================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
     1934

                    For the fiscal year ended March 31, 2007

     TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934

          For the transition period from _____________ to ____________

             Commission file number _______________________________

                              KYTO BIOPHARMA, INC.
           (Name of small business issuer as specified in its charter)

              FLORIDA                                           65-1086538
   (State or other jurisdiction of                            (IRS Employer
    Incorporation or organization)                         Identification No.)

B1-114 BELMONT, TORONTO, ONTARIO, CANADA                         M5R 1P8
 Address of principal executive offices)                       (Zip Code)

                    Issuer's telephone number: (416) 955-0349

           Securities registered under Section 12(b) of the Act: NONE

              Securities registered under Section 12(g) of the Act:
                 COMMON STOCK, $.0001 PAR VALUE ("COMMON STOCK")

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

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

State issuer's revenues for its most recent fiscal year: $0.00

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. NONE AS OF MARCH 31ST, 2007

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 12,080,203 COMMON SHARES - $0.0001
PAR VALUE - AS OF MARCH 31, 2007.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES [X]   NO [ ]

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<PAGE>


                              KYTO BIOPHARMA, INC.
                                   FORM 10-KSB
                      FOR FISCAL YEAR ENDED MARCH 31, 2006


                                TABLE OF CONTENTS


PART I     .................................................................   3
     ITEM 1. DESCRIPTION OF BUSINESS........................................   3
     ITEM 2. DESCRIPTION OF PROPERTY........................................   8
     ITEM 3. LEGAL PROCEEDINGS..............................................   8
     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............   8

PART II      ...............................................................   9
     ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......   9
     ITEM 6. MANAGEMENT `S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....  10
     ITEM 7. FINANCIAL STATEMENTS...........................................  15
     ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE............................  15
     ITEM 8A. CONTROLS AND PROCEDURES.......................................  15

PART III....................................................................  16
     ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL
             PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.....  16
     ITEM 10. EXECUTIVE COMPENSATION........................................  17
     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT....................................................  19
     ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................  20
     ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..............................  20
     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES........................  21

   SIGNATURES ..............................................................  22

   CONSOLIDATED FINANCIAL STATEMENTS........................................ F-1






                                       2

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF 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 2007 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 delivery of cytotoxic drugs to cancer cells using the vitamin B12 as a
Trojan Horse, ii) the therapeutic effect of vitamin B12 depletion by receptor
modulators, and iii) 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 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. The
following table summarizes the Company's research and product development
programs:
<TABLE>
<CAPTION>
 --------------------------------------------------------------------------------------------
 TECHNOLOGIES              DRUG CANDIDATES         TARGET INDICATION      STATUS
 --------------------------------------------------------------------------------------------
<S>                        <C>                     <C>                    <C>
     Bioconjugates         Paclitaxel              Oncology               Development
     (Drug Delivery)       Doxorubicin             Oncology               Proof of concept
                           Carboplatinum           Oncology
 --------------------------------------------------------------------------------------------
 Monoclonal Antibodies     Transport protein       Oncology               Development
                           Receptor                Oncology               Development
 --------------------------------------------------------------------------------------------
     Growth Blockers       Receptor modulators     Oncology               Proof of concept
 --------------------------------------------------------------------------------------------
</TABLE>
                                  3
<PAGE>

Kyto is currently using vitamin B12 as a vehicle to deliver cytotoxic drugs
selectively to tumors. The process can be achieved by taking advantage of a
proprietary technology and expertise based on known biological transport
mechanisms. The technology, known as bioconjugation, creates a molecular complex
or "bioconjugate" through the non-covalent binding of a transportable state of
the drug with the vitamin B12. The technology is designed to protect drugs from
degradation whilst allowing absorption through specific binding to a receptor. A
number of different types of bioconjugates were produced, including those with
marketed chemotherapeutic agents such as: paclitaxel (Taxol(R)), doxorubicin,
and carboplatinum.

Kyto has developed a core drug delivery technology that permits to generate:

1) Vitamin B12 bioconjugates that are used as a vehicle to deliver cytotoxic
drugs selectively to tumors via a receptor-mediated pathway. 2) Growth blockers
that are used to deplete the same tumors of the vitamin B12, an essential
co-factor for the biosynthesis of methionine and nucleic acids.

Kyto's bioconjugate and growth blocker 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.

The Company believes that its core drug delivery technology exhibits a number of
properties that would make it attractive to potential partners and be
commercially viable:

(a)  Core component (vitamin B12) and linker are safe and non toxic;
(b)  Core technology is protected by issued patents;
(c)  Versatility of the technology;
(d)  Diverse drug payloads;
(e)  Permit rapid drug creation;
(f)  New bioconjugate constructs are patentable;
(g)  Availability and low cost of raw material, and;
(h)  Easy to scale-up and technology transfer.

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
comparables to the activities of Kyto:

                                        4
<PAGE>

(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:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Technologies /            Clinical
Drug Candidates           Market     Status             Collaborators
----------------------------------------------------------------------------------------
<S>                       <C>        <C>                <C>
Drug Delivery
Bioconjugates
----------------------------------------------------------------------------------------
   Paclitaxel             Oncology   Development        New York University
   Doxorubicin            Oncology   Proof of concept
   Carboplatinum          Oncology   Proof of concept
----------------------------------------------------------------------------------------
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   --
----------------------------------------------------------------------------------------
</TABLE>

In 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 2007 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 of 2007.

(4) Distribution of Products

Because of capital constraints, the Company has decided to focus its financial
resources for i) the development of its monoclonal antibodies and ii) the
pre-clinical development of its first lead drug candidate based on paclitaxel
conjugated to vitamin B12 for out-licensing.

As the first drug candidate paclitaxel conjugated to vitamin B12 enters the
formal preclinical program the Company plans to outsource specific study
components to a Chemical Contract Manufacturer (CCM) and an integrated Contract
Research Organizations (CRO) to permit the conduct of concurrent studies in
order to meet time-limiting project milestones.

During the preclinical development of a new drug candidate, a diverse number of
studies relating chemistry, formulation, animal pharmacology, toxicology,
manufacturing and clinical supplies are required to meet the regulatory
requirements of an Investigational New Drug (IND) submission. Kyto is also
reviewing the possibility to have a CRO as a strategic partner as opposed to a
service provider. Due to the limited internal project management staff, Kyto may
prefer to outsource the entire pre-clinical program to a vertically integrated
CRO capable of handling studies from discovery screening to IND filing.

                                       5
<PAGE>

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:
<TABLE>
<CAPTION>
     -------------------------------------------------------------------------------------------------------------------------
            PATENT NO.                                           TITLE                                          ISSUED
     -------------------------------------------------------------------------------------------------------------------------
          <S>                  <C>                                                                             <C>
            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                         18/11/97
                               B12/transcobalamin II receptor and binding sites
     -------------------------------------------------------------------------------------------------------------------------
           US5,739,287         Biotinylated cobalamins                                                         14/04/98
     -------------------------------------------------------------------------------------------------------------------------
           US5,840,712         Water soluble vitamin B12 receptor modulating agents and methods                24/11/98
                               relating thereto
     -------------------------------------------------------------------------------------------------------------------------
           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                04/07/00
                               relating thereto
     -------------------------------------------------------------------------------------------------------------------------
           CA2,135,277         Anti-receptor and growth blocking agents to the vitamin                         24/04/01
                               B12/transcobalamin II receptor and use in preventing cellular uptake of
                               vitamin B12
     -------------------------------------------------------------------------------------------------------------------------
            NZ323,127          Vitamin B12 receptor modulating agents and methods related and methods          12/07/01
                               related thereto
     -------------------------------------------------------------------------------------------------------------------------
            KR297,310          Anti-receptor and growth blocking agents to the vitamin                         21/05/01
                               B12/transcobalamin II receptor and use in preventing cellular uptake of
                               vitamin B12
     -------------------------------------------------------------------------------------------------------------------------
            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       13/09/2005
                               Receptor and binding sites
     -------------------------------------------------------------------------------------------------------------------------
         US60/790,330          Transcobalamin receptor polypeptides, nucleic acids, modular thereof, and      07/04/02006
                               Related methods of use in modulating cell growth and treating cancer and
                               Cobalamin deficiency
     -------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       6

<PAGE>

(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.

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 Phases 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
                           substantiative 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.

                                       7
<PAGE>
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 thereunder 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 $83,117, $41,590, and $1,186,633 for the
years ended March 31, 2007, 2006, and for the period from March 5, 1999
(inception) to March 31, 2007, 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-QSB) and an annual report (Form 10-KSB) 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

There is no litigation of any type whatsoever pending or threatened by or
against the Company, its officers and directors.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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

                                        8
<PAGE>

                                     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-KSB for the year
ending March 31, 2007. 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-KSB
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, 2006 and
2005. 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, 2007
       ------------------------------------------------------------
       First quarter                      $    1.10       $    0.75
       Second quarter                          1.10            1.00
       Third quarter                           1.00            0.51
       Fourth quarter                          0.75            0.51

       Fiscal Year Ended March 31, 2006
       ------------------------------------------------------------
       First quarter                      $    1.10       $    0.35
       Second quarter                          0.51            0.35
       Third quarter                           0.75            0.25
       Fourth quarter                          0.75            0.75

There were 12,080,203 shares of common stock outstanding and 25,000 options to
purchase common stock outstanding as of the end of the fiscal year ended March
31, 2007.

(B) HOLDERS

According to information provided to us by the transfer agent for our shares of
Common Stock, as of March 31, 2007, there were 15 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


                                        9

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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 2007 the company had, a net loss of
$4,148,725, cash used in operations of $169,531, a working capital deficiency of
$425,005, a stockholders' deficiency of $425,005, and a deficit accumulated
during development stage of $15,477,735 at March 31, 2007. 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 $83,117, $41,590, and $1,186,633 for the
years ended March 31, 2007, 2006, and for the period from March 5, 1999
(inception) to March 31, 2007, respectively.

In 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 of 2007.

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, 2007), $443,809 in
liabilities. The Company estimates that it will require up to $75,000 to meet
operating 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,
2007 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.

                                       10
<PAGE>

(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-KSB 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.

Endocyte, Inc. is a private U.S. based biotechnology company focused on vitamin
based drug targeting and delivery systems. Similarly to Kyto, Endocyte's mission
is to use vitamins as "trojan horses" to target and deliver diagnostic and
therapeutic agents into cells for treatment of diseases. Endocyte's lead project
is the use of the vitamin folate to target and deliver anticancer agents.

Protarga, Inc. is a private U.S. based pharmaceutical company that has developed
a technology involving the chemical attachment of natural fatty acids to
therapeutic agents that are accumulated by the cells. The Company's first
product candidate, Taxoprexin(R) Injection for cancer chemotherapy, is currently
being evaluated in eight Phase II clinical studies in the U.S. and Europe.

Manticore Pharmaceuticals Inc. is a private U.S. based biotechnology company
that has developed a method to target the delivery of cytotoxic anticancer drugs
to tumor cells by using vitamin B12 as delivery vehicle similarly to Kyto's
approach, except that their bioconjugates are synthesized by attaching cytotoxic
drugs to the cobalt atom of cobalamin. The bioconjugates need to be activated by
ultrasound to cleave the C-Co bond, thereby allowing release of the drug. They
also developed fluorescent cobalamin conjugates ("CobalaFluors") that may be
useful as diagnostic imaging agents in breast cancer surgery and other
diagnostic procedures where it is desirable to visualize cancer cells.

Access Pharmaceuticals, Inc. is a public U.S. based pharmaceutical company that
has proprietary patents or rights to seven drug delivery technology platforms:
synthetic polymer targeted delivery, vitamin mediated targeted delivery
(including oral), bioerodible hydrogel technology, nanoparticles, Residerm
topical delivery, carbohydrate targeting technology and agents for the
prevention and treatment of viral diseases, including HIV.

                                       11
<PAGE>

Other 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:

o        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.

o        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.

o        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.

                                       12
<PAGE>

o        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 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.

o        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.

                                       13

<PAGE>
o        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 73.6% of our common stock as of March
         31, 2006. 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.

o        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.

o        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.

         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.

o        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, 2007
         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.
                                       14
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

Attached audited consolidated financial statements for KYTO BIOPHARMA, INC. AND
SUBSIDIARY for the fiscal years ended March 31, 2007, 2006, and Cumulative from
March 5, 1999 (Inception) to March 31, 2007 can be found beginning on page F-1.

ITEM 8.  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 8A. CONTROLS AND PROCEDURES

An evaluation of the Company's disclosure controls and procedures (as defined in
Section 13(a)-14(c) of the Securities Exchange Act of 1934 (the "Act")) was
carried out under the supervision and with the participation of our President
and Chief Executive Officer within the 90-day period preceding the filing date
of this report. Our President and Chief Executive Officer concluded that the
Company's disclosure controls and procedures as currently in effect are
effective in ensuring that the information required to be disclosed by the
Company in the reports it files or submits under the Act is (i) accumulated and
communicated to the Company's management in a timely manner, and (ii) recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms.

There were no significant changes made to our internal control over financial
reporting (as defined in Rule 13 a-15(f) under the Exchange Act) during the
period covered by this report that materially affected or are reasonably likely
to materially affect our internal control over financial reporting. 13










                                       15
<PAGE>

                                    PART III

ITEM 9.  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           60     President & Chief Executive Officer, Director

Don MacAdam                 60     Director

Jean-Luc Berger, Ph.D.      44     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 a Director of BMB Munai Inc, a
public company. Mr. Benarroch is a director of Rebank Corp., a public Company.
Mr. Benarroch is also president of Osprey Gold Corp. , 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.

(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.

                                       16

<PAGE>

(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.

ITEM 10. 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.
  <TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                      Annual Compensation               Long-Term Compensation
                             ----------------------------------   -----------------------------------
                                                                       Awards             Payouts
                                                                  -----------------------------------
                                                                  Securities
                                                                    Under      Restricted
                                                      Other        Options/    Shares or
                                                      Annual         SARs      Restricted    LTIP       All Other
Name and                      Salary       Bonus   Compensation    Granted     Share Units   Payouts   Compensation
Principal Position    Year      ($)         ($)       ($)            (#)          ($)         ($)           ($)
-------------------------------------------------------------------------------------------------------------------
<S>                   <C>    <C>           <C>     <C>            <C>          <C>           <C>       <C>
Jean-Luc Berger,      2007   None                                                None
Director
                      2006   $55,000 (1)                                         None

                      2005   $52,250 (1)                                         None

                      2004   $40,000 (1)                                         None
-------------------------------------------------------------------------------------------------------------------

Georges Benarroch,    2007   None                                                None
Director

President and Chief
Executive Officer     2006   None                                                None

                      2005   None                                                None

                      2004   None                                                None
-------------------------------------------------------------------------------------------------------------------

Donald MacAdam,       2007   None                                                None
Director

                      2006   None                                                None

                      2005   None                                                None

                      2004   None                                                None
-------------------------------------------------------------------------------------------------------------------
</TABLE>

----------
(1) This was paid by B Twelve Limited, a subsidiary of Kyto Biopharma, Inc.

                                       17

<PAGE>

(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
2007, 2006, 2005 and 2004.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                         Number of             % of Total
                         Securities            Options/SARs Granted
                         Underlying            P[topms/SARs Granted   Exercise or
                         Options/SARs          to Employees in        Base
Name                     Granted (#)           Fiscal Year            Price ($Sh)           Expiration Date
------------------------------------------------------------------------------------------------------------------
<S>                      <C>                   <C>                    <C>                   <C>
Jean-Luc Berger          262,500               31                     $0.0001               Exercised in
                                                                                            November 2001
------------------------------------------------------------------------------------------------------------------
Uri Sagman               587,500               69                     $0.0001               Exercised in
                                                                                            February 2002
------------------------------------------------------------------------------------------------------------------
</TABLE>

(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 2005, 2004 and 2003) by the named executive
officer and employees and the fiscal year-end value of unexercised options/SARs
on an aggregated basis:

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

(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.

Four directors received 14,525 and 3,000 common shares each for services during
fiscal years 2001 and 2002, respectively. No director shares were granted in
fiscal years 2007 and 2006.

                                       18

<PAGE>

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, 2007 of Kyto other than for routine
indebtedness.

(F) EMPLOYMENT CONTRACTS

None

(G) REPORT ON REPRICING OF OPTIONS/SARS

None

ITEM 11. 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.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                      Name and Address of
Title of Class        Beneficial Owner                       Common Shares            Percentage of Class
---------------------------------------------------------------------------------------------------------------
<S>                   <C>                                      <C>                           <C>
Common                Credifinance Capital Corp. (1)           8,953,145                     73.6%

                      Delaware, United States
Common                Medarex Inc.                             1,300,000                     10.8%

                      New Jersey, United States
Common                Dr. Uri Sagman                             902,025                       7.5%
                      Toronto, Ontario, Canada
---------------------------------------------------------------------------------------------------------------
</TABLE>
------------
(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) SECURITY OWNERSHIP OF MANAGEMENT

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                      Name and Address of
Title of Class        Beneficial Owner                       Common Shares            Percentage of Class
---------------------------------------------------------------------------------------------------------------
<S>                   <C>                                    <C>                           <C>
Common                Georges Benarroch (1)                  44,079                        0.3%
Common                Dr. Jean-Luc Berger                    527,025                       4.4%
Common                Don MacAdam (2)                        30,025                        0.3%
---------------------------------------------------------------------------------------------------------------
</TABLE>

------------
(1)  Georges Benarroch is the President and Chief Executive Officer of
     Credifinance Capital Corp which owns 8,953,145 common shares representing
     74.1% of issued shares.
(2)  Don MacAdam owns 27,025 common shares directly and 3,000 common shares
     through A360 Inc., a private holding company.

(C) CHANGES IN CONTROL

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

                                       19

<PAGE>

ITEM 12. 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
8,953,145 common shares representing 74.1% of issued shares.

ITEM 13. 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.


                                       20

<PAGE>
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.

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 Opportunitylaws
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.

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,
2006.

(1) Audit Fees

Jewett our Independent Registered Public Accounting firm billed an aggregate of
$25,500 for the following professional services: audit of our annual
consolidated financial statements for the fiscal year ended March 31, 2006
included in our annual report on Form 10-KSB and review of our interim financial
statements included in our quarterly reports on Form 10-QSB.

(2) Tax Fees

No professional services were rendered by Jewett, Schwartz and Associates for
tax compliance, tax advice, and tax planning the fiscal years ended March 31,
2007.

(3) All Other Fees

Not applicable.

                                       21
<PAGE>

                                   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.

         DATE: June 29, 2007                 KYTO BIOPHARMA, INC.


                                             By: /s/ Georges Benarroch
                                                 ----------------------------
                                                 Georges Benarroch
                                                 President & C.E.O.


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

         DATE: June 29, 2007                 KYTO BIOPHARMA, INC.


                                             By: /s/ Georges Benarroch
                                                 ----------------------------
                                                 Georges Benarrcoh
                                                 President & C.E.O.,
                                                 Acting C.F.O., Director


         DATE: June 29, 2007                 KYTO BIOPHARMA, INC.


                                             By: /s/ Jean-Luc Berger
                                                 ----------------------------
                                                 Jean-Luc Berger
                                                 Director

                                       22

<PAGE>


                     Kyto Biopharma, Inc. and Subsidiary
                          (A Development Stage Company)

                              Financial Statements

                                 March 31, 2007

                                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

Consolidated Statements of Cash Flows ............................... F-6

Notes to the Consolidated Financial Statements....................... F-7 - F-18



























                                      F-1


<PAGE>

             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 sheet of Kyto Biopharma,
Inc. (A Development Stage Company) as of March 31, 2007 and the related
statements of operations, changes in shareholders' deficit and cash flows for
the years ended March 31, 2007 and 2006 and for the period from March 5, 1999
(inception) through March 31, 2007. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kyto Biopharma, Inc. (A
Development Stage Company) as of March 31, 2007 and the results of its
operations and its cash flows for the years then ended March 31, 2007 and 2006,
and from March 5, 1999 (inception) through March 31, 2007 in conformity with
accounting principles generally accepted in the United States.

The accompanying 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 financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


/s/ Jewett, Schwartz, Wolfe & Associates

Hollywood, Florida
June 29, 2007










                                       F-2

<PAGE>

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

                           CONSOLIDATED BALANCE SHEET


                                                              MARCH 31,
                                                               2007
                                                           ------------
ASSETS

Current Assets
    Cash                                                   $      3,848
    Prepaid expenses                                             14,956
                                                           ------------

TOTAL ASSETS                                               $     18,804
                                                           ============


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
    Accounts payable                                       $     26,399
    Accrued liabilities - related party                          50,000
    Accrued interest payable - related party                     33,980
    Loan payable-related party                                  233,430
    Note payable, related party                                 100,000
                                                           ------------
TOTAL CURRENT LIABILITIES                                       443,809
                                                           ------------

TOTAL LIABILITIES                                               443,809
                                                           ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
    Common stock, $0.0001 par value, 25,000,000 shares
       authorized, 12,080,203  issued and outstanding             1,208
    Additional paid-in capital                               15,323,307
    Deficit accumulated during development stage            (15,477,735)
    Accumulated other comprehensive loss                       (271,785)
                                                           ------------
                                                               (425,005)

                                                           ------------
TOTAL STOCKHOLDERS' DEFICIT                                    (425,005)
                                                           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                $     18,804

                                                           ============










          See accompanying notes to consolidated financial statements.

                                       F-3

<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                   FOR THE PERIOD FROM
                                                                                      MARCH 5, 1999
                                                         FOR THE YEARS ENDED         (INCEPTION) TO
                                                              MARCH 31,                 MARCH 31,
                                                      2007              2006              2007
                                                  ------------      ------------      ------------
<S>                                               <C>               <C>               <C>
OPERATING EXPENSES
     Compensation                                 $     10,250      $     54,935      $  1,750,636
     Depreciation and amortization                         228               602           814,183
     Consulting                                      3,976,300         3,374,950         9,700,899
     Bad debt                                               --                --            12,819
     Director fees                                          --                --            64,100
     Financing fees                                         --                --            28,781
     Professional fees                                  34,550            18,550           126,958
     General and administrative                         46,597            50,676           459,314
     Research and development                           83,117            41,590         1,186,633
     Loss on debt conversion                                --            23,513           519,795
     Impairment loss                                        --                --         1,191,846
                                                  ------------      ------------      ------------
TOTAL OPERATING EXPENSES                             4,151,042         3,564,816        15,855,964
                                                  ------------      ------------      ------------

OTHER INCOME (EXPENSES)
     Interest income                                        --                --             4,922
     Interest expense                                  (11,708)           (9,805)          (37,786)
     Gain on debt forgivemess                               48                 2            68,828
     Loss on disposal of equipment                          --                --              (567)
     Foreign currency transaction gain                  13,977            39,832           342,832
                                                  ------------      ------------      ------------
TOTAL OTHER INCOME, NET                                  2,317            30,029           378,229
                                                  ------------      ------------      ------------

NET LOSS                                            (4,148,725)       (3,534,787)      (15,477,735)
                                                  ------------      ------------      ------------

Comprehensive Loss
     Foreign currency translation loss                 (13,866)          (40,435)         (271,785)
                                                  ------------      ------------      ------------

TOTAL COMPREHENSIVE LOSS                          $ (4,162,591)     $ (3,575,222)     $(15,749,520)
                                                  ============      ============      ============

Weighted average number of shares outstanding
     during the year - basic and diluted            12,080,203        11,827,069         6,312,394
                                                  ============      ============      ============

Net loss per share - basic and diluted            $      (0.34)     $      (0.29)     $      (2.45)
                                                  ============      ============      ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4

<PAGE>


                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
          YEARS ENDED MARCH 31, 2006 AND 2005, AND FOR THE PERIOD FROM
                   MARCH 5, 1999 (INCEPTION) TO MARCH 31, 2007





<TABLE>
<CAPTION>
                                                               PREFERRED STOCK              COMMON STOCK           ADDITIONAL
                                                          ------------------------   -------------------------     PAID - IN
                                                            SHARES       AMOUNT        SHARES        AMOUNT         CAPITAL
                                                          ---------   ------------   ----------   ------------   ------------
<S>                                                       <C>         <C>            <C>          <C>            <C>
Common stock issued for services to officer                      --   $         --      300,000   $         30   $    299,970
Common stock issued for services to consultant                   --             --      255,000             25        254,975
Warrants issued to consultant                                    --             --           --             --        345,000
Net loss, 1999                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 1999                                          --             --      555,000             55        899,945
Preferred stock issued for cash                             250,000        250,000           --             --             --
Offering cost                                                    --             --           --             --        (17,005)
Common stock issued for intangible assets                        --             --    2,000,000            200      1,999,800
Common stock issued for cash upon exercise
   of warrants                                                   --             --      100,000             10         99,990
Foreign currency translation loss                                --             --           --             --             --
Net loss, 2000                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2000                                     250,000        250,000    2,655,000            265      2,982,730
Common stock issued as director fees                             --             --       58,100              6         58,094
Common stock issued for cash upon exercise
   of warrants                                                   --             --      150,000             15        149,985
Common stock issued for cash upon exercise
   of warrants                                                   --             --      345,000             35             --
Common stock issued to officer as
   compensation                                                  --             --      100,000             10         99,990
Common stock issued for cash                                     --             --      100,000             10         99,990
Common stock issued to consultant
   for services not yet rendered                                 --             --      400,000             40      1,199,960
Foreign currency translation gain                                --             --           --             --             --
Net loss, 2001                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2001                                     250,000        250,000    3,808,100            381      4,590,749
Preferred stock converted to common stock                  (250,000)      (250,000)     250,000             25        249,975
Common stock warrants issued for consulting
   services                                                      --             --           --             --        254,346
Common stock issued for cash upon exercise
   of warrants                                                   --             --      125,000             13        124,987
Common stock warrants issued for services                        --             --           --             --        849,915
Common stock issued for cash upon exercise
   of warrants                                                   --             --      850,000             85             --
Common stock issued to directors as
   compensation                                                  --             --        6,000             --          6,000
Common stock issued to employees as
   compensation                                                  --             --        3,000             --          3,000
Common stock issued as loan fee                                  --             --       25,000              3         24,997
Foreign currency translation gain                                --             --           --             --             --
Net loss, 2002                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2002                                          --             --    5,067,100            507      6,103,969
Stock issued for cash and services                               --             --      225,000             22        224,978
Stock issued in settlement of accounts payable,
   net of redeemable shares                                      --             --      100,000             10         99,990
Stock issued to settle loans payable, related party              --             --      102,658             10        102,648
Common stock issued for services to
   consultant not yet rendered                                   --             --      800,000             80        799,920
Stock issued for past and future rent and
   administrative services                                       --             --       65,000              7         64,993
Common stock warrants issued as financing fee                    --             --           --             --          3,783
Foreign currency translation loss                                --             --           --             --             --
Net loss, 2003                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2003                                          --             --    6,359,758            636      7,400,281
Foreign currency translation loss                                --             --           --             --             --
Amortization of deferred expenses                                --             --           --             --             --
Net Loss, 2004                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March  31, 2004                                         --             --    6,359,758            636      7,400,281
Stock issued for cash and services                               --             --      500,000             50        249,950
Common stock issued for services to consultant
   not yet rendered                                              --             --    4,500,000            450      6,749,550
Stock issued to settle loans payable, related party              --             --      320,000             32        479,968
Stock issued for past and future rent and
   administrative services                                       --             --      133,333             13        199,986
Foreign currency translation loss                                --             --           --             --             --
Net Loss, 2005                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2005                                          --   $         --   11,813,091   $      1,181   $ 15,079,735
Stock issued for cash and services                               --             --      173,058             18        173,040
Recognition of services rendered by consultant                   --             --           --             --             --
Stock issued to settle loans payable, related party              --             --       14,054              1         10,540
Stock issued for past and future rent and
   administrative services                                       --             --       80,000              8         59,992
Foreign currency translation loss                                --             --           --             --             --
Net Loss, 2006                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2006                                          --   $         --   12,080,203   $      1,208   $ 15,323,307
Stock issued for cash and services                               --             --           --             --             --
Recognition of services rendered by consultant                   --             --           --             --             --
Stock issued for past and future rent and
   administrative services                                       --             --           --             --             --
Foreign currency translation loss                                --             --           --             --             --
Net Loss, 2007                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2006                                          --   $         --   12,080,203   $      1,208   $ 15,323,307
Stock issued for cash and services                               --             --           --             --             --
Recognition of services rendered by consultant                   --             --           --             --             --
Stock issued for past and future rent and
   administrative services                                       --             --           --             --             --
Foreign currency translation loss                                --             --           --             --             --
Net Loss, 2007                                                   --             --           --             --             --
                                                          ---------   ------------   ----------   ------------   ------------
Balance, March 31, 2007                                          --   $         --   12,080,203   $      1,208   $ 15,323,307
                                                          =========   ============   ==========   ============   ============
</TABLE>
[Restubbed Table]
<TABLE>
<CAPTION>
                                                            DEFICIT
                                                          ACCUMULATED      ACCUMULATED
                                                            DURING            OTHER
                                                          DEVELOPMENT     COMPREHENSIVE      DEFERRED
                                                            STAGE             LOSS          CONSULTING
                                                         -------------    -------------    ------------
<S>                                                      <C>              <C>              <C>
Common stock issued for services to officer              $          --    $          --    $         --
Common stock issued for services to consultant                      --               --              --
Warrants issued to consultant                                       --               --              --
Net loss, 1999                                                (900,000)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 1999                                       (900,000)              --              --
Preferred stock issued for cash                                     --               --              --
Offering cost                                                       --               --              --
Common stock issued for intangible assets                           --               --              --
Common stock issued for cash upon exercise
  of warrants                                                       --               --              --
Foreign currency translation loss                                   --           (5,745)             --
Net loss, 2000                                                (650,366)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2000                                     (1,550,366)          (5,745)             --
Common stock issued as director fees                                --               --              --
Common stock issued for cash upon exercise
   of warrants                                                      --               --              --
Common stock issued for cash upon exercise
   of warrants                                                      --               --              --
Common stock issued to officer as
   compensation                                                     --               --              --
Common stock issued for cash                                        --               --              --
Common stock issued for future services                             --               --      (1,200,000)
Foreign currency translation gain                                   --           60,054              --
Net loss, 2001                                                (966,789)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2001                                     (2,517,155)          54,309      (1,200,000)
Preferred stock converted to common stock                           --               --              --
Common stock warrants issued for consulting
   services                                                         --               --              --
Common stock issued for cash upon exercise
   of warrants                                                      --               --              --
Common stock warrants issued for services                           --               --              --
Common stock issued for cash upon exercise
of warrants                                                         --               --              --
Common stock issued to directors as
   compensation                                                     --               --              --
Common stock issued to employees as
   compensation                                                     --               --              --
Common stock issued as loan fee                                     --               --              --
Foreign currency translation gain                                   --           13,397              --
Net loss, 2002                                              (2,959,415)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2002                                     (5,476,570)          67,706      (1,200,000)
Stock issued for cash and services                                  --               --              --
Stock issued in settlement of accounts payable,
   net of redeemable shares                                         --               --              --
Stock issued to settle loans payable, related party                 --               --              --
Stock issued as consideration for future
   services                                                         --               --        (800,000)
Stock issued for past and future rent and
   administrative services                                          --               --              --
Common stock warrants issued as financing fee                       --               --              --
Foreign currency translation loss                                   --          (80,354)             --
Net loss, 2003                                                (319,141)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2003                                     (5,795,711)         (12,648)     (2,000,000)
Foreign currency translation loss                                   --         (117,341)             --
Amortization of deferred expenses                                   --               --              --
Net Loss, 2004                                                 (34,846)              --              --
                                                         -------------    -------------    ------------
Balance, March  31, 2004                                    (5,830,557)        (129,989)     (2,000,000)
Stock issued for cash and services                                  --               --              --
Common stock issued for services to consultant                      --               --      (5,343,750)
Stock issued to settle loans payable, related party                 --               --              --
Stock issued for past and future rent and
   administrative services                                          --               --              --
Foreign currency translation loss                                   --          (87,495)             --
Net Loss, 2005                                              (1,963,666)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2005                                    $(7,794,223)     $  (217,484)   $ (7,343,750)
Stock issued for cash and services                                  --               --              --
Common stock issued for services to consultant                      --               --       3,374,950
Stock issued to settle loans payable, related party                 --               --              --
Stock issued for past and future rent and
   administrative services                                          --               --              --
Foreign currency translation loss                                   --          (40,435)             --
Net Loss, 2006                                              (3,534,787)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2006                                  $ (11,329,010)   $    (257,919)   $ (3,968,800)
Stock issued for cash and services                                  --               --              --
Recognition of services rendered by consultant                      --               --       3,968,800
Stock issued for past and future rent and
   administrative services                                          --               --              --
Foreign currency translation loss                                   --          (13,866)             --
Net Loss, 2007                                              (4,148,725)              --              --
                                                         -------------    -------------    ------------
Balance, March 31, 2007                                  $ (15,477,735)   $    (271,785)   $         --
                                                         =============    =============    ============
</TABLE>
[Restubbed table]
<TABLE>
<CAPTION>
                                                                            DEFERRED
                                                          SUBSCRIPTION        LOAN         DEFERRED
                                                           RECEIVABLE         FEE          EXPENSES        TOTAL
                                                          ------------    -----------    -----------    -----------
<S>                                                       <C>             <C>            <C>            <C>
Common stock issued for services to officer               $         --    $        --    $        --    $   300,000
Common stock issued for services to consultant                      --             --             --        255,000
Warrants issued to consultant                                       --             --             --        345,000
Net loss, 1999                                                      --             --             --       (900,000)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 1999                                             --             --             --             --
Preferred stock issued for cash                                     --             --             --        250,000
Offering cost                                                       --             --             --        (17,005)
Common stock issued for intangible assets                           --             --             --      2,000,000
Common stock issued for cash upon exercise
  of warrants                                                       --             --             --        100,000
Foreign currency translation loss                                   --             --             --         (5,745)
Net loss, 2000                                                      --             --             --       (650,366)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2000                                             --             --             --      1,676,884
Common stock issued as director fees                                --             --             --         58,100
Common stock issued for cash upon exercise
   of warrants                                                      --             --             --        150,000
Common stock issued for cash upon exercise
   of warrants                                                      --             --             --             35
Common stock issued to officer as
   compensation                                                     --             --             --        100,000
Common stock issued for cash                                        --             --             --        100,000
Common stock issued for future services                             --             --             --             --
Foreign currency translation gain                                   --             --             --         60,054
Net loss, 2001                                                      --             --             --       (966,789)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2001                                             --             --             --      1,178,284
Preferred stock converted to common stock                           --             --             --             --
Common stock warrants issued for consulting
   services                                                         --             --             --        254,346
Common stock issued for cash upon exercise
   of warrants                                                      --             --             --        125,000
Common stock warrants issued for services                           --             --             --        849,915
Common stock issued for cash upon exercise
   of warrants                                                      --             --             --             85
Common stock issued to directors as
   compensation                                                     --             --             --          6,000
Common stock issued to employees as
   compensation                                                     --             --             --          3,000
Common stock issued as loan fee                                     --        (25,000)            --             --
Foreign currency translation gain                                   --             --             --         13,397
Net loss, 2002                                                      --             --             --     (2,959,415)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2002                                             --        (25,000)            --       (529,385)
Stock issued for cash and services                                  --             --             --        225,000
Stock issued in settlement of accounts payable,
   net of redeemable shares                                         --             --             --        100,000
Stock issued to settle loans payable, related party                 --         25,000             --        127,655
Stock issued as consideration for future
   services                                                         --             --             --             --
Stock issued for past and future rent and
   administrative services                                          --             --        (30,000)        35,000
Common stock warrants issued as financing fee                       --             --             --          3,783
Foreign currency translation loss                                   --             --             --        (80,354)
Net loss, 2003                                                      --             --             --       (319,141)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2003                                             --             --        (30,000)      (437,442)
Foreign currency translation loss                                   --             --             --       (117,341)
Amortization of deferred expenses                                   --             --         30,000         30,000
Net Loss, 2004                                                      --             --             --        (34,846)
                                                          ------------    -----------    -----------    -----------
Balance, March  31, 2004                                            --             --             --       (559,629)
Stock issued for cash and services                                  --             --             --        250,000
Common stock issued for services to consultant                      --             --                     1,406,250
Stock issued to settle loans payable, related party                 --             --             --        480,000
Stock issued for past and future rent and
   administrative services                                         (13)            --             --        199,986
Foreign currency translation loss                                   --             --             --        (87,495)
Net Loss, 2005                                                      --             --             --     (1,963,666)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2005                                   $        (13)   $        --    $        --    $  (274,554)
Stock issued for cash and services                                   0             --             --        173,058
Common stock issued for services to consultant                      --             --                     3,374,950
Stock issued to settle loans payable, related party                 --             --             --         10,541
Stock issued for past and future rent and
   administrative services                                          (0)            --             --         60,000
Foreign currency translation loss                                   --             --             --        (40,435)
Net Loss, 2006                                                      --             --             --     (3,534,787)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2006                                   $        (13)   $        --    $        --    $  (231,227)
Stock issued for cash and services                                  --             --             --             --
Common stock issued for services to consultant                      --             --                     3,968,800
Stock issued to settle loans payable, related party                 13             --             --             13
Stock issued for past and future rent and
   administrative services                                          (0)            --             --        (13,866)
Foreign currency translation loss                                   --             --             --     (4,148,725)
Net Loss, 2006                                                      --             --             --     (3,534,787)
                                                          ------------    -----------    -----------    -----------
Balance, March 31, 2007                                   $         --    $        --    $        --    $  (425,005)
                                                          ============    ===========    ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-5


<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                               MARCH 5, 1999
                                                                                                               (INCEPTION) TO
                                                                              FOR THE YEAR ENDED MARCH 31         MARCH 31,
                                                                                2007              2006              2007
                                                                            ------------      ------------      ------------
<S>                                                                         <C>               <C>               <C>
Cash Flows from Operating Activities:
     Net loss                                                               $ (4,148,725)     $ (3,534,787)     $(15,477,735)
     Adjustment to reconcile net loss to net cash provided by (used in)
        operating activities:
        Depreciation and amortization                                                228                --           814,183
        Recognition of services rendered by consultant                         3,968,800                --        10,227,893
        Stock based consulting expense                                                --                --           854,345
        Stock based director fees                                                     --                --            64,100
        Stock based rent and administrative fees                                      --                --            87,028
        Common stock warrants issued as financing fee                                 --                --             3,783
        Loss on disposal of equipment                                                 --                --               567
        Impairment loss                                                               --               602         1,191,846
        Gain on settlement of accounts payable                                        --            23,513           (59,654)
        Loss on settlement of accounts payable                                        --            47,028           519,795
        Amortization of stock based financing fee                                     13         3,374,950            25,010
     Changes in operating assets and liabilities:
        (Increase) decrease in:
            Other receivables                                                        691             3,475                --
            Prepaids and other assets                                            (14,956)           17,500           (14,956)
        Increase in:
            Accounts payable and accrued expenses                                 24,418            22,083           541,215
            Accounts payable-related parties                                          --             2,401            20,879
                                                                            ------------      ------------      ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                             (169,531)          (43,235)       (1,201,701)
                                                                            ------------      ------------      ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                               --                --            (4,463)
                                                                            ------------      ------------      ------------
NET CASH USED IN INVESTING ACTIVITIES                                                 --                --            (4,463)
                                                                            ------------      ------------      ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from common stock issuance, net of offering cost                        --                --           958,222
     Loan proceeds from related parties, net                                     146,830            86,600           550,367
     Repayment of loan to related parties                                             --                --           (26,792)
                                                                            ------------      ------------      ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                        146,830            86,600         1,481,797
                                                                            ------------      ------------      ------------
Effect of Exchange Rate on Cash                                                  (13,866)          (40,435)         (271,785)
Net Increase (decrease) in Cash and Cash Equivalents                             (36,567)            2,930             3,848
Cash and Cash Equivalents at Beginning of Period                                  40,415            37,485                --
                                                                            ------------      ------------      ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $      3,848      $     40,415      $      3,848
                                                                            ============      ============      ============
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                                        $         --      $         --      $    640,716
                                                                            ============      ============      ============
        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
                                                                            ============      ============      ============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


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 parent 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 $4,148,725 and net cash used in operations of
$169,531 in 2007 and a working capital deficiency of $425,005, a stockholders'
deficiency of $425,005 and a deficit accumulated during the development stage of
$15,477,735 at March 31, 2007. 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, 2007, the Company received $146,830 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 2007 and 2006 and for the period for March 5, 1999
(inception) to March 31, 2007 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.

                                      F-7
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


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

(E) CASH AND CASH EQUIVALENTS

For the purpose of the consolidated cash flow statements, the Company considers
all highly liquid investments with original maturities of three months or less
at the time of purchase to be cash equivalents.

(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, exceed
federally insured limits. As of March 31, 2007, 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, 2007.

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.

                                      F-8
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


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

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.

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 $83,117, $41,590, and $1,186,633 for the
years ended March 31, 2007, 2006, and for the period from March 5, 1999
(inception) to March 31, 2007, 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.


                                      F-9
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


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

(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, 2007, there were common stock warrants to issue 25,000
common shares, which could potentially dilute future earnings per share.

(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.

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) NEW ACCOUNTING PRONOUNCEMENTS

SFAS No. 154 ("SFAS 154"), Accounting Changes and Error Corrections, was issued
in May 2005 and replaces APB Opinion No. 20 and SFAS No. 3 ("SFAS 3"). SFAS 154
requires retrospective application for voluntary changes in accounting principle
in most instances and is required to be applied to all accounting changes made
in fiscal years beginning after December 15, 2005. The Company adopted SFAS 154
on April 1, 2006. SFAS 154 is not expected to have a material impact on the
Company's consolidated financial condition or results of operations.

In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109" (FIN
48). FIN 48 clarifies the accounting for uncertainty in income taxes by
prescribing the recognition threshold a tax position is required to meet before
being recognized in the financial statements. It also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. The cumulative effects, if any, of applying
FIN 48 will be recorded as an adjustment to retained earnings as of the
beginning of the period of adoption. FIN 48 is effective for fiscal years
beginning after December 15, 2006, and the Company is required to adopt it in
the first quarter of fiscal year 2008. The Company is currently evaluating the
effect that the adoption of FIN 48 will have on its consolidated results of
operations and financial condition and is not currently in a position to
determine such effects, if any.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157). SFAS 157 provides guidance for using fair value to measure assets and
liabilities. SFAS 157 addresses the requests from investors for expanded
disclosure about the extent to which companies measure assets and liabilities at
fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007 and will be adopted by the Company in the first quarter of fiscal year
2008. The Company is unable at this time to determine the effect that its
adoption of SFAS 157 will have on its consolidated results of operations and
financial condition.

                                      F-10
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


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

In September 2006, the SEC issued Staff Accounting Bulletin No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 provides
guidance on the consideration of the effects of prior year misstatements in
quantifying current year misstatements for the purpose of a materiality
assessment. SAB 108 establishes an approach that requires quantification of
financial statement errors based on the effects of each on a company's balance
sheet and statement of operations and the related financial statement
disclosures. Early application of the guidance in SAB 108 is encouraged in any
report for an interim period of the first fiscal year ending after November 15,
2006, and will be adopted by the Company on April 1, 2007. The Company does not
expect the adoption of SAB 108 to have a material impact on its consolidated
results of operations and financial condition.
FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that
instruments that were originally issued as employee compensation and then
modified, and that modification is made to the terms of the instrument solely to
reflect an equity restructuring that occurs when the holders are no longer
employees, then no change in the recognition or the measurement (due to a change
in classification) of those instruments will result if both of the following
conditions are met: (a). There is no increase in fair value of the award (or the
ratio of intrinsic value to the exercise price of the award is preserved, that
is, the holder is made whole), or the antidilution provision is not added to the
terms of the award in contemplation of an equity restructuring; and (b). All
holders of the same class of equity instruments (for example, stock options) are
treated in the same manner. The Company does not expect the adoption of FSP FAS
123(R)-5 on April 1, 2007 to have a material impact on its consolidated results
of operations and financial condition.

(Q) RECLASSIFICATIONS

Certain amounts in the March 31, 2006 consolidated financial statements have
been reclassified to conform to the March 31, 2007 presentation.

NOTE 2  EQUIPMENT

Equipment consists of the following at March 31, 2007:

                                                                 2007
                                                               -------
 Computers and equipment                                       $ 4,589
 Less: Accumulated depreciation                                 (4,589)
                                                               -------
                                                               $    --
                                                               =======


Depreciation was $228 and $602 for the years ended March 31, 2007 and 2006,
respectively, and $814,183 for the period from March 5, 1999 (inception) to
March 31, 2007.

NOTE 3  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, 2007 the total prepaid expense is $14,956.


                                      F-11
<PAGE>


                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 4  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 5  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 2007, 2006, and for the period
from March 5, 1999 (inception) to March 31, 2007 were $20,000, $20,000, and
$148,377, 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 (See Note 6(B)). 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.

NOTE 6  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.

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.

                                      F-12
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 6  LOANS AND NOTES PAYABLE AND ACCRUED LIABILITIES, RELATED PARTIES
        (CONTINUED)

At March 31, 2005, the Company owed $4,616 to a related party 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 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 2007, 2006, and for
the period from March 5, 1999 (inception) to March 31, 2007 was $40,000,
$40,000, and $296,754, 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. Accrued
liabilities for the above services at March 31, 2007 were $50,000.

(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% (8.25% at March
31, 2007). Interest is accrued and payable quarterly. At March 31, 2007, accrued
interest totaled $33,980. 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.

NOTE 7 STOCKHOLDERS' DEFICIENCY

(A) 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.

                                      F-13
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

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. As of
March 31, 2007, no preferred shares were outstanding.

(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.

(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
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, 2007.



                                      F-14
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

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

                                   NUMBER OF
                                  OPTIONS AND   WEIGHTED AVERAGE
                                    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                                 --                 --
                                  -----------   ----------------
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             275,000   $           1.00
Granted                                    --                 --
Exercised                                  --                 --
Forfeited                            (250,000)  $           1.00
Terminated                                 --                 --
                                  -----------   ----------------
Balance at March 31, 2007              25,000   $           1.00
                                                ================
Weighted average fair value
  of options granted for
  services during 2007                          $             --
                                                ================

The following table summarizes information about options and warrants
outstanding at March 31, 2007:

<TABLE>
<CAPTION>
                  OPTIONS AND WARRANTS OUTSTANDING                        OPTIONS AND WARRANTS EXERCISABLE
    -----------------------------------------------------------------    ----------------------------------
                                            WEIGHTED
                                             AVERAGE        WEIGHTED                              WEIGHTED
     RANGE OF            NUMBER             REMAINING       AVERAGE            NUMBER             AVERAGE
     EXERCISE        OUTSTANDING AT        CONTRACTUAL      EXERCISE       EXERCISABLE AT        EXERCISE
       PRICE         MARCH 31, 2007           LIFE           PRICE         MARCH 31, 2006          PRICE
    ----------       --------------    --------------    ------------    ------------------    ------------
    <S>              <C>                 <C>             <C>             <C>                   <C>
    $     1.00               25,000      .08 Years               1.00                25,000            1.00
                     --------------                      ------------    ------------------    ------------
                             25,000                      $       1.00                25,000    $       1.00
                     ==============                      ============    ==================    ============
</TABLE>


                                      F-15
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

(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, 2007:

                                        Income          Shares        Per-share
                                     (Numerator)     (Denominator)     Amount
                                    ------------    ------------    ----------

Income from continuing operations   $ (4,148,725)
Less preferred stock dividends                --
                                    ------------
Income available to common
stockholders - Basic and diluted
earnings per share                    (4,148,725)     12,080,203    $    (0.34)
                                    ------------    ------------    ----------


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
                                                       -------------
Common stock warrants                                      25,000


NOTE 8 RELATED PARTIES

Certain liabilities with a related party were settled with common stock.

The Company leases its facility from a principal stockholder who also provides
certain administrative services to the Company.

During the year ended March 31, 2007, the Company received working capital funds
from a principal stockholder totaling $146,830.


                                      F-16

<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007


NOTE 9 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, 2007 and 2006, 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, 2007 and 2006, (computed by applying the United States
Federal Corporate tax rate of 34% to consolidated loss before taxes), as
follows:

YEAR ENDED MARCH 31, 2007
                                                    2007            2006
                                                ------------    ------------
 Computed "expected" tax benefit                $ (1,410,567)   $ (1,201,827)
 Foreign income tax rate differences                   1,660           1,200
 Change in deferred tax asset
   valuation allowance                             1,408,907       1,200,627
                                                ------------    ------------
                                                $         --    $         --
                                                ============    ============

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                      0.04%
Valuation allowance                                   (34.04)%
                                                ------------
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, 2007 are as follows:

Deferred tax assets:
United States net operating loss carryforward   $ 3,608,984
Canadian net operating loss carryforward          1,114,045
                                                -----------
Total gross deferred tax assets                   4,723,029
Less valuation allowance                         (4,723,029)
                                                -----------
Net deferred tax assets                         $        --
                                                ===========

The net change in valuation allowance during the year ended March 31, 2007 was
an increase of approximately $1,408,907. The Company's subsidiary has net
operating losses of approximately $2,622,122 at March 31, 2007 available to
offset the subsidiaries' net income through 2010 under Canadian Federal and
Provincial tax laws and the parent United States entity has a net operating loss
carryforward of approximately $12,664,000 available to offset the parent's net
income through 2025.

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-17
<PAGE>

NOTE 10 SUBSEQUENT EVENTS

On May 31, 2007 the Company entered into an agreement with a related party to
issue 500,000 convertible preferred shares at $1.00 per share. The agreement is
on an installment basis. Preferred shares may be converted into approximately 2
common shares per convertible preferred share until May 2009. The preferred
convertible shares will bear interest of 5% per year.























                                      F-18