UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2016
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, INC.
(Exact name of registrant as specified in its charter)
FLORIDA | 000-50390 | 65-1086538 | ||
(State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
of Incorporation) | File Number) | Identification No.) |
500 Australian Avenue South, Suite 600 West Palm Beach, FL 33401
(Address of Principal Executive Office) (Zip Code)
(416) 960-8770
(Registrant’s telephone number, including area code)
N/A
(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. ☑ 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 ☑ 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 | ☑ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
3,139,747 Common Shares - $0.0001 Par Value - as of February 13, 2017
KYTO BIOPHARMA, INC.
For the quarterly period ended December 31, 2016
INDEX
PART I. FINANCIAL INFORMATION | ||
Item 1. | Financial Statements | 3 |
Condensed Balance Sheets as of December 31, 2016 (Unaudited) and March 31, 2016 | 3 | |
Unaudited Condensed Statements of Operations for the Three and Nine Months Ended December 31, 2016 and 2015 | 4 | |
Unaudited Condensed Statement of Stockholders’ Deficit for the Nine Months Ended December, 2016 | 5 | |
Unaudited Condensed Statements of Cash Flows for the Three and Nine Months Ended December , 2016 and 2015 | 6 | |
Notes to Unaudited Condensed Financial Statements | 7 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 10 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 10 |
Item 4. | Controls and Procedures. | 11 |
PART II. OTHER INFORMATION | ||
Item 1. | Legal Proceedings. | 12 |
Item 1A. | Risk Factors. | 12 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 12 |
Item 3. | Defaults Upon Senior Securities. | 12 |
Item 4. | Mine Safety Disclosures | 12 |
Item 5. | Other Information | 12 |
Item 6. | Exhibits | 13 |
Signatures | 14-17 |
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Kyto Biopharma, Inc.
Condensed Balance Sheets
December 31, | March 31, | |
2016 | 2016 | |
( Unaudited ) | ||
Current Assets | ||
Cash | $9 | $32 |
Total Current Assets | 9 | 32 |
Total Assets | $9 | $32 |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
Current Liabilities | ||
Accounts payable | $326 | $- |
Accrued liabilities | 5,000 | 12,500 |
Accrued liabilities - related party | 132,000 | 84,000 |
Loan payable-related party | 65,018 | 35,732 |
Total Current Liabilities | 202,344 | 132,232 |
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, 2016 and March 31, 2016, respectively | - | - |
Common stock, $0.0001 par value, 100,000,000 shares authorized, 3,139,747 issued and outstanding as of December 31, 2016 and March 31, 2016, respectively | 314 | 314 |
Additional paid-in capital | 32,063,476 | 32,063,476 |
Accumulated deficit | (32,266,125) | (32,195,990) |
Total Stockholders' Deficit | (202,335) | (132,200) |
Total Liabilities and Stockholders' Deficit | $9 | $32 |
The accompanying notes are an integral part of these unaudited condensed financial statements
3
Kyto Biopharma, Inc.
Condensed Statements of Operations
Unaudited
For the Three Months Ended | For the Nine Months Ended | |||
December 31 | December 31 | |||
2016 | 2015 | 2016 | 2015 | |
Operating Expenses | ||||
General and administrative | $31,079 | $27,340 | $70,135 | $66,521 |
Total Operating Expenses | 31,079 | 27,340 | 70,135 | 66,521 |
Loss from Operations | 31,079 | 27,340 | 70,135 | 66,521 |
Net Loss before taxes | (31,079) | (27,340) | (70,135) | (66,521) |
Net Income (Tax) Benefit | - | - | - | - |
Net Loss | $(31,079) | $(27,340) | $(70,135) | $(66,521) |
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) |
The accompanying notes are an integral part of these unaudited condensed financial statements
4
Kyto Biopharma, Inc.
Condensed Statement of Stockholder's Deficit
For the Nine Months Ended December 31, 2016
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, 2016 | - | $- | 3,139,747 | $314 | $32,063,476 | $(32,195,990) | $(132,200) |
Net Loss | - | - | - | - | - | (70,135) | (70,135) |
Balance, December 31, 2016 | - | $- | 3,139,747 | $314 | $32,063,476 | $(32,266,125) | $(202,335) |
The accompanying notes are an integral part of these unaudited condensed financial statements
5
Kyto Biopharma, Inc.
Condensed Statements of Cash Flows
UnauditedFor the Nine Months Ended December 31, | ||
2016 | 2015 | |
Cash Flows from Operating Activities: | ||
Net loss | $(70,135) | $(66,521) |
Adjustment to reconcile net loss to net cash used in | ||
Operating activities: | ||
Changes in operating liabilities: | ||
Accrued liability related party | (7,500) | 30,000 |
Accrued liabilities | 48,000 | 13,000 |
Accounts payable and accrued expenses | 326 | 486 |
Net Cash Used in Operating Activities | (29,309) | (23,035) |
Cash Flows from Investing Activities: | ||
Net Cash Used in Investing Activities | - | - |
Cash Flows from Financing Activities: | ||
Loan proceeds from related parties, net | 29,286 | 23,062 |
Net Cash Provided by Financing Activities | 29,286 | 23,062 |
Net (decrease) or increase in Cash and Cash Equivalents | (23) | 27 |
Cash and Cash Equivalents at Beginning of Period | 32 | 2 |
Cash and Cash Equivalents at End of Period | $9 | $29 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for: | ||
Interest | $- | $- |
Taxes | $- | $- |
The accompanying notes are an integral part of these unaudited condensed financial statements
6
KYTO BIOPHARMA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
December 31, 2016
NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Kyto Biopharma, Inc. was formed as a Florida corporation on March 5, 1999. On August 14, 2002, the Company changed its name from B Twelve, Inc. to Kyto Biopharma, Inc.
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 2016 include, the valuation allowance of deferred tax assets.
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, 2016 and March 31, 2016, respectively.
CONCENTRATIONS
The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. As of December 31, 2016, the Company did not have any deposits in excess of federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2016 and March 31, 2016, respectively.
The Company has obtained and continues to obtain a large amount of its funding from loans and equity funding from a principal stockholder related to a director of the Company.
NOTE 2 – INTERIM REVIEW REPORTING
The accompanying unaudited condensed financial statements of Kyto Biopharma, 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, 2016 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, 2016, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.
7
KYTO BIOPHARMA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
December 31, 2016
NOTE 3 – GOING CONCERN
As reflected in the accompanying unaudited condensed financial statements, the Company has a working capital deficiency of $202,335, a deficit accumulated of $32,266,125, and a stockholders' deficit of $202,335 as of December 31, 2016. The ability of the Company to continue as a going concern is dependent on the Company's ability to devise a strategy and produces a business plan. The unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is highly dependent upon debt and equity funding. The Company must successfully complete its research and development resulting in a saleable product. However, there is no assurance that once the development of the product is completed and finally gains Federal Drug and Administration clearance, that the Company will achieve a profitable level of operations.
NOTE 4 - ACCOUNTING STANDARDS UPDATES
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 TRANSACTIONS
(A)
– Loan Payable- Related Party
During the nine months ended December 31, 2016, the Company received a net loan from a related party in the amount of $29,286. At December 31, 2016 and March 31, 2016, the Company owed $65,018 and $35,732 respectively to a related party of the Company. The loans are non-interest bearing, unsecured and due on demand. The loans are included in loans payable, related party on the accompanying balance sheet.
(B)
– Accrued liabilities -Related Party
The Company leases office space and administrative services from a related party principal stockholder. Rent and administrative expense for the three months ended December 31, 2016 and 2016 was $10,000 and $10,000 and for the nine months ended December 31, 2016 and 2015, was $30,000, and $30,000, respectively and is included in general and administrative expense in the accompanying statements of operations.
Directors fees are also included in Accrued liabilities – related parties. Directors fees for the three months ended December 31, 2016 and 2016 was $6,000 and $6,000, respectively and for the nine months ended December 31, 2016 and 2015 was $18,000 and $18,000, respectively and is included in general and administrative expense in the accompanying statements of operations. As of December 31, 2016, and March 31, 2016, the remaining balance in the accrued liabilities-related party account for the above services was $132,000 and $84,000, respectively.
8
KYTO BIOPHARMA, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
December 31, 2016
NOTE 6– EQUITY
(A)
– Convertible Preferred Stock.
On May 24 2007, the Company entered into an agreement with Comindus Finance Corp. a related party, to issue up to 500,000 convertible preferred shares at $1.00 per share. This agreement is on an installment basis. During the year ended March 31, 2008 the Company issued 473,624 shares of convertible preferred stock to Comindus Finance Corp. for a total of $473,624 to satisfy the related party loan payable. Convertible preferred stock may be converted into common shares at the rate of $0.45 per common share. Convertible preferred stock bears dividend at a rate of five percent per annum. Preferred convertible stock has the same voting rights as common stock. On September 12, 2014, the convertible stocks were converted to common stock at a price of $0.05 per share. As of December 31, 2016, and March 31, 2016, there are no preferred shares of the Company issued and outstanding.
(B)
– COMMON STOCK
As of December 31, 2016, and March 31, 2016, 3,139,747 shares of the Company’s common stock were issued and outstanding.
NOTE 7– SUBSEQUENT EVENT
Management evaluated all activities of the Company through the issuance date of the Company's interim unaudited condensed financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosure into the interim unaudited condensed financial statements.
9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLAN OF OPERATION
The report of our Independent Registered Public Accounting firm dated June 29, 2016 on our March 31, 2016 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our 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
For the three months ended December 31, 2016 the Company’s net loss attributable to common shareholders increase by $3,739 to $31,079 compared to a net loss of $27,340 for the three months ended December 31, 2015.
For the nine months ended December 31, 2016 the Company’s net loss attributable to common shareholders decreased by $3,614 to $70,135 compared to a net loss of $66,521 for the nine months ended December 31, 2015.
Liquidity and Capital Resources
The Company had working capital deficits of $202,335 as of December 31,2016, and $132,200 as of March 31, 2016. Cash was $9 as of December 31,2016, and $32 as of March 31, 2016.
Cash from operating activities
The Company’s net cash used in operations increased by $6,274 to $29,309 for the nine months ended December 31, 2016 compared to net cash used in operations of $23,035 for the nine months ended December, 2015.
Cash from financing activities
The Company’s net cash flows from financing activities increased by $6,224 to $29,286 for the nine months ended December 31, 2016 compared to cash flows from financing activities of $23,062 for the nine months ended December 31, 2015.
The Company’s plan of operation for the next twelve months is to continue to focus its efforts on finding new sources of capital and on R&D activities related to the development 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 provide operating loan funds to the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required for smaller reporting company.
10
ITEM 4. CONTROLS AND PROCEDURES
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, 2016 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal 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, 2016.
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, 2016, 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.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS.
Not required for smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Index to Exhibits on page 13
12
INDEX TO EXHIBITS
EXHIBIT NUMBER | DESCRIPTION | |
3(i)(a) | Articles of Incorporation of Kyto Biopharma, Inc.* | |
3(i)(b) | Articles of Amendment changing name to Kyto Biopharma, Inc.* | |
3(ii) | Bylaws of Kyto Biopharma, Inc.* | |
10.1 | Research collaboration agreement between The Research Foundation of State University of New York and B. Twelve Ltd. (Kyto Biopharma, Inc.) [dated August 19, 1999]** | |
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 Biopharma, Inc.) Modification No. 1 [dated November 01, 2000]** | |
10.4 | Debt Settlement Agreement and Put Option (dated November 2002) between Kyto Biopharma, Inc. and New York University.** | |
10.5 | Extension/Modification Research Collaboration Agreement between the Research Foundation of State University of New York and Kyto Biopharma, Inc., Modification No. 2 [dated December 2004]. ** | |
10.6 | Services Agreement between Kyto Biopharma, Inc. and Gerard Serfati [dated November 1, 2004]*** | |
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 ** |
———————
* Filed as Exhibit to Company's Form 10-SB on September 12th, 2003, with the Securities and Exchange Commission
** Filed as Exhibit with this Form 10-Q.
*** Previously filed with Form S-8 on November 18, 2004.
13
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 Biopharma, Inc. | |||
Date: February 14, 2017 | By: | /s/ Georges Benarroch | |
Georges Benarroch | |||
Chief Executive Officer, principal executive officer, principal financial and accounting officer |
14