UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 10-K/A No. 3





þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the Fiscal Year Ended March 31, 2011


OR




oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





KYTO BIOPHARMA INC.(Exact name of registrant as specified in its charter)





FLORIDA

65-1086538(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification Number)





B1-114 BELMONT STREET, TORONTO ONTARIO CANADA

M5R 1P8(Address of Principal Executive Offices)

(Zip Code)





Registrant's telephone number, including area code (416) 960-8790





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





COMMON STOCK, $0.0001 PAR VALUE


(Title of Class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  oNo   þ





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  þNo   o





Check whether the issuer  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes  þNo   o





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





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.





Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
þ





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





The aggregate market value of the voting common stock held by non-affiliates of the Registrant on September 30, 2010, was approximately $146,549.76.





The Registrant had 12,998,482 shares of common stock, $0.0001 par value per share, outstanding on June  27, 2011,














EXPLANATORY NOTE
 
 We are providing this to our Annual Report on Form 10-K (the “Amended 10-K”) for the year ended March 31, 2011, filed with the Securities and Exchange Commission on June 29, 2011 (the “Original 10-K”). This Amended 10-K/3 amends the Amended 10-K for the purpose of updating the following items:
 
 Research and Development Program
 Provides a Summary of the signed a research and commercialization agreement with Medarex Inc. on January 15, 2001. The agreement has been included as exhibitA.
 
 The company have 18 patents, the table as been amended to include the expiration date of the patents, the description of material application has been included as an exhibit B.
 
 Plan of Operation
 In February 10,2010 the company entered into a licensing agreement with Research Foundation of the State University of New York.  Provides a Summary of the licensing agreement. The agreement has been included as an exhibit C.
 
 Identify Directors and Executive officers
 Updated specific experience, qualifications, attributes or skills that led to the conclusion that each of the company’s directors is qualified.
 
 Certain Relationships and Related Transaction
 The company amended the filing by identifying the related party director and vendor who is also a principal stock holder
 
 Signatures & Certifications
 The signatures and certifications were updated to include the titles Principal Executive Officer and Exhibits 31.1 were updated to include the complete certification.
 
 This Amended 10-K/3 does not reflect events occurring after the filing of the Original 10-K and does not modify or update the disclosure in the Original 10-K, other than the items shown above in this explanatory note. This Amended 10-K/3 replaces the Original 10-K, 10 K-A and 10K/A2 in its entirety














TABLE OF CONTENTS


FORM 10-K


FOR FISCAL YEAR ENDED MARCH 31, 2011





PagePART IITEM 1
Business


3ITEM 2.
Properties


8ITEM 3.
Legal Proceedings


8ITEM 4.
(Removed and Reserved)


8PART IIITEM 5.
Market for Registrants Common Equity and Related Stockholders Matters


9ITEM 6
Selected Financial Data


10ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation


11ITEM 8 .
Financial Statements and Supplementary Data


16ITEM 9.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure


16ITEM 9A.
Controls and Procedures


16ITEM 9B
Other Information


18PART IIIITEM 10.
Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act


19ITEM 11.
Executive Compensation


21ITEM 12.
Security Ownership of Certain Beneficial Owners and Management


23ITEM 13.
Certain Relationships and Related Transactions


24ITEM 14.
Principal Accountants Fee and Services


25PART IVITEM 15.
Exhibits and Financial Statement Schedules Signatures


26





2





PART I





ITEM 1.  BUSINESS





(A) BUSINESS DEVELOPMENT





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





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





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





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





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





(B) BUSINESS OF ISSUER





(1) Principal Products and Markets





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





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





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




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





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





Monoclonal Antibodies

Development
Transport protein

Receptor
Oncology

Oncology
DevelopmentGrowth Blockers
Receptor modulators
Oncology
Proof of concept





3





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





(a) Existing drugs;





(b) Generic drugs;





(c) Molecules in development, and;





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





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





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








(2) Research and Development Programs





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








Vitamin B12 Depletion

Monoclonal AntibodiesTransport protein



Receptor
Oncology



Oncology
Development



Development
Medarex Inc.

The Research Foundation of State

University of New YorkReceptor ModulatorsGrowth blockers
Oncology
Proof of concept
The Research Foundation of State

University of New York





On January 15, 2001 Medarex Inc. (“Medarex”) and Kyto Biopharma Inc.(“Kyto”) entered into an agreement for the research, development and commercialization of novel cancer therapeutics through the application of Medarex's UltiMAb(TM) Human Antibody Development System(SM) and B. Twelve's targeted technology. Kyto will apply its expertise with vitamin B12 related targets and proprietary technology and expects to bring several cancer related targets to the collaboration. Medarex is responsible for generating fully human antibodies to targets provided by Kyto.




Under the terms of the agreement, Kyto will develop and commercialize human antibody products resulting from this alliance. Medarex expects to receive license fees and milestone payments as well as royalties on commercial sales of products resulting from this agreement. In addition, Medarex has received 400,000 of the company’s common shares. The value of the shares received by Medarex ($1,200,000) will be applied against certain license fees and milestone payments payable by Kyto to Medarex under the terms of the agreement. The agreement is enclosed as an Exhibit.




On November 11, 2002, Kyto Biopharma and Medarex Inc. ("Medarex") agreed to restructure certain aspects of their collaboration under a Research and Collaboration Agreement signed on January 15, 2001. In connection with the restructuring, Kyto Biopaharma  granted to Medarex a right of first negotiation to license human monoclonal antibody products developed under the collaboration and issued 800,000 of its common shares to Medarex.





However, the company is no longer engaged in any material development with the Medaex.




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





4





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





(3) Distribution of Products





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





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





(4) Patents





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





PATENT NO.
TITLE
ISSUED

EXPIRATIONNZ252,559
Anti-receptor agents to the vitamin B12/transcobalamin II receptor
02/14/97

05/07/13US5,688,504
Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and binding sites
11/18/97

11/18/14US5,739,287
Biotinylated cobalamins
04/14/98

04/14/15US5,840,712
Water soluble vitamin B12 receptor modulating agents and methods relating thereto
11/24/98

04/08/14US5,840,880
Vitamin B12 receptor modulating agents
11/24/98

11/24/15US5,869,465
Methods for receptor modulation and uses thereto
02/09/99

02/09/16US6,083,926
Water soluble vitamin B12 receptor modulating agents and methods relating thereto
07/04/00

04/08/14CA2,135,277
Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12
04/24/01

05/07/13NZ323,127
Vitamin B12 receptor modulating agents and methods related and methods related thereto
07/12/01

10/18/16KR297,310
Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12
05/21/01

05/07/13CH0754189
Receptor modulating agents and methods relating thereto
10/09/02

04/07/15DE0754189
Receptor modulating agents and methods relating thereto
10/09/02

04/07/15FR0754189
Receptor modulating agents and methods relating thereto
10/09/02

04/07/15GB0754189
Receptor modulating agents and methods relating thereto
10/09/02

04/07/15US7416728
Growth Blocking Agents
08/26/08

05/08/12CA2199940
Anti-receptor and growth blocking agents to Vitamin B12/transcobalmin II Receptor and binding sites
02/11/11

09/13/15




5





(5) Regulatory Environment





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





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





PRECLINICAL STUDIES





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





CLINICAL STUDIES





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





Phase I
These studies usually take one year to complete and are conducted  on a small number of healthy human subjects to evaluate the  drug's pharmacological actions, toxicity, metabolism and pharmacokinetics.Phase II
These studies take an average of two years to complete and are carried out on a relatively small number of patients suffering from the targeted condition or disease, to determine the drug's effectiveness and dose response relationship. This phase provides additional safety data and the first substitutive evidence of the drug's efficacy in humans.Phase III
These studies take an average of two years to three years to complete and involve tests on a much larger population of patients suffering from the targeted condition or disease, typically several hundred to several thousand patients. Such studies measure the drug's efficacy and its side effects on a large scale and typically involve numerous hospitals and clinics.Phase IV
This final phase involves monitoring the long-term benefits and risks of a drug after it has entered the market. These studies also involve examining the efficacy and safety of different dosage forms or focusing on specific sub-populations of patients for evaluation of the drug's efficacy and safety. Such studies  can be carried out on thousands to tens of thousands of patients.





6




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





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





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





(6) 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 $0 and $146,347, and $1,664,951 the years ended March 31, 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011, respectively.





(7) Employees





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





C) REPORTS TO SECURITY HOLDERS





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





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





7





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 Benarroch Securities., a related party, at the rate of approximately $10,000 quarterly, which includes rent and certain administrative services, such as bookkeeping, copying and printing, courier services, and telephone.





The Company owns no investments.





ITEM 3.  LEGAL PROCEEDINGS





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





ITEM 4.  SUBMISSION (REMOVED AND RESERVED)





8




PART II





ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS





The following discussions should be read in conjunction with the financial statements and related notes which are included in this Form 10-K for the year ending March 31, 2011. Statements made below which are not historical facts are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, general economic conditions and our ability to develop our products. For further information regarding our business, competition and risk factors, refer to this Company's Form 10-K filed with the U.S. Securities Exchange Commission.





(A) MARKET INFORMATION





As of February 23, 2011, our stock quotation coverage moved from the FINRA operated OTC Bulletin Board to the OTC Markets Group, Inc.'s OTCQB under the same symbol "KPBH."


In September, 2009, the Financial Industry Regulatory Authority (FINRA), which owns and operates the Over-the-Counter Bulletin Board (OTCBB), announced that it wished to divest itself of the ownership and operation of the OTCBB and intended to sell to an independent third party the OTCBB.com web site, URL, and reservation rights, certain OTCBB.com content; and the OTCBB trademark. Given the uncertainty of the fate of the FINRA operated OTCBB, there has been a large migration of market makers from the OTCBB quotation system to the OTC Link quotation system. According to otcmarkets.com, in the past 30 calendar days, there have been over 624 publically traded companies that have moved from being dually quoted (OTCBB and OTC Link) to being quoted exclusively on the OTC Link platform, and only 19 issuers remain exclusively quoted on the OTCBB. As of February 18, 2011, priced quotes published on OTC Link made up 95% of priced quotes in the OTC marketplace.




Our common stock had traded on the OTC Bulletin Board(R), or OTCBB, since August 04, 2005. The Company's common stock is quoted on the Electronic Bulletin Board of the OTC market, under the trading symbol KBPH. The following table sets forth, for the calendar quarters indicated, the high and low closing prices for our common stock as reported by OTCBB for fiscal years ended March 31, 2011 and 2010. The quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not represent actual transactions. The market for the common stock has been sporadic and there have been long periods during which there were few, if any, transactions in the common stock and no reported quotations. Accordingly, reliance should not be placed on the quotes listed below, as the trades and depth of the market may be limited, and therefore, such quotes may not be a true indication of the current market value of the Company's common stock.





Common StockHigh


LowFiscal Year Ended March 31, 2011First quarter

$
0.70


$
0.55Second quarter


0.55



0.47Third quarter


0.55



0.33Fourth quarter


0.55



0.35Fiscal Year Ended March 31, 2010First quarter

$
1.70


$
0.55Second quarter


1.50



1.50Third quarter


1.50



0.45Fourth quarter


1.01



0.30





There were 12,998,482 shares of common stock outstanding as of the end of the fiscal year ended March 31, 2011.





(B) HOLDERS





According to information provided to us by the transfer agent for our shares of Common Stock, as of March 31, 2011, there were 14 holders of record of the shares of Common Stock, including depositories. Based upon information we have received from some of these record owners, we believe there are more than 150 beneficial holders of our shares of Common Stock.





9




(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.  SELECTED FINANCIAL DATA





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





Years ended March 31,2011


2010Net Loss

$
(518,258
)

$
(591,293
)Loss Per Share

$
(0.04
)

$
(0.05
)Total assets

$
863


$
170,014Total liabilities

$
1,382,799


$
1,122,797




10





ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION





(A) PLAN OF OPERATION





The Company had not been profitable and had no revenues from operations since its inception in March 1999. As reflected in the accompanying audited consolidated financial statements, in 2011 the company had, a net loss of $518,258, a working capital deficiency of $1,381,936, a stockholders' deficiency of $1,381,936, and a deficit accumulated during development stage of $17,584,219 at March 31, 2011. These factors raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Research and development expense was $0, $146,347, and $1,664,951 for the years ended March 31, 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011, respectively.





During the period ending March 31, 2011, the Company continued to evaluate its Intellectual Property Portfolio. Under the recommendation from Patent Attorneys, management and consultants, Kyto has elected to cancel patent protection in non essential jurisdictions, to allow more focus to be placed on Kyto’s monoclonal antibody technologies.





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





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





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





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





The efforts of the Company's R&D have produced notable accomplishments with respect to the development of a novel cancer therapy through the regulation of Vitamin B12 uptake, an essential nutrient for cells. For the first time, the Company has conclusively identified the protein and the gene encoding the Vitamin B12 receptor. The work on utilizing the Vitamin B12 pathway provides for several strategies aimed at preventing the proliferation of cancer cells.





During the period ending March 31, 2011, the Company conducted a comprehensive review of its existing Intellectual Property portfolio with the assistance various IP legal firms and consultants. As a result of this review, the Company has elected to drop some of its patents while funding the remaining patents in full. During the year ending March 31, 2011, the Company wrote off  the patent rights valued at $165,570.





11





The Company is currently a development stage company and its continued existence is dependent upon the Company's ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is very dependent upon debt and equity funding. The Company must successfully complete its research and development resulting in a saleable product. However, there is no assurance that once the development of the product is completed and finally gains Federal Drug and Administration clearance, that the Company will achieve a profitable level of operations.





The Company has, as of the end of its fiscal year (March 31, 2011), $1,382,799 in liabilities. During 2011 and  2010 the Company advanced $43,689 and $265,931 respectively to a newly founded US based biotechnology company, Targeted Payload Therapeutics Inc. ("TPT"), a related party.  During the first quarter of 2011 the Company has deemed this advance uncollectable because the company cancelled the agreement with TPT as a result of irreconcilable differences among the management of TPT which prevented the project from moving forward. As of result we deemed the amount as non-recoverable and has written it off.   This has adversely impacted the Company’s liquidity.  The Company estimates that it will require up to $100,000 to meet operating costs, excluding research and development costs, and up to $300,000 for research and development costs for this fiscal year. In addition, with the help of its scientific partners, the Company is reviewing its technology and assessing the best way of pursuing its development. The report of our Independent Registered Public Accounting Firm on our March 31, 2011 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to substantial recurring losses from operations, cash used in operations, stockholders' deficit and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional funding and maintain operations. We do not currently have sufficient financial resources to fund our operations. Therefore, we need additional funds to continue these operations. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, we would be forced to curtail our business operations.





On February 10, 2010 Kyto executed an “Executive Licensing Agreement”(see exhibit C) with The Research Foundation of State University of New York, “RFSUNY”
 
 The technology licensed from RFSUNY relates to the use of the Transcobalamin Receptor as a target in Cancer Therapy.  Kyto has exclusive licensing rights which expire upon the expiration of the last patent rights relating to the license( Patents  applications were filed with the appropriate governing body on April 5, 2007  and the patents have yet to be issued, and patent usually expires 20 years from date of filing, April 5, 2027). Specifically the licensing rights relate to the group of patents relating to Kyto’s Research and Development strategy of developing monoclonal antibodies to the vitamin B12 receptor as specific delivery vehicles for cytotoxic payloads.
 
 The licensing rights grants kyto an exclusive, world wide, perpetual rights and license to use and practice to make and have made, to use and have used, to offer for sale or lease, to sell or lease, have sold or leased the technologies including but not limited to diagnostic uses, and prophylactic and therapeutic treatment of human diseases, including and not limited to cancer.
 
 In consideration for the exclusive license, Kyto will pay RFSUNY a royalty on Net Sales of between 2% and 4% based on the level of Net Sales, and grant RFSUNY a 2% equity position in Kyto.
 
 Kyto has full and complete control over the prosecution of patent applications, of any re-issues or re-examniation of the licensed patents or of any disclaimer proceeding in connection with the subject matter of the patent rights. However, RFSUNY must keep  Kyto up to date regarding any development associated with any pending patents, issued patents or future patents application incorporated into the patents rights.
 
 Kyto has exclusive licensing rights which expire upon the expiration of the last patent rights relating to the license, or Kyto ceases to do business or makes an assignment of the agreement. The agreement also expire if Kyto fails to pay RFSUNY, RFSUNY has to right to terminate the agreement. If Both Kyto and RFSUNY fails to Keep or perform any of its obligations the agreement can be terminated. Upon termination of agreement, all rights granted to either party shall cease and terminate.
 
 Kyto has been successful in developing a specific murine monoclonal antibody to the transcobalamin receptor.  The antibody identified as mAbTCR23, has been demonstrated to be highly effective in targeting cancer cells and in inhibiting cell proliferation in a number of cell lines including solid tumors and lymphnoid malignancies.  The conjugation of the mAbTCR23 antibody to saporin, a highly effective intercellular cytotoxic agent, did not affect the biological activity of the antibody.





(B) LIQUIDITY AND CAPITAL RESOURCES





The Company had working capital deficit of $1,381,936 and $1,118,353 as of March 31, 2011 and 2010 respectively. Cash were $863 and $4,444 as of March 31, 2011 and 2010 respectively.





Cash from operating activities


The company’s cash outflow from operations of $246,432 for the year ended March 31, 2011 was $278,860 below cash flow from operating activities as of March 31, 2010 which was $525,292.





Cash from financing activities


The company’s net cash flow from financing activities of $242,800 for the year ended March 31, 2011 was $274,172- below the cash flow from financing activities for the year ended March 31, 2010, which was $516,972.





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





12





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





The Company operates in a rapidly changing environment that involves a number of factors, some of which are beyond management's control, such as financial market trends and investors' appetite for new financings. It should also be emphasized that, should the Company not be successful in completing its own financing (either by debt or by the issuance of securities from treasury), the Company may be unable to continue to operate as a going concern.





(C) OFF-BALANCE SHEET ARRANGEMENT





None.





(D) COMPETITION





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





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





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





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





13


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





● KYTO HAS BASED MANY OF ITS DRUG CANDIDATES ON UNPROVEN NOVEL TECHNOLOGIES, AND IT MAY NEVER DEVELOP THEM INTO COMMERCIAL PRODUCTS. Our primary focus is on our research and development activities of drug candidates covered by proprietary biopharmaceutical patents and patent applications. Research and development activities, by their nature, preclude definitive statements as to the time required and costs involved in reaching certain objectives. Actual research and development costs, therefore, could exceed budgeted amounts and estimated time frames may require extension. Cost overruns, unanticipated regulatory delays or demands, unexpected adverse side effects or insufficient therapeutic efficacy will prevent or substantially slow our research and development effort and our business could ultimately suffer. We anticipate that we will remain principally engaged in research and development activities for an indeterminate, but substantial, period of time. Furthermore, preclinical results in animal studies may not predict outcome in human clinical trials.





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





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





14


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





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





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





● THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO SIGNIFICANT RECURRING LOSSES FROM OPERATIONS, CASH USED IN OPERATIONS, STOCKHOLDERS' DEFICIT, ACCUMULATED DEFICIT AND WORKING CAPITAL DEFICIT ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING. The report of our Independent Registered Public Accounting Firm on our March 31, 2011 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to substantial recurring losses from operations, cash used in operations, stockholders' deficit and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional funding and maintain successful operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty





15





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA





Attached audited consolidated financial statements for KYTO BIOPHARMA, INC. AND SUBSIDIARY for the fiscal years ended March 31, 2011, 2010 and Cumulative from March 5, 1999 (Inception) to March 31, 2011 can be found beginning on page F-1.





ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





Previous independent registered public accounting firm





On May 3, 2011 (the “Resignation Date”), Jewett, Schwartz, Wolfe & Associates   (“JSW”) advised Kyto Biopharma Inc. (the “Company”) that its audit practice was acquired by RBSM LLP (“RBSM ”), an independent registered public accounting firm and that, accordingly, JSW was resigning as the Company’s independent registered public accounting firm.





The reports of JSW on the Company’s  financial statements for the years ended March 31, 2010 and 2009  and for the period March 5, 1999 (date of inception) through March 31, 2010 did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope, or accounting principle, except that the reports of JSW on the Company’s consolidated financial statements as of and for the years ended March 31, 2010 and 2009 and for the period March 5, 1999 (date of inception) through March 31, 2010 contained an explanatory paragraph which noted that there was substantial doubt as to the Company’s ability to continue as a going concern due to a deficit in working capital and incurring significant losses.





During the years ended March 31, 2010 and 2009 and for the period March 5, 1999 (date of inception) through March 31, 2010, and through May 2, 2011, the Company has not had any disagreements with JSW on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to JSW’s satisfaction, would have caused them to make reference thereto in their reports on the Company’s financial statements for such periods.





During the years ended March 31, 2010 and 2009 and for the period March 5, 1999 (date of inception) through March 31 2010, and through May 3, 2011, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.





New independent registered public accounting firm





On May 9, 2011  (the “Engagement Date”), the Company engaged RBSM LLP (“RBSM ”) as its independent registered public accounting firm for the Company’s fiscal year ended March 31, 2011. The engagement of RBSM as the Company’s independent registered public accounting firm was approved by the Company’s Board of Directors.





ITEM 9A.  CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer/chief financial officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended March 31, 2011 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of March 31, 2011.





16





Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.





With the participation of our Chief Executive Officer/ Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2011 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation and the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2011 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff.  The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.  To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.








These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.





In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the year ended March 31, 2011 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the year ended March 31, 2011 are fairly stated, in all material respects, in accordance with US GAAP.





This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.





17





Limitations on Effectiveness of Controls and Procedures





Our management, including our Chief Executive Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.




Changes in Internal Controls





During the fiscal quarter ended March 31, 2011, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.





Item 9B. Other Information.





We do not have any information required to be disclosed in a report on Form 8-K during the first quarter of  fiscal 2011 that was not reported.





18





PART III





ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





(A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS





NAME

AGE

POSITIONGeorges Benarroch

64

President & Chief Executive Officer, DirectorJean-Luc Berger, Ph.D.

47

DirectorUri Sagman, M.D. FRCPC

57

DirectorDon MacAdam

64

Director





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





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





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





Mr. Benarroch has 30 years of investment banking as well as money management experience. Mr. Benarroch has raised financing for numerous companies, public as well as private and has managed for 30 years investment banking firms. As well he has been the CEO of a multi billion dollar asset management firm.





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





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




Dr. Berger is currently involved in a number of biotechnology companies in view of his expertise and has experience in being a director of a public company.





DR. URI SAGMAN, M.D ., DIRECTOR





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


Dr. Sagman sits on the advisory board of a number of medical ventures, has experience raising funds and being a director of a public company.





19





MR. DONALD MACADAM, DIRECTOR.





Director of the Company since November 17, 1999. Since January 2000, Mr. MacAdam is a consultant to technology companies. He is currently President and Chief Executive Officet of MBVax Bioscience, a private Canadian biotechnology company. From 1997 to 1999, he was President and Chief Executive Officer of Tm Bioscience Corporation. Prior to Tm Bioscience Corporation, Mr. MacAdam was President of CRS Robotics Corporation from 1993 to 1996. Both Tm Bioscience Corporation and CRS Robotics Corporation are public companies.  Mr. Macadam resigned as a director of the company on May 17, 2010.




(B) IDENTIFY SIGNIFICANT EMPLOYEES





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





(C) FAMILY RELATIONSHIPS





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





(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS





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





(E) AUDIT COMMITTEE





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





20





ITEM 11.  EXECUTIVE COMPENSATION





(A) SUMMARY COMPENSATION TABLE





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


Annual Compensation

Long-Term CompensationAwards

PayoutsAll Other Name and Payouts Principal  Position

Year

Salary

($)

Bonus

($)

Other Annual

Compensation

($)

Securities Under Options/SARs

Granted

(#)

Restricted Shares

or  Restricted

Share Units

($)

LTIP

($)Jean-Luc Berger, Director

2011

None







None2010

None







NoneGeorges Benarroch, Director

2011

None







None2010

None







NoneDonald MacAdam, Director

2011

None







None2010

None







None


(B) OPTION/SAR GRANTS TABLE


There were no options granted to employees and no grants to key employees in fiscal years 2011 and 2010.





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





None




21





(D) COMPENSATION OF DIRECTORS





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





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





No director shares were granted in fiscal years  2011 and 2010 .





None of the directors or senior officers of Kyto and no associate of any of the directors or senior officers of Kyto was indebted to the Company during the financial period ended March 31, 2011 of Kyto other than for routine indebtedness.





(E) EMPLOYMENT CONTRACTS





None





(F) REPORT ON REPRICING OF OPTIONS/SARS





None





22





ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





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





TITLE OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER

COMMON

SHARES


PERCENTAGE OF CLASSCommon
Medarex Inc.

New Jersey, United States


1,300,000



10.0
%Common
Dr. Uri Sagman

Toronto, Ontario, Canada


1,402,025



10.7
%





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





TITLE OF CLASS
NAME AND ADDRESS  OF  BENEFICIAL OWNER

PREFERRED

SHARES


PERCENTAGE OF CLASSConvertible  Preferred
Credifinance Capital Corp. (1)


473,624



100.0
%





23




(C) SECURITY OWNERSHIP OF MANAGEMENT





TITLE OF CLASS
NAME AND ADDRESS  OF BENEFICIAL OWNER

COMMON

SHARES


PERCENTAGE

OF CLASSCommon
Georges Benarroch (1)


177,412



1.4
%Common
Dr. Jean-Luc Berger


527,025



4.054
%Common
Uri Sagman


1,402,025



10.7
%





(1) Georges Benarroch is the President and Chief Executive Officer of Credifinance Capital Corp which 473,624 convertible preferred shares represented 100% of issued shares.





(D) CHANGES IN CONTROL





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





ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





(A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS





Detail of related party transactions are described in notes 6 of the consolidated Financial Statements.





During the year ended March 31, 2010, we loaned $265,931 to a newly founded US based biotechnology company, Targeted Payload Therapeutics Inc. ("TPT"), a related party. Amounts loaned under this notes were non- interest bearing, unsecured, due on demand and did not follow any specific repayment terms. TPT was created to commercialize licensed technology which was developed at leading medical centers of excellence in the USA.  Mr. Georges Benarroch, our CEO and member of our Board of Directors, and Dr. Uri Sagman, a member of our Board of Directors, are also the founders of TPT.  In April 2010, an additional loan of $43,690 was made to TPT.  In May 2010, we cancelled the agreement with TPT.  Accordingly, as we deem the amounts owed us by TPT as non-recoverable, at March 31, 2011 and 2010 we have written off this loan receivable in the amount of $43,690 and $265,931 respectively.





At March 31, 2011, the Company owed $1,066,096 to Credifinance Capital Corp. Georges Benarroch is the President and Chief Executive Officer of Credifinance Capital Corp . The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. However, ASC-835-30 “Imputation of Interest” has been applied to impute the interest on loan from the related as there is no agreement between the Companies. Imputation of interest has been done @5%p.a. quarterly cumulative from FY 2009 and $89,043 has been imputed as interest.


Preferred convertible stock were issued in 2008 to satisfy a related party loan . The shares may be converted into common shares at the rate of $0.45 per share and bear interest at the rate of 5% per annum.  As of March 31, 2011 the a company has accrued $76,137 as interest.


During the year ended March 31, 2001, the Company entered into an agreement with a Medarex Inc(‘the vendor’), who is also a principal stockholder, for services totaling $200,000. On November 11, 2002, the Company and vendor mutually agreed that in lieu of the $200,000 payment, the vendor would accept 100,000 shares of the Company's common stock valued at $1.00 totaling $100,000. In addition, the Company also executed a $100,000 unsecured promissory note with the vendor. Under the terms of the promissory note, the obligation bears interest at prime plus 1% (4.25% at March 31, 2011). Interest is accrued and payable quarterly. At March 31, 2011 and 2010, accrued interest totaled $66,139 and $59,329, respectively.


24





(B) TRANSACTIONS WITH PROMOTORS





Georges Benarroch would be considered as a promoter of the Company. Georges Benarroch, is holding 473,624 convertible preferred shares represented 100% of issued shares.





ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES





The Board of Directors appointed RBSM LLP (“RBSM”), as our independent auditors for the fiscal year ending March 31, 2011





(1) Audit Fees





RBSM LLP, Independent Registered Public Accounting firm billed an aggregate of $20,000 for audit of our annual consolidated financial statements for the fiscal year ended March 31, 2011 included in our annual report on Form 10-K. Jewett, Schwartz, Wolfe and Associates, billed an aggregate of $12,000 for the review of our interim financial statements included in our quarterly reports on Form 10-Q.





(2) Audit Related Fees





No other professional services were rendered by RBSM LLP and Jewett, Schwartz, Wolfe and Associates for audit related services rendered during the fiscal year ended March 31, 2011, in connection with, among other things, the preparation of a Registration Statement on Form 10-K.





(3) Tax Fees





No professional services were rendered by RBSM LLP and Jewett, Schwartz, Wolfe and Associates for tax compliance, tax advice, and tax planning the fiscal year ended March 31, 2011.





(4) All Other Fees





Not applicable.


25




ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K





(A) LISTING OF EXHIBITS





EXHIBIT NUMBER

DESCRIPTION3(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.*A

Medarex Agreement**B

Patent Family Summary**C

Research Foundation of The State University of New York agreement**31.1

Section 302 Certification of the principal executive officer and the principal financial and accounting officer**32.1

Certification pursuant to 18 U.S.C. Section 1350 as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act  of 2002 of the principal executive officer and principal financial accounting officer**





* Filed as Exhibit to Company's Form 10-SB on September 12th, 2003, with the Securities and Exchange Commission


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





(B) Code of Ethics





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





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





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





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





26





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





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





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





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





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





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





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





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





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





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





27




SIGNATURES





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




KYTO BIOPHARMA, INC.DATE: December 12, 2011
By:
/s/ Georges BenarrochName: Georges BenarrochTitle:  President & C.E.O.





Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Signature

Title

Date/s/ Georges Benarroch

President, Chief Executive Officer, principal executive officer

December 12, 2011Georges Benarroch

and principal financial and accounting officer/s/ Jean-Luc Berger

Director

December 12, 2011Jean-Luc Berger/s/ Uri Sagman

Director

December 12, 2011Uri Sagman




28




Kyto Biopharma, Inc. and Subsidiary
 (A Development Stage Company)
 
 Consolidated Financial Statements
 Table of Contents
 
 Report of Independent Registered Public Accounting Firms


F-2 / F-3Consolidated Balance Sheets  as of March 31, 2011 and 2010


F-4Consolidated Statements of Operations for the years ended March 31, 2011 and 2010 and for the period from March 5, 1999 (Date of Inception) through March 31, 2011


F-5Consolidated Statements of Stockholders' Deficit for the period from March 5, 1999 (Date of Inception) through March 31, 2011.


F-6 / F-8Consolidated Statements of Cash Flows for the years ended March 31, 2011 and 2010 and for the period from March 5, 1999 (Date of Inception) through March 31, 2011


F-9Notes to Consolidated Financial Statements


F-10  / F-22
 
    F-1
  RBSM LLP
 CERTIFIED PUBLIC ACCOUNTANTS
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Board of Directors and shareholders of
 Kyto Biopharma, Inc.
 Toronto, Canada
 
  We have audited the accompanying consolidated balance sheet of Kyto Biopharma, Inc. and its Subsidiary (the “Company”), a development Stage company as of March 31, 2011 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year ended March 31, 2011 and for the period from March 5, 1999 (date of inception) through March 31, 2011. 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 audit. The accompanying consolidated financial statements of the Company for the period from March 5, 1999 (date of inception) through March 31, 2010 were not audited by us. Those statements were audited by other auditors whose report, dated June 28, 2010 except for Note 2 as to which the date is August 26, 2010 expresses an unqualified opinion on those statements and included an explanatory paragraph regarding the Company’s ability to continue as a going concern. The consolidated financial statements for the period from March 5, 1999 (date of inception) through March 31, 2010, reflect a net loss of $17,065,962. Our opinion, insofar as it relates to the amounts included for such prior periods as indicated in the accompanying financial statements for such periods from March 5, 1999 (date of inception) through March 31, 2010 is based solely on the report of such other auditors.
  We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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 audit provided 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 its Subsidiary as of March 31, 2011 and the consolidated results of its operations and its cash flows for the year ended March 31, 2011, and for the period from March 5, 1999 (date of inception) through March 31, 2011, in conformity with accounting principles generally accepted in the United States.
  The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 of the accompanying consolidated financial statements, the Company is in development stage, has no revenue, has incurred significant losses since inception, and has a working capital deficiency as of March 31, 2011, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
   /s/ RBSM LLP
 New York, New York
 June 29, 2011
   F-2
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   To the board of directors and sharesholders of
            /s/ Jewett, Schwartz, Wolfe & Associates
  F-3
 
 Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company)Consolidated Balance SheetsMarch 31,


March 31,2011


2010(Restated)ASSETSCurrent AssetsCash

$
863


$
4,444Total Current Assets


863



4,444Other AssetsPatent Rights


-



165,570Total Assets

$
863


$
170,014LIABILITIES AND STOCKHOLDERS' DEFICITCurrent LiabilitiesAccounts payable

$
12,760


$
6,518Accrued liabilities


32,667



21,667Accrued liabilities - related party


29,000



62,501Accrued interest payable - related party


66,139



59,329Accrued interest payable - preferred convertible stock


76,137



49,486Loan payable-related party


1,066,096



823,296Note payable-related party


100,000



100,000Total Current Liabilities


1,382,799



1,122,797Commitments and ContingenciesStockholders'  DeficitPreferred convertible stock, $1.00 par value, 1,000,000 sharesauthorized, 473,624 issued and outstanding as ofMarch 31, 2011 and 2010 respectively


473,624



473,624Common stock, $0.0001 par value, 25,000,000 sharesauthorized, 12,998,482  issued and outstanding as ofMarch 31, 2011 and 2010 respectively


1,300



1,300Additional paid-in capital


15,904,542



15,815,489Deficit accumulated during development stage


(17,584,219
)


(17,065,962
)Accumulated other comprehensive loss


(177,183
)


(177,234
)Total  Stockholders'  Deficit


(1,381,936
)


(952,783
)Total Liabilities and  Stockholders'  Deficit

$
863


$
170,014
  The accompanying notes are an integral part of these consolidated financial statements
 F-4
  Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company)Consolidated Statements of OperationsFor the period fromMarch 5, 1999For The Year Ended


(inception) toMarch 31


March 31,2011


2010


2011(Restated)Operating ExpensesDepreciation and amortization

$
-


$
-


$
814,183General and administrative


352,050



293,369



16,543,447Total Operating Expenses

$
352,050


$
293,369


$
17,357,630Loss from Operation

$
352,050


$
293,369


$
17,357,630Other Income (Expenses)Interest income


-



-



4,922Interest expense


(122,514
)


(31,903
)


(249,026
)Loss on debt forgiveness


(43,690
)


(265,931
)


(230,956
)Loss on disposal of equipment


-



-



(567
)Foreign currency transaction gain


(4
)


(90
)


249,038Total Other Income (Expense), net


(166,208
)


(297,924
)


(226,589
)Net Loss before taxes

$
(518,258
)

$
(591,293
)

$
(17,584,220
)Net Income (Tax) Benefit

$
-


$
-


$
-Net Loss

$
(518,258
)

$
(591,293
)

$
(17,584,220
)Comprehensive Income (Loss)Foreign currency translation gain (loss)


51



10



(177,183
)Total Comprehensive Loss

$
(518,207
)

$
(591,283
)

$
(17,761,403
)Weighted average number of shares outstandingduring the year - basic and diluted


12,998,482



12,743,610Net loss per share - basic and diluted

$
(0.04
)

$
(0.05
)
  The accompanying notes are an integral part of these consolidated financial statements
 F-5
  Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company)Consolidated Statement of Stockholders' DeficitFor the period from March 5, 1999 (Date of Inception) to March 31, 2011Deficit


AccumulatedAccumulated


OtherPreferred Stock


Common Stock


Additional


During


Comprehensive








Deferred$1.00 par value


$0.0001 par value


Paid - in


Development


Income


Deferred


Subscription


Loan


DeferredShares


Amount


Shares


Amount


Capital


Stage


(Loss)


Consulting


Receivable


Fee


Expenses


TotalCommon stock issued for services to officer


-


$
-



300,000


$
30


$
299,970


$
-


$
-


$
-


$
-


$
-


$
-


$
300,000Common stock issued for services to consultant


-



-



255,000



25



254,975



-



-



-



-



-



-



255,000Warrants issued to consultant


-



-



-



-



345,000



-



-



-



-



-



-



345,000Net loss, 1999


-



-



-



-



-



(900,000
)


-



-



-



-



-



(900,000
)Balance, March 31, 1999


-


$
-



555,000


$
55


$
899,945


$
(900,000
)

$
-


$
-


$
-


$
-


$
-


$
-Preferred stock issued for cash


250,000



250,000



-



-



-



-



-



-



-



-



-



250,000Offering cost


-



-



-



-



(17,005
)


-



-



-



-



-



-



(17,005
)Common stock issued for intangible assets


-



-



2,000,000



200



1,999,800



-



-



-



-



-



-



2,000,000Common stock issued for cash upon exerciseof warrants


-



-



100,000



10



99,990



-



-



-



-



-



-



100,000Foreign currency translation loss


-



-



-



-



-



-



(5,745
)


-



-



-



-



(5,745
)Net loss, 2000


-



-



-



-



-



(650,366
)


-



-



-



-



-



(650,366
)Balance, March 31, 2000


250,000


$
250,000



2,655,000


$
265


$
2,982,730


$
(1,550,366
)

$
(5,745
)

$
-


$
-


$
-


$
-


$
1,676,884Common stock issued as director fees


-



-



58,100



6



58,094



-



-



-



-



-



-



58,100Common stock issued for cash upon exerciseof warrants


-



-



150,000



15



149,985



-



-



-



-



-



-



150,000Common stock issued for cash upon exerciseof warrants


-



-



345,000



35



-



-



-



-



-



-



-



35Common stock issued to officer ascompensation


-



-



100,000



10



99,990



-



-



-



-



-



-



100,000Common stock issued for cash


-



-



100,000



10



99,990



-



-



-



-



-



-



100,000Common stock issued to consultant for services not yet rendered


-



-



400,000



40



1,199,960



-



-



(1,200,000
)


-



-



-



-Foreign currency translation gain


-



-



-



-



-



-



60,054



-



-



-



-



60,054Net loss, 2001


-



-



-



-



-



(966,789
)


-



-



-



-



-



(966,789
)Balance, March 31, 2001


250,000


$
250,000



3,808,100


$
381


$
4,590,749


$
(2,517,155
)

$
54,309


$
(1,200,000
)

$
-


$
-


$
-


$
1,178,284
  The accompanying notes are an integral part of these consolidated financial statements
  F-6
  Preferred stock converted to common stock


(250,000
)


(250,000
)


250,000



25



249,975



-



-



-



-



-



-



-Common stock warrants issued for consultingservices


-



-



-



-



254,346



-



-



-



-



-



-



254,346Common stock issued for cash upon exerciseof warrants


-



-



125,000



13



124,987



-



-



-



-



-



-



125,000Common stock warrants issued for services


-



-



-



-



849,915



-



-



-



-



-



-



849,915Common stock issued for cash upon exerciseof warrants


-



-



850,000



85



-



-



-



-



-



-



-



85Common stock issued to directors ascompensation


-



-



6,000



-



6,000



-



-



-



-



-



-



6,000Common stock issued to employees ascompensation


-



-



3,000



-



3,000



-



-



-



-



-



-



3,000Common stock issued as loan fee


-



-



25,000



3



24,997



-



-



-



-



(25,000
)


-



-Foreign currency translation gain


-



-



-



-



-



-



13,397



-



-



-



-



13,397Net loss, 2002


-



-



-



-



-



(2,959,415
)


-



-



-



-



-



(2,959,415
)Balance, March 31, 2002


-


$
-



5,067,100


$
507


$
6,103,969


$
(5,476,570
)

$
67,706


$
(1,200,000
)

$
-


$
(25,000
)

$
-


$
(529,388
)Stock issued for cash and services


-



-



225,000



22



224,978



-



-



-



-



-



-



225,000Stock issued in settlement of accounts payable,net of redeemable shares


-



-



100,000



10



99,990



-



-



-



-



-



-



100,000Stock issued to settle loans payable, related party


-



-



102,658



10



102,648



-



-



-



-



25,000



-



127,658Common stock issued for services toconsultant not yet rendered


-



-



800,000



80



799,920



-



-



(800,000
)


-



-



-



-Stock issued for past and future rent andadministrative services


-



-



65,000



7



64,993



-



-



-



-



-



(30,000
)


35,000Common stock warrants issued as financing fee


-



-



-



-



3,783



-



-



-



-



-



-



3,783Foreign currency translation loss


-



-



-



-



-



-



(80,354
)


-



-



-



-



(80,354
)Net loss, 2003


-



-



-



-



-



(319,141
)


-



-



-



-



-



(319,141
)Balance, March 31, 2003


-


$
-



6,359,758


$
636


$
7,400,281


$
(5,795,711
)

$
(12,648
)

$
(2,000,000
)

$
-


$
-


$
(30,000
)

$
(437,442
)Foreign currency translation loss


-



-



-



-



-



-



(117,341
)


-



-



-



-



(117,341
)Amortization of deferred expenses


-



-



-



-



-



-



-



-



-



-



30,000



30,000Net Loss, 2004


-



-



-



-



-



(34,846
)






-



-



-



-



(34,846
)Balance, March 31, 2004


-


$
-



6,359,758


$
636


$
7,400,281


$
(5,830,557
)

$
(129,989
)

$
(2,000,000
)

$
-


$
-


$
-


$
(559,629
)Stock issued for cash and services


-



-



500,000



50



249,950



-



-



-



-



-



-



250,000Common stock issued for services to consultant not yet rendered


-



-



4,500,000



450



6,749,550



-



-



(5,343,750
)


-



-



-



1,406,250Stock issued to settle loans payable, related party


-



-



320,000



32



479,968



-



-



-



-



-



-



480,000Stock issued for past and future rent andadministrative services


-



-



133,333



13



199,986



-



-



-



(13
)


-



-



199,986Foreign currency translation loss


-



-



-



-



-



-



(87,495
)


-



-



-



-



(87,495
)Net Loss, 2005


-



-



-



-



-



(1,963,666
)


-



-



-



-



-



(1,963,666
)
  The accompanying notes are an integral part of these consolidated financial statements
  F-7
  Balance, March 31, 2005


-


$
-



11,813,091


$
1,181


$
15,079,735


$
(7,794,223
)

$
(217,484
)

$
(7,343,750
)

$
(13
)

$
-


$
-


$
(274,554
)Stock issued for cash and services


-



-



173,058



18



173,040



-



-



-



-



-



-



173,058Recognition of services rendered by consultant


-



-



-



-



-



-



-



3,374,950



-



-



-



3,374,950Stock issued to settle loans payable, related party


-



-



14,054



1



10,540



-



-



-



-



-



-



10,541Stock issued for past and future rent andadministrative services


-



-



80,000



8



59,992



-



-



-



-



-



-



60,000Foreign currency translation loss


-



-



-



-



-



-



(40,435
)


-



-



-



-



(40,435
)Net Loss, 2006


-



-



-



-



-



(3,534,787
)


-



-



-



-



-



(3,534,787
)Balance, March 31, 2006


-


$
-



12,080,203


$
1,208


$
15,323,307


$
(11,329,010
)

$
(257,919
)

$
(3,968,800
)

$
(13
)

$
-


$
-


$
(231,227
)Stock issued for cash and services


-



-



-



-



-



-



-



-



-



-



-



-Recognition of services rendered by consultants


-



-



-



-



-



-



-



3,968,800



-



-



-



3,968,800Stock issued for past and future rent andadministrative services


-



-



-



-



-



-



-



-



13



-



-



13Foreign currency translation loss


-



-



-



-



-



-



(13,866
)


-



-



-



-



(13,866
)Net Loss, 2007


-



-



-



-



-



(4,148,725
)


-



-



-



-



-



(4,148,725
)Balance, March 31, 2007


-


$
-



12,080,203


$
1,208


$
15,323,307


$
(15,477,735
)

$
(271,785
)

$
-


$
-


$
-


$
-


$
(425,005
)Preferred convertible stock issued to settle loan payable, related party


459,734



459,734



-



-



-



-



-



-



-



-



-



459,734Preferred convertible stock issued to settle 5% interest onconvertible preferred stock


13,890



13,890



-



-



-



-



-



-



-



-



-



13,890Common stock issued to settle loan payable, related party


-



-



3,408



1



1,703



-



-



-



-



-



-



1,704Stock issued for rent and administrative services


-



-



159,999



16



79,984



-



-



-



-



-



-



80,000Common stock issued for director fees


-



-



500,000



50



249,950



-



-



-



-



-



-



250,000Foreign currency translation loss


-



-



-



-



-



-



(146,222
)


-



-



-



-



(146,222
)Net Loss, 2008


-



-



-



-



-



(353,838
)


-



-



-



-



-



(353,838
)Balance, March 31, 2008


473,624


$
473,624



12,743,610


$
1,275


$
15,654,944


$
(15,831,573
)

$
(418,007
)

$
-


$
-


$
-


$
-


$
(119,737
)Foreign currency translation gain


-



-



-



-



-



-



240,763



-



-



-



-



240,763Net Loss, 2009


-



-



-



-



-



(643,096
)


-



-



-



-



-



(643,096
)Balance, March 31, 2009


473,624


$
473,624



12,743,610


$
1,275


$
15,654,944


$
(16,474,669
)

$
(177,244
)

$
-


$
-


$
-


$
-


$
(522,070
)Common stock issued for patent rights


-



-



254,872



25



160,545



-



-



-



-



-



-



160,570Foreign currency translation gain


-



-



-



-



-



-



10



-



-



-



-



10Net Loss, 2010


-



-



-



-



-



(591,293
)


-



-



-



-



-



(591,293
)Balance, March 31, 2010


473,624


$
473,624



12,998,482


$
1,300


$
15,815,489


$
(17,065,962
)

$
(177,234
)

$
-


$
-


$
-


$
-


$
(952,783
)Imputed Interest


-



-



-



-



89,053



-



-



-



-



-



-



89,053Net Loss, 2011


-



-



-



-



-



(518,257
)


-



-



-



-



-



(518,257
)Foreign currency translation gain


-



-



-



-



-



-



51



-



-



-



-



51Balance, March 31, 2011


473,624


$
473,624



12,998,482


$
1,300


$
15,904,542


$
(17,584,219
)

$
(177,183
)

$
-


$
-


$
-


$
-


$
(1,381,936
)
  The accompanying notes are an integral part of these consolidated financial statements
  F-8
  Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company)Consolidated Statements of Cash Flows
  For the period from March 5, 1999 (Inception) to March 31, 2011For the Year Ended March2011


2010(Restated)Cash Flows from Operating Activities:Net loss

$
(518,258
)

$
(591,293
)

$
(17,584,219
)Adjustment to reconcile net loss to net cash provided by (used in)operating activities:Depreciation and amortization


-



-



814,183Recognition of services rendered by consultant


-



-



10,227,893Stock based consulting expense


-



-



854,345Stock based director fees


-



-



314,100Stock based rent and administrative fees


-



-



167,028Interest Expense


89,053



-



89,053Preferred convertible stock issued for interest due on outstanding preferred convertible stock


-



-



13,890Common stock warrants issued as financing fee


-



-



3,783Loss on disposal of equipment


-



-



567Impairment loss


165,570



-



1,357,416Loans receivable from related party-written off


43,689



-



299,783Gain on settlement of accounts payable


-



-



(59,654
)Loss on settlement of accounts payable


-



-



519,795Amortization of stock based financing fee


-



-



25,010Changes in operating assets and liabilities:Loan receivable


(43,689
)


-



(309,620
)Prepaids and other assets


-



42,562



(5,000
)Accounts payable and accrued expenses


17,242



(8,465
)


546,299Related party accounts payable, accrued interest, and accrued liabilities


(40
)


31,904



81,456Net Cash Used in Operating Activities


(246,432
)


(525,292
)


(2,640,892
)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 ofoffering cost


-



-



958,222Loan proceeds from related parties, net


275,800



516,972



1,924,971Repayment of loan to related parties


(33,000
)


-



(59,792
)Net Cash Provided by Financing Activities


242,800



516,972



2,823,401Effect of Exchange Rate on Cash


51



10



(177,183
)Net Increase (decrease) in Cash and Cash Equivalents


(3,581
)


(8,310
)


863Cash and Cash Equivalents at Beginning of Period


4,444



12,754



-Cash and Cash Equivalents at End of Period

$
863


$
4,444


$
863Supplemental Disclosure of Cash Flow Information:Cash paid for:Interest


$
-


$
-


$
-Taxes


$
-


$
-


$
-Supplemental Disclosure of Non-CashInvesting and Financing Activities:Conversion of debt to equity

$
-


$
-


$
1,102,154Stock issued for deferred consulting services

$
-


$
-


$
6,750,000Conversion of liabilities to note payable

$
-


$
-


$
102,023Stock issued for debt restructuring anti-dilusion provision

$
-


$
-


$
800,000Conversion of preferred shares to common shares

$
-


$
-


$
250,000Stock issued for future services

$
-


$
-


$
1,200,000Issued common shares for intangible assets

$
-


$
160,570


$
2,160,570
  The accompanying notes are an integral part of these consolidated financial statements
 F-9
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 
 NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 (A) NATURE OF BUSINESS
 
 Kyto Biopharma, Inc. was formed as a Florida corporation on March 5, 1999. B Twelve, Limited, Kyto Biopharma, Inc.'s wholly-owned Canadian subsidiary (collectively referred to as the "Company"), was also formed on March 5, 1999. On August 14, 2002, the Company changed its name from B Twelve, Inc. to Kyto Biopharma, Inc.
 
 The Company is a biopharmaceutical company, formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other proliferate and autoimmune diseases. The Company has subsequently built itself into a development stage biopharmaceutical company that develops receptor-mediated technologies to control the uptake of vitamin B12 by non-controlled proliferative cells.
 
 Activities during the development stage include acquisition of financing and intellectual properties and research and development activities conducted by others under contracts.
 
 (B) PRINCIPLES OF CONSOLIDATION
 
 The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.
 
 (C) GOING CONCERN
 
 As reflected in the accompanying consolidated financial statements, the Company has no revenues, a net loss of $518,258 , a working capital deficiency of $1,381,936, a stockholders' deficiency of $1,381,936 and a deficit accumulated during the development stage of $17,584,219 at March 31, 2011. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
 The Company is currently a development stage company and its continued existence is dependent upon the Company's ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. During the year ended March 31, 2011, the Company received $242,800 in related party debt financing.
 
 The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is very dependent upon debt and equity funding. The Company must successfully complete its research and development resulting in a saleable product. However, there is no assurance that once the development of the product is completed and finally gains Federal Drug and Administration clearance, and that the Company will achieve a profitable level of operations.
 
 F-10
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 1  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 (D) USE OF ESTIMATES
 
 In preparing consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the period presented. Actual results may differ from these estimates.
 
 Significant estimates during 2011 and 2010 and for the period for March 5, 1999 (inception) to March 31, 2011 include depreciable lives on equipment, valuation of intangible assets, the valuation allowance of deferred tax assets, and the valuation of non-cash stock based transactions.
 
 (E) CASH AND CASH EQUIVALENTS
 
 The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at March 31, 2011 and 2010, respectively.
 
 (F) BASIS OF PRESENTATION AND FOREIGN CURRENCY
 
 The accompanying consolidated financial statements are presented under accounting principles generally accepted in the United States of America and in United States dollars.
 
 The Company's Canadian subsidiary transacts business in the Canadian dollar. The accounts of the Canadian subsidiary are translated to United States dollars using the current rate method. Under the current rate method, all assets and liabilities are translated using exchange rates at the balance sheet date. Revenue and expense items are translated using the average rate of exchange prevailing during the period. Capital transactions are translated at their historical rates. Exchange gains and losses resulting from translation of foreign currencies are recorded in stockholders' deficiency as a cumulative translation adjustment and reflected as a component of other accumulated comprehensive income or loss.
 
 Gains and losses resulting from foreign currency transactions are recognized in operations of the period incurred.
 
 (G) CONCENTRATIONS
 
 The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. As of March 31, 2011, 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, 2011 and 2010, respectively.
 
 The Company has obtained and continues to obtain a large amount of its funding from loans and equity funding from a principal stockholder related to a director of the Company.
 
 (H) EQUIPMENT
 
 Equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided using the straight-line method over the estimated useful lives of the assets of five years.
  F-11
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 (I) LONG-LIVED ASSETS
 
 The Company reviews long-lived assets and certain identifiable assets related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. If the undiscounted future cash flows of the long-lived assets are less that the carrying amount, their carrying amount is reduced to fair value and an impairment loss is recognized.
 
 (J) STOCK-BASED COMPENSATION
 
 Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation requires generally that all equity awards granted to employees be accounted for at “fair value.” This fair value is measured at grant for stock settled awards, and at subsequent exercise or settlement for cash-settled awards.
 
 Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using the Black Scholes options pricing model.
 
 (K) RESEARCH AND DEVELOPMENT COSTS
 
 Others conduct research and development on behalf of the Company under contractual agreements and such costs are charged to expense as incurred. Research and development expense was $0, $146,347, and $1,664,951 for the years ended March 31, 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011, respectively.
 
 (L) PATENT RIGHTS
 
 Acquisition of Patent Rights is stated at cost and will be reclassified to intangible assets and amortized on a straight-line basis over the estimated future periods to be benefited if and once the patent has been granted by the United States Patent and Trademark Office (“USPTO”). The Company will write-off any currently capitalized costs for patents not granted by the USPTO (See note 3).
 
 (M) INCOME TAXES
 
 The Company accounts for income taxes under the Financial Accounting Standards  Accounting Standard Cordifcation Topic 740"Accounting for Income Taxes" ("Topic 740"). Under Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to 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 Topic 740, 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.
 
 (N) COMPREHENSIVE INCOME
 
 The Company accounts for Comprehensive Income under the Financial Accounting Standards Board Statement of Financial Accounting Standards  Accounting Standard Codification  Topic 220, "Reporting Comprehensive Income" ("Topic  220"). Topic 220 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).
  F-12
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 The foreign currency translation gains and losses resulting from the translation of the financial statements of B Twelve, Ltd. expressed in Canadian dollars to United States dollars are reported as Accumulated Other Comprehensive Income or Loss in the Statement of Operations.
 
 (O) NET LOSS PER COMMON SHARE
 
 In accordance with Statement of Financial Accounting Standards Accounting Standard Codification Topic. 260, "Earnings per Share", basic earnings per share is computed by dividing the net income less preferred dividends for the period by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income less preferred dividends by the weighted average number of common shares outstanding including the effect of common stock equivalents. Common stock equivalents, consisting of stock options and warrants, have not been included in the calculation, as their effect is anti dilutive for the periods presented. At March 31, 2011, there were convertible preferred shares which could have been potentially been converted into 1,052,498 shares of common stock, but would be anti dilutive.
 
 (P) SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS
 
 Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
 
 (Q) RECLASSIFICATIONS
 
 Certain amounts in the March 31, 2010 consolidated financial statements may have been reclassified to conform to the March 31, 2011 presentation.
 
 NOTE 2  RESTATEMENT
 
 In the second quarter of 2010, the Company cancelled the agreement with Targeted Payload Therapeutics (“TPT”), a private Nevada registered company, as described in Note 6. As of March 31, 2010, the Company was owed $265,931 from TPT which was considered non-recoverable and impaired as a result of cancellation of agreement in May, 2010 between the Company and TPT. Accordingly, the Company recorded a write off of an impaired loan receivable in the amount of $265,931 for the year ending March 31, 2010, which resulted in an increase of net loss from $325,362, as previously reported to $591,293 as restated, and an increase in deficit accumulated during development stage from $16,800,031, as previously reported to $17,065,962, as restated. This adjustment also resulted in a decline of total assets from $435,945, as previously reported to $170,014, as restated. The Company has reflected the impact of these adjustments in its consolidated financial statements for the year ending March 31, 2010.
 
 NOTE 3  PATENT RIGHTS
 Acquisition of Patent Rights is stated at cost and will be reclassified to intangible assets and amortized on a straight-line basis over the estimated future periods to be benefited if and once the patent has been granted by the United States Patent and Trademark Office.
 
 On  February 10, 2010, the Company purchased a portfolio of patents, patents pending, and related intellectual property (collectively the "Intellectual Property") from a third party in exchange for 254,872 shares of the Company's common stock and an outstanding balance of $5,000. The shares were valued at $0.63 per share resulting in  total value of $165,570.
  F-13
  KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 3  PATENT RIGHTS(CONTINUED)
 
 Kyto executed an “Executive Licensing Agreement” with The Research Foundation of State University of New York, “RFSUNY”, allowing Kyto to license certain technology surrounding the Human Transcobalamin
 
 Receptor.  The licensing agreement is active until the expiry of the patent rights.  The rights primarily relate to the patent: “Transcobalamin Receptor Polypeptides, Nucleic Acids, and Modulators Thereof, and Related Methods of Use in Modulating Cell Growth and Treating Cancer and Cobalamin Deficiency”.   The Patents were deemed to have been impaired during the year ended March 31, 2011.
 
 NOTE 4  INTANGIBLE ASSETS IMPAIRMENT
 
 On June 2, 1999, the Company purchased a portfolio of patents, patents pending, and related intellectual property (collectively the "Intellectual Property") from a third party in exchange for 2,000,000 shares of the Company's common stock. The shares were valued at $1.00 per share based on contemporaneous cash purchases of convertible preferred stock and common stock warrants resulting in a value of $2,000,000. The Company also capitalized certain legal costs.
 
 As of March 31, 2002, management performed an impairment analysis of the Intellectual Property. Due to of the Company being in  a development stage along with the inherent difficulties in projecting future revenues, the company recognized an impairment loss for the full remaining book value of the asset totaling $1,191,846 in 2002.
 
 NOTE 5  COMMITMENTS AND CONTINGENCIES
 
 (A) LEASES
 
 The Company leases office space on a month-to-month basis. The premise is leased from a principal stockholder. Rent expense in 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011 were $20,000, $18,000 and $206,377, respectively and is included in general and administrative expense in these accompanying consolidated statements of operations.
 
 (B) REGULATION
 
 The business of the Company is subject to various governmental regulations in the United States of America, Canada, and other countries, which must approve any Company products before commencement of commercial sales and which regulate the manufacturing of pharmaceuticals.
 
 NOTE 6  RELATED PARTY TRANSACTION
 
 (A) LOANS PAYABLE, RELATED PARTIES
 
 In November 2002, the Company received working capital funds from a principal stockholder totaling $50,000 as part of a $100,000 agreement to provide debt financing.
 
 During the year ended March 31, 2004, the Company received the remaining $50,000 portion of the debt financing transaction plus an additional $25,000. All activity with this principal stockholder represents a 100% concentration of all debt financing for the year ended March 31, 2004. All loans are non-interest bearing, unsecured and due on demand. In the first quarter of fiscal 2004, an additional $35,000 loan was received from the same principal stockholder. In October 2004, the $160,000 was exchanged for 320,000 common shares. The Company recognized a loss of $320,000 on this transaction.
  F-14
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 6  RELATED PARTY TRANSACTION(CONTINUED)
 
 At March 31, 2005, the Company owed $4,616 to a director of the Company. The loan was non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. The amount was paid in February 2006, through issuance of stock.
 
 At March 31, 2007, the Company owed $233,430 to a related party of the Company. The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. During the year ended March 31, 2008, the company was advanced an additional $228,008. The loan was paid through issuance of 459,734 shares of preferred convertible stock valued at $1 per share and 3,408 shares of common stock valued at $0.50 per share for a total of $461,438. The balance of the related party loan payable as of March 31, 2008 was $0.
 
 At March 31, 2011, the Company owed $1,066,096 to a related party director of the Company. The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. However, FASB-835-30 “Imputation of Interest” has been applied to impute the interest on loan from CFCC as there is no agreement between the Company and CFCC. Imputation of interest has been done @5%p.a. quarterly cumulative from FY 2009 and $89,043 has been imputed as interest.
 
 (B) LOAN RECEIVABLE FROM TPT
 
 In June 2009, 2 of the founders of the Company entered into a Standstill Agreement with the Clayton Foundation to license and commercialize from the Clayton Foundation for Research a portfolio of product candidates based on proprietary technology in part developed at the MD Anderson Cancer Center by Dr Michael Rosenblum, a former director of Kyto Biopharma Inc.
 
 The services of 2 biotechnology specialized investment banks were secured in order to prepare a business plan, a valuation of the licenses and raise the funds necessary for the clinical development of targeted anticancer therapeutic proteins.
 
 Through a new entity, Targeted Payload Therapeutics, Inc. (TPT), funds advanced by a related party were advanced to TPT for the payment of the “Standstill Agreement”, fees related to the services of the 2 investment banks and expenses related to the transaction. The shareholders of TPT upon closing were: Kyto Biopharma Inc.,  Dr Sagman, a director and one of the founders of the Company, the Clayton Foundation and scientists instrumental in bringing the transaction and continuing the development of the pipeline of products.
 
 During the year ended March 31, 2010, Kyto loaned $265,931 to a newly founded US based biotechnology company, TPT. Amounts loaned under this note was non- interest bearing, unsecured, due on demand and did not follow any specific repayment terms.TPT was created to commercialize licensed technology which was developed at leading medical centers of excellence in the USA. Two of the founders of Kyto, Mr. Georges Benarroch and Dr. Uri Sagman, are also the founders of TPT.
 
 On May 7, 2010 the Company announced the cancellation of its agreement with Targeted Payload Therapeutics Inc. ("TPT") as a result of irreconcilable differences among the management of TPT which prevented the Company to pursue activities per Standstill Agreement.  Amounts loaned under the aforesaid note was non- interest bearing, unsecured, due on demand and did not follow any specific repayment terms.
  In April 2010, an additional loan of $43,690 was made to TPT.  In May 2010, the Company cancelled the agreement with TPT.  Accordingly, as the Company deem the amounts owed us by TPT as non-recoverable, at March 31, 2011 and 2010 the Company have written off this loan receivable in the amount of $43,690 and $265,931 respectively.  (See note 2).
  F-15
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
  
 NOTE 6  RELATED PARTY TRANSACTION(CONTINUED)
 
 (C) ACCRUED LIABILITIES, RELATED PARTY
 
 The Company leases office space and administrative services from a related party principal stockholder. Rent and administrative expense in 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011 was $40,000, $36,000, and $450,254, respectively and is included in general and administrative expense in the accompanying consolidated statements of operations. The Company allocates 50% of these amounts to rent expense. During the year ended March 31, 2008, the Company issued 159,999 shares of common stock valued at $0.50 per share for a total of $80,000 to satisfy accrued rent and administrative expense. As of March 31, 2011 and 2010, the remaining balance in the accrued liabilities-related party account for the above services was $29,000 and $62,501, respectively.
 
 (D) NOTE PAYABLE, RELATED PARTY
 
 During the year ended March 31, 2001, the Company entered into an agreement with a vendor, who is also a principal stockholder, for services totaling $200,000. On November 11, 2002, the Company and vendor mutually agreed that in lieu of the $200,000 payment, the vendor would accept 100,000 shares of the Company's common stock valued at $1.00 totaling $100,000. In addition, the Company also executed a $100,000 unsecured promissory note with the vendor. Under the terms of the promissory note, the obligation bears interest at prime plus 1% (4.25% at March 31, 2011). Interest is accrued and payable quarterly. At March 31, 2011 and 2010, accrued interest totaled $66,139 and $59,329, respectively. In connection with the promissory note, all principal and accrued interest is payable in full upon the earliest of the following:
 
 (i) The date on which the Company raises at least $1,000,000 in funding within a twelve-month period;
 
 (ii) The date on which the agreement between the Company, vendor and other unrelated party terminates; or
 
 (iii) Three years from the date of the promissory note.
 
 Since the note was due in November 2005, the note payable was re-classified to current liabilities at March 31, 2005.
 
 
 NOTE 7  STOCKHOLDERS' DEFICIENCY
 
 (A) CONVERTIBLE PREFERRED STOCK
 
 In June 1999, an investor purchased 250,000 units at $1.00 per unit or $250,000 consisting of 250,000 shares of convertible preferred stock and receives warrants to purchase up to 750,000 common shares as follows: 250,000 common stock warrants exercisable at $1.00 per share issued with the preferred stock and another potential 500,000 as discussed below. The preferred stock was convertible to common stock on a one-for-one basis upon the earlier of:
 
 (i) An initial public offering by the Company, as defined,
 
 (ii) The completion of a reverse take-over transaction,
 
 (iii) A minimum $3,000,000 private equity financing based on a $10,000,000 valuation or,
  (iv) The merger of the Company with another corporation or the sale of substantively all the assets of the Corporation.
  F-16
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 7  STOCKHOLDERS' DEFICIENCY(CONTINUED)
 
 There was no beneficial conversion feature upon the sale as the value of the common shares into which the preferred shares are convertible are also $1.00 based on contemporaneous transactions.
 
 Upon exercise of the first 250,000 warrants, the investor received another warrant for 250,000 common shares at $1.00 exercise price per share. Upon conversion of the preferred stock, each share of common stock issued shall be coupled with an additional common stock purchase warrant at an exercise price of $1.00 per share with a three-month term. In December 1999 and May 2000, 100,000 and 150,000, respectively, of the first warrant were exercised and therefore in May 2000 the additional 250,000 warrant were granted with an exercise price of $1.00 expiring June 2003. In June 2001, pursuant to a letter of intent, which was ratified by the shareholders, the preferred shares were converted and the additional 250,000 warrants were granted at an exercise price of $1.00 with an amended term not to exceed five years. There was no beneficial conversion feature to the warrants as the value of the common stock was still considered to be $1.00 based on contemporaneous transactions at that time. There was no effect of the warrant issuances on operations as all warrants are considered to be purchased as part of the preferred stock unit. The second and third warrants totaling 500,000 common shares remained outstanding at March 31, 2003. In June 2003, 250,000 expired and in June 2006 the remaining 250,000 expired.
 
 In May 2007, Kyto entered into an agreement with Credifinance Capital Corp. to issue up to 500,000 convertible preferred shares at $1.00 per share in satisfaction of amounts due to Credifinance Capital Corp. During the year ended March 31, 2008 the Company issued 459,734 shares of convertible preferred stock to a Credifinance Capital Corp. to satisfy the related party loan payable. As there is no readily available fair value for the Company's convertible preferred stock, the issuance has been recorded at par value of $1 per share for a total of $459,734. The preferred convertible stock issued to satisfy the related party loan may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum. Preferred convertible stock has the same voting rights as common stock.
 
 The Company issued 13,890 shares of preferred stock valued at $1 per share for a total of $13,890 to Credifinance Capital Corp. for the accrued interest due on outstanding convertible preferred stock during the year ended March 31, 2008. These shares may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum.
 
 As of March 31, 2011, 473,624 convertible preferred shares were outstanding.
 
 (B) COMMON STOCK AND OPTIONS
 
 In January 2006, the Company issued 94,054 shares valued at $0.75 per share based on the quoted trade price in payment of various expenses totaling $47,027 to a finance company controlled by a director of the company and to a director. The Company recorded a loss on debt conversion of $23,513.
 
 In February 2008, the company issued 500,000 shares valued at $0.50 per share in payment of consulting service to Dr. Uri Sagman, 159,999 shares valued at $0.50 per share to Credifinance Capital Corp. for rent and administration fees, and 3,408 shares valued at $0.50 per share to Credifinance Capital Corp. for satisfaction of the balance of the related party loan payable.
 
 In March 2010, the Company issued 254,872 shares valued at $0.63 per share, in exchange for Patent rights.
  F-17
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
  
 NOTE 7  STOCKHOLDERS' DEFICIENCY(CONTINUED)
 
 As of March 31, 2011, 12,998,482 common  shares were outstanding.
 
 (C) STOCK OPTIONS AND WARRANTS
 
 The Company issues stock options and warrants to employees, service providers, and investors in the course of business.
 
 For stock options and warrants issued to non-employees, the Company applies ASC 718. Accordingly, consulting expense of $3,783 and $254,345 were recognized in 2003 and 2002, respectively, upon granting of 25,000 and 125,000 common stock options, respectively. $345,000 was charged to operations in 1999 as reflected in the accompanying consolidated statements of operations from March 5, 1999 (inception) to March 31, 2008.
 
 For consolidated financial statement disclosure purposes and for purposes of valuing stock options and warrants issued to consultants, the fair market value of each stock granted was estimated on the grant date using the
 
 Black-Scholes Option-Pricing Model in accordance with ASC 718. The following weighted-average assumptions were used for the year ended March 31:
 
 2011

2010


2009


2008


2007


2006


2005


2004


2003


2002


2001


2000


1999Expected Dividend Yield


--


--



--



--


­­--



--



--



--



--



--



--



--



--Risk Free Interest Rate


--


--



--



--



--



--



--



--



4.15
%


3.57
%


--



--



4.53
%Expected Volatility


--


--



--



--



--



--



--



--



0.00
%


0.00
%


--



--



0.00
%Expected Term


--


--



--



--



--



--



--



--


4 Years


1 Year



--



--


2 Years
 
 F-18
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 7  STOCKHOLDERS' DEFICIENCY(CONTINUED)
 
 A summary of the options outstanding, which were granted for cash or services are presented below:
 
 Stock Options

WARRANTS


EXERCISE PRICEBalance at March 31, 2002


500,000


$
1.00Granted


25,000



1.00Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2003


525,000


$
1.00Granted


-



-Exercised


-



-Forfeited


(250,000
)


1.00Terminated


-



-Balance at March 31, 2004


275,000


$
1.00Granted


-



-Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2005


275,000


$
1.00Granted


-



-Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2006


275,000


$
1.00Grant


-



-Exercised


-



-Forfeited


(250,000
)

$
1.00Terminated


-



-Balance at March 31, 2007


25,000


$
1.00Grant


-



-Exercised


-



-Forfeited


(25,000
)

$
1.00Terminated


-



-Balance at March 31, 2008


-


$
1.00Grant


-



-Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2009


-


$
1.00Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2010


-


$
1.00Weighted average fair value of options granted for services during 2010





$
-
  Exercised


-



-Forfeited


-



-Terminated


-



-Balance at March 31, 2011


-


$
1.00Weighted average fair value of options granted for services during 2011





$
-
 
 F-19
  KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 7  STOCKHOLDERS' DEFICIENCY(CONTINUED)
 
 (D) PAR VALUE
  In August 2001, the par value of common stock was changed to $0.0001 from $1.00. The change is reflected retroactively for all periods presented in the accompanying consolidated financial statements.
 
 (E) EARNINGS PER SHARE
 
 Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. The following reconciles amounts reported in the financial statements for the year ended:
 
 2011


2010Loss available to common stockholders.

$
(518,257
)

$
(591,293
)Weighted average common shares outstanding


12,998,482



12,743,610Basic and diluted loss per share

$
(0.04
)

$
(0.05
)
 
 Effect of dilutive securities
 
 The following convertible securities were not included in the computation of diluted earnings per share because the effect of conversion would be antidilutive:
 
 SHARES OF POTENTIAL
 COMMON STOCK
 
 Preferred convertible shares 473,624 is convertible to 1,052,498 potential common shares.
  F-20
  KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 8 INCOME TAXES
 
 The Company files separate tax returns for the parent and its Canadian subsidiary. There was no income tax expense or utilization of net operating loss carry forwards for the years ended March 31, 2011 and 2010, 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, 2011 and 2010, (computed by applying the United States Federal Corporate tax rate of 34% to consolidated loss before taxes), as follows:
 
 2011


2010Computed "expected" tax benefit

$
(176,207
)

$
(201,040
)Foreign income tax rate differences


16,583



18,921Change in deferred tax asset valuation allowance


159,623



182,119$
-


$
-The above benefit was calculated using a combined federal and state tax estimated rate as noted belowStatutory federal income tax rate


34.00
%State income taxes


--
%Foreign income tax rate difference


(3.2
)%Valuation allowance


(30.8
)%Effective tax rate


(0.0
)%
 
 The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at March 31, 2011 are as follows:
  Deferred tax assets:United States net operating loss carryforward

$
5,054,480Canadian net operating loss carryforward


-Total gross deferred tax assets


5,054,480Less valuation allowance


(5,054,480
)Net deferred tax assets

$
-
 
 The net change in valuation allowance during the year ended March 31, 2011 was an increase of approximately $176,207. The Company's subsidiary has net operating losses of approximately $743,100 at March 31, 2010   which expired during the year ended March 31, 2011 and the parent United States entity has a net operating loss carry forward of approximately $16,410,650 available to offset the parent's net income through 2027.
 
 For the purpose of these estimates, certain stock based expenses aggregating approximately $1,008,000 and impairment loss amounting to $165,570 since inception were considered non-deductible. Actual amounts ultimately deductible may differ from these estimates.
 
 The utilization of the net operating loss carry forwards is dependent upon the ability to generate sufficient taxable income during the carry forward period. In addition, utilization of these carry forwards may be limited due to ownership changes as defined in the Internal Revenue Code.
 
 The Company is subject to taxation in the United States and certain state jurisdictions. The Company’s tax years for 2002 and forward are subject to examination by the United States and applicable state tax authorities due to the carry forward of unutilized net operating losses. Certain subsidiaries of the Company are subject to examination by the Canadian tax authorities as per the laws and regulations of Canada.
  F-21
 
 KYTO BIOPHARMA, INC. AND SUBSIDIARY
 (A DEVELOPMENT STAGE COMPANY)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 MARCH 31, 2011
 
 NOTE 8 SUBSEQUENT EVENTS
 
 Management evaluated all activities of the Company through the issuance date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the consolidated financial statements.