NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(A)
NATURE OF BUSINESS
Kyto Biopharma, Inc. was formed as a Florida corporation on
March 5, 1999. On August 14, 2002, the Company changed
its name from B Twelve, Inc. to Kyto Biopharma, Inc
The
Company is a biopharmaceutical company, originally formed to
acquire and develop innovative minimally toxic and
nonimmunosuppressive proprietary drugs for the treatment of cancer,
arthritis, and other proliferate and autoimmune diseases. The
Company is currently in the development stage and has disposed of
its Research and Development in 2012 and is now in the process of
looking at a number of strategies for an acquisition and merger to
become active. Once it has settled on the strategy, the Company
will develop a plan for an acquisition and the means to achieve its
goal.
(B)
RECLASSIFICATION OF PRIOR YEAR PRESENTATION
Certain
prior year amounts have been reclassified for consistency with the
current period presentation. These reclassifications had no effect
on the reported results of operations or previously reported cash
flows.
During
the year ended March 31, 2016, Directors fees were reclassified
from accrued liabilities to accrued liabilities related
party.
(C)
GOING CONCERN
As
reflected in the accompanying financial statements, the Company has
no revenues, a net loss of $93,929, a working capital deficiency of
$226,219, a stockholders' deficiency of $226,219, and an
accumulated deficit of $32,289,919 at March 31, 2017. 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 Financial statements do not
include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
The
Company’s continued existence is dependent upon the Company's
ability to resolve its liquidity problems, principally by obtaining
additional debt financing and/or equity capital. During the year
ended March 31, 2017, the Company received $32,375 in related
party debt financing.
The
Company has yet to generate an internal cash flow, and until the
sales of its product begins, the Company is very dependent upon
debt and equity funding. The Company must successfully complete its
research and development resulting in a saleable product. However,
there is no assurance that once the development of the product is
completed and finally gains Food and Drug Administration clearance,
the Company will achieve a profitable level of
operations.
KYTO BIOPHARMA, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
(D) USE
OF ESTIMATES
In
preparing financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and revenues
and expenses during the period presented. Actual results may differ
from these estimates.
Significant
estimates during the fiscal year ended March 31, 2017 and 2016
include the valuation allowance of deferred tax
assets.
(E)
CASH AND CASH EQUIVALENTS
The
Company considers all highly liquid investments with original
maturities of three months or less at the time of purchase to be
cash equivalents. There were no cash equivalents at March 31,
2017 and 2016, respectively.
(F)
CONCENTRATIONS
The
Company maintains its cash in bank deposit accounts, which, at
times, may exceed federally insured limits. As of March 31, 2017
and 2016, the Company did not have any deposits in excess of
federally insured limits. The Company has not experienced any
losses in such accounts through March 31, 2017 and 2016,
respectively.
The
Company has obtained and continues to obtain a large amount of its
funding from loans and equity funding from a principal stockholder
related to a director of the Company.
(G)
STOCK-BASED COMPENSATION
Financial
Accounting Standards Board Accounting Standards Codification Topic
718, Stock Compensation requires generally that all equity awards
granted to employees be accounted for at “fair value.”
This fair value is measured at grant date for stock settled awards,
and at subsequent exercise or settlement for cash-settled
awards.
Under
this method, the Company records an expense equal to the fair value
of the options or warrants issued. The fair value is computed using
the Black Scholes options pricing model.
(H)
INCOME TAXES
The
Company accounts for income taxes under the Financial Accounting
Standards Accounting Standard Codification Topic 740
"Accounting for Income Taxes" ("Topic 740"). Under Topic 740,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under Topic 740, the effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period, which includes the enactment
date.
KYTO BIOPHARMA, INC.
NOTES
TO FINANCIAL STATEMENTS
MARCH 31, 2017
(I)
NET LOSS PER COMMON SHARE
In
accordance with Statement of Financial Accounting Standards
Accounting Standard Codification Topic 260, "Earnings per Share",
basic earnings per share is computed by dividing the net income
less preferred dividends for the period by the weighted average
number of common shares outstanding. Diluted earnings per share is
computed by dividing net income less preferred dividends by the
weighted average number of common shares outstanding including the
effect of common stock equivalents. Common stock equivalents,
consisting of stock options and warrants, have not been included in
the calculation, as their effect is anti-dilutive for the periods
presented.
(J)
SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS
Management
does not believe that any recently issued, but not yet effective,
accounting standards if currently adopted would have a material
effect on the accompanying financial statements.
NOTE 2 COMMITMENTS AND CONTINGENCIES
(A)
LEASES
The
Company leases office space on a month-to-month basis. The premises
is leased from a principal stockholder. Rent expense in 2017 and
2016 was $20,000 and $20,000, respectively and is included in
general and administrative expense in the accompanying statements
of operations.
(B)
REGULATION
The
business of the Company is subject to various governmental
regulations in the United States of America, Canada, and other
countries, which must approve any Company products before
commencement of commercial sales and which regulate the
manufacturing of pharmaceuticals.
NOTE 3 RELATED PARTY TRANSACTIONS
(A) LOAN
PAYABLE, RELATED PARTY
At
March 31, 2017 and 2016, the Company owed $68,107 and $35,732,
respectively, to a related party director of the Company. The loan
is non-interest bearing, unsecured and due on demand and included
in the loans payable, related party balance.
(B)
ACCRUED LIABILITIES, RELATED PARTY
The
Company leases office space and administrative services from a
related party principal stockholder. Rent and administrative
expense in 2017 and, 2016, was $40,000 and $40,000, respectively
and is included in general and administrative expense in the
accompanying statements of operations. The Company allocates 50% of
these amounts to rent expense. As of March 31, 2017, and 2016, the
remaining balance in the accrued liabilities-related party account
for the above services was $100,000 and $60,000,
respectively.
Directors
fees are also included in Accrued liabilities – related
parties. Directors fees for the years ended March 31, 2017 and 2016
was $24,000 and $24,000 and is included in general and
administrative expense in the accompanying statements of
operations. As of, March 31, 2017 and 2016, the remaining balance
in the accrued liabilities-related party account for the above
services was $48,000 and $24,000, respectively.
KYTO BIOPHARMA, INC.
NOTES
TO FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 4 STOCKHOLDERS' DEFICIENCY
(A)
COMMON STOCK AND OPTIONS
Effective
October 15, 2015, Kyto BioPharma Inc. completed a reverse stock
split in the amount of a one (1) for ten (10) issued and
outstanding shares of common stock.
Reference
to common stock shares and per share amounts have been
retroactively restated to give effect of the reverse stock split of
one for ten shares.
On
August 11, 2014, the number of authorized common stock increased to
100,000,000 from 25,000,000 having a par value of $0.0001,
amounting in the aggregate to Ten Thousand Dollars
($10,000)
On
August 11, 2014, the number of authorized non-voting preferred
stock increased to 2,000,000 from 1,000,000 having a par value of
$1.00, amounting in the aggregate to Two Million Dollars
($2,000,000)
As of
March 31,2017 and 2016 there are 3,139,747 shares of the Company
common stock as issued and outstanding.
(B)
STOCK OPTIONS AND WARRANTS
As of
March 31, 2017, no stock options and warrants were issued and
outstanding.
(C) PAR
VALUE
In
August 2001, the par value of common stock was changed to $0.0001
from $1.00. The change is reflected retroactively for all periods
presented in the accompanying financial statements.
(D)
EARNINGS PER SHARE
Basic
earnings per share are computed by dividing earnings available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflect
per share amounts that would have resulted if dilutive potential
common stock had been converted to common stock. The following
reconciles amounts reported in the financial statements for the
years ended:
|
|
|
Net loss
available to common stockholders.
|
$
(93,929
)
|
$
(90,378
)
|
Weighted
average common shares outstanding
|
3,139,747
|
3,139,747
|
Basic and
diluted net loss per share
|
$
(0.03
)
|
$
(0.03
)
|
KYTO BIOPHARMA, INC.
NOTES
TO FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 5 INCOME TAXES
The
Company files separate tax returns for the parent and its Canadian
subsidiary. There was no income tax expense or utilization of net
operating loss carry forwards for the years ended March 31, 2017
and 2016, due to the Company's net losses.
The
Company's tax expense differs from the "expected" tax expense for
Federal income tax purposes for the years ended March 31, 2017 and
2016 (computed by applying the United States Federal Corporate tax
rate of 34% to loss before taxes), as follows:
|
|
|
|
|
|
Computed "expected"
tax benefit
|
$
(31,935
)
|
$
(30,728
)
|
Change in deferred
tax asset valuation allowance
|
31,935
|
30,728
|
|
$
-
|
$
-
|
The above benefit
was calculated using a combined federal and state tax estimated
rate as noted below
|
|
|
Statutory federal
income tax rate
|
34.00
%
|
34.00
%
|
State income
taxes
|
1
%
|
1
%
|
Foreign income tax
rate difference
|
(1
)%
|
(1
)%
|
Valuation
allowance
|
(34.00
)%
|
(34.00
%
|
Effective tax
rate
|
(0.0
)%
|
(0.0
)%
|
The
effects of temporary differences that gave rise to significant
portions of deferred tax assets and liabilities at March 31, 2017
are as follows:
Deferred tax
assets:
|
|
United States net
operating loss carryforward
|
$
9,323,620
|
Canadian net
operating loss carryforward
|
-
|
Total gross
deferred tax assets
|
9,323,620
|
Less valuation
allowance
|
(9,323,620
)
|
Net deferred tax
assets
|
$
-
|
The net
change in valuation allowance during the year ended March 31, 2017
was an increase of approximately $31,935. The Company's has a net
operating loss carry forward of approximately $27,422,414 available
to offset net income through 2033.
The
utilization of the net operating loss carry forwards is dependent
upon the ability to generate sufficient taxable income during the
carry forward period. In addition, utilization of these carry
forwards may be limited due to ownership changes as defined in the
Internal Revenue Code.
The
Company is subject to taxation in the United States and certain
state jurisdictions. The Company’s tax years for 2002 and
forward are subject to examination by the United States and
applicable state tax authorities due to the carry forward of
unutilized net operating losses.