KYTO BIOPHARMA, INC. AND SUBSIDIARY (A Development Stage Company)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
| | | | | | | | | For the period from | |
| | | | | | | | | March 5, 1999 | |
| | | For the Nine Months Ended December 31, | | | (Inception) to | |
| | | 2010 | | | 2009 | | | December 31, 2010 | |
Cash Flows from Operating Activities: | | | | | | | | | |
Net loss | | $ | (209,578 | ) | | $ | (254,287 | ) | | $ | (17,275,540 | ) |
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 | |
Loans receivable from related party-written off | | | 43,689 | | | | - | | | | 299,783 | |
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: | | | | | | | | | | | | |
Loan receivable | | | (43,689 | ) | | | - | | | | (309,620 | ) |
Prepaids and other assets | | | - | | | | 44,229 | | | | (5,000 | ) |
Accounts payable and accrued expenses | | | 6,941 | | | | 20,944 | | | | 535,998 | |
Related party accounts payable, accrued interest, and accrued liabilities | | | 24,943 | | | | 23,787 | | | | 109,439 | |
Net Cash Used in Operating Activities | | | (177,694 | ) | | | (165,327 | ) | | | (2,572,154 | ) |
| | | | | | | | | | | | | |
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 | | | 174,300 | | | | 153,738 | | | | 1,823,471 | |
Repayment of loan to related parties | | | - | | | | - | | | | (26,792 | ) |
Net Cash Provided by Financing Activities | | | 174,300 | | | | 153,738 | | | | 2,754,901 | |
| | | | | | | | | | | | | |
Effect of Exchange Rate on Cash | | | 50 | | | | 10 | | | | (177,184 | ) |
| | | | | | | | | | | | | |
Net Increase (decrease) in Cash and Cash Equivalents | | | (3,344 | ) | | | (11,579 | ) | | | 1,100 | |
| | | | | | | | | | | | | |
Cash and Cash Equivalents at Beginning of Period | | | 4,444 | | | | 12,754 | | | | - | |
| | | | | | | | | | | | | |
Cash and Cash Equivalents at End of Period | | $ | 1,100 | | | $ | 1,175 | | | $ | 1,100 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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 | | $ | 160,570 | | | $ | - | | | $ | 2,160,570 | |
See Accompanying Notes to Unaudited Consolidated Financial Statements.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company) Condensed Consolidated Statements of Operations(Unaudited)
| | | | | | | | For the period from | |
| | | | | | | | March 5, 1999 | |
| | For The Three Months Ended | | | (inception) to | |
| | June 30 | | | June 30, | |
| | 2011 | | | 2010 | | | 2011 | |
| | | | | | | | | |
| | | | | | | | | |
Operating Expenses | | | | | | | | | |
Depreciation and amortization | | $ | - | | | $ | - | | | $ | 814,183 | |
General and administrative | | | 51,330 | | | | 35,022 | | | | 16,594,778 | |
| | | | | | | | | | | | |
Total Operating Expenses | | $ | 51,330 | | | $ | 35,022 | | | $ | 17,408,961 | |
| | | | | | | | | | | | |
Loss from Operation | | $ | 51,330 | | | $ | 35,022 | | | $ | 17,408,961 | |
| | | | | | | | | | | | |
Other Income (Expenses) | | | | | | | | | | | | |
Interest income | | | - | | | | - | | | | 4,922 | |
Interest expense | | | (16,513 | ) | | | - | | | | (189,403 | ) |
Loss on debt forgiveness | | | - | | | | (43,689 | ) | | | (230,956 | ) |
Loss on disposal of equipment | | | - | | | | - | | | | (567 | ) |
Foreign currency transaction gain | | | - | | | | 56 | | | | 249,039 | |
Total Other Income (Expense), net | | | (16,513 | ) | | | (45,309 | ) | | | (166,965 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Net Loss before taxes | | $ | (67,844 | ) | | $ | (80,331 | ) | | $ | (17,575,926 | ) |
| | | | | | | | | | | | |
Net Income (Tax) Benefit | | $ | - | | | $ | - | | | $ | - | |
| | | | | | | | | | | | |
Net Loss | | $ | (67,844 | ) | | $ | (80,331 | ) | | $ | (17,575,926 | ) |
| | | | | | | | | | | | |
Preferred Stock Dividends | | | (6,871 | ) | | | (6,539 | ) | | | (83,008 | ) |
| | | | | | | | | | | | |
Net Loss Attributed to common shareholders | | $ | (74,715 | ) | | $ | (86,870 | ) | | $ | (17,658,934 | ) |
| | | | | | | | | | | | |
Comprehensive Income (Loss) | | | | | | | | | | | | |
Foreign currency translation gain (loss) | | | - | | | | (56 | ) | | | (177,183 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Total Comprehensive Loss | | $ | (74,715 | ) | | $ | (86,926 | ) | | $ | (17,836,117 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Weighted average number of shares outstanding | | | | | | | | | | | | |
during the year - basic and diluted | | | 12,998,482 | | | | 12,998,482 | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Net loss per share - basic and diluted | | $ | (0.01 | ) | | $ | (0.01 | ) | | | | |
Net loss per share attributable to common share holders - basic and diluted | | $ | (0.01 | ) | | $ | (0.01 | ) | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Kyto Biopharma, Inc. and Subsidiary(A Development Stage Company) Condensed Consolidated Statement of Stockholders' DeficitFor the Three Months Ended June 30, 2011(Unaudited)
| | | | | | | | | | | | | | | | | Deficit | | | Accumulated | | | | |
| | | | | | | | | | | | | | | | | Accumulated | | | Other | | | | |
| | Preferred Stock | | | Common Stock | | | Additional | | | During | | | Comprehensive | | | | |
| | $1.00 par value | | | $0.0001 par value | | | Paid - in | | | Development | | | Income | | | | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Stage | | | (Loss) | | | Total | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Balance, March 31, 2011 | | | 473,624 | | | $ | 473,624 | | | | 12,998,482 | | | $ | 1,300 | | | $ | 15,904,542 | | | $ | (17,584,219 | ) | | $ | (177,183 | ) | | $ | (1,381,936 | ) |
Imputed Interest | | | - | | | | - | | | | - | | | | - | | | | 14,764 | | | | - | | | | - | | | | 14,764 | |
Preferred Stock Dividends | | | | | | | | | | | | | | | | | | | | | | | (6,871 | ) | | | | | | | | |
Net Loss, 2011 | | | - | | | | - | | | | - | | | | - | | | | - | | | | (67,844 | ) | | | - | | | | (74,715 | ) |
Balance, June 30, 2011 | | | 473,624 | | | $ | 473,624 | | | | 12,998,482 | | | $ | 1,300 | | | $ | 15,919,306 | | | $ | (17,658,934 | ) | | $ | (177,183 | ) | | $ | (1,441,887 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Kyto Biopharma, Inc. and Subsidiary
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(unaudited)
| | | | | | | | | For the period from | |
| | | | | | | | | March 5, 1999 | |
| | | For the Three Months Ended June 30 | | | (Inception) to | |
| | | 2011 | | | 2010 | | | June 30, 2011 | |
Cash Flows from Operating Activities: | | | | | | | | | |
Net loss | | $ | (67,844 | ) | | $ | (80,331 | ) | | $ | (17,575,926 | ) |
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 | |
| Interest Expense | | | 14,764 | | | | - | | | | 103,817 | |
| Preferred convertible stock issued for dividend on outstanding preferred convertible stock | | | - | | | | - | | | | 13,890 | |
| Common stock warrants issued as financing fee | | | - | | | | - | | | | 3,783 | |
| Loss on disposal of equipment | | | - | | | | - | | | | 567 | |
| Impairment loss | | | - | | | | - | | | | 1,357,416 | |
| Loans receivable from related party-written off | | | - | | | | 43,689 | | | | 299,783 | |
| 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: | | | | | | | | | | | | |
| Loan receivable | | | - | | | | (43,689 | ) | | | (309,620 | ) |
| Prepaids and other assets | | | - | | | | - | | | | (5,000 | ) |
| Accounts payable and accrued expenses | | | (3,640 | ) | | | (4,785 | ) | | | 542,659 | |
| Related party accounts payable, accrued interest, and accrued liabilities | | | 11,748 | | | | 1,675 | | | | 103,075 | |
Net Cash Used in Operating Activities | | | (44,972 | ) | | | (83,441 | ) | | | (2,685,864 | ) |
| | | | | | | | | | | | | |
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 | | | 49,000 | | | | 81,500 | | | | 1,973,971 | |
Repayment of loan to related parties | | | - | | | | - | | | | (59,792 | ) |
Net Cash Provided by Financing Activities | | | 49,000 | | | | 81,500 | | | | 2,872,401 | |
| | | | | | | | | | | | | |
Effect of Exchange Rate on Cash | | | - | | | | 56 | | | | (177,183 | ) |
| | | | | | | | | | | | | |
Net Increase (decrease) in Cash and Cash Equivalents | | | 4,028 | | | | (1,885 | ) | | | 4,891 | |
| | | | | | | | | | | | | |
Cash and Cash Equivalents at Beginning of Period | | | 863 | | | | 4,444 | | | | - | |
| | | | | | | | | | | | | |
Cash and Cash Equivalents at End of Period | | $ | 4,891 | | | $ | 2,559 | | | $ | 4,891 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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 | | $ | - | | | $ | - | | | $ | 2,160,570 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2010June 30, 2011
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 condensed 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, 20102011 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 isare translated into U.S. dollars on consolidation. The functional currency of Kyto’s subsidiary is the Canadian dollar.
NOTE 2 – INTERIM REVIEW REPORTING
The accompanying unaudited condensed consolidated financial statements of Kyto Biopharma, Inc. (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's March 31, 20102011 Annual Report as filed on Form 10K. In the opinion of management, all adjustments, in cludingincluding normal recurring adjustments necessary to present fairly the financial position of the Company with respect to the interim condensed consolidated financial statements and the results of its operations for the interim period ended December 31, 2010,June 30, 2011, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year.
KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010June 30, 2011
NOTE 3 – GOING CONCERN
As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has a working capital deficiency of $1,327,881$1,441,887, a deficit accumulated during development stage of $17,275,540$17,658,934 and a stockholders' deficit of $1,162,311 as$ 1,441,887as of December 31, 2010.June 30, 2011. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The unaudited condensed 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
December 31, 2010
NOTE 4 –- ACCOUNTING STANDARDS UPDATES
In December 2010, the FASBSignificant Recent Accounting Pronouncements
Management does not believe that any recently issued, Accounting Standard Update No. 2010-28 (ASU No. 2010-28) “Intangibles – Goodwill and Other (Topic 350).” ASU No. 2010-28 addresses questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that Step 1 of the goodwill impairment test, as stated in Topic 350, is passed in those circumstances because the fair value of their reporting unit will generally be greater than zero. The amendments in this update dobut not provide guidance on how to determine the carrying amount or measure the fair value of the reporting unit. The amendments in this update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For public entities, the amendments in th is update areyet effective, for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is permitted. For nonpublic entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Nonpublic entities may early adopt the amendments using effective date for public entities. The Company is evaluating the impact ASU No. 2010-28 willaccounting standards if currently adopted would have a material effect on the accompanying unaudited condensed consolidated financial statements.
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s consolidated financial statements
NOTE 5- PATENT RIGHTS
On February 10, 2010, the Company purchased a portfolio of patents, patents pending, and related intellectual property (collectively the "Intellectual Property") from a third party in exchange for 254,872 shares of the Company's common stock and cash of $5,000 which was paid during the quarter ending June 30, 2010. The shares were valued at $0.63 per share resulting in total value of $165,570.
Kyto executed an “Executive Licensing Agreement” with The Research Foundation of State University of New York, “RFSUNY”, allowing Kyto to license certain technology surrounding the Human Transcobalamin Receptor. The licensing agreement is active until the expiry of the patent rights.. The rights primarily relate to the patent: “Transcobalamin Receptor Polypeptides, Nucleic Acids, and Modulators Thereof, and Related Methods of Use in Modulating Cell Growth and Treating Cancer and Cobalamin Deficiency”. The Patents were valued for $165,570.
Patent rights are stated at cost and will be reclassified to intangible assets and amortized on a straight-line basis over the estimated future periods to be benefited ( twenty years) if and once the patent has been granted by the patent office. As of December
The Patents were deemed to have been impaired during the year ended March 31, 2010, the Company has2011. The company does not amortized the value of patent rightshave patents portfolio as it has not started generating any future economic benefits. As per the Company’s management, there is no impairment noted in the value of patent rights as of December 31, 2010.on June 30, 2011.
KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010
June 30, 2011
NOTE 5 – LOANS PAYABLE – RELATED6 –RELATED PARTY TRANSACTIONS
A) LOAN PAYABLE - CFCC
In June 30, 2011, the company owed $1,115,096 to a related party director of the Company. During the ninethree months ended December 31, 2010,June 30, 2011, the Company borrowed $174,300$49,000 from a related party of the Company. The loan is non-interest bearing, unsecured, due on demand, does not follow any specific repayment terms and included in the loans payable- related party balance. As per ASC-835-30 “Imputation of Interest”, interest has been imputed @ 5%p.a. quarterly cumulative and $14,764 has been imputed and accrued as interest.
NOTE 6-B) LOAN RECEIVABLE FROM RELATED PARTY (TPT)
In June 2009, two of the founders of the Company entered into a Standstill Agreement with the Clayton Foundation to license and commercialize from the Clayton Foundation for Research a portfolio of product candidates based on proprietary technology in part developed at the MD Anderson Cancer Center by Dr Michael Rosenblum, a former director of Kyto Biopharma Inc.
The services of two biotechnology specialized investment banks were secured in order to prepare a business plan, a valuation of the licenses and raise the funds necessary for the clinical development of targeted anticancer therapeutic proteins.
Through a new entity, Targeted Payload Therapeutics (TPT), funds advanced by a related party were advanced to TPT for the payment of the “Standstill Agreement”, fees related to the services of the 2 investment banks and expenses related to the transaction. The shareholders of TPT upon closing were: Kyto Biopharma Inc., Dr. Sagman, a director and one of the founders of the Company, the Clayton Foundation and scientists instrumental in bringing the transaction and continuing the development of the pipeline of products.
During the year ended March 31, 2010, Kyto loaned $265,931 to a newly founded US based biotechnology company, TPT. Amounts loaned under this note was non- interest bearing, unsecured, due on demand and do not follow any specific repayment terms.TPT was created to commercialize licensed technology which was developed at leading medical centers of excellence in the USA. Two of the founders of Kyto, Mr. Georges Benarroch and Dr. Uri Sagman, are also the founders of TPT. Kyto also loaned additional $43,689 during the quarter ending June 30, 2010.
On May 7, 2010 the Company announced the cancellation of its agreement with Targeted Payload Therapeutics Inc. ("TPT") and pursue any activities under Standstill Agreement. For the periods ending Decemberyears ended March 31, 20102011 and March 31, 2010, the Company had written off an impaired loan of $43,689 and $265,931, respectively, towards loss incurred as a consequence of cancellation of agreement with TPT.
C) ACCRUED LIBILITIES
The Company leases office space and administrative services from a related party principal stockholder and is included in general and administrative expense in the accompanying consolidated statements of operations. The Company allocates 50% of these amounts to rent expense. As of June 30, 2011, the remaining balance in the accrued liabilities-related party account for the above services was $39,000.
D) NOTES PAYABLE
During the year ended March 31, 2001, the Company entered into an agreement with a vendor, who is also a principal stockholder, for services totalling $200,000. On November 11, 2002, the Company and vendor mutually agreed that in lieu of the $200,000 payment, the vendor would accept 100,000 shares of the Company's common stock valued at $1.00 totalling $100,000. In addition, the Company also executed a $100,000 unsecured promissory note with the vendor. Under the terms of the promissory note, the obligation bears interest at prime plus 1% (4.25% at June 30, 2011). Interest is accrued and payable quarterly.
At June 30, 2011 and March 31, 2011, accrued interest totalled $67,887 and $66,139 respectively.
KYTO BIOPHARMA, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010June 30, 2011
NOTE 7- EQUITY
A) CONVERTIBLE PREFERRED STOCK
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 473,624 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 interestdividend at a rate of 5% per annum. Preferred Convertible Stock has the same voting rights as Common Stock. Interest expenseDividend accrued on the Convertible Preferred Stock through December 31June 30, 2011 was $69,349.$83,008. As of June 30, 2011, 473,624 convertible preferred shares were outstanding.
B) COMMON STOCK
In January 2006, the Company issued 94,054 shares valued at $0.75 per share based on the quoted trade price in payment of various expenses totaling $47,027 to a finance company controlled by a director of the company and to a director. The Company recorded a loss on debt conversion of $23,513. In February 2008, the company issued 500,000 shares valued at $0.50 per share in payment of consulting service to Dr. Uri Sagman, 159,999 shares valued at $0.50 per share to Credifinance Capital Corp. for rent and administration fees, and 3,408 shares valued at $0.50 per share to Credifinance Capital Corp. for satisfaction of the balance of the related party loan payable.
In March 2010, the Company issued 254,872 shares valued at $0.63 per share, in exchange for Patent rights.
As of June 30, 2011, 12,998,482 common shares were outstanding.
NOTE 8 - SUBSEQUENT EVENTS
Management evaluated all activities of the Company through the issuance date of the Company’s Unaudited Condensed Consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the unaudited condensed consolidated financial statementsstatements.
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS |
PLAN OF OPERATION
During the year ending March 31, 2010,2011, 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.
The company is pleased to announce that on June 29, 2010, the Canadian Patent Office issued the Patents for Canadian Patent Application No, 2187346, in the name of Receptor Modulating Agents and Methods Relating Thereto. The patentees are The University of Washington and Kyto Biopharma, Inc. The application was filed on April 7, 1995 and will remain in force for a period of 20 years from the filing date.
The report of our Independent Registered Public Accounting firm dated June 28, 201029, 2011 on our March 31, 20102011 consolidated 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 man agement’smanagement’s control, such as financial market trends and investors’ appetite for new financings. It should be emphasized that, should the Company not be successful in completing its own financing (either by debt or by the issuance of securities from treasury), the Company may be unable to continue to operate as a going concern.
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.
On February 10, 2010 Kyto executed an “Executive Licensing Agreement” with The Research Foundation of State University of New York, “RFSUNY”, allowing Kyto to license certain technology surrounding the Human Transcobalamin Receptor. The licensing agreement is active until the expiry of the patent rights. The rights primarily relate to the patent: “Transcobalamin Receptor Polypeptides, Nucleic Acids, and Modulators Thereof, and Related Methods of Use in Modulating Cell Growth and Treating Cancer and Cobalamin Deficiency”.
Results of Operations
For the nine monthsthree ended December 31, 2010June 30, 2011 the Company’s net loss decreased by $44.709$12,487 to of $209,578$67,844 compared to a net loss of $254,287$80,331 for the ninethree months ended December 31, 2009.June 30, 2010. The comprehensive loss for the ninethree months ended December 31, 2010 decreaseJune 30, 2011 the Company’s net loss decreased by $44,749$12,155 to $209,528$74,715 compared to a net loss of $254,277$86,870 for the ninethree months ended December 31, 2010.June 30, 2010
Liquidity and Capital Resources
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..technologies. 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.
Not required for smaller reporting company.
Not required for smaller reporting company.
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.