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, 2004

[ ]      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.)

41A AVENUE ROAD, TORONTO, ONTARIO, CANADA                        M5R 2G3
(Address of principal executive offices)                        (Zip Code)

Issuer's telephone number: (416) 955-0159

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 [x]   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. [ ]

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, 2004

                      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: 6,532,816 COMMON SHARES -
$0.0001 PAR VALUE - AS OF MARCH 31, 2004.

         Transitional Small Business Disclosure Format (Check One)
Yes [ ]  No [x]


<PAGE>


                              KYTO BIOPHARMA, INC.
                                   FORM 10-KSB
                      FOR FISCAL YEAR ENDED MARCH 31, 2004

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


<S>                                                                                                              <C>
   PART I       ..................................................................................................3
         ITEM 1. DESCRIPTION OF BUSINESS..........................................................................3
         ITEM 2. DESCRIPTION OF PROPERTY..........................................................................9
         ITEM 3. LEGAL PROCEEDINGS................................................................................9
         ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............................................9

   PART II      .................................................................................................10
         ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........................................10
         ITEM 6. MANAGEMENT `S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......................................10
         ITEM 7. FINANCIAL STATEMENTS............................................................................11
         ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
         DISCLOSURE..............................................................................................11
         ITEM 8A. CONTROLS AND pROCEDURES........................................................................11

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

   SIGNATURES ...................................................................................................19

   FINANCIAL TABLE OF CONTENTS...................................................................................F-1
   REPORT OF INDEPENDENT AUDITORS................................................................................F-2
   FINANCIAL STATEMENTS..........................................................................................F-3 - F-24
</TABLE>


                                       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 2004 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                  Proof of concept
     (Drug Delivery)             Doxorubicin               Oncology                  Proof of concept
                                                                                     Proof of concept
-------------------------------- ------------------------- ------------------------- ---------------------
                                 Carboplatinum             Oncology
-------------------------------- ------------------------- ------------------------- ---------------------
     Monoclonal Antibodies       Transport protein         Oncology                  Proof of concept
                                 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:

     (b)  Existing drugs (c) Generic drugs
     (d)  Molecules in development.
     (e)  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
and Europe.

(2)  Competitive Business Conditions and Adverse Factors

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

                                       4
<PAGE>

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 US 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.

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 establishes and maintain good
     strategic alliances. Currently, it is seeking strategic alliances. Kyto has
     limited experience in establishing and maintaining such strategic alliances
     and cannot give any assurance that it will be successful in establishing
     one or more 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 continue or engage in any of these activities.

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, or vi) be precluded from commercialization by
     proprietary rights of third parties.

o    Because, Kyto has based many of its drug candidates on unproven novel
     technologies, it may never develop them into commercial products.
     Furthermore, preclinical results in animal studies may not predict outcome
     in human clinical trials.

                                       5
<PAGE>

o    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.

     (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>

-------------------------------- ------------- ------------------------ -------------------------------------
<S>                              <C>           <C>                      <C>
Technologies /                   Clinical      Status                   Collaborators
Drug Candidates                  Market
-------------------------------- ------------- ------------------------ -------------------------------------
Drug Delivery Bioconjugates
-------------------------------- ------------- ------------------------ -------------------------------------
     Paclitaxel                  Oncology      Proof of concept         New York University
     Doxorubicin                 Oncology      Proof of concept
     Carboplatinum               Oncology      Proof of concept
-------------------------------- ------------- ------------------------ -------------------------------------
Vitamin B12 Depletion
Monoclonal Antibodies
-------------------------------- ------------- ------------------------ -------------------------------------
     Transport protein           Oncology      Proof of concept         Medarex Inc.
                                                                        The Research Foundation of State
     Receptor                    Oncology      Development              University of New York

-------------------------------- ------------- ------------------------ -------------------------------------
Receptor Modulators
-------------------------------- ------------- ------------------------ -------------------------------------
     Growth blockers             Oncology      Proof of concept         -
-------------------------------- ------------- ------------------------ -------------------------------------
</TABLE>

     (4)  Distribution of Products

     Because of capital constraints, the Company has decided to focus its
financial resources to 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
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.

     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


                                       6
<PAGE>

technologies and products. To date, 16 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>                                                                             <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
------------------------- -------------------------------------------------------------------------- --------------------
       KR361,075          Receptor modulating agents and methods relating thereto                        01/11/2002
------------------------- -------------------------------------------------------------------------- --------------------
</TABLE>

     (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


                                       7
<PAGE>

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.

     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

     For the fiscal years ended March 31, 2004 and 2003, the Company incurred
$25,297 and $84,475, repectively, on research and development. For the period
from March 5, 1999 (inception) through March 31, 2004, the Company incurred
$1,017,314 on research and development.

     (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 he is compensated by
B Twelve Limited, the wholly-owned subsidiary Canadian corporation.

                                       8
<PAGE>

(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 will be 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 Securities
Limited at the rate of $3,333.33 (US) monthly, which includes rent and certain
administrative services, such as 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.

                                       9
<PAGE>


PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (A)  MARKET INFORMATION

     There is no public trading market for the Company's stock. We are pursuing
discussions with a market maker regarding a public market for the stock. The
market maker has filed on behalf of the Company a Form 211 Application with the
NASD OTC Compliance Unit. The Market Maker filed this form to initiate
quotations of the Company's stock in the OTC Bulletin Board(R) Service. At
present time, the pending Form 211 Application remains deficient and there is no
assurance that we will successfully complete the application for a public market
for our stock. By completing this form, a market maker is representing that it
has satisfied all applicable requirements of Securities and Exchange Commission
(SEC) Rule 15c2-11 and the filing and information requirements of NASD Rule
6740.

     There are 275,000 options to purchase common stock outstanding as of the
end of the fiscal year ended March 31, 2004.

     (B)  HOLDERS

     According to information provided to us by the transfer agent for our
shares of Common Stock, as of March 31, 2004, there were 17 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
200 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


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, the Company has no revenues, a net loss of
$34,846 and cash used in operations of $38,856 in 2004, a working capital
deficiency of $288,123, deficit accumulated during development stage of
$5,830,557 and a stockholders' deficiency of $559,629 at March 31, 2004. 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. 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.

                                       10
<PAGE>

     The Company has, as of the end of its fiscal year (March 31, 2004),
$397,510 in liabilities. The Company estimates that it will require
approximately $250,000 to meet operating costs for this fiscal year, excluding
research and development costs. In addition, the Company is seeking up to five
million dollars ($5,000,000) in research and development funds.

     Research and development expense was $25,297, $84,475, and $1,017,314 for
the years ended March 31, 2004, 2003, and for the period from March 5, 1999
(inception) to March 31, 2004, respectively.

     To meet the projected cash requirements as stated above, the Company
intends to obtain cash loans from one or more of its stockholders, several of
whom have expressed a desire to provide operating loan funds for the Company.
Additionally, the Company intends to seek alliances with other pharmaceutical
and biotechnology companies for product co-development. Management is also
looking to merger opportunities or to acquire companies and products to raise
capital.

     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.

     (B) OFF-BALANCE SHEET ARRANGEMENT

     Not applicable.

ITEM 7. FINANCIAL STATEMENTS

     Attached audited financial statements for KYTO BIOPHARMA, INC. AND
SUBSIDIARY for the fiscal years ended March 31, 2004, 2003, and Cumulative from
March 5, 1999 (Inception) to March 31, 2004 can be found on page F-1

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     The Company has not changed accountants during the previous three year
period 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.

                                       11
<PAGE>

     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.


                                       12
<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
-------------------------------------------------------------------------------

Jean-Luc Berger, Ph.D.     41         President & Chief Executive Officer,
                                      Director

Georges Benarroch          57         Director

Don MacAdam                57         Director

-------------------------------------------------------------------------------

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

Dr. Jean-Luc Berger, Ph.D., President & Chief Executive Officer; Director.
--------------------------------------------------------------------------

Director of the Company since inception on March 5, 1999, Dr. Berger has been
President and C.E.O. of the Company since May 15, 2001. Co-founder of Kyto, he
joined the Company as Chief Operating Officer in September 2000. 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.

Mr. Georges Benarroch, Director.
--------------------------------

Director of the Company since May 5, 2000. Mr. Benarroch is the President and
Chief Executive Officer of Credifinance Capital Corp. and Credifinance
Securities Limited, and Chairman of the Board, President and Chief Executive
Officer of Credifinance Capital Inc. Mr. Benarroch is a Director of BMB Munai
Inc, a public company (OTCBB:BMBM.OB).

Mr. Donald MacAdam, Director.
-----------------------------

Director of the Company since November 17, 1999. Since January 2000, Mr. MacAdam
is a consultant to technology companies. 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.

     (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.

                                       13
<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
                                                                ------------------------     -------
                                                     Other      Securities     Restricted
                                                     Annual       Under         Shares or
                                                     Compen-    Options/       Restricted      LTIP
Name and                        Salary       Bonus   Annual       SARs         Share Units    Payouts    All Other
Principal Position     Year      ($)          ($)    sation     Granted (#)        ($)         ($)     Compensation ($)
--------------------- -------- ------------ -------- ---------- ----------- --------------- ---------- ----------------
<S>                   <C>      <C>                                               <C>
Jean-Luc Berger,      2004     $40,000 (1)                                       None
President and Chief
Executive Officer
                      2003     $40,000 (1)                                     $149,985


                      2002     $40,000 (1)                                     $262,474


                      2001     $25,268 (1)                                     $114,525
--------------------- -------- ------------ -------- ---------- ----------- --------------- ---------- ------------

Georges Benarroch,    2004     None                                              None
Director

                      2003     None                                              None


                      2002     None                                             $3,000


                      2001     None                                            $14,525
--------------------- -------- ------------ -------- ---------- ----------- --------------- ---------- ------------

Donald MacAdam,       2004     None                                              None
Director

                      2003     None                                              None

                      2002     None                                             $3,000

                      2001     None                                            $14,525
--------------------- -------- ------------ -------- ---------- ----------- --------------- ---------- ------------
</TABLE>

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

     (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


                                       14
<PAGE>

2002 to the name key employees. There were no grants to key employees in fiscal
years 2004 and 2003.
<TABLE>
<CAPTION>
------------------------ --------------------- ---------------------- --------------------- ----------------------
                         Number of               % of Total
                         Securities            Options/SARs
                         Underlying            Granted to
                         Options/SARs          Employees in            Exercise or 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 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>
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 FY2001 and FY2002, respectively. No director shares were granted in
fiscal years 2004 and 2003.

     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 31st, 2004 of Kyto other than for routine
indebtedness.

                                       15
<PAGE>

     (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>
--------------------- -------------------------------- -------------------------- -----------------------------
Title of Class        Name and Address of Beneficial         Common Shares            Percentage of Class
                      Owner
--------------------- -------------------------------- -------------------------- -----------------------------
<S>                   <C>                                      <C>                            <C>
Common                Credifinance Capital Corp. (1)           3,419,812                      52.3%
                      Delaware, United States

Common                Dr. Uri Sagman                             902,025                      13.8%
                      Toronto, Ontario, Canada

Common                Medarex, Inc.                            1,300,000                      19.9%
                      New Jersey, United States

Common                Dr. Jean-Luc Berger                        527,025                       8.1%
                      Toronto, Ontario, Canada
--------------------- -------------------------------- -------------------------- -----------------------------
</TABLE>

(1)  Credifinance Capital Corp. is a privately held Delaware corporation. A
     director of Kyto, Georges Benarroch is the President & CEO of Credifinance
     Capital Corp.

     (B)  SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
------------------------ ----------------------------- -------------------------- -----------------------------
Title of Class           Name and Address of
                         Beneficial
                         Owner                              Common Shares            Percentage of Class
------------------------ ----------------------------- -------------------------- -----------------------------
<S>                      <C>                                    <C>                           <C>
Common                   Georges Benarroch (1)                   30,025                        0.5%
Common                   Dr. Jean-Luc Berger                    527,025                        8.1%
Common                   Don MacAdam (2)                         30,025                        0.5%
------------------------ ----------------------------- -------------------------- -----------------------------
</TABLE>

(1)  Georges Benarroch is the President & CEO of Credifinance Capital Corp which
     owns 3,419,812 common shares representing 52.3% 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.

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.

                                       16
<PAGE>

     (B) TRANSACTIONS WITH PROMOTORS

     Jean-Luc Berger, President, Director and co-founder of Kyto Biopharma, Inc.
would be considered as the only promoter of the Company. No assets were received
by Dr. Berger other the 527,025 shares acquired.

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, 203, with the
Securities and Exchange Commission

**Filed as Exhibit with this Form 10-KSB.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The Board of Directors appointed Salberg & Company, P.A. ("SALBERG") as our
independent auditors for the fiscal years ending March 31, 2004 and March 31,
2003.

(1)  Audit Fees

     SALBERG billed us an aggregate of $12,500 for the following professional
services: audit of our annual consolidated financial statements for the fiscal
year ended March 31, 2003 included in registration filing on Form 10-SB.

     SALBERG billed us an aggregate of $24,500 for the following professional
services: audit of our annual consolidated financial statements for the fiscal
year ended March 31, 2004 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 for the periods ended June 30, 2003, September 30, 2003, and
December 31, 2003.

(2)  Audit Related Fees

     SALBERG billed us and our subsidiary an aggregate of $0 and $1,000 for
audit related services rendered during the fiscal years ended March 31, 2004 and
2003, respectively in connection with the Registration Statement on Form 10-SB.

                                       17
<PAGE>

(3)  Tax Fees

     No professional services was rendered by SALBERG for tax compliance, tax
advice, and tax planning the fiscal years ended March 31, 2004 and March 31,
2003.

(4)  All Other Fees

     Not applicable.



                                       18
<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 25, 2004                        KYTO BIOPHARMA, INC.
                                           By: /s/ Jean-Luc Berger
                                           Jean-Luc Berger
                                           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 25, 2004                        KYTO BIOPHARMA, INC.
                                           By: /s/ Jean-Luc Berger
                                           Jean-Luc Berger
                                           President & C.E.O., Director

DATE: June 25, 2004                        KYTO BIOPHARMA, INC.
                                           By: /s/ Georges Benarroch
                                           Georges Benarroch
                                           Director

                                       19
<PAGE>


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

                        Consolidated Financial Statements

                      Years Ended March 31, 2004, 2003, and
                    Cumulative from March 5, 1999 (Inception)
                                to March 31, 2004

                                    Contents



                                                                  Page(s)
                                                                  -------
Independent Auditors' Report                                        F-2

Consolidated Balance Sheet                                          F-3

Consolidated Statements of Operations                               F-4

Consolidated Statement of Changes in Stockholders' Deficiency       F-5 - F-6

Consolidated Statements of Cash Flows                               F-7 - F-8

Notes to Consolidated Financial Statements                          F-9 - F-24



                                      F-1
<PAGE>

                          Independent Auditors' Report


To the Board of Directors of:
     Kyto Biopharma, Inc. and Subsidiary
     (A Development Stage Company)


We have audited the accompanying consolidated balance sheet of Kyto Biopharma,
Inc. and Subsidiary (a development stage company) as of March 31, 2004 and the
related consolidated statements of operations, changes in stockholders'
deficiency and cash flows for the years ended March 31, 2004 and 2003 and for
the period from March 5, 1999 (inception) to March 31, 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the consolidated financial position of Kyto
Biopharma, Inc. and Subsidiary (a development stage company) as of March 31,
2004, and the consolidated results of their operations, changes in stockholders'
deficiency and cash flows for the years then ended and for the period from March
5, 1999 (inception) to March 31 2004, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 11 to
the consolidated financial statements, the Company has no revenues, a net loss
of $34,846 and cash used in operations of $38,856 in 2004, a working capital
deficiency of $288,123, a stockholders' deficiency of $559,629 and a deficit
accumulated during development stage of $5,830,557 at March 31, 2004. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plan in regards to these matters is also described in Note
11. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.



SALBERG & COMPANY, P.A.
Boca Raton, Florida
June 8, 2004


                                      F-2
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2004


                           ASSETS

CURRENT ASSETS
    Cash                                                        $     2,408
    Prepaid assets                                                    1,323
    Other receivables                                                 5,656
                                                                -----------
TOTAL CURRENT ASSETS                                                  9,387
                                                                -----------

EQUIPMENT, NET                                                        1,552
                                                                -----------

TOTAL ASSETS                                                    $    10,939
                                                                ===========

                   LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
    Accounts payable                                            $   131,380
    Accounts payable - related party                                  8,160
    Accrued liabilities                                              22,020
    Accrued interest payable, related party                           6,692
    Loans payable - related parties                                 129,258
                                                                -----------
TOTAL CURRENT LIABILITIES                                           297,510
                                                                -----------

LONG TERM LIABILITIES
    Note Payable, related party                                     100,000
                                                                -----------

TOTAL LIABILITIES                                                   397,510
                                                                -----------

REDEEMABLE COMMON STOCK PURSUANT TO PUT OPTION
    173,058 shares issued and outstanding,
       (Redemption value, $173,058)                                 173,058
                                                                -----------

STOCKHOLDERS' DEFICIENCY
    Preferred stock, $1.00 par value, 1,000,000 shares
      authorized, none issued and outstanding                            --
    Common stock, $0.0001 par value, 25,000,000 shares
      authorized, 6,359,758 issued and outstanding                      636
    Additional paid-in capital                                    7,400,281
    Deficit accumulated during development stage                 (5,830,557)
    Accumulated other comprehensive loss                           (129,989)
                                                                -----------
                                                                  1,440,371
    Less: Deferred consulting fee                                (2,000,000)
                                                                -----------
TOTAL STOCKHOLDERS' DEFICIENCY                                     (559,629)
                                                                -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                  $    10,939
                                                                ===========

          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
                                                       YEAR ENDED MARCH 31,       (INCEPTION) TO
                                                      2004            2003        MARCH 31, 2004
                                                  -----------      -----------  -------------------
<S>                                               <C>              <C>              <C>
OPERATING EXPENSES
    Compensation                                  $        --      $   225,742      $ 1,588,853
    Depreciation and amortization                       1,244              405          812,548
    Consulting                                         44,345           38,749          987,744
    Bad debt                                               --               --           12,819
    Director fees                                          --               --           64,100
    Financing fees                                         --           28,781           28,781
    Professional fees                                  35,253           22,054           57,307
    General and administrative                         41,626           42,242          309,645
    Research and development                           25,297           84,475        1,017,314
    Impairment loss                                        --               --        1,191,846
                                                  -----------      -----------      -----------
TOTAL OPERATING EXPENSES                              147,765          442,448        6,070,957
                                                  -----------      -----------      -----------

LOSS FROM OPERATIONS                                 (147,765)        (442,448)      (6,070,957)
                                                  -----------      -----------      -----------

OTHER INCOME (EXPENSES)
    Interest income                                        58                1            4,800
    Interest expense                                   (4,669)          (4,680)          (9,349)
    Gain on settlement                                     --           59,654           59,654
    Loss on settlement                                     --          (16,296)         (16,296)
    Loss on disposal of assets                             --               --             (567)
    Foreign currency transaction gain                 117,530           84,628          202,158
                                                  -----------      -----------      -----------
TOTAL OTHER INCOME, NET                               112,919          123,307          240,400
                                                  -----------      -----------      -----------

NET LOSS                                          $   (34,846)     $  (319,141)     $(5,830,557)
                                                  ===========      ===========      ===========

COMPREHENSIVE LOSS
    Foreign currency translation loss                (117,341)         (80,354)        (129,989)
                                                  -----------      -----------      -----------

TOTAL COMPREHENSIVE LOSS                          $  (152,187)     $  (399,495)     $(5,960,546)
                                                  ===========      ===========      ===========

Net Loss Per Share - Basic and Diluted            $     (0.01)     $     (0.06)     $     (1.37)
                                                  ===========      ===========      ===========

Weighted average number of shares outstanding
    during the year - basic and diluted             6,359,758        5,492,530        4,244,828
                                                  ===========      ===========      ===========
</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, 2004, 2003, AND FOR THE PERIOD FROM
                   MARCH 5, 1999 (INCEPTION) TO MARCH 31, 2004

<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 for future services               -       -      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
Stock issued as consideration for future
    services                                          -       -      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
                                               ======== ========   =========     ====   ==========
</TABLE>

                                      F-5
<PAGE>

[RESTUBBED]

<TABLE>
<CAPTION>
                                               Deficit
                                               Accumulated  Accumulated
                                                 During       Other                 Deferred
                                               Development Comprehensive  Deferred    Loan    Deferred
                                                 Stage         Loss         Fees       Fee    Expenses    Total
                                              -----------  -----------  -----------  ------   --------  ---------
<S>                                           <C>          <C>          <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)           -            -       -          -   (900,000)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March 31, 1999                          (900,000)           -            -       -          -          -
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)           -       -          -     (5,745)
Net loss, 2000                                   (650,366)           -            -       -          -   (650,366)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March 31, 2000                        (1,550,366)      (5,745)           -       -          -  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                 -            -   (1,200,000)      -          -          -
Foreign currency translation gain                       -       60,054            -       -          -     60,054
Net loss, 2001                                   (966,789)           -            -       -          -   (966,789)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March 31, 2001                        (2,517,155)      54,309   (1,200,000)      -          -  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                         -            -            - (24,997)         -          3
Foreign currency translation gain                       -       13,397            -       -          -     13,397
Net loss, 2002                                 (2,959,415)           -            -       -          - (2,959,415)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March 31, 2002                        (5,476,570)      67,706   (1,200,000)(24,997)         -   (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                                        -            -            -  24,997          -    127,655
Stock issued as consideration for future
    services                                            -            -     (800,000)      -          -          -
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)           -       -          -    (80,354)
Net loss, 2003                                   (319,141)           -            -       -          -   (319,141)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March 31, 2003                        (5,795,711)     (12,648)  (2,000,000)      -    (30,000)  (437,442)
Foreign currency translation loss                       -     (117,341)           -       -       -      (117,341)
Amortization of deferred expenses                       -            -            -       -     30,000     30,000
Net Loss, 2004                                    (34,846)           -            -       -          -    (34,846)
                                              -----------  -----------  -----------  ------   --------  ---------
Balance, March  31, 2004                      $(5,830,557) $  (129,989) $(2,000,000) $    -   $      -  $(559,629)
                                              ===========  ===========  ===========  ======   ========  =========
</TABLE>

          See accompanying notes to consolidated financial statements.



                                      F-6
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                    FOR THE PERIOD FROM
                                                                                       MARCH 5, 1999
                                                            YEAR ENDED MARCH 31,      (INCEPTION) TO
                                                            2004          2003        MARCH 31, 2004
                                                         ---------      ---------   --------------------
<S>                                                      <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss                                             $ (34,846)     $(319,141)     $(5,830,557)
    Adjustment to reconcile net income (loss)
       to net cash used in operating activities:
       Depreciation and amortization                         1,244            405          812,548
       Stock based compensation                                 --        224,978        1,477,893
       Stock based consulting expense                           --             --          854,345
       Stock based director fees                                --             --           64,100
       Recognition of stock based rent and
         administrative fees                                30,000         10,000           40,000
       Common stock warrants issued as financing fee            --          3,783            3,783
       Loss on disposal of equipment                            --             --              567
       Impairment loss                                          --             --        1,191,846
       Gain on settlement of accounts payable                   --        (59,654)         (59,654)
       Loss on settlement of accounts payable                   --         16,296           16,296
       Amortization of stock based financing fee                --         24,997           24,997
    Changes in operating assets and liabilities:
       (Increase) decrease in:
          Other receivables                                  2,546         (2,652)          (5,656)
          Prepaids and other assets                         (1,323)         4,997           (1,323)
       Increase (decrease) in:
          Accounts payable and accrued liabilities          33,075             --          576,507
          Accounts payable - related party                   8,160             --            8,160
                                                         ---------      ---------      -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES         38,856        (95,991)        (826,148)
                                                         ---------      ---------      -----------

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 costs                                           --             22          708,222
    Loan proceeds from related parties                      75,463        177,952          283,708
    Repayment of loan to related parties                        --             --          (26,792)
                                                         ---------      ---------      -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                   75,463        177,974          965,138
                                                         ---------      ---------      -----------

Effect of Exchange Rate on Cash                           (117,341)       (80,354)        (132,119)

Net Increase (Decrease) in Cash and Cash Equivalents        (3,022)         1,629            2,408

Cash and Cash Equivalents at Beginning of Period             5,430          3,801               --
                                                         ---------      ---------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD               $   2,408      $   5,430      $     2,408
                                                         =========      =========      ===========

Supplemental Disclosure of Cash Flow Information
Cash Paid for:
    Interest                                             $      --      $      --      $        --
                                                         =========      =========      ===========
    Taxes                                                $      --      $      --      $        --
                                                         =========      =========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements


                                      F-7
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

The Company acquired intangible assets valued at $2,000,000 for 2,000,000 common
shares in June 1999.

The Company issued 400,000 common shares in 2001 for future services valued at
$1,200,000. (See Notes 6(B) and 7)

An Investor converted 250,000 preferred shares into 250,000 common shares in
2002.

During the year ended March 31, 2003, the Company issued 273,058 shares of
common stock to settle certain accounts payable. (See Notes 4 (C) and 6(B))

During the year ended March 31, 2003, the Company issued 167,658 shares of
common stock to settle certain loans payable. (See Notes 6(B) and 7)

During the year ended March 31, 2003, the Company issued 800,000 shares of
common stock in connection with a debt restructuring related to an anti-dilution
provision. (See Note 6(B))

During the year ended March 31, 2003, the Company converted accounts payable and
related accrued interest to a note payable totaling $102,023. (See Note 5(B))



                                      F-8
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

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, Ltd., 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
         proliferative and autoimmune diseases.

         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 it's subsidiary. All material intercompany balances
         and transactions have been eliminated in consolidation.

         (C) USE OF ESTIMATES

         In preparing consolidated financial statements, management is required
         to make estimates and assumptions that effect 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 2004 and 2003 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.

         (D) 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.

         (E) 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 functional currency of the Company's Canadian subsidiary is the
         Canadian dollar. The accounts of the Canadian subsidiary are translated
         to United States dollars using the current rate method. Under the


                                      F-9
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         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.

         (F) CONCENTRATIONS

         The Company maintains its cash in bank deposit accounts, which, at
         times, exceed federally insured limits. As of March 31, 2004, 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, 2004.

         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.

         (G) 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.

         (H) 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.

         (I) STOCK-BASED COMPENSATION

         The Company accounts for stock options issued to employees in
         accordance with the provisions of Accounting Principles Board ("APB")
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations. As such, compensation cost is measured on the date of
         grant as the excess of the current market price of the underlying stock
         over the exercise price. Such compensation amounts are amortized over
         the respective vesting periods of the option grant. The Company adopted
         the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
         Compensation," and SFAS No. 148, "Accounting for Stock Based
         Compensation-Transaction and Disclosure," which permits entities to
         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. 123 had been applied.



                                      F-10
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         The Company accounts for stock options or warrants issued to
         non-employees for goods or services in accordance with SFAS No. 123.
         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 an options pricing model.

         (J) 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 $25,297, $84,475, and
         $1,017,314 for the years ended March 31, 2004, 2003, and for the period
         from March 5, 1999 (inception) to March 31, 2004, respectively.

         (K) 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.

         (L) 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 Consolidated Statement of
         Changes in Stockholders' Deficiency.

         (M) 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, 2004, there were common stock warrants to issue 275,000


                                      F-11
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         common shares, which could potentially dilute future earnings per
         share.

         Additionally, there were 173,058 shares of redeemable common stock
         issued in connection with a written put option (see Note 4(C)) that are
         not included as a component of stockholders' deficiency and are not
         included in the computation of basic and diluted earnings per share as
         these shares are not considered to be outstanding during the periods
         presented and the effect of the issuance of these shares is
         anti-dilutive.

         (N) 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 receivable, accounts payable, and loans payable-related
         parties, approximate fair value due to the relatively short period to
         maturity for these instruments.

         (O) NEW ACCOUNTING PRONOUNCEMENTS

         In May 2003, the FASB issued SFAS No. 149; "Amendment of Statement 133
         on Derivative Instruments and Hedging Activities" ("SFAS 149") which
         provides for certain changes in the accounting treatment of derivative
         contracts. SFAS 149 is effective for contracts entered into or modified
         after June 30, 2003, except for certain provisions that relate to SFAS
         No. 133, Implementation issues that have been effective for fiscal
         quarters that began prior to June 15, 2003, which should continue to be
         applied in accordance with their respective effective dates. The
         guidance should be applied prospectively. The adoption of SFAS 149 did
         not have a material impact on the Company's consolidated financial
         position, results of operations, or liquidity.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
         Financial Instruments with Characteristics of both Liabilities and
         Equity" ("SFAS 150"). This new statement changes the accounting for
         certain financial instruments that, under previous guidance, issuers
         could account for as equity. It requires that those instruments be
         classified as liabilities in balance sheets. Most of the guidance in
         SFAS 150 is effective for all instruments entered into or modified
         after May 31, 2003, and otherwise is effective at the beginning of the
         interim period beginning after June 15, 2003. The adoption of SFAS 150
         did not have a material impact on the Company's consolidated financial
         position, results of operations, or liquidity.

         In November 2002, the FASB issued FASB Interpretation No. 45,
         "Guarantor's Accounting and Disclosure Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
         FIN 45 requires that a liability be recorded in the guarantor's balance


                                      F-12
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         sheet upon issuance of the guarantee. In addition, FIN 45 requires
         disclosures about the guarantees that an entity has issued, including a
         reconciliation of changes in the entity's product warranty liabilities.
         The initial recognition and initial measurement provisions of FIN 45
         are applicable on a prospective basis to guarantees issued or modified
         after December 31, 2002, irrespective of the guarantor's fiscal
         year-end. The disclosure requirements of FIN 45 are effective for the
         Company for consolidated financial statements of interim periods
         beginning July 1, 2003 and did not have a material impact on the
         Company's consolidated financial position or results of operations.

         In January 2003, the FASB issued FASB Interpretation No. 46,
         "Consolidation of Variable Interest Entities" ("FIN 46"), as amended by
         FIN46(R), which represents an interpretation of Accounting Research
         Bulletin No. 51 ("ARB 51"), "Consolidated Financial Statements". ARB 51
         requires that a Company's financial statements include subsidiaries in
         which the Company has a controlling financial interest. That
         requirement usually has been applied to subsidiaries in which the
         Company has a majority voting interest. However, the voting interest
         approach is not effective in identifying controlling financial
         interests in entities (referred to as " variable interest entities")
         that are not controllable through voting interests or in which the
         equity investors do not bear the residual economic risks. FIN 46
         provides guidance on identifying variable interest entities and on
         assessing whether a Company's investment in a variable interest entity
         requires consolidation thereof. As amended by FIN 46(R), this
         interpretation is effective by the end of the first reporting period
         ending after December 15, 2003 for small business issuers that have
         special purpose entities and after December 15, 2004 for all other
         types of variable interest entities. The adoption of FIN 46 did not
         have a material impact on the Company's financial position, results of
         operations, or liquidity.

         (P) RECLASSIFICATIONS

         Certain amounts in the March 31, 2003 consolidated financial statements
         have been reclassified to conform to the March 31, 2004 presentation.

NOTE 2   EQUIPMENT

Equipment consists of the following at March 31:

                                             2004
                                            -------
         Computers and equipment            $ 4,589
         Less: Accumulated depreciation      (3,037)
                                            -------
                                            $ 1,552
                                            =======

Depreciation was $1,244 and $405 for the years ended March 31, 2004 and 2003,
respectively, and $3,037 for the period from March 5, 1999 (inception) to March
31, 2004.

During 2002, furniture and fixtures were disposed of. The loss on the disposal
for the year ended March 31, 2002 was $567.


                                      F-13
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

NOTE 3   INTANGIBLE ASSETS

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.

The purchased Intellectual Property was being amortized over its estimated
useful life of seven years from the acquisition date and through March 31, 2002.

Amortization expense was $285,708 for the year ended March 31, 2002 and $809,511
for the period from March 5, 1999 (inception) to March 31, 2004. There was no
amortization expense for the years ended March 31, 2004 and 2003, respectively.

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

NOTE 4   COMMITMENTS AND CONTINGENCIES

         (A) EMPLOYMENT AGREEMENTS

         The Company entered into an employment agreement with an officer in
         June 1999, which expired on May 31, 2001. The agreement stipulates a
         salary based on funding criteria and issuance of 1,200,000 common stock
         options, which vest based on the Company meeting stipulated milestones.
         The options are exercisable upon vesting at $0.0001 per share. The
         options were valued on the grant date using the intrinsic value method
         pursuant to APB No. 25 and the contemporaneous cash common stock sale
         price of $1.00 resulting in an approximate $1.00 option value. Due to
         the uncertainty of meeting milestones, a compensation expense based on
         the estimated $1.00 value of the options will be recognized upon
         vesting. Through March 31, 2001, none of the options vested. In May
         2001, 587,500 of the options vested, and a compensation expense of
         $587,441 was recognized. (See Notes 6(B) and 6(C))

         The Company entered into an employment agreement with an officer in
         June 2000, which expired on May 31, 2001. The agreement stipulates a
         salary based on funding criteria and issuance of 400,000 common stock
         options, which vest based on the Company meeting stipulated milestones.
         The options are exercisable upon vesting at $0.0001 per share. The
         options were valued on the grant date using the intrinsic value method
         of APB No. 25 and the contemporaneous cash common stock sale price of
         $1.00 resulting in an approximate $1.00 option value. Due to the
         uncertainty of meeting milestones, a compensation expense based on the
         estimated $1.00 value of the options will be recognized upon vesting.
         Through March 31, 2001, none of the options vested. In May 2001,
         262,500 of the options vested and a compensation expense of $262,474
         was recognized. (See Notes 6(B) and 6(C))


                                      F-14
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         In June 2001, the above employment agreements were renewed and the
         remaining 612,500 and 137,500 options under each agreement,
         respectively, remained outstanding. However, in November 2001, those
         employment agreements were terminated by the Company and the related
         option agreements for 612,500 and 137,500 options were also cancelled.
         One of those agreements was replaced with an oral consulting agreement
         with one individual to act as President and Chief Executive Officer.

         (B) LEASES

         The Company leases office space on a month-to-month basis. The premise
         is leased from a principal stockholder (See Note 6(B) and 7). Rent
         expense in 2004, 2003, and for the period from March 5, 1999
         (inception) to March 31, 2004 was $20,000, $10,223, and $88,377,
         respectively and is included in general and administrative expense in
         the accompanying consolidated statements of operations.

         (C) 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.
         Specifically, 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 will then have 90 days
         from the notification date to make the required payment. The redemption
         value of these shares of common stock at March 31, 2004 is $173,058.
         (See Note 1(M))

         (D) 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. (See Note 11)

NOTE 5   LOANS AND NOTES PAYABLE, 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. Total outstanding loans were $125,000 at March 31,
         2004 and are included in the loans payable related party balance. The
         loan is non-interest bearing, unsecured and due on demand (see Notes 7
         and 12). Upon the Company's next debt or equity type financing


                                      F-15
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         transaction with an unrelated party, terms of this debt financing will
         be reestablished in accordance with the terms of the next financing
         transaction with an unrelated party.

         At March 31, 2004, the Company owed $4,258 to a related party of a
         principal stockholder. The loan was non-interest bearing, unsecured and
         due on demand and included in the loans payable, relayed party balance.
         (See Note 7)

         (B) 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, related
         party 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 would bear interest at prime plus
         1%. Interest is accrued and payable quarterly. At March 31, 2004,
         accrued interest totaled $6,692. The related accrued interest is
         classified as short term. 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 an agreement between the Company, vendor and
                  other unrelated party terminates; or
         (iii)    Three years from the date of the promissory note.

         Since none of these conditions have been met as of March 31, 2004, the
         promissory note is classified as long term.

NOTE 6   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,
                  (ii) 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-16
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         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 was 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 t 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 of those expired leaving 250,000 outstanding at March 31,
         2004.

         (B) COMMON STOCK AND OPTIONS

         In March 1999, the Company issued 300,000 common shares to an officer
         for services, which were valued at a planned contemporaneous cash
         offering price for one-for-one convertible preferred stock and common
         stock warrants issued with an exercise price of $1.00 per share. A
         compensation expense of $300,000 was recorded in 1999.

         In March 1999, the Company issued 255,000 common shares and 345,000
         common stock warrants exercisable at $0.0001 per share as a fee for
         assistance in the acquisition of intangible assets. The common shares
         were valued based on a contemporaneous cash-offering price of $1.00 per
         share. The warrants were valued pursuant to SFAS 123, at $1.00 per
         warrant. The aggregate consulting expense charged to operations in 1999
         for the shares and warrants was $600,000.

         In June 1999, the Company issued 2,000,000 common shares for a
         portfolio of patents, patents pending, and related intellectual
         property. The portfolio was valued at $2,000,000 based on a $1.00 per
         share contemporaneous cash offering price for one-for-one convertible
         preferred stock and common stock warrants issued with an exercise price
         of $1.00.

         In December 1999, 100,000 common stock warrants were exercised for
         $100,000.

         In May 2000, directors were granted an aggregate 58,100 common shares
         for services rendered. The shares were valued at the contemporaneous
         cash offering price of $1.00 per share resulting in a compensation
         expense of $58,100 on the grant date.

         In May 2000, 150,000 common stock warrants were exercised for $150,000.


                                      F-17
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         In October 2000, 345,000 common stock warrants were exercised at
         $0.0001 per share or a total of $35.

         In October 2000, 100,000 common shares were issued to an officer as
         compensation for services rendered. A compensation expense of $100,000
         was recognized on the grant date based on the contemporaneous cash
         offering price of $1.00 per common share.

         In December 2000, 50,000 common shares were sold to an unrelated party
         for $50,000 and another 50,000 common shares were sold to a stockholder
         for $50,000.

         During January 2001, the Company issued 400,000 fully vested shares to
         a third party research and development subcontractor (the "Vendor") to
         be used as credit against $1,200,000 in future invoiced license and
         royalty fees. Based on the contract, the shares had a fair value of
         $3.00 per share and stated anti-dilution provisions provided to the
         Vendor, the Company valued the 400,000 shares at $1,200,000, which
         reflected the best available evidence as to the valuation of these
         shares (See note 7). The value, considered a prepaid expense, was
         recorded as deferred consulting fees deducted from stockholders'
         deficiency, to be amortized against future invoices. During 2003, in
         accordance with the anti-dilution provision, the Company issued an
         additional 800,000 shares for common stock having a fair value of $1.00
         per share based on recent transactions upon which certain accounts
         payable and loans payable with related and unrelated parties were
         settled. For financial accounting purposes, the additional shares are
         valued at $800,000 based on contemporaneous transactions at $1.00 per
         share and were recorded as an addition to the $1,200,000 deferred
         consulting fees for a total of $2,000,000. However, the vendor only
         receives credit of $1,200,000 towards its invoices. In addition, the
         vendor's common stock holdings may not exceed 20%. Should the vendor's
         stock be reduced to comply with the 20% provision the Company's credit
         will be reduced pro-rata. As of March 31, 2004, no services had yet
         been performed under the terms of the agreement. As a result of the
         800,000 shares issued, this third party subcontractor became a
         principal stockholder of approximately 19.9% and thus, a related party.

         In May 2001, two officers vested in 850,000 common stock options
         previously granted pursuant to their employment agreements upon the
         achievement of certain milestones. A compensation expense of $849,915
         was recognized under APB 25 based on the intrinsic value of the options
         at the grant date. In November 2001 and March 2002, the 262,500 and
         587,500 options, respectively, were exercised. Accordingly, 850,000
         common shares were issued at $0.0001 per share for an aggregate $85.
         (See Notes 4(A) and 6(C))

         In May 2001, a principal stockholder was granted 125,000 common stock
         options and a consulting expense of $254,345 was recognized pursuant to
         SFAS 123 based on the $3.00 fair market value of the common shares. The
         shareholder immediately exercised 125,000 options for 125,000 common
         shares at an exercise price of $125,000. (See Note 7)

         In May 2001, the 250,000 preferred shares were converted into 250,000
         common shares. Pursuant to the warrant agreement attached to the
         preferred shares, an additional 250,000 warrants were issued upon
         conversion with an exercise term of five years at an exercise price of
         $1.00 per share.


                                      F-18
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         In December 2001, 3,000 common shares were issued to an employee at
         $0.0001 per share for services rendered. A compensation expense was
         recognized at the actual cost of $1.00 per share or $3,000 based on a
         contemporaneous cash offering price.

         In December 2001, 3,000 common shares were issued to two directors each
         at $0.0001 per share for services rendered. A director's fee was
         recognized at the actual cost of $1.00 per share or $6,000 based on a
         contemporaneous cash offering price.

         In March 2002, 25,000 common shares were issued to a related party for
         $0.0001 per share as a loan fee relating to a convertible debenture
         issued subsequently to March 31, 2002 (see Note 9). A deferred loan fee
         was recorded at $24,997 based on the contemporaneous cash offering
         price less the cash paid of $3.00 (see Note 10). During 2003, the
         convertible debt associated with this loan fee was converted into
         102,658 shares of common stock and the entire fee of $24,997 was
         charged to operations for 2003.

         In November 2002, the Company issued 225,000 shares of common stock at
         $0.001 par value for $23.00 to certain employees, members of
         management, and the board of directors (see Note 7). The shares issued
         had a fair value of $1.00 per share based on recent contemporaneous
         transactions. Accordingly, an additional $224,977 was charged to
         operations and reflected as compensation.

         In November and December 2002, the Company issued 167,658 shares of
         common stock having a fair value of $1.00 per share based on the recent
         stock issuances for cash to settle outstanding loans payable with a
         related party totaling $167,658. Of the total shares issued, 102,658
         shares valued at $102,658 were issued in connection with a convertible
         debenture (see Note 9). Accordingly, no gain or loss was recognized in
         these transactions. (See Note 7)

         In November 2002 and February 2003, the Company issued an aggregate
         273,058 shares of common stock to settle certain accounts payable
         totaling $256,762 with unrelated entities (See Note 4(C)). The shares
         issued has a fair value of $1.00 per share representing the mutually
         agreed upon value of the Company's stock. As a result, the Company
         recognized a loss on settlement totaling $16,296.

         In December 2002, the Company issued 40,000 shares of its common stock
         to a principal stockholder (See Notes 4(B) and 7) having a fair value
         of $40,000 based on recent contemporaneous transactions. In exchange
         for the stock issued, the Company received various corporate services
         including rental of the office facility, general accounting services
         and overhead. The 40,000 shares were issued for calendar year 2003.
         Accordingly, $10,000 was charged to operations and included in general
         and administrative expenses and the remaining $30,000 was deferred and
         included as a separate component of stockholders' deficiency to be
         amortized over the remaining service period.

         (C) STOCK OPTIONS AND WARRANTS

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


                                      F-19
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         In accordance with SFAS 123, for options issued to employees, the
         Company applies APB Opinion No. 25 and related interpretations. During
         2003, the Company did not grant common stock options to officers. Due
         to the uncertain vesting period of certain grants due to vesting
         contingencies, compensation expense is recognized only upon vesting.
         Accordingly, compensation cost of $849,915 was recognized for 850,000
         options vested in May 2001. The remaining 750,000 potential options
         under the employment agreements were terminated by the Board of
         Directors when the employment agreements were terminated in November
         2001.
         (See Notes 4(A) and 6(B))

         Had compensation cost for the Company's stock-based compensation plan
         been determined on the fair value at the grant dates for awards under
         that plan, consistent with Statement No. 123, the Company's net loss
         for the years ended March 31, 2004 and 2003 and the period from March
         5, 1999 (inception) to March 31, 2004 would not have changed.

         The effect of applying Statement No. 123 is not likely to be
         representative of the effects on reported net income (loss) for future
         years due to, among other things, the effects of vesting.

         For stock options and warrants issued to non-employees, the Company
         applies SFAS 123. Accordingly, consulting expense of $3,783 and
         $254,345 was 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, 2004. See tabular summary below for assumptions.

         For consolidated financial statement disclosure purposes and for
         purposes of valuing stock options and warrants issued to consultants,
         the fair market value of each stock granted was estimated on the grant
         date using the Black-Scholes Option-Pricing Model in accordance with
         SFAS 123. The following weighted-average assumptions were used for the
         year ended March 31:
<TABLE>
<CAPTION>
                                      2004          2003          2002         2001         2000         1999
                                     ------        ------       -------      -------     --------      -------
<S>                                  <C>           <C>          <C>          <C>         <C>           <C>
         Expected Dividend Yield     $   --        $ 0.00%      $  0.00%     $    --     $     --      $  0.00%
         Risk Free Interest Rate         --         4.145%         3.57%          --           --         4.53%
         Expected Volatility             --          0.00%         0.00%          --           --         0.00%
         Expected Term                   --        4 Years        1 Year          --           --       2 Years
         Consulting Expense          $   --        $ 3,783      $254,345     $    --     $     --      $345,000
</TABLE>

         A summary of the options outstanding, which were granted for cash or
         services are presented below:
<TABLE>
<CAPTION>
                                                   Number of
                                                  Options and       Weighted Average
                                                   Warrants          Exercise Price
                                                  ------------      ----------------
<S>                                                  <C>                 <C>
         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                                       --                --
                                                   ---------             -----
         Options exercisable at March 31, 2004       275,000             $1.00
                                                   =========             =====
         Weighted average fair value of
         options granted from services
         during 2004                               $      --             $  --
                                                   =========             =====
</TABLE>


                                      F-20
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

         The following table summarizes information about options and warrants
outstanding at March 31, 2004:
<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, 2004           Life             Price         March 31, 2004          Price
               --------        --------------        -----------       --------        --------------        ---------
<S>                               <C>                 <C>                <C>               <C>                  <C>
                $1.00             250,000             2.08 Years         1.00              250,000              0.91
                $1.00              25,000             3.08 Years         1.00               25,000              0.09
                                  -------                               -----              -------             -----
                                  275,000                               $1.00              275,000             $1.00
                                  =======                               =====              =======             =====
</TABLE>

         (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.

NOTE 7   RELATED PARTIES

The Company leases its facility from a principal stockholder (see Notes 4(B) and
6(B)).

During the year ended March 31, 2004, the Company received working capital funds
from a principal stockholder totaling $75,463. The receipt of these funds
represents a 100% concentration of debt financing for the Company during 2004.
(See Notes 5 (A) and 12)

At March 31, 2004, the Company owed $129,258 to a related party of a principal
stockholder. (See Note 5(A)).

At March 31, 2003, the Company issued 167,758 shares of common stock to settle
certain accounts payable (See Note 6(B)).

In November 2002, the Company issued 225,000 shares of common stock to certain
employees, members of management, and directors. (See Note 6(B).


                                      F-21
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

On May 1, 2002, the Company issued a $100,000, 5% Senior Secured Convertible
Debenture-Series A to a principal stockholder (see notes 6(B) and 9).

In May 2001, a principal stockholder was granted 125,000 common stock options
(See Note 6(B)).

In October 2000, 400,000 stock options were reserved in trust for future
issuance in accordance with an anti-dilution provision in an amended stockholder
agreement (See Note 6(B)). During May 2001, 125,000 of these options were
granted to a principal stockholder and then exercised at a price of $1.00 per
share. The Company recognized a consulting expense of $254,345 in 2002 based on
the $3.00 current fair market value of the warrants computed pursuant to the
fair market value method of SFAS 123. (See Note 6(B))

Loans payable to related parties are non-interest bearing, unsecured, and due on
demand.

NOTE 8   SETTLEMENT OF ACCOUNTS PAYABLE

During the year ended March 31, 2003, the Company had outstanding accounts
payable with a vendor totaling $59,654. The vendor formally released the Company
of any further obligations under the terms of the agreement. Accordingly, the
Company recognized the entire $59,654 as a gain on settlement and this amount is
reflected in the year ended March 31, 2003 consolidated statement of operations
as other income.

NOTE 9   CONVERTIBLE DEBENTURE

On May 1, 2002, the Company issued a $100,000, 5% Senior Secured Convertible
Debenture-Series A (the "Debenture") to a principal stockholder (the "Investor")
and received the first $50,000 of funding under the debenture (see Note 7).
Unless converted, redeemed or retracted before maturity, interest payments are
due May 1, 2003 and April 30, 2004. The Debenture must be paid in full on the
earlier of April 30, 2004 or the closing date of the next round of financing for
a minimum of $1,000,000. The Debenture is collateralized under a Security
Agreement by all of the Company's assets, including its patent applications. At
any time, at the option of the holder, the outstanding principal amount of the
debenture is convertible into common shares of the Company at a conversion price
of $1.00 per share and accrued interest shall be payable in cash at that time.
The Debenture contains various covenants, some of which restrict the ability of
the Company to issue further debt or equity securities. The Debenture contains
anti-dilution provisions requiring the Company to issue additional shares to the
Investor, based upon a stipulated formula, if the Company sells any additional
shares at less than $3.00 per share. (See Note 6(B)).

Upon the issuance of the convertible debenture, and in accordance with EITF 98-5
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratio," there was no beneficial conversion as
the market price of the Company's common stock, which was $1.00 on the
commitment date, was equivalent to the exercise price of $1.00.

In November 2002, the $100,000 debenture plus accrued interest was converted
into 102,568 shares of common stock having a fair value of $102,568. The
principal of $100,000 and accrued interest of $2,568 was valued at $1.00 per
share based upon recent transaction for the settlement of certain accounts


                                      F-22
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

payable and loans payable with the same related party (principal stockholder)
and unrelated parties (See Note 6(B)).

NOTE 10  INCOME TAXES

The Company files separate tax returns for the parent and its Canadian
subsidiary. There was no income tax expense for the years ended March 31, 2004
and 2003, 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, 2004 and 2003, (computed by applying the United States
Federal Corporate tax rate of 34% to consolidated loss before taxes), as
follows:
<TABLE>
<CAPTION>
                                                               Years Ended March 31,
                                                                2004           2003
                                                              --------      ---------
<S>                                                           <C>           <C>
         Computed "expected" tax benefit                      $(11,848)     $(108,508)
         Foreign income tax rate differences                     5,198       (116,896)
         Change in deferred tax asset valuation allowance        6,650        225,404
                                                              --------      ---------
                                                              $     --      $      --
                                                              ========      =========
</TABLE>

The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at March 31, 2004 are as follows:

         Deferred tax assets:
         United States net operating loss carryforward     $ 1,011,755
         Canadian net operating loss carryforward            1,115,622
                                                           -----------
         Total gross deferred tax assets                     2,127,377
         Less valuation allowance                           (2,127,377)
                                                           -----------
         Net deferred tax assets                           $        --
                                                           ===========

The valuation allowance at March 31, 2003 was $2,120,727. The net change in
valuation allowance during the year ended March 31, 2004 was an increase of
approximately $6,650. The Company's subsidiary has net operating losses of
approximately $2,688,000 at March 31, 2004 available to offset the subsidiaries'
net income through 2009 under Canadian Federal and Provincial tax laws and the
parent United States entity has a net operating loss carryforward of
approximately $2,976,000 available to offset the parent's net income through
2024.

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-23
<PAGE>

                      KYTO BIOPHARAMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2004

NOTE 11  GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company
has no revenues, a net loss of $34,846 and net cash provided in operations of
$38,856 in 2004 and a working capital deficiency of $288,123, a stockholders'
deficiency of $559,629 and a deficit accumulated during the development stage of
$5,830,557 at March 31, 2004. 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 (see Note 4(D)). 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 it's 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.

NOTE 12  SUBSEQUENT EVENT

In May 2004, the Company received $35,000 in debt financing from a principal
stockholder.

                                      F-24