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
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)
DELAWARE | 000-50390 | 65-1086538 | ||
(Commission | (I.R.S. Employer | |||
of Incorporation) | File Number) | Identification No.) |
13050 Paloma Road, Los Altos Hills, CA 94022
(Address of Principal Executive Office) (Zip Code)
(650) 204 7896
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Title of each class | Trading Symbol | Exchange |
Common stock | KBPH | OTC QB |
———————
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). ☐[X] Yes ☑[ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.
Large accelerated filer | [ ] | Accelerated filer | [ ] | ||
Non-accelerated filer | [ ] | Smaller reporting company | [X] | ||
Emerging | [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
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.
5,836,832 Common Shares - $0.0001$.01 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 | 3 | |||||
Unaudited Condensed Statements of Operations for the Three and | 4 | |||||
Unaudited Condensed | 5 | |||||
Unaudited Condensed Statements of Cash Flows for the | 7 | |||||
Schedule of Investments as of September 30, 2020 (Unaudited) and March 31, 2020 | 8 | |||||
Notes to Unaudited Condensed Financial Statements | 10 | |||||
Item 2. | Management’s Discussion and Analysis of Financial | 20 | ||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 23 | ||||
Item 4. | Controls and Procedures. | 23 | ||||
PART II. OTHER INFORMATION | ||||||
Item 1. | Legal Proceedings. | 24 | ||||
Item 1A. | Risk Factors. | 24 | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 24 | ||||
Item 3. | Defaults Upon Senior Securities. | 24 | ||||
Item 4. | Mine Safety Disclosures | 24 | ||||
Item 5. | Other Information | 24 | ||||
Item 6. | Exhibits | 24 | ||||
Signatures | 25 |
ITEM 1. FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
Kyto Technology and Life Science, Inc. | |||||||
Condensed Balance Sheets | |||||||
|
|
|
| September 30, |
| March 31, |
|
|
|
|
| 2020 |
| 2020 |
|
|
|
|
| ( Unaudited) |
|
|
|
ASSETS |
|
|
| ||||
Current Assets |
|
|
|
|
| ||
| Cash | $ | 397,442 | $ | 33,756 |
| |
| Receivables |
| - |
| 500 |
| |
| Investments |
| 3,883,748 |
| 2,665,499 |
| |
Total Assets | $ | 4,281,190 | $ | 2,699,755 |
| ||
|
|
|
|
|
|
|
|
LIABILITIES AND NET ASSETS |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
| ||
| Accounts payable & accrued liabilities | $ | 42,459 | $ | 26,394 |
| |
| Accrued liabilities & loans - related party |
| 8,000 |
| 5,750 |
| |
Total Current Liabilities |
| 50,459 |
| 32,144 |
| ||
|
|
|
|
|
|
|
|
Commitments and Contingencies |
| - |
| - |
| ||
|
|
|
|
|
|
|
|
NET ASSETS |
|
|
|
|
| ||
| Preferred stock authorized but not designated, $.01 par value |
|
|
|
|
| |
|
| 19,800,000 shares, none issued and outstanding as of |
|
|
|
|
|
|
| September 30, 2020 and March 31, 2020 |
| - |
| - |
|
| Series A preferred convertible stock, $.01 par value, 4,200,000 shares |
|
|
|
|
| |
|
| designated, 4,200,000 issued and outstanding |
|
|
|
|
|
|
| as of September 30, 2020 and March 31, 2020 |
| 42,001 |
| 42,001 |
|
| Series B preferred convertible stock, $0.01 par value, 6,000,000 shares |
|
|
|
|
| |
|
| designated, 2,337,500 and 812,500 issued and outstanding as of |
|
|
|
|
|
|
| September 30, 2020 and March 31, 2020, respectively |
| 23,375 |
| 8,125 |
|
| Common stock, $.01 par value, 40,000,000 shares |
|
|
|
|
| |
|
| authorized, 5,836,832 issued and outstanding as of |
|
|
|
|
|
|
| September 30, 2020 and March 31 2020 |
| 58,368 |
| 58,368 |
|
| Additional paid-in capital |
| 37,211,970 |
| 35,943,369 |
| |
| Accumulated deficit |
| (33,104,983) |
| (33,384,252) |
| |
Total net assets |
| 4,230,731 |
| 2,667,611 |
| ||
|
|
|
|
|
|
|
|
Total liabilities and net assets | $ | 4,281,190 | $ | 2,699,755 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 these unaudited condensed financial statements.
(Unaudited)
|
|
|
| For the Three months ended September 30, |
|
| For the Six months ended September 30, | ||||
|
|
|
| 2020 |
| 2019 |
|
| 2020 |
| 2019 |
INVESTMENT INCOME |
|
|
|
|
|
|
|
|
| ||
|
| Interest on loans | $ | - | $ | - |
| $ | - | $ | - |
|
| Other interest and other income |
| - |
| 5,700 |
|
| 500 |
| 8,950 |
|
| Total investment income |
| - |
| 5,700 |
|
| 500 |
| 8,950 |
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
| ||
|
| Management Fees |
| - |
| - |
|
| - |
| - |
|
| Interest expense |
| - |
| - |
|
| - |
| - |
|
| Banking and professional fees |
| 63,605 |
| 20,291 |
|
| 76,543 |
| 28,952 |
|
| Other operating expenses |
| 96,506 |
| 44,762 |
|
| 122,936 |
| 240,949 |
|
| Total expenses |
| 160,111 |
| 65,053 |
|
| 199,479 |
| 269,901 |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment loss |
| (160,111) |
| (59,353) |
|
| (198,979) |
| (260,951) | ||
|
|
|
|
|
|
|
|
|
|
|
|
| Net realized gain (loss) from investment |
| - |
| - |
|
| - |
| - | |
| Net change in unrealized gain (loss) from investment |
| 478,248 |
| (61,046) |
|
| 478,248 |
| (61,046) | |
| Net change in unrealized gain (loss) from hedging activities |
| - |
| - |
|
| - |
| - | |
| Net realised and change in unrealized gain (loss) from investment and hedging activities | $ | 478,248.00 | $ | (61,046) |
| $ | 478,248 | $ | (61,046) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in net assets resulting from operations | $ | 318,137 | $ | (120,399) |
| $ | 279,269 | $ | (321,997) | |
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
|
|
|
|
|
|
|
| ||
| Net increase (decrease) in net assets resulting from operations per share | $ | 0.05 | $ | (0.02) |
| $ | 0.05 | $ | (0.06) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding |
| 5,836,832 |
| 5,836,832 |
|
| 5,836,832 |
| 5,836,832 | |
|
|
|
|
|
|
|
|
|
|
|
|
Fully diluted earnings per share |
|
|
|
|
|
|
|
|
| ||
| Net increase (decrease) in net assets resulting from operations per share | $ | 0.02 | $ | (0.02) |
| $ | 0.02 | $ | (0.06) | |
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding |
| 17,987,040 |
| 5,836,832 |
|
| 17,058,856 |
| 5,836,832 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Changes in Net Assets for the Three months and Six months ended September 30, 2020 | ||||||||||||||||||
( Unaudited) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred A |
| Preferred A Stock |
| Preferred B |
| Preferred B Stock |
| Common |
| Common Stock |
| Additional Paid-in |
| Accumulated |
|
|
|
| Stock # |
| Amount |
| Stock # |
| Amount |
| Stock # |
| Amount |
| Capital |
| Deficit |
| Total |
Balance, Jun 30, 2020 |
| 4,200,000 | $ | 42,001 |
| 1,281,250 | $ | 12,188 |
| 5,836,832 | $ | 58,368 | $ | 36,315,354 | $ | (33,423,120) | $ | 3,004,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment loss |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (160,111) |
| (160,111) |
Net realized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Net change in unrealized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 478,248 |
| 478,248 |
Net change in unrealized loss from hedging activities |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Dividends and distributions |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Sale of Series B Preferred stock at $0.80 per share |
| - |
| - |
| 1,056,250 |
| 11,187 |
| - |
| - |
| 883,813 |
| - |
| 895,000 |
Compensation expense on stock options |
| - |
| - |
| - |
| - |
| - |
| - |
| 12,803 |
| - |
| 12,803 |
Balance, September 30, 2020 |
| 4,200,000 | $ | 42,001 |
| 2,337,500 | $ | 23,375 |
| 5,836,832 | $ | 58,368 | $ | 37,211,970 | $ | (33,104,983) | $ | 4,230,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2020 |
| 4,200,000 | $ | 42,001 |
| 812,500 | $ | 8,125 |
| 5,836,832 | $ | 58,368 | $ | 35,943,369 | $ | (33,384,252) | $ | 2,667,611 |
Net investment loss |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (198,979) |
| (198,979) |
Net realized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Net change in unrealized gain from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 478,248 |
| 478,248 |
Net change in unrealized loss from hedging activities |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Dividends and distributions |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Sale of Series B Preferred stock at $0.80 per share |
| - |
| - |
| 1,525,000 |
| 15,250 |
| - |
| - |
| 1,254,750 |
| - |
| 1,270,000 |
Compensation expense on stock options |
| - |
| - |
| - |
| - |
| - |
| - |
| 13,851 |
| - |
| 13,851 |
Balance, September 30, 2020 |
| 4,200,000 | $ | 42,001 |
| 2,337,500 | $ | 23,375 |
| 5,836,832 | $ | 58,368 | $ | 37,211,970 | $ | (33,104,983) | $ | 4,230,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kyto Technology and Life Science, Inc. | ||||||||||||||||||
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statements of Changes in Net Assets for the Three months and Six months ended September 30, 2019 | ||||||||||||||||||
( Unaudited) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred A |
| Preferred A Stock |
| Preferred B |
| Preferred B Stock |
| Common |
| Common Stock |
| Additional Paid-in |
| Accumulated |
|
|
|
| Stock # |
| Amount |
| Stock # |
| Amount |
| Stock # |
| Amount |
| Capital |
| Deficit |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2019 |
| 3,693,750 | $ | 36,938 |
| - | $ | - |
| 5,836,832 | $ | 58,368 | $ | 34,944,380 | $ | (32,812,451) | $ | 2,227,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment loss |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (59,353) |
| (59,353) |
Net realized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Net change in unrealized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (61,046) |
| (61,046) |
Net change in unrealized loss from hedging activities |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Dividends and distributions |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Sale of Series A Preferred stock at $0.80 per share |
| 506,250 |
| 5,062 |
| - |
| - |
| - |
| - |
| 399,938 |
| - |
| 405,000 |
Balance, September 30, 2019 |
| 4,200,000 | $ | 42,000 |
| - | $ | - |
| 5,836,832 | $ | 58,368 | $ | 35,344,318 | $ | (32,932,850) | $ | 2,511,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2019 |
| 2,612,500 | $ | 26,125 |
| - | $ | - |
| 5,836,832 | $ | 58,368 | $ | 34,090,092 | $ | (32,610,853) | $ | 1,563,732 |
Net investment loss |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (260,951) |
| (260,951) |
Net realized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Net change in unrealized loss from investment |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| (61,046) |
| (61,046) |
Net change in unrealized loss from hedging activities |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Dividends and distributions |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
Sale of Series A Preferred stock at $0.80 per share |
| 1,587,500 |
| 15,875 |
| - |
| - |
| - |
| - |
| 1,254,125 |
| - |
| 1,270,000 |
Compensation expense on stock options |
| - |
| - |
| - |
| - |
| - |
| - |
| 101 |
| - |
| 101 |
Balance, September 30, 2019 |
| 4,200,000 | $ | 42,000 |
| - | $ | - |
| 5,836,832 | $ | 58,368 | $ | 35,344,318 | $ | (32,932,850) | $ | 2,511,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
| For the six months ended |
| For the six months ended |
|
|
|
|
| September 30, 2020 |
| September 30, 2019 |
|
|
|
|
|
|
|
|
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
| ||
| Net increase (decrease) in net assets resulting from operations |
| $ | 279,269 | $ | (321,997) | |
| Adjustments to reconcile net increase (decrease) in net assets resulting |
|
|
|
|
| |
|
| from operations to net cash used in operating activities |
|
|
|
|
|
|
| Net change in unrealised (gain) loss on investments |
|
| (478,248) |
| 61,046 |
|
| Option compensation expense |
|
| 13,851 |
| 101 |
|
|
|
|
|
|
|
|
| Changes in operating assets and liabilities |
|
|
|
|
| |
|
| Receivables |
|
| 500 |
| (3,300) |
|
| Investments |
|
| (740,000) |
| (673,497) |
|
| Deferred fundraising expenses |
|
| - |
| (209,596) |
|
| Accounts payable and accrued liabilities |
|
| 15,064 |
| 35,536 |
| Net cash used in operating activities |
|
| (909,564) |
| (1,111,707) | |
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| ||
|
| Proceeds from sales of Series A Preferred stock |
|
| - |
| 1,270,000 |
|
| Proceeds from sales of Series B Preferred stock |
|
| 1,270,000 |
| - |
|
| Receipt of SBA loan |
|
| 1,000 |
| - |
|
| Advances from related party |
|
| 2,250 |
| 1,500 |
| Net cash provided by financing activities |
|
| 1,273,250 |
| 1,271,500 | |
|
|
|
|
|
|
|
|
Net increase in cash |
|
| 363,686 |
| 159,793 | ||
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
| 33,756 |
| 93,634 | ||
Cash at end of period |
| $ | 397,442 | $ | 253,427 | ||
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
|
| ||
|
| Interest Paid |
| $ | - | $ | - |
|
| Taxes Paid |
| $ | 800 | $ | 800 |
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities |
| $ | - | $ | - | ||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited condensed financial statements. |
Kyto Technology and Life Science Inc
Schedule of these unaudited condensed financial statements.
As of September 30, 2020
Portfolio Company | Industry | Investment | Approx % Ownership |
| Cost |
| Fair value | Percentage of net assets (a) |
|
|
|
|
|
|
|
|
|
SAFE Investment - Not readily marketable |
|
|
|
|
|
|
| |
Mitre Medical Corp | Life Science | SAFE | 0.6% | $ | 75,000 | $ | 75,000 | 1.8% |
Total SAFE Investment - Not readily marketable |
| $ | 75,000 | $ | 75,000 | 1.8% | ||
|
|
|
|
|
|
|
|
|
Preferred Stock Investment - Not readily marketable |
|
|
|
|
|
| ||
Altis Biosystems Inc. | Life Science | Series Seed-1 Preferred Stock | 0.6% | $ | 50,000 | $ | 50,000 | 1.2% |
Cnote Group, Inc | Fintech | Seed 2 Preferred Stock | 0.6% |
| 50,000 |
| 59,783 | 1.4% |
Cnote Group, Inc | Fintech | Seed 3 Preferred Stock | 8.3% |
| 51,500 |
| 66,247 | 1.6% |
Colabs Inc | Life Science | Series A Preferred Stock | 5.0% |
| 50,000 |
| 50,000 | 1.2% |
Deep Blue Medical Advances Inc | Life Science | Series A Preferred Stock | 1.0% |
| 49,997 |
| 49,997 | 1.2% |
Eumentis Thereapeutics Inc | Life Science | Series A Preferred Stock | 1.0% |
| 100,000 |
| 100,000 | 2.4% |
FemtoDX Inc | Life Science | Series A Preferred Stock | 5.0% |
| 100,000 |
| 100,000 | 2.4% |
Inhalon Biopharma Inc | Life Science | Series A Preferred Stock | 1.0% |
| 99,997 |
| 99,997 | 2.4% |
Light Line Medical Inc | Life Science | Convertible note, converted to Preference Stock | 1.3% |
| 30,000 |
| 38,031 | 0.9% |
Light Line Medical Inc | Life Science | Convertible note, converted to Preference Stock | 0.8% |
| 70,000 |
| 88,739 | 2.1% |
Lowell Therapeutics Inc | Life Science | Series A Preferred Stock | 5.0% |
| 50,000 |
| 50,000 | 1.2% |
Lowell Therapeutics Inc | Life Science | Series A Preferred Stock | 5.0% |
| 50,000 |
| 50,000 | 1.2% |
Neuroflow Inc | Life Science | Series A Seed-2 Stock | 7.5% |
| 150,000 |
| 150,000 | 3.5% |
Otomagnetics Inc | Life Science | Series A-1 Preferred shares at $6..04675 | 3.3% |
| 100,000 |
| 100,000 | 2.4% |
Promaxo, Inc. | Life Science | Convertible note, converted to Preference Stock | 1.4% |
| 250,000 |
| 531,738 | 12.6% |
Seal Rock Therapeutics, Inc. | Life Science | Convertible note, converted to Preference Stock | 6.0% |
| 78,000 |
| 80,329 | 1.9% |
Shyft (FKA Crater Group Inc) | Technology | Convertible note, converted to Preference Stock | 3.4% |
| 51,500 |
| 97,940 | 2.3% |
Shyft (FKA Crater Group Inc) | Technology | Convertible note, converted to Preference Stock | 1.8% |
| 50,000 |
| 64,626 | 1.5% |
Trellis Bioscience LLC | Life Science | Class B Preferred Shares with warrants | 0.5% |
| 50,000 |
| 50,000 | 1.2% |
Trellis Bioscience LLC | Life Science | Class B Preferred Shares with warrants | 0.5% |
| 50,000 |
| 50,000 | 1.2% |
Valfix Medical Inc | Life Science | Series Seed Preferred Stock | 2.9% |
| 50,000 |
| 50,000 | 1.2% |
Valfix Medical Inc | Life Science | Series Seed Preferred Stock | 2.9% |
| 50,000 |
| 50,000 | 1.2% |
Visgenx inc | Life Science | Series Seed Preferred Stock | 1.1% |
| 25,000 |
| 25,648 | 0.6% |
Visgenx inc | Life Science | Series Seed Preferred Stock | 0.7% |
| 15,003 |
| 15,392 | 0.4% |
Visgenx Inc | Life Science | Series Seed Preferred Stock | 6.0% |
| 30,000 |
| 30,777 | 0.7% |
Total Preferred Stock Investment - Not readily marketable |
| $ | 1,700,997 | $ | 2,099,244 | 49.6% | ||
|
|
|
|
|
|
|
|
|
Common Stock Investment - Not readily marketable |
|
|
|
|
|
| ||
Boardwalk Tech | Technology | 150,000 units of common stock and warrant | 4.9% | $ | 73,500 | $ | 64,500 | 1.5% |
Bendarx | Life Science | Common shares |
|
| 100,000 |
| 100,000 | 2.4% |
Total Common Stock Investment - Not readily marketable |
| $ | 173,500 | $ | 164,500 | 3.9% | ||
|
|
|
|
|
|
|
|
|
Other Investment - Not readily marketable |
|
|
|
|
|
| ||
Exodos Life Sciences LP | Life Science | General Partnership Class A-1 Unit | 1.5% | $ | 206,000 | $ | 206,000 | 4.9% |
Enduralock LLC | Technology | Unit of LLC | 1.5% |
| 30,000 |
| 30,000 | 0.7% |
Green Sun Medical LLC | Life Science | Class A-1 units | 0.6% |
| 50,000 |
| 50,000 | 1.2% |
Green Sun Medical LLC | Life Science | Class A-1 units | 0.3% |
| 25,000 |
| 25,000 | 0.6% |
Green Sun Medical LLC | Life Science | Class A-1 units | 0.3% |
| 25,000 |
| 25,000 | 0.6% |
Total Other Investment - Not readily marketable |
| $ | 336,000 | $ | 336,000 | 7.9% | ||
|
|
|
|
|
|
|
|
|
Convertible Loan Investment - Not readily marketable |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 | 2.5% | $ | 100,000 | $ | 117,184 | 2.8% |
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 | 5.0% |
| 25,000 |
| 28,036 | 0.7% |
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 | 1.3% |
| 50,000 |
| 52,586 | 1.2% |
Avisi Teechnologies Inc. | Life Science | Convertible Debenture 8% interest maturing in 24 months | 10.0% |
| 50,000 |
| 50,679 | 1.2% |
Basepaws Inc | Technology | Convertible note, 1%, due April 30, 2020 | 2.6% |
| 50,000 |
| 50,959 | 1.2% |
Beam Semiconductor Inc | Technology | Convertible note, 8%, due June 30, 2020 | 2.5% |
| 150,000 |
| 165,066 | 3.9% |
Beam Semiconductor Inc | Technology | Convertible note, 8%, due March 5, 2021 | 5.6% |
| 50,000 |
| 52,290 | 1.2% |
Cyberdontics Inc | Life Science | Convertible note, 8%, due September 4, 2022 | 2.1% |
| 30,000 |
| 32,571 | 0.8% |
Cyberdontics Inc | Life Science | Convertible note, 8%, due February 27, 2023 | 6.7% |
| 35,000 |
| 36,651 | 0.9% |
Every Key Inc | Technology | Convertible note, 5%, due December 11, 2023 | 10.0% |
| 100,000 |
| 104,027 | 2.5% |
INBay Technology Inc | Technology | Convertible note, 24%, due October 26, 2020 | 0.3% |
| 50,000 |
| 57,726 | 1.4% |
INBay Technology Inc | Technology | Convertible note, 12%, due July 9, 2021 | 8.3% |
| 30,000 |
| 32,952 | 0.8% |
INBay Technology Inc | Technology | Convertible note, 12%, due February 21, 2022 | 5.0% |
| 50,000 |
| 53,649 | 1.3% |
Kitotech Medical Inc | Life Science | Convertible note, 6%, due December 19, 2020 | 5.0% |
| 100,000 |
| 110,701 | 2.6% |
Lifewave Biomedical Inc | Life Science | Convertible note, 6%, due December 31, 2020 | 0.4% |
| 30,000 |
| 31,933 | 0.8% |
Lifewave Biomedical Inc | Life Science | Convertible note, 6%, due December 31, 2020 | 5.0% |
| 70,000 |
| 72,716 | 1.7% |
SageMedic Corp | Life Science | Convertible note, 8%, due April 12, 2021 | 5.0% |
| 50,000 |
| 55,885 | 1.3% |
Sensing Electromagnetic Plus corp | Technology | Convertible note, 6%, due August 29, 2020 | 0.1% |
| 50,000 |
| 1 | 0.0% |
Sensing Electromagnetic Plus corp | Technology | Convertible note, 5%, due January 24, 2021 | 1.3% |
| 11,048 |
| 1 | 0.0% |
Xpan Inc | Life Science | Convertible Debenture 8% interest maturing in 24 months at 20% discount on conversion subject to appox $ 3 million cap (4.0 Can Dollars) | 0.7% |
| 25,000 |
| 25,548 | 0.6% |
Xpan Inc | Life Science | Convertible Debenture 8% interest maturing in 24 months at 20% discount on conversion subject to appox $ 3 million cap (4.0 Can Dollars) | 1.4% |
| 25,000 |
| 25,542 | 0.6% |
Xpan Inc | Life Science | Convertible note, 8%, due March 4, 2022 | 3.3% |
| 50,000 |
| 52,301 | 1.2% |
Total Convertible Loan Investment - Not readily marketable |
| $ | 1,181,048 | $ | 1,209,004 | 28.6% | ||
|
|
|
|
|
|
|
|
|
Total |
|
|
| $ | 3,466,545 | $ | 3,883,748 | 91.8% |
(a) Percentages are based on net assets of $4,230,731 as of September 30, 2020 |
|
|
|
|
|
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 Technology and Life Science Inc
Schedule of these unaudited condensed financial statements.
As of March 31, 2020
Portfolio Company | Industry | Investment and approximate ownership |
| Cost |
| Fair value | Percentage of net assets (a) | |
SAFE Investment - Not readily marketable |
|
|
|
|
|
|
| |
Cnote Group, Inc | Fintech | 4.3 % ownership | $ | 51,500 | $ | 51,500 | 1.9% | |
Mitre Medical Corp | Life Science | 0.6 % ownership |
| 75,000 |
| 75,000 | 2.8% | |
Total SAFE Investment - Not readily marketable |
|
| $ | 126,500 | $ | 126,500 | 4.7% | |
|
|
|
|
|
|
|
| |
Preferred Stock Investment - Not readily marketable |
|
|
|
|
|
|
| |
Shyft (FKA Crater Group Inc) | Technology | 3.4 % ownership | $ | 51,500 | $ | 51,500 | 1.9% | |
Colabs Inc | Life Science | 5.0 % ownership |
| 50,000 |
| 50,000 | 1.9% | |
Neuroflow Inc | Life Science | 7.5 % ownership |
| 150,000 |
| 150,000 | 5.6% | |
FemtoDX Inc | Life Science | 42,436 series A preferred stock - 5.0 % ownership |
| 100,000 |
| 100,000 | 3.7% | |
Deep Blue Medical Advances Inc | Life Science | 10,431 series A preferred stock - 1.0 % ownership |
| 49,997 |
| 49,997 | 1.9% | |
Otomagnetics Inc | Life Science | 3.3 % ownership |
| 100,000 |
| 100,000 | 3.7% | |
Trellis Bioscience LLC | Life Science | 0.5 % ownership |
| 50,000 |
| 50,000 | 1.9% | |
Valfix Medical Inc | Life Science | 2.9 % ownership |
| 50,000 |
| 50,000 | 1.9% | |
Trellis Bioscience LLC | Life Science | 0.5% ownership |
| 50,000 |
| 50,000 | 1.9% | |
Total Preferred Stock Investment - Not readily marketable |
|
| $ | 651,497 | $ | 651,497 | 24.4% | |
|
|
|
|
|
|
|
| |
Common Stock Investment - Not readily marketable |
|
|
|
|
|
|
| |
Boardwalk Tech | Technology | 150,000 units of common stock and warrant - 4.9% ownership | $ | 73,500 | $ | 73,500 | 2.8% | |
Total Common Stock Investment - Not readily marketable |
|
| $ | 73,500 | $ | 73,500 | 2.8% | |
|
|
|
|
|
|
|
| |
Other Investment - Not readily marketable |
|
|
|
|
|
|
| |
Exodos Life Sciences LP | Life Science | General Partnership Class A-1 Unit - 1.5 % ownership | $ | 206,000 | $ | 206,000 | 7.7% | |
Enduralock LLC | Technology | Unit of LLC - 1.5 % ownership |
| 30,000 |
| 30,000 | 1.1% | |
Total Other Investment - Not readily marketable |
|
| $ | 236,000 | $ | 236,000 | 8.8% | |
|
|
|
|
|
|
|
| |
Convertible Loan Investment - Not readily marketable |
|
|
|
|
|
|
| |
Seal Rock Therapeutics, Inc. | Life Science | Convertible note, 5%, no fixed term | $ | 78,000 | $ | 78,000 | 2.9% | |
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 |
| 100,000 |
| 100,000 | 3.7% | |
Sensing Electromagnetic Plus corp | Technology | Convertible note, 6%, due August 29, 2020 |
| 50,000 |
| 1 | 0.0% | |
INBay Technology Inc | Technology | Convertible note, 24%, due October 26, 2020 |
| 50,000 |
| 50,000 | 1.9% | |
Basepaws Inc | Technology | Convertible note, 1%, due April 30, 2020 |
| 50,000 |
| 50,000 | 1.9% | |
Kitotech Medical Inc | Life Science | Convertible note, 6%, due December 19, 2020 |
| 100,000 |
| 100,000 | 3.7% | |
Sensing Electromagnetic Plus corp | Technology | Convertible note, 5%, due January 24, 2021 |
| 11,048 |
| 1 | 0.0% | |
Cnote Group, Inc | Fintech | Convertible note, 4%, due December 18, 2020 |
| 50,000 |
| 50,000 | 1.9% | |
Promaxo, Inc. | Life Science | Convertible note, 8%, due September 1, 2020 |
| 250,000 |
| 250,000 | 9.4% | |
Shyft (FKA Crater Group Inc) | Technology | Convertible note, 8%, due March 18, 2020 |
| 50,000 |
| 50,000 | 1.9% | |
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 |
| 25,000 |
| 25,000 | 0.9% | |
SageMedic Corp | Life Science | Convertible note, 8%, due April 12, 2021 |
| 50,000 |
| 50,000 | 1.9% | |
Beam Semiconductor Inc | Technology | Convertible note, 8%, due June 30, 2020 |
| 150,000 |
| 150,000 | 5.6% | |
INBay Technology Inc | Technology | Convertible note, 12%, due July 9, 2021 |
| 30,000 |
| 30,000 | 1.1% | |
Lifewave Biomedical Inc | Life Science | Convertible note, 6%, due December 31, 2020 |
| 30,000 |
| 30,000 | 1.1% | |
Cyberdontics Inc | Life Science | Convertible note, 8%, due September 4, 2022 |
| 30,000 |
| 30,000 | 1.1% | |
Light Line Medical Inc | Life Science | Convertible note, 8%, due September 9, 2021 |
| 30,000 |
| 30,000 | 1.1% | |
Visgenx Inc | Life Science | Convertible note, 6%, due December 31, 2020 |
| 30,000 |
| 30,000 | 1.1% | |
Every Key Inc | Technology | Convertible note, 5%, due December 11, 2023 |
| 100,000 |
| 100,000 | 3.7% | |
Achelios Therapeutics Inc. | Life Science | Convertible note, 8%, due December 31, 2021 |
| 50,000 |
| 50,000 | 1.9% | |
Lifewave Biomedical Inc | Life Science | Convertible note, 6%, due December 31, 2020 |
| 70,000 |
| 70,000 | 2.6% | |
Light Line Medical Inc | Life Science | Convertible note, 8%, due February 10, 2022 |
| 70,000 |
| 70,000 | 2.6% | |
INBay Technology Inc | Technology | Convertible note, 12%, due February 21, 2022 |
| 50,000 |
| 50,000 | 1.9% | |
Cyberdontics Inc | Life Science | Convertible note, 8%, due February 27, 2023 |
| 35,000 |
| 35,000 | 1.3% | |
Xpan Inc | Life Science | Convertible note, 8%, due March 4, 2022 |
| 50,000 |
| 50,000 | 1.9% | |
Beam Semiconductor Inc | Technology | Convertible note, 8%, due March 5, 2021 |
| 50,000 |
| 50,000 | 1.9% | |
Total Convertible Loan Investment - Not readily marketable |
|
|
| 1,639,048 |
| 1,578,002 | 59.2% | |
|
|
|
|
|
|
|
| |
Total |
|
| $ | 2,726,545 | $ | 2,665,499 | 99.9% | |
|
|
|
|
|
|
|
| |
(a) Percentages are based on net assets of $2,667,611 as of March 31, 2020 |
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.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2020
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 B Twelve Inc. In August, 14, 2002, the Company changed its name from B Twelve, Inc. to Kyto Biopharma,BioPharma Inc.
The Company was originally formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other proliferateautoimmune diseases and autoimmune diseases. The Company is currently in the development stage as it is in the process ofhad been looking at a number of strategies to become active. OnceIn April, 2018, the Board adopted a new business plan focused on the development of early stage technology and life science businesses through early stage investment funding. The Company has recruited a number of experienced investment consultants from a network that includes angel investors, corporate managers, and successful entrepreneurs across a number of technology and life science products and markets and relies on input from these advisors in conducting due diligence and making investment decisions. In order to offset the risk in early stage investing, the Company works with angel investment groups and participates only after these groups have completed due diligence and committed to invest, and does not typically invest more than $250,000 in any single investment. Generally, the Company’s investments represent less than 5% ownership interests, and the Company therefore has no effective control or influence over the management or commercial decisions of the Companies in which it invests. The Company plans to generate revenue from realised gains from the sale of the businesses in which it has settledinvested. Generally, it is expected that investments will be realised from an exit within a period of four years following investment. Such sales are outside its control and depend on M&A transactions which may result in cash or equity proceeds. Accordingly, it is difficult to forecast revenue, net income, and cash flow. At March 31, 2020, management determined that the strategy,Company was an investment company for purposes of ASC 946 disclosure, and committed to follow the specialized accounting and reporting guidance of contained therein. Other than making its initial investments in its portfolio companies, the Company does not provide any financial support to any of its investees.
The Company has no regular employees, full-time or part-time. The chief executive officer of Kyto Technology and Life Science, Inc. is acting as a consultant to the Company and does not receive contractual compensation for his services in the form of cash. For the three months and six months ended September 30, 2020 he was granted 215,000 stock options and an ex gratia bonus of $50,000.
The Company has created a portfolio of minority investments in early-stage start-up companies and derives its revenue opportunity from the sale of those investments. Such sales are outside its control and depend on M&A transactions which may result in cash or equity proceeds. Accordingly, it is difficult to forecast revenue, net income, and cash flow. The Company currently has approximately $400,000 in the bank and is now actively marketing a $3 million Series B round with a target close date of December 2020. The average monthly expenses for the six months ended September 30, 2020 were approximately $33,000 per month so the Company has sufficient cash to fund its operations through the close of its Series B round if it simply manages its existing investments. However it plans to ramp up monthly expenditure to market and ensure the success of the Series B round, whereupon, if successful it will have sufficient funding for further investments and ongoing operations. In the event that the Series B close is delayed, management has the ability to slow down expenditure and defer future investment opportunities to balance its cash flow accordingly. While there is a degree of uncertainty in this business model, the Company has two viable alternative options to ensure continuity of liquidity and ongoing operations. However, there is no assurance that the Company will developbe able to continue as a going concern, and stay at home orders, and general economic uncertainties arising out of the current Covid-19 epidemic create additional delay and uncertainty. To date there has been no disruption to the Company’s business operations, and none have been reported among its portfolio investment companies.
NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(A)BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the three and six months ended September 30, 2020 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements of the Company for the year ended March 31, 2020, included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2020.
The company’s financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments. The company carries its liabilities at amounts payable, net of unamortized premiums or discounts. The company does not currently plan to elect to carry its liabilities at fair value. Net assets are calculated as the carrying amounts of assets, including the fair value of investments, less the carrying amounts of its liabilities.
(B)REVENUE RECOGNITION
The Company derives revenue from the sale of investments and occasional 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 manage the timing or acceptance of liquidity events that will realize its investments, nor the ability to predict when they may happen, although as a guideline, 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 receipt of net proceeds, after deducting related transaction expenses. As an Investment Company, we recognize the net increase or decrease in fair market value of our investments as investment income. The Company is in regular contact with the management of its portfolio investment companies to provide the basis for an acquisitionimpairment reviews, revaluation assessments and forecasting future revenue and fund raising needs.
(C)INCOME TAXES
The Company accounts for income taxes under the meansFinancial Accounting Standards Accounting Standard Codification Topic 740 "Accounting for Income Taxes" ("Topic 740"). Under Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to achieve its goal.
(D)USE OF ESTIMATES
In preparing financial statements, management 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 2017the three and six months ended September 30, 2020 and March 31, 2020 include the valuation allowance of investments, deferred tax assets.
(E)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 cash equivalents. There were no cash equivalents at December 31, 2017September 30, 2020 and March 31, 2017,2020, respectively.
(F)CONCENTRATIONS
The Company maintains its cash in bank checking and deposit accounts, which, at times, may exceed federally insured limits. As of December 31, 2017,September 30, 2020 the Company did not have anyhad approximately $150,000 of deposits in excess of federally insured limits.limits (March 31, 2020 $0.). The Company has not experienced any losses in such accounts through December 31, 2017September 30, 2020 and March 31, 2017,2020, respectively.
(G)STOCK-BASED COMPENSATION
Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” requires generally that all equity awards granted to employees and consultants be accounted for at “fair value.” This fair value is measured at grant date for stock settled awards, and 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 computed using the Black Scholes options pricing model. The Company has obtainedgranted 510,000 and continues0 options to obtain a large amount of its funding from loansconsultants and equity funding from a principal stockholder related to a director ofadvisors during the Company.three months ended September 30, 2020 and September 30, 2019, respectively.
(H)NET LOSSINCOME (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 preferred stock, stock options and warrants, have not been included in the calculation, as their effect is anti-dilutive for the periods presented.
Number of shares used in calculation of diluted EPS | |
Common stock | 5,836,832 |
Series A preferred stock | 4,200,000 |
Series B preferred stock | 2,337,500 |
Stock option | 2,000,000 |
Warrant | 4,200,000 |
18,574,332 |
(I)INVESTMENT AND VALUATION OF INVESTMENT AT FAIR VALUE
The Company reviews the performance of the underlying investments including, management reports, press releases, web site announcements and progress reports, Carta equity updates, management interviews and, where accessible, financial reports, 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. The Company recognized impairment of one of its investments which was written down by $61,046 in September 2019. The Company has not experienced any impairment write-downs in any prior or subsequent periods.
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.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.
The Company has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the extent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.
For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and the fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The market approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our management and board.
In determining the appropriate fair value of an investment using these approaches, the most significant information and assumption may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparable, the principal market and enterprise values, environmental factors, among other factors.
The accompanying unaudited condensed financial statementsestimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of Kyto Biopharma, Inc. (the "Company")future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been prepared pursuantused had a broader market for the investments existed.
The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the rules and regulationsvaluation. The three levels of valuation hierarchy are defined as follows:
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 market data, which require the use of the Securitiesreporting entity’s own assumptions.
(J)SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS
In March 2020, the Company adopted Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and Exchange Commission (the "SEC”). Certaincarries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments.
In June 2016, the FASB issued ASU 2016-13 (as amended through November 2019), Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to incorporate considerations of historical information, current information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally acceptedreasonable and supportable forecasts. This ASU also expands disclosure requirements. ASU 2016-13 is effective for the Company beginning in the United Statesfirst quarter of America2020. The guidance will be applied using the modified-retrospective approach. The adoption of this ASU did not have been condensed or omitted pursuanta material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to such SEC rulesthe general principles in Topic 740 and regulations. Nevertheless,amends existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company is in the Company believes thatprocess of evaluating the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed financial statements should be read in conjunction with the auditedimpacts of this guidance on its consolidated financial statements and notes thereto included in the Company's March 31, 2017 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, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.
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.
(K)VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE
During the fourth quarter of fiscal 2020, the Company made a voluntary change in accounting principle by preparing the company’s financial statements using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946).
The Company made this voluntary change in principle because it believes that the Company now met the characteristics and requirement of being an investment company under ASC 946, and the presentation under ASC 946 better reflects the business purpose and enhances the comparability of its financial statements with many of its industry peers. In accordance with U.S. GAAP, the change was reflected in the financial statements through retrospective application as follows:
| June 30, 2019 | |||||
|
| Prior to |
| Effect of |
|
|
|
| Change |
| Change |
| Adjusted |
Cash | $ | 325,308 | $ | - | $ | 325,308 |
Receivable |
| 1,000 |
| - |
| 1,000 |
Investment |
| - |
| 1,821,545 |
| 1,821,545 |
Deferred fundraising expenses |
| 124,013 |
| - |
| 124,013 |
Current assets |
| 450,321 |
| 1,821,545 |
|
|
|
|
|
|
|
|
|
Investment |
| 1,821,545 |
| (1,821,545) |
| - |
Total assets | $ | 2,271,866 | $ | - | $ | 2,271,866 |
There have been no further changes in the three or six months ended September 30, 2020.
(L)RECLASSIFICATION POLICY
Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on the previously reported net increase (decrease) in net assets resulting from operations.
NOTE 3 – COMMITMENTS AND CONTINGENCIES
The Company has no commitments or contingencies.
At December 31, 2017September 30, 2020 and March 31, 2017,2020, the Company had accrued and owed $89,067$8,000 and $68,107,$5,750, respectively, to a related partyofficers of the Company. Company for service fees, telephone and car allowance.
NOTE 5 – INVESTMENTS
The loans are non-interest bearing, unsecured and due on demand. The loans are included in loans payable, related party onfollowing table summarizes the accompanying balance sheet.
|
|
| September 30, 2020 |
|
| March 31, 2020 |
|
Number of portfolio companies |
| 33 |
|
| 28 |
| |
Fair value | $ | 3,883,748 |
| $ | 2,665,499 |
| |
Cost |
| $ | 3,466,545 |
| $ | 2,726,545 |
|
% of portfolio at fair value |
|
|
|
|
|
| |
| Convertible notes |
| 1,209,004 | 31% |
| 1,578,002 | 59% |
| Preferred stock |
| 2,099,244 | 54% |
| 651,497 | 24% |
| Common stock |
| 164,500 | 4% |
| 73,500 | 3% |
| SAFE |
| 75,000 | 2% |
| 126,500 | 5% |
| Other ownership units |
| 336,000 | 9% |
| 236,000 | 9% |
| Total | $ | 3,883,748 | 100% | $ | 2,665,499 | 100% |
Our investment portfolio represents approximately 91.8% of our net assets at September 30, 2020 and 99.9% at March 31, 2020. For convertible loans the remaining balancevaluation is increased to reflect accrued interest. For preferred stock investments or convertible loans that convert to preferred stock, the Company values their investment at the price paid by investors unless there has been a subsequent round, in which case the Company uses a valuation midway between the price of its preferred stock and the price paid by investors in the accrued liabilities-relatedlatest funding round. For common stock of publicly traded portfolio companies the Company uses closing price on the last day of the quarter. For other investments including common stock, SAFEs and units, the investments are carried at cost unless there are other available metrics, such as relevant market multiples and comparable company valuations, company specific-financial data including actual and projected results and, independent third party account for the above services was $196,000 and $148,000, respectively.
The following table presents fair value measurements of December 31, 2017,investments, by major class, as of September 30, 2020 and March 31, 2017,2020, according to the fair value hierarchy:
Description | Level 1 | Level 2 | Level 3 | Total |
September 30, 2020 |
|
|
|
|
Convertible notes | - | - | $ 1,209,004 | $ 1,209,004 |
Preferred stock | - | - | 2,099,244 | 2,099,244 |
SAFEs | - | - | 75,000 | 75,000 |
Common stock | - | - | 164,500 | 164,500 |
Other ownership interests | - | - | 336,000 | 336,000 |
Total | $ - | $ - | $ 3,883,748 | $ 3,883,748 |
|
|
|
|
|
Description | Level 1 | Level 2 | Level 3 | Total |
March 31, 2020 |
|
|
|
|
Convertible notes | - | - | $ 1,528,002 | $ 1,528,002 |
Preferred stock | - | - | 701,497 | 701,497 |
SAFEs | - | - | 73,500 | 73,500 |
Common stock | - | - | 126,500 | 126,500 |
Other ownership interests | - | - | 236,000 | 236,000 |
Total | $ - | $ - | $ 2,665,499 | $ 2,665,499 |
We focus on making our investments in the United States, Canada and Israel. The investments in Canada and Israel were denominated and can be settled in USD.
As of March 31, 2020 |
|
|
|
|
| America | Canada | Israel | Total |
Fair value beginning of year | $ 2,170,499 | $ 245,000 | $ 250,000 | $ 2,665,499 |
New investments | 540,000 | 150,000 | 50,000 | 740,000 |
Proceeds from sale of investments | - | - | - | - |
Realized gains | - | - | - | - |
Change in value of investments | 438,953 | 21,947 | 17,348 | 478,248 |
Fair value September 30, 2020 | $ 3,149,452 | $ 416,947 | $ 317,348 | $ 3,883,747 |
|
|
|
|
|
As of March 31, 2019 |
|
|
|
|
| America | Canada | Israel | Total |
Fair value beginning of year | $ 1,448,048 | $ 50,000 | $ - | $ 1,498,048 |
New investments | 783,497 | 195,000 | 250,000 | $ 1,228,497 |
Proceeds from sale of investments | - | - | - | - |
Realized gains | - | - | - | - |
Change in value of investments | (61,046) | - | - | (61,046) |
Fair value March 31, 2020 | $ 2,170,499 | $ 245,000 | $ 250,000 | $ 2,665,499 |
Working on the experience of our technical advisors, we limit our investments to fintech, technology, and life sciences
As of March 31, 2020 |
|
|
|
|
| Fintech | Technology | Life science | Total |
Fair value beginning of year | $ 101,500 | $ 685,002 | $ 1,878,997 | $ 2,665,499 |
New investments |
|
| 740,000 | 740,000 |
Proceeds from sale of investments | - | - | - | - |
Realized gains | - | - | - | - |
Change in value of investments | 24,530 | 37,769 | 415,950 | 478,249 |
Fair value September 30, 2020 | $ 126,030 | $ 722,771 | $ 3,034,947 | $ 3,883,748 |
|
|
|
|
|
As of March 31, 2019 |
|
|
|
|
| Fintech | Technology | Life science | Total |
Fair value beginning of year | $ 101,500 | $ 262,548 | $ 1,134,000 | $ 1,498,048 |
New investments |
| 483,500 | 744,997 | 1,228,497 |
Proceeds from sale of investments | - | - | - | - |
Realized gains | - | - | - | - |
Change in value of investments | - | (61,046) | - | (61,046) |
Fair value March 31, 2020 | $ 101,500 | $ 685,002 | $ 1,878,997 | $ 2,665,499 |
We invest in early stage private companies developing products or solutions in the fields of fintech, technology and life sciences. Typically we are investing in interest bearing notes that may be convertible into equity securities upon the completion of qualified subsequent financings, preferred stock, SAFEs or other forms of ownership.
As of March 31, 2020 |
|
|
|
|
|
|
| Convertible notes | Preferred stock | SAFEs | Common stock | Other ownership interests | Total |
|
|
|
|
|
|
|
Fair value beginning of year | $ 1,528,002 | $ 701,497 | $ 73,500 | $ 126,500 | $ 236,000 | $ 2,665,499 |
Conversions to preferred stock | (597,984) | 678,313 | (80,329) |
|
| - |
New investments | 100,000 | 440,000 | - | 100,000 | 100,000 | 740,000 |
Proceeds from sale of investments | - | - | - | - | - | - |
Realized gains | - | - | - | - | - | - |
Change in value of investments | 178,986 | 279,434 | 81,829 | (62,000) | - | 478,249 |
Fair value September 30, 2020 | $ 1,209,004 | $ 2,099,244 | $ 75,000 | $ 164,500 | $ 336,000 | $ 3,883,748 |
|
|
|
|
|
|
|
| Convertible notes | Preferred stock | SAFEs | Common stock | Other ownership interests | Total |
As of March 31, 2019 |
|
|
|
|
|
|
Fair value beginning of year | $ 764,048 | $ 401,500 | $ - | $ 126,500 | $ 206,000 | $ 1,498,048 |
New investments | 825,000 | 299,997 | 73,500 | - | 30,000 | 1,228,497 |
Proceeds from sale of investments | - | - | - | - | - | - |
Realized gains | - | - | - | - | - | - |
Change in value of investments | (61,046) | - | - | - | - | (61,046) |
Fair value March 31, 2020 | $ 1,528,002 | $ 701,497 | $ 73,500 | $ 126,500 | $ 236,000 | $ 2,665,499 |
NOTE 6 – EQUITY
(A)PREFERRED STOCK
Series A
As of September 30, 2020 and March 31, 2020, there are 2,000,0004,200,000 shares authorizedof Series A preferred stock (“Series A”) designated at a par value of $.01 per share. These shares were sold as investment Units at $0.80 per Unit in a private placement to accredited investors. The Units consist of one Series A share and no preferred sharesone warrant per Unit. The Series A can either be converted at the option of the holder into Common Shares at a conversion price of $0.80 per share or it shall be converted upon listing of the Company issued and outstanding.
Series B
As of September 30, 2020 and March 31, 2020, there are, 6,000,000 shares of Series B preferred stock (“Series B”) designated at a par value of $.01 per share. These shares were sold in a private placement to accredited investors. The Series B can either be converted at the option of the holder into Common Shares at a conversion price of $0.80 per share or it shall be converted upon listing of the Company on Nasdaq, NYSE or OTC markets or the closing of one or more of a series financings resulting in aggregate proceeds of $10,000,000. In the event the Company issues additional securities at a purchase price less than the current conversion price, the conversion price shall be adjusted as defined. In the event of any liquidation or winding up of the Company, the holders of the Series B shall be entitled to receive in preference to the holders of Series A and Common Shares, a per share amount equal to the greater of i) one time (1x) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference – currently $0.80 per share) or ii) such amount per share as would have been payable had all shares of Series B been converted into common stock immediately prior to such liquidating event. The shares of Series B shall be voting on an as-converted basis with the common stock. As of September 30, 2020 and March 31, 2020, there are, respectively, 2,337,500 and 812,500 shares of Series B outstanding. The Company sold 1,056,250 shares of Series B preferred for $895,000 during the three months ended September 30, 2020 and 1,525,000 shares of Series B preferred for $1,270,000 during the six months ended September 30, 2020.
(B)COMMON STOCK
The Company has authorized 40,000,000 shares of common stock at a par value of $0.01 per share. As of September 30, 2020, and March 31, 2020 a total of 5,836,832 shares of the Company’s common stock were issued and outstanding.
(C)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 July 2019, the majority of the shareholders of the Company approved the introduction of the Kyto Technology and Life Science 2019 Stock Option and Incentive Plan (“Plan”), and reserved 2 million shares for issuance to directors, officers, consultants and advisors. During the six months ended September 30, 2020 and 2019, the Company issued a total of 630,000 and 0 non-qualified stock options to consultants and advisors vesting over terms of up to two years.
| Number of Options granted |
| Weighted average exercise price | Weighted average remaining life years |
Outstanding March 31, 2019 | - |
| - | - |
Granted | 1,370,000 |
| 0.033 | 2.00 |
Exercised | - |
| - | - |
Cancelled | - |
| - | - |
Outstanding March 31, 2020 | 1,370,000 |
| 0.033 | 1.40 |
Granted | 630,000 |
| 0.039 | 2.00 |
Exercised | - |
| - | - |
Cancelled | - |
| - | - |
Outstanding September 30, 2020 | 2,000,000 |
| 0.035 | 1.63 |
|
|
|
|
|
Exercisable March 31, 2020 | 619,863 |
| 0.033 | 1.40 |
Exercisable September 30, 2020 | 1,233,849 |
| 0.035 | 1.63 |
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.
September 30, 2020 | |
Stock Price at grant date | $0.033 - $ 0.078 |
Exercise Price | $0.033 - $ 0.078 |
Term in Years | 1.0 - 2.32 |
Volatility assumed | 71% - 193% |
Annual dividend rate | 0.0% |
Risk free discount rate | 1.79% - 2.0% |
The compensation expense calculated at time of grant is amortised over the vesting period for the options granted. During the three months ended September 30, 2020 and 2019, the Company amortised $12,804 and $0, respectively, as option expense. The intrinsic value of outstanding options at September 30, 2020 was $85,950, and $11,816 of the option expense upon grant remained unamortized at September 30, 2020.
(E)WARRANTS
In conjunction with the sale of Series A preferred stock Units, the Company issued 4,200,000 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.
| Number of warrants | Weighted average exercise price | Weighted average remaining life in years |
Outstanding March 31, 2019 | 2,612,500 | $1.20 | 2.4 |
Granted | 1,587,500 | 1.20 | 3.0 |
Exercised | - | - | - |
Cancelled | - | - | - |
Outstanding March 31, 2020 | 4,200,000 | 1.20 | 2.9 |
Granted | - | - | - |
Exercised | - | - | - |
Cancelled | - | - | - |
|
|
|
|
Outstanding September 30, 2020 | 4,200,000 | $1.20 | 2.4 |
The assumptions used for warrants granted in the three months ended September 30, 2019 were as follows:
Stock Price at valuation | $ | 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 September 30, 2019 the value of the warrants was $0 as the Company did not bifurcate the value of Series A and warrants within the Units sold. The weighted average remaining life of the warrants at September 30, 2020 was 2.4 years. The intrinsic value of outstanding warrants at September 30, 2020 was $0.
NOTE 7 – FINANCIAL HIGHLIGHTS
|
| Three months ended |
| Six months ended | |||||
|
| September 30, 2020 |
| September 30, 2019 |
| September 30, 2020 |
| September 30, 2019 | |
Net asset value per basic share (a) |
| $0.72 |
| $0.43 |
| $0.72 |
| $0.43 | |
Net asset value per fully-diluted share (a) |
| $0.24 |
| ( a ) |
| $0.24 |
| ( a ) | |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
Net gain (loss) per basic share (a) |
| $0.05 |
| ($0.02) |
| $0.05 |
| ($0.06) | |
Net gain (loss) per fully-diluted share (a) |
| $0.02 |
| ( a ) |
| $0.02 |
| ( a ) | |
|
|
|
|
|
|
|
|
| |
Net realized and unrealized gain (loss) on investments per primary share (a) |
| $0.08 |
| ($0.01) |
| $0.08 |
| ($0.01) | |
Net realized and unrealized gain (loss) on investments per fully-diluted share (a) |
| $0.03 |
| ( a ) |
| $0.03 |
| ( a ) | |
|
|
|
|
|
|
|
|
| |
Ratios and Supplemental Data |
|
|
|
|
|
|
|
| |
Net assets, end of period |
| $ 4,230,731 |
| $ 2,511,836 |
| $ 4,230,731 |
| $ 2,511,836 | |
|
|
|
|
|
|
|
|
| |
Basic shares outstanding, end of period |
| 5,836,832 |
| 5,836,832 |
| 5,836,832 |
| 5,836,832 | |
Fully-diluted shares outstanding, during the period |
| 17,987,040 |
| ( a ) |
| 17,058,856 |
| ( a ) | |
|
|
|
|
|
|
|
|
| |
Total operating expenses/net assets |
| 3.78% |
| 2.59% |
| 4.72% |
| 10.75% | |
Net income ( loss)/net assets |
| 7.52% |
| -4.79% |
| 6.60% |
| -12.82% | |
Interest expense |
| - |
| - |
| - |
| - | |
|
|
|
|
|
|
|
|
| |
(a) Per Share Data is based on weighted average number of shares outstanding for the period. |
|
|
|
| |||||
Earnings per share is not provided where the results would be anti-dilutive. |
|
|
|
|
|
NOTE 7
On October 1, 2020 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 asfiled a going concern.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLAN OF OPERATIONS
Kyto Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999 under the S-8 Registration Statementname of B Twelve Inc. In August, 2002, the Company changed its name from B Twelve, Inc. to Kyto BioPharma will have 9,936,832 common shares issuedInc. and outstanding.
The Company was originally formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other autoimmune diseases and had been looking at a number of strategies to become active. In April, 2018, the Board adopted a new business plan focused on the development of early stage technology and life science businesses through early stage investment funding. The Company has recruited a number of experienced investment advisors from a network that includes angel investors, corporate managers, and successful entrepreneurs across a number of technology and life science products and markets and relies on input from these advisors in conducting due diligence and making investment decisions to build its investment portfolio which aims to spread risk by making small investments in a large number of early stage business opportunities. In order to offset the risk in early stage investing, the Company works with angel investment groups and participates only after these groups have completed due diligence and committed to invest, and does not typically invest more than $250,000 in any single investment. Generally, the Company’s investments represent less than 5% ownership interests, and the Company therefore has no effective control or influence over the management or commercial decisions of the Companies in which it invests. The Company plans to generate income from realised gains from the sale of the businesses in which it has invested. Generally, it is expected that investments will be changedrealised from an exit within a period of four years following investment. Such exits are outside its control and depend on M&A transactions from third parties which may result in cash or equity proceeds. Accordingly, it is difficult to forecast investment income, net change from realized and unrealized gains or (loss) from investment activities, and cash flow. At March 31, 2020, management determined that the Company was an investment company for purposes of ASC 946 disclosure, and committed to follow the specialized accounting and reporting guidance contained therein.
The Company has no regular employees, full-time or part-time. The chief executive officer of Kyto Technology and Life Science, Inc. is acting as a symbol as agreedconsultant to by OTCQB.
The Company currently has approximately $400,000 in the bank and is now actively marketing a $3 million Series B round with a target close date of December 2020. The average monthly expenses for the closingsix months ended September 30, 2020 were approximately $33,000 per month so the Company has sufficient cash to fund its operations through the close of its Series B round if it simply manages its existing investments. However it plans to ramp up monthly expenditure to market and ensure the success of the Private Placement,Series B round, whereupon, if successful it will have sufficient funding for further investments and ongoing operations. In the event that the Series B close is delayed, management has the ability to slow down expenditure and defer future investment opportunities to balance its cash flow accordingly. While there is a degree of uncertainty in this business model, the Company has two viable alternative options to ensure continuity of liquidity and ongoing operations. However, there is no assurance that the Company will be able to continue as a changegoing concern, and stay at home orders, and general economic uncertainties arising out of the current Covid-19 epidemic create additional delay and uncertainty. To date there has been no disruption to the OfficersCompany’s business operations, and Directors of KPBH. The officers and directors of KBPH at closing of the Private Placement will be as follows:
Results of Operations
Revenue: In the three months ended September 30, 2020 and September 30, 2019, the Company billed $0 and $5,700, respectively for management advisory services provided to its investment portfolio companies. In the six months ended September 30, 2020 and September 30, 2019, the Company billed $500 and $8,950, respectively for management advisory services provided to its investment portfolio companies. In the three months and six months ended September 30, 2020, the Company recognized unrealized gains of $478,248 following the introduction of investment company accounting in the quarter ended September 30, 2020 compared to an unrealized loss of $61,046 in the corresponding three and six months ended September 30, 2019.
General and Administration Expenses: General and administration expenses include professional fees incurred in the course of SEC filing and compliance, and travel and conference fees associated with fund raising and review of investment deal-flow. In the three months ended September 30, 2020 and September 30, 2019, the Company incurred General and administration expenses of $160,111 and $65,053, of which executive bonus was $50,000 and $0, respectively. In the six months ended September 30, 2020 and September 30, 2019, the Company incurred General and administration expenses of $199,479 and $269,901, respectively. The general and administration expenses for the six months ended September 30, 2020 included $50,000 executive bonus compared to $160,000 in the six months ended September 30, 2019.
For the three months ended December 31, 2017September 30, 2020 the Company’s net loss attributable to common shareholders decreased by $6,946 to $24,133gain was $318,137 compared to a net loss of $31,079$120,399 for the three months ended December 31, 2016.
Liquidity and Capital Resources
The Company had working capital deficitsnet assets of $289,991 as of December 31, 2017$4,230,731 and $226,129 as of$2,667,611 at September 30, 2020 and March 31, 2017.2020, respectively. Cash was $76$397,442 and $33,756 as of December 31, 2017,at September 30, 2020 and Nil as of March 31, 2017.
Cash from operating activities
The Company’sCompany used net cash of $909,564 in operations during the six months ended September 30, 2020 compared to $1,111,707 used in operations decreased by $8,425 to $20,884 for the ninesix months ended December 31, 2017 compared to net cash used in operations of $29,309September 30, 2019. Main reasons for the ninehigher level in 2019 was the payment of $209,596deferred fundraising expenses in the six months ended December 31, 2016.
Cash from financing activities
The Company’sCompany had a net cash flows from financing activities decreased by $8,326 to $20,960 for the nine months ended December 31, 2017 compared to cash flowsinflow from financing activities of $29,286 for$1,273,250 in the ninesix 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 to use this funding to fund additional investments as they become available, and to cover operating expenses.
CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
In preparing financial statements, management 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 the three and six months ended September 30, 2020 and the year ended March 31, 2020 include the valuation of investment, deferred tax asset, tax valuation allowance, stock options and warrants.
INVESTMENT AND VALUATION OF INVESTMENT AT FAIR VALUE
The Company reviews the performance of the underlying investments including, management reports, press releases, web site announcements and progress reports, Carta equity updates, management interviews and, where accessible, financial reports, 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. The Company recognized impairment of one of its investments which was written down by $61,046 in September 2019. The Company has not experienced any impairment write-downs in any prior or subsequent periods.
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 R&D activities relateda 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.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.
The Company has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the developmentextent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.
For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and applicationthe fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The market approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our management and board.
In determining the appropriate fair value of an investment using these approaches, the most significant information and assumption may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparable, the principal market and enterprise values, environmental factors, among other factors.
The estimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been used had a broader market for the investments existed.
The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation. The three levels of valuation hierarchy are defined as follows:
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 market data, which require the use of the reporting entity’s own assumptions.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2020, the Company adopted Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its antibody technologies. investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments.
In June 2016, the FASB issued ASU 2016-13 (as amended through November 2019), Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands disclosure requirements. ASU 2016-13 is effective for the Company beginning in the first quarter of 2020. The guidance will be applied using the modified-retrospective approach. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.
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 financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of filing of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
IMPACT OF INFLATION
The Company does not foresee any implications being created by the current rate of inflation.
CONTRACTUAL OBLIGATION
The Company has no contractual obligations outside the normal course of business with the U.S. Securitiesits vendors, advisors, and Exchange Commission, the Company did receive a commitment of one of its stockholders to continue to provide operating loan funds to the Company.
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, 2017September 30, 2020 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,September 30, 2020, 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
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Index to Exhibits on page 13
EXHIBIT NUMBER | DESCRIPTION | |
Articles of Incorporation of Kyto | ||
Articles of Amendment changing name to Kyto | ||
3(i)(c) | Delaware incorporation and revised articles of incorporation .** | |
3(ii) | Bylaws of 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 | ||
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * |
———————
* | Filed as Exhibit with this Form 10-Q. |
** | Previously filed with Form 10-K or Form 10-Q. |
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 | ||
By: | /s/ | |
Paul Russo Chief Executive Officer, principal executive officer, | ||
Date: November 16, 2020
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. | ||
By: | /s/ Simon Westbrook | |
Simon Westbrook Principal financial and accounting officer | ||
Date: February 14, 2018November 16, 2020
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