UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


———————

FORM 10-Q

——————— .



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

For the quarterly period endedJuneSeptember 30, 2009

or


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

For the transition period from: _____________ to _____________


KYTO BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)


FLORIDA

000-50390

65-1086538

(State or Other Jurisdiction

(Commission

(I.R.S. Employer

of Incorporation)

File Number)

Identification No.)


B1-114 Belmont Avenue Toronto, Ontario Canada M5R 1P8

(Address of Principal Executive Office) (Zip Code)

(416) 960-8790

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

———————


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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.   þ Yes   ¨ No

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

Large accelerated filer¨

 Accelerated filer¨

Non-accelerated filer¨

 Smaller reporting companyþ

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

12,743,610Common Shares - $0.0001 Par Value - as ofJuly 21,November 10, 2009

 

 







UNITED STATES

KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)

INDEX


Page

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements (Unaudited)

1

Unaudited Consolidated Balance Sheet Juneas of September 30, 2009 and Auditedaudited Consolidated
Balance Sheet as of March 31, 2009

1

Unaudited Consolidated Statements of Operations for the  ThreesThree and Six Months Ended
JuneSeptember 30, 2009 and 2008

2

Unaudited Consolidated StatementStatements of Cash Flows for the Three and Six Months Ended
JuneSeptember 30, 2009 and 2008.ws2008

3

Notes toTo Unaudited Consolidated Financial Statements

45

Item 2.Management’s Discussion Andand Analysis Ofof Financial Conditions Andand Results Ofof Operations

79

Item 3.Quantitative Andand Qualitative Disclosures About Market Risk
(Not required for smaller reporting company.)

79

Item 4.Controls and Procedures

810

PART II. OTHER INFORMATIONINORMATION

Item 1.Legal Proceedings

911

Item 1a.Risk FactorsFactors.(Not required for smaller reporting company.)

911

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds .

911

Item 3.Defaults Upon Senior Securities

911

Item 4.Submission of Matters to a Vote of Security Holders

911

Item 5.Other Information

911

Item 6.Exhibits

911

Signatures

1113

Certifications







PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

KYTO BIOPHARMA, INC. AND SUBSIDIARY


(A Development Stage Company)


UNAUDITED CONSOLIDATED BALANCE SHEET
June 30, 2009

 

June 30,

 

March 31,

 

 

September 30,

 

March 31,

 

 

2009

 

2009

 

 

2009

 

2009

 

 

Unaudited

 

(Audited)

 

ASSETS

 

 

 

 

 

     

 

 

    

 

 

 

Current Assets:

 

 

 

 

 

     

 

 

 

 

 

 

Cash

 

$

1,082

 

 

$

12,754

 

     

$

1,653

 

$

12,754

 

Prepaid expenses

 

 

3,333

 

 

 

47,562

 

     

 

47,572

 

 

47,562

 

Total Current Assets

 

 

4,415

 

 

 

60,316

 

     

 

49,225

 

 

60,316

 

 

 

 

 

 

 

     

 

 

 

 

 

 

Total Assets

 

$

4,415

 

 

$

60,316

 

     

$

49,225

 

$

60,316

 

 

 

 

 

 

 

     

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

     

 

 

 

 

 

 

Accounts payable

 

$

13,251

 

 

$

8,317

 

     

$

14,813

 

$

8,317

 

Accrued liabilities - related party

 

 

49,833

 

 

 

43,333

 

     

 

58,833

 

 

43,333

 

Accrued interest payable - related party

 

 

54,407

 

 

 

52,784

 

     

 

55,648

 

 

52,784

 

Accrued interest payable - preferred convertible stock

 

 

30,350

 

 

 

24,128

 

     

 

36,650

 

 

24,128

 

Loan payable-related party

 

 

364,039

 

 

 

353,824

 

     

 

482,057

 

 

353,824

 

Note payable-related party

 

 

100,000

 

 

 

100,000

 

     

 

100,000

 

 

100,000

 

Total Current Liabilities

 

 

611,880

 

 

 

582,386

 

     

 

748,001

 

 

582,386

 

 

 

 

 

 

 

     

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

Stockholders' Deficit:

 

 

 

 

 

 

     

 

 

 

 

 

 

Preferred convertible stock, $1.00 par value, 1,000,000 shares
authorized, 473,624 issued and outstanding

 

 

473,624

 

 

 

473,624

 

     

 

473,624

 

 

473,624

 

Common stock, $0.0001 par value, 25,000,000 shares
authorized, 12,743,610 issued and outstanding

 

 

1,275

 

 

 

1,275

 

     

 

1,275

 

 

1,275

 

Additional paid-in capital

 

 

15,654,944

 

 

 

15,654,944

 

     

 

15,654,944

 

 

15,654,944

 

Deficit accumulated during development stage

 

 

(16,460,811

)

 

 

(16,474,669

)

     

 

(16,651,451

)

 

(16,474,669

)

Accumulated other comprehensive loss

 

 

(276,497

)

 

 

(177,244

)

     

 

(177,168

)

 

(177,244

)

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

Total Stockholders' Deficit

 

 

(607,465

)

 

 

(522,070

)

     

 

(698,776

)

 

(522,070

)

 

 

 

 

 

 

     

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

     

$

49,225

 

$

60,316

 



See Accompanying Notes to Unaudited Consolidated Financial Statements


Statements.

1




KYTO BIOPHARMA, INC. AND SUBSIDIARY

 (A
(A Development Stage Company)


UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

For the period

from

 

 

 

 

 

 

March 5, 1999

 

 

For The Quarters Ended

 

(inception) to

 

 

June 30,

 

June 30

 

 

For The Quarters Ended
September 30,

 

For The Six Months Ended
September 30,

 

For the period
from March 5,
1999
(inception)
to
September 30,

 

 

2009

 

2008

 

2009

 

 

2009

 

2008

 

2009

 

2008

 

2009

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation

 

$

––

 

 

$

––

 

 

$

1,750,636

 

     

$

––

     

$

––

     

$

––

     

$

––

     

$

1,750,636

 

Depreciation and amortization

 

 

––

 

 

 

––

 

 

 

814,183

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

814,183

 

Consulting

 

 

14,000

 

 

 

11,000

 

 

 

9,817,811

 

     

 

13,999

     

 

17,348

     

 

27,999

     

 

28,348

     

 

9,831,810

 

Bad debt

 

 

––

 

 

 

––

 

 

 

12,819

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

12,819

 

Director fees

 

 

––

 

 

 

––

 

 

 

314,100

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

314,100

 

Financing fees

 

 

––

 

 

 

––

 

 

 

28,781

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

28,781

 

Professional fees

 

 

12,095

 

 

 

9,015

 

 

 

209,005

 

     

 

10,088

     

 

21,371

     

 

22,182

     

 

30,386

     

 

219,092

 

General and administrative

 

 

9,494

 

 

 

12,215

 

 

 

570,220

 

     

 

10,637

     

 

17,338

     

 

20,131

     

 

29,553

     

 

580,857

 

Research and development

 

 

42,039

 

 

 

36,369

 

 

 

1,560,643

 

     

 

49,045

     

 

83,615

     

 

91,084

     

 

119,984

     

 

1,609,688

 

Loss on debt conversion

 

 

––

 

 

 

––

 

 

 

519,795

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

519,795

 

Impairment loss

 

 

––

 

 

 

––

 

 

 

1,191,846

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

1,191,846

 

Total Operating Expenses

 

 

77,628

 

 

 

68,599

 

 

 

16,789,839

 

     

 

83,769

     

 

139,672

     

 

161,396

     

 

208,271

 

 

16,873,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

––

 

 

 

––

 

 

 

4,922

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

4,922

 

Interest expense

 

 

(7,845

)

 

 

(8,098

)

 

 

(102,454

)

     

 

(7,541

)

 

(8,219

)

 

(15,386

)

 

(16,317

)

 

(109,995

)

Gain on debt forgiveness

 

 

––

 

 

 

––

 

 

 

78,665

 

     

 

––

     

 

––

     

 

––

     

 

––

     

 

78,665

 

Loss on disposal of equipment

 

 

––

 

 

 

––

 

 

 

(567

)

     

 

––

     

 

––

     

 

––

     

 

––

     

 

(567

)

Foreign currency translation gain

 

 

99,331

 

 

 

8,095

 

 

 

348,462

 

     

 

––

     

 

(50,925

)

 

––

     

 

(42,830

)

 

249,131

 

Total Other Income (Expense), net

 

 

91,486

 

 

 

(3

)

 

 

329,028

 

     

 

(7,541)

 

 

(59,144

 )    

 

(15,386)

 

 

(59,147

)

 

222,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$

13,858

 

 

$

(68,602

)

 

$

(16,460,811

)

     

$

(91,310)

 

$

(198,816

 )    

$

(176,782)

 

$

(267,418

)

$

(16,51,451)

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(99,253

)

 

 

(8,142

)

 

 

(276,497

)

     

 

(9

)

 

51,025

     

 

76

 

 

42,883

     

 

(177,168

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive Loss

 

$

(85,395

)

 

$

(76,744

)

 

$

(16,737,308

)

 

$

(91,319

)

$

(147,791

)

$

(176,706

)

$

(224,535

)

$

(16,828,619

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding
during the year - basic and diluted

 

 

12,743,610

 

 

 

12,169,263

 

 

 

7,352,183

 

     

 

12,743,610

     

 

12,743,610

     

 

12,743,610

     

 

12,743,610

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

0.00

 

 

$

(0.01

)

 

$

(2.27

)

Net Income (Loss) per share - basic and diluted

     

$

0.00

 

$

(0.02

)     

$

0.00

 

$

(0.02

)

 

 

 





See Accompanying Notes to Unaudited Consolidated Financial Statements.

2




KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

For the Six Months
Ended  September 30,

 

March 5, 1999
(Inception) to
September 30,

 

 

 

2009

 

2008

 

2009

 

Cash Flows from Operating Activities:

  

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(176,782)

   

$

(267,418

)

$

(16,651,451

)

Adjustment to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

––

 

 

––

   

 

814,183

 

Recognition of services rendered by consultant

 

 

––

 

 

––

 

 

10,227,893

 

Stock based consulting expense

 

 

––

 

 

––

 

 

854,345

 

Stock based director fees

 

 

––

 

 

––

 

 

314,100

 

Stock based rent and administrative fees

 

 

––

 

 

––

 

 

167,028

 

Preferred convertible stock issued for interest due on outstanding preferred convertible stock

 

 

––

 

 

––

 

 

13,890

 

Common stock warrants issued as financing fee

 

 

––

 

 

––

 

 

3,783

 

Loss on disposal of equipment

 

 

––

 

 

––

 

 

567

 

Impairment loss

 

 

––

 

 

––

 

 

1,191,846

 

Gain on debt forgiveness

 

 

––

 

 

––

 

 

(9,837

)

Gain on settlement of accounts payable

 

 

––

 

 

––

 

 

(59,654

)

Loss on settlement of accounts payable

 

 

––

 

 

––

 

 

519,795

 

Amortization of stock based financing fee

 

 

––

 

 

––

 

 

25,010

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

Prepaids and other assets

 

 

(10

)

 

6,010

 

 

(47,572

)

Accounts payable and accrued expenses

 

 

21,996

 

 

45,010

 

 

559,518

 

Related party accounts payable, accrued interest, and accrued liabilities

 

 

15,386

 

 

32,636

 

 

67,978

 

Net Cash Used in Operating Activities

 

 

58,927

 

 

(183,762

)

 

(1,810,241

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

––

 

 

––

 

 

(4,463

)

Net Cash Used in Investing Activities

 

 

––

 

 

––

 

 

(4,463

)

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from common stock issuance, net of offering cost

 

 

––

 

 

––

 

 

958,222

 

Loan proceeds from related parties, net

 

 

128,233

 

 

135,825

 

 

1,260,432

 

Repayment of loan to related parties

 

 

––

 

 

––

 

 

(26,792

)

Net Cash Provided by Financing Activities

 

 

128,233

 

 

135,825

 

 

2,191,862

 

Effect of Exchange Rate

 

 

(76

)

 

42,883

 

 

(177,168

)

Net Increase (decrease) in Cash and Cash Equivalents

 

 

(11,101

)

 

(5,054

)

 

1,653

 

Cash and Cash Equivalents at Beginning of Period

 

 

12,754

 

 

7,328

 

 

––

 

Cash and Cash Equivalents at End of Period

 

$

1,653

 

$

2,274

 

$

1,653

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

 

 

           Interest

 

$

––

 

$

––

 

$

––

 

           Taxes

 

$

––

 

$

––

 

$

––

 




See Accompanying Notes to Unaudited Consolidated Financial StatementsStatements.

3


2



KYTO BIOPHARMA, INC. AND SUBSIDIARY

 (A
(A Development Stage Company)


UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

 

 

 

 

 

March 5, 1999

 

 

 

For the Quarters Ended June 30

 

 

(Inception) to

 

 

 

2009

 

 

2008

 

 

June 30, 2009

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

13,858

 

 

$

(68,602

)

 

$

(16,460,811

)

Adjustment to reconcile net loss to net cash provided by
(used in)operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

––

 

 

 

––

 

 

 

814,183

 

Recognition of services rendered by consultant

 

 

––

 

 

 

––

 

 

 

10,227,893

 

Stock based consulting expense

 

 

––

 

 

 

––

 

 

 

854,345

 

Stock based director fees

 

 

––

 

 

 

––

 

 

 

314,100

 

Stock based rent and administrative fees

 

 

––

 

 

 

––

 

 

 

167,028

 

Preferred convertible stock issued for interest due on
outstanding preferred convertible stock

 

 

––

 

 

 

––

 

 

 

13,890

 

Common stock warrants issued as financing fee

 

 

––

 

 

 

––

 

 

 

3,783

 

Loss on disposal of equipment

 

 

––

 

 

 

––

 

 

 

567

 

Impairment loss

 

 

––

 

 

 

––

 

 

 

1,191,846

 

Gain on debt forgiveness

 

 

––

 

 

 

––

 

 

 

(9,837

)

Gain on settlement of accounts payable

 

 

––

 

 

 

––

 

 

 

(59,654

)

Loss on settlement of accounts payable

 

 

––

 

 

 

––

 

 

 

519,795

 

Amortization of stock based financing fee

 

 

––

 

 

 

––

 

 

 

25,010

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Prepaids and other assets

 

 

44,229

 

 

 

42,353

 

 

 

(3,333

)

Accounts payable and accrued expenses

 

 

11,434

 

 

 

(13,694

)

 

 

548,956

 

Related party accounts payable, accrued interest,
and accrued liabilities

 

 

7,845

 

 

 

18,098

 

 

 

60,437

 

Net Cash Used in Operating Activities

 

 

77,366

 

 

 

(21,845

)

 

 

(1,791,802

)

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

––

 

 

 

––

 

 

 

(4,463

)

Net Cash Used in Investing Activities

 

 

––

 

 

 

––

 

 

 

(4,463

)

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from common stock issuance, net of offering cost

 

 

––

 

 

 

––

 

 

 

958,222

 

Loan proceeds from related parties, net

 

 

10,215

 

 

 

26,824

 

 

 

1,142,414

 

Repayment of loan to related parties

 

 

––

 

 

 

––

 

 

 

(26,792

)

Net Cash Provided by Financing Activities

 

 

10,215

 

 

 

26,824

 

 

 

2,073,844

 

Effect of Exchange Rate on Cash

 

 

(99,253

)

 

 

(8,142

)

 

 

(276,497

)

Net Increase (decrease) in Cash and Cash Equivalents

 

 

(11,672

)

 

 

(3,163

)

 

 

1,082

 

Cash and Cash Equivalents at Beginning of Period

 

 

12,754

 

 

 

7,328

 

 

 

––

 

Cash and Cash Equivalents at End of Period

 

$

1,082

 

 

$

4,165

 

 

$

1,082

 

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

 

$

––

 

 

$

––

 

 

$

1,102,154

 

Stock issued for deferred consulting services

 

$

––

 

 

$

––

 

 

$

6,750,000

 

Conversion of liabilities to note payable

 

$

––

 

 

$

––

 

 

$

102,023

 

Stock issued for debt restructuring anti-dilusion provision

 

$

––

 

 

$

––

 

 

$

800,000

 

Conversion of preferred shares to common shares

 

$

––

 

 

$

––

 

 

$

250,000

 

Stock issued for future services

 

$

––

 

 

$

––

 

 

$

1,200,000

 

Issued common shares for intangible assets

 

$

––

 

 

$

––

 

 

$

2,000,000

 

(Continued)

 

 

For the Six Months
Ended  September 30,

 

March 5, 1999
(Inception) to
September 30,

 

 

 

2009

 

2008

 

2009

 

Supplemental Disclosure of Non-Cash

 

 

 

 

 

 

 

 

 

 

Investing and Financing Activities:

 

 

 

 

 

 

 

 

 

 

Conversion of debt to equity

 

$

––

 

$

––

 

$

1,102,154

 

Stock issued for deferred consulting services

 

$

––

 

$

––

 

$

6,750,000

 

Conversion of liabilities to note payable

 

$

––

 

$

––

 

$

102,023

 

Stock issued for debt restructuring anti-dilusion provision

 

$

––

 

$

––

 

$

800,000

 

Conversion of preferred shares to common shares

 

$

––

 

$

––

 

$

250,000

 

Stock issued for future services

 

$

––

 

$

––

 

$

1,200,000

 

Issued common shares for intangible assets

 

$

––

 

$

––

 

$

2,000,000

 




See Accompanying Notes to Unaudited Consolidated Financial StatementsStatements.



3



KYTO BIOPHARMA, INC. AND SUBSIDIARY


(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June
September 30, 2009

(Unaudited)


NOTE 1 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

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

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

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim consolidated financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of consolidated financial position and results of operations.

It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair consolidated financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

For further information, refer to the audited consolidated financial statements and footnotes of the Company for the year ending March 31, 2009 included in the Company's Form 10-K.

Foreign Currency Risk

The companyCompany is exposed to foreign exchange rate fulcturationsfluctuations as the financial results of the company’s Canadian subsidiary is translated into U.S. dollars on consolidation. The functional currency of Kyto’s subsidiary is the Canadian dollar.

NOTE 2 - GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company has a working capital deficiency of $607,465,$698,776, a deficit accumulated during development stage of $16,460,811$16,651,451 and a stockholders' deficiencydeficit of $607,465$698,776 as of JuneSeptember 30, 2009. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company has yet to generate an internal cash flow, and until the sales of its product begins, the Company is veryhighly 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.



45



KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009

(Unaudited)


NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTSSTANARDS UPDATES

In MayJune 2009, the Financial Accounting Standards Board (“FASB”)(FASB) issued FASB 165: Subsequent Event, “The objective of thisits final Statement is to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth:

1.

The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements

2.

The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements

3.

The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

This Statement should not result in significant changes in the subsequent events that an entity reports—either through recognition or disclosure—in its financial statements.”

The implementation of this standard will not have a material impact on the Company's consolidated financial position and results of operations.

In June 2009, FASB Issued FASB 166:Accounting for Transfers of Financial Assets—an amendment of FASB StatementAccounting Standards (SFAS) No. 140

168,The Board’s objective in issuing this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets.  The Board undertook this project to address (1) practices that have developed since the issuance of FASB Statement No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, that are not consistent with the original intent and key requirements of that Statement and (2) concerns of financial statement users that many of the financial assets (a nd related obligations) that have been derecognized should continue to be reported in the financial statements of transferors.

The Company is currently assessing the impact of FASB 166 on its consolidated financial position and results of operations.

In June 2009, FASB issued FASB 147:An Amendments to FASB Interpretation No. 46(R). “ The Board’s objective in issuing this Statement is to improve financial reporting by enterprises involved with variable interest entities. The Board undertook this project to address (1) the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003),Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FASB Statement No. 166,Accounting for Transfers of Financial Assets, and (2) constituent concerns about the appl ication of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provide timely and useful information about an enterprise’s involvement in a variable interest entity”

The implementation of this standard will not have a material impact on the Company's consolidated financial position and results of operations.

In June 2009, FASB Issue FASB 168: TheFASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles—Principles a replacementReplacement of FASB StatementStatementNo. 162”. SFAS No. 162

“The168 made the FASB Accounting Standards CodificationTM (Codification) will become (the Codification) the single source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be appliedGAAP used by nongovernmental entities. Rulesentities in the preparation of financial statements, except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws, which are also sources of authoritative GAAPaccounting guidance for SEC registrants. On the effective date of this Statement, theThe Codification will supersedeis meant to simplify user access to all then-existingauthoritative accounting guidance by reorganizing U.S. GAAP pronouncements into roughly 90 accounting topics within a consistent structure; its purpo se is not to create new accounting and reporting guidance. The Codification supersedes all existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literaturestandards and was effective for the Company beginning July 1, 2009. Following SFAS No. 168, the Board will not includedissue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates (ASU). The FASB will not consider ASUs as authoritative in their own right; these updates will serve only to update the Codification, will become nonauthoritative.  provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification.



5In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effect ive for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.



NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS( Cont.)

This Statement is effectiveIn September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), ”Implementation Guidance on Accounting for financial statements issuedUncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities. For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009.

For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph740-10-65-1(e), this update shall be effective upon adoption of those standards. The Company is currently assessingadoption of this standard did not have an impact on the impact of FASB 166 on itsCompany’s consolidated financial position and results of operations.


In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted.The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.





6




KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009

(Unaudited)


NOTE 3 – ACCOUNTING STANARDS UPDATES (Continued)

In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.


In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and nonsoftware components that function together to deliver the tangible product's essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance. The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial posi tion and results of operations.


Other ASUs not effective until after September 30, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

NOTE 4 – LOANS PAYABLE – RELATED PARTY

During the threesix months ended JuneSeptember 30, 2009, the Company borrowed $10,215$128,233 from a related party of the Company. The loan is non-interest bearing, unsecured, due on demand, and included in the loans payable, related party balance.



7




KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009

(Unaudited)


NOTE 5 - EQUITY

Convertible Preferred Shares

On May 24, 2007 the Company entered into an agreement with Credifinance Capital Corp, a related party, to issue up to 500,000 Convertible Preferred Stock at $1.00 per share. This agreement is on an installment basis. During the year ended March 31, 2008, the Company issued 459,734 shares of Convertible Preferred Stock to Credifinance Capital Corp. for a total of $473,624 to satisfy a related party loan payable. Convertible Preferred Stock may be converted into Common Shares at a price of $0.45 per Common Share. The Convertible Preferred Stock bears interest at a rate of 5% per annum. Preferred convertible stockConvertible Stock has the same voting rights as common stock.Common Stock. Interest expense accrued on the Convertible Preferred Stock through JuneSeptember 30, 2009 is $30,350.$36,650.

NOTE 6 – SUBSEQUENT EVENTS

The company evaluated subsequent events through November 12, 2009, the date the consolidated financial statements were issued and concluded there are no other material subsequent events.



6




ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

PLAN OF OPERATION

During the period ending JuneSeptember 30, 2009, the Company has continued to conduct a comprehensive review of its existing Intellectual Property portfolio with the assistance various IP legal firms and consultants. As a result of this review, the Company has elected to drop some of its patents while funding the remaining patents in full.

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

On May 4, 2007, the Company signed a formal consultancy agreement with Dr. Michael Rosenblum, Head, Immunopharmacology and Targeted Therapy Laboratory, Department of Experimental Therapeutics at M.D. Anderson Medical Center at the University of Texas to assist the Company with determining the scientific and commercial viability of its scientific technology. Dr. Rosenblum provides assistance to the Company on an as-needed basis for and receives $3,000 per month as remuneration. The Company has also held discussions with other potential strategic partners in order to determine if those relationships will provide the Company with benefits related to its corporate development. As of the date of this filing none of those discussions have resulted in formal collaborative relationships.

On May 24, 2007 the Company entered into an agreement with a related party (Credifinance Capital Corp) to issue 500,000 Convertible Preferred Shares at $1.00 per share. This agreement is on an installment basis. Preferred Shares may be converted into Common Shares at a price of $0.45 per Common Share for a period of two years. The Convertible Preferred Shares are cumulative and will bear interest at an interest rate of 5% per annum. As of

JuneSeptember 30, 2009  473,624 preferred shares were issued.

The report of our Independent Registered Public Accounting firm on our March 31, 2009 financial statements includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern due to substantial recurring losses from operations, cash used in operations, stockholders’ deficit and significant accumulated deficit and working capital deficit. Our ability to continue as a going concern will be determined by our ability to obtain additional financing and maintain operations. We do not currently have sufficient financial resources to fund our operations. Therefore, we need additional funds to continue these operations. 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 be emphasized that, should the Company not be successf ul 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.

In discussions with various collaborative partners, the Company has decided to pursue a specific antibody strategy with the assistance of RFSUNY and an outsourced third party vendor. The development of this antibody technology will be overseen by RFSUNY and is currently in the early stages of development. The Company does not yet have an estimate of the total costs associated with this development. As the Company has no current revenues from operations, management fully expects to incur additional liabilities in order to fund the development of this strategy over the next 9 months.

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 R&D activities related to the development and application of its antibody technologies. The Company has, as of the end of JuneSeptember 30, 2009, $607,467$748,001 in total liabilities. As of the date of filing of this Form 10-Q with the U.S. Securities and Exchange Commission, the Company did receive a commitment of one of its stockholders to continue to provide operating loan funds to the Company.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting company.



7




ITEM 4.

CONTROLS AND PROCEDURES

(a)

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its principle executive officrs, as appropriate, to allow timely decisions regarding disclosure.


The Company’s management has evaluated, with the participation of the principle executive offers the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.


(b)

The registrant’s principal executive officers have determined that there have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.





PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None

ITEM 1A.

RISK FACTORS.

Not required for smaller reporting company.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS .

None

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Index to Exhibits on page 10.11.





INDEX TO 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 Biopharma, 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-Q.

***

PreviouslyPrevioulsy filed with Form S-8 on November 18, 2004.



10




SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


         

Kyto Biopharma, Inc.

 

(Registrant)  

 

 

 

 

 

 

By:  

/s/ GEORGES BENARROCHGeorges Benarroch

 

 

Georges Benarroch

Acting President and Chief Executive Officer
And Acting Chief Executive Officer

 

 

Date:  August 14November, 13, 2009





1113