abdominal ailments and an overall decrease in the function of the immune system.

Scientific understanding of probiotics and their potential for preventing and treating health conditions is at an early stage, but growing. In November 2005, a conference that was co-sponsored by the National Center for Complementary and Alternative Medicine (NCCAM) and convened by the American Society for Microbiology reported encouraging evidence for health and disease prevention or treatment benefits from the study of specific probiotic formulations. See http://nccam.nih.gov/health/probiotics. Researchers are exploring whether probiotics could halt unfriendly agents in the first place and/or suppress their growth and activity in conditions such as irritable bowel syndrome; ulcerative colitis; Crohn's disease; infection with Helicobacter pylori (H. pylori), a bacterium that causes most ulcers and many types of chronic stomach inflammation; tooth decay and periodontal disease; vaginal infections; stomach and respiratory infections that children acquire in daycare and skin infections or conditions such as eczema.

Interest in probiotics also stems from the fact there are cells of the immune system located within the gastrointestinal (GI) tract. One theory is that probiotic bacteria may have beneficial effects on immune defenses, either by altering the microorganisms in an individual’s GI tract or having a direct effect on cells of the immune system.

Until now, probiotics have been sold in the United States as dietary supplements or as components of conventional food products, such as yogurt. The hurdles to developing probiotics as prescription drugs are many, among them the requirement to meet the stringent requirements of the FDA. However, this pathway does exist, as evidenced by the approval of the IND for E. coli M17. In their scientific publications, FDA staff has termed such products “live biotherapeutics,” as compared to other biologic products, many of which may have been produced by living organisms or cells, but are not in and of themselves capable of replicating and multiplying in the body.

Scientific publications emphasize that while the evidence is growing to support the use of probiotics, more rigorous studies to validate their use in specific conditions is needed. The European Food Safety Authority has rejected health claims for a number of probiotic products sold over-the-counter, because its expert panel concluded that the clinical data supporting these claims was inadequate. We believe that this provides a strong rationale for developing probiotics according to drug regulations and approval standards, where the efficacy testing and label indications are approved by the FDA.

Pouchitis: IND Indication

E. coli M17 has an active IND with the FDA for the indication of maintenance of symptomatic remission in chronic antibiotic-dependent pouchitis. Pouchitis is a complication that may occur in patients following surgical treatment of ulcerative colitis. This involves removing the colon and reconstructing a rectal pouch, a procedure called restorative proctocolectomy or ~~ileal-anal~~ilealanal pouch anal anastomosis. In some individuals, the pouch can become inflamed, accompanied by pain and frequent, sometimes bloody bowel movements, requiring antibiotic treatment. While the population of pouchitis sufferers is small, the unmet treatment need is significant. There are at present no FDA-approved drugs for treating this condition, although metronidazole and ciprofloxacin are typically prescribed off-label. Some patients develop chronic pouchitis and require continuous antibiotic treatment to maintain remission of their symptoms. This is undesirable due to the side effects of the drugs and the increased likelihood for developing antibiotic-resistant bacteria. We plan on developing E. coli M17 as a maintenance therapy alternative to long-term use of antibiotics and their associated risks.

Strategy

We believe that broader medical use of probiotics will follow convincing clinical tests of the type used to obtain regulatory approval for drugs and biologics to treat specific conditions. We intend to identify, in-license and develop unique probiotic strains for specific medical conditions, obtain regulatory approval and market these probiotics products as FDA-approved prescription drugs for specific label indications. E. coli M17 represents our first probiotic candidate for development and with adequate funding we believe that we will be able to successfully execute our business plan. A key element of our strategy has been the identification of a dosage form that transforms live probiotic bacteria into a dry, shelf-stable, state of “suspended animation.” Heretofore, probiotic bacteria have been subjected to freeze-drying or lyophilization, processes that have been ineffective in maintaining viability during storage at room temperature. Some probiotic products require refrigeration to preserve adequate viability. This may be one reason for the variable clinical efficacy results that have been reported for many probiotic strains. Subject to UST’s technology meeting our specifications and our funding resources, we intend to license UST’s bacterial vitrification process, which we believe is far superior to other drying techniques and which we believe will enable us to meet the high potency standards necessary for prescription drug approval.

We intend to pursue our business plan of developing prescription biologics and drugs for treating various gastrointestinal disorders within the next 12 months, subject to the availability of funding. We currently intend to finance the development of our business, including our prescription drug development efforts, from outside sources including through the sale of equity, debt or convertible securities, third party financing and strategic partnering.

Our Development Plans for Operations in the First Twelve Months

We intend to build our technology and product portfolio through licensing and/or acquisition. Our strategy for acquiring products is based on identifying and pre-qualifying probiotic bacterial strains that meet certain standards. Specifically, a candidate product should ideally (a) have an established scientific publication record that demonstrates its unique characteristics, (b) have a history of safe use in humans, and (c) evidence of producing a clinical response in individuals with one or more gastrointestinal disorders. We believe that E. coli M17 met these standards. Many probiotics have not been subject to the same scientifically rigorous evaluation as other biotherapeutics or biologic drugs. As a result, candidate products we identify may not have each of these criteria as well-established as others.

We believe that our unique value proposition is our established template for this rigorous development. We believe that by adhering to this template, we can efficiently and at reasonable cost develop a scientific and clinical portfolio for a candidate probiotic drug that will meet FDA standards for clinical development under an approved IND.

The following illustrates our commercial development model for the development of a hypothetical probiotic strain:

• Demonstrate strain stability, metabolic characteristics, antibiotic sensitivity, etc. These are classic microbiological characteristics associated with a stable bacterial strain.

• Confirm that the strain has been appropriately registered in national or international repositories, such as the American Type Culture Collection. The strain to be developed must be traceable to a specific repository or be deposited at the time of acquisition.

• Demonstrate genetic uniqueness. This involves rapid genomic sequencing using a high throughput commercial laboratory facility that meets accepted FDA Good Laboratory Practices. The benefits of genome sequencing are that the candidate strain can be compared against genomic databanks of other related bacteria, both for its unique sequences as well as presence of any undesirable genetic markers. It also will produce unique sequences that can be used for strain identification in manufacturing and in clinical practice. Due to major recent advances in sequencing technology, the cost of this step has been reduced significantly.

• Develop a high-potency, shelf-stable formulation. This may be based on the UST’s bacterial vitrification process described above, or on other approaches that meet our specifications for long shelf life (ideally one year or longer), during which the potency of the product remains at levels for which clinical efficacy results have been achieved.

• Develop a cGMPs production plan. The probiotic candidate strain will be evaluated for manufacturing scale up and stability, in conjunction with a certified cGMP contract manufacturer. By undertaking this step early in the development process, we believe the steps that follow will meet FDA guidelines for submission in the first regulatory filing.

• Develop a regulatory submission plan. Summarizing everything known about a strain and conducting a rigorous “gap analysis” is a critical step in order to ensure that the development program will not experience late and costly surprises. As part of this process, we will endeavor to meet as early as possible with FDA staff in a “pre-IND meeting” to confirm that our assumptions regarding the necessary steps leading to regulatory approval are correct. A key part of this planning process will be to identify the specific indication and label claims for which we will conduct clinical testing and seek approval. This also allows us to assess the market opportunity for the product, for this initial indication and other possible follow-on indications.

• Confirm safety in animal testing and if appropriate, preclinical efficacy in an appropriate animal model for the condition or conditions to be treated. Probiotics must be non-pathogenic and predictably safe when used in animal testing. Because there are not good animal models for all gastrointestinal diseases, efficacy testing in animal models may not be appropriate in each case. Where a model does exist, however, the value of establishing successful performance is a solid proof of principle.

• Select expert partners for the development program, in the form of consultants and contract research organizations. The efficiency of development will be enhanced by choosing an external team with deep experience and a demonstrated track record of successful approved products. We believe that our management’s past experience gives it a strong pool of potential advisors to draw from for building this team.

• Prepare and file an IND for first use as a regulated product in humans. Probiotics, unlike other new drugs, will likely have been used in humans without any regulatory oversight. In many cases, a probiotic strain will have been identified and isolated from an individual as part of the normal gastrointestinal microbial population (the “microflora”). The IND contains the first clinical protocol for testing and typically will have identified the first institution where testing will be undertaken. Once an IND is active, we will have established that its assumptions regarding the development program are acceptable to FDA, thus paving the way for first testing in clinical trials.

• Establish relationships with key thought leaders in the GI clinical area with expertise in the condition for which we develop its probiotic product. Typically, these thought leaders will serve as principal investigators for our early clinical trials and longer-term provide a means of publishing clinical results in the scientific literature. Our management has relationships with leaders in the GI academic community that we believe will facilitate identifying thought leaders and possible university medical centers where trials can be conducted.

The logical next steps include expanded clinical testing. Because we believe that the first year of development is critical for our success, we have provided the detailed outline as a means of assessing the capital requirements needed to launch a comprehensive clinical development program. If there has been prior testing in animal models and clinical use in humans, the primary task will be to solidify the scientific database with the elements outlined above. Provided that we obtain adequate financing to re-establish manufacturing in a qualified facility, we believe that the timeline for initiating clinical trials for E. coli M17 is one year or less from the time financing is available.

We Based upon our experience with developing E. coli M17, we currently believe the cost of establishing an active IND for a future candidate probiotic to be approximately $750,000 to $1,000,000 depending on the established scientific and safety database for a particular product. The most expensive tasks include the genomic sequencing, demonstrating that a manufacturing process can be established that meets cGMP standards, and animal testing, depending on the extent required.

We intend to build a pipeline of probiotic biologic candidates. To minimize the initial capital requirements and speed the path to successful clinical testing, we selected E. coli M17 because it has a strong history of established use. Our preferred deal structure for follow-on products will be to use equity instead of cash for the upfront licensing or acquisition costs, coupled with cash or equity milestone payments as the product advances in clinical development, at which point we believe that testing, if successful will increase our ability to raise additional financing.

Our current goal is to be in clinical testing of E. coli M17 within 12 months of obtaining adequate financing. Meeting this goal is contingent upon completing the license agreement with UST and moving quickly to produce and complete quality assessment of the shelf-stable dosage form based on the US technology, resulting in a formulation that is suitable for use in our initial clinical trials. Follow-on probiotic candidate strains may be less developed and may take up to two years to complete these steps, provided that there is compelling data to support a unique position for clinical use, compared to probiotic products currently being marketed as traditional dietary supplements.

To assist us in selecting candidate products among the pool of potential products we have identified, we intend to hire a team of expert advisors in microbiology and gastroenterology to assess the relative scientific strength of the knowledge base for each candidate product. We currently anticipate that this team of advisors will be engaged by us within the first month of financed operations. Initial contact with prospective licensors will be made as soon as this key step is completed, followed by pre-acquisition due diligence. We have also identified service vendors needed to complete our template steps and plan on engaging such vendors once sufficient financing is obtained. Based upon discussions with these potential vendors, we anticipate that they will be able to begin work on our lead candidate as soon as we have clearance to initiate development.

Regulatory Considerations

We currently have a single product, E. coli M17, in development, although we will not begin clinical testing until adequate financing is in place. Our intended products, probiotic bacteria, fall into the class of biologics. Our current regulatory strategy involves pursuing FDA approvals of biologic products we may develop as prescription medications. Industry studies indicate that it takes approximately 8 to 10 years for the average prescription drug or biologic to progress from the IND filing to market introduction. Biologics are derived from living organisms and include a wide range of products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins. Biologics can be composed of sugars, proteins, or nucleic acids or complex combinations of these substances, or may be living entities such as cells and tissues. Biologics are isolated from a variety of natural sources, human, animal, or microorganism, and may be produced by biotechnology methods and other cutting-edge technologies. Gene-based and cellular biologics, for example, often are at the forefront of biomedical research, and may be used to treat a variety of medical conditions for which no other treatments are available.

Biologics are approved for marketing under the provisions of the Public Health Service Act. The Act requires a firm which manufactures a biologic for sale in the United States to hold a license for the product. A Biologic License Application, also called a Therapeutic Biologic Application, is a submission that contains specific biologic product information on the manufacturing processes, quality assessments, pharmacology, clinical pharmacology and the medical affects of the biologic product. If the information provided meets FDA requirements, the application is approved and a license is issued allowing the firm to market the product in the US. A BLA is issued for approved biologics and a NDA (“NDA”) is issued for drugs. Each BLA includes information that is specific for the process and facility where the biologic product is manufactured, tested, and stored.

A prescription drug or biologic can be assigned orphan drug status by the FDA and European regulatory authorities if the indication addresses a target population of less than 200,000 sufferers in the U.S. or less than 5 sufferers per 10,000 persons in Europe. There is a separate Office of Orphan Drug Product Development at the FDA designed to help facilitate rapid approval of orphan drug applications. Once approved, orphan drugs are given 7 year exclusivity in the U.S. and ten years of exclusivity in Europe. Additional benefits of receiving orphan drug status in the U.S. include study design assistance, a 50% reduction in the filing cost of the NDA/BLA (new drug application/biological licensing application) and may also include partial funding of clinical costs by the FDA. The NDA/BLA requests permission from FDA to market a drug in the U.S. In Europe, a drug product is filed with the European Medicines Agency (“EMEA”) for marketing throughout the European Commission area. The EMEA has a Committee for Orphan Medicinal Products whereby drugs are designated "orphan drug" status for the European Union. We believe that the indication identified in the IND for E. coli M17 will meet criteria for orphan drug designation, based upon the target population being less than 200,000 in the U.S.

Clinical Trials and Marketing Approval

Before an experimental drug or biologic can be sold over the counter or with a prescription, it must undergo rigorous testing. Clinical trials are studies done with human subjects to answer specific questions about the new biologic product. The questions that are usually asked in a clinical trial involve the safety and effectiveness of the product in humans. The results of these clinical studies define the ways to use the potentially new product in humans. Carefully conducted and well controlled sound clinical trials are the fastest and safest way to test if a biotech drug or treatment is safe and effective in humans. The entire development of a new product can take up to nine years, over which time the FDA carefully reviews each study before, during and after the study is started. There are many factors that can influence the overall time for the biological approval process.

Clinical trials proceed in several well-defined phases, beginning with a demonstration that the proposed product is safe in animal or cell-culture based studies before it is tested for the first time in humans, and ending with the product being approved for marketing by the FDA or corresponding regulatory agency in Europe and elsewhere. The stages of development generally proceed as follows:

Non-clinical studies. An experimental drug or biologic that is examined in a test tube experiments or in animal experiments is referred to as non-clinical research. The non-clinical research that occurs before an experimental drug or biologic is tested in humans is called pre-clinical research. If early pre-clinical research in animal studies shows that the product appears to be safe, the company will then provide this information to the FDA along with a request to begin testing of the experimental drug in humans. This request is referred to as an IND or an Investigational New Drug application. It is estimated that only about 0.1% (or one in one thousand) compounds developed in laboratories pass the pre-clinical studies and advance to FDA-regulated clinical trials. All studies monitor the safety of the product in humans.

Phase 1 trials. Researchers test their experimental product in a small group of people (20-100) to determine the metabolic and pharmacologic actions of the product, the side effects that may be associated with increasing doses, and any early evidence of effectiveness. These early studies typically could last up to 2-3 years before moving on to the next phase of study (Phase 2).

Phase 2 trials. A larger population of subjects (up to 300) is included in this phase of study. It is here that the experimental product can be tested in comparison to another product or a placebo, to see if the experimental product offers any benefit of effectiveness. The comparison of the product with another group is called a “controlled study”, and a comparison of the 2 or more groups is made for safety, effectiveness. These Phase 2 studies also help to define the dose and frequency of dosing for this disease. It is in the Phase 2 study that some indication of the potential benefits and risks associated with the use of the experimental product can be first seen. This phase typically could last up to 2 years, before moving on to the next phase of study (Phase 3).

Phase 3 trials. Pursuing a Phase 3 study requires time and enormous costs to conduct a pivotal trial. Results from Phase 3 studies provide the necessary data for the FDA to make its final decision on approving the experimental product and awarding a BLA. These studies also provide the needed information for the drug dosing and administration. These studies are usually large studies (several hundred to thousands) using control groups that are designed to confirm the experimental product’s effectiveness and safety when used in the target clinical population. In general, these studies may last several years.

Filing of NDA or BLA for marketing approval. After the successful completion of clinical phases of the experimental product’s development, Phases 1-3, a company will assemble and submit to the FDA the results of these studies to obtain marketing authorization to the public, in the form of a BLA for a biologic product and a NDA for a drug product. The license process under FDA review generally takes from 12-18 months. We anticipate that most of the products we currently plan to develop, if approved will receive BLA authorization.

·	Phase 4 trials. The FDA may request post-marketing clinical and/or non-clinical studies to define additional information (for example, risks, benefits, and optimal use) for a new product.

In addition to a proposed product moving through the development stages outlined above, a particular product may qualify for special designation by the FDA or corresponding regulatory agency, depending on the clinical need for the product or the size of the population with the particular disease that the product is intended to treat.

·	Fast track approval status. If granted by the FDA, fast track approval status allows for expedited review and approval. This could reduce the FDA product approval time to 6 months.

Orphan product status is granted to drugs or biologics addressing patient populations of less then 200,000. The FDA, through the Orphan Drug Act of 1983, grants seven-year market exclusivity and tax breaks to companies with orphan drugs. Additional benefits of receiving orphan drug status in the U.S. include FDA assistance with clinical study design, a 50% reduction in the costs of filing for the marketing authorization (NDA or BLA) and potentially partial FDA funding of clinical costs.

Manufacturing

We do not have manufacturing facilities. Any products that we develop will be required to be manufactured in a facility maintained and operated under FDA laboratory and cGMP requirements as a prescription drug or biologic product. The manufacturer of any future product, whether done by third-party contractors or internally, will be subject to rigorous regulations, including the need to comply with the FDA's cGMP standards. As part of obtaining FDA approval for a product, manufacturing facilities must be inspected, approved by and registered with the FDA. For a biologic, this includes licensing of the facility under a BLA. In addition to obtaining FDA approval of the prospective manufacturer's quality control and manufacturing procedures, domestic and foreign manufacturing facilities are subject to periodic inspection by the FDA and/or foreign regulatory authorities which have the authority to suspend or withdraw approvals.

We have established the basic terms of a technology transfer and clinical trial product manufacturing contract with an experienced cGMP contract manufacturing company to be entered into upon our raising sufficient funds in order to satisfy our payment requirements under such agreement. The ~~incorporation~~contract terms will need to be revised in accordance with the use of the UST technology into ~~the~~our manufacturing process,. ifAssuming that we will be successful in concluding our ~~development~~license ~~project~~agreement with ~~UST~~and ~~proves~~the ~~successful~~associated transfer of the process technology from UST, ~~should~~we believe that the incorporation of the UST technology into the manufacturing process has the potential to decrease the number of production batches needed for clinical trial manufacturing, therefore lowering costs. We believe that the capital expense associated with incorporating the UST technology will be limited to freeze-drying equipment. Until we license the UST technology and transfer the manufacturing process, we will be unable to determine the cost of producing clinical trial material or making a final determination whether the UST process is compatible with the contract manufacturing facility we have identified. These changes will need to be factored into the terms of the manufacturing contract. While we believe that this is possible, we have no assurance at the present time that these changes are acceptable to the contract manufacturing company. For this reason, finalization of the license agreement with UST and transfer of full process details is a key step in determining whether our manufacturing plan is achievable. If we are successful in raising financing sufficient to allow us to enter into such agreement, both with UST and the contract manufacturer, and the manufacturer executes and delivers to us the agreement containing those terms, we will be in a position to implement manufacturing.

Intellectual Property

We have a right of first refusal to enter into a license agreement with UST for an exclusive, worldwide license to UST’s preservation/stabilization technology which includes certain patents, patent applications, know-how and associated trade secrets. These rights have been maintained through extensions of our initial agreement with UST. The license is intended to cover the use of E. coli probiotic bacteria but excludes the use to preserve E. coli bacteria as a system for delivering vaccine materials to the gastrointestinal tract.

The intellectual property acquired with the BioBalance acquisition includes a number of issued U.S. and foreign patents, as well as patent applications that are pending. The issued patents cover specific composition of a liquid dosage form and its therapeutic use, as well as the use of E. coli M17 for various gastrointestinal disorders. Pending U.S. and foreign patent applications relate to the liquid dosage form, a composition combining an antibiotic with E. coli M17 and other aspects related to E coli M17 that have not yet been published. In addition, should we obtain a license for the UST technology, this will provide access to several pending U.S. and foreign applications, one of which has received first notice of allowance in Israel. In addition, we acquired ownership of the E. coli M17 cell deposits with the American Tissue Culture Collection, master and working seed deposits at secure storage locations, and know-how related to the manufacture of E. coli M17 product in the BioBalance acquisition. The BioBalance patent portfolio is actively maintained through our relationship and regular communications with our patent counsel, G.E. Ehrlich, Ltd., and their interactions with the patent offices on our behalf, responding to office actions and attending to renewal fees, and other related issues.

The following patents were acquired from BioBalance:

ISSUED PATENTS ACQUIRED FROM BIOBALANCE: TITLE	COUNTRY PATENT NUMBER	EXPIRATION DATE
Probiotic Compositions for the Treatment of Inflammatory Bowel Disease	US 7,018,629	10/06/2022
Bacterial Strain, Processed Plant Extracts and Probiotic Compositions for Human and Veterinary Use	Europe 1185618 Australia 778789 Mexico 255870 New Zealand 515830 New Zealand 527587	06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019
Bacterial Strain, Processed Plant Extracts, Compositions Containing Same, Processes for Their Preparation and Their Therapeutic And Industrial Applications	US 6,500,467 US 6,569,424 US 6,544,510 US 6,544,509 US 6,544,508 US 6,534,054 US 6,534,053 US 6,524,576 US 6,524,575 US 6,514,494	06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019 06/03/2019
Bacterial Strain, Processed Plant Extracts and Probiotic Compositions for Human and Veterinary Use	US 6,503,505 US 6,500,424 US 6,511,661 US 6,500,423	06/03/2019 06/03/2019 06/03/2019 06/03/2019
Bacterial Strain, Processed Plant Extracts, Compositions Containing Same, Processes for Their Preparation and Their Therapeutic and Industrial Applications	Australia 2002221004 New Zealand 526748 US 7,504,251 China ZL01821485.1 Russian Fed. 2281326 South Africa 2003/4747	11/30/2020 11/30/2020 11/30/2020 11/30/2020 11/30/2020 ~~11/30/2020~~

Competition

We currently have no products or drugs in commercial production. Accordingly, we do not compete with any product or in any market or industry. While there is no assurance that we will develop any products capable of commercialization, we believe that competition, should we develop products which obtain regulatory clearances required for commercialization, will be intense competition from large pharmaceuticals companies with resources far greater than ours and which have been in business longer than us and have established brand recognition and consumer loyalty. We will compete based on factors including, effectiveness of our products for the approved indications, delivery, price, insurance availability, price, quality, service and distribution.

Most probiotic products being marketed as dietary supplements today are sold in traditional capsule format, where the capsules are made of gelatin, gel caps made of vegetable origin ingredients, or an enteric coated version of one of these (meaning a polymer coating that is designed to withstand the low pH of the gastric juice acid and permit release of the product as it enters the small intestine, where the pH is higher and less damaging to bacteria. Most of these products use a traditional freeze-drying approach to stabilize the probiotic. Testing by third party organizations, such as Consumer Reports, has indicated that many products have significantly lower viable organisms than the label specifies, though most companies indicate the number of bacteria present at the time the product was manufactured instead of the number to be expected at the end of shelf-life. Several chewable tablet formulations have been marketed, but the comparative shelf-life viability of probiotics in these forms is unknown. In contrast, UST’s preservation/stabilization technology has been shown to preserve probiotics and other microbial agents for a year or longer, with significantly higher viability upon reconstitution of the dry product compared to traditional freeze-dried (also called lyophilized) comparison probiotic formulations. For this reason, we believe that if we enter into a license agreement to acquire such technology and are successful in our commercialization efforts, we will have a competitive position in the market place.

Governmental Regulations

The manufacturing and marketing of drug and drug delivery and research and development activities are subject to regulation for safety, efficacy and quality by numerous governmental authorities in the United States and other countries. Compliance with these regulations will involve a considerable amount of time, expense and uncertainty.

In the United States, drugs are subject to rigorous federal regulation and, to a lesser extent, state regulation. The United States Food, Drug and Cosmetic Act, the regulations promulgated thereunder, and other federal and state statutes and regulations govern, among other things, the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of drugs. Drug development and approval within this regulatory framework is difficult to predict and will take a number of years and involve material expenditures that are difficult to accurately projected but which will exceed our current resources and will require additional funding.

We will be subject to a variety of state laws and regulations relating to, among other things, advertising, pricing, charging and collecting state sales or use tax and product safety/restrictions. We will be subject to certain federal, state and local laws and regulations relating to the protection of the environment and human health and safety.

Employees

We currently have no employees. All functions including development, strategy, negotiations and administration are currently being provided by our executive officers on a voluntary basis.

Item 1A. Risk Factors

~~RISK~~As ~~FACTORS~~a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 1A.

Risk Factors Relating to Our Company

We are a development stage company, have generated no revenues to date and have a limited operating history upon which we may be evaluated.

We were incorporated on September 2, 2009, have generated no revenues from operations to date, and have no meaningful assets. Our lack of operating history makes it difficult to evaluate our business. We face all of the risks inherent in a new business and those risks specifically inherent in the business of developing, testing, obtaining regulatory approvals for, manufacturing, commercializing and selling new prescription drug products, with all of the unforeseen costs, expenses, problems, and difficulties to which such ventures are subject. Accordingly, we expect to incur substantial operating losses. We cannot assure you that we will be able to generate revenues or profits from operation of our business or that we will be able to generate or sustain profitability in the future.

We expect losses in the future because we have no revenue to offset losses.

As reflected in our financial statements filed in this Annual Report, we are in the development stage. As of December 31, 2011, we have incurred a net loss of $303,723 from inception and used cash in operations of $252,010. As we have no current revenue, we are expecting losses over the next 12 months because we do not yet have any revenues to offset the expenses associated with the development and implementation of our business plan. We cannot guarantee that we will ever be successful in generating revenues in the future. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

Our business model is unproven and our success is dependent on our ability to develop and then expand our customer base.

Our business model is to generate revenues from the sale of probiotic, biotherapeutic drug products. We cannot guarantee that we will ever be successful in doing this. Our business model is new, and our ability to generate revenue is unproven. Therefore, it is not possible for us to predict the future level of demand for the products we intend to develop, or if we will be able to effectuate our business plan. We recognize that if we are unable to generate revenues, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

Our independent auditor has issued a going concern opinion after reviewing our financial statements; our ability to continue is dependent on our ability to raise additional capital and our operations could be curtailed if we are unable to obtain required additional funding when needed.

We will be required to expend substantial amounts of working capital in order to acquire, develop, test, obtain the requisite regulatory approvals, manufacture and market our proposed products and establish the necessary relationships to implement our business plan. Even though we raised $425,000 from the issuance of shares of common stock, we still do not have sufficient cash for our operations. We will continue to require additional financing to execute our business strategy. We are totally dependent on external sources of financing for the foreseeable future. Our failure to raise additional funds in the future will adversely effect our business operations, and may require us to suspend our operations, which in turn may result in a loss to the purchasers of our common stock. We are entirely dependent on our ability to attract and receive additional funding from either the sale of securities or outside sources such as private investment or a strategic partner. We are in discussions with several financing sources but currently have no firm commitments, agreements or arrangements with respect to any such financing, and there can be no assurance that any needed funds will be available to us on acceptable terms or at all. The inability to obtain sufficient funding of our operations in the future could restrict our ability to grow and reduce our ability to continue to conduct business operations. After reviewing our financial statements, our independent auditor issued a going concern opinion and our ability to continue is dependent on our ability to raise additional capital. If we are unable to obtain necessary financing, we will likely be required to curtail our development plans which could cause us to become dormant. Any additional equity financing may involve substantial dilution to our then existing shareholders.

We may never be able to effectuate the license agreement with UST and therefore we may lose all payments made to UST.

Under the terms of a development agreement with UST, we are required to pay UST at least CA$8,333.33 per month (which amount may be increased depending on the scope of the work required). We commenced paying UST these monthly payments in May 2011, and have made eleven payments to UST, with the last payment due on April 15, 2012 after which time we plan to exercise our option to enter into the license agreement with UST. At such time a $25,000 payment will become due to UST. If we are unable to make such payment, all payments made to UST will be forfeited and we will have no asset or revenue stream; however, we could possibly have a revenue stream from the product formulated with a different technology. Accordingly, an investor may not see any return from his investment in our company

Our right of first refusal to license the UST’s preservation technology, if exercised, is limited to E. coli probiotic bacteria.

Our right of first refusal to license the UST’s technology, if exercised, is limited to the use with E. coli probiotic bacteria. In order to utilize the UST license we will need to source and/or acquire development rights for an E. coli probiotic strain.If our development of recently acquired E. coli M17 proves unsuccessful, we may be unable to gain access to an appropriate E. coli probiotic strain. We would then be unable to utilize the UST’s technology, unless we were successful in renegotiating a field of use with UST for a different probiotic bacterial species. There is no assurance that we could negotiate an alternate use for equivalent or favorable terms which would have an adverse effect our ability to complete product development plans and on our company.

Even if we are able to make payments to UST as contractually required, we may not obtain FDA approval for the formulation licensed from UST.

In order to make use of the UST’s technology, we will need to obtain access to an E. coli probiotic and move it forward in preclinical and clinical development. With the acquisition of E. coli M17 we have an E coli strain that is suitable for use of the UST technology under the terms of a potential license with UST. We believe that the UST manufacturing process is compatible with our existing process for producing E. coli M17 and will be acceptable to FDA. However, until we transfer the technology, we cannot conduct the necessary manufacturing runs incorporating the UST process and submit those to FDA as an amendment to our manufacturing process. While we plan to make these changes and submit them in accordance with existing regulatory requirements, subject to adequate finding, we have no assurance that the FDA will find them to be satisfactory. Initiation of clinical testing of product made using the UST technology will require approval of our change in manufacturing. Failure to obtain such approval would hamper our development plans and after having made significant capital expenditures, could have a material adverse effect on us.

UST’s final product formulation may not satisfy the stability and shelf-life requirements that we require.

We are currently basing our development plans on the ability of UST’s technology to meet our specifications for a thermostable, commercially viable formulation of an E. coli probiotic, thereby enabling us to move forward with clinical testing. UST’s technology has been previously shown to have the capability to do this. However, UST may be unable to make such a thermostable formulation with the E. coli strain that we ultimately select for development. This could delay our development program and clinical testing, and force us to seek another formulation and stabilization technology. We may be unable to find an alternate stabilization technology to substitute for UST’s technology and we would lose our funds invested in the development of UST’s technology which would have a material adverse effect on us.

We are completely dependent on the services of our executive officers, especially Dr. Robert Hoerr and Dr. Lawrence Levitan. If we should lose their services before we are able to engage and retain qualified employees or consultants to execute our business plan, we may not be able to continue with our business model.

Our operations and business strategy are completely dependent upon the knowledge and business contacts of Dr. Robert Hoerr, our president and principal executive officer, and Dr. Lawrence Levitan, our treasurer and principal financial and accounting officer. They are under no contractual obligation to remain employed by us. We do not have employment agreements in place with Dr. Hoerr and Dr. Levitan and will be unable to do so until we have the funding in place to commit to their compensation. If they should choose to leave us for any reason before we have hired suitable replacements, our operations may fail. Even if we are able to find such personnel, it is uncertain whether we could find someone who could develop our business along the lines described herein. We will fail without Dr. Hoerr or Dr. Levitan or an appropriate replacement(s). We intend to acquire key-man life insurance on the life of Dr. Hoerr and Dr. Levitan naming us as the beneficiary when and if we obtain the resources to do so and provided that Drs. Hoerr and Levitan remain insurable. We have not yet procured such insurance, and there is no guarantee that we will be able to obtain such insurance in the future. Accordingly, it is important that we are able to attract, motivate and retain highly qualified and talented personnel and independent contractors.

The products we plan to develop may not satisfy regulatory requirements or become commercially viable.

The products that we plan to develop will require development, testing, and investment in order to market them as prescription drugs. We cannot be sure that our product research and development efforts will be successful, that candidates will enter clinical studies as anticipated, that we will satisfy the FDA’s Good Laboratory Practices, current Good Manufacturing Practices (“cGMP”), Good Clinical Practices or prescription drug or prescription biologic requirements or that any required regulatory approvals will be expeditiously applied for or obtained, or that any products, if introduced, will be commercially successful. The results of pre-clinical and other trials on products we plan to develop are not necessarily predictive of results that will be obtained from large scale clinical testing. We cannot be sure that clinical trials of the products which we plan to develop will demonstrate the safety and efficacy of such products or will result in a marketable product. The failure to demonstrate adequately the safety and efficacy of a therapeutic drug product could delay or prevent regulatory approval and commercial sale of the product, which could have a material adverse effect on us. We may encounter difficulties in manufacturing, process development and formulation activities that could result in delays in clinical trials, regulatory submissions, regulatory approvals and commercialization of any products we plan to develop, or cause negative financial and competitive consequences. We cannot assure you that any product will be successfully developed, be developed on a timely basis or prove to be more effective than competing products based on existing or newly developed technologies. The inability to successfully complete development, or a determination by us, for financial or other reasons, not to undertake to complete development of a product, particularly in instances in which we have made significant capital expenditures, could have a material adverse effect on us.

Intellectual property rights may not protect our business.

We plan to use a combination of patents, trademarks and trade secrets to protect any proprietary intellectual property rights that we may develop or acquire from UST or other third parties. We cannot assure you that patent and trademark registration applications will result in issued patents and registered trademarks, or that, if issued, our applications will be upheld if challenged. Further, even if granted, we cannot assure you that these patents and trademarks will provide us with any protection from competitors or, that if they do provide any meaningful level of protection, that we will have the financial resources necessary to enforce our patent and trademark rights. In addition, we cannot assure you that others will not independently develop technologies similar to those covered by our pending patents and trade secrets, or design around the pending patents. If others are able to design around our patents, our results of operations could be materially adversely affected. Further, we will have very limited, if any, protection of our proprietary rights in those jurisdictions where we have not affected any filings or where we fail to obtain protection through our filings. There can be no assurance that third parties will not assert intellectual property infringement claims against us with respect to products we may develop. We may be responsible for defending against charges of infringement of third party intellectual property rights by our actions and products and such assertion may require us to refrain from the sale of our products, enter into royalty arrangements or undertake costly litigation. Further, challenges may be instituted by third parties as to the validity, enforceability and infringement of our patents. Our adherence to industry standards with respect to our product may limit our opportunities to provide proprietary features which may be protected. In addition, the laws of various countries in which our product may be sold may not protect our product and intellectual property rights to the same extent as the laws of the United States.

The validity of patents covering pharmaceutical and biotechnological inventions and the scope of intellectual property claims made under such patents is uncertain. Failure to secure necessary patents could impair our ability to produce and market any products that we develop.

There is no consistent policy regarding the breadth of intellectual property claims permitted in specialty pharmaceutical and biotechnology patents. In addition, patents may have been granted, or may be granted, to others covering products or processes that we need, or may need, for testing and developing any products that we may develop. If products or processes that we may develop infringe upon patents held by third parties, or otherwise impermissibly utilize the intellectual property of others, we might be unable to develop, manufacture, or sell such products. In such event, we may be required to obtain licenses from third parties to use such intellectual property. We cannot be sure that we will be able to obtain such licenses on acceptable terms, or at all. If we enter into a license agreement with UST for its technology, UST may be unsuccessful in gaining patent protection for the formulation technology that is a key element of our product development strategy, or, others may be successful in developing competing formulation technology that is equivalent to or superior to this formulation technology.

Failure to develop, or contract for, an adequate sales and marketing organization, or partner with a larger pharmaceutical company would result in the inability to market and sell our products.

To market any products that we may develop directly, we would have to develop a substantial marketing and sales force. Alternatively, we may, for certain products, attempt to obtain the assistance of larger pharmaceutical companies with established distributions systems and direct sales forces. We do not know if we will be able to enter into agreements with other companies to assist in the marketing and sales of such products. If we are not able to sustain such marketing efforts, we may license marketing rights to a third party. However, we cannot be sure that we would be able to locate a qualified marketer or distributor or enter into any such agreement on reasonable terms or at all.

We own no manufacturing facilities and will be dependent on third parties to make any products that we may develop.

We own no manufacturing facilities or equipment, and employ no manufacturing personnel. We currently expect to use third parties to manufacture products we may develop on a contract basis. We have negotiated the terms of a technology transfer and clinical trial product manufacturing contract with an established cGMP contract manufacturing company which we currently intend to enter into upon our raising sufficient funds to satisfy our payment requirements under such agreement. The terms of this contract will need to be revised if we license the UST technology, in order to incorporate the UST process into our manufacturing plan. We do not yet have the detailed information required to revise or re-negotiate such terms or to predict how it will change the contract or the costs. We intend to do this as soon as possible after the decision to license the UST technology is made. However, there can be no assurances that we will be able to renegotiate a contract on favorable terms or at all. Third party manufacturers may require that we have sufficient funding to, among other things, transfer our manufacturing process. We may not be able to obtain manufacturing services on reasonable terms or at all or sufficient funding to transfer our manufacturing process. As a result, our ability to manufacture products we may develop and start clinical trial testing may be impaired. We may in the future seek to establish our own manufacturing facilities, in which case, we will incur expenses requiring additional financing, may be unsuccessful in hiring sufficient experienced personnel and experience significant time delays in our development program.

We will be required to comply with good manufacturing practices, good laboratory practices and good clinical practices, both in our development program and following product approval.

The manufacture of our proposed products will be subject to cGMP procedures prescribed by the FDA. There can be no assurance that we or any entity manufacturing products on our behalf will be able to comply with cGMP or satisfy certain regulatory inspections in connection with the manufacture of our proposed products. Failure or delay by any manufacturer of products we develop to comply with cGMP or similar regulations or satisfy regulatory inspections would impair our ability to have product manufactured for clinical trials and thereby have a material adverse effect on us. The conduct of clinical trials must be made according to Good Clinical Practices and any laboratory testing or quality control procedures must be performed under Good Laboratory Practices, also prescribed by FDA. Failure of any of the service providers we may use to conduct clinical trials or analytical laboratory services to adhere to any of these quality-related measures may cause interruptions in or failure of our commercial development program.

Potential side effects of any product we may develop could impair our ability to continue clinical trials, obtain regulatory approval, or successfully market our products.

It is possible that, any time during clinical trials or patient usage, side effects of products may be encountered. If they are common or significant enough, this could result in the termination of clinical trials, denial of FDA approval, the inability to market and sell products, products being withdrawn from the market, or liability claims being asserted against us.

We may not be able to secure FDA regulatory approval for Investigational New Drug applications needed to begin clinical trials or for Biologics Licensing Applications needed for marketing approval.

Our business strategy depends on our ability to gain FDA regulatory approval to conduct clinical trials with products which we may develop and eventually to gain marketing approval. While we intend to hire individuals with experience in preparing and gaining FDA approval for such regulatory filings , there is no assurance that we will be able to satisfy FDA requirements or that new information regarding risks associated with our product candidates may come to light that render them incapable of meeting FDA requirements for safety and/or efficacy.

Any products which we may develop may not be accepted by physicians, patients or third party payers.

Patients, doctors and third-party payers must accept our products as medically useful and cost effective for us to be successful. Doctors and patients are very important constituents because they directly make all medical decisions. Third party payers are also very important because they pay for a major portion of all medical care expenses. Third party payers consist of health maintenance organizations, health insurers, managed care providers, Medicare and Medicaid, and their equivalent organizations in jurisdictions outside the U.S. There can be no assurance that patients, doctors or third-party payers will accept our products, even if approved for marketing, on a timely basis.

Government and private insurance plans may not pay for products which we may develop.

The success of products which we may develop in the United States and other significant markets will depend, in part, upon the extent to which a consumer will be able to obtain reimbursement for the cost of such product from governmental authorities, third-party payers and other organizations. We cannot determine in advance the reimbursement status of newly approved therapeutic products. Even if a product is developed and approved for marketing, we cannot be sure that adequate reimbursement will be available. Also, future legislation or regulation, or related announcements or developments, concerning the healthcare industry, or third party or governmental coverage and reimbursement, may adversely affect our business. In particular, legislation or regulation limiting consumers' reimbursement rights could have a material adverse effect on our business and revenues.

We may lose any technological advantage because pharmaceutical research technologies change rapidly.

The pharmaceutical research field is characterized by rapid technological progress and intense competition. As a result, our business strategy may not be successful and any products we may develop may not reach the marketplace or be saleable. Businesses, academic institutions, governmental agencies, and other public and private research organizations, may conduct research to develop technologies that may compete with technologies we may obtain or license. It is possible that competitors could acquire or develop technologies that would render such technologies obsolete or noncompetitive. We cannot be certain that we will be able to access the same technologies at an acceptable price, or at all. In addition, other therapeutic products or surgical procedures that may be developed for the indications we are pursuing may provide superior efficacy and make any product we may develop less competitive.

We may not be able to procure required insurance coverage.

We will need to procure liability insurance coverage required by clinical investigators, patients and other third parties with respect to clinical studies. There can be no assurance that such coverage will be available to us or that, even if available, we will be able to bear the expense of such insurance coverage. Absent such coverage, we will not be able to perform required clinical studies.

We may be subject to product liability claims which could result in significant losses and adverse product publicity.

We face an inherent risk of exposure to product liability claims and negative publicity in the event that the use of a product that we develop and commercialize results in injury. We face the risk that materials used in the manufacture of the final product may be contaminated with substances that may cause sickness or injury to persons who have used the products, or that sickness or injury to persons may occur if the product distributed by us is ingested in dosages that exceed the dosage recommended on the product label. In the event that insurance coverage or contractual indemnification is not adequate, product liability claims could have a material adverse effect on our business. The successful assertion or settlement of any uninsured claim, a significant number of insured claims, or a claim exceeding any future insurance coverage, could have a material adverse effect on our business. Additionally, negative publicity asserting that any products we may develop, or similar products of others, may be harmful, could have a material adverse effect on our business, regardless of whether such reports are scientifically supported, regardless of whether the harmful effects would be present at the dosages recommended for such products, and regardless of whether such adverse effects resulted from failure to consume the product as directed.

Intense competition may result in our inability to generate sufficient revenues to operate profitably.

The pharmaceutical industry is highly competitive. Numerous companies, many of which are significantly larger than we are, and which have greater financial, personnel, distribution and other resources than we have and may be better able to withstand volatile market conditions, will compete with us in the development, manufacture and marketing of probiotics for the treatment of GI disorders. There can be no assurance that national or international companies will not seek to enter or increase their presence in the industry. In addition, large nationally known companies may compete with us and they have already spent millions of dollars to develop treatments for GI disorders. Current or increased competition could have a material adverse effect on our business, as many of our competitors have far greater financial and other resources and possess extensive manufacturing, distribution and marketing capabilities far greater than ours.

We may be dependent on collaborative agreements for the development of our technologies and business development which exposes us to the risk of reliance on the viability of third parties.

In conducting research and development activities, we may rely upon numerous collaborative agreements with universities, governmental agencies, charitable foundations, manufacturers, contract research organizations, and corporate partners. The loss of, or failure to perform under, any of these arrangements by any of these entities may substantially disrupt or delay our research and development activities.

Since our officers and directors work or consult for other companies, their activities could slow down our operations.

Our officers and directors are not required to work exclusively for us and do not devote all of their time to our operations. It is expected that each of our officers and directors will devote between 5 and 30 hours per week to our operations on an ongoing basis, and will devote whole days and even multiple days at a stretch when required. It is possible that a conflict of interest with regard to their time may arise based on their employment for other companies. Their other activities may prevent them from devoting full-time to our operations which could slow our operations and may reduce our financial results because of the slow down in operations.

Due to our limited marketing, sales, and distribution experience, we may be unsuccessful in our efforts to sell any products that we develop, enter into relationships with third parties, or develop a direct sales organization.

We have no marketing, sales, or distribution capabilities. At the appropriate time, we expect to enter into agreements with third parties to sell products we may develop or we may develop our own sales and marketing force. We may be unable to establish or maintain third party relationships on a commercially reasonable basis, if at all. In addition, these third parties may have similar or more established relationships with competitors who may exist after the introduction of our existing products, if any. If we do not enter into relationships with third parties for the sales and marketing of any products we may develop, we will need to develop our own sales and marketing capabilities. We have no experience in developing, training, or managing a sales force. We may be unable to build a sales force on a cost effective basis or at all. Any such direct marketing and sales efforts may prove to be unsuccessful. In addition, we will compete with many other companies that currently have extensive marketing and sales operations. We may be unable to establish a sufficient sales and marketing organization on a timely basis, if at all, and may be unable to engage qualified distributors. Even if engaged, these distributors may:

• fail to satisfy financial or contractual obligations;

• fail to adequately market our assigned products;

• cease operations with little or no notice; or

• offer, design, manufacture, or promote competing products.

If we fail to develop sales, marketing, and distribution channels, we would experience delays in product sales and incur increased costs, which would harm our financial results.

Our principal shareholders, who are our officers and directors, own a controlling interest in our voting stock. Therefore investors will not have any voice in our management, which could result in decisions adverse to our other shareholders’ interest.

Our officers and directors, in the aggregate, beneficially own or have the right to vote approximately 29% of our outstanding common stock. As a result, these shareholders, acting together, will have the ability to substantially affect all matters submitted to our shareholders for approval including:

• election of our board of directors;

• removal of any of our directors;

• amendment of our Articles of Incorporation or bylaws; and

• adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

As a result of their ownership and positions, our directors and executive officers collectively are able to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by our directors and executive officers could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in our company may decrease. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.

RISK FACTORS RELATING TO OUR COMMON STOCK

The issuance of shares by the Company, as well as any future issuances, will reduce investors’ percent of ownership and dilute our share value.

Our Articles of Incorporation authorizes the issuance of 150,000,000 shares of common stock, par value $.0001 per share, of which 35,413,391 shares are currently issued and outstanding. The issuance of the shares of common stock by the Company will result in substantial dilution in the percentage of our common stock held by our existing shareholders. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

Our common stock is subject to the "penny stock" rules of the Securities and Exchange Commission (“SEC”) and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The SEC has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

We believe that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

· Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

· Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

· "Boiler room" practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

· Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

Because we do not intend to pay any cash dividends on our shares of common stock, our shareholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell them at a price higher than that which they initially paid for such shares.

We may issue shares of preferred stock in the future that may adversely impact your rights as holders of our common stock.

Our Articles of Incorporation authorizes us to issue up to 5,000,000 shares of "blank check" preferred stock, none of which are issued and outstanding. Accordingly, our board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further shareholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends are declared to holders of our common stock, and the right to the redemption of such preferred shares, together with a premium, prior to the redemption of the common stock. To the extent that we do issue such additional shares of preferred stock, your rights as holders of common stock could be impaired thereby, including, without limitation, dilution of your ownership interests in us. In addition, shares of preferred stock could be issued with terms calculated to delay or prevent a change in control or make removal of management more difficult, which may not be in your interest as holders of common stock

We may be exposed to potential risks and significant expenses resulting from the requirements under Section 404 of the Sarbanes-Oxley Act of 2002.

We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We expect to incur significant continuing costs, including accounting fees and staffing costs, in order to maintain compliance with the internal control requirements of the Sarbanes-Oxley Act of 2002. Development of our business will necessitate ongoing changes to our internal control systems, processes and information systems. Currently, we have no employees, no products in development, no manufacturing facilities and no intellectual property rights, other than our right of first refusal until May 15, 2012 to enter into a license Agreement with UST. If and when we develop our product, obtain intellectual property rights and regulatory approval, hire employees and consultants and seek to protect our intellectual property rights, our current design for internal control over financial reporting will not be sufficient to enable management to determine that our internal controls are effective for any period, or on an ongoing basis. Accordingly, as we develop our business, such development and growth will necessitate changes to our internal control systems, processes and information systems, all of which will require additional costs and expenses.

In the future, if we fail to complete the annual Section 404 evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest and similar matters.

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than necessary, we have not yet adopted these measures.

Because none of our directors are independent, we do not currently have independent audit or compensation committees. As a result, the director has the ability, among other things, to determine his own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

The costs to meet our reporting and other requirements as a public company subject to the Exchange Act of 1934 are substantial and may result in us having insufficient funds to expand our business or even to meet routine business obligations.

As a public entity subject to the reporting requirements of the Exchange Act of 1934, we incur ongoing expenses associated with professional fees for accounting, legal and SEC filings and compliance. We estimate that these costs will increase if our business volume and activity increases. As a result of such expenses, we may not have sufficient funds to grow our operations.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

Our executive offices, located at 1264 University Avenue West, Suite 404, St. Paul, Minnesota 55104, consist of approximately 200 square feet of office space provided to us by our President. We do not pay rent for this space. We believe that this space will be sufficient until we are able to generate revenues, if at all, and hire employees.

Item 3. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

2314

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is quoted on the OTC Bulletin Board (“OTCBB”) under the symbol “ELGO”. Trading of our common stock commenced on April 15, 2011. Prior to said date, ~~2011~~ there was no active market for our common stock. The following table sets forth the high and low bid prices as reported on the OTCBB. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

FISCAL YEAR 2011	HIGH		LOW

Second Quarter	$	0.61	$	0.10
Third Quarter	$	1.01	$	0.05
Fourth Quarter	$	0.40		0.11

The last reported sales price of our common stock on the OTCBB on April 9, 2012, was $0.102.

FISCAL YEAR 2012	HIGH		LOW

First Quarter	$	0.26	$	0.12
Second Quarter	$	0.20	$	0.10
Third Quarter	$	0.11	$	0.10
Fourth Quarter	$	0.10	$	0.07

The last reported sales price of our common stock on the OTCBB on March 28, 2013 was $0.02.

Holders

As of ~~April~~March 928, ~~2012~~2013, we had approximately 6560 shareholders of record.

DIVIDEND POLICY

We have not declared or paid dividends on our common stock nor do we anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our board of directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.

Equity Compensation Plans

We do not have any equity compensation plans.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

The following are all issuances of unregistered securities by us since inception on September 2, 2009 which were not registered under the Securities Act of 1933, as amended (the "Securities Act"). In each of these issuances the recipient represented that he or it was acquiring the shares for investment purposes only, and not with a view towards distribution or resale except in compliance with applicable securities laws. No general solicitation or advertising was used in connection with any transaction, and the certificate evidencing the securities that were issued contained a legend restricting their transferability absent registration under the Securities Act or the availability of an applicable exemption therefrom.

On November 4, 2009 by action taken by our board of directors, we issued 1,500,000, 500,000, 500,000 and 7,800,000 shares of our common stock to Dr. Hoerr, Dr. Levitan, Mr. Welwart and Mrs. Grossman, respectively, our executive officers and directors, at the purchase price of $0.0001 per share for the aggregate consideration of $1,030. Each issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act. Each of the above persons is a founder of our Company and had access to all of the information which would be required to be included in a registration statement, and the transaction did not involve a public offering.

From November through December 2009, we issued an aggregate of 15,700,000 shares of our common stock to 50 investors in a fully subscribed private placement made pursuant to the exemption from the registration requirements of the Securities Act provided under Section 4(2) of, and Rule 504 of Regulation D of the Securities Act. The consideration paid for such shares was $0.003 per share, amounting in the aggregate to $47,100. The Company conducted the private placement without any general solicitation or advertisement and a restriction on resale. The Company provided all investors in the private placement with a subscription agreement.

In May 2010, the Company issued 20,000 shares of common stock to an outside vendor for services with a fair value of $60 ($.003 per share). The issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act.

On January 17, 2011, in connection with a loan agreement for a series of loans up to an aggregate of $50,000, we issued 500,000 shares of our common stock to the lender as consideration for its loan commitment. The issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act.

In February 2011, we issued Surge Partners, Ltd. (“Surge”) 500,000 shares of common stock in consideration for Surge agreeing to lend the Company up to an aggregate of $50,000. The shares were valued at $25,000 ($.05 per share). Irv Bader, the father of Lisa Grossman, the Secretary of our company, is President of Surge. The issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act.

On June 6, 2011, in connection with the completion of the acquisition and in considerations for all of the shares of BioBalance, we issued (i) 393,391 shares of common stock and (ii) a three-year promissory note to NYHC in the original principal amount of $100,000. Such note bears interest at the rate of 5% per annum, payable semi-annually, with the principal amount payable in three equal annual installments of $33,333.33 commencing on the first anniversary of the date of issuance. If there is an event of default, as defined in the Note, interest will accrue at 10%. We have the right to prepay the note, in whole or in part, at any time without premium or penalty. Such shares and note were issued pursuant to the exemption from registration afforded under Section 4(2) of the Securities Act of 1933, as amended.

On January 11, 2012, we entered into an agreement with MBTA Management, LLC, a Pennsylvania limited liability company (“MBTA”), pursuant to which MBTA will lend us an aggregate of $100,000 as follows, $50,000 on or before January 16, 2012, $25,000 upon our request at any time after February 1, 2012 and an additional $25,000 upon our request after February 15, 2012. Each loan will be unsecured and evidenced by a promissory note setting forth the interest rate and other terms of the loan.

On January 16, 2012, MBTA made the first loan of $50,000 to us and we issued a promissory note in the principal amount of $50,000 and 500,000 shares of common stock to MBTA as consideration for agreeing to make such loans. The note bears interest at 5% per annum, can be prepaid by us without penalty or premium, and is due and payable on July 16, 2012, or earlier upon our bankruptcy, an assignment for the benefit of creditors or an involuntary bankruptcy not resolved in 10 days. The proceeds of the $50,000 loan were used to pay off two outstanding promissory notes, each in the principal amount of $25,000, which were held by BSF II LLC, an affiliate of the Company.

On each of February 1, 2012 and March 14, 2012, MBTA loaned us $25,000 and we issued MBTA a promissory note evidencing such loans. The notes bear interest at 5% per annum, can be prepaid by us without penalty or premium, and are due and payable on August 1, 2012, and September 14, 2012, respectively, or earlier upon our bankruptcy, an assignment for the benefit of creditors or an involuntary bankruptcy not resolved in 10 days.

The issuances to MBTA were made in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act.

On May 10, 2012, the Company issued 250,000 shares of its common stock to The 1999 Family Trust, a Pennsylvania limited liability company (the “Trust”), concurrent with a loan of $50,000 made by the Trust to the Company. The loan was made pursuant to a promissory note, is due November 10, 2012 and bears interest at 5% per annum. At any time after 30 days from issuance, the holder can convert the note, in whole or in part, into shares of common stock at $0.05 per share. The issuances were made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

Effective as of July 31, 2012, the Company issued 1,000,000 shares of its common stock to Corporate Debt Consultants, LLC, a New York limited liability company concurrent with a loan made by Corporate Debt Consultants to the Company. The issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

As of November 29, 2012, we issued 500,000 shares of common stock to MBTA in connection with its extension of our loan to May 1, 2013.

As of December 31, 2012 we issued 200,000 shares of common stock to UST in connection with the extension of the letter of intent through April 30, 2013.

As of January 15, 2013, we issued 150,000 shares of common stock to the Trust in connection with its extension of our loan to May 1, 2013.

Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers

We have not repurchased any shares of our common stock during the fiscal year ended December 31, ~~2011~~2012.

Item 6. Selected Financial Data.

Smaller reporting companies are not required to provide the information required by this Item 6.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our plan of operation and financial condition is based upon, and should be read in conjunction with, our financial statements and accompanying notes thereto included elsewhere in this annual report.

Certain statements contained in this annual report, including statements regarding the anticipated development and expansion of our business, our intent, belief or current expectations, primarily with respect to our future operating performance and the products we plan to offer and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements. Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may contain forward-looking statements, because such statements include risks and uncertainties, and actual results may differ materially from those expressed or implied by such forward-looking statements. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Overview

We are an early stage company with plans to engage in the development of proprietary probiotic bio-therapeutic products for the treatment of various gastrointestinal disorders. We intend to market these products as FDA approved prescription drugs.

UST

On January 12, 2011, we entered into a letter of intent with UST pursuant to which we were granted a right of first refusal until May 15, 2012 to enter into a definitive license agreement for the exclusive, ~~world-wide~~worldwide license to develop, manufacture, use, sublicense, market and sell UST’s ~~intellectual~~patents, ~~property~~patent ~~for~~applications, ~~the~~know-how and trade secrets relating to its preservation/stabilization of E. coli ~~probiotic~~ bacteria. The license is intended to specifically cover E. coli bacteria when used as a probiotic and to exclude use as a system for delivering vaccine materials to the gastrointestinal tract. Such agreement will expire on the later of (i) 20 years or (ii) the last to expire patent included in the licensed intellectual property. ~~From~~ ~~January~~UST ~~15,~~agreed ~~2011~~ to ~~May~~extend ~~15,~~their ~~2012~~obligation ~~UST will~~ not to negotiate with, or entertain or consider offers from, any third party with respect to the same terms of the letter of intent until April 30, 2013.

~~Upon~~In ~~execution~~May of2011 ~~the~~we ~~license~~entered ~~agreement,~~into wea ~~will~~development beagreement ~~required~~with toUniversal ~~issue~~Stabilization ~~100~~Technologies,~~000~~ ~~shares~~Inc., ofa ~~our~~Delaware ~~common~~company ~~stock~~(“UST”) to ~~UST~~evaluate ~~and~~its toprobiotic ~~pay~~stabilization ~~CA$75,000~~technology. asWe ~~license~~have ~~issue~~a ~~and~~right ~~technology~~of ~~transfer~~first ~~fees.~~refusal Into ~~addition,~~enter weinto ~~will~~a belicense ~~obligated~~agreement towith ~~pay~~ UST ~~CA$50,000~~ for ~~each~~a ~~new~~unique ~~patent~~preservation/stabilization ~~granted,~~bacterial ~~minimum~~“vitrification” ~~annual~~process ~~license~~that ~~payments~~we ofbelieve ~~CA$25,000~~is ~~until~~superior ~~the~~to ~~first~~conventional ~~FDA~~freeze-drying ~~approval~~techniques ofand ~~the~~can ~~BLA~~be ~~and~~applied ~~CA$50,000~~to ~~following~~a ~~the~~wide ~~approval~~variety of ~~the~~bacterial ~~BLA~~strains, ~~with~~rendering ~~annual~~them ~~payments~~in ~~increasing by CA$25,000 thereafter to~~ a ~~maximum~~state of ~~CA$100,000~~“suspended ~~for~~animation” auntil ~~orphan~~they ~~drug~~are ~~and~~administered. ~~CA$150,000~~The ~~for~~process ais ~~drug~~proprietary ~~for~~and aincludes ~~larger~~the ~~indication~~use ~~market.~~of Westabilizing ~~will~~materials, ~~also~~including besugars, ~~required~~that toprevent ~~make~~the ~~royalty~~formation ~~payments~~ of updamaging toice 3%crystals onduring ~~net~~a ~~sales~~vacuum ofdrying ~~the~~process. ~~licensed~~We ~~products~~currently ~~sold~~plan byto usexercise or our ~~sublicensees. Our~~ right to ~~sublicense~~license ~~under~~ the ~~license~~UST ~~agreement~~preservation istechnology ~~subject~~provided tothat ~~UST’s~~we ~~approval,~~have ~~which~~the ~~will~~necessary ~~not~~financing beto ~~unreasonably~~do ~~withheld.~~so Inand the ~~event~~technology weperforms ~~receive~~as ~~other~~expected ~~than~~during ~~cash~~our ~~consideration~~evaluation ~~from~~period. aTesting ~~sublicense,~~results weobtained ~~will~~to bedate ~~required~~confirm tothe ~~pay~~value ~~20%~~ of the ~~fair~~technology ~~market~~for ~~value~~extending the shelf-life of ~~such~~our ~~consideration~~E. tocoli ~~UST~~M17 ~~and~~probiotic in ~~the~~a ~~case~~dry ofform. ~~equity,~~Based ~~20%~~on ofthese ~~shares~~results, ~~issued.~~we ~~All~~believe ~~amounts~~that ~~required~~the totechnology bewill ~~paid~~enable ~~to UST by~~ us ~~will~~to beproduce ~~made~~a inshelf-stable, ~~Canadian~~dry ~~dollars~~dosage atform ~~UST’s~~of ~~request~~E. We ~~will~~coli beM17 ~~required~~for toclinical ~~cover~~testing ~~any~~purposes. ~~currency~~We ~~conversion~~plan ~~and~~to ~~bank~~undertake ~~transfer~~this ~~costs~~work upas tosoon 1%as of the ~~total~~technology ~~payment~~license agreement is executed.

OnUpon orexecution ~~about~~of ~~May~~the ~~15,~~license ~~2011~~agreement, we ~~entered~~will ~~into~~be arequired ~~one-year~~to ~~non-binding~~issue ~~development~~100,000 ~~agreement~~shares ~~for~~of ~~UST~~our tocommon ~~conduct~~stock ~~suitability~~to ~~studies~~UST and ~~protocols~~ to ~~produce~~pay ~~data~~CA$75,000 ~~demonstrating~~as ~~the~~license ~~suitability~~issue ofand ~~its stabilization~~ technology totransfer ~~produce~~fees. aIn ~~thermostable~~addition, ~~commercially~~we ~~viable~~will ~~formulation~~be ofobligated anto E.pay ~~coli~~UST ~~probiotic~~CA$50,000 ~~satisfying our~~for ~~specifications.~~each Wenew ~~have~~patent ~~made~~granted, ~~monthly~~minimum annual license payments of CA$825,~~333~~000 ~~(which~~until ~~amount~~the ~~may~~first beFDA ~~increased~~approval ~~depending~~of on the ~~scope~~biologics oflicense ~~the~~application ~~work~~(“BLA”) toand ~~UST~~CA$50,000 ~~pursuant~~following tothe approval of the ~~agreement.~~BLA, ~~From~~with ~~January~~annual 15payments increasing by CA$25,000 ~~2011~~thereafter to ~~May~~a 15maximum of CA$100,000 ~~2012~~for ~~UST~~a ~~will~~orphan ~~not~~drug ~~negotiate~~and ~~with~~CA$150,000 orfor ~~entertain~~a ordrug ~~consider~~for ~~offers~~a ~~from,~~larger ~~any~~indication ~~third~~market. ~~party~~We ~~with~~will ~~respect~~also be required to ~~the~~make ~~same~~royalty ~~terms~~payments of ~~the~~up ~~letter~~to 3% on net sales of ~~intent~~the licensed products sold by us or our sublicensees. Our right to ~~enter~~sublicense ~~into~~under athe ~~definitive~~ license agreement ~~with~~is subject to UST’s approval, which will ~~terminate~~not ifbe unreasonably withheld. In the event that we ~~fail~~receive other than cash consideration from a sublicense, we will be required to ~~make~~pay 20% of the fair market value of such ~~monthly~~consideration ~~payments~~to UST and in the case of equity, 20% of shares issued. We ~~have~~All ~~made~~amounts ~~eleven~~required ~~monthly~~to ~~payments~~be paid to UST, ~~with~~by ~~the~~us ~~last~~will ~~payment~~be ~~due~~made onin ~~April~~Canadian 15dollars, ~~2012~~at UST’s request. We will be required to cover any currency conversion and bank transfer costs up to 1% of the total payment.

There are no assurances that UST’s technology will perform as expected. If such technology fails to perform to our expectations, we may not enter into a license agreement with UST or if such technology performs, there can be no guarantee that we will have the resources to enter into a license agreement with UST and we may lose all of the payments made to UST.18

On or about May 15, 2011, we entered into a one-year non-binding development agreement for UST to conduct suitability studies and protocols to produce data demonstrating the suitability of its stabilization technology to produce a thermostable, commercially viable formulation of an E. coli probiotic satisfying their specifications. We have made monthly payments of CA$8,333 (which amount may be increased depending on the scope of the work) to UST pursuant to the agreement. We will recommence making such monthly payments on May 1, 2013. In lieu of cash payments for the first four months of 2013, we issued UST 200,000 shares of common stock. Our right to enter into a definitive license agreement with UST will terminate if we fail to make such monthly payments. The development program has proceeded according to plan, and as stated earlier, the UST preservation technology has extended the shelf-life of our E. coli M17 probiotic in a dry form. While the technology has performed to our expectations, there can be no guarantee that we will have the resources to enter into a license agreement with UST and we may lose all of the payments made to UST.

BioBalance

On September 6, 2011, we completed our acquisition of all of the shares of BioBalance and its wholly owned subsidiary BioBalance LLC, from NYHC, the sole owner of BioBalance, pursuant to the Stock Purchase Agreement entered into on June 20, 2011. In connection with the completion of the acquisition and in consideration for the shares acquired, we paid NYHC $300,000 in cash at closing and issued to NYHC (i) 393,391 shares of common stock and (ii) a three-year promissory note in the original principal amount of $100,000. The note bears interest at the rate of 5% per annum, payable semi-annually, with the principal amount payable in three equal annual installments of $33,333.33 commencing on September 6, 2012. If there is an event of default under the note, interest will accrue at 10%. We have the right to prepay the note, in whole or in part, at any time without premium or penalty. In connection with the acquisition, we assumed $25,000 of certain liabilities of BioBalance and BioBalance LLC.

This acquisition provides us with the intellectual property to develop and test biotherapeutic agents for the treatment of various gastrointestinal disorders.

The Stock Purchase Agreement required that NYHC be the sole owner of BioBalance. Accordingly, BioBalance purchased from Yitz Grossman his 33 1/3% membership interest in BioBalance LLC pursuant to the Membership Purchase Agreement in consideration for the indemnification of Mr. Grossman for up to $75,000 in legal fees incurred by him, and not otherwise reimbursed, as a result of his prior activities on behalf of NYHC. As a result of this purchase and the closing of the stock acquisition described above, we own 100% of both BioBalance and BioBalance LLC.

Plan of Operation

Over the next twelve months, we intend to focus on obtaining the necessary financing to move E. coli M17 forward in development, including finalizing the licensing arrangement with UST, making the necessary changes in our manufacturing plan, finalizing our contract with a manufacturer, making clinical trial product, and beginning first clinical studies permitted under the IND. As reviewed above, the UST technology has performed as expected in our development program. Assuming that we are able to execute our license, we will promptly thereafter begin technology transfer for purposes of integrating the UST process into our manufacturing program and producing the dosage formulation that will be used in our clinical trial program. We also hope to recruit additional management or expert consultants to assist in our further development of E. coli M17. We also intend to utilize expert consultants for identifying additional probiotic products and intellectual property for in-licensing and further development, evaluating and expanding the intellectual property coverage for those products, and establishing the clinical and regulatory development program for these. first in-licensed product. We are not currently negotiating for or considering the acquisition of additional technology.

Results of Operations for the years ended December 31, ~~2011~~2012 and ~~2010~~2011

As of December 31, ~~2011~~2012, we had ~~$17,975~~no in cash as compared to having $117,~~058~~975 in cash for the year ended December 31, ~~2010~~2011. WeAccordingly, ~~believe~~we ~~that~~do ~~such funds will~~ not behave sufficient to effectuate our development plans over the next twelve months. We will need to seek additional capital for the purpose of financing our development and marketing efforts.

Revenues

We did not generate any revenues during the years ended December 31, ~~2011~~2012 and ~~2010~~2011 and for the period from September 2, 2009 (inception) through December 31, ~~2011~~2012.

Total operating expenses

For the year ended December 31, ~~2011~~2012, totaling operating expenses were $698,906, which includes impairment expense of $481,353, research and development expense of $112,480, professional fees of $45,549, consulting fees of $27,000, and amortization expense of $5,972. For the year ended December 31, 2011, total operating expenses were $195,029, which include $47,528 for professional fees, $12,000 for consulting fees, $91,344 for research and development, $6,000 for compensation expense, $37,371 for general and administrative expenses and $786 for amortization expense. ~~For~~ The increase was due primarily to the ~~year~~impairment ~~ended~~of ~~December~~goodwill. ~~31,~~The ~~2010,~~increase in total operating expenses ~~were~~of $72698,~~451,~~906represents ~~which~~an ~~include~~increase of $35503,~~541~~877, ~~for~~or ~~professional~~approximately ~~fees~~258%, from the total operating expenses of $12195,~~000~~029 for ~~compensation~~the ~~expense~~year ~~and~~ended ~~$24~~December 31,~~910~~ ~~for~~2011. ~~general~~During ~~and~~the ~~administrative~~period from September 2, 2009 (inception) to December 31, 2011, total operating expenses were $974,350..

The increase in total operating expenses of $122,578 represents an increase of 169% from the total operating expenses of $72,451 for the year ended December 31, 2010. During the period from September 2, 2009 (inception) to December 31, 2011, total operating expenses were $275,444. The increase in the research and development expenses is attributable to the one year non-binding development agreement with UST. For the period commencing September 9, 2009 (inception) to December 31, 2010, the total operating expenses were $80,415, which included legal and professional accounting fees associated with the filing of a registration statement and general and administrative expenses of $416.19

Net loss

During the year ended December 31, ~~2011~~2012 and the period from September 2, 2009 (Inception) to December 31, ~~2011~~2012, we had a net loss of $~~223~~932,~~013~~953 and $~~303~~1,~~723~~236,676, respectively.. During the year ended December 31, ~~2010 and the period from September 2~~2011, ~~2009 (Inception) to December 31, 2009,~~ we had a net ~~lost of $72,611 and $8,099, respectively, and a net~~ loss of $80223,~~710 for the period from September 2, 2009 (Inception) through December 31, 2010~~013.

Liquidity and Capital Resources

As of December 31, ~~2011~~2012, we had ano cash ~~balance of $17,975~~. ~~Other~~We ~~than the current $1,750,000 offering, we~~ currently have no agreements, arrangements or understandings to obtain funds through bank loans, lines of credit or any other sources. We estimate we will require approximately $1,000,000 to adequately fund operations and execute our business plan in the next twelve months. We do not believe that such funds will be sufficient to fund our expenses over the next twelve months when we plan to initiate clinical testing. Since we have no other such arrangements or plans currently in effect, our inability to raise funds for the above purposes will have a severe negative impact on our ability to remain a viable company.

Going Concern Consideration

As reflected in the accompanying audited condensed financial statements, we are in the development stage with no operations, a net loss of $~~303~~1,~~723~~236,676 from inception and used cash in operations from inception of $~~252~~974,~~010~~350. This raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Recently Issued Accounting Standards

Our consolidated financial statements are based on the selection and application of accounting principles (“GAAP”), which require us to make estimates and assumptions that affect the amounts reported in both our consolidated financial statements and the accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from these estimates and any such differences may be material to the financial statements. Our significant accounting policies are described in Note 1 to our Consolidated Financial Statements and are included in Item 8 of Part II of this Annual Report. If different assumptions were made or different conditions existed, our financial results could have been materially different.

See “Note 1 - Organization and Summary of Significant Accounting Policies to our financial statements included in Item 8 of Part II of this Annual Report for information regarding recently recent accounting pronouncements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

2920

Item 8. Financial Statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Enterologics, Inc.

We have audited the accompanying consolidated balance sheets of Enterologics, Inc. (a development stage Company) (the “Company”) as of December 31, ~~2011and~~2012 ~~2010~~and 2011, and the related consolidated statements of operations, consolidated stockholders’ deficit, and consolidated cash flows for each of the years ~~then~~in the two-year period ended December 31, 2012, and for the period since September 2, 2009 (inception) through December 31, ~~2011~~2012. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Enterologics, Inc. (a development stage Company) as of December 31, ~~2011~~2012 and ~~2010~~2011, and the results of its operations and its cash flows for each of the years ~~then~~in the two-year period ended December 31, 2012 and for the period since September 2, 2009 (inception) through December 31, ~~2011~~2012, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has been in the development stage since its inception and continues to incur significant losses. The Company’s viability is dependent upon its ability to obtain future financing and the success of its future operations. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 78. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Lake & Associates, CPA’s LLC

Lake & Associates, CPA’s LLC

Schaumburg, Illinois

~~April~~March 1029, ~~2012~~2013

1905 Wright Boulevard

Schaumburg, IL 60193

Phone: 847.524.0800

Fax: 847.524.1655

30F-1

ENTEROLOGICS, INC.

(A DEVELOPMENT STAGE COMPANY)

ENTEROLOGICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
	December 31,			December 31,
	2011			2010
CURRENT ASSETS
Cash	$	17,975		$	1,058
Prepaid expenses		-			800
Total Current Assets		17,975			1,858
PROPERTY AND EQUIPMENT
Patent, (net of Accumulated Amortization of $12,691 and -0- respectively)		93,644
Website Costs, (net of Accumulated Amortization of $786 and -0- respectively)		2,359			1,000
Total Property and Equipment-Net		96,003			1,000
OTHER ASSETS
Goodwill		481,353			-
Total Other Assets		481,353			-
TOTAL ASSETS	$	595,331		$	2,858
LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable	$	28,805		$	9,107
Accounts payable - related party		1,101			2,123
Accrued Interest		2,958			148
Notes payable		100,000
Notes payable - related party		33,333			12,000
Total Current Liabilities		166,197			23,378
LONG TERM LIABILITIES
Notes payable		66,667			-
Total Long Term Liabilities		66,667			-
TOTAL LIABILITIES		232,864			23,378
STOCKHOLDERS’ EQUITY / (DEFICIENCY)
Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding	$	-		$	-
Common stock, $0.0001 par value, 150,000,000 shares authorized, 35,413,391 and 26,020,000 shares issued and outstanding, respectively		3,541			2,602
Additional paid in capital		662,649			57,588
Accumulated deficit - during developmental stage		(303,723	)		(80,710	)
Total Stockholders’ Equity / (Deficiency)		362,467			(20,520	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIENCY)	$	595,331		$	2,858

CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2012			2011
ASSETS

CURRENT ASSETS

Cash	$	-		$	17,975
Investment in Bio Balance
Prepaid expenses		-			-

TOTAL CURRENT ASSETS		-			17,975
Patent, (net of Accumulated Amortization of $17,615 and $12,691 respectively)		88,720			93,644
Website Costs, (net of Accumulated Amortization of $1,834 and $786 respectively)		1,311			2,359

OTHER ASSETS

Goodwill					481,353

TOTAL ASSETS	$	90,031		$	595,331

LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIENCY)

CURRENT LIABILITIES
Accounts payable	$	33,514		$	28,805
Accounts payable - related party		1,090			1,101
Accrued Interest		15,913			2,958
Accrued Expense		10,500
Notes payable		250,000
Notes payable - related party		65,333			133,333
Total Current Liabilities		376,350			166,197

LONG TERM LIABILITIES
Notes payable		66,667			16,667

TOTAL LIABILITIES		443,017			182,864


COMMITMENTS AND CONTINGENCIES		-


STOCKHOLDERS’ EQUITY / (DEFICIENCY)
Preferred Stock, $0.0001 par value, 5,000,000 shares authorized, none issued and outstanding		-
Common stock, $0.0001 par value, 150,000,000 shares authorized, 37,163,391 and 35,413,391 shares issued and outstanding, respectively	$	3,716		$	3,541
Additional paid in capital		879,974			662,649
Accumulated deficit - during developmental stage		(1,236,676	)		(303,723	)
Total Stockholders’ Equity / (Deficiency)		(352,986	)		362,467

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIENCY)	$	90,031		$	545,331

ENTEROLOGICS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
	For the Year Ended			For the Year Ended			For the Period September 2, 2009 (Inception) to
	December 31, 2011			December 31, 2010			December 31, 2011
OPERATING EXPENSES
Professional fees	$	47,528		$	35,541		$	90,616
Consulting fees		12,000			-			12,000
Research and development		91,344			-			91,344
Compensation expense		6,000			12,000			18,000
General and administrative		37,371			24,910			62,698
Impairment expense					-
Amortization expense		786			-			786
Total Operating Expenses		195,029			72,451			275,444
LOSS BEFORE PROVISION FOR INCOME TAXES		(195,029	)		(72,451	)		(275,444	)
OTHER INCOME (EXPENSES)
Interest income		-			5			5
Loan amortization expense- related party		(25,000	)		-			(25,000	)
Interest expense		(2,984	)		(165	)		(3,284	)
Total Other Income (Expenses)		(27,984	)		(160	)		(28,279	)
NET (LOSS) BEFORE PROVISION FOR INCOME TAXES		(223,013	)		(72,611	)		(303,723	)
Provision for Income Taxes		-			-			-
NET (LOSS)	$	(223,013	)	$	(72,611	)	$	(303,723	)
Net loss per share - basic and diluted		-			-
Weighted average number of shares outstanding during the period - basic and diluted		33,166,649			26,012,000

F-2

32ENTEROLOGICS, INC.

ENTEROLOGICS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY / (DEFICIENCY)
FOR THE PERIOD FROM SEPTEMBER 2, 2009 (INCEPTION) TO DECEMBER 31, 2011
									Additional					Accumulated Deficit -			Total Stockholders'
	Preferred Stock				Common Stock				Paid-In		Subscription			Development Stage			Equity / (Deficiency)
	Shares		Amount		Shares		Amount		Capital		Receivable
BALANCE, SEPTEMBER 2, 2009 (Inception)		-	$	-		-	$	-	$	-	$	-		$	-		$	-
Sale of common stock -Founders $.001 per share		-		-		10,300,000		1,030		-		-			-			1,030
Sale of common stock - private placement $.003 per share		-		-		15,700,000		1,570		45,530		(20	)		-			47,080
Net loss, for the period September 2, 2009 (Inception) to
December 31, 2009		-		-		-		-		-		-			(8,099	)		(8,099	)
BALANCE, DECEMBER 31, 2009		-		-		26,000,000		2,600		45,530		(20	)		(8,099	)		40,011
Imputed Compensation		-		-		-		-		12,000		-			-			12,000
Common stock issued for services		-		-		20,000		2		58		-			-			60
Cash received from issuance of common stock		-		-		-		-		-		20			-			20
Net loss, for the year ended December 31, 2010		-		-		-		-		-		-			(72,611	)		(72,611	)
BALANCE, DECEMBER 31, 2010		-		-		26,020,000		2,602		57,588		-			(80,710	)		(20,520	)
Imputed Compensation		-		-		-		-		6,000		-			-			6,000
Sale of common stock - private placement $.05 per share		-		-		8,500,000		850		424,150					-			425,000
Common stock issued for loan comitment fees $.05 per share		-		-		500,000		50		24,950		-			-			25,000
Common stock issued for purchase of Bio-Balance						393,391		39		149,961								150,000
Net loss, for Twelve months ended December 31, 2011		-		-		-		-		-		-			(223,013	)		(223,013	)
BALANCE, DECEMBER 31, 2011		-	$	-		35,413,391	$	3,541	$	662,649	$	-		$	(303,723	)	$	362,467

(A DEVELOPMENT STAGE COMPANY)

33CONSOLIDATED STATEMENTS OF OPERATIONS

ENTEROLOGICS, INC.
	For the Twelve Months Ended			For the Twelve Months Ended			For the Period September 2, 2009 Inception to
(A DEVELOPMENT STAGE COMPANY)
	December 31 2012			December 31 2011			December 31 2012
STATEMENTS OF CASH FLOWS
OPERATING EXPENSES
	For the Year Ended			For the Year Ended			For the Period Septemeber 2, 2009 (Inception) to
Professional fees	$	45,549		$	47,528		$	136,165
	December 31, 2011			December 31, 2010			December 31, 2011
Consulting fees		27,000			12,000			39,000
CASH FLOWS FROM OPERATING ACTIVITIES:
Research and Development		112,480			91,344			203,824
Net loss	$	(223,013	)	$	(72,611	)	$	(303,723	)
Compensation expense		-			6,000			18,000
Adjustments to reconcile net loss to net cash used in operating activities:
General and administrative		26,552			37,372			89,250
Imputed compensation		6,000			12,000			18,000
Impairment Expense		481,353						481,353
Stock issued for loan commitment fees-related party		25,000						25,000
Amortization Expense		5,972			786			6,758
Stock issued for services		-			60			60
Total Operating Expenses		698,906			195,029			974,350
Amortization Expense		786			-			786
LOSS BEFORE PROVISION FOR INCOME TAXES		(698,906	)		(195,029	)		(974,350	)
Changes in operating assets and liabilities:								-
OTHER INCOME / (EXPENSES)
(Increase) in prepaid expenses		800			(800	)		-
Interest income		-			-			5
Increase/ (decrease) in accounts payable		(7,421	)		9,059			1,686
Loan amortization expense- related party		(217,500	)		(25,000	)		(242,500	)
Increase / (decrease) is accounts payable - related party		1,101			2,123			3,224
Interest expense		(16,547	)		(2,984	)		(19,831	)
Increase/ (decrease) in Accrued Expenses		2,809			13			2,957
Total Other Income (Expenses)		(234,047	)		(27,984	)		(262,326	)
Net Cash Used In Operating Activities		(193,938	)		(50,156	)		(252,010	)
NET (LOSS) BEFORE PROVISION FOR INCOME TAXES		(932,953	)		(223,013	)		(1,236,676	)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Provision for Income Taxes		-			-
Website costs		(2,145	)		(1,000	)		(3,145	)
NET LOSS	$	(932,953	)	$	(223,013	)	$	(1,236,676	)
Cash paid for acquisition of wholly owned subsidiary		(300,000	)		-			(300,000	)
Net loss per share - basic and diluted		(0.03	)		(0.01	)
Net Cash Used In Investing Activities		(302,145	)		(1,000	)		(303,145	)
Weighted average number of shares outstanding during the period - basic and diluted		36,248,323			33,166,649
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		425,000			20			473,130
Proceeds from notes payable-related party		130,000			8,500			145,500
Repayment from notes payable-related party		(42,000	)		-			(45,500	)
Net Cash Provided By Financing Activities		513,000			8,520			573,130
NET INCREASE (DECREASE ) IN CASH		16,917			(42,636	)		17,975
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,058			43,694			-
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	17,975		$	1,058		$	17,975
Cash paid for interest expense	$	2,984		$	151		$	-
Cash paid for Income Taxes	$	-		$	-		$	-
Supplemental disclosure of non cash investing & financing activities:
Issuance of 500,000 shares of common stock of $25,000 ($0.05 per share) for loan commitment fees	$	25,000		$	-		$	25,000
Issuance of stock for asset acquistion	$	150,000		$	-		$	150,000
Issuance of note payable for asset acquistion	$	100,000		$	-		$	100,000
Assumption of accounts payable in asset acquistion	$	24,997		$	-		$	24,997

34F-3

ENTEROLOGICS, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Twelve Months Ended			For the Twelve Months Ended			For the Period Septemeber 2, 2009 (Inception) to
	December 31 2012			December 31 2011			December 31 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		(932,953	)		(223,013	)		(1,236,676	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment Loss		481,353						481,353
Imputed compensation		-			6,000			18,000
Stock issued for loan commitment fees-related party		217,500			25,000			242,500
Stock issued for services		-			-			60
Amortization Expense		5,972			786			6,758
Changes in operating assets and liabilities:
(Increase) in prepaid expenses					800			-
Increase/ (decrease) in accounts payable		4,709			(7,421	)		6,395
Increase / (decrease) is accounts payable - related party		(11	)		1,101			3,213
Increase/ (decrease) in Accrued Expenses		23,455			2,809			26,412
Net Cash Used In Operating Activities		(199,975	)		(193,938	)		(451,985	)

CASH FLOWS USED IN INVESTING ACTIVITIES:
Website costs		-			(2,145	)		(3,145	)
Cash paid for acquisition of wholly owned subsidiary		-			(300,000	)		(300,000	)

Net Cash Used In Investing Activities		-			(302,145	)		(303,145	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock					425,000			473,130
Proceeds from notes payable-related party		83,500			130,000			229,000
Repayments to notes payable-related party		(151,500	)		(42,000	)		(197,000	)
Proceeds from notes payable-third party		252,500						252,500
Repayments to notes payable-third party		(2,500	)					(2,500	)
								-
Net Cash Provided By Financing Activities		182,000			513,000			755,130

NET INCREASE (DECREASE ) IN CASH		(17,975	)		16,917			-

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		17,975			1,058			-

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	-			17,975			-

Cash paid for interest expense	$	16,547			2,984
Cash paid for Income Taxes		-			-			-

Supplemental disclosure of non cash investing & financing activities:

Issuance of common stock for loan commitment fees	$	217,500			25,000			242,500

Issuance of stock for asset acquistion				$	150,000			150,000
Issuance of note payable for asset acquistion				$	100,000			100,000
Assumption of accounts payable in asset acquistion				$	24,997			24,997

F-4

ENTEROLOGICS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY / (DEFICIENCY)

FOR THE PERIOD FROM SEPTEMBER 2, 2009 (INCEPTION) TO DECEMBER 31, 2012

	Preferred Stock				Common Stock				Additional Paid-In		Subscription			Accumulated Deficit - Development			Total Stockholders' Equity /
	Shares		Amount		Shares		Amount		Capital		Receivable			Stage			(Deficiency)

BALANCE, September 2, 2009 (Inception)		-	$	-		-	$	-	$	-	$	-		$	-		$	-

Sale of common stock -Founders $.001 per share		-		-		10,300,000		1,030		-		-			-			1,030

Sale of common stock - private placement $.003 per share		-		-		15,700,000		1,570		45,530		(20	)		-			47,080

Net loss, for the period September 2, 2009 (Inception) to December 31, 2009		-		-		-		-		-		-			(8,099	)		(8,099	)

BALANCE, December 31, 2009		-		-		26,000,000		2,600		45,530		(20	)		(8,099	)		40,011

Imputed Compensation		-		-		-		-		12,000		-			-			12,000

Common stock issued for services		-		-		20,000		2		58		-			-			60

Cash received from issuance of common stock		-		-		-		-		-		20			-			20

Net loss, for the year ended December 31, 2010		-		-		-		-		-		-			(72,611	)		(72,611	)

BALANCE, DECEMBER 31, 2010		-		-		26,020,000		2,602		57,588		-			(80,710	)		(20,520	)

Imputed Compensation		-		-		-		-		6,000		-			-			6,000

Sale of common stock - private placement $.05 per share		-		-		8,500,000		850		424,150					-			425,000

Common stock issued for loan comitment fees $.05 per share		-		-		500,000		50		24,950		-			-			25,000

Common stock issued for purchase of Bio-Balance						393,391		39		149,961								150,000

Net loss, for Twelve months ended December 31, 2011		-		-		-		-		-		-			(223,013	)		(223,013	)

BALANCE, DECEMBER 31 2011		-	$	-		35,413,391	$	3,541	$	662,649	$	-		$	(303,723	)	$	362,467

Common stock issued for loan comitment fees		-		-		1,750,000		175		217,325		-			-			217,500

Net loss, for Twelve months ended December 31, 2012		-		-		-		-		-		-			(932,953	)		(932,953	)

BALANCE, DECEMBER 31 2012		-	$	-		37,163,391	$	3,716		879,974		-			(1,236,676	)		(352,986	)

F-5

ENTEROLOGICS, INC

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

~~December~~DECEMBER 31, ~~2011~~2012 ~~and~~AND ~~2010~~2011

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Organization

Enterologics, Inc. was incorporated under the laws of the State of Nevada on September 2, 2009 to develop, test, and obtaining regulatory approvals for, manufacturing, commercializing and selling new prescription drug products.

On September 6, 2011 Enterologics, Inc. acquired BioBalance Corp. and BioBalance LLC, and they are a wholly-owned subsidiary of Enterologics, Inc.

Activities during the development stage include developing the business plan, acquiring technology and raising capital.

(B) Use of Estimates

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

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. The Company at times has cash in excess of FDIC insurance limits and places its temporary cash investments with high credit quality financial institutions. At December 31, ~~2011~~2012 and ~~2010~~2011 the Company did not have any balances that exceeded FDIC insurance limits.

(D) Website Development

The Company has adopted the provisions of FASB Accounting Standards Codification No. 350 Intangible-Goodwills and Other. Costs incurred in the planning stage of a website are expensed, while costs incurred in the development stage are capitalized and amortized over the estimated three year life of the asset. During the ~~year~~three months ended December 31, ~~2011~~2012 and ~~2010~~ 2011, the Company incurred $3,145 ~~and $1,000,~~ respectively, in website development costs. As of December 31, ~~2011~~2012 and ~~2010~~2011, amortization of $~~764 has been taken~~1,572 ~~as of December 31, 2010 the website had not been placed into service~~ and no$786 ~~amortization~~respectively ~~expense~~ has been ~~recorded~~taken.

(E) Principles of Consolidation

The consolidated financial statements included the accounts of Enterologics, Inc. and its wholly-owned subsidiary ~~BioBalance~~Biobalance Corp., and ~~BioBalance~~Biobalance LLC, from the date of acquisition of September 6, 2011 through December 31, ~~2011~~2012. All material intercompany balances and transactions have been eliminated in consolidation.

(F) Stock-Based Compensation

In December 2004, the FASB issued FASB Accounting Standards Codification No. 718, Compensation – Stock Compensation. Under FASB Accounting Standards Codification No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies this statement prospectively.

F-6

Equity instruments (“instruments”) issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting Standards Codification No. 718. FASB Accounting Standards Codification No. 505, Equity Based Payments to Non-Employees defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a) performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the FASB Accounting Standards Codification.

(G) Loss ~~per~~Per Share

Basic and diluted net (loss) per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings ~~per~~Per Share.” As of December 31, ~~2011~~2012 and ~~2010~~ 2011, there were no37,163,391 ~~common~~and ~~share~~35,413,391 ~~equivalents~~shares issued and outstanding, respectively.

(H) Research and Development

In accordance with ASC Topic 730, “Research and Development”, expenditures for research and development of the Company’s products and services are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $~~114~~112,~~329~~480 and $091,344 for the ~~year~~twelve months ended December 31, ~~2011~~2012 and ~~2010~~2011, respectively.

(I) Fair Value of Financial Instruments

The carrying amounts of the Company's accounts payable, accrued expenses, and notes payable related approximate fair value due to the relatively short period to maturity for these instruments.

(J) Acquisitions and Intangible Assets

We account for acquisitions in accordance with ASC 805, Business Combinations (“ASC 805”) and ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our unaudited condensed consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following an asset acquisition.

(K) Long-lived Assets

Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets in accordance with ASC Topic 360, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results, significant changes in the use of the assets, significant negative industry or economic trends, a significant decline in the Company’s stock price for a sustained period of time, and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair market value of the assets.

~~(L) Income Taxes~~F-7

(L) Impairment of Goodwill and Intangible Assets

We evaluate goodwill for impairment annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value of the goodwill may not be fully recoverable. We evaluate goodwill for impairment at the reporting unit level and have allocated goodwill to the reporting unit based on an estimate of its relative fair value. The evaluation is a two-step approach requiring us to compute the fair value of a reporting unit and compare it with its carrying value. If the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed to measure the potential goodwill impairment. Significant judgment is involved in estimating cash flows and fair value. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected operating performance, recent market transactions and current industry trading multiples. See Note 12 for further information regarding goodwill and related impairment charges recorded during 2012 and 2011.

Other intangible assets are tested for impairment at least annually during the fourth quarter or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable. We estimate the fair value of our Patent and Website using the best information available, using both a market approach, as well as a discounted cash flow model, commonly referred to as the income approach. If the estimated fair value is less than the carrying value, the intangible asset is written down to its estimated fair value. Significant judgment is involved in estimating fair value and long-term revenue forecasts. Management’s estimates, which fall under Level 3 of the U.S. GAAP fair value hierarchy as defined by FASB ASC Topic 820-10-35, are based on historical and projected revenue performance and industry trends. As of December 31, 2012, the estimated fair value of our other intangible assets exceeded their carrying values.

(M) Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

	2011		2010
	2012		2011
Expected income tax recovery (expense) at the statutory rate of 38.6%	$	(84174,~~052~~318)	$	(2884,~~028~~052	)
Tax effect of expenses that are not deductible for income tax purposes
(net of other amounts deductible for tax purposes)		~~2,365~~14		42,~~846~~365
Change in valuation allowance		81174,~~688~~304		2381,~~182~~688
Provision for income taxes	$	-	$	-

The components of deferred income taxes are as follows:
		2011		2010
		2012		2011
Deferred income tax asset:
Net operating loss carry forwards	$	~~109~~255,~~715~~992	$	26109,~~308~~715
Valuation allowance		(~~109~~255,~~715~~992)		(26109,~~308~~715	)
Deferred income taxes	$	-	$	-

As of December 31, ~~2011~~2012, the Company has a net operating loss carry forward of $~~284~~663,~~237~~191 available to offset future taxable income through 2030. This results in deferred tax assets of $~~109~~255,~~715~~992 as of December 31, ~~2011~~2012. The valuation allowance at December 31, ~~2010~~2011 was $28109,~~028~~715. The change in the valuation allowance for the year ended December 31, ~~2010~~2012 was an increase of $81146,~~688~~227.

37F-8

(MN) Fair Value

The Company measures the fair value of its assets and liabilities under the guidance of ASC 820, Fair Value Measurements and Disclosures , which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. SC 820 does not require any new fair value measurements, but its provisions apply to all other accounting pronouncements that require or permit fair value measurement.

ASC 820 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:

· Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets; · Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly such as quoted prices for similar assets or liabilities or market-corroborated inputs; and · Level 3: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions about how market participants would price the assets or liabilities. ~~The valuation techniques that may be used to measure fair value are as follows:~~

The valuation techniques that may be used to measure fair value are as follows:

	A.	Market approach - Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities
	B.	Income approach - Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method
	C.	Cost approach - Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

The Company also adopted the provisions of ASC 825, Financial Instruments. ASC 825allows companies to choose to measure eligible assets and liabilities at fair value with changes in value recognized in earnings. Fair value treatment may be elected either upon initial recognition of an eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of accounting. The Company did not elect to re-measure any of its existing financial assets or liabilities under the provisions of this Statement and did not elect the fair value option for any financial assets and liabilities transacted in the ~~year-~~years ended December 31, ~~2011~~2012 and ~~December 31, 2010~~2011. All of the Company’s intangible assets are valued using the level 3 inputs as of December 31, ~~2011~~2012.

(NO) Recent Accounting Pronouncements

In July 2012 the FASB issued ASU No. ~~2011~~2012-02;, AIntangibles ~~Creditor’s~~- ~~Determination~~Goodwill ofand ~~Whether~~Other a(Topic ~~Restructuring~~350) IsTesting aIndefinite-Lived ~~Troubled~~Intangible ~~Debt~~Assets ~~Restructuring(“TDR”).In~~for ~~April~~Impairment, ~~2011,~~which ~~the~~simplifies ~~FASB~~how ~~issued~~entities ~~ASU~~test Noindefinite-lived intangible assets for impairment. ~~2011~~ASU 2012-02, ~~intended~~permits an entity to ~~provide~~first ~~additional~~assess ~~guidance~~qualitative factors to ~~assist~~determine ~~creditors~~whether init ~~determining~~is ~~whether~~more alikely ~~restructuring~~than ofnot that an indefinite-lived intangible asset is impaired as a ~~receivable~~basis ~~meets~~for ~~the~~determining ~~criteria~~whether it is necessary to beperform ~~considered~~the aquantitative ~~troubled~~impairment ~~debt~~test ~~restructuring.~~currently ~~The~~required ~~amendments~~by inASC ~~this~~Topic 350-30 on general intangibles other than goodwill. ASU ~~are~~2012-02 is effective for ~~the~~annual ~~first~~and interim orimpairment ~~annual~~tests ~~period~~performed ~~beginning~~for onfiscal oryears beginning after ~~June~~September 15, ~~2011,~~2012. ~~and~~Early ~~are~~adoption tois bepermitted, ~~applied~~provided ~~retrospectively~~that to the ~~beginning~~entity ofhas ~~the~~not ~~annual~~yet ~~period~~issued ofits ~~adoption~~financial statements. The Company ~~has~~does ~~adopted~~not ~~the~~anticipate ~~methodologies~~any ~~prescribed~~material byimpact ~~this~~from the adoption of ASU 2012-02.

~~ASU~~In ~~No.~~August ~~2011~~2012, the FASB issued ASU 2012-03;, ~~Reconsideration~~Technical ofAmendments ~~Effective~~and ~~Control~~Corrections ~~for~~to ~~Repurchase~~SEC ~~Agreements.~~Sections: InAmendments ~~April,~~to ~~2011,~~SEC ~~the~~Paragraphs ~~FASB~~Pursuant ~~issued~~to ~~ASU~~SEC ~~No.~~Staff ~~2011-03.~~Accounting ~~The~~Bulletin ~~amendments~~(“SAB”) inNo. ~~this~~114, ~~ASU~~Technical ~~remove~~Amendments ~~from~~Pursuant ~~the~~to ~~assessment~~SEC ofRelease ~~effective~~No. ~~control~~33-9250, ~~the~~and ~~criterion~~Corrections ~~relating~~Related to ~~the~~FASB ~~transferor’s~~Accounting ~~ability~~Standards toUpdate ~~repurchase~~2010 orin ~~redeem~~ASU ~~financial~~No. ~~assets~~2012-03. onThis ~~substantially~~update ~~the~~amends ~~agreed~~various ~~terms,~~SEC ~~even~~paragraphs inpursuant to the ~~event~~issuance of ~~default~~SAB byNo. ~~the transferee~~114. The ~~amendments~~adoption inof ~~this~~ ASU ~~also~~2012-03 ~~eliminate~~is ~~the~~not ~~requirement~~expected to ~~demonstrate~~have ~~that~~a ~~the~~material ~~transferor~~impact ~~possesses~~on ~~adequate~~our ~~collateral~~financial toposition ~~fund~~or ~~substantially~~results ~~all the cost~~ of ~~purchasing replacement financial assets~~operations.

38F-9

~~The~~In ~~guidance~~October in2012, ~~this~~FASB issued ASU is2012-04, ~~effective~~Technical ~~for~~Corrections ~~the~~and ~~first~~Improvements ~~interim~~in orASU ~~annual~~No. ~~period~~2012-04. ~~beginning~~The onamendments orin ~~after~~this ~~December~~update ~~15,~~cover ~~2011.~~a ~~The~~wide ~~guidance~~range ~~should~~of beTopics ~~applied~~in ~~prospectively~~the toAccounting ~~transactions~~Standards orCodification. ~~modifications~~These ofamendments ~~existing~~include ~~transactions~~technical ~~that~~corrections ~~occur~~and onimprovements orto ~~after~~ the ~~effective~~Accounting ~~date.~~Standards ~~Early~~Codification ~~adoption~~and isconforming ~~not~~amendments ~~permitted~~related to fair value measurements. The ~~Company~~amendments ~~has~~in ~~adopted~~this ~~the~~update ~~methodologies~~will ~~prescribed~~be byeffective ~~this~~for ~~ASU~~fiscal byperiods ~~the~~beginning ~~date~~after ~~required~~December 15, ~~and~~2012. ~~the~~The adoption of ASU ~~will~~2012-04 ~~does~~is not expected to have a material ~~effect~~impact on ~~its~~our financial position or results of operations.

~~ASU~~Certain ~~No.~~accounting ~~2011-04;~~pronouncements ~~Amendments~~have tobeen ~~Achieve~~issued ~~Common~~by ~~Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. In May, 2011,~~ the FASB ~~issued~~and ~~ASU~~other ~~No.~~standard ~~2011-04.~~setting ~~The~~organizations ~~amendments~~which inare ~~this~~not ~~ASU~~yet ~~generally~~effective ~~represent~~and ~~clarifications~~have ofnot ~~Topic~~yet ~~820,~~been ~~but~~adopted ~~also~~by ~~include~~the ~~some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed~~Company. ~~This~~The ~~ASU~~impact ~~results~~on inthe ~~common~~Company’s ~~principles~~financial ~~and~~position ~~requirements for measuring fair value~~ and ~~for~~results ~~disclosing~~of ~~information~~operations ~~about~~from ~~fair~~adoption ~~value~~of ~~measurements~~these instandards ~~accordance~~is ~~with~~not ~~U.S.~~expected ~~GAAP and IFRSs. The amendments in this ASU are~~ to be ~~applied~~material ~~prospectively.~~to ~~For public entities,~~ the ~~amendments are effective during interim and annual periods beginning after December 15, 2011~~Company.

The Company has adopted the methodologies prescribed by this ASU by the date required, and the ASU does not have a material effect on its financial position or results of operations.

ASU No. 2011-05; Amendments to Topic 220, Comprehensive Income. In June, 2011, the FASB issued ASU No.2011-05. Under the amendments in this ASU, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

The amendments in this ASU should be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company has adopted ASU 2011-05, as of December 31, 2011.

NOTE 2 ASSET PURCHASE AQUISITION

On September 6, 2011, the Company acquired 100% of the common stock of Bio Balance Corp and its subsidiary Bio Balance LLC from New York Health Care, Inc. for $300,000 in cash, 393,391 shares of our common stock with a fair value of $150,000 based on the fair value on the date of the grant and a Note Payable for $100,000 to be paid in three equal installments of $33,333.33 with the first installment due on September 6, 2012, and annually thereafter with the last payment due no later than September 6, 2014. This note accrues interest at a rate of 5% per annum and $5,069 and $347 of interest expense was recognized for the ~~period~~years ended December 31, 2012 and 2011, respectively. These financial statements are presented in a consolidated format.

Purchase price	$	550,000
Patents	$	93,644
Goodwill		481,353
Less: Assumption of Accounts Payable		-24,997
Total assets acquired	$	550,000

The table below summarizes the unaudited pro forma information of the results of operations as though the acquisitions had been completed as of January 1, 2011:

	Enterologics Corp and Subsidiary for the year ended December 31, 2011
	Enterologics Corp and Subsidiary year ended December 31, 2012			Enterologics Corp and subsidiary year ended December 31, 2011
Gross revenue	$	-		$	-
Total expenses		(~~243~~451,~~542~~600	)		(234,542	)
Net income (loss) before taxes	$	(~~243~~451,~~542~~600	)	$	(243,542	)
Earnings (loss) per share	$	(0.01	)	$	(0.01	)

NOTE 3 NOTES PAYABLE- RELATED PARTIES

On March 23, 2009 a related party loaned $3,500 to the Company for initial start-up costs. The loan is unsecured, carries an interest rate of 5%, and matured on February 28, 2010. As of December 31, 2009 the Company recorded accrued interest of $135. In February 2010, the loan and accrued interest of $151 was repaid. (See note 5).

F-10

On August 17, 2010 a related party loaned $5,000 to the Company for initial start-up costs. The loan is unsecured, carries an interest rate of 5%, and originally matures on November 15, 2010, which was extended until February 1, 2011. As of December 31, 2010 the Company recorded accrued interest of $93. On January 10, 2010 the loan and accrued interest of $21 were repaid. (See note 5).

On October 22, 2010 a related party loaned $5,000 to the Company for operating expenses. The loan is unsecured, carries an interest rate of 5%, and matures on January 15, 2011. As of December 31, 2010 the Company recorded accrued interest of $45. On January 10, 2010 the loan and accrued interest of $21 were repaid. (See note 5).

On November 24, 2010 a related party loaned $2,000 to the Company for operating expenses. The loan is unsecured, carries an interest rate of 5%, and matures on May 23, 2011. As of December 31, 2010 the Company recorded accrued interest of $10On January 10, 2010 the loan and accrued interest of $8 were repaid. (See note 5).

On January 7, 2011, the Company entered into a loan agreement for a series of loans up to an aggregate of $50,000 and borrowed an initial $20,000 and issued 7% promissory notes to the lender. The principal and accrued interest under the note is due and payable on the earlier of October 9, 2011 or the date the Company receives $350,000 or more in proceeds from the sale of securities in a private offering or through an effective registration statement. During February 2011, the Company issued an additional promissory note for $10,000 due the earlier of October 9, 2011 or the date the Company receives proceeds from the sale of securities in a private offering or through an effective registration statement. In consideration of the loan commitments, the Company issued the lender 500,000 shares of common stock with a fair value of $25,000 ($.05 per share) based on the most recent cash offering price (See Notes 2 and 5). On April 11, 2011 $30,000 plus accrued interest of $301 was repaid against all of the previously issued promissory notes.

On September 14, 2011 a related party loaned $50,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 6%, and be demanded to be repaid on or after October 31, 2011. AsOn ofOctober ~~December 31~~15, ~~2011~~2012 the ~~Company~~loan ~~recorded~~and accrued interest of $~~908. The loan has not been repaid as of April~~ 3,192 ~~2012~~were ~~and is currently in default~~repaid. (See note 5).

On December 2, 2011 a related party loaned $25,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%, and be demanded to be repaid not before December 31, 2011 ~~As of December 31, 2011 the Company recorded accrued interest of $104~~. On January 18, 2012 the loan and accrued interest of $104 were repaid. (See note 5).

On December 19, 2011 a related party loaned $25,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%, and be demanded to be repaid not before December 31, 2011 ~~As of December 31, 2011 the Company recorded accrued interest of $45~~. On January 18, 2012 the loan and accrued interest of $161 were repaid. (See note 5).

40On April 27, 2012 a related party loaned $10,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 6%, and be demanded to be repaid not before May 30, 2012. On May 10, 2012 the loan and accrued interest of $21 were repaid. (See note 5).

On July 31, 2012 a related party loaned $15,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%, and be demanded to be repaid on or after August 5, 2012 . On August 5, 2012 the loan and accrued interest of $10 were repaid. (See note 5).

F-11

On August 6, 2012 a related party loaned $4,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $22 were repaid. (See note 5).

On September 10 2012 a related party loaned $5,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $13 were repaid. (See note 5).

On September 14 2012 a related party loaned $7,500 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $17 were repaid. (See note 5).

On September 25 2012 a related party loaned $10,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $16 were repaid. (See note 5).

On November 20, 2012 a related party loaned $15,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%. As of December 31, 2012 the loan accrued interest of $87. (See note 5).

On November 29, 2012 a related party loaned $7,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%. As of December 31, 2012 the loan accrued interest of $33. (See note 5).

On December 7, 2012 a related party loaned $10,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 5%. As of December 31, 2012 the loan accrued interest of $24. (See note 5).

NOTE 4 STOCKHOLDERS' EQUITY / (DEFICIENCY)

(A) Common Stock Issued to Founders for Cash

In September 2009 the Company sold a total of 10,300,000 shares of common stock to four founders for $1,030 ($.0001 per share).

(B) Common Stock Issued for Cash

In 2009, the Company sold a total of 15,700,000 shares of common stock to 55 individuals for cash of $47,080 and a subscription receivable of $20 ($.003 per share). Cash of $20 was collected during the year ended December 31, 2010.

During the ~~six~~twelve months ended ~~June~~December 3031, ~~2011~~2012, the Company sold a total of 81,~~500~~750,000 shares of common stock to 3 ~~individuals~~entities for cash of $~~425~~217,~~000~~500 ($0.05 per share).

On September 6, 2011, the Company issued 393,391 share of common stock as part of an asset purchase acquisition of Bio Balance Corp and its subsidiary Bio Balance LLC from New York Health Care. In addition $300,000 in cash was paid to New York Health Care and a Note Payable was issued for $100,000 to New York Health Care to be paid in three equal installments of $33,333.33 with the first installment due on September 6, 2012, and the annually thereafter with the last payment due no later than September 6, 2014. This note accrues interest at a rate of 5% per annum and $~~347~~5,069 of interest expense was recognized for the ~~year~~twelvemonths ended December 31, ~~2011~~2012.

F-12

On January 7, 2011 the Company issued 500,000 shares of common stock to a related party valued at ($.05 per share) the most recent cash offering price, as a loan commitment fee. The commitment ends on September 7, 2011. The Company is amortizing the value over the term of the commitment. ~~As of December 31, 2011 the Company expensed $25,000.~~

On January 11, 2012 the Company issued 500,000 shares of common stock valued at ($.19 per share) the most recent cash offering price, as a loan commitment fee. The commitment ends on October 1, 2012. The Company is amortizing the value over the term of the commitment.

On May 10, 2012 the Company issued 250,000 shares of common stock valued at ($.05 per share) the most recent cash offering price, as a loan commitment fee. The commitment ends on November 10, 2012. The Company is amortizing the value over the term of the commitment.

On July 31 , 2012 the Company issued 1,000,000 shares of common stock valued at ($.11 per share) the most recent cash offering price, as a loan commitment fee. The commitment ends on the six months anniversary or earlier from the proceeds of a capital raise. The Company is amortizing the value over the term of the commitment

(D) Imputed Compensation

During the ~~year~~twelve months ended December 31, 2012 and 2011, an individual contributed services to the Company at a fair value of $~~6,000.During~~0 ~~the~~and ~~year ended December 31, 2010, an individual contributed services to the Company at a fair value of~~ $126,000 respectively.

(E) Stock Issued for Services

In May 2010 Company issued 20,000 shares of common stock to an outside vendor for services with a fair value of $60 ($.003 per share), based on a recent cash offering price.

(F) Preferred Stock

In October 2009, the Company amended its Articles of Incorporation to increase its authorized shares to 155,000,000 shares which shall consist of 150,000,000 shares of common stock with a par value of $.0001 and 5,000,000 shares of preferred stock with a par value of $.0001 with rights and preferences to be determined by the Board of Directors.

NOTE 5 RELATED PARTY TRANSACTIONS

F-13

On April 27, 2012 a related party loaned $10,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 6%, and be demanded to be repaid not before May 30, 2012. On May 10, 2012 the loan and accrued interest of $21 were repaid.

F-14

NOTE 6 COMMITMENTS AND CONTINGENCIES

On January 12, 2011, the Company entered into a letter of intent with UST pursuant to which it was granted a right of first refusal until May 15, 2012 to enter into a definitive license agreement for the exclusive, world-wide license to UST’s intellectual property for the preservation/stabilization of E. coli probiotic bacteria. The license is intended to specifically cover E. coli bacteria when used as a probiotic and exclude use as a system for delivering vaccine materials to the gastrointestinal tract.

On May 15, 2011, the company entered into a one-year development agreement for UST to conduct suitability studies and protocols to produce data demonstrating the suitability of its stabilization technology to produce a thermostable, commercially viable formulation of an E. coli probiotic satisfying ~~our~~ their specifications. It is contemplated that during such one-year development project the Company will make monthly payments of at least CA$8,333 (which amount may be increased depending on the scope of the work). From January 15, 2011 to May 15, 2012 UST will not negotiate with, or entertain or consider offers from, any third party with respect to the same terms of the letter of intent. The Company’s right to enter into a definitive license agreement with UST will terminate if it fails to make such monthly payments.

42The letter of intent provides that the Company will negotiate in good faith with UST to enter into a license agreement by May 15, 2012 for the exclusive, worldwide license to develop, manufacture, use, sublicense, market and sell UST’s patents, patent applications, know-how and trade secrets relating to its preservation/stabilization of E. coli bacteria. Such agreement will expire on the later of (i) 20 years or (ii) the last to expire patent included in the licensed intellectual property. On May 14, 2012 the period for the Company to enter into a License agreement was extended to August 15, 2012. On August 15, 2012 the period for the Company to enter into a License agreement was extended to October 15, 2012. As of October 15, 2012 the period for the Company to enter into a License agreement was extended to December 15, 2012. As of December 31, 2012 the period for the Company to enter into a License agreement was extended to April 30, 2013. No payments will be made for months of January to April 2013. In lieu of payments for these months the company has agreed to issue 200,000 shares of its common stock par value $0.001 in favor of Universal Stabilization Technologies, Inc.

~~The~~Upon ~~letter~~execution of ~~intent~~the ~~provides~~license ~~that~~agreement, the Company will ~~negotiate~~be inrequired ~~good~~to ~~faith~~issue ~~with~~100,000 shares of our common stock to UST and to ~~enter~~pay ~~into~~CA$75,000 aas license ~~agreement~~issue byand ~~May~~technology 15transfer fees. In addition, ~~2012~~the Company will be obligated to pay UST CA$50,000 for ~~the~~each ~~exclusive~~new patent granted, ~~worldwide~~minimum annual license topayments ~~develop,~~of ~~manufacture~~CA$25,000 ~~use~~until the first FDA approval of the BLA and CA$50,000 ~~sublicense~~following the approval of the BLA, ~~market~~with ~~and~~annual ~~sell~~payments ~~UST’s~~increasing ~~patents~~by CA$25,000 ~~patent~~thereafter ~~applications~~to a maximum of CA$100,000 ~~know-how~~for a orphan drug and ~~trade~~CA$150,000 ~~secrets~~for ~~relating~~a drug for a larger indication market. The Company will also be required to ~~its~~make ~~preservation/stabilization~~royalty payments of E.up ~~coli~~to ~~bacteria~~3% on net sales of the licensed products sold by us or our sublicenses. ~~Such~~ The Company’s right to sublicense under the license agreement is subject to UST’s approval, which will ~~expire~~not onbe unreasonably withheld. In the ~~later~~event ofthat ~~(i)~~the 20Company ~~years~~receives orother ~~(ii)~~than ~~the~~cash ~~last~~consideration from a sublicense, it will be required to ~~expire~~pay ~~patent~~20% ~~included~~of the fair market value of such consideration to UST and in the ~~licensed~~case ~~intellectual~~of ~~property.~~equity, 20% of shares issued

~~Upon~~All ~~execution~~amounts ~~of the license agreement, the Company will be~~ required to ~~issue~~be ~~100,000~~paid ~~shares of our common stock~~ to UST ~~and~~by ~~to pay CA$75,000 as license issue and technology transfer fees. In addition,~~ the Company will be ~~obligated~~made toin ~~pay~~Canadian ~~UST~~dollars ~~CA$50,000~~at ~~for~~UST’s each new patent granted, minimum annual license payments of CA$25,000 until the first FDA approval of the BLA and CA$50,000 following the approval of the BLA, with annual payments increasing by CA$25,000 thereafter to a maximum of CA$100,000 for a orphan drug and CA$150,000 for a drug for a larger indication marketrequest. The Company will ~~also~~ be required to ~~make~~cover ~~royalty~~any ~~payments~~currency ofconversion upand tobank 3%transfer oncosts ~~net~~up ~~sales of the licensed products sold by us or our sublicenses. The Company’s right~~ to ~~sublicense~~1% ~~under~~of the ~~license~~total ~~agreement is subject to UST’s approval, which will not be unreasonably withheld~~payment. InDuring the ~~event~~twelve ~~that~~months ~~the~~ended ~~Company~~December ~~receives other than cash consideration from a sublicense~~31, it2012 ~~will be required to pay 20% of~~ the ~~fair~~company ~~market~~made ~~value~~payments ~~of such consideration~~ to UST ~~and~~totaling ~~in the case of equity~~$103,543 ~~20%~~US ~~of shares issued~~Dollars.

~~All amounts required to be paid to UST by the Company will be made in Canadian dollars at UST’s request~~. The Company will be required to cover any currency conversion and bank transfer costs up to 1% of the total payment. During the year ended December 31, 2011 the company made payments to UST totaling $114,329 US Dollars.

~~NOTE 7 GOING CONCERN~~F-15

AsNOTE ~~reflected~~7 inNOTES the accompanying financial statements, the Company is in the development stage with no operations, a net loss of $303,723 from inception, used cash in operations from inception of $252,010. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.PAYABLE

~~NOTE~~On ~~8 SUBSEQUENT~~January ~~EVENTS~~11, 2012, the Company entered into a loan agreement for $100,000 and issued the initial 5% promissory note for $50,000 to the lender on January 19, 2012. The principal and accrued interest under the note is due and payable on July 16, 2012 which has been extended to September 15, 2012 and has a conversion feature. An additional 5 % promissory note for $25,000 was issued on February 1, 2012. The principal and accrued interest are due and payable on August 1, 2012 which has been extended to October1, 2012.The final 5 % promissory note for $25,000 was issued on March 14, 2012. The principal and accrued interest are due and payable on September 14, 2012 In consideration of the loan, the Company issued the lender 500,000 shares of common stock with a fair value of $95,000 ($.19 per share) based on the most recent cash offering price.

On ~~January~~May 1110, 2012, the Company entered into a ~~letter~~loan of agreement for ~~a series of loans up to an aggregate of~~ $~~100,000 and on January 17, 2012 borrowed an initial $~~50,000 and issued a 5% promissory ~~notes~~note to the lender. The principal and accrued interest under the note is due and payable on ~~July~~November 1610, 2012. ~~On February 3, 2012 the Company borrowed an additional $25,000~~ and ~~issued~~has 5%a ~~promissory~~conversion ~~notes~~feature ~~to the lender~~. ~~The~~ ~~principal~~In ~~and~~consideration ~~accrued~~of ~~interest under~~ the ~~note is due and payable on August 1~~loan, ~~2012. On March 14, 2012~~ the Company ~~borrowed~~issued anthe ~~additional~~lender ~~$25~~250,000 ~~and~~shares ~~issued~~of 5%common ~~promissory~~stock ~~notes~~with toa ~~the~~fair ~~lender. The~~value ~~principal~~of ~~and~~$12, ~~accrued~~500 ~~interest~~($.05 ~~under~~per ~~the~~share) ~~note~~based ~~is due and payable~~ on ~~September 14, 2012. This was~~ the ~~final~~most ~~borrowing~~recent ~~under~~cash ~~the~~offering ~~letter of agreement~~price.

On ~~January~~July 1831, ~~2011~~2012, the Company ~~repaid~~entered ~~two~~into ~~outstanding~~an ~~demand~~unsecured ~~notes~~loan agreement for a series of loans up to ~~related~~an ~~parties~~aggregate of $250,000 and borrowed an initial $15,000 and issued 6% promissory notes to the lender on ~~December~~August 21, ~~2011~~2012. The principal and ~~December~~accrued ~~19,~~interest ~~2011~~under the ~~repayment~~note ~~included~~is due and payable on the six months anniversary or earlier from the proceeds of a capital raise. An additional 6 % promissory note for $30,000 was issued on October 11, 2012. The principal and accrued interest atare 5due and payable on April 11, 2013. An additional 6 % ofpromissory note for $~~161~~55,000 was issued on October 15, 2012. The principal and accrued interest are due and payable on April 15, 2013.In consideration of the loan commitments, the Company issued the lender 1,000,000 shares of common stock with a fair value of $~~103~~110,000 ~~respectively~~($.11 per share) based on the most recent cash offering price .The company did not borrow additional funds from the lender under the agreement and the commitment to fund additional loans expired on November 30, 2012.

43On October 5, 2012 an unrelated party loaned $2,500 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3%.The note was repaid with interest on October 11, 2012.

NOTE 8 GOING CONCERN

As reflected in the accompanying financial statements, the Company is in the development stage with no operations, a net loss of $1,236,676 from inception, used cash in operations from inception of $451,985. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 9 GOODWILL AND INTANGIBLE ASSETS

In accordance with accounting standards for goodwill and other intangible assets, goodwill is not amortized but requires testing for potential impairment, at a minimum on an annual basis, or when indications of potential impairment exist. The impairment test for goodwill utilizes a fair value approach. The impairment test for identifiable intangible assets not subject to amortization is also performed annually or when impairment indications exist, and consist of a comparison of the fair value of the intangible asset with its carrying amount. Identifiable intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate other long-lived assets. Our annual impairment analysis is performed at the last day of our accounting period each year.

F-16

We perform our annual goodwill and intangible impairment test required under accounting standards at the last day of our accounting period each year, or when an indication of potential impairment exists. The goodwill impairment test involves a two-step process as described in the “Summary of Significant Accounting Policies” in Note 1. The first step is a comparison of each reporting unit's fair value to its carrying value. If the carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist and the second step must be performed to measure the amount of impairment loss.

After performing the first step of the process, we determined goodwill recorded in 2012 were potentially impaired. The company has not had any revenue generated from related goodwill. After performing the second step of the process, we determined that the total amount of goodwill recorded at these reporting units was impaired and recorded charges of $481,353 and $0 in 2012 and 2011, respectively.

A significant amount of judgment is involved in determining if an indicator of impairment has occurred at a date other than the annual impairment test date. Such indicators may include, among others: a significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates.

NOTE 10 SUBSEQUENT EVENTS

As of December 31, 2012 the period for the Company to enter into a License agreement was extended to April 30, 2013. No payments will be made for months of January to April 2013. On January 30, 2013 in lieu of payments for these months the company issued 200,000 shares of its common stock par value $0.001 in favor of Universal Stabilization Technologies, Inc.

On January 11, 2012, the Company entered into a letter agreement to loan the company for $100,000. The first 5% promissory note for $50,000 was issued on January 16, 2012. The second 5% promissory note for $25,000 was issued on February 1, 2012. The third and final 5% promissory note for $25,000 was issued on March 14, 2012.The principal and accrued interest under the notes are due and payable on May 1, 2013. In consideration of the loan, On February 1, 2013 the Company issued the lender 500,000 shares of common stock with a fair value of $6,000 ($.012 per share) based on the most recent cash offering price

On January 11, 2012, the Company entered into a letter agreement to loan the company for $50,000. The 5% promissory note for $50,000 was issued May 10, 2012. In consideration of the loan, On January 15, 2013 the Company issued the lender 150,000 shares of common stock with a fair value of $3,000 ($.02 per share) based on the most recent cash offering price

F-17

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

~~MANAGEMENT'S~~Evaluation ~~REPORT~~of ONDisclosure ~~INTERNAL CONTROL OVER FINANCIAL REPORTING~~Controls

~~Our~~Under the supervision and with the participation of our management, isincluding ~~responsible~~our ~~for~~principal ~~establishing~~executive officer and ~~maintaining~~principal ~~adequate~~financial ~~internal~~officer, ~~control~~we ~~over~~conducted ~~financial~~an ~~reporting.~~evaluation ~~Internal~~of ~~control~~our ~~over~~disclosure ~~financial~~controls ~~reporting~~and procedures, as such term is defined inunder Rule 13a-15(fe) orand Rule 15d-15(fe) promulgated under the Securities Exchange Act of 1934, as aamended, ~~process~~as ~~designed~~of byDecember 31, or2011. ~~under~~Based ~~the~~on ~~supervision~~this ofevaluation, ~~the~~our ~~company’s~~ principal executive officer and principal financial ~~officers~~officer have concluded that our disclosure controls and ~~effected~~procedures were effective to ensure that information required to be disclosed by us in the ~~company’s~~reports ~~board~~filed ofor ~~directors~~submitted under the Securities Exchange Act were recorded, ~~management~~processed, summarized, and ~~other~~reported ~~personnel,~~within tothe ~~provide~~time ~~reasonable~~periods ~~assurance~~specified ~~regarding~~in the ~~reliability~~Securities ofand ~~financial~~Exchange ~~reporting~~Commission’s rules and ~~the~~forms ~~preparation~~and ofthat ~~financial~~our ~~statements~~disclosure ~~for~~controls ~~external~~are ~~purposes~~designed into ~~accordance~~ensure ~~with~~that ~~accounting~~information ~~principles~~required ~~generally~~to ~~accepted~~be disclosed by us in the ~~United~~reports ~~States~~that ofwe ~~America~~file or submit under the Securities Exchange Act is accumulated and ~~includes~~communicated ~~those~~to ~~policies~~management, including our principal executive officer and ~~procedures~~principal ~~that:~~financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

●Management’s ~~Pertain~~Report toOn ~~the~~Internal ~~maintenance~~Control ofOver ~~records~~Financial ~~that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;~~Reporting

●Our ~~Provide~~management ~~reasonable~~is ~~assurance~~responsible ~~that~~for ~~transactions~~establishing ~~are~~and ~~recorded~~maintaining effective internal control over financial reporting as ~~necessary~~defined in Rule 13a-15(f) under the Exchange Act. Our internal control of financial reporting is designed to ~~permit~~provide reasonable assurance to our management and our board of directors regarding the preparation and fair presentation of published financial statements in accordance with ~~accounting~~GAAP, ~~principles~~including ~~generally~~those ~~accepted~~policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail accurately and fairly reflect the ~~United~~transactions ~~States~~and dispositions of ~~America~~our ~~and~~assets, (ii) provide reasonable assurance that ~~receipts~~transactions ~~and~~are ~~expenditures~~recorded as necessary to permit preparation of ~~the~~financial ~~company~~statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and our directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could have a material effect on the ~~company;~~financial ~~and~~statements.

●Our ~~Provide~~management ~~reasonable~~conducted ~~assurance~~an ~~regarding~~evaluation ~~prevention~~of orthe ~~timely~~effectiveness ~~detection~~of internal control over financial reporting as of ~~unauthorized~~December ~~acquisition~~31, ~~use~~2012 orbased ~~disposition~~on ofthe framework in Internal Control – Integrated Framework issued by the ~~company's~~Committee ~~assets~~of ~~that~~Sponsoring ~~could~~Organizations ~~have~~of athe ~~material~~Treadway ~~effect~~Commission (“COSO”). Based on ~~the~~this assessment and COSO criteria, our management concluded that our internal control over financial ~~statements~~reporting was effective as of December 31, 2012.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ~~Projections~~Therefore, ofeven ~~any~~those ~~evaluation~~systems ofdetermined ~~effectiveness~~ to ~~future~~be ~~periods~~effective ~~are~~can ~~subject~~provide toonly ~~the~~reasonable ~~risk~~assurance ~~that controls may become inadequate because of changes in conditions, or that the degree of compliance~~ with ~~the~~respect ~~policies~~to orfinancial ~~procedures~~statement ~~may~~preparation ~~deteriorate.~~and ~~All internal control systems, no matter how well designed, have inherent limitations~~presentation.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or delected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.21

AsThere ofwere ~~December~~no ~~31,~~changes ~~2011~~in ~~management assessed the effectiveness of~~ our internal ~~control~~controls over financial reporting ~~based~~during onour ~~the~~fourth ~~criteria~~fiscal ~~for~~quarter effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that ~~evaluation,~~have ~~they~~materially ~~concluded that~~affected, ~~during~~or ~~the~~are ~~period~~reasonably ~~covered~~likely byto ~~this~~materially ~~report~~affect, such internal controls and procedures were not effective to detect inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal ~~controls~~control over financial reporting ~~that adversely affected our internal controls and that may be considered to be material weaknesses~~.

~~The~~This ~~matters~~annual ~~involving~~report ~~internal~~does ~~controls~~not ~~and~~include ~~procedures~~an ~~that~~attestation ~~our~~report ~~management considered to be material weaknesses under the standards~~ of ~~the~~our ~~Public~~registered ~~Company~~public ~~Accounting~~accounting ~~Oversight~~firm ~~Board~~regarding ~~were:~~internal ~~(1)~~control ~~lack~~over ~~of a full time accountant with adequate and relevant experience in conforming~~ financial ~~statements~~reporting. ~~with~~Management’s USreport ~~GAAP;~~was ~~(2)~~not ~~lack~~subject ~~of a functioning audit committee due~~ to aattestation ~~lack~~by ofour aregistered ~~majority~~public ofaccounting ~~independent~~firm ~~members~~pursuant ~~and~~to asection ~~lack~~989G of ~~a majority of outside directors on our board of directors, resulting in ineffective oversight in~~ the ~~establishment~~Dodd-Frank ~~and~~Wall ~~monitoring~~Street ofReform ~~required internal controls~~ and ~~procedures;~~Consumer ~~(3)~~Protection ~~inadequate~~Act ~~segregation~~that ofpermits ~~duties~~us ~~consistent~~to ~~with~~provide ~~control~~only ~~objectives;~~management’s ~~and~~report ~~(4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our officers~~ in ~~connection~~this ~~with~~annual ~~the review of our financial statements as of December 31, 2011~~report.

~~Management~~The ~~believes~~Company’s ~~any~~management, including the Principal Executive Officer and Principal Financial Officer, do not expect that its disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the ~~matters~~control ~~noted~~system ~~above~~are ~~could~~met. ~~result~~In inaddition, the design of a ~~material~~control ~~misstatement~~system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in ~~our~~all ~~financial~~control ~~statements~~systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in ~~future~~decision-making ~~periods~~can be faulty, and that breakdowns can occur because of simple error or mistake.

44Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management’s override of the control. The design of any systems of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Individual persons perform multiple tasks which normally would be allocated to separate persons and therefore extra diligence must be exercised during the period these tasks are combined. Management is aware of the risks associated with the lack of segregation of duties at the Company due to the small number of employees currently dealing with general administrative and financial matters. Although management will periodically reevaluate this situation, at this point it considers the risks associated with such lack of segregation of duties and that the potential benefits of adding employees to segregate such duties do not justify the substantial expense associated with such increases. It is also recognized the Company has not designated an audit committee and no member of the board of directors has been designated or qualifies as a financial expert. The Company may consider taking steps to address these concerns.

MANAGEMENT'S REMEDIATION INITIATIVES

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

In order to mitigate the foregoing material weaknesses, we engaged an outside accounting consultant to assist us in the preparation of our financial statements to ensure that these financial statements are prepared in conformity to U.S. GAAP. This outside accounting consultant is a certified public accountant in the U.S. and has significant experience in the preparation of financial statements in conformity with U.S. GAAP. We believe that the engagement of this consultant will lessen the possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis, and we will continue to monitor the effectiveness of this action and make any changes that our management deems appropriate. We expect to continue to rely on this outside consulting arrangement to supplement our internal accounting staff for the foreseeable future. We believe that the foregoing steps will remediate the significant deficiencies identified above, and we will continue to monitor the effectiveness of these steps and make any changes that our management deems appropriate.

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And. we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a full functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

We anticipate that these initiatives will be at least partially, if not fully, implemented with the next 12 months. Additionally, we plan to test our updated controls and remediate our deficiencies by November 30, 2012.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current directors and executive officers.

Name and Business Address	Age	Position
Robert Hoerr, M.D., PhD.	6263	President and Director
Lawrence Levitan, M.D.	5556	Treasurer and Director
William Welwart	5758	Vice President and Director
Lisa Grossman	4950	Secretary

Robert Hoerr, M.D., PhD. has been our President and a director of our company since its inception on September 2, 2009. From October 2004 through October 2009, Dr. Hoerr was the Chairman of the Board and Chief Executive Officer and a director of Nanocopoeia, Inc., a development stage company, which he co-founded, which is involved in the development of pharmaceutical products. He continues as a director and as Chief Scientific Officer provides research and development guidance to Nanocopoeia. From October 2004 to the present, Dr. Hoerr has been the president and owner of Nutramentals, Inc., a medical and regulatory consulting firm. Dr. Hoerr’s experience and skill in the pharmaceutical industry, with strategic planning for development stage companies as well as his qualification as a director of another company, led to the conclusion of our board that Dr. Hoerr should serve as a director of our company.

Lawrence Levitan, M.D. has been our Treasurer and a director of our company since its inception on September 2, 2009. Dr. Levitan has been a physician with Beth Israel Medical Center since January 1999. Dr. Levitan’s medical background facilitates his ability to contribute to medical and technical issues that are addressed by our board and led to the conclusion of our board that Dr. Levitan should serve as a director of our company.

William Welwart has been a Vice President and a director of our company since its inception on September 2, 2009. Since April 2007, Mr. Welwart has been a pharmaceutical consultant to the pharmaceutical industry. From February 2000 through April 2007 he was the director of operations of 15W Pharmacy Edison Inc. Mr. Welwart’s experience and skill in the pharmaceutical industry, both as a consultant and director of operations of another company, led to the conclusion of our board that Mr. Welwart should serve as a director of our company.

Lisa Grossman has been our Secretary since our inception on September 2, 2009. Ms. Grossman has been the Vice President of The Meister Group, a private financial consulting firm since July 2004.

There are no familial relationships among any of our officers or directors. None of our directors or officers is a director in any other reporting companies. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last ten years. We are not aware of any proceedings to which any of our officers or directors, or any associate of any such officer or director, is a party adverse to us or any of our or has a material interest adverse to us or any of our subsidiaries.

Each director of the Company serves for a term of one year or until such director’s successor is duly elected and is qualified. Each officer serves, at the pleasure of the board of directors, for a term of one year and until such officer’s successor is duly elected and is qualified.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires officers and directors of the Company and persons who own more than 10% of a registered class of the Company's equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. Based solely on our review of copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied with all Section 16(a) filing requirements during the fiscal year ended December 31, ~~2011 except that Lisa Grossman, Robert Hoerr, Lawrence Levitan and William Welwart filed their respective Form 3s late~~2012.

Code of Ethics

We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have a “financial expert” on the board or an audit committee or nominating committee.

Potential Conflicts of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company has only three directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.

Involvement in Certain Legal Proceedings

There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.

Item 11. Executive Compensation.

Summary Compensation

Since our incorporation on September 2, 2009, we have not paid any compensation to our directors or officers in consideration for their services rendered to our Company in their capacity as such. We have no pension, health, annuity, bonus, insurance, stock options, profit sharing or similar benefit plans.

SUMMARY COMPENSATION TABLE

Name and principal position (a)	~~Year (b)~~	Year (b)	~~Salary ($) (c)~~	Salary ($) (c)		~~Bonus ($) (d)~~	Bonus ($) (d)		~~Stock Awards ($) (e)~~	Stock Awards ($) (e)		~~Option Awards ($) (f)~~	Option Awards ($) (f)		~~Non-Equity Incentive Plan Compensation ($) (g)~~	Non-Equity Incentive Plan Compensation ($) (g)		~~Nonqualified Deferred Compensation Earnings ($) (h)~~	Nonqualified Deferred Compensation Earnings ($) (h)		~~All Other Compensation ($) (i)~~	All Other Compensation ($) (i)		~~Total ($) (j)~~	Total ($) (j)
Robert Hoerr, M.D., PhD	2011			0			0			0			0			0			0			0			0
Robert Hoerr, M.D., PhD (President)		2012			0			0			0			0			0			0			0			0
(President)	2010			0			0			0			0			0			0			0			0
		2011			0			0			0			0			0			0			0			0
Lawrence Levitan, M.D	2011			0			0			0			0			0			0			0			0
Lawrence Levitan, M.D (Treasurer)		2012			0			0			0			0			0			0			0			0
(Treasurer)	2010			0			0			0			0			0			0			0			0
		2011			0			0			0			0			0			0			0			0
William Welwart	2011			0			0			0			0			0			0			0			0
William Welwart (Vice President)		2012			0			0			0			0			0			0			0			0
(Vice President)	2010			0			0			0			0			0			0			0			0
		2011			0			0			0			0			0			0			0			0
Lisa Grossman	2011			0			0			0			0			0			0			0			0
Lisa Grossman (Secretary)		2012			0			0			0			0			0			0			0			0
(Secretary)	2010			0			0			0			0			0			0			0			0
		2011			0			0			0			0			0			0			0			0

We have no employment agreements with any of our directors or executive officers.

Long-Term Incentive Plans. As of December 31, ~~2011~~2012, we had no group life, health, hospitalization, or medical reimbursement or relocation plans in effect. Further, we had no pension plans or plans or agreements which provide compensation in the event of termination of employment or corporate change in control.

Outstanding Equity Awards at Fiscal Year-End.

Since our incorporation on September 2, 2009, no stock options or stock appreciation rights were granted to any of our directors or executive officers. We have no long-term equity incentive plans.

Compensation of Directors

Since our incorporation on September 2, 2009, no compensation has been paid to any of our directors in consideration for their services rendered in their capacity as directors.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table lists, as of ~~April~~March 927, ~~2012~~2013, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to us to be the beneficial owner of more than 5% of our common stock; (ii) each executive officer and director of our company; and (iii) all executive officers and directors as a group. Information relating to beneficial ownership of Common Stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

48The percentages below are calculated based on 37,163,391 shares of our common stock issued and outstanding as of March 27, 2013. Unless otherwise indicated, the address of each person listed is c/o Enterologics, Inc., 1264 University Avenue West, Suite 404, St. Paul, Minnesota 55104.

The percentages below are calculated based on 35,413,391 shares of our common stock issued and outstanding as of April 9, 2012. Unless otherwise indicated, the address of each person listed is c/o Enterologics, Inc., 1264 University Avenue West, Suite 404, St. Paul, Minnesota 55104.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class

Uri Dreifus		2,088,500		5.62	%
Zachary Grossman		2,500,000		6.73	%
Gabriel Solomon		2,500,000		6.73	%
Robert Hoerr, M.D., PhD.		1,500,000		4.04	%
Lawrence Levitan, M.D		500,000	Less than 1		%
William Welwart		500,000	Less than 1		%
Lisa Grossman		6,240,000		16.79	%
Directors and officers, as a group (4 persons)		15,828,500		42.59	%

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
Uri Dreifus		2,088,500		5.96	%
Zachary Grossman		2,500,000		7.14	%
Gabriel Solomon		2,500,000		7.14	%
Robert Hoerr, M.D., PhD.		1,500,000		4.28	%
Lawrence Levitan, M.D		500,000	Less than 1		%
William Welwart		500,000	Less than 1		%
Lisa Grossman		7,800,000		22.27	%
Directors and officers, as a group (4 persons)		10,300,000		29.41	%

There are no family relationships among our officers and directors. Zachary Grossman is the adult son of Lisa Grossman.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Since January 1, 2010, we have engaged in the following transactions with our directors, executive officers, holders of more than five percent of our voting securities, and affiliates of our directors, executive officers and 5% shareholders.

On August 17, 2010, The Meister Group loaned us $5,000 for operating expenses. The loan was unsecured, accrued interest at the rate of 5%, and had a maturity of November 15, 2010 which was extended to February 1, 2011. The loan was repaid in full with accrued interest on January 10, 2011. Lisa Grossman, our Secretary is the vice president of The Meister Group.

On October 22, 2010, The Meister Group loaned us $5,000 for operating expenses. The loan was unsecured, accrued interest at the rate of 5% and matured on January 15, 2011. The loan was repaid in full with accrued interest on January 10, 2011. Lisa Grossman, our Secretary is the vice president of The Meister Group.

On November 24, 2010, The Meister Group loaned us $2,000 for operating expenses. The loan was unsecured, accrued interest at the rate of 5% and matured on March 23, 2011. The loan was repaid in full with accrued interest on January 10, 2011. Lisa Grossman, our Secretary is the vice president of The Meister Group.

Our executive offices consist of approximately 200 square feet of office space provided to us by our President, Dr. Hoerr. We currently do not pay rent for such space.

On January 7, 2011, we entered into a loan agreement with Surge for a series of loans up to an aggregate of $50,000 and borrowed an initial $20,000 and issued a 5% promissory note to Surge. The principal and accrued interest under the note is due and payable on the earlier of September 7, 2011 or the date we receive proceeds from the sale of our securities in a private offering or through an effective registration statement. In consideration of the loan commitment, on January 17, 2011, we issued Surge 500,000 shares of our common stock. Irv Bader, the father of Lisa Grossman, our Secretary, is President of Surge. On February 9, 2011 we borrowed an additional $10,000 from Surge and executed a substantially identical promissory note, except that the note matures on October 9, 2011. On March 21, 2011 we executed an amendment with Surge which provides that the notes only need to be repaid earlier than the maturity date, if and when the proceeds received by us are in excess of $350,000. We repaid these loans in full with accrued interest on April 11, 2011.

On September 14, 2011, BFSF LLC, loaned us $50,000 for operating expenses. The loan was evidenced by an unsecured demand promissory note which bears interest at the rate of 6% per annum, and may be demanded to be repaid on or after October 31, 2011. As of April 9, 2011, no demand has been made to have the loan repaid. Lisa Grossman, our Secretary and a significant shareholder, is a co-manager of BFSF LLC.

On each of December 2, 2011 and December 19, 2011, BSF II LLC loaned us $25,000 for operating expenses. The loan was evidenced by unsecured demand promissory notes which bear interest at the rate of 5% per annum. These loans were repaid in full with accrued interest on January 18, 2012. Lisa Grossman, our Secretary and a significant shareholder, is a co-manager of BSF II LLC, together with her husband Yitz Grossman.

In connection with our acquisition of BioBalance on September 6, 2011, NYHC was required to be the sole owner of BioBalance. Accordingly, BioBalance purchased from Yitz Grossman his 33 1/3% membership interest in BioBalance LLC pursuant to the Membership Purchase Agreement in consideration for the indemnification of Mr. Grossman for up to $75,000 in legal fees incurred by him, and not otherwise reimbursed, as a result of his prior activities on behalf of NYHC. Mr. Grossman is the husband of Lisa Grossman, our Secretary and significant shareholder.

On September 10, 2012 a related party loaned $5,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $13 were repaid.

On September 14, 2012 a related party loaned $7,500 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $17 were repaid.

On September 25, 2012 a related party loaned $10,000 to the Company for operating expenses. The Demand Promissory Note is unsecured, carries an interest rate of 3% . On October 11, 2012 the loan and accrued interest of $16 were repaid.

Director Independence

We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.”

Item 14. Principal Accounting Fees and Services.

Our principal independent accountant is Lake & Associates, CPA's LLC. Their pre-approved fees billed to the Company are set forth below:

	Fiscal Year Ended December 31, 2010		Fiscal Year Ended December 31, 2011
	Fiscal Year Ended December 31, 2012		Fiscal Year Ended December 31, 2011
Audit Fees	$	815,~~066~~000	$	10,500
Audit Related Fees	$	0	$	0
Tax Fees	$	0	$	0
All Other Fees	$	0	$	0

As of December 31, ~~2011~~2012, the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

Exhibit		Description
3.1		Articles of Incorporation (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on February 17, 2010).
3.2		Amendment to Articles of Incorporation (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on February 17, 2010).
3.3		By-Laws (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on February 17, 2010).
4.1		Form of Stock Certificate (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on February 17, 2010).
10.1		Letter of Intent, dated June 8, 2010 and executed and delivered June 15, 2010, by and among Enterologics, Inc., New York Health Care, Inc., and BioBalance LLC (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on June 16, 2010 )
10.2		Letter, dated September 1, 2010 from Enterologics, Inc. to New York Health Care, Inc. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on September 2, 2010)
10.3		Form of Subscription Agreement (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on February 17, 2010).
10.4		Letter of Intent, entered into on January 12, 2011, with Universal Stabilization Technologies, Inc. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on January 13, 2011)
10.5		Letter Agreement, dated January 7, 2011, with Surge Partners, Ltd. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on January 18, 2011)
10.6		5% Promissory Note, dated January 7, 2011 issued to Surge Partners, Ltd. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on January 18, 2011)
10.7		Waiver, dated January 17, 2011 from Surge Partners, Ltd. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on January 18, 2011)
10.8		Form of Subscription Agreement (Incorporated by reference to the corresponding exhibit filed with our Registration Statement on Form S-1 filed with the SEC on January 19, 2011).
10.9		5% Promissory Note, dated February 9, 2011 issued to Surge Partners, Ltd. (Incorporated by reference to the corresponding exhibit filed with our Annual Report on Form 10-K filed with the SEC on March 23, 2011)
10.10		Amendment dated March 21, 2011 between Enterologics, Inc. and Surge Partners, Ltd. (Incorporated by reference to the corresponding exhibit filed with our Annual Report on Form 10-K filed with hethe SEC on March 23, 2011)
10.11		Stock Purchase Agreement, dated June 20, 2011, between Enterologics, Inc. and New York Health Care, Inc. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on June 22, 2011)

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10.11		Stock Purchase Agreement, dated June 20, 2011, between Enterologics, Inc. and New York Health Care, Inc. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on June 22, 2011)
10.12		Form of Promissory Note (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on June 22, 2011)
10.13		Form of Membership Interest Purchase Agreement (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on June 22, 2011)
10.14		Promissory Note dated September 6, 2011 in the principal amount of $100,000 issued to BioBalance Corp. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on September 7, 2011)
10.15		Membership Interest Purchase Agreement dated September 6, 2011 between Yitz Grossman and BioBalance Corp. (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on September 7, 2011)
10.16		Agreement, dated January 11, 2012, between Enterologics, Inc. and MBTA Management, LLC (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on January 31, 2012)
10.17		Promissory Note, dated January 16, 2012 in the principal amount of $50,000 issued to MBTA Management, LLC (Incorporated by reference to the corresponding exhibit filed with our Current Report on Form 8-K filed with the SEC on Janaury 31, 2012)
10.18		Promissory Note, dated February 1, 2012 in the principal amount of $5025,000 issued to MBTA Management, LLC
10.19		Promissory Note, dated March 14, 2012 in the principal amount of $25,000 issued to MBTA Management, LLC
31.1		Certification of Principal executive officer pursuant to Section 302(a) of Sarbanes-Oxley
32.1		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
31.2		Certification of Principal Financial and Accounting Officer pursuant to Section 302(a) of Sarbanes-Oxley
32.2		Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley
32.1		Certification of Principal Executive Officer pursuant to Section 906 of Sarbanes-Oxley
32.2		Certification of Principal Financial and Accounting Officer pursuant to Section 906 of Sarbanes-Oxley

101.INS **		XBRL Instance Document

101.SCH **		XBRL Taxonomy Extension Schema Document

101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB **		XBRL Taxonomy Extension Label Linkbase Document

101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

________________

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

5230

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ENTEROLOGICS, INC.
Dated: April 11, 2012	By:	/s/Robert Hoerr, M.D., Ph.D.
Dated: March 29, 2013	By:	/s/ Robert Hoerr, M.D., Ph.D.
		Robert Hoerr, M.D., Ph.D.
	Name:	Robert Hoerr, M.D., Ph.D.
		President (Principal Executive Officer)
	Title:	President (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date:	Signature:	Name:	Title:
April 11, 2012	/s/ Robert Hoerr	Robert Hoerr, M.D., Ph.D.	President and Director (Principal Executive Officer)
March 29, 2013	/s/ Robert Hoerr	Robert Hoerr, M.D., Ph.D.	President and Director (Principal Executive Officer)
April 11, 2012	/s/ Lawrence Levitan	Lawrence Levitan, M.D.	Treasurer and Director (Principal Financial and Accounting Officer)
March 29, 2013	/s/ Lawrence Levitan	Lawrence Levitan, M.D.	Treasurer and Director
April 11, 2012	/s/ William Welwart	William Welwart	Vice President and Director
			(Principal Financial and Accounting Officer)
April 11, 2012	/s/ Lisa Grossman	Lisa Grossman	Secretary
March 29, 2013	/s/ William Welwart	William Welwart	Vice President and Director
March 29, 2013	/s/ Lisa Grossman	Lisa Grossman	Secretary

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Filing Compare · Enterologics, Inc.