UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
December 31,or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
KYTO BIOPHARMA,TECHNOLOGY AND LIFE SCIENCE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA | 000-50390 | 65-1086538 | ||
(Commission File Number) | (I.R.S. Employer | |||
Identification No.) |
13050 Paloma Road, Los Altos Hills, CA 94022
(Address of Principal Executive Office) (Zip Code)
(408) 313 5830
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑[X] Yes ☐[ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 (or for such shorter period that the registrant was required to submit and post such files). ☐[ ] Yes ☑[X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ ] | Smaller reporting company | |
[X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐[ ] Yes ☑[X] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
5,027,703 Common Shares - $0.0001$1.00 Par Value - as of
KYTO BIOPHARMA, INC.
For the quarterly period ended December 31, 2017
INDEX
PART I. FINANCIAL INFORMATION | |||||
Item 1. | Financial Statements | ||||
Condensed Balance Sheets as of December 31, | 3 | ||||
Unaudited Condensed Statements of Operations for the Three Months and Nine Months Ended December 31, | 4 | ||||
Unaudited Condensed Statement of Stockholders’ | 5 | ||||
Unaudited Condensed Statements of Cash Flows for the Nine Months Ended December 31, | 6 | ||||
Notes to Unaudited Condensed Financial Statements | 7 | ||||
Item 2. | Management’s Discussion and Analysis of Financial | 12 | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 13 | |||
Item 4. | Controls and Procedures. | 13 | |||
PART II. OTHER INFORMATION | |||||
Item 1. | Legal Proceedings. | 14 | |||
Item 1A. | Risk Factors. | 14 | |||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 14 | |||
Item 3. | Defaults Upon Senior Securities. | 14 | |||
Item 4. | Mine Safety Disclosures | 14 | |||
Item 5. | Other Information | 14 | |||
Item 6. | Exhibits | 15 | |||
Signatures | 16 |
Kyto Technology and Life Science, Inc. | |||||||
Condensed Balance Sheets | |||||||
| |||||||
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| December 31, |
| March 31, | |
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|
| 2018 |
| 2018 | |
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| (Unaudited) |
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| |
ASSETS |
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| |||
Current Assets |
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| |||
| Cash | $ | 14,534 | $ | 4 | ||
| Receivables |
| 1,000 |
| - | ||
| Prepaid & other current assets |
| - |
| 7,500 | ||
Total Current Assets |
| 15,534 |
| 7,504 | |||
|
|
|
|
|
| ||
| Investments |
| 1,037,000 |
| - | ||
Total Assets | $ | 1,052,534 | $ | 7,504 | |||
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| ||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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| ||
Current Liabilities |
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| |||
| Accounts payable & accrued liabilities | $ | 7,770 | $ | 13,030 | ||
| Accrued liabilities & loans - related party |
| 7,274 |
| 311,430 | ||
Total Current Liabilities |
| 15,044 |
| 324,460 | |||
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| ||
Commitments and Contingencies |
| - |
| - | |||
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Stockholders' Equity (Deficit) |
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| Series A preferred convertible stock, $1.00 par value, 2,000,000 shares |
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|
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| ||
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| authorized, 1,868,750 and none issued and outstanding as of |
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| |
|
| December 31, 2018 and March 31, 2018, respectively |
| 1,868,750 |
| - | |
| Series B preferred convertible stock, $0.80 par value, 1,500,000 shares |
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| ||
|
| authorized, none issued and outstanding as of December 31, 2018 and |
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|
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| |
|
| March 31, 2018, respectively |
| - |
| - | |
| Common stock, $0.0001 par value, 100,000,000 shares |
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| ||
|
| authorized, 5,027,703 and 3,139,747 issued and outstanding as of |
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| |
|
| December 31, 2018 and March 31 2018, respectively |
| 503 |
| 314 | |
| Additional paid-in capital |
| 31,705,129 |
| 32,063,476 | ||
| Accumulated deficit |
| (32,536,892) |
| (32,380,746) | ||
Total Stockholders' Equity (Deficit) |
| 1,037,490 |
| (316,956) | |||
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| |
Total Liabilities and Stockholders' Equity (Deficit) | $ | 1,052,534 | $ | 7,504 | |||
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| |
The accompanying notes are an integral part of these unaudited condensed financial statements. |
Kyto Technology and Life Science, Inc. | ||||||||||
Condensed Statements of Operations | ||||||||||
(Unaudited) | ||||||||||
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| For the Three Months Ended |
| For the Nine Months Ended | ||||
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|
| December 31 |
| December 31 | ||||
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| 2018 |
| 2017 |
| 2018 |
| 2017 |
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Revenue from sale of services | $ | 5,000 | $ | - | $ | 5,000 | $ | - | ||
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Operating Expenses |
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| ||
| General and administrative |
| 62,923 |
| 24,133 |
| 161,121 |
| 63,862 | |
Total Operating Expenses |
| 62,923 |
| 24,133 |
| 161,121 |
| 63,862 | ||
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|
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|
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|
Loss from Operations |
| (57,923) |
| (24,133) |
| (156,121) |
| (63,862) | ||
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| Interest expense, net |
| - |
| - |
| (25) |
| - | |
Net Loss before taxes |
| (57,923) |
| (24,133) |
| (156,146) |
| (63,862) | ||
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| Net income (tax) benefit |
| - |
| - |
| - |
| - |
Net Loss | $ | (57,923) | $ | (24,133) | $ | (156,146) | $ | (63,862) | ||
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Weighted average number of shares outstanding |
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| ||
| basic and diluted |
| 5,027,703 |
| 3,139,747 |
| 4,650,112 |
| 3,139,747 | |
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Net loss per share - basic and diluted | $ | (0.01) | $ | (0.01) | $ | (0.03) | $ | (0.02) | ||
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The accompanying notes are an integral part of these unaudited condensed financial statements. |
Kyto Biopharma, Inc. | ||
Condensed Balance Sheets | ||
December 31, | March 31, | |
2017 | 2017 | |
(Unaudited) | ||
ASSETS | ||
Current Assets | ||
Cash | $76 | $- |
Total Current Assets | 76 | - |
Total Assets | $76 | $- |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Current Liabilities | ||
Accounts payable and accrued expenses | $- | $22 |
Accrued liabilities | 5,000 | 10,000 |
Accrued liabilities - related party | 196,000 | 148,000 |
Loans payable - related party | 89,067 | 68,107 |
Total Current Liabilities | 290,067 | 226,129 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Preferred convertible stock, $1.00 par value, 2,000,000 shares | ||
authorized, none issued and outstanding as of | ||
December 31, 2017 and March 31, 2017, respectively | - | - |
Common stock, $0.0001 par value, 100,000,000 shares | ||
authorized, 3,139,747 issued and outstanding as of | ||
December 31, 2017 and March 31, 2017, respectively | 314 | 314 |
Additional paid-in capital | 32,063,476 | 32,063,476 |
Accumulated deficit | (32,353,781) | (32,289,919) |
Total Stockholders' Deficit | (289,991) | (226,129) |
Total Liabilities and Stockholders' Deficit | $76 | $- |
Kyto Technology and Life Science, Inc. | ||||||||||||||
Condensed Statements of Shareholders' Equity (Deficit) | ||||||||||||||
(Unaudited) | ||||||||||||||
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| Preferred |
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| Common |
| Additional |
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| Preferred |
| Stock |
| Common |
| Stock |
| Paid-in |
| Accumulated |
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| Stock # |
| Amount |
| Stock # |
| Amount |
| Capital |
| Deficit |
| Total |
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Balance, March 31, 2018 |
| - | $ | - |
| 3,139,747 | $ | 314 | $ | 32,063,476 | $ | (32,380,746) | $ | (316,956) |
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Net (loss) for nine months ended December 31, 2018 |
| - |
| - |
| - |
| - |
| - |
| (156,146) |
| (156,146) |
Sale of preferred stock at $0.80 per share |
| 1,468,750 |
| 1,468,750 |
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|
| (293,750) |
| - |
| 1,175,000 |
Preferred stock issued for conversion of related party debt |
| 400,000 |
| 400,000 |
| - |
| - |
| (80,000) |
| - |
| 320,000 |
Exercise of options for common stock at $.006 per share |
| - |
| - |
| 1,887,956 |
| 189 |
| 11,139 |
| - |
| 11,328 |
Compensation expense on stock options |
| - |
| - |
| - |
| - |
| 4,264 |
| - |
| 4,264 |
Balance, December 31, 2018 |
| 1,868,750 | $ | 1,868,750 |
| 5,027,703 | $ | 503 | $ | 31,705,129 | $ | (32,536,892) | $ | 1,037,490 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
Kyto Biopharma, Inc. | ||||
Condensed Statements of Operations | ||||
(Unaudited) | ||||
For the Three Months Ended | For the Nine Months Ended | |||
Dember 31, 2017 | December 31 | |||
2017 | 2016 | 2017 | 2016 | |
Operating Expenses | ||||
General and administrative | $24,133 | $31,079 | $63,862 | $70,135 |
Total Operating Expenses | 24,133 | 31,079 | 63,862 | 70,135 |
Loss from Operations | 24,133 | 31,079 | 63,862 | 70,135 |
Net Loss before taxes | (24,133) | (31,079) | (63,862) | (70,135) |
Net Income (Tax) Benefit | - | - | - | - |
Net Loss | $(24,133) | $(31,079) | $(63,862) | $(70,135) |
Weighted average number of shares outstanding | ||||
basic and diluted | 3,139,747 | 3,139,747 | 3,139,747 | 3,139,747 |
Net loss per share - basic and diluted | $(0.01) | $(0.01) | $(0.02) | $(0.02) |
Kyto Technology and Life Science, Inc. | ||||||
Condensed Statements of Cash Flows | ||||||
(unaudited) | ||||||
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| For the nine months ended |
| For the nine months ended |
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| December 31, 2018 |
| December 31, 2017 |
CASH FLOW FROM OPERATING ACTIVITIES |
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| Net loss | $ | (156,146) | $ | (63,862) | |
| Adjustments to reconcile net loss to net cash used |
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| in operating activities |
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| Loss on conversion of related party debt |
| 5,099 |
| - |
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| Option compensation expense |
| 4,264 |
| - |
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| Increase / (decrease) in operating assets and liabilities |
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| |
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| Receivables |
| (1,000) |
| - |
|
| Prepaid & other current assets |
| 7,500 |
| - |
|
| Related party liabilities |
| - |
| 48,000 |
|
| Accounts payable and accrued liabilities |
| (5,260) |
| (5,022) |
| Total cash (used in) operating activities |
| (145,543) |
| (20,884) | |
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CASH FLOW FROM INVESTING ACTIVITIES |
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| Purchase of equity investments |
| (1,037,000) |
| - |
| Total cash used in investing activities |
| (1,037,000) |
| - | |
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CASH FLOW FROM FINANCING ACTIVITIES |
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| Proceeds from sales of preferred stock |
| 1,175,000 |
| - |
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| Proceeds from exercise of options for common stock |
| 11,328 |
| - |
|
| Advances from related party |
| 10,745 |
| 20,960 |
| Total cash provided by financing activities |
| 1,197,073 |
| 20,960 | |
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Net increase in cash |
| 14,530 |
| 76 | ||
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Cash at beginning of period |
| 4 |
| - | ||
Cash at end of period | $ | 14,534 | $ | 76 | ||
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Supplemental Cash Flow Information: |
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| Interest Paid | $ | 25 | $ | - |
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| Taxes Paid | $ | - | $ | - |
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Non Cash Financing and Investing Activities |
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| Preferred shares issued for conversion of related party debt | $ | 320,000 | $ | - |
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The accompanying notes are an integral part of these unaudited condensed financial statements. |
Kyto Biopharma, Inc. | |||||||
Condensed Statement of Stockholder's Deficit | |||||||
For the Nine Months Ended December 31, 2017 | |||||||
(Unaudited) | |||||||
Preferred Stock | Common Stock | Additional | |||||
$1.00 par value | $0.0001 par value | Paid - in | Accumulated | ||||
Shares | Amount | Shares | Amount | Capital | Deficit | Total | |
Balance, March 31, 2017 | - | $- | 3,139,747 | $314 | $32,063,476 | $(32,289,919) | $(226,129) |
Net Loss | - | - | - | - | - | (63,862) | (63,862) |
Balance, December 31, 2017 | - | $- | 3,139,747 | $314 | $32,063,476 | $(32,353,781) | $(289,991) |
Kyto Biopharma, Inc. | ||
Condensed Statements of Cash Flows | ||
(Unaudited) | ||
For the Nine Months Ended December 31, | ||
2017 | 2016 | |
Cash Flows from Operating Activities: | ||
Net loss | $(63,862) | $(70,135) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Changes in operating liabilities: | ||
Accrued liabilities - related party | 48,000 | 48,000 |
Accrued liabilities | (5,000) | (7,500) |
Accounts payable and accrued expenses | (22) | 326 |
Net Cash Used in Operating Activities | (20,884) | (29,309) |
Cash Flows from Investing Activities: | ||
Net Cash Used in Investing Activities | - | - |
Cash Flows from Financing Activities: | ||
Loan proceeds from related parties, net | 20,960 | 29,286 |
Net Cash Provided by Financing Activities | 20,960 | 29,286 |
Net increase (decrease) in Cash and Cash Equivalents | 76 | (23) |
Cash and Cash Equivalents at Beginning of Period | - | 32 |
Cash and Cash Equivalents at End of Period | $76 | $9 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for: | ||
Interest | $- | $- |
Income taxes | $- | $- |
KYTO BIOPHARMA,TECHNOLOGY AND LIFE SCIENCE INC.
December 31, 2017
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Kyto Biopharma,Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999. On1999 under the name of B12 Inc. In August, 14, 2002, the Company changed its name from B Twelve, Inc. to Kyto Biopharma,BioPharma Inc.
The Company is a biopharmaceutical company,was originally formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other proliferate and autoimmune diseases. The Company is currently in the development stage as it is in the process ofdiseases and had been looking at a number of strategies to become active. Once it has settledIn April, 2018, the Board adopted a new business plan focused on the strategy, the Company will develop a plan for an acquisitiondevelopment of early stage technology and the means to achieve its goal.
NOTE 2 – INTERIM REVIEW REPORTING
The accompanying unaudited condensed financial statements of Kyto Biopharma,Technology and Life Science, Inc. (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's March 31, 20172018 Annual Report as filed on Form 10K. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position of the Company with respect to the interim unaudited condensed financial statements and the results of its operations for the interim period ended December 31, 2017,2018, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.
REVENUE RECOGNITION
The Company derives revenue from two sources: proceeds from the sale of investments and fees earned from the provision of financial advisory services to portfolio investment companies. As a minority, early-stage investor, the Company does not have the ability to devisemanage the timing or acceptance of liquidity events that will realize its investments, nor the ability to predict when they may happen, although as a strategyguideline, it would expect such events to occur around four years after its investments are made. The Company will book the revenue from investment activities upon completion of sale and producereceipt of net proceeds, after deducting related transaction expenses. The Company does not recognize any revenue from unrealized gains. The Company is in regular contact with the management of its portfolio investment companies and, from time to time, provides investment advice on a business plan.meeting or project basis under its advisory agreements. The unaudited condensedservices are invoiced, and the revenue recognized, upon completion.
USE OF ESTIMATES
In preparing financial statements, do notmanagement is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period presented. Actual results may differ from these estimates.
Significant estimates during 2018 include, any adjustments that mightthe valuation allowance of stock options and warrants.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be necessary ifcash equivalents. There were no cash equivalents at December 31, 2018 and March 31, 2018, respectively.
CONCENTRATIONS
The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. As of December 31, 2018, the Company is unable to continue as a going concern.
NET LOSS PER COMMON SHARE
In accordance with Statement of Financial Accounting Standards Accounting Standard Codification Topic 260, "Earnings per Share", basic earnings per share is computed by dividing the net income less preferred dividends for the period by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income less preferred dividends by the weighted average number of common shares outstanding including the effect of common stock equivalents. Common stock equivalents, consisting of stock options and warrants, have not been included in the calculation, as their effect is anti-dilutive for the periods presented.
STOCK-BASED COMPENSATION
Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” requires generally that all equity awards granted to generate an internal cash flow,employees be accounted for at “fair value.” This fair value is measured at grant date for stock settled awards, and until the sales of its product begins,at subsequent exercise or settlement for cash-settled awards. Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is highly dependent upon debt and equity funding.computed using the Black Scholes options pricing model. The Company must successfully complete its researchdid not grant any options or warrants prior to March 31, 2018.
INCOME TAXES
The Company accounts for income taxes under the Financial Accounting Standards Accounting Standard Codification Topic 740 "Accounting for Income Taxes" ("Topic 740"). Under Topic 740, deferred tax assets and development resultingliabilities 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 Topic 740, the effect on deferred tax assets and liabilities of a saleable product. However,change in tax rates is recognized in income in the period, which includes the enactment date.
INVESTMENTS
The Company carries investments at the lower of cost or fair market value. These investments are accounted for as cost method investments in accordance with ASC 325 as we own less than 20% of the voting securities and do not have the ability to exercise significant influence over operating and financial policies of the entities. The Company reviews the performance of the underlying investments to determine their current and future potential value and liquidity. In the event that Management considers the value of an investment to be impaired, the carrying value of the investment will be written down by an impairment charge to reflect Management’s estimated valuation.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs for which there is little or no assurance that oncemarket data, which require the developmentuse of the product is completed and finally gains Federal Drug and Administration clearance, thatreporting entity’s own assumptions.
NOTE 3 – INVESTMENTS
During the three months ended December 31, 2018, the Company will achievemade an aggregate investment of $450,000 in five separate early stage companies. In no case was there any financial or management control over the investment targets, and the ownership interest was below 15%. Accordingly, the Company carries these investments at cost and reviews results and expectations of target companies with target management on at least a profitable levelquarterly basis to determine if there is any impairment in value, in which case the carrying value of operations.
Significant Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying unaudited condensed financial statements.
NOTE 5
– RELATED PARTY TRANSACTIONSAt December 31, 2018, $7,274 was due and payable to related parties. Of this amount $5,000 was due to the Company Chief Financial Officer for services provided to the Company, and $2,724 was due to the Chief Executive Officer as reimbursement for expenses incurred in the normal course of business.
The Company now operates virtually, and from public locations, and no longer leases any office space from related parties.
(A)PREFERRED STOCK
As of December 31, 2018 and March 31, 2018, there are 2,000,000 shares of Series A preferred stock (“Series A”) authorized at a par value of $1.00 per share. The Company has outstanding 1,868,750 shares of Series A as a result of the sale during the nine months ended December 31, 2017,2018 of 1,468,750 Units at $0.80 per Unit in a private placement to accredited investors for $1,175,000, and 400,000 Units for the conversion of $320,000 of related party debt. The Units consist of one Series A share and one warrant per Unit. The Series A can either be converted into Common Shares upon listing of the Company receivedon Nasdaq or elect to receive $1.60 per share. In the event of any liquidation or winding up of the Company, the holders of the Series A shall be entitled to receive in preference to the holders of Common Shares a net loan fromper share amount equal to two times (2 X) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference). All share issuances and obligations are recognized on the books and stock register, however, as at the date of this report certificates have not been delivered as a related partyresult of administrative delays in transferring to the amountCompany’s selected stock transfer agent.
There are also 1,500,000 shares of $20,960. AtSeries B preferred stock (“Series B”) authorized at a par value of $0.80 per share. No Series B was issued or outstanding as at December 31, 2017 and2018 or March 31, 2017,2018. The Series B can either be converted into Common Shares upon listing of the Company owed $89,067 and $68,107, respectivelyon Nasdaq or elect to a related partyreceive $1.60 per share. In the event of any liquidation or winding up of the Company. The loans are non-interest bearing, unsecuredCompany, the holders of the Series B shall be entitled to receive in preference to the holders of Common Shares and due on demand. The loans are included in loans payable, related party on the accompanying balance sheet.
The Company leases office space and administrative services fromhas authorized 100,000,000 shares of common stock at a related party principal stockholder. Rent and administrative expense for the nine months ended December 31, 2017 and 2016 was $30,000 and $30,000, respectively and is included in general and administrative expense in the accompanying statementspar value of operations.
(C)PRIVATE PLACEMENT
In April 2018, in a non-brokered private placement, the Company offered accredited investors an opportunity to purchase a minimum of 875,000 and maximum of 1,500,000 Units. These Units consist of one Series A (convertible into one common share) and one warrant (exercisable into one common share at $1.20 per share for a period of three years). The Preferred Shares can be converted into Common Shares upon listing of the Company on NASDAQ, or redeemed for $1.60 per share. In the event of any liquidation or winding up of the Company, the holders of preferred shares shall be entitled to receive in preference to the holders of Common Shares a per share amount equal to (2x) the Original Purchase price plus any declared but unpaid dividends (“Liquidation preference”). The Units are priced at $0.80 per unit.
In April 2018, a total of $320,000 of related party loans and accrued liabilities were converted into Units consisting of 400,000 shares of Series A, and 400,000 Warrants to purchase common stock at $1.20 per share. Additionally, since April 2018, the Company has sold 1,468,750 investment units to accredited investors in a private placement for $1,175,000 in cash.
(D)STOCK OPTIONS
In April 2018, the Company approved the introduction of the Kyto Technology and Life Science, Inc. Incentive Stock Option Plan for the benefit of employees, consultants and directors, with the objective of securing the benefit of services for stock options rather than cash salaries. In the nine months ended December 31, 2018, the Company granted a total of 2,697,085 options at an exercise price of $0.006 per share. On May 18, 2018, 1,887,956 options vested upon the initial closing of the private placement and were exercised for $11,328. The remaining balance of 809,129 options will become fully vested upon the final close of the private placement after the sale of 1,500,000 units.
| Number of options | Weighted average exercise price | Weighted average remaining life years |
Outstanding March 31, 2018 | - | - | - |
Granted | 2,697,085 | $ 0.006 | 1.00 |
Exercised | (1,887,956) | $ 0.006 | - |
Cancelled | - | - | - |
Outstanding December 31, 2018 | 809,129 | $ 0.006 | 0.25 |
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Exercisable December 31, 2018 | - | $ - | - |
In connection with the grant of stock options the Company recognises the value of the related option expense using the Black Scholes model, with appropriate assumptions for option life, stock value, risk free interest rate, volatility, and cancellations. The assumptions used for options granted in the nine months ended December 31, 2018 were as follows:
Stock Price at grant date | $0.006 |
Exercise Price | $0.006 |
Term in Years | 1.00 |
Volatility assumed | 73% |
Annual dividend rate | 0.0% |
Risk free discount rate | 1.79% |
The compensation expense calculated at time of grant is amortised over the vesting period for the options granted. During the three and nine months ended December 31, 2018, the Company amortised $356 and $4,264, respectively, as option expense.
No options were granted as of March 31, 2018.
E)WARRANTS
In conjunction with the sale of stock Units, the Company issued 1,868,750 warrants to purchase common stock at a price of $1.20 per share for a period of three years. The Company values the warrantsusing the Black Scholes model, with appropriate assumptions for warrant life, stock value, risk free interest rate, and volatility. The assumptions used for warrants granted in the nine months ended December 31, 2018 were as follows:
| Number of warrants | Weighted average exercise price | Weighted average remaining life years |
Outstanding March 31, 2018 | - | - | - |
Granted | 1,868,750 | $ 1.20 | 3.00 |
Exercised | - | $ - | - |
Cancelled | - | $ - | - |
Outstanding December 31, 2018 | 1,868,750 | $ 1.20 | 2.25 |
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Exercisable December 31, 2018 | 1,868,750 | $ 1.20 | 2.25 |
Stock Price at Valuation date | $0.006 |
Exercise Price | $1.20 |
Term in Years | 3.00 |
Volatility assumed | 73.0% |
Annual dividend rate | 0.0% |
Risk free discount rate | 1.79% |
At December 31, 2018 the value of the warrants was $0 as the Company did not bifurcate the value of Series A and warrants within the Units sold. There were no warrants issued or outstanding at March 31, 2018.
NOTE 7
– SUBSEQUENT EVENTSSubsequent to December 31, 2018, the Company has raised a total of $200,000, for the sale of another 250,000 investment units.
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLAN OF OPERATIONS
Although the Company has $14,534 in the bank at December 31, 2018 and has raised another $200,000 since that date, management recognizes that it currently has minimal to no revenue and that revenue generation could be a slow and uncertain process depending on our March 31, 2017 financial statements includes an explanatory paragraph indicating thatthe success and liquidity of the businesses in which it invests and there is substantialno assurance that the Company will be able to continue to raise such funding to cover new investments and net operating expenses. Accordingly, there is no assurance that the Company will be able to meet its cash obligations when they come due and payable, which raises doubt about ourover the Company’s ability to continue as a going concern due to substantial recurring losses from operations, cash used in operations, stockholders’ deficit, significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional financing and maintain operations. Currently we do not have sufficient financial resources to fund our operations. Therefore, we need additional funds to continue these operations. The Company operates in a rapidly changing environment that involves a number of factors, some of which are beyond management’s control, such as financial market trends and investors’ appetite for new financings. It should be emphasized that, should the Company not be successful in completing its own financing (either by debt or by the issuance of securities from treasury), the Company may be unable to continue to operate as a going concern.
Results of Operations
Revenue: In the three months ended December 31, 20172018, the Company’s net loss attributableCompany billed $5,000 for management advisory services provided to common shareholders decreased by $6,946 to $24,133 compared to a net lossits investment portfolio companies.
General and Administration expenses: General and administration expenses include professional fees incurred in the course of $31,079 for the three months ended December 31, 2016.
For the nine months ended December 31, 2018 and 2017, the Company’s net loss attributable to common shareholders decreased by $6,273 towas $156,146 and $63,862, respectively, compared to a net loss of $70,135$57,923 and $24,133 for the three monthsended December 31, 2018 and 2017, respectively.
Liquidity and Capital Resources
The Company had a working capital deficit of $316,956 as of March 31, 2018. As a result of the private placement, the Company’s net working capital increased to $490 as of December 31, 2018. Cash was $4 as of March 31, 2018, and $14,534 as of December 31, 2018.
Cash from operating activities
The Company used net cash of $145,543 in operations during the nine months ended December 31, 2018 compared to net cash of $20,884 used by operations for the nine months ended December 31, 2016.
Cash from financing activities
The Company had working capital deficitsa cash inflow from financing activities of $289,991 as of December 31, 2017 and $226,129 as of March 31, 2017. Cash was $76 as of December 31, 2017, and Nil as of March 31, 2017.
Cash from financinginvesting activities
Cash outflow used in investing activities decreased by $8,326 to $20,960 forwas $1,037,000 in the nine months ended December 31, 20172018 compared to cash flows from financing activities of $29,286 for$0 in the nine months ended December 31, 2016.
The Company’s plan of operations for the next twelve months is to continue to focus its efforts on finding new sources of capital by means of private placements and on R&D activities related to the developmentuse this funding to fund additional investments as they become available, and application of its antibody technologies. As of the date of filing of this Form 10-Q with the U.S. Securities and Exchange Commission, the Company did receive a commitment of one of its stockholders to continue to providecover operating loan funds to the Company.expenses.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKNot required for smaller reporting company.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer/chief financial officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended December 31, 20172018 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the chiefprincipal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of December 31, 2017.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors 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 control system are met. Further, the design of a control 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 all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also 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, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Internal Controls over Financial Reporting
During the quarter ended December 31, 2017,2018, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.
None
Not required for smaller reporting company.
None
None
ITEM 5.
OTHER INFORMATIONITEM 6.
EXHIBITSEXHIBIT NUMBER | DESCRIPTION | |
Articles of Incorporation of Kyto | ||
Articles of Amendment changing name to Kyto | ||
Bylaws of Kyto | ||
10.1 | Research collaboration agreement between The Research Foundation of State University of New York and B. Twelve Ltd. (Kyto | |
10.2 | Collaborative Research Agreement to synthesize new vitamin B12 analogs signed between the Company and New York University [dated November 11, 1999]** | |
10.3 | Extension/Modification Research Collaboration Agreement between the Research Foundation of State University of New York and B Twelve, Inc., (Kyto | |
10.4 | Debt Settlement Agreement and Put Option (dated November 2002) between Kyto | |
10.5 | Extension/Modification Research Collaboration Agreement between the Research Foundation of State University of New York and Kyto | |
Services Agreement between Kyto | ||
Section 302 Certification of principal executive officer.** | ||
Section 302 Certification of principal financial and accounting officer.** | ||
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** |
*
**
***
SIGNATURES
In accordance with the requirements 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.
Kyto | ||
Date: February 11, 2019 | ||
By: | /s/ Paul Russo | |
Paul Russo | ||
Chief Executive Officer, principal executive officer |
SIGNATURES
In accordance with the requirements 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.
Kyto Technology and Life Science, Inc. | ||
Date: February 11, 2019 | ||
By: | /s/ Simon Westbrook | |
Simon Westbrook Principal financial and accounting officer | ||
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