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

                                   FORM 10-KSB/A

(Mark One)

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

                    For the fiscal year ended March 31, 2005
                                              --------------

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

          For the transition period from _____________ to ____________

             Commission file number _______________________________


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


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


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

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

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

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

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

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

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

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. NONE AS OF MARCH 31ST,
2005

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 11,986,149 COMMON SHARES -
$0.0001 PAR VALUE - AS OF MARCH 31, 2005.

         Transitional Small Business Disclosure Format (Check One)  Yes   No


<PAGE>


                              KYTO BIOPHARMA, INC.
                                   FORM 10-KSB/A
                      FOR FISCAL YEAR ENDED MARCH 31, 2005

                                TABLE OF CONTENTS


PART I     .................................................................   3
     ITEM 1. DESCRIPTION OF BUSINESS........................................   3
     ITEM 2. DESCRIPTION OF PROPERTY........................................  14
     ITEM 3. LEGAL PROCEEDINGS..............................................  14
     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............  14

PART II
     ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......  15
     ITEM 6. MANAGEMENT `S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....  15
     ITEM 7. FINANCIAL STATEMENTS...........................................  17
     ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE............................  17
     ITEM 8A. CONTROLS AND PROCEDURES.......................................  17

PART III....................................................................  18
     ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL
             PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.....  18
     ITEM 10. EXECUTIVE COMPENSATION........................................  19
     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT....................................................  21
     ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................  22
     ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..............................  22
     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES........................  23

   SIGNATURES ..............................................................  24

   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.................. F-1
   CONSOLIDATED FINANCIAL STATEMENTS........................................ F-2


<PAGE>


                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

     (A) BUSINESS DEVELOPMENT

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

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

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

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

     The Company filed a Uniform Business Report (UBR) with the Department of
State, State of Florida, for the year 2005 and paid all required fees. Its
status is active.

     (B) BUSINESS OF ISSUER

     (1) Principal Products and Markets
         ------------------------------

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

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

     i)   the delivery of cytotoxic drugs to cancer cells using the vitamin B12
          as a Trojan Horse,
     ii)  the therapeutic effect of vitamin B12 depletion by receptor
          modulators, and
     iii) the use of monoclonal antibodies to block the vitamin B12 uptake by
          cancer cells.

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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
TECHNOLOGIES                    DRUG CANDIDATES            TARGET INDICATION         STATUS
----------------------------------------------------------------------------------------------------------
<S>                             <C>                        <C>                       <C>
    Bioconjugates               Paclitaxel                 Oncology                  Pre-clinical
    (Drug Delivery)             Doxorubicin                Oncology                  Pre-clinical
                                Carboplatinum              Oncology                  Pre-clinical
----------------------------------------------------------------------------------------------------------
Monoclonal Antibodies           Transport protein          Oncology                  Pre-clinical
                                Receptor                   Oncology                  Pre-clinical
----------------------------------------------------------------------------------------------------------
    Growth Blockers             Receptor modulators        Oncology                  Pre-clinical
----------------------------------------------------------------------------------------------------------
</TABLE>

                                        3

<PAGE>

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

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

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

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

     (b)  Existing drugs
     (c)  Generic drugs
     (d)  Molecules in development.
     (e)  Molecules with attractive biological activity and potency that were
          never developed because of too short half-life of activity for
          commercial utility or inadequate safety profile.

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

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

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

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

                                        4

<PAGE>

     (2) Competitive Business Conditions and Adverse Factors
         ---------------------------------------------------

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

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

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

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

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

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

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

o    KYTO'S BUSINESS STRATEGY REQUIRES THAT IT ESTABLISHES AND MAINTAIN GOOD
     STRATEGIC ALLIANCES. Currently, 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 (for details see below
     section (3) Research and Development Programs). Specifically, we may seek
     to joint venture, sublicense or enter other marketing arrangements with
     parties that have an established marketing capability or we may choose to
     pursue the commercialization of such products on our own. We may, however,
     be unable to establish such additional collaborative arrangements, license
     agreements, or marketing agreements as we may deem necessary to develop,
     commercialize and market our potential pharmaceutical products on
     acceptable terms.

     Furthermore, if we maintain and establish arrangements or relationships
     with third parties, our business may depend upon the successful performance
     by these third parties of their responsibilities under those arrangements
     and relationships.

o    KYTO HAS NO EXPERIENCE IN MANUFACTURING, PROCURING PRODUCTS IN COMMERCIAL
     QUANTITIES OR MARKETING, CONDUCTING CLINICAL TRIALS, REGULATORY APPROVAL
     PROCESS AND ONLY LIMITED EXPERIENCE IN NEGOTIATING, SETTING-UP OR
     MAINTAINING RESEARCH COLLABORATION AND THERE IS NO ASSURANCE THAT IT WILL
     SUCCESSFULLY CONTINUE OR 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

                                        5

<PAGE>

     our products may adversely affect our ability to generate profits or
     acceptable profit margins and our ability to develop and deliver such
     products on a timely and competitive basis. Kyto may be unable to obtain
     the raw materials used in the production of some of its bioconjugates in
     sufficient quantity to meet demand when and if such product is approved. By
     example, paclitaxel is derived from certain varieties of yew trees and is
     also used in one of the Company's drug candidates. To date, Kyto has not
     entered into an agreement with a supplier to provide sufficient quantity or
     quality of any drugs used in the construction of its bioconjugates. Kyto
     does not have internal facilities for the manufacture of any of its
     products for clinical or commercial production.

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

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

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

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

                                        6

<PAGE>

o    OWNERSHIP OF OUR SHARES IS CONCENTRATED, TO SOME EXTENT, IN THE HANDS OF A
     FEW INVESTORS, WHICH COULD LIMIT THE ABILITY OF OUR OTHER STOCKHOLDERS TO
     INFLUENCE THE DIRECTION OF THE COMPANY: Gerard Serfati and Credifinance
     Capital Corp. owned approximately 37.5% and 36.0%, respectively, of our
     common stock as of March 31, 2005. Accordingly, they collectively may have
     the ability to significantly influence or determine the election of all of
     our directors or the outcome of most corporate actions requiring
     stockholder approval. They may exercise this ability in a manner that
     advances their best interests and not necessarily those of our other
     stockholders.

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

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

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

o    THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN
     DUE TO SIGNIFICANT RECURRING LOSSES FROM OPERATIONS, CASH USED IN
     OPERATIONS, STOCKHOLDERS' DEFICIT, ACCUMULATED DEFICIT AND WORKING CAPITAL
     DEFICIT ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS
     UNLESS WE OBTAIN ADDITIONAL FUNDING. The report of our Independent
     Registered Public Accounting Firm on our March 31, 2005 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.

     (3) Research and Development Programs
         ---------------------------------

     Kyto believes that there are several applications for its drug candidates.
A number of properties of our drug delivery and vitamin B12 depletion
technologies suggest a potential role for its drug candidates in the therapy of

                                        7

<PAGE>

solid tumors such as colorectal and breast cancer in addition to treatment of
leukemias. Specifically, Kyto's research and product development programs
include the following projects:

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

-------------------------------------------------------------------------------------------------------------
Receptor Modulators
-------------------------------------------------------------------------------------------------------------
     Growth blockers             Oncology      Pre-clinical             --
-------------------------------------------------------------------------------------------------------------
</TABLE>

     In common with other biotechnology companies, it has been the Company's
strategy to develop technologies that target the development of therapeutics
which address large unmet market opportunities. A hallmark of this business
strategy is to leverage strategic alliances with biotechnology companies and
academic centers to enhance internal development. In congruence with the above
trends, the Company has implemented the first phase intended to leverage the
development, regulatory and commercialization expertise of potential corporate
partners to accelerate the development of its products while retaining full or
co-promotion rights, as implemented with the research programs with the State
University of New York, New-York University, and Medarex Inc. Currently, this
strategy circumvents costly implementation and operation of laboratory
facilities, reduces development costs and maximizes flexibility.

     In order to conduct the research necessary to conduct pre-clinical and
proceed later into human clinical trials, experience in several scientific areas
is required. For the current effort in targeting the vitamin B12 pathway, these
include:

     (a)  Knowledge of vitamin B12 metabolism and cellular uptake;
     (b)  Diseases and market awareness, with initial focus in Oncology
     (c)  Gene cloning and expression (i.e. recombinant protein technology);
     (d)  Organic chemistry;
     (e)  Scale-up manufacture of drug candidates; and
     (f)  In vitro and in vivo models to study toxicity and therapeutic efficacy
          of drug candidates

     Some of our product development programs depend on our ability to maintain
rights under collaboration agreements. These partners have the power to
terminate the agreements with us if we fail to meet our obligations under these
agreements. If we default under any of these collaboration agreements, we may
lose or partially lose our rights to market and sell any future products based
on the developed technologies.

The Research Foundation of State University of New York

     On August 1999, the Company and The Research Foundation of State University
of New York (RFSUNY) have entered into a research collaboration agreement (the
"RFSUNY Agreement") aimed to evaluate and investigate the biological activities
of monoclonal antibodies and vitamin B12 related agents that have potential uses
in patient care and treatment. The RFSUNY Agreement was further amended with
Extension Modification of Research Collaboration Agreement Modification No. 1
and No. 2 entered on February 2001 and December 2004, respectively.

                                       8


<PAGE>

     The RFSUNY Agreement grants the Company an option to negotiate and acquire
an exclusive world-wide, royalty bearing license to the antibodies. The Company
and RFSUNY agreed to enter into good faith negotiations regarding the terms and
conditions of said license, and further agree to negotiate license fee rates and
other payments that are fair and reasonable to both parties. If RFSUNY and the
Company fail to enter into an agreement during that period of time, the Company
shall have a right of first refusal to any terms generally more favourable
offered by the University to a third party for a period of one year thereafter.
To date, the parties did not enter into the negotiation period. The Company paid
$97,392.00 in November 2004 for the work performed under the RFSUNY Agreement
and Modification No. 1 and $35,000 in January 2005 under Modification No. 2 for
a total of $132,392 paid to RFSUNY. In December 2004, the Company signed an
Extension Modification of Research Collaboration Agreement Modification No. 2
with RFSUNNY regarding the research and development of the use of monoclonal
antibodies to block the vitamin B12 uptake by cancer cells for funding
consideration of $35,000 to be appropriated for the initial 6 months of the
conduct of the research plan from January 1, 2005 through June 30, 2005. Also,
the Company shall amend patent No. 5,688,504 to legally establish joint
ownership with RFSUNY. The $35,000 was paid in January 2005.

New York University

     On November 1999, the Company and New York University ("NYU") have entered
into a collaborative research agreement (the "NYU Agreement") to synthesize new
vitamin B12 analogs. For the work performed under the terms of NYU Agreement,
the Company was indebted to NYU in the aggregate amount of $102,780, and the
parties agreed to convert this debt into common stock from treasury of the
Company for issuance of 113,058 common shares pursuant to the terms of a Debt
Settlement Agreement and Put option (the "Put Option Agreement") dated November
19, 2002. Specifically, three years from the date of the initial settlement, the
put option holders have a thirty-day period in which to notify the Company of
their intent to put the options back to the Company at a redemption price of
$1.00 per share. The Company will then have 90 days from the notification date
to make the required payment. To date, the Company has not received a
notification from NYU regarding their intention to redeem their shares according
to the Put Option Agreement. Under the NYU Agreement, NYU granted the Company an
exclusive option at any time during the option period to negotiate a new
agreement with respect to an exclusive worldwide license to use and practice the
Research Technology. The license shall include reasonable and customary terms
and conditions (including, but not limited to reasonable royalties) with respect
to university-industry agreements. The Agreement is expected to be terminated
once the Option period is expired.To date, the parties did not initiate the
option period and the Company has no further financial obligation towards NYU.

Medarex Inc.

     On January 2001, the Company and Medarex Inc. (NasdaqNM:MEDX) have entered
into an agreement for the research, development and commercialization of novel
cancer therapeutics through the application of Medarex's UltiMAb Human Antibody
Development Systemsm. The Company is contributing several cancer related targets
to the collaboration. By having access to Medarex' human antibody platform and
development capability, the Company will be able to efficiently advance its
development program to human clinical trials and reduce operating costs. The
Medarex' T-12 Development program TM - "Target to Trial" in about 12 months -
has been documented as one of the most advanced approach for the development of
high affinity fully human therapeutic antibodies.

     Under terms of the agreement, the Company will develop and commercialize
human antibody products resulting from this alliance. Medarex is responsible for
generating fully human antibodies to targets provided by Kyto. Some of the
scientific emanating from the collaboration with Medarex is outlined below:

     o    Creation of high-affinity, fully human antibodies against targets
          delivered by the Company

     o    Cell line development

     o    Purification process development

     o    Quality control assay development and validation

     o    Scale up of complete production process

     o    Production and release of lot for toxicology studies

     o    Production and release of vialed products for Phase I/II clinical
          trials

     o    Preparation and maintenance of various reports and records, including
          SOPs

     o    Preparation and submission of a Drug Master File to U.S. FDA, and/or
          European regulatory agencies


                                       9

<PAGE>

     During January 2001, the Company issued 400,000 fully vested common shares
to Medarex (a third party research and development subcontractor) to be used as
credit against $1,200,000 in future invoiced license and royalty fees. Based on
the contract, the shares had a fair value of $3.00 per share and stated
anti-dilution provisions provided to Medarex, the Company valued the 400,000
shares at $1,200,000, which reflected the best available evidence as to the
valuation of these shares at the time of issuance. The value, considered a
prepaid expense, was recorded as deferred consulting fees deducted from
stockholders' deficiency, to be amortized against future invoices. During 2003,
in accordance with the anti-dilution provision, the Company issued an additional
800,000 shares for common stock having a fair value of $1.00 per share based on
recent transactions upon which certain accounts payable and loans payable with
related and unrelated parties were settled. For financial accounting purposes,
the additional shares are valued at $800,000 based on contemporaneous
transactions at $1.00 per share and were recorded as an addition to the
$1,200,000 deferred consulting fees for a total of $2,000,000.

     During the year ended March 31, 2001, we entered into an agreement with
Medarex for services totaling $200,000. On November 11, 2002, the Company and
Medarex mutually agreed that in lieu of the $200,000 payment, Medarex 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 Medarex. Under the terms of the promissory note, the obligation bears
interest at prime plus 1% (6.75% at March 31, 2005). Interest is accrued and
payable quarterly. At March 31, 2005, accrued interest totaled $13,029. In
connection with the promissory note, all principal and accrued interest is
payable in full upon the earliest of the following:

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

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

          (iii) Three years from the date of the promissory note (i.e. the note
               is due in November 2005)

     As of March 31, 2005, no services had yet been performed under the terms of
the agreement. As a result of the 1,300,000 shares issued, Medarex is a
principal stockholder of the Company with approximately 11.0% of the outstanding
common shares and thus, a related party.


     (4) Distribution of Products

     All our drug candidates are still in research and preclinical development,
which means that they have not yet been tested on humans. We will need to commit
significant time and resources to develop these product candidates. Because of
capital constraints, the Company has decided to focus its financial resources to
i) the development of its monoclonal antibodies and ii) the pre-clinical
development of its first lead drug candidate based on paclitaxel conjugated to
vitamin B12 for out-licensing.

     The Company intends to further leverage its resources by continuing to
enter into strategic alliances and novel financing mechanisms to enhance its
internal development and commercialization capabilities. Moreover the Company
will continue to focus its resources on research and development activities by
outsourcing its requirements for manufacturing, regulatory and clinical
monitoring activities. This will allow the Company to focus on its core
discovery and development programs. We believe this model is consistent with
current biotechnology and pharmaceutical industry licensing practices. In
addition, although out-licensing is a primary strategy of the Company, we may
choose to retain co-development or marketing rights to particular drug products
if we consider it appropriate to do so. Our objectives in seeking to out-license
candidates include:

     o    Obtaining long term revenues streams from royalty payments on the sale
          of the products

     o    Providing access to the resources and experience of large
          pharmaceutical or biotechnology companies

     o    Obtaining up-front payments for products sub-licensing rights

     o    Minimizing development expenditures through cost sharing programs

     As the first drug candidate based on our drug delivery technology -
paclitaxel conjugated to vitamin B12 - enters formal preclinical program, the
Company plans to outsource specific study components to a Chemical Contract
Manufacturer (CCM) and an integrated Contract Research Organizations (CRO) to
permit the conduct of concurrent studies. During the preclinical development of
a new drug candidate, a diverse number of studies relating chemistry,
formulation, animal pharmacology, toxicology, manufacturing and clinical

                                       10

<PAGE>

supplies are required to meet the regulatory requirements of an Investigational
New Drug (IND) submission. During the fiscal year, we had several meetings with
potential third parties to determine their interest to license or co-develop the
paclitaxel conjugate. We also reviewed the possibility to have a CRO as a
strategic partner as opposed to a service provider. Due to the limited internal
project management staff, we may prefer to outsource the entire pre-clinical
program to a vertically integrated CRO capable of handling studies from
discovery screening to IND filing. Based on discussion with independent chemical
manufacturer contractors and CROs, we anticipate a budget of $2.0 million to
file an IND with the FDA and a development time frame of 18 to 24 months per
selected bioconjugate. To date, the Company did not enter into any agreements
with any third parties for the future development of the paclitaxel conjugate.

     During the fiscal year, some data issued of the monoclonal antibodies
program were reviewed by the Company and submitted for publications in
peer-reviewed scientific journals by the State University of New York. The
Company intends to make these peer-reviewed papers available to the public via
News Release and posting them on its website as it receives confirmation letter
from the editors. The Company will increase its meeting with potential partners
during the third and fourth quarter of the current calendar year in order to
seek a partner to further co-develop these antibodies. Based on discussion with
Medarex, the Company anticipates a budget of $2.0 million to file an IND with
the FDA and a development time frame of 12 to 18 month per selected antibody.

     Our compounds may not enter human clinical trials on a timely basis, if at
all, and we may not develop any product candidates suitable for
commercialization. Prior to commercialization, each product candidate will
require significant additional research, development and preclinical testing and
extensive clinical investigation before submission of any regulatory application
for marketing approval. Potential products that appear to be promising at early
stages of development may not reach the market for a number of reasons.
Potential products may: i) be found ineffective or cause harmful side effects
during preclinical testing or clinical trials, ii) fail to receive necessary
regulatory approvals, iii) be difficult to manufacture on a large scale, iv) be
uneconomical to produce, v) fail to achieve market acceptance, or vi) be
precluded from commercialization by proprietary rights of third parties.

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

     (5) Patents

         Kyto's patent strategy has been to develop an "umbrella" of patents
protecting its core technology and their therapeutic uses and the underlying
technologies used to create them. The Company has filed a number of patent
applications in the United States, the PCT Member Countries, Japan, and in most
other jurisdictions to protect its proprietary rights in the development of its
technologies and products. To date, 16 patents have been issued. Kyto is
co-assignee on the issued and pending patents along with the State University of
New York. The Company shall also amend patent No. 5,688,504 to legally establish
joint ownership with RFSUNY according to an Extension Modification of Research
Collaboration Agreement with the Research Foundation of State University of New
York (RFSUNNY) signed in December 2004. The following is a list of the issued
patents:



                                       11

<PAGE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
       PATENT NO.                                           TITLE                                          ISSUED
-------------------------------------------------------------------------------------------------------------------------
        <S>                <C>                                                                             <C>
       NZ252,559          Anti-receptor agents to the vitamin B12/transcobalamin II receptor              14/02/97
-------------------------------------------------------------------------------------------------------------------------
      US5,688,504         Anti-receptor and growth blocking agents to the vitamin                         18/11/97
                          B12/transcobalamin II receptor and binding sites
-------------------------------------------------------------------------------------------------------------------------
      US5,739,287         Biotinylated cobalamins                                                         14/04/98
-------------------------------------------------------------------------------------------------------------------------
      US5,840,712         Water soluble vitamin B12 receptor modulating agents and methods                24/11/98
                          relating thereto
-------------------------------------------------------------------------------------------------------------------------
      US5,840,880         Vitamin B12 receptor modulating agents                                          24/11/98
-------------------------------------------------------------------------------------------------------------------------
      US5,869,465         Methods for receptor modulation and uses thereto                                09/02/99
-------------------------------------------------------------------------------------------------------------------------
      US6,083,926         Water soluble vitamin B12 receptor modulating agents and methods                04/07/00
                          relating thereto
-------------------------------------------------------------------------------------------------------------------------
      CA2,135,277         Anti-receptor and growth blocking agents to the vitamin                         24/04/01
                          B12/transcobalamin II receptor and use in preventing cellular uptake of
                          vitamin B12
-------------------------------------------------------------------------------------------------------------------------
       NZ323,127          Vitamin B12 receptor modulating agents and methods related and methods          12/07/01
                          related thereto
-------------------------------------------------------------------------------------------------------------------------
       KR297,310          Anti-receptor and growth blocking agents to the vitamin                         21/05/01
                          B12/transcobalamin II receptor and use in preventing cellular uptake of
                          vitamin B12
-------------------------------------------------------------------------------------------------------------------------
       CH0754189          Receptor modulating agents and methods relating thereto                        09/10/2002
-------------------------------------------------------------------------------------------------------------------------
       DE0754189          Receptor modulating agents and methods relating thereto                        09/10/2002
-------------------------------------------------------------------------------------------------------------------------
       EP0754189          Receptor modulating agents and methods relating thereto                        09/10/2002
-------------------------------------------------------------------------------------------------------------------------
       FR0754189          Receptor modulating agents and methods relating thereto                        09/10/2002
-------------------------------------------------------------------------------------------------------------------------
       GB0754189          Receptor modulating agents and methods relating thereto                        09/10/2002
-------------------------------------------------------------------------------------------------------------------------
       KR361,075          Receptor modulating agents and methods relating thereto                        01/11/2002
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


     (6) Regulatory Environment
         ----------------------

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

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

Preclinical Studies

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

Clinical Studies

     Upon successful completion of pre-clinical studies the drug undergoes a
series of evaluations in humans including healthy volunteers. The pharmaceutical
Company sponsoring the new drug must file an Investigational New Drug
application (IND), which includes results from the pre-clinical evaluations and

                                       12

<PAGE>

provides comprehensive descriptions of the proposed human clinical studies.
There are four generally accepted Phases in clinical studies, but the Phases may
overlap:

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

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

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

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

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

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

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

     (7) Research and Development Costs
         ------------------------------

     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 $44,614, $25,297, and $1,061,928 for the
years ended March 31, 2005, 2004, and for the period from March 5, 1999
(inception) to March 31, 2005, respectively.

     (8) Employees
         ---------

     The Company has no employees, full-time or part-time. The President of Kyto
Biopharma, Inc. is acting as consultant to the Company and he is compensated by
B Twelve Limited, the wholly-owned subsidiary Canadian corporation.

                                       13

<PAGE>

     (C) REPORTS TO SECURITY HOLDERS

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

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


ITEM 2. DESCRIPTION OF PROPERTY

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

     The Company owns no investments.


ITEM 3. LEGAL PROCEEDINGS

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


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

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











                                       14


<PAGE>


                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     (A) MARKET INFORMATION

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

                                                    Common Stock
                                             --------------------------
                                             High                   Low
                                             ----                   ---
            Fiscal Year Ended March 31, 2005
            ------------------------------------------------------------
            First quarter                      $      --       $      --
            Second quarter                          2.00            1.50
            Third quarter                           1.50            1.55
            Fourth quarter                          1.60            1.10

     There were 11,986,149 shares of common stock outstanding and 275,000
options to purchase common stock outstanding as of the end of the fiscal year
ended March 31, 2005.

     (B) HOLDERS

     According to information provided to us by the transfer agent for our
shares of Common Stock, as of March 31, 2005, there were 15 holders of record of
the shares of Common Stock, including depositories. Based upon information we
have received from some of these record owners, we believe there are more than
200 beneficial holders of our shares of Common Stock.

     (C) DIVIDENDS

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

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

     None


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     (A) PLAN OF OPERATION

     The following discussion should be read in conjunction with the financial
statements and related notes which are included in this Form 10-KSB/A for the
year ending March 31, 2005. Statements made below which are not historical facts
are forward-looking statements. Forward-looking statements involve a number of
risks and uncertainties including, but not limited to, general economic
conditions and our ability to develop our products. For further information
regarding our business, competition and risk factors, refer to this Company's
Form 10-KSB filed with the U.S. Securities Exchange Commission.

                                       15

<PAGE>

     The Company had not been profitable and had no revenues from operations
since its inception in March 1999. As reflected in the accompanying audited
consolidated financial statements, the Company has no revenues, a net loss of
$1,963,666 and cash used in operations of $162,786 in 2005, a working capital
deficiency of $102,326, a stockholders' deficiency of $274,554 and a deficit
accumulated during development stage of $7,794,223 at March 31, 2005. 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 $44,614, $25,297, and $1,061,928 for
the years ended March 31, 2005, 2004, and for the period from March 5, 1999
(inception) to March 31, 2005, respectively.

     In December 2004, the Company signed an Extension Modification of Research
Collaboration Agreement with the Research Foundation of State University of New
York (RFSUNNY) regarding the research and development of the use of monoclonal
antibodies to block the vitamin B12 uptake by cancer cells for funding
consideration of $35,000 to be appropriated for the initial 6 months of the
conduct of the research plan from January 1, 2005 through June 30, 2005. The
Company shall amend patent No. 5,688,504 to legally establish joint ownership
with RFSUNY. The $35,000 was paid in January 2005.

     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, 2005),
$161,477 in liabilities. The Company estimates that it will require up to
$200,000 to meet operating costs for this fiscal year, excluding research and
development costs. In addition, the Company is seeking up to five million
dollars ($5,000,000) in research and development funds.

     The report of our Independent Registered Public Accounting Firm on our
March 31, 2005 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.

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

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

                                       16

<PAGE>

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

     (B) OFF-BALANCE SHEET ARRANGEMENT

     Not applicable.


ITEM 7.  FINANCIAL STATEMENTS

     Attached audited consolidated financial statements for KYTO BIOPHARMA, INC.
AND SUBSIDIARY for the fiscal years ended March 31, 2005, 2004, and Cumulative
from March 5, 1999 (Inception) to March 31, 2005 can be found beginning on page
F-1


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

     The Company has not changed accountants during the previous three year
period to the date of this registration statement and there are no disagreements
with the findings of said accountants.


ITEM 8A. CONTROLS AND PROCEDURES

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

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

















                                       17

<PAGE>

                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

     (A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS

--------------------------------------------------------------------------------
NAME                        AGE    POSITION
--------------------------------------------------------------------------------

Jean-Luc Berger, Ph.D.      42     President & Chief Executive Officer, Director

Georges Benarroch           58     Director

Don MacAdam                 58     Director

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

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

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

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

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

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

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.

     (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.

                                       18

<PAGE>

     (D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

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

     (E) AUDIT COMMITTEE

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


     (F) CODE OF ETHICS

     At the time of filing this Form 10-KSB, the Company has not adopted a code
of ethics that applies to all directors, officers, employees and agents
including its principal executive officer, principal financial officer,
principal accounting officer or controller, and persons performing similar
functions. Management and the Board of Directors have initiated the drafting of
the Code of Ethics and expect to file the document in a timely manner.

The Code of Ethics is intended to promote, among other things:

     o    honest and ethical conduct, including the ethical handling of actual
          or apparent conflicts of interest between personal and professional
          relationships;

     o    full, fair, accurate, timely and understandable disclosure in
          continuous disclosure reports and documents filed with or submitted to
          securities regulators, and other public communications;

     o    compliance with applicable governmental laws, rules and regulations;

     o    prompt internal reporting of violations of the Code to the appropriate
          person identified in the Code; and,

     o    accountability for adherence to the Code.

     The Code of Ethics is intended to provide general guidance as to ethical
behaviour when dealing with other people - from employees, officers and
directors to customers, suppliers, government authorities and the public. The
Code of Ethics of Kyto Biopharma will be available at a dedicated page on the
Company's website (www.kytobiopharma.com). All of our directors, officers,
employees, agents and consultants are expected to adhere to the principles of
the Code of Ethics in their dealings with us.


ITEM 10. EXECUTIVE COMPENSATION

     (A) SUMMARY COMPENSATION TABLE

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                         Annual Compensation                        Long-Term Compensation
                                  -----------------------------------    ---------------------------------------
                                                                                   Awards               Payouts
                                                                          --------------------------------------
                                                                         Securities
                                                                           Under         Restricted
                                                            Other         Options/       Shares or
                                                            Annual          SARs         Restricted       LTIP         All Other
Name and                          Salary       Bonus     Compensation     Granted        Share Units      Payouts     Compensation
Principal Position      Year        ($)         ($)         ($)             (#)             ($)            ($)             ($)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>      <C>     <C>                                              <C>
Jean-Luc Berger,        2005     $52,250 (1)                                               None
President and Chief
Executive Officer
                        2004     $40,000 (1)                                               None


                        2003     $40,000 (1)                                             $149,985


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

Georges Benarroch,      2005     None                                                      None
Director

                        2004     None                                                      None


                        2003     None                                                      None


                        2002     None                                                     $3,000
-----------------------------------------------------------------------------------------------------------------------------------

Donald MacAdam,         2005     None                                                      None
Director

                        2004     None                                                      None


                        2003     None                                                      None


                        2002     None                                                     $3,000
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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



                                       19

<PAGE>

     (B) OPTION/SAR GRANTS TABLE
         -----------------------

     The following table (presented in accordance with the Regulation) sets
forth stock options granted under the Share Incentive Plan during fiscal year
2002 to the name key employees. There were no grants to key employees in fiscal
years 2005, 2004 and 2003.

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

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

     The following table (presented in accordance with the Regulation) sets
forth details of all exercises of stock options/SARs during the fiscal year end
March 31, 2002 (none in fiscal years 2005 and 2004) by the named executive
officer and employees and the fiscal year-end value of unexercised options/SARs
on an aggregated basis:

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


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

     None

     (D) COMPENSATION OF DIRECTORS

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

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

     Four directors received 14,525 and 3,000 common shares each for services
during FY2001 and FY2002, respectively. No director shares were granted in
fiscal years 2005 and 2004.

     None of the directors or senior officers of Kyto and no associate of any of
the directors or senior officers of Kyto was indebted to the Company during the
financial period ended March 31st, 2005 of Kyto other than for routine
indebtedness.

                                       20

<PAGE>

     (F) EMPLOYMENT CONTRACTS

     None

     (G) REPORT ON REPRICING OF OPTIONS/SARS

     None


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                      Name and Address of
Title of Class        Beneficial Owner                       Common Shares            Percentage of Class
---------------------------------------------------------------------------------------------------------------
<S>                   <C>                                      <C>                          <C>

Common                Gerard Serfati                           4,500,000                     37.5%
                      Geneva, Switzerland
Common                Credifinance Capital Corp. (1)           4,373,145                       36%

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

                      New Jersey, United States
Common                Dr. Uri Sagman                             902,025                       7.5%
                      Toronto, Ontario, Canada
---------------------------------------------------------------------------------------------------------------
</TABLE>

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

     (B) SECURITY OWNERSHIP OF MANAGEMENT

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

---------------
(1)  Georges Benarroch is the President & CEO of Credifinance Capital Corp which
     owns 4,373,145 common shares representing 36% of issued shares.
(2)  Don MacAdam owns 27,025 common shares directly and 3,000 common shares
     through A360 Inc., a private holding company.

     (C) CHANGES IN CONTROL

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

                                       21

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     (A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

     (B) TRANSACTIONS WITH PROMOTORS

       Jean-Luc Berger, President, Director and co-founder of Kyto Biopharma,
       Inc., Gerard Serfati, and Georges Benarroch would be considered as the
       promoters of the Company. No assets were received by Dr. Berger other the
       527,025 shares acquired. Gerard Serfati owns 4,500,000 common shares
       representing 37.5% of issued shares and Georges Benarroch, is the
       President & CEO of Credifinance Capital Corp which owns 4,373,145 common
       shares representing 36% of issued shares.



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (A) LISTING OF EXHIBITS

EXHIBIT NUMBER      DESCRIPTION
--------------      ------------
   3(i)(a)          Articles of Incorporation of Kyto Biopharma, Inc.*

   3(i)(b)          Articles of Amendment changing name to Kyto Biopharma, Inc.*

   3(ii)            Bylaws of Kyto Biopharma, Inc.*


10.1                Research collaboration agreement between The Research
                    Foundation of State University of New York and B. Twelve
                    Ltd. (Kyto Biopharma, Inc.) [dated August 19, 1999]**

10.2                Collaborative Research Agreement to synthesize new vitamin
                    B12 analogs signed between the Company and New York
                    University [dated November 11, 1999]**

10.3                Extension/Modification Research Collaboration Agreement
                    between the Research Foundation of State University of New
                    York and B Twelve, Inc., (Kyto Biopharma, Inc.) Modification
                    No. 1 [dated November 01, 2000]**

10.4                Debt Settlement Agreement and Put Option (dated November
                    2002) between Kyto Biopharma, Inc. and New York
                    University.**

10.5                Extension/Modification Research Collaboration Agreement
                    between the Research Foundation of State University of New
                    York and Kyto Biopharma, Inc., Modification No. 2 [dated
                    December 2004]. **

10.6                Services Agreement between Kyto Biopaharma, Inc. and Gerard
                    Serfati [dated November 1, 2004]***

31.1                Section 302 Certification**

32.1                Certification pursuant to 18 U.S.C. Section 1350 as
                    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                    of 2002 **

*   Filed as Exhibit to Company's Form 10-SB on September 12th, 2003, with the
    Securities and Exchange Commission
**  Filed as Exhibit with this Form 10-KSB.
*** Previously filed with Form S-8 on November 18, 2004.

                                       22


<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The Board of Directors appointed Salberg & Company, P.A. ("SALBERG") as our
independent auditors for the fiscal years ending March 31, 2005 and March 31,
2004.

(1)  Audit Fees

     SALBERG billed us and our subsidiary an aggregate of $24,500 for the
following professional services: audit of our annual consolidated financial
statements for the fiscal year ended March 31, 2004 included in our annual
report on Form 10-KSB and review of our interim financial statements included in
our quarterly reports on Form 10-QSB.

     SALBERG billed us and our subsidiary an aggregate of $16,800 for the
following professional services: audit of our annual consolidated financial
statements for the fiscal year ended March 31, 2005 included in our annual
report on Form 10-KSB and review of our interim financial statements included in
our quarterly reports on Form 10-QSB.

(2)  Audit Related Fees

     SALBERG billed us and our subsidiary an aggregate of $0 and $0 for audit
related services rendered during the fiscal years ended March 31, 2005 and 2004,
respectively in connection with, among other things, the preparation of a
Registration Statement on Form 10-SB.

(3)  Tax Fees

     No professional services was rendered by SALBERG for tax compliance, tax
advice, and tax planning the fiscal years ended March 31, 2005 and March 31,
2004.

(4)  All Other Fees

     Not applicable.
























                                       23

<PAGE>

                                   SIGNATURES


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


DATE: September 16, 2005                  KYTO BIOPHARMA, INC.


                                          By: /s/ Jean-Luc Berger
                                              ----------------------------------
                                              Jean-Luc Berger
                                              President & C.E.O.
                                              And Acting Chief Financial Officer

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


DATE: September 16, 2005                  KYTO BIOPHARMA, INC.


                                          By: /s/ Jean-Luc Berger
                                              ----------------------------
                                              Jean-Luc Berger
                                              President & C.E.O.,
                                              And Acting Chief Financial Officer


DATE: September 16, 2005                  KYTO BIOPHARMA, INC.


                                          By: /s/ Georges Benarroch
                                              ----------------------------------
                                              Georges Benarroch
                                              Director








                                       24

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

                                    Contents

                                                                       Page(s)
                                                                       -------

Report of Independent Registered Public Accounting Firm                   2

Consolidated Balance Sheet                                                3

Consolidated Statements of Operations                                     4

Consolidated Statement of Changes in Stockholders' Deficiency             5

Consolidated Statements of Cash Flows                                     6

Notes to Consolidated Financial Statements                              7-23


                                       1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheet of Kyto Biopharma,
Inc. and Subsidiary (a development stage company) as of March 31, 2005 and the
related consolidated statements of operations, changes in stockholders'
deficiency and cash flows for the years ended March 31, 2005 and 2004 and for
the period from March 5, 1999 (inception) to March 31, 2005. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the consolidated financial position of Kyto
Biopharma, Inc. and Subsidiary (a development stage company) as of March 31,
2005, and the consolidated results of their operations, changes in stockholders'
deficiency and cash flows for the years ended March 31, 2005 and 2004 and for
the period from March 5, 1999 (inception) to March 31 2005, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 11 to
the consolidated financial statements, the Company has no revenues, a net loss
of $1,963,666 and cash used in operations of $162,786 in 2005, a working capital
deficiency of $102,326, a stockholders' deficiency of $274,554 and a deficit
accumulated during development stage of $7,794,223 at March 31, 2005. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plan in regards to these matters is also described in Note
11. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

SALBERG & COMPANY, P.A.
Boca Raton, Florida
June 2, 2005

                                       2
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2005

ASSETS

CURRENT ASSETS
    Cash                                                   $     37,485
    Prepaid deposit                                              17,500
    Other receivables                                             4,166
                                                           ------------
TOTAL CURRENT ASSETS                                             59,151
                                                           ------------

EQUIPMENT, NET                                                      830
                                                           ------------

TOTAL ASSETS                                               $     59,981
                                                           ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
    Note Payable - related party                           $    100,000
    Loans payable - related parties                               4,616
    Accrued interest payable - related party                     13,029
    Accounts payable                                             31,607
    Accounts payable - related party                              2,225
    Accrued liabilities - related party                          10,000
                                                           ------------
TOTAL CURRENT LIABILITIES                                       161,477
                                                           ------------

TOTAL LIABILITIES                                               161,477
                                                           ------------

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

COMMITMENTS (NOTE 4)

STOCKHOLDERS' DEFICIENCY
    Preferred stock, $1.00 par value, 1,000,000 shares
      authorized, none issued and outstanding                        --
    Common stock, $0.0001 par value, 25,000,000 shares
      authorized, 11,813,091 issued and outstanding               1,181
    Additional paid-in capital                               15,079,735
    Deficit accumulated during development stage             (7,794,223)
    Accumulated other comprehensive loss                       (217,484)
                                                           ------------
                                                              7,069,209
    Less: Subscription Receivable                                   (13)
    Less: Deferred consulting fees                           (7,343,750)
                                                           ------------
TOTAL STOCKHOLDERS' DEFICIENCY                                 (274,554)
                                                           ------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY             $     59,981
                                                           ============

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                               FOR THE PERIOD FROM
                                                                                                  MARCH 5, 1999
                                                      YEAR ENDED MARCH 31                         (INCEPTION) TO
                                                           2005                  2004             MARCH 31, 2005
                                                       -----------           -----------       -------------------
<S>                                                    <C>                   <C>                   <C>
OPERATING EXPENSES
    Compensation                                       $    52,253           $    44,345           $ 1,685,451
    Depreciation and amortization                              805                 1,244               813,353
    Consulting                                           1,406,250                    --             2,349,649
    Bad debt                                                    --                    --                12,819
    Director fees                                               --                    --                64,100
    Financing fees                                              --                    --                28,781
    Professional fees                                       16,551                35,253                73,858
    General and administrative                              52,396                41,626               362,041
    Research and development                                44,614                25,297             1,061,928
    Loss on debt conversion                                479,986                    --               496,282
    Impairment loss                                             --                    --             1,191,846
                                                       -----------           -----------           -----------
TOTAL OPERATING EXPENSES                                 2,052,855               147,765             8,140,108
                                                       -----------           -----------           -----------

LOSS FROM OPERATIONS                                    (2,052,855)             (147,765)           (8,140,108)
                                                       -----------           -----------           -----------

OTHER INCOME (EXPENSES)
    Interest income                                            124                    58                 4,924
    Interest expense                                        (6,924)               (4,669)              (16,273)
    Gain on debt forgiveness                                 9,124                    --                68,778
    Loss on disposal of equipment                               --                    --                  (567)
    Foreign currency transaction gain (loss)                86,865               117,530               289,023
                                                       -----------           -----------           -----------
TOTAL OTHER INCOME (EXPENSE), NET                           89,189               112,919               345,885
                                                       -----------           -----------           -----------

NET (LOSS)                                             $(1,963,666)          $   (34,846)          $(7,794,223)
                                                       ===========           ===========           ===========

COMPREHENSIVE (LOSS)
    Foreign currency translation gain (loss)               (87,495)             (117,341)             (217,484)
                                                       -----------           -----------           -----------

TOTAL COMPREHENSIVE (LOSS)                             $(2,051,161)          $  (152,187)          $(8,011,707)
                                                       ===========           ===========           ===========

Net Loss Per Share - Basic and Diluted                 $     (0.23)          $     (0.01)          $     (1.58)
                                                       ===========           ===========           ===========

Weighted average number of shares outstanding
    during the year - basic and diluted                  8,389,402             6,359,758             4,926,870
                                                       ===========           ===========           ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
          YEARS ENDED MARCH 31, 2005 AND 2004, AND FOR THE PERIOD FROM
                   MARCH 5, 1999 (INCEPTION) TO MARCH 31, 2005
<TABLE>
<CAPTION>
                                                              PREFERRED STOCK                 COMMON STOCK           ADDITIONAL
                                                          ------------------------      -------------------------    PAID - IN
                                                           SHARES        AMOUNT           SHARES        AMOUNT         CAPITAL
                                                          --------    ------------      ----------   ------------   ------------
<S>                                                       <C>         <C>               <C>          <C>            <C>
Common stock issued for services to officer                     --    $         --         300,000   $         30   $    299,970
Common stock issued for services to consultant                  --              --         255,000             25        254,975
Warrants issued to consultant                                   --              --              --             --        345,000
Net loss, 1999                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 1999                                         --              --         555,000             55        899,945
Preferred stock issued for cash                            250,000         250,000              --             --             --
Offering cost                                                   --              --              --             --        (17,005)
Common stock issued for intangible assets                       --              --       2,000,000            200      1,999,800
Common stock issued for cash upon exercise
  of warrants                                                   --              --         100,000             10         99,990
Foreign currency translation loss                               --              --              --             --             --
Net loss, 2000                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 2000                                    250,000         250,000       2,655,000            265      2,982,730
Common stock issued as director fees                            --              --          58,100              6         58,094
Common stock issued for cash upon exercise
  of warrants                                                   --              --         150,000             15        149,985
Common stock issued for cash upon exercise
  of warrants                                                   --              --         345,000             35             --
Common stock issued to officer as
  compensation                                                  --              --         100,000             10         99,990
Common stock issued for cash                                    --              --         100,000             10         99,990
Common stock issued for future services                         --              --         400,000             40      1,199,960
Foreign currency translation gain                               --              --              --             --             --
Net loss, 2001                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 2001                                    250,000         250,000       3,808,100            381      4,590,749
Preferred stock converted to common stock                 (250,000)       (250,000)        250,000             25        249,975
Common stock warrants issued for consulting
  services                                                      --              --              --             --        254,346
Common stock issued for cash upon exercise
  of warrants                                                   --              --         125,000             13        124,987
Common stock warrants issued for services                       --              --              --             --        849,915
Common stock issued for cash upon exercise
of warrants                                                     --              --         850,000             85             --
Common stock issued to directors as
  compensation                                                  --              --           6,000             --          6,000
Common stock issued to employees as
  compensation                                                  --              --           3,000             --          3,000
Common stock issued as loan fee                                 --              --          25,000              3         24,997
Foreign currency translation gain                               --              --              --             --             --
Net loss, 2002                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 2002                                         --              --       5,067,100            507      6,103,969
Stock issued for cash and services                              --              --         225,000             22        224,978
Stock issued in settlement of accounts payable,
  net of redeemable shares                                      --              --         100,000             10         99,990
Stock issued to settle loans payable, related party             --              --         102,658             10        102,648
Stock issued as consideration for future
  services                                                      --              --         800,000             80        799,920
Stock issued for past and future rent and
  administrative services                                       --              --          65,000              7         64,993
Common stock warrants issued as financing fee                   --              --              --             --          3,783
Foreign currency translation loss                               --              --              --             --             --
Net loss, 2003                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 2003                                         --              --       6,359,758            636      7,400,281
Foreign currency translation loss                               --              --              --             --             --
Amortization of deferred expenses                               --              --              --             --             --
Net Loss, 2004                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March  31, 2004                                        --              --       6,359,758            636      7,400,281
Stock issued for cash and services                              --              --         500,000             50        249,950
Common stock issued for services to consultant                  --              --       4,500,000            450      6,749,550
Stock issued to settle loans payable, related party             --              --         320,000             32        479,968
Stock issued for past and future rent and
  administrative services                                       --              --         133,333             13        199,986
Foreign currency translation loss                               --              --              --             --             --
Net Loss, 2005                                                  --              --              --             --             --
                                                          --------    ------------      ----------   ------------   ------------
Balance, March 31, 2005                                         --    $         --      11,813,091   $      1,181   $ 15,079,735
                                                          ========    ============      ==========   ============   ============
</TABLE>

[RESTUB]

<TABLE>
<CAPTION>
                                                         DEFICIT
                                                        ACCUMULATED     ACCUMULATED
                                                          DURING           OTHER
                                                        DEVELOPMENT    COMPREHENSIVE       DEFERRED
                                                          STAGE            LOSS           CONSULTING
                                                        -----------      -----------      -----------
<S>                                                     <C>              <C>              <C>
Common stock issued for services to officer             $        --      $        --      $        --
Common stock issued for services to consultant                   --               --               --
Warrants issued to consultant                                    --               --               --
Net loss, 1999                                             (900,000)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 1999                                    (900,000)              --               --
Preferred stock issued for cash                                  --               --               --
Offering cost                                                    --               --               --
Common stock issued for intangible assets                        --               --               --
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --
Foreign currency translation loss                                --           (5,745)              --
Net loss, 2000                                             (650,366)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 2000                                  (1,550,366)          (5,745)              --
Common stock issued as director fees                             --               --               --
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --
Common stock issued to officer as
  compensation                                                   --               --               --
Common stock issued for cash                                     --               --               --
Common stock issued for future services                          --               --       (1,200,000)
Foreign currency translation gain                                --           60,054               --
Net loss, 2001                                             (966,789)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 2001                                  (2,517,155)          54,309       (1,200,000)
Preferred stock converted to common stock                        --               --               --
Common stock warrants issued for consulting
  services                                                       --               --               --
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --
Common stock warrants issued for services                        --               --               --
Common stock issued for cash upon exercise
of warrants                                                      --               --               --
Common stock issued to directors as
  compensation                                                   --               --               --
Common stock issued to employees as
  compensation                                                   --               --               --
Common stock issued as loan fee                                  --               --               --
Foreign currency translation gain                                --           13,397               --
Net loss, 2002                                           (2,959,415)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 2002                                  (5,476,570)          67,706       (1,200,000)
Stock issued for cash and services                               --               --               --
Stock issued in settlement of accounts payable,
  net of redeemable shares                                       --               --               --
Stock issued to settle loans payable, related party              --               --               --
Stock issued as consideration for future
  services                                                       --               --         (800,000)
Stock issued for past and future rent and
  administrative services                                        --               --               --
Common stock warrants issued as financing fee                    --               --               --
Foreign currency translation loss                                --          (80,354)              --
Net loss, 2003                                             (319,141)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 2003                                  (5,795,711)         (12,648)      (2,000,000)
Foreign currency translation loss                                --         (117,341)              --
Amortization of deferred expenses                                --               --               --
Net Loss, 2004                                              (34,846)              --               --
                                                        -----------      -----------      -----------
Balance, March  31, 2004                                 (5,830,557)        (129,989)      (2,000,000)
Stock issued for cash and services                               --               --               --
Common stock issued for services to consultant                   --               --       (5,343,750)
Stock issued to settle loans payable, related party              --               --               --
Stock issued for past and future rent and
  administrative services                                        --               --               --
Foreign currency translation loss                                --          (87,495)              --
Net Loss, 2005                                           (1,963,666)              --               --
                                                        -----------      -----------      -----------
Balance, March 31, 2005                                 $(7,794,223)     $  (217,484)     $(7,343,750
                                                        ===========      ===========      ===========
</TABLE>

[RESTUB]

<TABLE>
<CAPTION>
                                                                          DEFERRED
                                                       SUBSCRIPTION         LOAN           DEFERRED
                                                        RECEIVABLE           FEE           EXPENSES           TOTAL
                                                        -----------      -----------      -----------      -----------
<S>                                                     <C>              <C>              <C>              <C>
Common stock issued for services to officer             $        --      $        --      $        --      $   300,000
Common stock issued for services to consultant                   --               --               --          255,000
Warrants issued to consultant                                    --               --               --          345,000
Net loss, 1999                                                   --               --               --         (900,000)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 1999                                          --               --               --               --
Preferred stock issued for cash                                  --               --               --          250,000
Offering cost                                                    --               --               --          (17,005)
Common stock issued for intangible assets                        --               --               --        2,000,000
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --          100,000
Foreign currency translation loss                                --               --               --           (5,745)
Net loss, 2000                                                   --               --               --         (650,366)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 2000                                          --               --               --        1,676,884
Common stock issued as director fees                             --               --               --           58,100
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --          150,000
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --               35
Common stock issued to officer as
  compensation                                                   --               --               --          100,000
Common stock issued for cash                                     --               --               --          100,000
Common stock issued for future services                          --               --               --               --
Foreign currency translation gain                                --               --               --           60,054
Net loss, 2001                                                   --               --               --         (966,789)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 2001                                          --               --               --        1,178,284
Preferred stock converted to common stock                        --               --               --               --
Common stock warrants issued for consulting
  services                                                       --               --               --          254,346
Common stock issued for cash upon exercise
  of warrants                                                    --               --               --          125,000
Common stock warrants issued for services                        --               --               --          849,915
Common stock issued for cash upon exercise
of warrants                                                      --               --               --               85
Common stock issued to directors as
  compensation                                                   --               --               --            6,000
Common stock issued to employees as
  compensation                                                   --               --               --            3,000
Common stock issued as loan fee                                  --          (24,997)              --                3
Foreign currency translation gain                                --               --               --           13,397
Net loss, 2002                                                   --               --               --       (2,959,415)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 2002                                          --          (24,997)              --         (529,385)
Stock issued for cash and services                               --               --               --          225,000
Stock issued in settlement of accounts payable,
  net of redeemable shares                                       --               --               --          100,000
Stock issued to settle loans payable, related party              --           24,997               --          127,655
Stock issued as consideration for future
  services                                                       --               --               --               --
Stock issued for past and future rent and
  administrative services                                        --               --          (30,000)          35,000
Common stock warrants issued as financing fee                    --               --               --            3,783
Foreign currency translation loss                                --               --               --          (80,354)
Net loss, 2003                                                   --               --               --         (319,141)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 2003                                          --               --          (30,000)        (437,442)
Foreign currency translation loss                                --               --               --         (117,341)
Amortization of deferred expenses                                --               --           30,000           30,000
Net Loss, 2004                                                   --               --               --          (34,846)
                                                        -----------      -----------      -----------      -----------
Balance, March  31, 2004                                         --               --               --         (559,629)
Stock issued for cash and services                                0               --               --          250,000
Common stock issued for services to consultant                   --               --                         1,406,250
Stock issued to settle loans payable, related party              --               --               --          480,000
Stock issued for past and future rent and
  administrative services                                       (13)              --               --          199,986
Foreign currency translation loss                                --               --               --          (87,495)
Net Loss, 2005                                                   --               --               --       (1,963,666)
                                                        -----------      -----------      -----------      -----------
Balance, March 31, 2005                                 $       (13)     $        --      $        --      $  (274,554)
                                                        ===========      ===========      ===========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
             KYTO BIOPHARMA, INC. AND SUBSIDIARY
                (A DEVELOPMENT STAGE COMPANY)
            CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                           FOR THE PERIOD FROM
                                                                                              MARCH 5, 1999
                                                                  YEAR ENDED MARCH 31        (INCEPTION) TO
                                                                 2005            2004       DECEMBER 31, 2004
                                                             -----------      -----------  -------------------
<S>                                                          <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income (loss)                                        $(1,963,666)     $   (34,846)     $(7,794,223)
    Adjustment to reconcile net income (loss)
      to net cash used in operating activities:
      Depreciation and amortization                                  805            1,244          813,353
      Stock based compensation                                 1,406,250               --        2,884,143
      Stock based consulting expense                                  --               --          854,345
      Stock based director fees                                       --               --           64,100
      Stock based rent and administrative fees                        --           30,000           40,000
      Common stock warrants issued as financing fee                   --               --            3,783
      Loss on disposal of equipment                                   --               --              567
      Impairment loss                                                 --               --        1,191,846
      Gain on settlement of accounts payable                          --               --          (59,654)
      Loss on debt conversion                                    479,986               --          496,282
      Amortization of stock based financing fee                       --               --           24,997
    Changes in operating assets and liabilities:
      (Increase) decrease in:
         Other receivables                                         1,491            2,546           (4,165)
         Prepaids and other assets                               (16,177)          (1,323)         (17,500)
      Increase (decrease) in:
         Accounts payable and accrued expenses                   (81,793)          33,075          494,714
         Accounts payable-Related Parties                         10,318            8,160           18,478
                                                             -----------      -----------      -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             (162,786)          38,856         (988,934)
                                                             -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                --               --           (4,463)
                                                             -----------      -----------      -----------
NET CASH USED IN INVESTING ACTIVITIES                                 --               --           (4,463)
                                                             -----------      -----------      -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from common stock issuance, net of
      offering cost                                              250,000               --          958,222
    Loan proceeds from related parties, net                       35,358           75,463          319,066
    Repayment of loan to related parties                              --               --          (26,792)
                                                             -----------      -----------      -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                        285,358           75,463        1,250,496
                                                             -----------      -----------      -----------

Effect of Exchange Rate on Cash                                  (87,495)        (117,341)        (219,614)

Net Increase in Cash and Cash Equivalents                         35,077           (3,022)          37,485

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                   2,408            5,430               --
                                                             -----------      -----------      -----------

Cash and Cash Equivalents at End of Period                   $    37,485      $     2,408      $    37,485
                                                             ===========      ===========      ===========


    Supplemental Disclosure of Cash Flow Information:
      Cash paid for:
         Interest                                            $        --      $        --      $        --
                                                             ===========      ===========      ===========
         Taxes                                               $        --      $        --      $        --
                                                             ===========      ===========      ===========

    Supplemental Disclosure of Non-Cash Investing and
      Financing Activities:
         Conversion of debt to equity                        $   200,000      $        --      $   640,716
                                                             ===========      ===========      ===========
         Stock issued for deferred consulting services       $ 6,750,000      $        --      $ 6,750,000
                                                             ===========      ===========      ===========
         Conversion of liabilities to note payable           $        --      $        --      $   102,023
                                                             ===========      ===========      ===========
         Stock issued for debt restructuring
           anti-dilution provision                           $        --      $        --      $   800,000
                                                             ===========      ===========      ===========
         Conversion of preferred shares to common shares     $        --      $        --      $   250,000
                                                             ===========      ===========      ===========
         Stock issued for future services                    $        --      $        --      $ 1,200,000
                                                             ===========      ===========      ===========
         Issued common shares for intangible assets          $        --      $        --      $ 2,000,000
                                                             ===========      ===========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

NOTE 1   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A) NATURE OF BUSINESS

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

         The Company is a biopharmaceutical company, formed to acquire and
         develop innovative minimally toxic and non-immunosuppressive
         proprietary drugs for the treatment of cancer, arthritis, and other
         proliferative 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) 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 2005 and 2004 and for the period for March
         5, 1999 (inception) to March 31, 2005 include depreciable lives on
         equipment, valuation of intangible assets, the valuation allowance of
         deferred tax assets, and the valuation of non-cash stock based
         transactions.

         (D) CASH AND CASH EQUIVALENTS

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

                                       7
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         (E) BASIS OF PRESENTATION AND FOREIGN CURRENCY

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

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

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

         (F) CONCENTRATIONS

         The Company maintains its cash in bank deposit accounts, which, at
         times, exceed federally insured limits. As of March 31, 2005, 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, 2005.

         The Company has obtained and continues to obtain a large amount of its
         funding from loans and equity funding from a principal stockholder
         related to a director of the Company.

         (G) EQUIPMENT

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

         (H) LONG-LIVED ASSETS

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

         (I) STOCK-BASED COMPENSATION

         The Company accounts for stock options issued to employees in
         accordance with the provisions of Accounting Principles Board ("APB")
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations. As such, compensation cost is measured on the date of
         grant as the excess of the current market price of the underlying stock
         over the exercise price. Such compensation amounts are amortized over


                                       8
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

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

         The Company accounts for stock options or warrants issued to
         non-employees for goods or services in accordance with SFAS No. 123.
         Under this method, the Company records an expense equal to the fair
         value of the options or warrants issued. The fair value is computed
         using an options pricing model.

         (J) RESEARCH AND DEVELOPMENT COSTS

         Others conduct research and development on behalf of the Company under
         contractual agreements and such costs are charged to expense as
         incurred. Research and development expense was $44,614, $25,297, and
         $1,061,928 for the years ended March 31, 2005, 2004, and for the period
         from March 5, 1999 (inception) to March 31, 2005, respectively.

         (K) INCOME TAXES

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

         (L) COMPREHENSIVE INCOME

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

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

         (M) NET LOSS PER COMMON SHARE

         In accordance with Statement of Financial Accounting Standards No. 128,
         "Earnings per Share", basic earnings per share is computed by dividing


                                       9
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         the net income less preferred dividends for the period by the weighted
         average number of common shares outstanding. Diluted earnings per share
         is computed by dividing net income less preferred dividends by the
         weighted average number of common shares outstanding including the
         effect of common stock equivalents. Common stock equivalents,
         consisting of stock options and warrants, have not been included in the
         calculation, as their effect is antidilutive for the periods presented.
         At March 31, 2005, there were common stock warrants to issue 275,000
         common shares, which could potentially dilute future earnings per
         share.

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

         (N) FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

         (O) NEW ACCOUNTING PRONOUNCEMENTS

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

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

                                       10
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         In December 2004, the FASB issued SFAS No. 123(R) that will require
         compensation costs related to share-based payment transactions to be
         recognized in the financial statements. With limited exceptions, the
         amount of compensation cost will be measured based on the grant-date
         fair value of the equity or liability instruments issued. In addition,
         liability awards will be re-measured each reporting period.
         Compensation cost will be recognized over the period that an employee
         provides service in exchange for the award. Statement 123(R) replaces
         FASB Statement No. 123 and supersedes APB Opinion No. 25, and is
         effective as of the beginning of the first annual reporting period that
         begins after June 15, 2005

         (P) RECLASSIFICATIONS

         Certain amounts in the March 31, 2004 consolidated financial statements
         have been reclassified to conform to the March 31, 2005 presentation.

NOTE 2   EQUIPMENT

Equipment consists of the following at March 31:

                                              2005
                                            -------
         Computers and equipment            $ 4,589
         Less: Accumulated depreciation      (3,759)
                                            -------
                                            $   830
                                            =======

Depreciation was $805 and $1,244 for the years ended March 31, 2005 and 2004,
respectively, and $813,353 for the period from March 5, 1999 (inception) to
March 31, 2005.

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

NOTE 3   INTANGIBLE ASSETS IMPAIRMENT

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

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

Amortization expense was $285,708 for the year ended March 31, 2002 and $809,511
for the period from March 5, 1999 (inception) to March 31, 2004 (See below).
There was no amortization expense for the years ended March 31, 2005 and 2004,
respectively.

As of March 31, 2002, management performed an impairment analysis of the
Intellectual Property. Due to the then current status of the Company as a


                                       11
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

development stage company and the inherent difficulties in projecting future
revenues, management decided to take a conservative approach and recognize an
impairment loss for the full book value of the asset totaling $1,191,846 in
2002.

NOTE 4   COMMITMENTS AND CONTINGENCIES

         (A) EMPLOYMENT AGREEMENTS

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

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

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

         (B) LEASES

         The Company leases office space on a month-to-month basis. The premise
         is leased from a principal stockholder (See Note 6(B) and 7). Rent
         expense in 2005, 2004, and for the period from March 5, 1999
         (inception) to March 31, 2005 was $20,000, $20,000, and $108,377,
         respectively and is included in general and administrative expense in
         the accompanying consolidated statements of operations. (See Note 5(B))

                                       12
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         (C) REDEEMABLE COMMON STOCK PURSUANT TO PUT OPTION

         In November 2002 and February 2003, the Company issued an aggregate
         273,058 shares of its common stock having a fair value of $273,058 to
         settle certain accounts payable under a debt settlement agreement
         ("agreement") with three unrelated parties (See Note 6(B)). Of the
         total stock issued in connection with the agreement, two of these
         parties received an aggregate 173,058 shares of common stock. In
         addition, these two creditors received a written put option for the
         aggregate 173,058 shares of common stock previously issued.
         Specifically, three years from the date of the initial settlement, the
         put option holders have a thirty-day period in which to notify the
         Company of their intent to put the options back to the Company at a
         redemption price of $1.00 per share. The Company will then have 90 days
         from the notification date to make the required payment. The redemption
         value of these shares of common stock at March 31, 2005 is $173,058.
         (See Note 1(M))

         (D) REGULATION

         The business of the Company is subject to various governmental
         regulations in the United States of America, Canada, and other
         countries, which must approve any Company products before commencement
         of commercial sales and which regulate the manufacturing of
         pharmaceuticals. (See Note 11)

         (E) COMMITMENT

         In December 2004, 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 $35,000 to be appropriated
         for the initial 6 months of the conduct of the research plan from
         January 1, 2005 through June 30, 2005. The Company shall amend patent
         No. 5,688,504 to legally establish joint ownership with RFSUNY. The
         $35,000 was paid in January 2005 with a prepaid balance of $17,500
         remaining at March 31, 2005.

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

         (A) LOANS PAYABLE, RELATED PARTIES

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

         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 (see
         Note 6 (B)). The Company recognized a loss of $320,000 on this
         transaction.

                                       13
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         At March 31, 2005, the Company owed $4,616 to a related party director
         of the Company. The loan was non-interest bearing, unsecured and due on
         demand and included in the loans payable, relayed party balance. (See
         Note 7)

         (B) ACCRUED LIABILITIES, RELATED PARTY

         The Company leases office space and administrative services from a
         principal stockholder related party. Rent and administrative expense in
         2005, 2004, and for the period from March 5, 1999 (inception) to March
         31, 2005 was $40,000, $40,000, and $216,754, respectively and is
         included in general and administrative expense in the accompanying
         consolidated statements of operations. The Company allocates 50% of
         these amounts to rent expense. (See Note 4(B)). Accrued liabilities for
         the above services at March 31, 2005 were $10,000. (See Note 4(B))

         At March 31, 2005, accounts payable-related party of $2,225 are
         payables to a director for expense reimbursement due.

         (C) NOTE PAYABLE, RELATED PARTY

         During the year ended March 31, 2001, the Company entered into an
         agreement with a vendor, who is also a principal stockholder, related
         party for services totaling $200,000. On November 11, 2002, the Company
         and vendor mutually agreed that in lieu of the $200,000 payment, the
         vendor would accept 100,000 shares of the Company's common stock valued
         at $1.00 totaling $100,000. In addition, the Company also executed a
         $100,000 unsecured promissory note with the vendor. Under the terms of
         the promissory note, the obligation bears interest at prime plus 1%
         (6.75% at March 31, 2005). Interest is accrued and payable quarterly.
         At March 31, 2005, accrued interest totaled $13,029. In connection with
         the promissory note, all principal and accrued interest is payable in
         full upon the earliest of the following:

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

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

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

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

NOTE 6   STOCKHOLDERS' DEFICIENCY

         (A) PREFERRED STOCK

         In June 1999, an investor purchased 250,000 units at $1.00 per unit or
         $250,000 consisting of 250,000 shares of convertible preferred stock
         and receives warrants to purchase up to 750,000 common shares as


                                       14
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         follows: 250,000 common stock warrants exercisable at $1.00 per share
         issued with the preferred stock and another potential 500,000 as
         discussed below. The preferred stock was convertible to common stock on
         a one-for-one basis upon the earlier of:

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

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

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

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

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

         Upon exercise of the first 250,000 warrants, the investor received
         another warrant for 250,000 common shares at $1.00 exercise price per
         share. Upon conversion of the preferred stock, each share of common
         stock issued shall be coupled with an additional common stock purchase
         warrant at an exercise price of $1.00 per share with a three-month
         term. In December 1999 and May 2000, 100,000 and 150,000, respectively,
         of the first warrant were exercised and therefore in May 2000 the
         additional 250,000 warrant was granted with an exercise price of $1.00
         expiring June 2003. In June 2001, pursuant to a letter of intent, which
         was ratified by the shareholders, the preferred shares were converted
         and the additional 250,000 warrants were granted at an exercise price
         of $1.00 with an amended term not to exceed five years. There was no
         beneficial conversion feature to the warrants as the value of the
         common stock was still considered to be $1.00 based on contemporaneous
         transactions at that time. There was no effect of the warrant issuances
         on operations as all warrants are considered 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 of those expired leaving 250,000 outstanding at March 31,
         2005. At March 31, 2005, no preferred shares were outstanding.

         (B) COMMON STOCK AND OPTIONS

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

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

         In June 1999, the Company issued 2,000,000 common shares for a
         portfolio of patents, patents pending, and related intellectual


                                       15
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         property. The portfolio was valued at $2,000,000 based on a $1.00 per
         share contemporaneous cash offering price for one-for-one convertible
         preferred stock and common stock warrants issued with an exercise price
         of $1.00.

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

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

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

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

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

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

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

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

                                       16
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

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

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

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

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

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

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

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

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

         In December 2002, the Company issued 40,000 shares of its common stock
         to a principal stockholder (See Notes 4(B) and 7) having a fair value


                                       17
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         of $40,000 based on recent contemporaneous transactions. In exchange
         for the stock issued, the Company received various corporate services
         including rental of the office facility, general accounting services,
         and overhead. The 40,000 shares were issued for calendar year 2003.
         Accordingly, $10,000 was charged to operations and included in general
         and administrative expenses and the remaining $30,000 was deferred and
         included as a separate component of stockholders' deficiency to be
         amortized over the remaining service period.

         In October 2004, the Company entered into a non-brokered private
         placement of 500,000 shares at a price of $0.50 per share for proceeds
         of $250,000 with a finance company controlled by a director of the
         Company.

         In October 2004, the Company converted a related party loans payable of
         $160,000 into 320,000 shares of common stock at $1.50 per share. The
         debt was due to a finance company controlled by a director of the
         Company. The Company recognized a loss of $320,000 on this transaction
         (see Note 5 (A)).

         In November 2004, the Company entered into a services agreement for two
         years to generate and increase customer interest in the Company's
         products and technologies and explore merger/acquisition possibilities.
         The Company issued 4,500,000 shares of common stock. The stock was
         valued at the quoted trading price of $1.50 on the grant date resulting
         in a total value of $6,750,000 to be recognized over the service period
         of November 1, 2004 through October 31, 2006. A consulting expense of
         $1,406,250 was recorded as of March 31, 2005.

         In December 2004, the Company issued 133,333 shares valued at $1.50 per
         share based on the quoted trade price in payment of various expenses
         totaling $40,000 owed to a finance company controlled by a director of
         the Company. The Company recorded a loss on debt conversion of
         $159,986. A subscription receivable of $13.00 was recorded as of
         December 31, 2004.

         In January 2005, the Company received the remaining $100,000 from a
         private placement announced in October 2005.

         (C) STOCK OPTIONS AND WARRANTS

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

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

                                       18
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         Had compensation cost for the Company's stock-based compensation plan
         been determined on the fair value at the grant dates for awards under
         that plan, consistent with Statement No. 123, the Company's net loss
         for the years ended March 31, 2005 and 2004 and the period from March
         5, 1999 (inception) to March 31, 2005 would not have changed.

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

         For stock options and warrants issued to non-employees, the Company
         applies SFAS 123. Accordingly, consulting expense of $3,783 and
         $254,345 was recognized in 2003 and 2002, respectively, upon granting
         of 25,000 and 125,000 common stock options, respectively. $345,000 was
         charged to operations in 1999 as reflected in the accompanying
         consolidated statements of operations from March 5, 1999 (inception) to
         March 31, 2005. See tabular summary below for assumptions.

         For consolidated financial statement disclosure purposes and for
         purposes of valuing stock options and warrants issued to consultants,
         the fair market value of each stock granted was estimated on the grant
         date using the Black-Scholes Option-Pricing Model in accordance with
         SFAS 123. The following weighted-average assumptions were used for the
         year ended March 31:
<TABLE>
<CAPTION>
                                     2005       2004         2003            2002        2001        2000           1999
                                   --------    ------     -----------     ---------    -------     --------     -----------
     <S>                           <C>         <C>        <C>             <C>          <C>         <C>          <C>
     Expected Dividend Yield       $    --     $   --     $    0.00%      $  0.00%     $    --     $     --     $    0.00%
     Risk Free Interest Rate            --         --          4.145%        3.57%          --           --          4.53%
     Expected Volatility                --         --          0.00%         0.00%          --           --          0.00%
     Expected Term                      --         --         4 Years        1 Year         --           --         2 Years
     Consulting Expense            $    --     $   --     $    3,783      $ 254,345    $    --     $     --     $   345,000
</TABLE>

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

                                           NUMBER OF
                                          OPTIONS AND         WEIGHTED AVERAGE
                                            WARRANTS           EXERCISE PRICE
                                          -----------         ----------------
         Stock Options
         Balance at March 31, 2002           500,000              $1.00
         Granted                              25,000               1.00
         Exercised                                --                 --
         Forfeited                                --                 --
         Terminated                               --                 --
                                            --------              -----
         Balance at March 31, 2003           525,000              $1.00
         Granted                                  --                 --
         Exercised                                --                 --
         Forfeited                          (250,000        )      1.00
         Terminated                               --                 --
                                            --------              -----
         Balance at March 31, 2004           275,000              $1.00
         Granted                                  --                 --
         Exercised                                --                 --
         Forfeited                                --                 --
         Terminated                               --                 --
                                            --------              -----
         Balance at March 31, 2005           275,000              $1.00
                                                                  =====
         Weighted average fair value
           of options granted for
           services during 2005                                   $  --
                                                                  =====

                                       19
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

         The following table summarizes information about options and warrants
         outstanding at March 31, 2005:
<TABLE>
<CAPTION>
                             OPTIONS AND WARRANTS OUTSTANDING                         OPTIONS AND WARRANTS EXERCISABLE
              --------------------------------------------------------------------    ----------------------------------

                                                      WEIGHTED
                                                       AVERAGE         WEIGHTED                              WEIGHTED
               RANGE OF            NUMBER             REMAINING         AVERAGE            NUMBER             AVERAGE
               EXERCISE        OUTSTANDING AT        CONTRACTUAL       EXERCISE        EXERCISABLE AT        EXERCISE
                 PRICE         MARCH 31, 2005           LIFE             PRICE         MARCH 31, 2005          PRICE
              ------------    ------------------    --------------    ------------    ------------------    ------------

<S>                                    <C>           <C>              <C>                      <C>          <C>
           $        1.00               250,000       1.08 Years             1.00               250,000            0.91
           $        1.00                25,000       2.08 Years             1.00                25,000            0.09
                              ------------------                      ------------    ------------------    ------------
                                       275,000                        $     1.00               275,000      $     1.00
                              ==================                      ============    ==================    ============
</TABLE>

         (D) PAR VALUE

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

NOTE 7   RELATED PARTIES

Certain liabilities with a related party were settled with common stock. (See
Note 6(B).)

In November 2004 the Company issued 4,500,000 shares to a consultant which
represents approximately 37% of the outstanding shares as of March 31, 2005.
Therefore, this consultant became a principle stockholder related party in
November 2004.

The Company leases its facility from a principal stockholder who also provides
certain administrative services to the Company. (See Notes 4(B) and 6(B)).

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

At March 31, 2005, the Company owed $4,616 to a related party of a principal
stockholder. (See Note 5(A)).

                                       20
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

In November and December, 2003, the Company issued 167,758 shares of common
stock to settle certain accounts and loans payable (See Note 6(B).)

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

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

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

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

NOTE 8   SETTLEMENT OF ACCOUNTS PAYABLE

During the year ended March 31, 2003, the Company had outstanding accounts
payable with a vendor totaling $59,654. The vendor formally released the Company
of any further obligations under the terms of the agreement. Accordingly, the
Company recognized the entire $59,654 as a gain on settlement and this amount is
reflected in the consolidated statement of operations as other income during the
period from March 5, 1999 (inception) to March 31, 2005.

During 2005 the Company recorded a gain on debt forgiveness of $9,124 relating
to a vendor invoice.

NOTE 9   CONVERTIBLE DEBENTURE

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

Upon the issuance of the convertible debenture, and in accordance with EITF 98-5
"Accounting for Convertible Securities with Beneficial Conversion Features or


                                       21
<PAGE>

                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

Contingently Adjustable Conversion Ratio," there was no beneficial conversion as
the market price of the Company's common stock, which was $1.00 on the
commitment date, was equivalent to the exercise price of $1.00.

In November 2002, the $100,000 debenture plus accrued interest was converted
into 102,568 shares of common stock having a fair value of $102,568. The
principal of $100,000 and accrued interest of $2,568 was valued at $1.00 per
share based upon recent transaction for the settlement of certain accounts
payable and loans payable with the same related party (principal stockholder)
and unrelated parties (See Note 6(B)).

NOTE 10  INCOME TAXES

The Company files separate tax returns for the parent and its Canadian
subsidiary. There was no income tax expense for the years ended March 31, 2005
and 2004, due to the Company's net losses or utilization of net operating loss
carryforwards.

The blended Canadian Federal and Provincial Corporate tax rate of 41.5% applies
to loss before taxes of the Canadian subsidiary. The Company's tax expense
differs from the "expected" tax expense for Federal income tax purposes for the
years ended March 31, 2004 and 2003, (computed by applying the United States
Federal Corporate tax rate of 34% to consolidated loss before taxes), as
follows:

                                             YEARS ENDED MARCH 31,
                                           2005               2004
                                       --------------    ---------------
Computed "expected" tax benefit        $    (667,646)    $      (11,848)
Foreign income tax rate differences            2,196              5,198
Change in deferred tax asset
  valuation allowance                        665,450              6,650
                                       --------------    ---------------
                                       $          --     $           --
                                       ==============    ===============

The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at March 31, 2005 are as follows:

Deferred tax assets:
United States net operating loss carryforward             $      1,689,357
Canadian net operating loss carryforward                         1,103,470
                                                          --------------------
Total gross deferred tax assets                                  2,792,827
Less valuation allowance                                        (2,792,827)
                                                          --------------------
Net deferred tax assets                                   $            --
                                                          ====================

The valuation allowance at March 31, 2003 was $2,127,377. The net change in
valuation allowance during the year ended March 31, 2005 was an increase of
approximately $665,450. The Company's subsidiary has net operating losses of
approximately $2,659,000 at March 31, 2005 available to offset the subsidiaries'
net income through 2010 under Canadian Federal and Provincial tax laws and the
parent United States entity has a net operating loss carryforward of
approximately $4,969,000 available to offset the parent's net income through
2024.

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

                                       22
<PAGE>
                       KYTO BIOPHARMA, INC. AND SUBSIDIARY
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2005

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

NOTE 11  GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company
has no revenues, a net loss of $1,963,666 and net cash used in operations of
$162,786 in 2005 and a working capital deficiency of $102,326, a stockholders'
deficiency of $274,554 and a deficit accumulated during the development stage of
$7,794,223 at March 31, 2005. The ability of the Company to continue as a going
concern is dependent on the Company's ability to further implement its business
plan, raise capital, and generate revenues (see Note 4(D)). The consolidated
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.

The Company is currently a development stage company and 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 three months ended June 30, 2004, the Company received $35,000 in related
party debt financing. In October 2004, the Company closed on a non-brokered
private placement of 500,000 shares at a price of $0.50 per share for proceeds
of $250,000 of which $100,000 was paid in January 2005 and has also converted a
debt of $160,000 into 320,000 shares of common stock (See Note 5(A) and Note
6(B)) The Company recognized a loss of $320,000 on this transaction.

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.

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