UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K



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

SECURITIES EXCHANGE ACT OF 1934



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

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:

or

For the transition period from: _____________ to _____________

COMMISSION FILE NO. 000-28107



KYTO BIOPHARMA INC.

(Exact name of registrant as specified in its charter)



|                                  |                    
|--------------------------------- | -------------------
|FLORIDA                           | 65-1086538         
|(State or Other Jurisdiction      | (I.R.S. Employer   
|of Incorporation or Organization) | Identification No.)



B1-114 BELMONT STREET, TORONTO ONTARIO CANADA   M5R 1P8

(Address of Principal Executive Office) (Zip Code)



(416) 960-8790

(Registrants telephone number, including area code)



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

COMMON STOCK, $.0001 PAR VALUE

(Title of Class)

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

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

Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90 days. Yesþ  No  ̈

Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ̈

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  þ

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

The aggregate market value of the voting common stock held by non-affiliates of the Registrant on September 30, 2008, was approximately $ 935,424.

The Registrant had 12,743,610 shares of common stock, .0001 par value per share, outstanding on June 3, 2009







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TABLE OF CONTENTS

FORM 10-K

FOR FISCAL YEAR ENDED MARCH 31, 2009

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART I

ITEM 1.
Business
1
ITEM 2.
Description Of Property
5
ITEM 3.
Legal Proceedings
5
ITEM 4.
Submissionof Matters to a Vote of Security Holders
5
PART II
ITEM 5.
Market for Common Equity and Related Stockholder Matters
6
ITEM 6.
Selected Financial Data
7
ITEM 7.
Management's Discussion and Analysis of Financial Conditions and Resultsof Operation
7
ITEM 8.
Financial Statements and Supplementary Data
11
ITEM 9.
Changes In and Disagreements with Accountantson Accounting and Financial Disclosure
11
ITEM 9A.
Controls and Procedures
11
PART III
ITEM 10.
Directors And Executive Officers, Promotors And Control Persons; Compliance
With Section 16(A) Of The Exchange Act
13
ITEM 11.
Executive Compensation
15
ITEM 12.
Security Ownership Of Certain Beneficial Owners And Management
17
ITEM 13.
Certain Relationships And Related Transactions
17
ITEM 14.
Principal Accountant Fees And Services
18
PARTVI
ITEM 15.
Exhibits And Reports On Form 8-K
19
SIGNATURES
21
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 







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PART I

ITEM 1.

BUSINESS

(A) BUSINESS DEVELOPMENT

Kyto Biopharma, Inc. was originally formed under the name of B. Twelve, Inc., a Florida corporation, filed with the Department of State on March 5, 1999. Also, on March 5, 1999, the Company acquired B Twelve Limited as a wholly-owned subsidiary Canadian corporation.

On April 27, 1999, the Company filed an amendment to its Articles of Incorporation, increasing its authorized capital stock from 1,000 shares of common stock with a Par Value of $1.00 per share, to 25,000,000 shares of common stock with a Par Value of $1.00 per share and 1,000,000 shares of preferred stock, also with a Par Value of $1.00 per share.

In August, 2001, the Company filed an amendment to its Articles of Incorporation, changing the Par Value of its common stock from $1.00 per share to $0.0001 Par Value per share.

On August 14, 2002, the Company filed an amendment to its Articles of Incorporation, changing the name to KYTO BIOPHARMA, INC.

The Company filed a Uniform Business Report (UBR) with the Department of State, State of Florida, for the year 2008 and paid all required fees. Its status is active.

(B) BUSINESS OF ISSUER

(1) Principal Products and Markets

Kyto Biopharma, Inc. (Kyto) was formed to acquire a patent portfolio and the rights to early-stage compounds which have potential use as therapeutic agents for the treatment of cancer and diseases of the immune system. The Company has subsequently built itself into a development stage biopharmaceutical company that develops receptor-mediated technologies to control the uptake of vitamin B12 by non-controlled proliferative cells. Vitamin B12 regulates one of two major cellular pathways for the production of folates, the cell's primary source of carbon and the progenitor for the synthesis of DNA.

Kyto is currently engaged in the development of a portfolio of potential targeted biologic treatments based on:

i)

the therapeutic effect of vitamin B12 depletion by receptor modulators, and

ii)

the use of monoclonal antibodies to block the vitamin B12 uptake by cancer cells.

Kyto's portfolio consists of molecules at the research and development stage which may ultimately prove useful in the treatment of certain types of cancer and inflammatory diseases. Kyto believes that there are several human therapeutics applications for its drug candidates. Specifically, a number of properties of the Company's vitamin B12 depletion and monocbnal antibody technologies suggest a potential role for its drug candidates in the therapy of solid tumors such as colorectal and breast cancer in addition to treatment of leukemias. The following table summarizes the Company's research and product development programs:

|                      |                     |          |                 
|--------------------- | ------------------- | -------- | ----------------
|Monoclonal Antibodies | Transport protein   | Oncology | Development     
|                      | Receptor            | Oncology | Development     
|Growth Blockers       | Receptor modulators | Oncology | Proof of concept





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Kyto's growth blocker and monocbnal antibody technologies are applicable to a very broad range of therapeutic areas. Each specific technology has the potential to target a large number of therapeutic targets for creation of drug candidates. New drug candidates can be synthesis from:

(a)

Existing drugs;

(b)

Generic drugs;

(c)

Molecules in development, and;

(d)

Molecules with attractive biological activity and potency that were never developed because of too short half-life of activity for commercial utility or inadequate safety profile.

As mentioned above, Kyto has created a class of agents known as receptor modulators, with the selectivity of the natural ligand (vitamin B12) for its receptor, that cause a reduction in the number of receptors through alterations in receptor movement on the surface of and within the cell. Treatment with such drugs eventually results in cells devoid of receptors triggering the death of the cancer cells, biological response known as apoptosis.

The second aspect of Kyto's business is the development of human antibodies. The Company is developing monoclonal antibodies as vitamin B12 receptor control agents for certain pharmaceutical applications including treatment of cancer and autoimmune diseases. Many of the product development issues for antibodies have been addressed over the last ten years including immunogenicity and scale-up manufacturing for therapeutic applications resulting in the approval or pending approval of a number of products in the United States (U.S.) and Europe.

(2) Competitive Business Conditions and Adverse Factors

The Company has identified the following companies as competitors and/or comparable to the activities of Kyto:

(3) Research and Development Programs

Kyto believes that there are several applications for its drug candidates. A number of properties of our drug delivery and vitamin B12 depletion technologies suggest a potential role for its drug candidates in the therapy of solid tumors such as colorectal and breast cancer in addition to treatment of leukemias. Specifically, Kyto's research and product development programs include the following projects:

|                                            |          |                  |                                                        
|------------------------------------------- | -------- | ---------------- | -------------------------------------------------------
|Vitamin B12 Depletion
Monoclonal Antibodies |          |                  |                                                        
|Transport protein                           | Oncology | Development      | Medarex Inc.
The Research Foundation of State          
|Receptor                                    | Oncology | Development      | University of New York                                 
|                                            |          |                  |                                                        
|Receptor Modulators                         |          |                  |                                                        
|Growth blockers                             | Oncology | Proof of concept | The Research Foundation of State University of New York



On October 2006, the Company signed an Extension Modification of Research Collaboration Agreement with the Research Foundation of State University of New York (RFSUNY) regarding the research and development of the use of monoclonal antibodies to block the vitamin B12 uptake by cancer cells for funding consideration of $119,647 to be appropriated for the initial 12 months of the conduct of the research plan from November 2006 through October 2007. The Company shall amend patent No. 5,688,504 to legally establish joint ownership with RFSUNY. The initial payment for the first six months was made in November 2006 and the second payment was made in May 2007.

In May 2007, the company extended the agreement with RFSUNY regarding the research and development of the use of monoclonal antibodies to block the vitamin B12 cancer cells for additional $125,406. A payment of $62,703 was made in January 2008. During the year ended March 31, 2009, the company once again extended the agreement with RFSUNY, paying a total of $141,161, to cover the period ending June 2009.



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(4) Distribution of Products

Because of capital constraints, the Company has decided to focus its financial resources for the development of its monoclonal antibodies.  At this time Kyto is in the process of evaluation and sourcing a vendor to produce either fully humanized or mouse-human chimeric antibodies

As the first drug candidate paclitaxel conjugated to vitamin B12 enters the formal preclinical program the

The Company has no specific marketing plans beyond those mentioned above. Future marketing will depend upon the amount of capital realized by the Company.

(5) Patents

Kyto's patent strategy has been to develop an "umbrella" of patents protecting its core technology and their therapeutic uses and the underlying technologies used to create them. The Company has filed a number of patent applications in the United States, the PCT Member Countries, Japan, and in most other jurisdictions to protect its proprietary rights in the development of its technologies and products. To date, 18 patents have been issued. Kyto is co-assignee on the issued and pending patents along with different universities. The following is a list of the issued patents:

|             |                                                                                                                                             |           
|------------ | ------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|PATENT NO.   | TITLE                                                                                                                                       | ISSUED    
|NZ252,559    | Anti-receptor agents to the vitamin B12/transcobalamin II receptor                                                                          | 14/02/97  
|US5,688,504  | Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and binding sites                                    | 18/11/97  
|US5,739,287  | Biotinylated cobalamins                                                                                                                     | 14/04/98  
|US5,840,712  | Water soluble vitamin B12 receptor modulating agents and methods relating thereto                                                           | 24/11/98  
|US5,840,880  | Vitamin B12 receptor modulating agents                                                                                                      | 24/11/98  
|US5,869,465  | Methods for receptor modulation and uses thereto                                                                                            | 09/02/99  
|US6,083,926  | Water soluble vitamin B12 receptor modulating agents and methods relating thereto                                                           | 04/07/00  
|CA2,135,277  | Anti-receptor and growth blocking agents to the B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12         | 24/04/01  
|NZ323,127    | Vitamin B12 receptor modulating agents and methods related and methods related thereto                                                      | 12/07/01  
|KR297,310    | Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12 | 21/05/01  
|CH0754189    | Receptor modulating agents and methods relating thereto                                                                                     | 09/10/2002
|DE0754189    | Receptor modulating agents and methods relating thereto                                                                                     | 09/10/2002
|EP0754189    | Receptor modulating agents and methods relating thereto                                                                                     | 09/10/2002
|FR0754189    | Receptor modulating agents and methods relating thereto                                                                                     | 09/10/2002
|GB0754189    | Receptor modulating agents and methods relating thereto                                                                                     | 09/10/2002
|US10/656,735 | Growth Blocking Agents                                                                                                                      | 01/10/2004
|CA2199940    | Anti-receptor and growth blocking agents to Vitamin B12/transcobalmin II Receptor and binding sites                                         | 13/09/2005

(6) Regulatory Environment

Kyto's pre-clinical and clinical trials, as well as the manufacturing and marketing of its potential products, are subject to extensive regulation for safety and efficacy by various governmental authorities around the world. The United States Food and Drug Administration ("FDA") plays a key role since it regulates drug approval for the world's largest market.

The process of studying drugs intended for use in humans usually begins with pre-clinical studies involving only animals. These pre-clinical studies are followed by studies that involve humans on a scale to assess safety and which are then expanded to a larger group to assess safety and efficacy. These various studies are usually broken into four phases with multiple studies generally conducted within each phase. Throughout these pre-clinical and clinical studies drug concentrations are measured in biological fluid samples as part of the assessment of drug safety and efficacy.



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PRECLINICAL STUDIES

Preclinical drug studies involve the evaluation of drug testing in animals in a preliminary effort to determine toxicity, correct doses, side effects and efficacy in animals to provide evidence of the safety of the drug prior to its administration to humans. Bioanalytical research involves the use of instruments that can detect and measure trace quantities of drugs, metabolites, genetic material and other products in biological samples.

CLINICAL STUDIES

Upon successful completion of pre-clinical studies the drug undergoes a series of evaluations in humans including healthy volunteers. The pharmaceutical Company sponsoring the new drug must file an Investigational New Drug application (IND), which includes results from the pre-clinical evaluations and provides comprehensive descriptions of the proposed human clinical studies. There are four generally accepted Phases in clinical studies, but the Phase may overlap:

Phase I

These studies usually take one year to complete and are conducted on a small number of healthy human subjects to evaluate the drug's pharmacological actions, toxicity, metabolism and pharmacokinetics.

Phase II

These studies take an average of two years to complete and are carried out on a relatively small number of patients suffering from the targeted condition or disease, to determine the drug's effectiveness and dose response relationship. This phase provides additional safety data and the first substitutive evidence of the drug's efficacy in humans.

Phase III

These studies take an average of two years to three years to complete and involve tests on a much larger population of patients suffering from the targeted condition or disease, typically several hundred to several thousand patients. Such studies measure the drug's efficacy and its side effects on a large scale and typically involve numerous hospitals and clinics.

Phase IV

This final phase involves monitoring the long-term benefits and risks of a drug after it has entered the market. These studies also involve examining the efficacy and safety of different dosage forms or focusing on specific sub-populations of patients for evaluation of the drug's efficacy and safety. Such studies can be carried out on thousands to tens of thousands of patients.

Upon completion of Phase III clinical studies, the pharmaceutical company sponsoring the new drug assembles all the preclinical and clinical data in the form of a New Drug Application (NDA), for submission to the FDA, or a New Drug Submission (NDS) for the TPP. The review process generally takes 12 to 18 years before the drug receives approval for marketing.

In Canada, these activities are regulated by the Food and Drug Act. The approval procedure is substantially similar to that of the FDA, but the rules and regulations promulgated there under are enforced by the Therapeutic Products and Programs ("TPP") of Health Canada. Outside the United States and Canada, and whether or not the FDA or TPP approval has been obtained, approval of a product by local regulatory authorities must be obtained prior to the commencement of commercial sales of the product in a given country. The requirements governing the conduct of clinical trials and product approvals vary widely from country to country, and the time required for approval may be longer or shorter than that required for FDA or TPP approval. Although there are some procedures for unified regulatory filings for certain European countries, in general, each country at this time has its own procedures and requirements.

Drug manufacturing is also regulated, thus companies are required to ensure compliance with GMPs quality standards that require the control of production activities, raw-material procurement, complaint management, product recalls, labeling and promotional material. In addition to these standards, which are common to all drugs, manufacturers of biopharmaceutical products must demonstrate that their products are homogeneous from one lot to the next, failing which the applicable regulatory authority may prohibit the sale of a lot and possibly require that a product be recalled.

(7) Research and Development Costs

Others conduct research and development on behalf of the Company under contractual agreements and such costs are charged to expense as incurred. Research and development expense was $216,926, $115,045, and



4



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$1,518,604 for the years ended March 31, 2009, 2008, and for the period from March 5, 1999 (inception) to March 3, 2009, respectively.

(8) Employees

The Company has no employees, full-time or part-time. The President of Kyto Biopharma, Inc. is acting as consultant to the Company and does not receive compensation.

C) REPORTS TO SECURITY HOLDERS

The Bylaws of Kyto Biopharma, Inc. are silent regarding an annual report to shareholders. Kyto Biopharma, Inc. is a reporting company and files reports with the U.S. Securities and Exchange Commission (SEC). The Company is required to file quarterly reports (Form 10-Q) and an annual report (Form 10-K) with the SEC. The annual report includes an audited financial statement.

Any materials that the Company filed with the Securities and Exchange Commission may be read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further, you may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SECD-0330. The Company is an electronic filer and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. That site is http://www.sec.gov.

ITEM 2.

DESCRIPTION OF PROPERTY

The Company occupies office space on a month-to-month basis and therefore has no leasehold interest. The Company pays a fee to Credifinance Capital Corp., a related party, at the rate of $3,333.33 monthly, which includes rent of $1,666.6 and certain administrative services, such as bookkeeping, copying and printing, courier services, and telephone.

The Company owns no investments.

ITEM 3.

LEGAL PROCEEDINGS

A claim against the Company has been commenced by SHI Consulting in the amount of $32,416 plus GST for damages resulting from a breach of contract and prejudgment and post judgment interest and costs. The Company counterclaimed for $300,000 for breach of contract plus interest and costs. As of March 31, 2009, the action has been dismissed.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no shareholders meetings during the period covered by this report.



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PART II

ITEM 5.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The following discussions should be read in conjunction with the financial statements and related notes which are included in this Form 10-K for the year ending March 31, 2009. Statements made below which are not historical facts are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, general economic conditions and our ability to develop our products. For further information regarding our business, competition and risk factors, refer to this Company's Form 10-K filed with the U.S. Securities Exchange Commission.

(A) MARKET INFORMATION

Our common stock has traded on the OTC Bulletin Board(R), or OTCBB, since August 04, 2005. The Company's common stock is quoted on the Electronic Bulletin Board of the OTC market, under the trading symbol KBPH. The following table sets forth, for the calendar quarters indicated, the high and low closing prices for our common stock as reported by OTCBB for fiscal years ended March 31, 2009 and 2008. The quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not represent actual transactions. The market for the common stock has been sporadic and there have been long periods during which there were few, if any, transactions in the common stock and no reported quotations. Accordingly, reliance should not be placed on the quotes listed below, as the trades and depth of the market may be limited, and therefore, such quotes may not be a true indication of the current market value of the Company's common stock.

|                                 |  |      |              |     |   |      | 
|-------------------------------- |  | ---- | ------------ | --- | - | ---- | 
|                                 |  |      | Common Stock
|                                 |  | High |              | Low
|Fiscal Year Ended March 31, 2009 |  |      |              |    
|First quarter                    |  | $    | 1.35         |     | $ | 1.35
|Second quarter                   |  |      | 3.00         |     |   | 1.35
|Third quarter                    |  |      | 3.00         |     |   | 1.70
|Fourth quarter                   |  |      | 1.70         |     |   | 1.70
|                                 |  |      |              |     |   |     
|Fiscal Year Ended March 31, 2008 |  |      |              |     |   |     
|First quarter                    |  | $    | 0.40         |     | $ | 0.40
|Second quarter                   |  |      | 0.45         |     |   | 0.40
|Third quarter                    |  |      | 1.55         |     |   | 0.40
|Fourth quarter                   |  |      | 1.35         |     |   | 1.35

There were 12,743,610 shares of common stock outstanding as of the end of the fiscal year ended March 31, 2009.

(B) HOLDERS

According to information provided to us by the transfer agent for our shares of Common Stock, as of March 31, 2009, there were 16 holders of record of the shares of Common Stock, including depositories. Based upon information we have received from some of these record owners, we believe there are more than 150 beneficial holders of our shares of Common Stock.

(C) DIVIDENDS

The Company has not paid any dividends to date and has no plans to do so in the foreseeable future.

(D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.

None



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ITEM 6.

SELECTED FINANCIAL DATA

Earnings per share for each of the fiscal years shown below are based on the weighted average number of shares outstanding.





|                       |  |                       |          |   |      |   |          |  
|---------------------- |  | --------------------- | -------- | - | ---- | - | -------- | -
|                       |  | Years ended March 31, |         
|                       |  | 2009                  |          |   | 2008 |  
|Revenues               |  |                       |        |   |      |   |        |  
|Net Loss               |  | $                     | (643,096 | ) |      | $ | (353,838 | )
|Earning Loss Per Share |  | $                     | (0.05    | ) |      | $ | (0.03    | )
|Total assets           |  | $                     | 60,316   |   |      | $ | 53,014   |  
|Total liabilities      |  | $                     | 582,386  |   |      | $ | 172,751  |  

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

(A) PLAN OF OPERATION

The Company had not been profitable and had no revenues from operations since its inception in March 1999. As reflected in the accompanying audited consolidated financial statements, in 2009 the company had, a net loss of $643,096, a working capital deficiency of $522,070, a stockholders' deficiency of $522,070, and a deficit accumulated during development stage of $16,474,669 at March 31, 2009. These factors raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Research and development expense was $216,926, $115,045, and $1,518,604 for the years ended March 31, 2009, 2008, and for the period from March 5, 1999 (inception) to March 31, 2009, respectively.

During the period ending March 31, 2009, the Company continued to evaluate its Intellectual Property Portfolio. Under the recommendation from Patent Attorneys, management and consultants, Kyto has elected to cancel patent protection in non essential jurisdictions, to allow more focus to be placed on Kytos monoclonal antibody technologies.

The Companys R&D efforts are progressing with respect to the development of a novel cancer therapy through the regulation of Vitamin B12 uptake. To date the Company has, conclusively identified the protein and the gene encoding the Vitamin B12 receptor, isolated and cloned three monoclonal antibodies to the Vitamin B12 receptor, and is proceeding toward the development of fully humanized antibodies.

An article authored by two of Kytos consulting scientists (Dr. Quadros and Dr. Sequeira) describing findings relating to Kytos process, was published in Blood magazine, on September 8, 2008, in an article titled The protein and the gene encoding the receptor for the cellular uptake of transcobalamin-bound cobalamin. Blood magazine is published by the American Society of Hematology.

Nearing the end of fiscal year 2008, Kyto proceeded with its planned antibody strategy and collaborated with a 3 rdparty vendor to acquire antibodies. The development of this antibody technology will be overseen by RFSUNY and is currently in the early stages of development. The Company does not yet have an estimate of the total costs associated with this development. As the Company has no current revenues from operations, management fully expects to incur additional liabilities in order to fund the development of this strategy.

Over the next twelve months the company will focus its efforts on further developing its antibodies with the assistance of an outsourced manufacturer and the help of scientists from RFSUNY and MD Anderson, with the goal of developing fully humanized antibodies. At this time Kyto has had success in demonstrating kills to a variety of cancer cells expressing the Vitamin B12 receptor.



7



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The efforts of the Company's R&D have produced notable accomplishments with respect to the development of a novel cancer therapy through the regulation of Vitamin B12 uptake, an essential nutrient for cells. For the first time, the Company has conclusively identified the protein and the gene encoding the

Vitamin B12 receptor. The work on utilizing the Vitamin B12 pathway provides for several strategies aimed at preventing the proliferation of cancer cells.

During the period ending March 31,2009, the Company conducted a comprehensive review of its existing Intellectual Property portfolio with the assistance various IP legal firms and consultants. As a result of this review, the Company has elected to drop some of its patents while funding the remaining patents in full.

The Company is currently a development stage company and its continued existence is dependent upon the Company's ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is very 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.

The Company has, as of the end of its fiscal year (March 31, 2009), $582,386 in liabilities. The Company estimates that it will require up to $100,000 to meet operating costs and up to $300,000 for research and development costs for this fiscal year, excluding research and development costs. In addition, with the help of its scientific partners, the Company is reviewing its technology and assessing the best way of pursuing its development.The report of our Independent Registered Public Accounting Firm on our March 31, 2009 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 and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional funding and maintain operations. We do not currently have sufficient financial resources to fund our operations. Therefore, we need additional funds to continue these operations. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, we would be forced to curtail our business operations.

(B) LIQUIDITY AND CAPITAL RESOURCES

To meet the projected cash requirements as stated above, the Company intends to obtain cash loans from one or more of its stockholders. As the date of filing of this Form 10-K with the U.S. Securities and Exchange Commission, the Company did not receive any commitments of any of its stockholders to provide operating loan funds for the Company. We are also looking at merger opportunities or to acquire companies and products to raise capital. We expect to form strategic alliances for product development and to out-license the commercial rights to development partners. By forming strategic alliances with third parties, we believe that our technologies and related products can be more rapidly developed and successfully introduced into the marketplace.

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 research activities and the development of its drug candidates which maximize the utility and application of its platform technologies. Management expects the Company to incur additional operating losses over the next several years as research and development efforts, preclinical and clinical testing activities and manufacturing scale-up efforts expand. To date, we have not had any material product sales and do not anticipate receiving any revenue from the sale of products in the upcoming year. Our sources of working capital have been equity financings and interest earned on investments.

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 also 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.

(C) OFF-BALANCE SHEET ARRANGEMENT

None.



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(D) COMPETITION

There are a number of companies that are involved in the development and/or production, improved method of delivery or analogs of paclitaxel include but are not limited to Bristol-Myers Squibb Company, Cell Therapeutics Inc., Ivax Corporation, Bioxell Pharma Inc., Supratek Pharma Inc., Enzon Inc., Napro Biotherapeutics Inc., F.H. Faulding & Co. Limited, Phytogen Inc., Aphios Corporation, Taxolog Inc., Cytoclonal Pharmaceutics Inc., Protarga Inc., and Mylan Laboratories Inc.

In addition to the competition, as noted above, the Company faces certain adverse conditions/and/or risks factors as outlined below:

KYTO'S BUSINESS STRATEGY REQUIRES THAT IT ESTABLISH AND MAINTAIN GOOD STRATEGIC ALLIANCES. Currently, Kyto is seeking strategic alliances. We have limited experience in establishing and maintaining such strategic alliances and cannot give any assurance that we will be successful in establishing one or more relationships. Our strategy for the research, development and commercialization of our potential biopharmaceutical products may require us to enter into various arrangements with corporate and academic collaborators, licensors, licensees and others, in addition to our existing relationships with other parties. Specifically, we may seek to joint venture, sublicense or enter other marketing arrangements with parties that have an established marketing capability or we may choose to pursue the commercialization of such products on our own. We may, however, be unable to establish such additional collaborative arrangements, license agreements, or marketing agreements as we may deem necessary to develop, commercialize and market our potential pharmaceutical products on acceptable terms. Furthermore, if we maintain and establish arrangements or relationships with third parties, our business may depend upon the successful performance by these third parties of their responsibilities under those arrangements and relationships.

KYTO HAS NO EXPERIENCE IN MANUFACTURING, PROCURING PRODUCTS IN COMMERCIAL QUANTITIES OR MARKETING, CONDUCTING CLINICAL TRIALS, REGULATORY APPROVAL PROCESS AND ONLY LIMITED EXPERIENCE IN NEGOTIATING, SETTING-UP OR MAINTAINING RESEARCH COLLABORATION AND THERE IS NO ASSURANCE THAT IT WILL SUCCESSFULLY ENGAGE OR CONTINUE TO ENGAGE IN ANY OF THESE ACTIVITIES. If we are unable to obtain or retain third party manufacturing on commercially acceptable terms, we may not be able to commercialize our products as planned. Our potential dependence upon third parties for the manufacture of our products may adversely affect our ability to generate profits or acceptable profit margins and our ability to develop and deliver such products on a timely and competitive basis. Kyto may be unable to obtain the raw materials used in the production of some of its bioconjugates in sufficient quantity to meet demand when and if such product is approved. By example, paclitaxel is derived from certain varieties of yew trees and is also used in one of the Company's drug candidates. To date, Kyto has not entered into an agreement with a supplier to provide sufficient quantity or quality of any drugs used in the construction of its bioconjugates. Kyto does not have internal facilities for the manufacture of any of its products for clinical or commercial production.

MANY OF KYTO'S DRUG CANDIDATES ARE STILL IN RESEARCH AND PRECLINICAL DEVELOPMENT, WHICH MEANS THAT THEY HAVE NOT YET BEEN TESTED ON HUMANS. The Company will need to commit significant time and resources to develop these and additional product candidates. Kyto is dependent on the successful completion of clinical trials and obtaining regulatory approval in order to generate revenues. Specifically, its drug candidates that appear to be promising at early stages of development may not reach the market for a number of reasons. Potential products may: i) be found ineffective or cause harmful side effects during preclinical testing or clinical trials, ii) fail to receive necessary regulatory approvals, iii) be difficult to manufacture on a large scale, iv) be uneconomical to produce, v) fail to achieve market acceptance, vi) be precluded from commercialization by proprietary rights of third parties, or vii) third parties may market superior or equivalent drugs.

KYTO HAS BASED MANY OF ITS DRUG CANDIDATES ON UNPROVEN NOVEL TECHNOLOGIES, AND IT MAY NEVER DEVELOP THEM INTO COMMERCIAL PRODUCTS. Our primary focus is on our research and development activities of drug candidates covered by proprietary biopharmaceutical patents and patent applications. Research and development activities, by their nature, preclude definitive statements as to the time required and costs involved in reaching certain objectives. Actual research and development costs, therefore, could exceed budgeted amounts and estimated time frames may require extension. Cost overruns, unanticipated regulatory delays or demands, unexpected adverse side effects or insufficient therapeutic efficacy will



9



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prevent or substantially slow our research and development effort and our business could ultimately suffer. We anticipate that we will remain principally engaged in research and development activities for an indeterminate, but substantial, period of time. Furthermore, preclinical results in animal studies may not predict outcome in human clinical trials.

KYTO MAY NOT BE SUCCESSFUL IN PROTECTING ITS INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS. Our success depends, in part, on our ability to obtain U.S. and foreign patent protection for our drug candidates and processes, preserve our trade secrets and operate our business without infringing the proprietary rights of third parties. Legal standards relating to the validity of patents covering pharmaceutical and biotechnological inventions and the scope of claims made under such patents are still developing and there is no consistent policy regarding the breadth of claims allowed in biotechnology patents. The patent position of a biotechnology firm is highly uncertain and involves complex legal and factual questions. The Company cannot assure you that any existing or future patents issued to, or licensed by, us will not subsequently be challenged, infringed upon, invalidated or circumvented by others. Kyto cannot assure investors that any additional patents will issue from any of the patent applications owned by, or licensed to, us. Furthermore, any rights that we may have under issued patents may not provide us with significant protection against competitive products or otherwise be commercially viable.

In addition, patents may have been granted to third parties or may be granted covering products or processes that are necessary or useful to the development of our drug candidates. If our drug candidates or processes are found to infringe upon the patents or otherwise impermissibly utilize the intellectual property of others, our development, manufacture and sale of such drug candidates could be severely restricted or prohibited. In such event, we may be required to obtain licenses from third parties to utilize the patents or proprietary rights of others. Kyto cannot assure investors that it will be able to obtain such licenses on acceptable terms, if at all. If we become involved in litigation regarding our intellectual property rights or the intellectual property rights of others, the potential cost of such litigation, regardless of the strength of our legal position, and the potential damages that we could be required to pay could be substantial.

OWNERSHIP OF OUR SHARES IS CONCENTRATED, TO SOME EXTENT, IN THE HANDS OF A FEW INVESTORS, WHICH COULD LIMIT THE ABILITY OF OUR OTHER STOCKHOLDERS TO INFLUENCE THE DIRECTION OF THE COMPANY: Credifinance Capital Corp. owned approximately 71.5 % of our common stock as of March 31, 2009. Accordingly, they collectively may have the ability to significantly influence or determine the election of all of our directors or the outcome of most corporate actions requiring stockholder approval. They may exercise this ability in a manner that advances their best interests and not necessarily those of our other stockholders.

OUR SECURITIES ARE QUOTED ON THE OVER-THE-COUNTER BULLETIN BOARD. The Over-the-Counter Bulletin Board is an inter-dealer, over-the-counter market that provides significantly less liquidity than the NASDAQ Stock Market or national or regional exchanges. Securities traded on the Over-the-Counter Bulletin Board are usually thinly traded, highly volatile, have fewer market makers and are not followed by analysts. The Securities and Exchange Commission's order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the Over-the-Counter Bulletin Board. Quotes for stocks included on the Over-the-Counter Bulletin Board are not listed in newspapers. Therefore, prices for securities traded solely on the Over-the-Counter Bulletin Board may be difficult to obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any price.

WE WILL REQUIRE ADDITIONAL FINANCING TO SUSTAIN OUR OPERATIONS AND WITHOUT IT WE WILL NOT BE ABLE TO CONTINUE OPERATIONS. We do not currently have sufficient financial resources to fund our operations. Therefore, we need additional funds to continue these operations. The ability of the Company to secure sources of funding will depend on a number of factors including, the prevailing market price of our common stock the results of our research and development programs, the timing and results of preclinical and clinical trials, our ability to maintain existing and establish new collaborative agreements with other companies to provide funding to us, technological advances, and activities of competitors and other factors and the extent to which we are able to secure working capital from other sources, such as through the sale of debt or sale of stock. If sufficient financing is not available or if we are unable to license and sell our technologies and related products, we will need to secure another source of funding in order to satisfy our working capital needs.



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If we do raise additional funds by issuing equity securities, further dilution to existing stockholders would result and future investors may be granted rights superior to those of our existing stockholders. If adequate funds are not are not available to us through additional equity offerings, we may be required to delay, reduce the scope of or eliminate one or more of our research and development programs or to obtain funds by entering into arrangements with collaborative partners or others that require us to issue additional equity securities or to relinquish rights to certain technologies or drug candidates that we would not otherwise issue or relinquish in order to in order to continue independent operations. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, we would be forced to curtail our business operations.

THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO SIGNIFICANT RECURRING LOSSES FROM OPERATIONS, CASH USED IN OPERATIONS, STOCKHOLDERS' DEFICIT, ACCUMULATED DEFICIT AND WORKING CAPITAL DEFICIT ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING. The report of our Independent Registered Public Accounting Firm on our March 31, 2009 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 and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional funding and maintain successful operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached audited consolidated financial statements for KYTO BIOPHARMA, INC. AND SUBSIDIARY for the fiscal years ended March 31, 2009, 2008 and Cumulative from March 5, 1999 (Inception) to March 31, 2009 can be found beginning on page F-1.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company did not change accountant during the year and to the date of this registration statement and there are no disagreements with the findings of said accountants.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Companys President who serves as its principal executive officer and principal financial and accounting officer is responsible for establishing and maintaining disclosure controls and procedures for the Company as defined in Rules 13a-15(e) and 15d-(15(e) of the Securities Exchange Act of 1934. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in the Companys reports filed under the Securities Exchange Act of 1934, such as this report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our President who also acts as our principal financial and principal accounting officer, to allow timely decisions regarding required disclosure.

The Companys management does not expect that our disclosure controls or our internal controls will prevent all error and 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. In addition, 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 a company have been detected. These inherent limitations include 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 systems 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



11



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compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Under the supervision and with the participation of our management, including our President who serves as our principal executive officer and our principal financial and accounting officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the period ended March 31, 2009 (the Evaluation Date). As of the Evaluation Date, the Companys President who also serves as its principal financial and accounting officer, concluded that the Company maintains disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in it reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to the Companys management to allow timely decisions regarding required disclosure.

Managements Report on Internal Control over Financial Reporting

The Companys management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. The Companys management assessed the effectiveness of its internal control over financial reporting as of March 31, 2009. In making this assessment, the Companys management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. The Companys management has concluded that, as of March 31, 2008 the Companys internal control over financial reporting is effective based on this criteria.

This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. The Companys management's report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control over Financial Reporting

There was no change in the Companys internal control over financial reporting identified in connection with the Companys evaluation that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.





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PART III

ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

(A)

IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS

|                           |  |     |  |                                              
|-------------------------- |  | --- |  | ---------------------------------------------
|Name                       |  | Age |  | Position                                     
|Georges Benarroch          |  | 62  |  | President & Chief Executive Officer, Director
|Don MacAdam                |  | 62  |  | Director                                     
|Jean-Luc Berger, Ph.D.     |  | 45  |  | Director                                     
|Michael G. Rosenblum, Ph.D |  | 56  |  | Director                                     
|Uri Sagman, M.D. FRCPC     |  | 55  |  | Director                                     



The business experience of the persons listed above during the past five years are as follows:

MR. GEORGES BENARROCH, PRESIDENT & CHIEF EXECUTIVE OFFICER; DIRECTOR.

Director of the Company since May 5, 2000. Mr Benarroch was elected as President and Chief Executive Officer effective February 27, 2006. Mr. Benarroch is the President and Chief Executive Officer of Credifinance Capital Corp. and Credifinance Securities Limited. Mr. Benarroch is the President & CEO of Gilla Inc., a public company.

MR. DONALD MACADAM, DIRECTOR.

Director of the Company since November 17, 1999. Since January 2000, Mr. MacAdam is a consultant to technology companies. He is currently President and Chief Executive Officet of MBVax Bioscience, a private Canadian biotechnology company. From 1997 to 1999, he was President and Chief Executive Officer of Tm Bioscience Corporation. Prior to Tm Bioscience Corporation, Mr. MacAdam was President of CRS Robotics Corporation from 1993 to 1996. Both Tm Bioscience Corporation and CRS Robotics Corporation are public companies.

DR. JEAN-LUC BERGER, PH.D., DIRECTOR.

Director of the Company since inception on March 5, 1999, Dr. Berger was President and Chief Executive Officer of the Company from May 15, 2001 to February 27, 2006. Co-founder of Kyto, he joined the Company as Chief Operating Officer in September 2000. Dr Berger resigned as President and Chief Executive Officer effective February 27, 2006. Prior to joining the Company, Dr. Berger was a Pharmaceutical/Biotechnology analyst with Credifinance Securities Limited, a Toronto-based, institutional investment and research firm, since 1996. Dr. Berger obtained his M. Sc. from Universite de Montreal, his Ph.D. from Universite LAVAL and completed his post-doctoral studies at McGill University and has over thirty publications and scientific communications to his credit.

DR. URI SAGMAN, M.D., DIRECTOR

Director of the Company since inception on July 27, 2007, Dr. Sagman ,studied medicine at McGill University, The University of Calgary, The University of Toronto and Oxford University. Dr. Sagman is a well-respected researcher who has received numerous awards and citations including the Young Investigator awards of the American Society of Clinical Oncology (ASCO) and the American Association for Cancer Research (AACR). He is trained as a medical oncologist, is a fellow of the Royal College of Physicians and Surgeons of Canada and is a fellowship recipient of the Medical Research Council of Canada. He co-founded several companies including C Sixty, Inc., a Canadian nanomedicine company focused on the development of fullerene antioxidants for the treatment of Parkinson's disease, Alzheimer's disease as well certain skin conditions related to aging and UV exposure. Dr. Sagman is also founder and chairman of GRN Capital Inc., a financial services corporation with merchant banking and investment banking operations based in Toronto. Separately, Dr. Sagman serves as Chairman of GRN Health International Inc., a globally-based academic research organization dedicated to medical research.



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DR. MICHAEL G. ROSENBLUM PH.D., DIRECTOR

Director of the Company since inception on July 27, 2007, Dr. Michael G. Rosenblum is a Professor of Medicine and heads M. D. Anderson Cancer Center's Section of Immunopharmacology and Targeted Therapy (ITT) 10 member-laboratory with expertise in the pre-clinical and clinical development of numerous agents, some of which have been approved utilizing the laboratory's own clinical trial data. ITT's training and expertise in the area of Pharmacology/Toxicology ranges from pre-clinical developmental stages (cellular pharmacology, animal pharmacology and toxicology studies) through Phase I and II clinical trial design, clinical pharmacology design, pharmacokinetic analysis and data interpretation. He has over 20 years of experience in the field of antibodies and targeted therapeutics and is a published author of over 300 scientific publications. Dr. Rosenblum also has extensive experience as an industry consultant and has significant experience in drug development and FDA submission and presentation.

(B) IDENTIFY SIGNIFICANT EMPLOYEES

The Company does not expect to receive a significant contribution from employees that are not executive officers.

(C) FAMILY RELATIONSHIPS

There are no directors, executive officers or persons nominated or persons chosen by the Company to become a director or executive officer of the Company who are directly related to an individual who currently holds the position of director or executive officer or is nominated to one of the said positions.

(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

There are no material events that have occurred in the last five years that would affect the evaluation of the ability or integrity of any director, person nominated to become a director, executive officer, promoter or control person of the Company.

(E) AUDIT COMMITTEE

The Company has currently no audit committee. The Board of Directors approved the financial statements for the previous year.



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ITEM 11.

EXECUTIVE COMPENSATION

(A) SUMMARY COMPENSATION TABLE

The following table sets forth all annual and long term compensation for services in all capacities rendered to Kyto by its executive officers and directors for each of the last four most recently completed fiscal years.

|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|--------------------------- |  | ---- |  | ------------------- |  | ---------------------- |  | --------------------------- |  | --------------------------------------- |  | --------------------------------------------- |  | -------------- |  | ------------------------
|                            |  |      |  | Annual Compensation |  | Long-Term Compensation
|                            |  |      |  |                     |  |                        |  |                             |  | Awards                                  |  | Payouts                                      
|Name and
Principal Position |  | Year |  | Salary
$            |  | Bonus
$                |  | Other
Annual
Compensation
$ |  | Securities
Under
Options
SARS
Granted
# |  | Restricted
Shares or
Restricted
Share Units
$ |  | LTIP
Payouts
$ |  | All
Other
Compensation
$
|Jean-Luc Berger,            |  | 2009 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|Director                    |  | 2008 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  | 2007 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  | 2006 |  | $55,000(1)          |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|Georges Benarroch,          |  | 2009 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|Director                    |  | 2008 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|President and Chief         |  | 2007 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|Executive Officer           |  | 2006 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|Donald MacAdam,             |  | 2009 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|Director                    |  | 2008 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  | 2007 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  | 2006 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|Michael G. Rosenblum,       |  | 2009 |  | None                |  |                        |  | 36,000                      |  |                                         |  | None                                          |  |                |  |                         
|Director                    |  | 2008 |  | None                |  |                        |  | 36,000(3)                   |  |                                         |  | None                                          |  |                |  |                         
|                            |  |      |  |                     |  |                        |  |                             |  |                                         |  |                                               |  |                |  |                         
|Uri Sagman,                 |  | 2009 |  | None                |  |                        |  |                             |  |                                         |  | None                                          |  |                |  |                         
|Director                    |  | 2008 |  | None                |  |                        |  |                             |  |                                         |  | 250,000(2)                                    |  |                |  |                         



(1)

This was paid by B Twelve Limited, a subsidiary of Kyto Biopharma, Inc.

(2)

On February 26, 2008 Kyto Biopharma Inc issued to Dr. Uri Sagman 500,000 common shares ($0.5 per share) for consulting service.

(3)

This was paid to Dr. Michael G. Rosenblum for consulting service.

(B) OPTION/SAR GRANTS TABLE

The following table (presented in accordance with the Regulation) sets forth stock options granted under the Share Incentive Plan during fiscal year 2002 to the name key employees. There were no grants to key employees in fiscal years 2009, 2008, 2007, and 2006.

|                 |  |                                                          |  |                                                                                  |  |                              |  |                           
|---------------- |  | -------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  | ---------------------------- |  | --------------------------
|Name             |  | Number of
Securities
Underlying
Options/SARs
Granted (#) |  | % of Total
Options/SARs
Granted
P[topms/SARs
Granted to
Employees in
Fiscal Year |  | Exercise
or Base
Price ($Sh) |  | Expiration
Date           
|Jean-Luc Berger, |  | 262,500                                                  |  | 31                                                                               |  | $0.0001                      |  | Exercised in
November 2001
|                 |  |                                                          |  |                                                                                  |  |                              |  |                           
|Uri Sagman       |  | 587,500                                                  |  | 69                                                                               |  | $0.0001                      |  | Exercised in
February 2002





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(C) AGGREGATED OPTION/SAR EXERCISE IN LATEST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUE TABLE

The following table (presented in accordance with the Regulation) sets forth details of all exercises of stock options/SARs during the fiscal year end March 31, 2002 (none in fiscal years 2009, 2008, 2007 and 2006) by the named executive officer and employees and the fiscal year-end value of unexercised options/SARs on an aggregated basis:

|                 |  |                                 |  |                  |  |                                                                                               |  |                                                                                         | 
|---------------- |  | ------------------------------- |  | ---------------- |  | --------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------- | 
|Name             |  | Shares
Acquired
on Exercise
(#) |  | Value
Realized
$ |  | Number of
Securities
Underlying
Options/SARs
Granted at
FY-End (#)
Exercisable/
Unexercisable |  | Value of
Unexercised
In-the-Money
Options/SARs
at FY-End ($)
Exercisable/
Unexercisable | 
|Jean-Luc Berger, |  | 262,500                         |  | 262,474          |  |                                                                                             |  |                                                                                     | 
|                 |  |                                 |  |                  |  |                                                                                               |  |                                                                                         | 
|Uri Sagman       |  | 587,500                         |  | 587,441          |  |                                                                                             |  |                                                                                     | 

(E) LONG-TERM INCENTIVE ("LTIP") AWARDS TABLE

None

(D) COMPENSATION OF DIRECTORS

All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election and compensation of directors. The Board of Directors appoints officers annually and each executive officer serves at the discretion of the Board of Directors. The Company does not have any standing committees at this time.

The Company does not currently maintain insurance for the benefit of the directors and officers of Kyto against liabilities incurred by them in their capacity as directors or officers of Kyto. Kyto does not maintain a pension plan for its employees, officers or directors.

No director shares were granted in fiscal years 2009

Dr.Uri Sagman, a new director of company received 500,000 restricted common shares for consulting service during fiscal year 2008

Dr. Michael G.Rosenblum received $36,000 for consulting service during fiscal year 2009 and 2008 respectively.

None of the directors or senior officers of Kyto and no associate of any of the directors or senior officers of Kyto was indebted to the Company during the financial period ended March 31, 2009 of Kyto other than for routine indebtedness.

(F) EMPLOYMENT CONTRACTS

None

(G) REPORT ON REPRICING OF OPTIONS/SARS

None



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ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following persons (including any group as defined in Regulation S-B, Section 228.403) are known to the Company, as the issuer, to be beneficial owner of more than five percent (5%) of any class of the said issuer's voting securities.

|               |  |                                      |  |               |  |                    
|-------------- |  | ------------------------------------ |  | ------------- |  | -------------------
|Title of Class |  | Name and Address
of Beneficial Owner |  | Common Shares |  | Percentage of Class
|Common         |  | Credifinance Capital Corp. (1)       |  | 9,116,552     |  | 71.5%              
|               |  | Delaware, United States              |  |               |  |                    
|Common         |  | Medarex Inc.                         |  | 1,300,000     |  | 10.2%              
|               |  | New Jersey, United States            |  |               |  |                    
|Common         |  | Dr. Uri Sagman                       |  | 1,402,025     |  | 11.0%              
|               |  | Toronto, Ontario, Canada             |  |               |  |                    



(1)

Credifinance Capital Corp. is a privately held Delaware corporation. A director and officer of Kyto, Georges Benarroch is the President & C.E.O. of Credifinance Capital Corp.

(B) On May 24, 2008, Kyto and the Company entered into an agreement to receive up to 500,000 convertible preferred shares at $1.00 per share of Kyto in satisfaction of amounts due to the Company. The preferred share stock has no readily available fair values. For financial accounting purposes, these investments are presented at cost basis.

|                      |  |                                      |  |                  |  |                    
|--------------------- |  | ------------------------------------ |  | ---------------- |  | -------------------
|Title of Class        |  | Name and Address
of Beneficial Owner |  | Preferred Shares |  | Percentage of Class
|Convertible Preferred |  | Credifinance Capital Corp. (1)       |  | 473,624          |  | 100%               

(C) SECURITY OWNERSHIP OF MANAGEMENT

|               |  |                                      |  |               |  |                    
|-------------- |  | ------------------------------------ |  | ------------- |  | -------------------
|Title of Class |  | Name and Address
of Beneficial Owner |  | Common Shares |  | Percentage of Class
|Common         |  | Georges Benarroch (1)                |  | 44,079        |  | 0.3%               
|Common         |  | Dr. Jean-Luc Berger                  |  | 527,025       |  | 4.1%               
|Common         |  | Don MacAdam (2)                      |  | 30,025        |  | 0.2%               
|Common         |  | Uri Sagman                           |  | 1,402,025     |  | 11.0%              



(1)

Georges Benarroch is the President and Chief Executive Officer of Credifinance Capital Corp which owns 9,116,552 common shares representing 71.5% of issued shares and 473,624 convertible preferred shares represented 100% of issued shares.

(2)

Don MacAdam owns 27,025 common shares directly and 3,000 common shares through A360 Inc., a private holding company.

(D) CHANGES IN CONTROL

There is no such arrangement which may result in a change in control of the Company.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Detail of related party transactions are described in note 5 of the consolidated Financial Statements.

(B) TRANSACTIONS WITH PROMOTORS

Georges Benarroch would be considered as a promoter of the Company. Georges Benarroch, is the President & CEO of Credifinance Capital Corp which owns 9,116,552 common shares representing 71.5% of issued shares and 473,624 convertible preferred shares represented 100% of issued shares



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ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board of Directors appointed Jewett, Schwartz, Wolfe, and Associates. ("Jewett") as our independent auditors for the fiscal years ending March 31, 2009.

(1) Audit Fees

Jewett our Independent Registered Public Accounting firm billed an aggregate of $28,000 for the following professional services: audit of our annual consolidated financial statements for the fiscal year ended March 31, 2009 included in our annual report on Form 10-K and review of our interim financial statements included in our quarterly reports on Form 10-Q.

(2) Tax Fees

No professional services were rendered by Jewett, Schwartz, Wolfe and Associates for tax compliance, tax advice, and tax planning the fiscal years ended March 31, 2009.

(3) All Other Fees

Not applicable.



18



---



PART IV

ITEM 15.

EXHIBITS AND REPORTS ON FORM 8-K

(A) LISTING OF 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.*                                                                                      
|31.1           |  | Section 302 Certification**                                                                                          
|32.1           |  | 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-KSB.

(B) Code of Ethics

Kyto Biopharma Inc. will conduct its business honestly and ethically wherever we operate in the world. We will constantly improve the quality of our services, products and operations and will create a reputation for honesty, fairness, respect, responsibility, and integrity, trust and sound business judgment. No illegal or unethical conduct on the part of officers, directors, employees or affiliates is in the company's best interest. Kyto Biopharma Inc. will not compromise its principles for short-term advantage. The ethical performance of this company is the sum of the ethics of the men and women who work here. Thus, we are all expected to adhere to high standards of personal integrity.

Officers, directors, and employees of the company must never permit their personal interests to conflict, or appear to conflict, with the interests of the company, its clients or affiliates. Officers, directors and employees must be particularly careful to avoid representing Kyto Biopharma Inc. in any transaction with others with whom there is any outside business affiliation or relationship. Officers, directors, and employees shall avoid using their company contacts to advance their private business or personal interests at the expense of the company, its clients or affiliates.

No bribes, kickbacks or other similar remuneration or consideration shall be given to any person or organization in order to attract or influence business activity. Officers, directors and employees shall avoid gifts, gratuities, fees, bonuses or excessive entertainment, in order to attract or influence business activity.

Officers, directors and employees of Kyto Biopharma Inc. will often come into contact with, or have possession of, proprietary, confidential or business-sensitive information and must take appropriate steps to assure that such information is strictly safeguarded. This information - whether it is on behalf of our company or any of our clients or affiliates - could include strategic business plans, operating results, marketing strategies, customer lists, personnel records, upcoming acquisitions and divestitures, new investments, and manufacturing costs, processes and methods. Proprietary, confidential and sensitive business information about this company, other companies, individuals and entities should be treated with sensitivity and discretion and only be disseminated on a need-to-know basis.

Misuse of material inside information in connection with trading in the company's securities can expose an individual to civil liability and penalties. Directors, officers, and employees in possession of material information not available to the public are "insiders". Spouses, friends, suppliers, brokers, and others outside the company who may have acquired the information directly or indirectly from a director, officer or employee are also "insiders." The Act prohibits insiders from trading in, or recommending the sale or purchase of, the company's securities, while such inside information is regarded as "material", or if it is important enough to influence you or any other person in the purchase or sale of securities of any company with which we do business, which could be affected by the inside information.



19



---

The following guidelines should be followed in dealing with inside information:

Until the company has publicly released the material information, an employee must not disclose it to anyone except those within the company whose positions require use of the information.

Employees must not buy or sell the company's securities when they have knowledge of material information concerning the company until it has been disclosed to the public and the public has had sufficient time to absorb the information.

Employees shall not buy or sell securities of another corporation, the value of which is likely to be affected by an action by the company of which the employee is aware and which has not been publicly disclosed.

Officers, directors and employees will seek to report all information accurately and honestly, and as otherwise required by applicable reporting requirements.

Officers, directors and employees will refrain from gathering competitor intelligence by illegitimate means and refrain from acting on knowledge, which has been gathered in such a manner. The officers, directors and employees of Kyto Biopharma Inc. will seek to avoid exaggerating or disparaging comparisons of the services and competence of their competitors.

Officers, directors and employees will obey all Equal Employment Opportunity laws and act with respect and responsibility towards others in all of their dealings. Officers, directors and employees will remain personally balanced so that their personal life will not interfere with their ability to deliver quality products or services to the company and its clients.

Officers, directors and employees agree to disclose unethical, dishonest, fraudulent and illegal behavior, or the violation of company policies and procedures, directly to management.

Violation of this Code of Ethics can result in discipline, including possible termination. The degree of discipline relates in part to whether there was a voluntary disclosure of any ethical violation and whether or not the violator cooperated in any subsequent investigation.



20



---

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its be signed on its behalf by the undersigned, thereunto duly authorized.



| |                      |                                     
| | -------------------- | ------------------------------------
| | KYTO BIOPHARMA, INC.
| |                      |                                     
| |                      |                                     
| | By:                  | /s/ GEORGES BENARROCH               
| |                      | Georges Benarroch
President & C.E.O.
| |                     

Date:  June 29, 2009



21



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Financial Statements

March 31, 2009

Table of Contents

|                                                            |      
|----------------------------------------------------------- | -----
|Report of Independent Registered Public Accounting Firm     | F-2  
|Consolidated Balance Sheet                                  | F-3  
|Consolidated Statements of Operations                       | F-4  
|Consolidated Statements of Changes in Shareholders' Deficit | F-5-6
|Consolidated Statements of Cash Flows                       | F-7  
|Notes to the Consolidated Financial Statements              | F-8  





F-1



---



Report of Independent Registered Public Accounting Firm

To the board of directors and shareholders of

Kyto Biopharma, Inc.

We have audited the accompanying consolidated balance sheets of Kyto Biopharma, Inc. (A Development Stage Company) as of March 31, 2009 and 2008 and the related statements of operations, changes in stockholders deficit and cash flows for the years ended March 31, 2009 and 2008 and for the period from March 5, 1999 (inception) through March 31, 2009. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provided a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kyto Biopharma, Inc. (A Development Stage Company) as of March 31, 2009 and the results of its operations and its cash flows for the years then ended March 31, 2009 and 2008, and from March 5, 1999 (inception) through March 31, 2009 in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Companys need to seek new sources or methods of financing or revenue to pursue its business strategy, raise substantial doubt about the Companys ability to continue as a going concern. Managements plans as to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Jewett, Schwartz, Wolfe & Associates

Hollywood, Florida

June 25, 2009





F-2



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Balance Sheets

|                                                                                                          |  |                |             |                |   |             |  
|--------------------------------------------------------------------------------------------------------- |  | -------------- | ----------- | -------------- | - | ----------- | -
|                                                                                                          |  | March 31,
2009 |             | March 31,
2008 |  
|                                                                                                          |  |                |            
|ASSETS                                                                                                    |  |                |             |                |   |             |  
|Current Assets:                                                                                           |  |                |             |                |   |             |  
|Cash                                                                                                      |  | $              | 12,754      |                | $ | 7,328       |  
|Prepaid expenses                                                                                          |  |                | 47,562      |                |   | 45,686      |  
|Total Current Assets                                                                                      |  |                | 60,316      |                |   | 53,014      |  
|                                                                                                          |  |                |             |                |   |             |  
|Total Assets                                                                                              |  | $              | 60,316      |                | $ | 53,014      |  
|                                                                                                          |  |                |             |                |   |             |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                     |  |                |             |                |   |             |  
|Current Liabilities                                                                                       |  |                |             |                |   |             |  
|Accounts payable                                                                                          |  | $              | 8,317       |                | $ | 17,552      |  
|Accrued liabilities - related party                                                                       |  |                | 43,333      |                |   | 10,000      |  
|Accrued interest payable - related party                                                                  |  |                | 52,784      |                |   | 45,199      |  
|Accrued interest payable - preferred convertible stock                                                    |  |                | 24,128      |                |   |           |  
|Loan payable-related party                                                                                |  |                | 353,824     |                |   |           |  
|Note payable-related party                                                                                |  |                | 100,000     |                |   | 100,000     |  
|Total Current Liabilities                                                                                 |  |                | 582,386     |                |   | 172,751     |  
|                                                                                                          |  |                |             |                |   |             |  
|Commitments and Contingencies                                                                             |  |                |             |                |   |             |  
|                                                                                                          |  |                |             |                |   |             |  
|Stockholders' Deficit                                                                                     |  |                |             |                |   |            
|Preferred convertible stock, $1.00 par value, 1,000,000 shares authorized, 473,624 issued and outstanding |  |                | 473,624     |                |   | 473,624     |  
|Common stock, $0.0001 par value, 25,000,000 shares authorized, 12,743,610  issued and outstanding         |  |                | 1,275       |                |   | 1,275       |  
|Additional paid-in capital                                                                                |  |                | 15,654,944  |                |   | 15,654,944  |  
|Deficit accumulated during development stage                                                              |  |                | (16,474,669 | )              |   | (15,831,573 | )
|Accumulated other comprehensive loss                                                                      |  |                | (177,244    | )              |   | (418,007    | )
|                                                                                                          |  |                |             |                |   |             |  
|Total Stockholders' Deficit                                                                               |  |                | (522,070    | )              |   | (119,737    | )
|                                                                                                          |  |                |             |                |   |             |  
|Total Liabilities and Stockholders' Deficit                                                               |  | $              | 60,316      |                | $ | 53,014      |  

See accompanying notes to consolidated financial statements.



F-3



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Statements of Operations



|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|--------------------------------------------------------------------------------- |  | ----------------------------- | ---------- | - | -------------------------------------------------------- | ---------- | - | ---- | ----------- | -
|                                                                                  |  | For the Years Ended
March 31, |            |   | For the period from
March 5, 1999(inception) to March 31 |           
|                                                                                  |  | 2009                          |            |   | 2008                                                     |            |   | 2009 |            
|Operating Expenses                                                                |  |                               |            |   |                                                          |            |   |      |             |  
|Compensation                                                                      |  | $                             |          |   | $                                                        |          |   | $    | 1,750,636   |  
|Depreciation and amortization                                                     |  |                               |          |   |                                                          |          |   |      | 814,183     |  
|Consulting                                                                        |  |                               | 57,482     |   |                                                          | 45,430     |   |      | 9,803,811   |  
|Bad debt                                                                          |  |                               |          |   |                                                          |          |   |      | 12,819      |  
|Director fees                                                                     |  |                               |          |   |                                                          | 250,000    |   |      | 314,100     |  
|Financing fees                                                                    |  |                               |          |   |                                                          |          |   |      | 28,781      |  
|Professional fees                                                                 |  |                               | 42,544     |   |                                                          | 27,408     |   |      | 196,910     |  
|General and administrative                                                        |  |                               | 54,853     |   |                                                          | 46,559     |   |      | 560,726     |  
|Research and development                                                          |  |                               | 216,926    |   |                                                          | 115,045    |   |      | 1,518,604   |  
|Loss on debt conversion                                                           |  |                               |          |   |                                                          |          |   |      | 519,795     |  
|Impairment loss                                                                   |  |                               |          |   |                                                          |          |   |      | 1,191,846   |  
|Total Operating Expenses                                                          |  |                               | 371,805    |   |                                                          | 484,442    |   |      | 16,712,211  |  
|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|Other Income (Expenses)                                                           |  |                               |            |   |                                                          |            |   |      |             |  
|Interest income                                                                   |  |                               |          |   |                                                          |          |   |      | 4,922       |  
|Interest expense                                                                  |  |                               | (31,713    | ) |                                                          | (25,110    | ) |      | (94,609     | )
|Gain on debt forgiveness                                                          |  |                               |          |   |                                                          | 9,837      |   |      | 78,665      |  
|Loss on disposal of equipment                                                     |  |                               |          |   |                                                          |          |   |      | (567        | )
|Foreign currency transaction gain (loss)                                          |  |                               | (239,578   | ) |                                                          | 145,877    |   |      | 249,131     |  
|Total Other Income (Expense), net                                                 |  |                               | (271,291   | ) |                                                          | 130,604    |   |      | 237,542     |  
|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|Net Income (Loss)                                                                 |  | $                             | (643,096   | ) | $                                                        | (353,838   | ) | $    | (16,474,669 | )
|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|Comprehensive Income (Loss)                                                       |  |                               |            |   |                                                          |            |   |      |             |  
|Foreign currency translation gain (loss)                                          |  |                               | 240,763    |   |                                                          | (146,222   | ) |      | (177,244    | )
|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|Total Comprehensive Loss                                                          |  | $                             | (402,333   | ) | $                                                        | (500,060   | ) | $    | (16,651,913 | )
|Weighted average number of shares outstanding during the year - basic and diluted |  |                               | 12,743,610 |   |                                                          | 12,169,263 |   |      | 7,352,183   |  
|                                                                                  |  |                               |            |   |                                                          |            |   |      |             |  
|Net loss per share - basic and diluted                                            |  | $                             | (0.05      | ) | $                                                        | (0.03      | ) | $    | (2.24       | )

See accompanying notes to consolidated financial statements.



F-4



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Statement of Changes in Stockholders Deficiency

Years Ended March 31, 2009 and 2008, and for the period from

March 5, 1999 (Inception) to March 31, 2009

|                                                                         |  |                                 |   |   |                                |   |                            |           |                                              |   |                                               |  |                     |           |                         |   |                   |   |                   |         |       |   |            |   |   |    |  |   |         |   |   |         |   |   |            |  
|------------------------------------------------------------------------ |  | ------------------------------- | - | - | ------------------------------ | - | -------------------------- | --------- | -------------------------------------------- | - | --------------------------------------------- |  | ------------------- | --------- | ----------------------- | - | ----------------- | - | ----------------- | ------- | ----- | - | ---------- | - | - | -- |  | - | ------- | - | - | ------- | - | - | ---------- | -
|                                                                         |  | Preferred Stock
$1.00 par value |   |   | Common Stock
$0.0001 par value |   | Additional
Paid-In
Capital |           | Deficit
Accumulated
During
Development
Stage |   | Accumulated
Other
Comprehensive
Income
(Loss) |  | Deferred
Consulting |           | Subscription
Receivable |   | Deferred
Loan
Fee |   | Deferred
Expenses |         | Total |  
|Shares                                                                   |  | Amount                          |   |   | Shares                         |   | Amount                    
|Common stock issued for services to officer                              |  |                               |   | $ |                              |   |                            | 300,000   |                                              | $ | 30                                            |  | $                   | 299,970   |                         | $ |                 |   | $                 |       |       | $ |          |   | $ |  |  | $ |       |   | $ |       |   | $ | 30,000     |  
|Common stock issued for services to consultant                           |  |                               |   |   |                              |   |                            | 255,000   |                                              |   | 25                                            |  |                     | 254,975   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 255,000    |  
|Warrants issued to consultant                                            |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     | 345,000   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 345,000    |  
|Net loss, 1999                                                           |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   | (900,000          | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (900,000   | )
|Balance, March 31, 1999                                                  |  |                               |   |   |                              |   |                            | 555,000   |                                              |   | 55                                            |  |                     | 899,945   |                         |   | (900,000          | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   |          |  
|Preferred stock issued for cash                                          |  | 250,000                         |   |   | 250,000                        |   |                            |         |                                              |   |                                             |  |                     |         |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 250,000    |  
|Offering cost                                                            |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     | (17,005)  |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (17,005    | )
|Common stock issued for intangible assets                                |  |                               |   |   |                              |   |                            | 2,000,000 |                                              |   | 200                                           |  |                     | 1,999,800 |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 2,000,000  |  
|Common stock issued for cash upon exercise of warrants                   |  |                               |   |   |                              |   |                            | 100,000   |                                              |   | 10                                            |  |                     | 99,990    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 100,000    |  
|Foreign currency translation loss                                        |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   |                 |   |                   | (5,745  | )     |   |          |   |   |  |  |   |       |   |   |       |   |   | (5,745     | )
|Net loss, 2000                                                           |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   | (650,366          | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (650,366   | )
|Balance, March 31, 2000                                                  |  | 250,000                         |   |   | 250,000                        |   |                            | 2,655,000 |                                              |   | 265                                           |  |                     | 2,982,730 |                         |   | (1,550,366)       |   |                   | (5,745  | )     |   |          |   |   |  |  |   |       |   |   |       |   |   | 1,676,884  |  
|Common stock issued as director fees                                     |  |                               |   |   |                              |   |                            | 58,100    |                                              |   | 6                                             |  |                     | 58,094    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 58,100     |  
|Common stock issued for cash upon exercise of warrants                   |  |                               |   |   |                              |   |                            | 150,000   |                                              |   | 15                                            |  |                     | 149,985   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 150,000    |  
|Common stock issued for cash upon exercise of warrants                   |  |                               |   |   |                              |   |                            | 345,000   |                                              |   | 35                                            |  |                     |         |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 35         |  
|Common stock issued to officer as compensation                           |  |                               |   |   |                              |   |                            | 100,000   |                                              |   | 10                                            |  |                     | 99,990    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 100,000    |  
|Common stock issued for cash                                             |  |                               |   |   |                              |   |                            | 100,000   |                                              |   | 10                                            |  |                     | 99,990    |                         |   |                 |   |                   |       |       |   |          |   |   |    |  |   |         |   |   |       |   |   | 100,000    |  
|Common stock issued to consultant for services not yet rendered          |  |                               |   |   |                              |   |                            | 400,000   |                                              |   | 40                                            |  |                     | 1,199,960 |                         |   |                 |   |                   |       |       |   | (1,200,000 | ) |   |  |  |   |       |   |   |       |   |   |          |  
|Foreign currency translation gain                                        |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   |                 |   |                   | 60,054  |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 60,054     |  
|Net loss, 2001                                                           |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   | (966,789          | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (966,789   | )
|Balance, March 31, 2001                                                  |  | 250,000                         |   |   | 250,000                        |   |                            | 3,808,100 |                                              |   | 381                                           |  |                     | 4,590,749 |                         |   | (2,517,155        | ) |                   | 54,309  |       |   | (1,200,000 | ) |   |  |  |   |       |   |   |       |   |   | 1,178,284  |  
|Preferred stock converted to common stock                                |  | (250,000                        | ) |   | (250,000                       | ) |                            | 250,000   |                                              |   | 25                                            |  |                     | 249,975   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   |          |  
|Common stock warrants issued for consulting services                     |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     | 254,346   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 254,346    |  
|Common stock issued for cash upon exercise of warrants                   |  |                               |   |   |                              |   |                            | 125,000   |                                              |   | 13                                            |  |                     | 124,987   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 125,000    |  
|Common stock warrants issued for services                                |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     | 849,915   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 849,915    |  
|Common stock issued for cash upon exercise of warrants                   |  |                               |   |   |                              |   |                            | 850,000   |                                              |   | 85                                            |  |                     |         |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 85         |  
|Common stock issued to directors as compensation                         |  |                               |   |   |                              |   |                            | 6,000     |                                              |   |                                             |  |                     | 6,000     |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 6,000      |  
|Common stock issued to employees as compensation                         |  |                               |   |   |                              |   |                            | 3,000     |                                              |   |                                             |  |                     | 3,000     |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 3,000      |  
|Common stock issued as loan fee                                          |  |                               |   |   |                              |   |                            | 25,000    |                                              |   | 3                                             |  |                     | 24,997    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   | (25,000 | ) |   |       |   |   |          |  
|Foreign currency translation gain                                        |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   |                 |   |                   | 13,397  |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 13,397     |  
|Net loss, 2002                                                           |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   | (2,959,415        | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (2,959,415 | )
|Balance, March 31, 2002                                                  |  |                               |   |   |                              |   |                            | 5,067,100 |                                              |   | 507                                           |  |                     | 6,103,969 |                         |   | (5,476,570        | ) |                   | 67,706  |       |   | (1,200,000 | ) |   |  |  |   | (25,000 | ) |   |       |   |   | (529,388   | )
|Stock issued for cash and services                                       |  |                               |   |   |                              |   |                            | 225,000   |                                              |   | 22                                            |  |                     | 224,978   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 225,000    |  
|Stock issued in settlement of accounts payable, net of redeemable shares |  |                               |   |   |                              |   |                            | 100,000   |                                              |   | 10                                            |  |                     | 99,990    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 100,000    |  
|Stock issued to settle loans payable, related party                      |  |                               |   |   |                              |   |                            | 102,658   |                                              |   | 10                                            |  |                     | 102,648   |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   | 25,000  |   |   |       |   |   | 127,658    |  
|Common stock issued for services to consultant not yet rendered          |  |                               |   |   |                              |   |                            | 800,000   |                                              |   | 80                                            |  |                     | 799,920   |                         |   |                 |   |                   |       |       |   | (800,000   | ) |   |  |  |   |       |   |   |       |   |   |          |  
|Stock issued for past and future rent and administrative services        |  |                               |   |   |                              |   |                            | 65,000    |                                              |   | 7                                             |  |                     | 64,993    |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   | (30,000 | ) |   | 35,000     |  
|Common stock warrants issued as financing fee                            |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     | 3,783     |                         |   |                 |   |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | 3,783      |  
|Foreign currency translation loss                                        |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   |                 |   |                   | (80,354 | )     |   |          |   |   |  |  |   |       |   |   |       |   |   | (80,354    | )
|Net loss, 2003                                                           |  |                               |   |   |                              |   |                            |         |                                              |   |                                             |  |                     |         |                         |   | (319,141          | ) |                   |       |       |   |          |   |   |  |  |   |       |   |   |       |   |   | (319,141   | )
|Balance, March 31, 2003                                                  |  |                               |   |   |                              |   |                            | 6,359,758 |                                              |   | 636                                           |  |                     | 7,400,281 |                         |   | (5,795,711        | ) |                   | (12,648 | )     |   | (2,000,000 | ) |   |  |  |   |       |   |   | (30,000 | ) |   | (437,442   | )



See the accompanying notes to the consolidated financial statements.



F-5



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Statement of Changes in Stockholders Deficiency (Continued)

Years Ended March 31, 2009 and 2008, and for the period from

March 5, 1999 (Inception) to March 31, 2009

|                                                                                        |  |                                 |  |   |                                |  |                            |            |                                              |   |                                               |  |                     |            |                         |   |                   |   |                   |          |       |   |            |   |   |     |   |   |    |  |   |        |  |   |            |   |  |  |  |  | 
|--------------------------------------------------------------------------------------- |  | ------------------------------- |  | - | ------------------------------ |  | -------------------------- | ---------- | -------------------------------------------- | - | --------------------------------------------- |  | ------------------- | ---------- | ----------------------- | - | ----------------- | - | ----------------- | -------- | ----- | - | ---------- | - | - | --- | - | - | -- |  | - | ------ |  | - | ---------- | - |  |  |  |  | 
|                                                                                        |  | Preferred Stock
$1.00 par value |  |   | Common Stock
$0.0001 par value |  | Additional
Paid-In
Capital |            | Deficit
Accumulated
During
Development
Stage |   | Accumulated
Other
Comprehensive
Income
(Loss) |  | Deferred
Consulting |            | Subscription
Receivable |   | Deferred
Loan
Fee |   | Deferred
Expenses |          | Total |  
|Shares                                                                                  |  | Amount                          |  |   | Shares                         |  | Amount                    
|Foreign currency translation loss                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | (117,341 | )     |   |          |   |   |   |   |   |  |  |   |      |  |   | (117,341   | )
|Amortization of deferred expenses                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   | 30,000 |  |   | 30,000     |  
|Net Loss, 2004                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (34,846           | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (34,846    | )
|Balance, March  31, 2004                                                                |  |                               |  | $ |                              |  |                            | 6,359,758  |                                              | $ | 636                                           |  | $                   | 7,400,281  |                         | $ | (5,830,557        | ) | $                 | (129,989 | )     | $ | (2,000,000 | ) | $ |   |   | $ |  |  | $ |      |  | $ | (559,629   | )
|Stock issued for cash and services                                                      |  |                               |  |   |                              |  |                            | 500,000    |                                              |   | 50                                            |  |                     | 249,950    |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 250,000    |  
|Common stock issued for services to consultant not yet rendered                         |  |                               |  |   |                              |  |                            | 4,500,000  |                                              |   | 450                                           |  |                     | 6,749,550  |                         |   |                 |   |                   |        |       |   | (5,343,750 | ) |   |   |   |   |  |  |   |      |  |   | 1,406,250  |  
|Stock issued to settle loans payable, related party                                     |  |                               |  |   |                              |  |                            | 320,000    |                                              |   | 32                                            |  |                     | 479,968    |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 480,000    |  
|Stock issued for past and future rent and administrative services                       |  |                               |  |   |                              |  |                            | 133,333    |                                              |   | 13                                            |  |                     | 199,986    |                         |   |                 |   |                   |        |       |   |          |   |   | (13 | ) |   |  |  |   |      |  |   | 199,986    |  
|Foreign currency translation loss                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | (87,495  | )     |   |          |   |   |   |   |   |  |  |   |      |  |   | (87,495    | )
|Net Loss, 2005                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (1,963,666        | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (1,963,666 | )
|Balance, March 31, 2005                                                                 |  |                               |  | $ |                              |  |                            | 11,813,091 |                                              | $ | 1,181                                         |  | $                   | 15,079,735 |                         | $ | (7,794,223        | ) | $                 | (217,484 | )     | $ | (7,343,750 | ) | $ | (13 | ) | $ |  |  | $ |      |  | $ | (274,554   | )
|Stock issued for cash and services                                                      |  |                               |  |   |                              |  |                            | 173,058    |                                              |   | 18                                            |  |                     | 173,040    |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 173,058    |  
|Recognition of services rendered by consultant                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   | 3,374,950  |   |   |   |   |   |  |  |   |      |  |   | 3,374,950  |  
|Stock issued to settle loans payable, related party                                     |  |                               |  |   |                              |  |                            | 14,054     |                                              |   | 1                                             |  |                     | 10,540     |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 10,541     |  
|Stock issued for past and future rent and administrative services                       |  |                               |  |   |                              |  |                            | 80,000     |                                              |   | 8                                             |  |                     | 59,992     |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 60,000     |  
|Foreign currency translation loss                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | (40,435  | )     |   |          |   |   |   |   |   |  |  |   |      |  |   | (40,435    | )
|Net Loss, 2006                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (3,534,787        | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (3,534,787 | )
|Balance, March 31, 2006                                                                 |  |                               |  | $ |                              |  |                            | 12,080,203 |                                              | $ | 1,208                                         |  |                     | 15,323,307 |                         | $ | (11,329,010       | ) | $                 | (257,919 | )     | $ | (3,968,800 | ) | $ | (13 | ) | $ |  |  | $ |      |  | $ | (231,227   | )
|Stock issued for cash and services                                                      |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   |          |  
|Recognition of services rendered by consultants                                         |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   | 3,968,800  |   |   |   |   |   |  |  |   |      |  |   | 3,968,800  |  
|Stock issued for past and future rent and administrative services                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   |          |   |   | 13  |   |   |  |  |   |      |  |   | 13         |  
|Foreign currency translation loss                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | (13,866  | )     |   |          |   |   |   |   |   |  |  |   |      |  |   | (13,866    | )
|Net Loss, 2007                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (4,148,725        | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (4,148,725 | )
|Balance, March 31, 2007                                                                 |  |                               |  | $ |                              |  |                            | 12,080,203 |                                              | $ | 1,208                                         |  |                     | 15,323,307 |                         | $ | (15,477,735       | ) | $                 | (271,785 | )     | $ |          |   | $ |   |   | $ |  |  | $ |      |  | $ | (425,005   | )
|Preferred convertible stock issued to settle loan payable, related party                |  | 459,734                         |  |   | 459,734                        |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 459,734    |  
|Preferred convertible stock issued to settle 5% interest on convertible preferred stock |  | 13,890                          |  |   | 13,890                         |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 13,890     |  
|Common stock issued to settle loan payable, related party                               |  |                               |  |   |                              |  |                            | 3,408      |                                              |   | 1                                             |  |                     | 1,703      |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 1,704      |  
|Stock issued for rent and administrative services                                       |  |                               |  |   |                              |  |                            | 159,999    |                                              |   | 16                                            |  |                     | 79,984     |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 80,000     |  
|Common stock issued for director fees                                                   |  |                               |  |   |                              |  |                            | 500,000    |                                              |   | 50                                            |  |                     | 249,950    |                         |   |                 |   |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 250,000    |  
|Foreign currency translation loss                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | (146,222 | )     |   |          |   |   |   |   |   |  |  |   |      |  |   | (146,222   | )
|Net Loss, 2008                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (353,838          | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (353,838   | )
|Balance, March 31, 2008                                                                 |  | 473,624                         |  | $ | 473,624                        |  |                            | 12,743,610 |                                              | $ | 1,275                                         |  | $                   | 15,654,944 |                         | $ | (15,831,573       | ) | $                 | (418,007 | )     | $ |          |   | $ |   |   | $ |  |  | $ |      |  | $ | (119,737   | )
|Foreign currency translation gain                                                       |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   |                 |   |                   | 240,763  |       |   |          |   |   |   |   |   |  |  |   |      |  |   | 240,763    |  
|Net Loss, 2009                                                                          |  |                               |  |   |                              |  |                            |          |                                              |   |                                             |  |                     |          |                         |   | (643,096          | ) |                   |        |       |   |          |   |   |   |   |   |  |  |   |      |  |   | (643,096   | )
|Balance, March 31, 2009                                                                 |  | 473,624                         |  | $ | 473,624                        |  |                            | 12,743,610 |                                              | $ | 1,275                                         |  | $                   | 15,654,944 |                         | $ | (16,474,669       | ) | $                 | (177,244 | )     | $ |          |   | $ |   |   | $ |  |  | $ |      |  | $ | (522,070   | )



See the accompanying notes to the consolidated financial statements.





F-6



---

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Statements of Cash Flows

|                                                                                               |  |                               |          |   |                                       |          |   |      |             |  
|---------------------------------------------------------------------------------------------- |  | ----------------------------- | -------- | - | ------------------------------------- | -------- | - | ---- | ----------- | -
|                                                                                               |  | For the Years Ended
March 31, |          |   | March 5, 1999
(inception) to March 31 |         
|                                                                                               |  | 2009                          |          |   | 2008                                  |          |   | 2009 |            
|Cash Flows from Operating Activities:                                                          |  |                               |          |   |                                       |          |   |      |             |  
|Net income (loss)                                                                              |  | $                             | (643,096 | ) | $                                     | (353,838 | ) |      | (16,474,669 | )
|Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:       |  |                               |          |   |                                       |          |   |      |             |  
|Depreciation and amortization                                                                  |  |                               |        |   |                                       |        |   |      | 814,183     |  
|Recognition of services rendered by consultant                                                 |  |                               |        |   |                                       |        |   |      | 10,227,893  |  
|Stock based consulting expense                                                                 |  |                               |        |   |                                       |        |   |      | 854,345     |  
|Stock based director fees                                                                      |  |                               |        |   |                                       | 250,000  |   |      | 314,100     |  
|Stock based rent and administrative fees                                                       |  |                               |        |   |                                       | 80,000   |   |      | 167,028     |  
|Preferred convertible stock issued for interest due on outstanding
preferred convertible stock |  |                               |        |   |                                       | 13,890   |   |      | 13,890      |  
|Common stock warrants issued as financing fee                                                  |  |                               |        |   |                                       |        |   |      | 3,783       |  
|Loss on disposal of equipment                                                                  |  |                               |        |   |                                       |        |   |      | 567         |  
|Impairment loss                                                                                |  |                               |        |   |                                       |        |   |      | 1,191,846   |  
|Gain on debt forgiveness                                                                       |  |                               |        |   |                                       | (9,837   | ) |      | (9,837      | )
|Gain on settlement of accounts payable                                                         |  |                               |        |   |                                       |        |   |      | (59,654     | )
|Loss on settlement of accounts payable                                                         |  |                               |        |   |                                       |        |   |      | 519,795     |  
|Amortization of stock based financing fee                                                      |  |                               |        |   |                                       |        |   |      | 25,010      |  
|Changes in operating assets and liabilities:                                                   |  |                               |          |   |                                       |          |   |      |           |  
|Prepaids and other assets                                                                      |  |                               | (1,876   | ) |                                       | (30,730  | ) |      | (47,562     | )
|Accounts payable and accrued expenses                                                          |  |                               | 24,098   |   |                                       | (27,791  | ) |      | 537,522     |  
|Related party accounts payable, accrued interest, and accrued liabilities                      |  |                               | 31,713   |   |                                       |        |   |      | 52,592      |  
|Net Cash Used in Operating Activities                                                          |  |                               | (589,161 | ) |                                       | (78,306  | ) |      | (1,869,168  | )
|Cash Flows from Investing Activities:                                                          |  |                               |        |   |                                       |        |   |      | (4,463      | )
|Purchase of property and equipment                                                             |  |                               |        |   |                                       |        |   |      | (4,463      | )
|Net Cash Used in Investing Activities                                                          |  |                               |          |   |                                       |          |   |      |             |  
|Cash Flows from Financing Activities:                                                          |  |                               |          |   |                                       |          |   |      |             |  
|Proceeds from common stock issuance, net of offering cost                                      |  |                               |        |   |                                       |        |   |      | 958,222     |  
|Loan proceeds from related parties, net                                                        |  |                               | 353,824  |   |                                       | 228,008  |   |      | 1,132,199   |  
|Repayment of loan to related parties                                                           |  |                               |        |   |                                       |        |   |      | (26,792     | )
|Net Cash Provided by Financing Activities                                                      |  |                               | 353,824  |   |                                       | 228,008  |   |      | 2,063,629   |  
|Effect of Exchange Rate on Cash                                                                |  |                               | 240,763  |   |                                       | (146,222 | ) |      | (177,244    | )
|Net Increase (decrease) in Cash and Cash Equivalents                                           |  |                               | 5,426    |   |                                       | 3,480    |   |      | 12,754      |  
|Cash and Cash Equivalents at Beginning of Period                                               |  |                               | 7,328    |   |                                       | 3,848    |   |      |           |  
|Cash and Cash Equivalents at End of Period                                                     |  | $                             | 12,754   |   | $                                     | 7,328    |   | $    | 12,754      |  

See accompanying notes to consolidated financial statements.



F-7



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Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Audited Consolidated Statements of Cash Flows (Continued)

|                                                            |  |   |    |  |   |         |  |   |           | 
|----------------------------------------------------------- |  | - | -- |  | - | ------- |  | - | --------- | 
|Supplemental Disclosure of Cash Flow Information:           |  |   |    |  |   |         |  |   |           | 
|Cash paid for:                                              |  |   |    |  |   |         |  |   |           | 
|Interest                                                    |  | $ |  |  | $ |       |  | $ |         | 
|Taxes                                                       |  | $ |  |  | $ |       |  | $ |         | 
|Supplemental Disclosure of Non-Cash                         |  |   |    |  |   |         |  |   |           | 
|Investing and Financing Activities:                         |  |   |    |  |   |         |  |   |           | 
|Conversion of debt to equity                                |  | $ |  |  | $ | 461,438 |  | $ | 1,102,154 | 
|Stock issued for deferred consulting services               |  | $ |  |  | $ |       |  | $ | 6,750,000 | 
|Conversion of liabilities to note payable                   |  | $ |  |  | $ |       |  | $ | 102,023   | 
|Stock issued for debt restructuring anti-dilusion provision |  | $ |  |  | $ |       |  | $ | 800,000   | 
|Conversion of preferred shares to common shares             |  | $ |  |  | $ |       |  | $ | 250,000   | 
|Stock issued for future services                            |  | $ |  |  | $ |       |  | $ | 1,200,000 | 
|Issued common shares for intangible assets                  |  | $ |  |  | $ |       |  | $ | 2,000,000 | 

See accompanying notes to consolidated financial statements.



F-8



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSMARCH 31, 2009

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) NATURE OF BUSINESS

Kyto Biopharma, Inc. was formed as a Florida corporation on March 5, 1999. B Twelve, Limited, Kyto Biopharma, Inc.'s wholly-owned Canadian subsidiary (collectively referred to as the "Company"), was also formed on March 5, 1999. On August 14, 2002, the Company changed its name from B Twelve, Inc. to Kyto Biopharma, Inc.

The Company is a biopharmaceutical company, formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other proliferate and autoimmune diseases. The Company has subsequently built itself into a development stage biopharmaceutical company that develops receptor-mediated technologies to control the uptake of vitamin B12 by non-controlled proliferative cells.

Activities during the development stage include acquisition of financing and intellectual properties and research and development activities conducted by others under contracts.

(B) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.

(C) GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company has no revenues, a net loss of $643,096, a working capital deficiency of $522,070, a stockholders' deficiency of $522,070 and a deficit accumulated during the development stage of $16,474,669 at March 31, 2009. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company is currently a development stage company and its continued existence is dependent upon the Company's ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. During the year ended March 31, 2009, the Company received $353,824 in related party debt financing.

The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is very 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, and that the Company will achieve a profitable level of operations.

(D) USE OF ESTIMATES

In preparing consolidated 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 consolidated financial statements, and revenues and expenses during the period presented. Actual results may differ from these estimates.

Significant estimates during 2009 and 2008 and for the period for March 5, 1999 (inception) to March 31, 2009 include depreciable lives on equipment, valuation of intangible assets, the valuation allowance of deferred tax assets, and the valuation of non-cash stock based transactions.

(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.



F-9



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

(F) BASIS OF PRESENTATION AND FOREIGN CURRENCY

The accompanying consolidated financial statements are presented under accounting principles generally accepted in the United States of America and in United States dollars.

The Company's Canadian subsidiary transacts business in the Canadian dollar. The accounts of the Canadian subsidiary are translated to United States dollars using the current rate method. Under the current rate method, all assets and liabilities are translated using exchange rates at the balance sheet date. Revenue and expense items are translated using the average rate of exchange prevailing during the period. Capital transactions are translated at their historical rates. Exchange gains and losses resulting from translation of foreign currencies are recorded in stockholders' deficiency as a cumulative translation adjustment and reflected as a component of other accumulated comprehensive income or loss.

Gains and losses resulting from foreign currency transactions are recognized in operations of the period incurred.

(G) CONCENTRATIONS

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. As of March 31, 2009, the Company did not have any deposits in excess of federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2009.

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.

(H) EQUIPMENT

Equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets of five years.

(I) LONG-LIVED ASSETS

The Company reviews long-lived assets and certain identifiable assets related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows of the long-lived assets are less that the carrying amount, their carrying amount is reduced to fair value and an impairment loss is recognized.

(J) STOCK-BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard ("SFAS") 123R, "Share-Based Payment", ("SFAS 123R) a revision to SFAS 123. SFAS 123R requires all share-based payments to be recognized in the financial statements based on their values using either a modified-prospective of modified-retrospective transition method.

Prior to March 31, 2006, the Company's stock-based compensation plans were accounted for under the recognition and measurement provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees ("APB 25") and related interpretations, as permitted by FASB Statement No. 123, "Accounting for Stock -Based Compensation ("SFAS 123").

The Company adopted the disclosure provisions of SFAS No. 123R, "Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock Based Compensation-Transaction and Disclosure," which has entities provide pro forma net income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method defined in SFAS No. 123R had been applied.



F-10



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

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.

(K) RESEARCH AND DEVELOPMENT COSTS

Others conduct research and development on behalf of the Company under contractual agreements and such costs are charged to expense as incurred. Research and development expense was $216,926 and $115,045, and $1,518,604 for the years ended March 31, 2009, 2008, and for the period from March 5, 1999 (inception) to March 31, 2009, respectively.

(L) INCOME TAXES

The Company accounts for income taxes under the Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period, which includes the enactment date.

(M) COMPREHENSIVE INCOME

The Company accounts for Comprehensive Income under the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("Statement No. 130"). Statement No. 130 establishes standards for reporting and display of comprehensive income and its components. Comprehensive income is the total of net income (loss) and other comprehensive income (loss).

The foreign currency translation gains and losses resulting from the translation of the financial statements of B Twelve, Ltd. expressed in Canadian dollars to United States dollars are reported as Accumulated Other Comprehensive Income or Loss in the Statement of Operations.

(N) NET LOSS PER COMMON SHARE

In accordance with Statement of Financial Accounting Standards No. 128, "Earnings per Share", basic earnings per share is computed by dividing the net income less preferred dividends for the period by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income less preferred dividends by the weighted average number of common shares outstanding including the effect of common stock equivalents. Common stock equivalents, consisting of stock options and warrants, have not been included in the calculation, as their effect is antidilutive for the periods presented. At March 31, 2009, there were convertible preferred shares which could have been potentially been converted into 471,816 shares of common stock, but would be antidilutive.

(O) FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate that value. For purposes of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.



F-11



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)

The carrying amounts of the Company's short-term financial instruments, including other receivables, accounts payable, and loans payable-related parties, approximate fair value due to the relatively short period to maturity for these instruments.

(P) RECENT ACCOUNTING PRONOUNCEMENTS

In April 2008, the FASB issued FASB Staff Position (FSP) SFAS No. 142-3, Determination of the Useful Life of Intangible Assets. This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets (SFAS 142). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R, and other GAAP. This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the SECs approval of the Public Company Accounting Oversight Boards amendments to AU section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Company is currently evaluating the impact of SFAS 162, but does not expect the adoption of this pronouncement will have a material impact on its financial position, results of operations or cash flows.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market For That Asset Is Not Active (FSP FAS 157-3), with an immediate effective date, including prior periods for which financial statements have not been issued. FSP FAS 157-3 amends FAS 157 to clarify the application of fair value in inactive markets and allows for the use of managements internal assumptions about future cash flows with appropriately risk-adjusted discount rates when relevant observable market data does not exist. The objective of FAS 157 has not changed and continues to be the determination of the price that would be received in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date. The adoption of FSP FAS 157-3 is not expected to have a material effect on the Companys financial position, results of operations or cash flows.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on the financial statements upon adoption.

(Q) RECLASSIFICATIONS

Certain amounts in the March 31, 2008 consolidated financial statements have been reclassified to conform to the March 31, 2009 presentation.

NOTE 2 PREPAID EXPENSES

Prepaid expenses are related to prepaid research and development. Prepaid research and development costs are amortized as services are performed. For the year ended March 31, 2009 and 2008 the total prepaid expenses were $47,562 and $45,686 respectively.



F-12



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 3 INTANGIBLE ASSETS IMPAIRMENT

On June 2, 1999, the Company purchased a portfolio of patents, patents pending, and related intellectual property (collectively the "Intellectual Property") from a third party in exchange for 2,000,000 shares of the Company's common stock. The shares were valued at $1.00 per share based on contemporaneous cash purchases of convertible preferred stock and common stock warrants resulting in a value of $2,000,000. The Company also capitalized certain legal costs.

As of March 31, 2002, management performed an impairment analysis of the Intellectual Property. Due to the then current status of the Company as a development stage company and the inherent difficulties in projecting future revenues recognized an impairment loss for the full remaining book value of the asset totaling $1,191,846 in 2002.

NOTE 4 COMMITMENTS AND CONTINGENCIES

(A) LEASES

The Company leases office space on a month-to-month basis. The premise is leased from a principal stockholder. Rent expense in 2009, 2008, and for the period from March 5, 1999 (inception) to March 31, 2009 were $20,000, $20,000, and $168,377, respectively and is included in general and administrative expense in the accompanying consolidated statements of operations.

(B) REDEEMABLE COMMON STOCK PURSUANT TO PUT OPTION

In November 2002 and February 2003, the Company issued an aggregate 273,058 shares of its common stock having a fair value of $273,058 to settle certain accounts payable under a debt settlement agreement ("agreement") with three unrelated parties. Of the total stock issued in connection with the agreement, two of these parties received an aggregate 173,058 shares of common stock. In addition, these two creditors received a written put option for the aggregate 173,058 shares of common stock previously issued. Three years from the date of the initial settlement, the put option holders have a thirty-day period in which to notify the Company of their intent to put the options back to the Company at a redemption price of $1.00 per share. The Company had 90 days from the notification date to make the required payment. These shares expired without redemption during the year ended March 31, 2006.

(C) REGULATION

The business of the Company is subject to various governmental regulations in the United States of America, Canada, and other countries, which must approve any Company products before commencement of commercial sales and which regulate the manufacturing of pharmaceuticals.

(D) LITIGATION

A claim against the Company has been commenced by SHI Consulting in the amount of $32,416 plus GST for damages resulting from a breach of contract and prejudgment and post judgment interest and costs. The Company counterclaimed for $300,000 for breach of contract plus interest and costs. The action is in preliminary stages. The claim has been dismissed as of March 31, 2009

NOTE 5 LOANS AND NOTES PAYABLE AND ACCRUED LIABILITIES, RELATED PARTIES

(A) LOANS PAYABLE, RELATED PARTIES

In November 2002, the Company received working capital funds from a principal stockholder totaling $50,000 as part of a $100,000 agreement to provide debt financing.



F-13



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 5 LOANS AND NOTES PAYABLE AND ACCRUED LIABILITIES, RELATED PARTIES(CONTINUED)

During the year ended March 31, 2004, the Company received the remaining $50,000 portion of the debt financing transaction plus an additional $25,000. All activity with this principal stockholder represents a 100% concentration of all debt financing for the year ended March 31, 2004. All loans are non-interest bearing, unsecured and due on demand. In the first quarter of fiscal 2004, an additional $35,000 loan was received from the same principal stockholder. In October 2004, the $160,000 was exchanged for 320,000 common shares. The Company recognized a loss of $320,000 on this transaction.

At March 31, 2005, the Company owed $4,616 to a director of the Company. The loan was non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. The amount was paid in February 2006, through issuance of stock.

At March 31, 2007, the Company owed $233,430 to a related party of the Company. The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. During the year ended March 31, 2008, the company was advanced an additional $228,008. The loan was paid through issuance of 459,734 shares of preferred convertible stock valued at $1 per share and 3,408 shares of common stock valued at $0.50 per share for a total of $461,438. The balance of the related party loan payable as of March 31, 2008 was $0.

At March 31, 2009, the Company owed $353,824 to a related party director of the Company. The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance.

(B) ACCRUED LIABILITIES, RELATED PARTY

The Company leases office space and administrative services from a related party principal stockholder. Rent and administrative expense in 2009, 2008, and for the period from March 5, 1999 (inception) to March 31, 2009 was $37,500, $40,000, and $374,254, respectively and is included in general and administrative expense in the accompanying consolidated statements of operations. The Company allocates 50% of these amounts to rent expense. During the year ended March 31, 2008, the Company issued 159,999 shares of common stock valued at $0.50 per share for a total of $80,000 to satisfy accrued rent and administrative expense. As of March 31, 2009 and 2008, the remaining balance in the accrued liabilities-related party account for the above services was $43,333 and $10,000, respectively.

(C) NOTE PAYABLE, RELATED PARTY

During the year ended March 31, 2001, the Company entered into an agreement with a vendor, who is also a principal stockholder, for services totaling $200,000. On November 11, 2002, the Company and vendor mutually agreed that in lieu of the $200,000 payment, the vendor would accept 100,000 shares of the Company's common stock valued at $1.00 totaling $100,000. In addition, the Company also executed a $100,000 unsecured promissory note with the vendor. Under the terms of the promissory note, the obligation bears interest at prime plus 1% (5.25% at March 31, 2008). Interest is accrued and payable quarterly. At March 31, 2008, accrued interest totaled $45,199. In connection with the promissory note, all principal and accrued interest is payable in full upon the earliest of the following:

(i) The date on which the Company raises at least $1,000,000 in funding within a twelve-month period;

(ii) The date on which the agreement between the Company, vendor and other unrelated party terminates; or

(iii) Three years from the date of the promissory note.

Since the note was due in November 2005, the note payable was re-classified to current liabilities at March 31, 2005.



F-14



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 6 STOCKHOLDERS' DEFICIENCY

(A) CONVERTIBLE PREFERRED STOCK

In June 1999, an investor purchased 250,000 units at $1.00 per unit or $250,000 consisting of 250,000 shares of convertible preferred stock and receives warrants to purchase up to 750,000 common shares as follows: 250,000 common stock warrants exercisable at $1.00 per share issued with the preferred stock and another potential 500,000 as discussed below. The preferred stock was convertible to common stock on a one-for-one basis upon the earlier of:

(i) An initial public offering by the Company, as defined,

(ii) The completion of a reverse take-over transaction,

(iii) A minimum $3,000,000 private equity financing based on a $10,000,000 valuation or,

(iv) The merger of the Company with another corporation or the sale of substantively all the assets of the Corporation.

There was no beneficial conversion feature upon the sale as the value of the common shares into which the preferred shares are convertible are also $1.00 based on contemporaneous transactions.

Upon exercise of the first 250,000 warrants, the investor received another warrant for 250,000 common shares at $1.00 exercise price per share. Upon conversion of the preferred stock, each share of common stock issued shall be coupled with an additional common stock purchase warrant at an exercise price of $1.00 per share with a three-month term. In December 1999 and May 2000, 100,000 and 150,000, respectively, of the first warrant were exercised and therefore in May 2000 the additional 250,000 warrant were granted with an exercise price of $1.00 expiring June 2003. In June 2001, pursuant to a letter of intent, which was ratified by the shareholders, the preferred shares were converted and the additional 250,000 warrants were granted at an exercise price of $1.00 with an amended term not to exceed five years. There was no beneficial conversion feature to the warrants as the value of the common stock was still considered to be $1.00 based on contemporaneous transactions at that time. There was no effect of the warrant issuances on operations as all warrants are considered to be purchased as part of the preferred stock unit. The second and third warrants totaling 500,000 common shares remained outstanding at March 31, 2003. In June 2003, 250,000 expired and in June 2006 the remaining 250,000 expired.

In May 2007, Kyto entered into an agreement with Credifinance Capital Corp. to issue up to 500,000 convertible preferred shares at $1.00 per share in satisfaction of amounts due to Credifinance Capital Corp. During the year ended March 31, 2008 the Company issued 459,734 shares of convertible preferred stock to a Credifinance Capital Corp. to satisfy the related party loan payable. As there is no readily available fair value for the Company's convertible preferred stock, the issuance has been recorded at par value of $1 per share for a total of $459,734. The preferred convertible stock issued to satisfy the related party loan may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum. Preferred convertible stock has the same voting rights as common stock.

The Company issued 13,890 shares of preferred stock valued at $1 per share for a total of $13,890 to Credifinance Capital Corp. for the accrued interest due on outstanding convertible preferred stock during the year ended March 31, 2008. These shares may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum.

As of March 31, 2009, 473,624 convertible preferred shares were outstanding.



F-15



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 6 STOCKHOLDERS' DEFICIENCY(CONTINUED)

(B) COMMON STOCK AND OPTIONS

In January 2006, the Company issued 94,054 shares valued at $0.75 per share based on the quoted trade price in payment of various expenses totaling $47,027 to a finance company controlled by a director of the company and to a director. The Company recorded a loss on debt conversion of $23,513.

In February 2008, the company issued 500,000 shares valued at $0.50 per share in payment of consulting service to Dr. Uri Sagman, 159,999 shares valued at $0.50 per share to Credifinance Capital Corp. for rent and administration fees, and 3,408 shares valued at $0.50 per share to Credifinance Capital Corp. for satisfaction of the balance of the related party loan payable..

(C) STOCK OPTIONS AND WARRANTS

The Company issues stock options and warrants to employees, service providers, and investors in the course of business.

For stock options and warrants issued to non-employees, the Company applies SFAS No. 123. Accordingly, consulting expense of $3,783 and $254,345 were recognized in 2003 and 2002, respectively, upon granting of 25,000 and 125,000 common stock options, respectively. $345,000 was charged to operations in 1999 as reflected in the accompanying consolidated statements of operations from March 5, 1999 (inception) to March 31, 2008.

For consolidated financial statement disclosure purposes and for purposes of valuing stock options and warrants issued to consultants, the fair market value of each stock granted was estimated on the grant date using the Black-Scholes Option-Pricing Model in accordance with SFAS 123. The following weighted-average assumptions were used for the year ended March 31:

|                        |   |      |      |      |      |      |      |         |        |      |      |        
|----------------------- | - | ---- | ---- | ---- | ---- | ---- | ---- | ------- | ------ | ---- | ---- | -------
|                        |   | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003    | 2002   | 2001 | 2000 | 1999   
|Expected Dividend Yield | $ |    |    |    |    |    |    |       |      |    |    |      
|Risk Free Interest Rate |   |    |    |    |    |    |    | 4.15%   | 3.57%  |    |    | 4.53%  
|Expected Volatility     |   |    |    |    |    |    |    | 0.00%   | 0.00%  |    |    | 0.00%  
|Expected Term           |   |    |    |    |    |    |    | 4 Years | 1 Year |    |    | 2 Years

A summary of the options outstanding, which were granted for cash or services are presented below:

|                          |  |  |           |  |  |                | 
|------------------------- |  |  | --------- |  |  | -------------- | 
|                          |  |  | WARRANTS  |  |  | EXERCISE PRICE | 
|Stock Options             |  |  |           |  |  |                | 
|Balance at March 31, 2002 |  |  | 500,000   |  |  | $1.00          | 
|Granted                   |  |  | 25,000    |  |  | 1.00           | 
|Exercised                 |  |  |         |  |  |              | 
|Forfeited                 |  |  |         |  |  |              | 
|Terminated                |  |  |         |  |  |              | 
|                          |  |  |           |  |  |                | 
|Balance at March 31, 2003 |  |  | 525,000   |  |  | $1.00          | 
|Granted                   |  |  |         |  |  |              | 
|Exercised                 |  |  |         |  |  |              | 
|Forfeited                 |  |  | (250,000) |  |  | 1.00           | 
|Terminated                |  |  |         |  |  |              | 





F-16



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 6 STOCKHOLDERS' DEFICIENCY(CONTINUED)

|                                                                          |  |  |           |  |  |                | 
|------------------------------------------------------------------------- |  |  | --------- |  |  | -------------- | 
|                                                                          |  |  | WARRANTS  |  |  | EXERCISE PRICE | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2004                                                 |  |  | 275,000   |  |  | $1.00          | 
|Granted                                                                   |  |  |         |  |  |              | 
|Exercised                                                                 |  |  |         |  |  |              | 
|Forfeited                                                                 |  |  |         |  |  |              | 
|Terminated                                                                |  |  |         |  |  |              | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2005                                                 |  |  | 275,000   |  |  | $1.00          | 
|Granted                                                                   |  |  |         |  |  |              | 
|Exercised                                                                 |  |  |         |  |  |              | 
|Forfeited                                                                 |  |  |         |  |  |              | 
|Terminated                                                                |  |  |         |  |  |              | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2006                                                 |  |  |         |  |  |              | 
|Granted                                                                   |  |  | 275,000   |  |  | $1.00          | 
|Exercised                                                                 |  |  |         |  |  |              | 
|Forfeited                                                                 |  |  | (250,000) |  |  | $1.00          | 
|Terminated                                                                |  |  |         |  |  |              | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2007                                                 |  |  | 25,000    |  |  | $1.00          | 
|Granted                                                                   |  |  |         |  |  |              | 
|Exercised                                                                 |  |  |         |  |  |              | 
|Forfeited                                                                 |  |  | (25,000)  |  |  | $1.00          | 
|Terminated                                                                |  |  |         |  |  |              | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2008                                                 |  |  |         |  |  | $1.00          | 
|Granted                                                                   |  |  |         |  |  |              | 
|Exercised                                                                 |  |  |         |  |  |              | 
|Forfeited                                                                 |  |  |         |  |  |              | 
|Terminated                                                                |  |  |         |  |  |              | 
|                                                                          |  |  |           |  |  |                | 
|Balance at March 31, 2009                                                 |  |  |         |  |  | $1.00          | 
|                                                                          |  |  |           |  |  |                | 
|Weighted average fair value
 of options granted for
 services during 2009 |  |  |           |  |  | $            | 

(D) PAR VALUE

In August 2001, the par value of common stock was changed to $0.0001 from $1.00. The change is reflected retroactively for all periods presented in the accompanying consolidated financial statements.

(E) EARNINGS PER SHARE

Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. The following reconciles amounts reported in the financial statements for the year ended March 31, 2009:



F-17



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KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 6 STOCKHOLDERS' DEFICIENCY(CONTINUED)

|                                                                               |  |   |                    |   |                      |  |                  |       |  
|------------------------------------------------------------------------------ |  | - | ------------------ | - | -------------------- |  | ---------------- | ----- | -
|                                                                               |  |   | Income
(Numerator) |   | Shares
(Denominator) |  | Per-Share
Amount |      
|Income from continuing operations                                              |  | $ | (643,096           | ) |                      |  |                  |       |  
|Less preferred stock dividends                                                 |  |   |                  |   |                      |  |                  |       |  
|                                                                               |  |   |                    |   |                      |  |                  |       |  
|Income available to common stockholders -
Basic and diluted earnings per share |  | $ | (643,096           | ) | 12,743,610           |  | $                | (0.05 | )

Effect of dilutive securities

The following convertible securities were not included in the computation of diluted earnings per share because the effect of conversion would be antidilutive:

SHARES OF POTENTIAL 
COMMON STOCK

Preferred convertible shares 471,816

NOTE 7 INCOME TAXES

The Company files separate tax returns for the parent and its Canadian subsidiary. There was no income tax expense or utilization of net operating loss carryforwards for the years ended March 31, 2009 and 2008, due to the Company's net losses.

The blended Canadian Federal and Provincial Corporate tax rate of 41.5% applies to loss before taxes of the Canadian subsidiary. The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes for the years ended March 31, 2009 and 2008, (computed by applying the United States Federal Corporate tax rate of 34% to consolidated loss before taxes), as follows:

|                                                 |  |   |          |   |   |          |  
|------------------------------------------------ |  | - | -------- | - | - | -------- | -
|                                                 |  |   | 2009     |   |   | 208      |  
|Computed "expected" tax benefit                  |  | $ | (218,653 | ) | $ | (120,305 | )
|Foreign income tax rate differences              |  |   | 20,579   |   |   | 11,079   |  
|Change in deferred tax asset valuation allowance |  |   | 198,074  |   |   | 109,226  |  
|                                                 |  | $ |        |   | $ |        |  
|                                                 |  |   |          |   |   |          |  

The above benefit was calculated using a combined federal and state tax estimated rate as noted below

|                                   |  |  |       |   
|---------------------------------- |  |  | ----- | --
|Statutory federal income tax rate  |  |  | 34.00 | % 
|State income taxes                 |  |  |     | % 
|Foreign income tax rate difference |  |  | (3.2  | )%
|Valuation allowance                |  |  | (30.8 | )%
|Effective tax rate                 |  |  | (0.0  | )%

The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at March 31, 2009 are as follows:

|                                              |  |   |            |  
|--------------------------------------------- |  | - | ---------- | -
|Deferred tax assets:                          |  |   |            |  
|United States net operating loss carryforward |  | $ | 4,922,350  |  
|Canadian net operating loss carryforward      |  |   | 410,500    |  
|Total gross deferred tax assets               |  |   | 5,332,850  |  
|Less valuation allowance                      |  |   | (5,332,850 | )
|Net deferred tax assets                       |  | $ |          |  



F-18



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| |  |  |  | 
| |  |  |  | 

KYTO BIOPHARMA, INC. AND SUBSIDIARY(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)MARCH 31, 2009

NOTE 7 INCOME TAXES(CONTINUED)

The net change in valuation allowance during the year ended March 31, 2009 was an increase of approximately $227,093. The Company's subsidiary has net operating losses of approximately $743,100 at March 31, 2009 available to offset the subsidiaries' net income through 2012 under Canadian Federal and Provincial tax laws and the parent United States entity has a net operating loss carryforward of approximately $14,477,500 available to offset the parent's net income through 2026.

For the purpose of these estimates, certain stock based expenses aggregating approximately $1,008,000 since inception were considered non-deductible. Actual amounts ultimately deductible may differ from these estimates.

The utilization of the net operating loss carryforwards is dependent upon the ability to generate sufficient taxable income during the carryforward period. In addition, utilization of these carryforwards may be limited due to ownership changes as defined in the Internal Revenue Code.



F-19