kbph_10k.htm

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Financial Statements

Table of Contents

Report of Independent Registered Public Accounting Firms			F-2 / F-3

Consolidated Balance Sheets as of March 31, 2011 and 2010			F-4

Consolidated Statements of Operations for the years ended March 31, 2011 and 2010 and for the period from March 5, 1999 (Date of Inception) through March 31, 2011			F-5

Consolidated Statements of Stockholders' Deficit for the period from March 5, 1999 (Date of Inception) through March 31, 2011.			F-6 / F-8

Consolidated Statements of Cash Flows for the years ended March 31, 2011 and 2010 and for the period from March 5, 1999 (Date of Inception) through March 31, 2011			F-9

Notes to Consolidated Financial Statements			F-10 / F-22

F-1

RBSM LLP

CERTIFIED PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and shareholders of

Kyto Biopharma, Inc.

Toronto, Canada

We have audited the accompanying consolidated balance sheet of Kyto Biopharma, Inc. and its Subsidiary (the “Company”), a development Stage company as of March 31, 2011 and the related consolidated statements of operations, stockholders’ deficit and cash flows for the year ended March 31, 2011 and for the period from March 5, 1999 (date of inception) through March 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The accompanying consolidated financial statements of the Company for the period from March 5, 1999 (date of inception) through March 31, 2010 were not audited by us. Those statements were audited by other auditors whose report, dated June 28, 2010 except for Note 2 as to which the date is August 26, 2010 expresses an unqualified opinion on those statements and included an explanatory paragraph regarding the Company’s ability to continue as a going concern. The consolidated financial statements for the period from March 5, 1999 (date of inception) through March 31, 2010, reflect a net loss of $17,065,962. Our opinion, insofar as it relates to the amounts included for such prior periods as indicated in the accompanying financial statements for such periods from March 5, 1999 (date of inception) through March 31, 2010 is based solely on the report of such other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provided a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Kyto Biopharma, Inc. and its Subsidiary as of March 31, 2011 and the consolidated results of its operations and its cash flows for the year ended March 31, 2011, and for the period from March 5, 1999 (date of inception) through March 31, 2011, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 of the accompanying consolidated financial statements, the Company is in development stage, has no revenue, has incurred significant losses since inception, and has a working capital deficiency as of March 31, 2011, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ RBSM LLP

New York, New York

June 29, 2011

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the board of directors and sharesholders of

Kyto Biopharma, Inc.

We have audited the accompanying consolidated balance sheets of Kyto Biopharma, Inc. (A Development Stage Company) as of March 31, 2010 and the related statements of operations, changes in stockholders' deficit and cash flows for the years ended March 31, 2010 and for the period from March 5, 1999 (inception) through March 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kyto Biopharma, Inc. (A Development Stage Company ) as of March 31, 2010 and the results of its operations and its cash flows for the year then ended March 31, 2010, and from March 5, 1999 (inception) through March 31, 2010 in conformity with accounting princples generally accepted in the United States.

The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company's need to seek new sources or methods of financing or revenue to pursue its business strategy, raise substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Jewett, Schwartz, Wolfe & Associates

Hollywood, Florida

June 28, 2010 except for Note 2 as to

which the date is August 26, 2010

F-3

Kyto Biopharma, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheets

	March 31,			March 31,
	2011			2010
				(Restated)
ASSETS
Current Assets
Cash	$	863		$	4,444

Total Current Assets		863			4,444

Other Assets
Patent Rights		-			165,570


Total Assets	$	863		$	170,014

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable	$	12,760		$	6,518
Accrued liabilities		32,667			21,667
Accrued liabilities - related party		29,000			62,501
Accrued interest payable - related party		66,139			59,329
Accrued interest payable - preferred convertible stock		76,137			49,486
Loan payable-related party		1,066,096			823,296
Note payable-related party		100,000			100,000
Total Current Liabilities		1,382,799			1,122,797

Commitments and Contingencies

Stockholders' Deficit
Preferred convertible stock, $1.00 par value, 1,000,000 shares
authorized, 473,624 issued and outstanding as of
March 31, 2011 and 2010 respectively		473,624			473,624
Common stock, $0.0001 par value, 25,000,000 shares
authorized, 12,998,482 issued and outstanding as of
March 31, 2011 and 2010 respectively		1,300			1,300
Additional paid-in capital		15,904,542			15,815,489
Deficit accumulated during development stage		(17,584,219	)		(17,065,962	)
Accumulated other comprehensive loss		(177,183	)		(177,234	)

Total Stockholders' Deficit		(1,381,936	)		(952,783	)

Total Liabilities and Stockholders' Deficit	$	863		$	170,014

The accompanying notes are an integral part of these consolidated financial statements

F-4

Kyto Biopharma, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statements of Operations

							For the period from
							March 5, 1999
	For The Year Ended						(inception) to
	March 31						March 31,
	2011			2010			2011
				(Restated)

Operating Expenses
Depreciation and amortization	$	-		$	-		$	814,183
General and administrative		352,050			293,369			16,543,447

Total Operating Expenses	$	352,050		$	293,369		$	17,357,630

Loss from Operation	$	352,050		$	293,369		$	17,357,630

Other Income (Expenses)
Interest income		-			-			4,922
Interest expense		(122,514	)		(31,903	)		(249,026	)
Loss on debt forgiveness		(43,690	)		(265,931	)		(230,956	)
Loss on disposal of equipment		-			-			(567	)
Foreign currency transaction gain		(4	)		(90	)		249,038
Total Other Income (Expense), net		(166,208	)		(297,924	)		(226,589	)


Net Loss before taxes	$	(518,258	)	$	(591,293	)	$	(17,584,220	)

Net Income (Tax) Benefit	$	-		$	-		$	-

Net Loss	$	(518,258	)	$	(591,293	)	$	(17,584,220	)

Comprehensive Income (Loss)
Foreign currency translation gain (loss)		51			10			(177,183	)


Total Comprehensive Loss	$	(518,207	)	$	(591,283	)	$	(17,761,403	)


Weighted average number of shares outstanding
during the year - basic and diluted		12,998,482			12,743,610


Net loss per share - basic and diluted	$	(0.04	)	$	(0.05	)

The accompanying notes are an integral part of these consolidated financial statements

F-5

Kyto Biopharma, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
For the period from March 5, 1999 (Date of Inception) to March 31, 2011


												Deficit			Accumulated
												Accumulated			Other
	Preferred Stock				Common Stock				Additional			During			Comprehensive								Deferred
	$1.00 par value				$0.0001 par value				Paid - in			Development			Income			Deferred			Subscription		Loan		Deferred
	Shares		Amount		Shares		Amount		Capital			Stage			(Loss)			Consulting			Receivable		Fee		Expenses		Total
Common stock issued for services to officer		-	$	-		300,000	$	30	$	299,970		$	-		$	-		$	-		$	-	$	-	$	-	$	300,000
Common stock issued for services to consultant		-		-		255,000		25		254,975			-			-			-			-		-		-		255,000
Warrants issued to consultant		-		-		-		-		345,000			-			-			-			-		-		-		345,000
Net loss, 1999		-		-		-		-		-			(900,000	)		-			-			-		-		-		(900,000	)
Balance, March 31, 1999		-	$	-		555,000	$	55	$	899,945		$	(900,000	)	$	-		$	-		$	-	$	-	$	-	$	-
Preferred stock issued for cash		250,000		250,000		-		-		-			-			-			-			-		-		-		250,000
Offering cost		-		-		-		-		(17,005	)		-			-			-			-		-		-		(17,005	)
Common stock issued for intangible assets		-		-		2,000,000		200		1,999,800			-			-			-			-		-		-		2,000,000
Common stock issued for cash upon exercise
of warrants		-		-		100,000		10		99,990			-			-			-			-		-		-		100,000
Foreign currency translation loss		-		-		-		-		-			-			(5,745	)		-			-		-		-		(5,745	)
Net loss, 2000		-		-		-		-		-			(650,366	)		-			-			-		-		-		(650,366	)
Balance, March 31, 2000		250,000	$	250,000		2,655,000	$	265	$	2,982,730		$	(1,550,366	)	$	(5,745	)	$	-		$	-	$	-	$	-	$	1,676,884
Common stock issued as director fees		-		-		58,100		6		58,094			-			-			-			-		-		-		58,100
Common stock issued for cash upon exercise
of warrants		-		-		150,000		15		149,985			-			-			-			-		-		-		150,000
Common stock issued for cash upon exercise
of warrants		-		-		345,000		35		-			-			-			-			-		-		-		35
Common stock issued to officer as
compensation		-		-		100,000		10		99,990			-			-			-			-		-		-		100,000
Common stock issued for cash		-		-		100,000		10		99,990			-			-			-			-		-		-		100,000
Common stock issued to consultant for services not yet rendered		-		-		400,000		40		1,199,960			-			-			(1,200,000	)		-		-		-		-
Foreign currency translation gain		-		-		-		-		-			-			60,054			-			-		-		-		60,054
Net loss, 2001		-		-		-		-		-			(966,789	)		-			-			-		-		-		(966,789	)
Balance, March 31, 2001		250,000	$	250,000		3,808,100	$	381	$	4,590,749		$	(2,517,155	)	$	54,309		$	(1,200,000	)	$	-	$	-	$	-	$	1,178,284

The accompanying notes are an integral part of these consolidated financial statements

F-6

Preferred stock converted to common stock	(250,000	)		(250,000	)	250,000		25		249,975		-			-			-			-			-			-			-
Common stock warrants issued for consulting
services	-			-		-		-		254,346		-			-			-			-			-			-			254,346
Common stock issued for cash upon exercise
of warrants	-			-		125,000		13		124,987		-			-			-			-			-			-			125,000
Common stock warrants issued for services	-			-		-		-		849,915		-			-			-			-			-			-			849,915
Common stock issued for cash upon exercise
of warrants	-			-		850,000		85		-		-			-			-			-			-			-			85
Common stock issued to directors as
compensation	-			-		6,000		-		6,000		-			-			-			-			-			-			6,000
Common stock issued to employees as
compensation	-			-		3,000		-		3,000		-			-			-			-			-			-			3,000
Common stock issued as loan fee	-			-		25,000		3		24,997		-			-			-			-			(25,000	)		-			-
Foreign currency translation gain	-			-		-		-		-		-			13,397			-			-			-			-			13,397
Net loss, 2002	-			-		-		-		-		(2,959,415	)		-			-			-			-			-			(2,959,415	)
Balance, March 31, 2002	-		$	-		5,067,100	$	507	$	6,103,969	$	(5,476,570	)	$	67,706		$	(1,200,000	)	$	-		$	(25,000	)	$	-		$	(529,388	)
Stock issued for cash and services	-			-		225,000		22		224,978		-			-			-			-			-			-			225,000
Stock issued in settlement of accounts payable,
net of redeemable shares	-			-		100,000		10		99,990		-			-			-			-			-			-			100,000
Stock issued to settle loans payable, related party	-			-		102,658		10		102,648		-			-			-			-			25,000			-			127,658
Common stock issued for services to
consultant not yet rendered	-			-		800,000		80		799,920		-			-			(800,000	)		-			-			-			-
Stock issued for past and future rent and
administrative services	-			-		65,000		7		64,993		-			-			-			-			-			(30,000	)		35,000
Common stock warrants issued as financing fee	-			-		-		-		3,783		-			-			-			-			-			-			3,783
Foreign currency translation loss	-			-		-		-		-		-			(80,354	)		-			-			-			-			(80,354	)
Net loss, 2003	-			-		-		-		-		(319,141	)		-			-			-			-			-			(319,141	)
Balance, March 31, 2003	-		$	-		6,359,758	$	636	$	7,400,281	$	(5,795,711	)	$	(12,648	)	$	(2,000,000	)	$	-		$	-		$	(30,000	)	$	(437,442	)

Foreign currency translation loss	-			-		-		-		-		-			(117,341	)		-			-			-			-			(117,341	)
Amortization of deferred expenses	-			-		-		-		-		-			-			-			-			-			30,000			30,000
Net Loss, 2004	-			-		-		-		-		(34,846	)					-			-			-			-			(34,846	)
Balance, March 31, 2004	-		$	-		6,359,758	$	636	$	7,400,281	$	(5,830,557	)	$	(129,989	)	$	(2,000,000	)	$	-		$	-		$	-		$	(559,629	)
Stock issued for cash and services	-			-		500,000		50		249,950		-			-			-			-			-			-			250,000
Common stock issued for services to consultant not yet rendered	-			-		4,500,000		450		6,749,550		-			-			(5,343,750	)		-			-			-			1,406,250
Stock issued to settle loans payable, related party	-			-		320,000		32		479,968		-			-			-			-			-			-			480,000
Stock issued for past and future rent and
administrative services	-			-		133,333		13		199,986		-			-			-			(13	)		-			-			199,986
Foreign currency translation loss	-			-		-		-		-		-			(87,495	)		-			-			-			-			(87,495	)
Net Loss, 2005	-			-		-		-		-		(1,963,666	)		-			-			-			-			-			(1,963,666	)

The accompanying notes are an integral part of these consolidated financial statements

F-7

Balance, March 31, 2005	-	$	-	11,813,091	$	1,181	$	15,079,735	$	(7,794,223	)	$	(217,484	)	$	(7,343,750	)	$	(13	)	$	-	$	-	$	(274,554	)
Stock issued for cash and services	-		-	173,058		18		173,040		-			-			-			-			-		-		173,058
Recognition of services rendered by consultant	-		-	-		-		-		-			-			3,374,950			-			-		-		3,374,950
Stock issued to settle loans payable, related party	-		-	14,054		1		10,540		-			-			-			-			-		-		10,541
Stock issued for past and future rent and
administrative services	-		-	80,000		8		59,992		-			-			-			-			-		-		60,000
Foreign currency translation loss	-		-	-		-		-		-			(40,435	)		-			-			-		-		(40,435	)
Net Loss, 2006	-		-	-		-		-		(3,534,787	)		-			-			-			-		-		(3,534,787	)
Balance, March 31, 2006	-	$	-	12,080,203	$	1,208	$	15,323,307	$	(11,329,010	)	$	(257,919	)	$	(3,968,800	)	$	(13	)	$	-	$	-	$	(231,227	)
Stock issued for cash and services	-		-	-		-		-		-			-			-			-			-		-		-
Recognition of services rendered by consultants	-		-	-		-		-		-			-			3,968,800			-			-		-		3,968,800
Stock issued for past and future rent and
administrative services	-		-	-		-		-		-			-			-			13			-		-		13
Foreign currency translation loss	-		-	-		-		-		-			(13,866	)		-			-			-		-		(13,866	)
Net Loss, 2007	-		-	-		-		-		(4,148,725	)		-			-			-			-		-		(4,148,725	)
Balance, March 31, 2007	-	$	-	12,080,203	$	1,208	$	15,323,307	$	(15,477,735	)	$	(271,785	)	$	-		$	-		$	-	$	-	$	(425,005	)
Preferred convertible stock issued to settle loan payable, related party	459,734		459,734	-		-		-		-			-			-			-			-		-		459,734
Preferred convertible stock issued to settle 5% interest on
convertible preferred stock	13,890		13,890	-		-		-		-			-			-			-			-		-		13,890
Common stock issued to settle loan payable, related party	-		-	3,408		1		1,703		-			-			-			-			-		-		1,704
Stock issued for rent and administrative services	-		-	159,999		16		79,984		-			-			-			-			-		-		80,000
Common stock issued for director fees	-		-	500,000		50		249,950		-			-			-			-			-		-		250,000
Foreign currency translation loss	-		-	-		-		-		-			(146,222	)		-			-			-		-		(146,222	)
Net Loss, 2008	-		-	-		-		-		(353,838	)		-			-			-			-		-		(353,838	)
Balance, March 31, 2008	473,624	$	473,624	12,743,610	$	1,275	$	15,654,944	$	(15,831,573	)	$	(418,007	)	$	-		$	-		$	-	$	-	$	(119,737	)
Foreign currency translation gain	-		-	-		-		-		-			240,763			-			-			-		-		240,763
Net Loss, 2009	-		-	-		-		-		(643,096	)		-			-			-			-		-		(643,096	)
Balance, March 31, 2009	473,624	$	473,624	12,743,610	$	1,275	$	15,654,944	$	(16,474,669	)	$	(177,244	)	$	-		$	-		$	-	$	-	$	(522,070	)
Common stock issued for patent rights	-		-	254,872		25		160,545		-			-			-			-			-		-		160,570
Foreign currency translation gain	-		-	-		-		-		-			10			-			-			-		-		10
Net Loss, 2010	-		-	-		-		-		(591,293	)		-			-			-			-		-		(591,293	)
Balance, March 31, 2010	473,624	$	473,624	12,998,482	$	1,300	$	15,815,489	$	(17,065,962	)	$	(177,234	)	$	-		$	-		$	-	$	-	$	(952,783	)
Imputed Interest	-		-	-		-		89,053		-			-			-			-			-		-		89,053
Net Loss, 2011	-		-	-		-		-		(518,257	)		-			-			-			-		-		(518,257	)
Foreign currency translation gain	-		-	-		-		-		-			51			-			-			-		-		51
Balance, March 31, 2011	473,624	$	473,624	12,998,482	$	1,300	$	15,904,542	$	(17,584,219	)	$	(177,183	)	$	-		$	-		$	-	$	-	$	(1,381,936	)

The accompanying notes are an integral part of these consolidated financial statements

F-8

Kyto Biopharma, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Cash Flows

							For the period from March 5, 1999 (Inception) to March 31, 2011

	For the Year Ended March
	2011			2010
				(Restated)
Cash Flows from Operating Activities:
Net loss	$	(518,258	)	$	(591,293	)	$	(17,584,219	)
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		89,053			-			89,053
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		165,570			-			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		-			42,562			(5,000	)
Accounts payable and accrued expenses		17,242			(8,465	)		546,299
Related party accounts payable, accrued interest, and accrued liabilities		(40	)		31,904			81,456
Net Cash Used in Operating Activities		(246,432	)		(525,292	)		(2,640,892	)

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		275,800			516,972			1,924,971
Repayment of loan to related parties		(33,000	)		-			(59,792	)
Net Cash Provided by Financing Activities		242,800			516,972			2,823,401

Effect of Exchange Rate on Cash		51			10			(177,183	)

Net Increase (decrease) in Cash and Cash Equivalents		(3,581	)		(8,310	)		863

Cash and Cash Equivalents at Beginning of Period		4,444			12,754			-

Cash and Cash Equivalents at End of Period	$	863		$	4,444		$	863


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

The accompanying notes are an integral part of these consolidated financial statements

F-9

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) NATURE OF BUSINESS

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

(B) PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany balances and transactions have been eliminated in consolidation.

As reflected in the accompanying consolidated financial statements, the Company has no revenues, a net loss of $518,258 , a working capital deficiency of $1,381,936, a stockholders' deficiency of $1,381,936 and a deficit accumulated during the development stage of $17,584,219 at March 31, 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 consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company is currently a development stage company and its continued existence is dependent upon the Company's ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. During the year ended March 31, 2011, the Company received $242,800 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 Federal Drug and Administration clearance, and that the Company will achieve a profitable level of operations.

F-10

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(D) USE OF ESTIMATES

In preparing consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the period presented. Actual results may differ from these estimates.

Significant estimates during 2011 and 2010 and for the period for March 5, 1999 (inception) to March 31, 2011 include depreciable lives on equipment, valuation of intangible assets, the valuation allowance of deferred tax assets, and the valuation of non-cash stock based transactions.

(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, 2011 and 2010, respectively.

(F) BASIS OF PRESENTATION AND FOREIGN CURRENCY

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

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

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

(G) CONCENTRATIONS

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. As of March 31, 2011, 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, 2011 and 2010, 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.

(H) EQUIPMENT

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

F-11

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(I) LONG-LIVED ASSETS

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

(J) 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 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.

(K) RESEARCH AND DEVELOPMENT COSTS

Others conduct research and development on behalf of the Company under contractual agreements and such costs are charged to expense as incurred. Research and development expense was $0, $146,347, and $1,664,951 for the years ended March 31, 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011, respectively.

(L) PATENT RIGHTS

Acquisition of Patent Rights is 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 if and once the patent has been granted by the United States Patent and Trademark Office (“USPTO”). The Company will write-off any currently capitalized costs for patents not granted by the USPTO (See note 3).

(M) INCOME TAXES

The Company accounts for income taxes under the Financial Accounting Standards Accounting Standard Cordifcation 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 consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under 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.

(N) COMPREHENSIVE INCOME

The Company accounts for Comprehensive Income under the Financial Accounting Standards Board Statement of Financial Accounting Standards Accounting Standard Codification Topic 220, "Reporting Comprehensive Income" ("Topic 220"). Topic 220 establishes standards for reporting and display of comprehensive income and its components. Comprehensive income is the total of net income (loss) and other comprehensive income (loss).

F-12

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

(O) 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. At March 31, 2011, there were convertible preferred shares which could have been potentially been converted into 1,052,498 shares of common stock, but would be anti dilutive.

(P) 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 consolidated financial statements.

(Q) RECLASSIFICATIONS

Certain amounts in the March 31, 2010 consolidated financial statements may have been reclassified to conform to the March 31, 2011 presentation.

NOTE 2 RESTATEMENT

In the second quarter of 2010, the Company cancelled the agreement with Targeted Payload Therapeutics (“TPT”), a private Nevada registered company, as described in Note 6. As of March 31, 2010, the Company was owed $265,931 from TPT which was considered non-recoverable and impaired as a result of cancellation of agreement in May, 2010 between the Company and TPT. Accordingly, the Company recorded a write off of an impaired loan receivable in the amount of $265,931 for the year ending March 31, 2010, which resulted in an increase of net loss from $325,362, as previously reported to $591,293 as restated, and an increase in deficit accumulated during development stage from $16,800,031, as previously reported to $17,065,962, as restated. This adjustment also resulted in a decline of total assets from $435,945, as previously reported to $170,014, as restated. The Company has reflected the impact of these adjustments in its consolidated financial statements for the year ending March 31, 2010.

NOTE 3 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 an outstanding balance of $5,000. The shares were valued at $0.63 per share resulting in total value of $165,570.

F-13

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 3 PATENT RIGHTS (CONTINUED)

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 deemed to have been impaired during the year ended March 31, 2011.

NOTE 4 INTANGIBLE ASSETS IMPAIRMENT

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

As of March 31, 2002, management performed an impairment analysis of the Intellectual Property. Due to of the Company being in a development stage along with the inherent difficulties in projecting future revenues, the company recognized an impairment loss for the full remaining book value of the asset totaling $1,191,846 in 2002.

NOTE 5 COMMITMENTS AND CONTINGENCIES

(A) LEASES

The Company leases office space on a month-to-month basis. The premise is leased from a principal stockholder. Rent expense in 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011 were $20,000, $18,000 and $206,377, respectively and is included in general and administrative expense in these accompanying consolidated 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 6 RELATED PARTY TRANSACTION

(A) LOANS PAYABLE, RELATED PARTIES

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

During the year ended March 31, 2004, the Company received the remaining $50,000 portion of the debt financing transaction plus an additional $25,000. All activity with this principal stockholder represents a 100% concentration of all debt financing for the year ended March 31, 2004. All loans are non-interest bearing, unsecured and due on demand. In the first quarter of fiscal 2004, an additional $35,000 loan was received from the same principal stockholder. In October 2004, the $160,000 was exchanged for 320,000 common shares. The Company recognized a loss of $320,000 on this transaction.

F-14

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 6 RELATED PARTY TRANSACTION (CONTINUED)

At March 31, 2005, the Company owed $4,616 to a director of the Company. The loan was non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. The amount was paid in February 2006, through issuance of stock.

At March 31, 2007, the Company owed $233,430 to a related party of the Company. The loan is non-interest bearing, unsecured and due on demand and included in the loans payable, related party balance. During the year ended March 31, 2008, the company was advanced an additional $228,008. The loan was paid through issuance of 459,734 shares of preferred convertible stock valued at $1 per share and 3,408 shares of common stock valued at $0.50 per share for a total of $461,438. The balance of the related party loan payable as of March 31, 2008 was $0.

At March 31, 2011, the Company owed $1,066,096 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. However, FASB-835-30 “Imputation of Interest” has been applied to impute the interest on loan from CFCC as there is no agreement between the Company and CFCC. Imputation of interest has been done @5%p.a. quarterly cumulative from FY 2009 and $89,043 has been imputed as interest.

(B) LOAN RECEIVABLE FROM TPT

In June 2009, 2 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 2 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, Inc. (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 did 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.

On May 7, 2010 the Company announced the cancellation of its agreement with Targeted Payload Therapeutics Inc. ("TPT") as a result of irreconcilable differences among the management of TPT which prevented the Company to pursue activities per Standstill Agreement. Amounts loaned under the aforesaid note was non- interest bearing, unsecured, due on demand and did not follow any specific repayment terms.

In April 2010, an additional loan of $43,690 was made to TPT. In May 2010, the Company cancelled the agreement with TPT. Accordingly, as the Company deem the amounts owed us by TPT as non-recoverable, at March 31, 2011 and 2010 the Company have written off this loan receivable in the amount of $43,690 and $265,931 respectively. (See note 2).

F-15

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 6 RELATED PARTY TRANSACTION (CONTINUED)

The Company leases office space and administrative services from a related party principal stockholder. Rent and administrative expense in 2011, 2010, and for the period from March 5, 1999 (inception) to March 31, 2011 was $40,000, $36,000, and $450,254, respectively and is included in general and administrative expense in the accompanying consolidated statements of operations. The Company allocates 50% of these amounts to rent expense. During the year ended March 31, 2008, the Company issued 159,999 shares of common stock valued at $0.50 per share for a total of $80,000 to satisfy accrued rent and administrative expense. As of March 31, 2011 and 2010, the remaining balance in the accrued liabilities-related party account for the above services was $29,000 and $62,501, respectively.

(D) NOTE PAYABLE, RELATED PARTY

During the year ended March 31, 2001, the Company entered into an agreement with a vendor, who is also a principal stockholder, for services totaling $200,000. On November 11, 2002, the Company and vendor mutually agreed that in lieu of the $200,000 payment, the vendor would accept 100,000 shares of the Company's common stock valued at $1.00 totaling $100,000. In addition, the Company also executed a $100,000 unsecured promissory note with the vendor. Under the terms of the promissory note, the obligation bears interest at prime plus 1% (4.25% at March 31, 2011). Interest is accrued and payable quarterly. At March 31, 2011 and 2010, accrued interest totaled $66,139 and $59,329, respectively. In connection with the promissory note, all principal and accrued interest is payable in full upon the earliest of the following:

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

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

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

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

NOTE 7 STOCKHOLDERS' DEFICIENCY

(A) CONVERTIBLE PREFERRED STOCK

In June 1999, an investor purchased 250,000 units at $1.00 per unit or $250,000 consisting of 250,000 shares of convertible preferred stock and receives warrants to purchase up to 750,000 common shares as follows: 250,000 common stock warrants exercisable at $1.00 per share issued with the preferred stock and another potential 500,000 as discussed below. The preferred stock was convertible to common stock on a one-for-one basis upon the earlier of:

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

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

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

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

F-16

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

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

Upon exercise of the first 250,000 warrants, the investor received another warrant for 250,000 common shares at $1.00 exercise price per share. Upon conversion of the preferred stock, each share of common stock issued shall be coupled with an additional common stock purchase warrant at an exercise price of $1.00 per share with a three-month term. In December 1999 and May 2000, 100,000 and 150,000, respectively, of the first warrant were exercised and therefore in May 2000 the additional 250,000 warrant were granted with an exercise price of $1.00 expiring June 2003. In June 2001, pursuant to a letter of intent, which was ratified by the shareholders, the preferred shares were converted and the additional 250,000 warrants were granted at an exercise price of $1.00 with an amended term not to exceed five years. There was no beneficial conversion feature to the warrants as the value of the common stock was still considered to be $1.00 based on contemporaneous transactions at that time. There was no effect of the warrant issuances on operations as all warrants are considered to be purchased as part of the preferred stock unit. The second and third warrants totaling 500,000 common shares remained outstanding at March 31, 2003. In June 2003, 250,000 expired and in June 2006 the remaining 250,000 expired.

In May 2007, Kyto entered into an agreement with Credifinance Capital Corp. to issue up to 500,000 convertible preferred shares at $1.00 per share in satisfaction of amounts due to Credifinance Capital Corp. During the year ended March 31, 2008 the Company issued 459,734 shares of convertible preferred stock to a Credifinance Capital Corp. to satisfy the related party loan payable. As there is no readily available fair value for the Company's convertible preferred stock, the issuance has been recorded at par value of $1 per share for a total of $459,734. The preferred convertible stock issued to satisfy the related party loan may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum. Preferred convertible stock has the same voting rights as common stock.

The Company issued 13,890 shares of preferred stock valued at $1 per share for a total of $13,890 to Credifinance Capital Corp. for the accrued interest due on outstanding convertible preferred stock during the year ended March 31, 2008. These shares may be converted into common shares at the rate of $0.45 per share for up to two years and bear interest at the rate of 5% per annum.

As of March 31, 2011, 473,624 convertible preferred shares were outstanding.

(B) COMMON STOCK AND OPTIONS

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.

F-17

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

As of March 31, 2011, 12,998,482 common shares were outstanding.

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

For stock options and warrants issued to non-employees, the Company applies ASC 718. Accordingly, consulting expense of $3,783 and $254,345 were recognized in 2003 and 2002, respectively, upon granting of 25,000 and 125,000 common stock options, respectively. $345,000 was charged to operations in 1999 as reflected in the accompanying consolidated statements of operations from March 5, 1999 (inception) to March 31, 2008.

For consolidated financial statement disclosure purposes and for purposes of valuing stock options and warrants issued to consultants, the fair market value of each stock granted was estimated on the grant date using the

Black-Scholes Option-Pricing Model in accordance with ASC 718. The following weighted-average assumptions were used for the year ended March 31:

	2011		2010		2009		2008		2007		2006		2005		2004		2003			2002			2001		2000		1999
Expected Dividend Yield		--		--		--		--	--			--		--		--		--			--			--		--		--
Risk Free Interest Rate		--		--		--		--		--		--		--		--		4.15	%		3.57	%		--		--		4.53	%
Expected Volatility		--		--		--		--		--		--		--		--		0.00	%		0.00	%		--		--		0.00	%
Expected Term		--		--		--		--		--		--		--		--	4 Years			1 Year				--		--	2 Years

F-18

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

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

Stock Options	WARRANTS			EXERCISE PRICE

Balance at March 31, 2002		500,000		$	1.00
Granted		25,000			1.00
Exercised		-			-
Forfeited		-			-
Terminated		-			-
Balance at March 31, 2003		525,000		$	1.00

Granted		-			-
Exercised		-			-
Forfeited		(250,000	)		1.00
Terminated		-			-
Balance at March 31, 2004		275,000		$	1.00

Granted		-			-
Exercised		-			-
Forfeited		-			-
Terminated		-			-
Balance at March 31, 2005		275,000		$	1.00

Granted		-			-
Exercised		-			-
Forfeited		-			-
Terminated		-			-
Balance at March 31, 2006		275,000		$	1.00

Grant		-			-
Exercised		-			-
Forfeited		(250,000	)	$	1.00
Terminated		-			-
Balance at March 31, 2007		25,000		$	1.00

Grant		-			-
Exercised		-			-
Forfeited		(25,000	)	$	1.00
Terminated		-			-
Balance at March 31, 2008		-		$	1.00

Grant		-			-
Exercised		-			-
Forfeited		-			-
Terminated		-			-
Balance at March 31, 2009		-		$	1.00

Exercised		-			-
Forfeited		-			-
Terminated		-			-
Balance at March 31, 2010		-		$	1.00
Weighted average fair value of options granted for services during 2010				$	-

Exercised	-		-
Forfeited	-		-
Terminated	-		-
Balance at March 31, 2011	-	$	1.00
Weighted average fair value of options granted for services during 2011		$	-

F-19

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 7 STOCKHOLDERS' DEFICIENCY (CONTINUED)

(D) PAR VALUE

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

(E) 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 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 year ended:

	2011			2010
Loss available to common stockholders.	$	(518,257	)	$	(591,293	)


Weighted average common shares outstanding		12,998,482			12,743,610
Basic and diluted loss per share	$	(0.04	)	$	(0.05	)

Effect of dilutive securities

The following convertible securities were not included in the computation of diluted earnings per share because the effect of conversion would be antidilutive:

SHARES OF POTENTIAL

COMMON STOCK

Preferred convertible shares 473,624 is convertible to 1,052,498 potential common shares.

F-20

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 8 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, 2011 and 2010, due to the Company's net losses.

The blended Canadian Federal and Provincial Corporate tax rate of 41.5% applies to loss before taxes of the Canadian subsidiary. The Company's tax expense differs from the "expected" tax expense for Federal income tax purposes for the years ended March 31, 2011 and 2010, (computed by applying the United States Federal Corporate tax rate of 34% to consolidated loss before taxes), as follows:

	2011			2010

Computed "expected" tax benefit	$	(176,207	)	$	(201,040	)
Foreign income tax rate differences		16,583			18,921
Change in deferred tax asset valuation allowance		159,623			182,119
	$	-		$	-
The above benefit was calculated using a combined federal and state tax estimated rate as noted below
Statutory federal income tax rate		34.00	%
State income taxes		--	%
Foreign income tax rate difference		(3.2	)%
Valuation allowance		(30.8	)%
Effective tax rate		(0.0	)%

The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at March 31, 2011 are as follows:

Deferred tax assets:
United States net operating loss carryforward	$	5,054,480
Canadian net operating loss carryforward		-
Total gross deferred tax assets		5,054,480
Less valuation allowance		(5,054,480	)
Net deferred tax assets	$	-

The net change in valuation allowance during the year ended March 31, 2011 was an increase of approximately $176,207. The Company's subsidiary has net operating losses of approximately $743,100 at March 31, 2010 which expired during the year ended March 31, 2011 and the parent United States entity has a net operating loss carry forward of approximately $16,410,650 available to offset the parent's net income through 2027.

For the purpose of these estimates, certain stock based expenses aggregating approximately $1,008,000 and impairment loss amounting to $165,570 since inception were considered non-deductible. Actual amounts ultimately deductible may differ from these estimates.

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. Certain subsidiaries of the Company are subject to examination by the Canadian tax authorities as per the laws and regulations of Canada.

F-21

KYTO BIOPHARMA, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011

NOTE 8 SUBSEQUENT EVENTS

Management evaluated all activities of the Company through the issuance date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the consolidated financial statements.

F-22

FLORIDA		65-1086538
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

B1-114 BELMONT STREET, TORONTO ONTARIO CANADA		M5R 1P8
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ

		Page
PART I

ITEM 1	Business		3
ITEM 2.	Properties		8
ITEM 3.	Legal Proceedings		8
ITEM 4.	(Removed and Reserved)		8

PART II

ITEM 5.	Market for Registrants Common Equity and Related Stockholders Matters		9
ITEM 6	Selected Financial Data		10
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation		11
ITEM 8 .	Financial Statements and Supplementary Data		16
ITEM 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure		16
ITEM 9A.	Controls and Procedures		16
ITEM 9B	Other Information		18

PART III

ITEM 10.	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act		19
ITEM 11.	Executive Compensation		21
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management		23
ITEM 13.	Certain Relationships and Related Transactions		24
ITEM 14.	Principal Accountants Fee and Services		25

PART IV

ITEM 15.	Exhibits and Financial Statement Schedules Signatures		26

Monoclonal Antibodies Development	Transport protein Receptor	Oncology Oncology	Development
Growth Blockers	Receptor modulators	Oncology	Proof of concept

Vitamin B12 Depletion Monoclonal Antibodies
Transport protein Receptor	Oncology Oncology	Development Development	Medarex Inc. The Research Foundation of State University of New York
Receptor Modulators
Growth blockers	Oncology	Proof of concept	The Research Foundation of State University of New York

PATENT NO.	TITLE	ISSUED
NZ252,559	Anti-receptor agents to the vitamin B12/transcobalamin II receptor	02/14/97
US5,688,504	Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and binding sites	11/18/97
US5,739,287	Biotinylated cobalamins	04/14/98
US5,840,712	Water soluble vitamin B12 receptor modulating agents and methods relating thereto	11/24/98
US5,840,880	Vitamin B12 receptor modulating agents	11/24/98
US5,869,465	Methods for receptor modulation and uses thereto	02/09/99
US6,083,926	Water soluble vitamin B12 receptor modulating agents and methods relating thereto	07/04/00
CA2,135,277	Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12	04/24/01
NZ323,127	Vitamin B12 receptor modulating agents and methods related and methods related thereto	07/12/01
KR297,310	Anti-receptor and growth blocking agents to the vitamin B12/transcobalamin II receptor and use in preventing cellular uptake of vitamin B12	05/21/01
CH0754189	Receptor modulating agents and methods relating thereto	10/09/02
DE0754189	Receptor modulating agents and methods relating thereto	10/09/02
FR0754189	Receptor modulating agents and methods relating thereto	10/09/02
GB0754189	Receptor modulating agents and methods relating thereto	10/09/02
US7416728	Growth Blocking Agents	08/26/08
CA2199940	Anti-receptor and growth blocking agents to Vitamin B12/transcobalmin II Receptor and binding sites	02/11/11

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

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

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

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

	Common Stock
	High		Low
Fiscal Year Ended March 31, 2011
First quarter	$	0.70	$	0.55
Second quarter		0.55		0.47
Third quarter		0.55		0.33
Fourth quarter		0.55		0.35

Fiscal Year Ended March 31, 2010
First quarter	$	1.70	$	0.55
Second quarter		1.50		1.50
Third quarter		1.50		0.45
Fourth quarter		1.01		0.30

	Years ended March 31,
	2011			2010

Net Loss	$	(518,258	)	$	(591,293	)

Loss Per Share	$	(0.04	)	$	(0.05	)

Total assets	$	863		$	170,014

Total liabilities	$	1,382,799		$	1,122,797

NAME	AGE	POSITION
Georges Benarroch	64	President & Chief Executive Officer, Director

Jean-Luc Berger, Ph.D.	47	Director

Uri Sagman, M.D. FRCPC	57	Director

Don MacAdam	64	Director

TITLE OF CLASS	NAME AND ADDRESS OF BENEFICIAL OWNER	COMMON SHARES		PERCENTAGE OF CLASS



Common	Medarex Inc. New Jersey, United States		1,300,000		10.0	%

Common	Dr. Uri Sagman Toronto, Ontario, Canada		1,402,025		10.7	%

TITLE OF CLASS	NAME AND ADDRESS OF BENEFICIAL OWNER	PREFERRED SHARES		PERCENTAGE OF CLASS

Convertible Preferred	Credifinance Capital Corp. (1)		473,624		100.0	%

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.*
31.1		Section 302 Certification of the principal executive officer**
31.2		Section 302 Certification of the principal financial and accounting officer
32.1		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the principal executive officer and principal financial accounting officer**

	KYTO BIOPHARMA, INC.

DATE: June 29, 2011	By:	/s/ Georges Benarroch
		Name: Georges Benarroch
		Title: President & C.E.O.

Signature	Title	Date

/s/ Georges Benarroch	President, Chief Executive Officer, principal executive officer	June 29, 2011
Georges Benarroch	and principal financial and accounting officer

/s/ Jean-Luc Berger	Director	June 29, 2011
Jean-Luc Berger

/s/ Uri Sagman	Director	June 29, 2011
Uri Sagman