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 ended~~September 30,~~December 31, 2009

¨ 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
~~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 of~~November 10, 2009~~

February 2, 2010

UNITED STATES

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)

INDEX


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Unaudited Consolidated Balance Sheet as of ~~September 30,~~December 31, 2009 and audited Consolidated Balance Sheet as of March 31, 2009	1
	Unaudited Consolidated Statements of Operations for the Three and ~~Six~~Nine Months Ended ~~September 30,~~ December 31, 2009 and 2008	2
	Unaudited Consolidated Statements of Cash Flows for the ~~Three and Six~~Nine Months Ended ~~September 30,~~ December 31, 2009 and 2008	3
	Notes To Unaudited Consolidated Financial Statements 5	4
Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations 9	8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk 9	8
Item 4.	Controls and Procedures 10	9

PART II. OTHER INORMATION

Item 1.	Legal Proceedings 11	10
Item 1a.	Risk Factors. 11	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds . 11	10
Item 3.	Defaults Upon Senior Securities 11	10
Item 4.	Submission of Matters to a Vote of Security Holders 11	10
Item 5.	Other Information 11 ~~Item 6. Exhibits~~ 11 ~~Signatures~~ 13 ~~Certifications~~	10
Item 6.	Exhibits	10

Signatures		12
Certifications

PART I - FINANCIAL INFORMATION

~~ITEM 1.~~

~~FINANCIAL STATEMENTS~~

ITEM 1. FINANCIAL STATEMENTS

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)

UNAUDITED CONSOLIDATED BALANCE SHEET

September 30,

March 31,

2009

2009

Unaudited

(Audited)

ASSETS




Current Assets:


Cash

$
1,653

$
12,754

Prepaid expenses


47,572

47,562

Total Current Assets


49,225

60,316



Total Assets

$
49,225

$
60,316



LIABILITIES AND STOCKHOLDERS' DEFICIT




Current Liabilities:


Accounts payable

$
14,813

$
8,317

Accrued liabilities - related party


58,833

43,333

Accrued interest payable - related party


55,648

52,784

Accrued interest payable - preferred convertible stock


36,650

24,128

Loan payable-related party


482,057

353,824

Note payable-related party


100,000

100,000

Total Current Liabilities


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

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


1,275

1,275

Additional paid-in capital


15,654,944

15,654,944

Deficit accumulated during development stage


(16,651,451
)

(16,474,669
)
Accumulated other comprehensive loss


(177,168
)

(177,244
)



Total Stockholders' Deficit


(698,776
)

(522,070
)



Total Liabilities and Stockholders' Deficit

$
49,225

$
60,316

	December 31,			March 31,
	2009			2009
	Unaudited			(Audited)
ASSETS
Current Assets:
Cash	$	1,175		$	12,754
Prepaid expenses		3,333			47,562
Total Current Assets		4,508			60,316

Total Assets	$	4,508		$	60,316

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable	$	10,761		$	8,317
Accrued liabilities - related party		61,833			43,333
Accrued interest payable - related party		57,671			52,784
Accrued interest payable - preferred convertible stock		43,028			24,128
Loan payable-related party		507,562			353,824
Note payable-related party		100,000			100,000
Total Current Liabilities		780,855			582,386

Commitments and Contingencies

Stockholders' Deficit:
Preferred convertible stock, $1.00 par value, 1,000,000 shares
authorized, 473,624 issued and outstanding, respectively		473,624			473,624
Common stock, $0.0001 par value, 25,000,000 shares
authorized, 12,743,610 issued and outstanding respectively		1,275			1,275
Additional paid-in capital		15,654,944			15,654,944
Deficit accumulated during development stage		(16,728,956	)		(16,474,669	)
Accumulated other comprehensive loss		(177,234	)		(177,244	)

Total Stockholders' Deficit		(776,347	)		(522,070	)

Total Liabilities and Stockholders' Deficit	$	4,508		$	60,316

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Financial Statements.~~

consolidated financial statements.

KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A

(A Development Stage Company)

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

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

2008

2009

Operating Expenses

Compensation

$
––

$
––

$
––

$
––

$
1,750,636

Depreciation and amortization


––


––


––


––


814,183

Consulting


13,999


17,348


27,999


28,348


9,831,810

Bad debt


––


––


––


––


12,819

Director fees


––


––


––


––


314,100

Financing fees


––


––


––


––


28,781

Professional fees


10,088


21,371


22,182


30,386


219,092

General and administrative


10,637


17,338


20,131


29,553


580,857

Research and development


49,045


83,615


91,084


119,984


1,609,688

Loss on debt conversion


––


––


––


––


519,795

Impairment loss


––


––


––


––


1,191,846

Total Operating Expenses


83,769


139,672


161,396


208,271

16,873,607

Other Income (Expenses)

Interest income


––


––


––


––


4,922

Interest expense


(7,541
)

(8,219
)

(15,386
)

(16,317
)

(109,995
)
Gain on debt forgiveness


––


––


––


––


78,665

Loss on disposal of equipment


––


––


––


––


(567
)
Foreign currency translation gain


––


(50,925
)

––


(42,830
)

249,131

Total Other Income (Expense), net


(7,541)

(59,144
)

(15,386)

(59,147
)

222,156

Net Income (Loss)

$
(91,310)

$
(198,816
)
$
(176,782)

$
(267,418
)
$
(16,51,451)
)

Comprehensive Loss

Foreign currency translation loss


(9
)

51,025


76

42,883


(177,168
)

Total Comprehensive Loss

$
(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


12,743,610


12,743,610


12,743,610


Net Income (Loss) per share - basic and diluted

$
0.00

$
(0.02
)
$
0.00

$
(0.02
)

													For the period from
													March 5, 1999
	For The Three Months Ended						For The Nine Months Ended						(inception) to
	December 31,						December 31,						December 31
	2009			2008			2009			2008			2009

Operating Expenses
Compensation	$	-		$	-		$	-		$	-		$	1,750,636
Depreciation and amortization		-			-			-			-			814,183
Consulting		14,000			15,107			41,999			43,455			9,845,810
Bad debt		-			-			-			-			12,819
Director fees		-			-			-			-			314,100
Financing fees		-			-			-			-			28,781
Professional fees		5,844			9,188			28,026			39,574			224,936
General and administrative		9,525			11,693			29,656			41,246			590,382
Research and development		39,672			45,638			130,756			165,622			1,649,360
Loss on debt conversion		-			-			-			-			519,795
Impairment loss		-			-			-			-			1,191,846
Total Operating Expenses		69,041			81,626			230,437			289,897			16,942,648


Other Income (Expenses)
Interest income		-			-			-			-			4,922
Interest expense		(8,401	)		(7,644	)		(23,787	)		(23,961	)		(118,396	)
Gain on debt forgiveness		-			-			-			-			78,665
Loss on disposal of equipment		-			-			-			-			(567	)
Foreign currency translation gain		(129	)		(159,710	)		(63	)		(202,540	)		249,068
Total Other Income (Expense), net		(8,530	)		(167,354	)		(23,850	)		(226,501	)		213,692


Net Income (Loss)	$	(77,571	)	$	(248,980	)	$	(254,287	)	$	(516,398	)	$	(16,728,956	)


Comprehensive Loss
Foreign currency translation gain (loss)		139			160,537			10			203,487			(177,234	)


Total Comprehensive Loss	$	(77,432	)	$	(88,443	)	$	(254,277	)	$	(312,911	)	$	(16,906,190	)


Weighted average number of shares outstanding
during the year - basic and diluted		12,743,610			12,743,610			12,743,610			12,743,610


Net Income (Loss) per share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Financial Statements.~~

consolidated financial statements.

KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A

(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

$
––

$
––

$
––

							March 5, 1999
	For the Nine Months Ended December 31,						(Inception) to
	2009			2008			December 31, 2009
Cash Flows from Operating Activities:
Net income (loss)	$	(254,287	)	$	(516,398	)	$	(16,728,956	)
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:
Other receivable		-			(42	)		-
Prepaids and other assets		44,229			39,353			(3,333	)
Accounts payable and accrued expenses		20,944			(12,226	)		558,466
Related party accounts payable, accrued interest, and accrued liabilities		23,787			45,794			76,379
Net Cash Used in Operating Activities		(165,327	)		(443,519	)		(2,034,495	)

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		153,738			243,824			1,285,937
Repayment of loan to related parties		-			-			(26,792	)
Net Cash Provided by Financing Activities		153,738			243,824			2,217,367

Effect of Exchange Rate		10			203,487			(177,234	)

Net Increase (decrease) in Cash and Cash Equivalents		(11,579	)		3,792			1,175

Cash and Cash Equivalents at Beginning of Period		12,754			7,328			-

Cash and Cash Equivalents at End of Period	$	1,175		$	11,120		$	1,175


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

See ~~Accompanying Notes~~accompanying notes to ~~Unaudited Consolidated Financial Statements.~~

consolidated financial statements.

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)
~~UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~(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 Statements.~~

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

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~September 30,~~

December 31, 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.

The Company is exposed to foreign exchange rate fluctuations 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 ~~$698,776,~~$776,347, a deficit accumulated during development stage of ~~$16,651,451~~$16,728,956 and a stockholders' deficit of ~~$698,776~~$776,347 as of ~~September 30,~~December 31, 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 highly 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.

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~September 30,~~

December 31, 2009

(Unaudited)

NOTE 3 – ACCOUNTING ~~STANARDS~~STANDARDS UPDATES

~~In June 2009, the Financial Accounting Standards Board (FASB) issued its final Statement of Financial Accounting Standards (SFAS) No. 168,~~ “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles a Replacement of FASB StatementNo. 162”. SFAS No. 168 made the FASB Accounting Standards Codification (the Codification) the single source of U.S. GAAP used by nongovernmental entities 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 sources of authoritative accounting guidance for SEC registrants. The Codification is meant to simplify user access to all authoritative 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 and was effective for the Company beginning July 1, 2009. Following SFAS No. 168, the Board will not issue 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, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification.

In 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.

In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), ”Implementation Guidance on Accounting for Uncertainty 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 adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.

~~In September~~December 2009, the FASB has published ASU 2010-16 ““Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” ASU No. ~~2009-12, “Fair Value Measurements~~2009-16 is a revision to ASC 860, “Transfers and ~~Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)~~Servicing,”. and amends the guidance on accounting for transfers of financial assets, including securitization transactions, where entities have continued exposure to risks related to transferred financial assets. ASU No. 2009-16 also expands the disclosure requirements for such transactions. 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 iswill become effective for ~~interim and annual periods ending after December 15, 2009.~~us on April 1, 2010.. Early ~~application~~adoption is ~~permitted.The~~permitted. The adoption of this ~~standard~~ASU did not have ana material impact on ~~the Company’s~~our consolidated financial ~~position and results of operations.~~

~~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)~~

statements; however, it may affect any future stock distributions.

In ~~October~~December 2009, the FASB has published ASU ~~2009-13, “Revenue Recognition~~2010-16 Consolidations (Topic ~~605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements~~810): Improvements to ~~enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance~~Financial Reporting by Enterprises Involved with Variable Interest Entities.” ASU No. 2009-17 amends the ~~criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”,~~guidance for ~~separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining~~consolidation of VIEs primarily related to 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 inceptiondetermination of the ~~arrangement to all deliverables using~~primary beneficiary of the ~~relative selling price method and also requires expanded disclosures. The guidance in this update is~~VIE. This ASU will become effective ~~prospectively~~ for ~~revenue arrangements entered into or materially modified in fiscal years beginning~~us on ~~or after June 15,~~April 1, 2010. Early adoption is permitted. The adoption of this ~~standard~~ASU did not have ana material impact on ~~the Company’s~~our consolidated financial ~~position and results of operations.~~

statements; however, it may affect any future stock distributions.

In ~~October 2009,~~January 2010, the FASB has published ASU ~~2009-14, “Software~~2010-01 “Equity (Topic ~~985)-Certain Revenue Arrangements~~505)- Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505,. ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that ~~Include Software Elements”~~have both stock and ~~changes the accounting model for revenue arrangements~~cash components. The stock portion of such distributions is considered a share issuance that ~~include both tangible products~~is reflected in earnings per share prospectively 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 ofis not a ~~tangible product containing software components are always excluded from the software revenue guidance.~~stock dividend. The ~~guidance~~amendments in this ~~ASU is~~Update are effective ~~prospectively~~ for ~~revenue arrangements entered into or materially modified in fiscal years beginning~~interim and annual periods ending on or after ~~June~~December 15, ~~2010. Early adoption is permitted.~~2009, and should be applied on a retrospective basis. The adoption of this ~~standard~~ASU did not have ana material impact on ~~the Company’s~~our consolidated financial ~~posi tion~~statements; however, it may affect any future stock distributions.

In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810)- Accounting and ~~results~~Reporting for Decreases in Ownership of ~~operations.~~

a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as previously discussed in this financial note. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, it may affect future divestitures of subsidiaries or groups of assets within its scope.

In January 2010, the FASB has published ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): - Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 clarifies improve disclosure requirement related to fair value measurements and disclosures – Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure about purchase, sales, issuances, and settlement in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.

The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis The adoption of this ASU did not have a material impact on our consolidated financial statements; however, it may affect any future stock distributions.

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009

(Unaudited)

NOTE 3 – ACCOUNTING STANDARDS UPDATES (Continued)

In January 2010, the FASB has published ASU 2010-05 “Compensation – Stock Compensation (Topic 718)- Escrowed Share Arrangements and the Presumption of Compensation.

ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, it may affect any future stock distributions.

Other ASUs not effective until after ~~September 30,~~December 31 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 ~~six~~nine months ended ~~September 30,~~December 31, 2009, the Company borrowed ~~$128,233~~$153,738 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.

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
~~September 30,~~

December 31, 2009

(Unaudited)

NOTE 5 - EQUITY

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 Stock has the same voting rights as Common Stock. Interest expense accrued on the Convertible Preferred Stock through ~~September 30,~~December 31, 2009 is ~~$36,650.~~

$43,028.

NOTE 6 – SUBSEQUENT EVENTS

The company evaluated subsequent events through ~~November~~February 12, ~~2009,~~2010, the date the consolidated financial statements were issued and concluded there are no other material subsequent events.

~~ITEM 2.~~

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

ITEM 2.

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

PLAN OF OPERATION

During the period ending ~~September 30,~~December 31, 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

~~September 30,~~ December 31, 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~~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.

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 ~~September 30,~~December 31, 2009, ~~$748,001~~$780,855 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~~

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required for smaller reporting company.

~~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.

ITEM 4.

CONTROLS AND PROCEDURES

(a)

(b)

PART II. OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

None

~~ITEM 1A.~~

~~RISK FACTORS.~~

ITEM 1A.

RISK FACTORS.

Not required for smaller reporting company.

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS .~~

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS ..

None

~~ITEM 3.~~

~~DEFAULTS UPON SENIOR SECURITIES~~

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

~~ITEM 4.~~

~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~

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

None

~~ITEM 5.~~

~~OTHER INFORMATION~~

ITEM 5. OTHER INFORMATION

None.

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6. EXHIBITS

Index to Exhibits on page 11.

INDEX TO EXHIBITS

EXHIBIT NUMBER		DESCRIPTION
~~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.~~

~~***~~

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

*	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.

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

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 Benarroch
		Georges Benarroch Acting President and Chief Executive Officer And Acting Chief Executive Officer

Date: ~~November, 13, 2009~~

February 12, 2010


	September 30,			March 31,
	2009			2009
	Unaudited			(Audited)
ASSETS
Current Assets:
Cash	$	1,653		$	12,754
Prepaid expenses		47,572			47,562
Total Current Assets		49,225			60,316

Total Assets	$	49,225		$	60,316

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable	$	14,813		$	8,317
Accrued liabilities - related party		58,833			43,333
Accrued interest payable - related party		55,648			52,784
Accrued interest payable - preferred convertible stock		36,650			24,128
Loan payable-related party		482,057			353,824
Note payable-related party		100,000			100,000
Total Current Liabilities		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
Common stock, $0.0001 par value, 25,000,000 shares authorized, 12,743,610 issued and outstanding		1,275			1,275
Additional paid-in capital		15,654,944			15,654,944
Deficit accumulated during development stage		(16,651,451	)		(16,474,669	)
Accumulated other comprehensive loss		(177,168	)		(177,244	)

Total Stockholders' Deficit		(698,776	)		(522,070	)

Total Liabilities and Stockholders' Deficit	$	49,225		$	60,316


	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			2008			2009
Operating Expenses
Compensation	$	––		$	––		$	––		$	––		$	1,750,636
Depreciation and amortization		––			––			––			––			814,183
Consulting		13,999			17,348			27,999			28,348			9,831,810
Bad debt		––			––			––			––			12,819
Director fees		––			––			––			––			314,100
Financing fees		––			––			––			––			28,781
Professional fees		10,088			21,371			22,182			30,386			219,092
General and administrative		10,637			17,338			20,131			29,553			580,857
Research and development		49,045			83,615			91,084			119,984			1,609,688
Loss on debt conversion		––			––			––			––			519,795
Impairment loss		––			––			––			––			1,191,846
Total Operating Expenses		83,769			139,672			161,396			208,271			16,873,607

Other Income (Expenses)
Interest income		––			––			––			––			4,922
Interest expense		(7,541	)		(8,219	)		(15,386	)		(16,317	)		(109,995	)
Gain on debt forgiveness		––			––			––			––			78,665
Loss on disposal of equipment		––			––			––			––			(567	)
Foreign currency translation gain		––			(50,925	)		––			(42,830	)		249,131
Total Other Income (Expense), net		(7,541)			(59,144	)		(15,386)			(59,147	)		222,156

Net Income (Loss)	$	(91,310)		$	(198,816	)	$	(176,782)		$	(267,418	)	$	(16,51,451)	)

Comprehensive Loss
Foreign currency translation loss		(9	)		51,025			76			42,883			(177,168	)

Total Comprehensive Loss	$	(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			12,743,610			12,743,610			12,743,610

Net Income (Loss) per share - basic and diluted	$	0.00		$	(0.02	)	$	0.00		$	(0.02	)


	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	$	––		$	––		$	––