Company Quick10K Filing
Kyto Technology & Life Science
Price-0.00 EPS-0
Shares6 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-0
TEV-0 TEV/EBIT1
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-02-16
10-Q 2020-09-30 Filed 2020-11-16
10-Q 2020-06-30 Filed 2020-08-04
10-K 2020-03-31 Filed 2020-06-30
10-Q 2019-12-31 Filed 2020-02-03
10-Q 2019-09-30 Filed 2019-11-05
10-Q 2019-06-30 Filed 2019-07-31
10-K 2019-03-31 Filed 2019-05-16
10-Q 2018-12-31 Filed 2019-02-12
10-Q 2018-09-30 Filed 2018-10-30
10-Q 2018-06-30 Filed 2018-08-20
10-K 2018-03-31 Filed 2018-06-28
10-Q 2017-12-31 Filed 2018-02-14
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-14
10-K 2017-03-31 Filed 2017-06-29
10-Q 2016-12-31 Filed 2017-02-14
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-K 2016-03-31 Filed 2016-06-29
10-Q 2015-12-31 Filed 2016-02-16
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-14
10-K 2015-03-31 Filed 2015-06-30
10-Q 2014-12-31 Filed 2015-02-17
10-Q 2014-09-30 Filed 2014-11-14
10-Q 2014-06-30 Filed 2014-08-14
10-K 2014-03-31 Filed 2014-06-30
10-Q 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-11-14
10-Q 2013-06-30 Filed 2013-08-14
10-K 2013-03-31 Filed 2013-06-28
10-Q 2012-12-31 Filed 2013-02-14
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-14
10-K 2012-03-31 Filed 2012-06-29
10-Q 2011-12-31 Filed 2012-02-14
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-K 2011-03-31 Filed 2011-06-29
10-Q 2010-12-31 Filed 2011-02-14
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-23
10-K 2010-03-31 Filed 2010-06-30
10-Q 2009-12-31 Filed 2010-02-12
8-K 2020-07-09
8-K 2019-07-17
8-K 2019-07-02
8-K 2018-04-25

KBPH 10Q Quarterly Report

Item 1. Financial Statements
Part I - Financial Information
Note 1 - Description of Business
Note 2 - Basis of Presentation and Significant Accounting Policies
Note 3 - Commitments and Contingencies
Note 4 - Related Party Transactions
Note 5 - Investments
Note 6 - Equity
Note 7 - Financial Highlights
Note 8 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 f10q123120_ex31z1.htm
EX-31.2 f10q123120_ex31z2.htm
EX-32.1 f10q123120_ex32z1.htm
EX-32.2 f10q123120_ex32z2.htm

Kyto Technology & Life Science Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
2.62.11.61.00.50.02016201720182020
Assets, Equity
0.10.0-0.0-0.1-0.1-0.22018201820192020
Rev, G Profit, Net Income
0.70.50.2-0.0-0.3-0.52016201720182020
Ops, Inv, Fin

10-Q 1 f10q123120_10q.htm FORM 10-Q QUARTERLY REPORT Form 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended December 31, 2020

 

or

 

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

 

For the transition period from: _____________ to _____________

 

KYTO TECHNOLOGY AND LIFE SCIENCE, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

000-50390

 

65-1086538

(State or Other Jurisdiction

 

(Commission

 

(I.R.S. Employer

of Incorporation)

 

File Number)

 

Identification No.)

 

13050 Paloma Road, Los Altos Hills, CA 94022

(Address of Principal Executive Office) (Zip Code)

 

(650) 204 7896

(Registrant’s telephone number, including area code)

 

 

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

 

Title of each class

Trading Symbol

Exchange

Common stock

KBPH

OTC QB

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 (or for such shorter period that the registrant was required to submit such files). [X] Yes [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

[   ]

 Accelerated filer

[   ]

Non-accelerated filer

[   ]

 Smaller reporting company

[X]

Emerging growth company

[   ]

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

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

 

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

 

9,801,832

Common Shares - $.01 Par Value - as of February 12, 2021


1


 

 

KYTO Technology and Life Science, Inc.

For the quarterly period ended December 31, 2020

 

INDEX

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Condensed Balance Sheets as of December 31, 2020 (Unaudited) and March 31, 2020

3

 

 

 

 

Unaudited Condensed Statements of Operations for the Three and Nine Months Ended December 31, 2020 and 2019

4

 

 

 

 

Unaudited Condensed Statements of Changes in Net Assets for the Three and Nine Months Ended December 31, 2020 and 2019

5

 

 

 

 

Unaudited Condensed Statements of Cash Flows for the Nine Months Ended December 31, 2020 and 2019

7

 

 

 

 

Schedule of Investments as of December 31, 2020 (Unaudited) and March 31, 2020

8

 

 

 

 

Notes to Unaudited Condensed Financial Statements

10

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

26

 

 

 

Item 4.

Controls and Procedures.

26

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings.

27

 

 

 

Item 1A.

Risk Factors.

27

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

27

 

 

 

Item 3.

Defaults Upon Senior Securities.

27

 

 

 

Item 4.

Mine Safety Disclosures

27

 

 

 

Item 5.

Other Information

27

 

 

 

Item 6.

Exhibits

29

 

 

 

 

Signatures

 


2


 

 

ITEM 1. FINANCIAL STATEMENTS 

 

PART I - FINANCIAL INFORMATION

 

Kyto Technology and Life Science, Inc.

Condensed Balance Sheets

 

 

 

December 31,

 

March 31,

 

 

2020

 

2020

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current Assets

 

 

 

 

Cash

$

563,795

$

33,756

Receivables

 

-

 

500

Deferred fundraising expenses

 

36,409

 

-

Investments

 

5,882,441

 

2,665,499

Total Assets

$

6,482,645

$

2,699,755

 

 

 

 

 

LIABILITIES AND NET ASSETS

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Accounts payable & accrued liabilities

$

75,102

$

26,394

Accrued liabilities & loans - related party

 

8,000

 

5,750

Total Current Liabilities

 

83,102

 

32,144

 

 

 

 

 

Commitments and Contingencies

 

-

 

-

 

 

 

 

 

NET ASSETS

 

 

 

 

Preferred stock authorized but not designated, $.01 par value

 

 

 

 

19,800,000 shares, none issued and outstanding as of

 

 

 

 

December 31, 2020 and March 31, 2020

 

-

 

-

Series A preferred convertible stock, $.01 par value, 4,200,000 shares

 

 

 

 

designated, 4,200,000  issued and outstanding

 

 

 

 

as of December 31, 2020 and March 31, 2020

 

42,001

 

42,001

Series B preferred convertible stock,  $0.01 par value, 6,000,000 shares

 

 

 

 

designated, 3,091,406 and 812,500 issued and outstanding as of

 

 

 

 

December 31, 2020 and March 31, 2020, respectively

 

30,914

 

8,125

Common stock, $.01 par value, 40,000,000 shares

 

 

 

 

authorized, 9,801,832 issued and outstanding as of

 

 

 

 

December 31, 2020 and March 31, 2020, respectively

 

98,018

 

58,368

Additional paid-in capital

 

39,337,610

 

35,943,369

Accumulated deficit

 

(33,109,000)

 

(33,384,252)

Total net assets

 

6,399,543

 

2,667,611

 

 

 

 

 

Total liabilities and net assets

$

6,482,645

$

2,699,755

 

 

 

 

 

The accompanying notes are an integral part of these unaudited  condensed financial statements.


3


 

 

Kyto Technology and Life Science, Inc.

Condensed Statements of Operations

(Unaudited)

 

 

 

For the Three months ended December 31,

 

For the Nine months ended December 31,

 

 

2020

 

2019

 

2020

 

2019

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on bank accounts

$

5

$

-

$

5

$

-

Other interest and other income

 

-

 

9,000

 

500

 

17,950

 

 

 

 

 

 

 

 

 

Total investment income

 

5

 

9,000

 

505

 

17,950

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

Management Fees

 

-

 

-

 

-

 

-

Interest expense

 

-

 

-

 

-

 

-

Banking and professional fees

 

91,669

 

9,063

 

168,212

 

38,015

Other operating expenses

 

241,047

 

90,242

 

363,983

 

331,191

 

 

 

 

 

 

 

 

 

Total expenses

 

332,716

 

99,305

 

532,195

 

369,206

 

 

 

 

 

 

 

 

 

Net investment loss

 

(332,711)

 

(90,305)

 

(531,690)

 

(351,256)

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from investment

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss) from investment

 

328,694

 

-

 

806,942

 

(61,046)

 

 

 

 

 

 

 

 

 

Net change in unrealized gain (loss) from hedging activities

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

Net realized  and change in unrealized gain (loss) from investment and hedging activities

$

328,694

$

-

$

806,942

$

(61,046)

 

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets  resulting from

operations

$

(4,017)

$

(90,305)

$

275,252

$

(412,302)

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease)  in net assets  resulting from

operations per share

$

(0.00)

$

(0.02)

$

0.04

$

(0.07)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

8,528,007

 

5,836,832

 

6,737,152

 

5,836,832

 

 

 

 

 

 

 

 

 

Fully diluted earnings per share

 

 

 

 

 

 

 

 

Not calculated where result is anti dilutive

 

 

 

 

 

 

 

 

Net increase (decrease)  in net assets  resulting from

operations per share

$

-

$

-

$

0.02

$

-

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

-

 

-

 

17,142,683

 

-

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

 


4


 

 

 

Kyto Technology and Life Science, Inc.

 

Condensed Statements of Changes in Net Assets for the Three months and Nine months ended December 31, 2020

(Unaudited)

 

 

Preferred

A

Preferred

A

Stock

Preferred

B

Preferred

B

Stock

Common

Common

Stock

Additional

Paid-in

Accumulated

 

 

Stock #

Amount

Stock #

Amount

Stock #

Amount

Capital

Deficit

Total

Balance, September 30, 2020

4,200,000

$

42,001

 

2,337,500

$

23,375

 

5,836,832

$

58,368

$

37,211,970

$

(33,104,983)

$

4,230,731

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(332,711)

 

(332,711)

Net realized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Net change in unrealized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

328,694

 

328,694

Net change in unrealized loss from hedging activities

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Dividends and distributions

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Sale of Series B Preferred stock at $0.80 per share

-

 

-

 

753,906

 

7,539

 

-

 

-

 

595,586

 

-

 

603,125

Common stock issued for warrants and options exercise

-

 

-

 

-

 

-

 

3,965,000

 

39,650

 

1,526,580

 

-

 

1,566,230

Compensation expense on stock options

-

 

-

 

-

 

-

 

-

 

-

 

3,474

 

-

 

3,474

Balance, December 31, 2020

4,200,000

$

42,001

 

3,091,406

$

30,914

 

9,801,832

$

98,018

$

39,337,610

$

(33,109,000)

$

6,399,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2020

4,200,000

$

42,001

 

812,500

$

8,125

 

5,836,832

$

58,368

$

35,943,369

$

(33,384,252)

$

2,667,611

Net investment loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(531,690)

 

(531,690)

Net realized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Net change in unrealized gain from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

806,942

 

806,942

Net change in unrealized loss from hedging activities

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Dividends and distributions

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Sale of Series B Preferred stock at $0.80 per share

-

 

-

 

2,278,906

 

22,789

 

-

 

-

 

1,850,336

 

-

 

1,873,125

Common stock issued for warrants and options exercise

-

 

-

 

-

 

-

 

3,965,000

 

39,650

 

1,526,579

 

-

 

1,566,229

Compensation expense on stock options

-

 

-

 

-

 

-

 

-

 

-

 

17,326

 

-

 

17,326

Balance, December 31, 2020

4,200,000

$

42,001

 

3,091,406

$

30,914

 

9,801,832

$

98,018

$

39,337,610

$

(33,109,000)

$

6,399,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.


5


 

 

Kyto Technology and Life Science, Inc.

 

Condensed Statements of Changes in Net Assets for the Three months and Nine months ended December 31, 2019

(Unaudited)

 

 

Preferred

A

Preferred

A

Stock

Preferred

B

Preferred

B

Stock

Common

Common

Stock

Additional

Paid-in

Accumulated

 

 

Stock #

Amount

Stock #

Amount

Stock #

Amount

Capital

Deficit

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

4,200,000

$

42,000

 

-

$

-

 

5,836,832

$

58,368

$

35,344,318

$

(32,932,850)

$

2,511,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(90,305)

 

(90,305)

Net realized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Net change in unrealized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Net change in unrealized loss from hedging activities

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Dividends and distributions

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Sale of Series B Preferred stock at $0.80 per share

-

 

-

 

531,250

 

5,313

 

-

 

-

 

419,687

 

-

 

425,000

 Compensation expense on stock options

-

 

-

 

-

 

-

 

-

 

-

 

6,168

 

-

 

6,168

Balance, December 31, 2019

4,200,000

$

42,000

 

531,250

$

5,313

 

5,836,832

$

58,368

$

35,770,173

$

(33,023,155)

$

2,852,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

2,612,500

$

26,125

 

-

$

-

 

5,836,832

$

58,368

$

34,090,092

$

(32,610,853)

$

1,563,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment loss

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(351,256)

 

(351,256)

Net realized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Net change in unrealized loss from investment

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(61,046)

 

(61,046)

Net change in unrealized loss from hedging activities

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Dividends and distributions

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Sale of Series A Preferred stock at $0.80 per share

1,587,500

 

15,875

 

-

 

-

 

-

 

-

 

1,254,125

 

-

 

1,270,000

Sale of Series B Preferred stock at $0.80 per share

-

 

-

 

531,250

 

5,313

 

-

 

-

 

419,687

 

-

 

425,000

Compensation expense on stock options

-

 

-

 

-

 

 

 

-

 

-

 

6,269

 

-

 

6,269

Balance, December 31, 2019

4,200,000

$

42,000

 

531,250

$

5,313

 

5,836,832

$

58,368

$

35,770,173

$

(33,023,155)

$

2,852,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.


6


 

Kyto Technology and Life Science, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

For the nine

months ended

 

For the nine

months ended

 

 

December 31,

2020

 

December 31,

2019

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

Net increase (decrease) in net assets resulting from operations

$

275,252

$

(412,302)

Adjustments to reconcile net increase (decrease) in net assets resulting

 

 

 

 

from operations to net cash used in operating activities

 

 

 

 

Net change in unrealized (gain) loss on investments

 

(806,942)

 

61,046

Option compensation expense

 

17,326

 

6,269

 

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

Receivables

 

500

 

(5,000)

Investments

 

(2,410,000)

 

(803,497)

Accounts payable and accrued liabilities

 

47,708

 

38,547

Net cash used in operating activities

 

(2,876,156)

 

(1,114,937)

 

 

 

 

 

CASH FLOW FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net cash provided used in investing activities

 

-

 

-

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

Sale of common stock from exercise of warrants and options

 

1,566,229

 

-

Deferred fundraising expenses

 

(36,409)

 

(256,174)

Proceeds from sales of Series A Preferred stock

 

-

 

1,270,000

Proceeds from sales of Series B Preferred stock

 

1,873,125

 

425,000

Receipt of SBA loan

 

1,000

 

-

Advances from related party

 

2,250

 

1,175

Net cash provided by financing activities

 

3,406,195

 

1,440,001

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

530,039

 

325,064

 

 

 

 

 

Cash at beginning of period

 

33,756

 

93,634

Cash at end of period

$

563,795

$

418,698

 

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

 

Interest Paid

$

-

$

-

Taxes Paid

$

800

$

800

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities

$

-

$

-

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.


7


 

 

Kyto Technology and Life Science Inc

Condensed schedule of investments

As at December 31, 2020

 

 

Portfolio Company

Industry

Investment

Approx %

Ownership

Cost

Fair value

% of

net

assets

(a)

SAFE investments - not readily marketable

 

 

 

 

 

 

 

Mitre Medical Corp

Life science

SAFE

0.6%

$  75,000

$  75,000

1.2%

 

Mitre Medical Corp

Life science

SAFE

0.3%

50,000

50,000

0.8%

 

Orion Biotechnology Inc.

Life science

SAFE

2.0%

100,000

100,000

1.6%

Total SAFE investments - not readily marketable

 

 

 

$225,000

$225,000

3.5%

 

 

 

 

 

 

 

 

Preferred investments - not readily marketable

 

 

 

 

 

 

 

Altis Biosystems

Life science

Series Seed-1 Preferred

0.6%

$  50,000

$  50,000

0.8%

 

Astrocyte Pharmaceuticals Inc

Life science

Series A Preferred

1.0%

100,000

100,000

1.6%

 

Cnote Group, Inc

Fintech

Series Seed Preferred

0.5%

51,500

59,783

0.9%

 

Cnote Group, Inc

Fintech

Series Seed Preferred

0.6%

50,000

66,247

1.0%

 

Colabs Inc

Life science

Series A Preferred

0.5%

50,000

50,000

0.8%

 

Deep Blue Medical Advances Inc

Life science

Series A Preferred

1.0%

49,997

49,997

0.8%

 

Eumentis Thereapeutics Inc

Life science

Series A Preferred

1.0%

100,000

100,000

1.6%

 

FemtoDX Inc

Life science

Series A Preferred

0.5%

100,000

100,000

1.6%

 

i-Lumen Scientific Inc.

Life science

Series A Preferred

0.4%

50,000

50,000

0.8%

 

i-Lumen Scientific Inc.

Life science

Series A Preferred

0.4%

50,000

50,000

0.8%

 

Inhalon Biopharma Inc

Life science

Series Seed Preferred

1.0%

99,997

99,997

1.6%

 

Light Line Medical Inc

Life science

Series Seed Preferred

0.4%

25,000

25,000

0.4%

 

Lowell Therapeutics Inc

Life science

Series A preferred

0.5%

50,000

50,000

0.8%

 

Lowell Therapeutics Inc

Life science

Series A preferred

0.5%

50,000

50,000

0.8%

 

Micronic Technologies Inc

Technology

Series Seed preferred

2.3%

100,000

100,000

1.6%

 

Neuroflow Inc

Life science

Series Seed -2 Preferred

1.0%

150,000

150,000

2.3%

 

New View Surgical, Inc.

Life science

Series A-1 Preferred

0.7%

75,000

75,000

1.2%

 

Otomagnetics Inc

Life science

Series A-1  Preferred

0.1%

100,000

100,000

1.6%

 

Promaxo, Inc.

Life science

Series B-1 Preferred

0.8%

250,000

531,738

8.3%

 

Seal Rock Therapeutics, Inc.

Life science

Series Seed Preferred

0.6%

78,000

80,329

1.3%

 

Shyft (FKA Crater Group Inc)

Technology

Series Seed Preferred

0.5%

51,500

97,940

1.5%

 

Shyft (FKA Crater Group Inc)

Technology

Series A-2 Preferred

0.3%

50,000

64,626

1.0%

 

Shyft (FKA Crater Group Inc)

Technology

Series A-1 Preferred

0.3%

50,000

50,000

0.8%

 

Trellis Bioscience LLC

Life science

Series B Preferred

0.3%

50,000

50,000

0.8%

 

Trellis Bioscience LLC

Life science

Series B Preferred

0.3%

50,000

50,000

0.8%

 

Trellis Bioscience LLC

Life science

Series B Preferred

0.7%

100,000

100,000

1.6%

 

Valfix Medical Inc

Life science

Series Seed Preferred

0.3%

50,000

50,000

0.8%

 

Visgenx Inc

Life science

Series Seed Preferred

0.8%

30,000

30,778

0.5%

 

Visgenx Inc

Life science

Series Seed Preferred

0.6%

25,000

25,648

0.4%

 

Visgenx Inc

Life science

Series Seed Preferred

0.4%

15,003

15,392

0.2%

Preferred investments - not readily marketable

 

 

 

$2,100,997

$2,472,475

38.6%

 

 

 

 

 

 

 

 

Common stock investments - not readily marketable

 

 

 

 

 

 

 

BendaRX Corp.

Life science

Common shares

0.1%

$100,000

$150,000

2.3%

 

BendaRX Corp.

Life science

Common shares

0.1%

100,000

150,000

2.3%

 

Boardwalk Tech

Technology

Common Stock

0.5%

73,500

91,995

1.4%

Total common stock investments - not readily marketable

 

 

 

$273,500

$391,995

6.1%

 

 

 

 

 

 

 

 

Other investments - not readily marketable

 

 

 

 

 

 

 

Enduralock LLC

Technology

Ownership Units

0.3%

$  30,000

$  30,000

0.5%

 

Enduralock LLC

Technology

Ownership Units

0.3%

35,000

35,000

0.5%

 

Exodos Life Sciences LP

Life science

Ownership Units

1.5%

206,000

206,000

3.2%

 

Green Sun Medical LLC

Life science

Ownership units

1.3%

50,000

50,000

0.8%

 

Green Sun Medical LLC

Life science

Ownership units

0.6%

25,000

25,000

0.4%

 

Green Sun Medical LLC

Life science

Ownership units

0.6%

25,000

25,000

0.4%

Total other investments - not readily marketable

 

 

 

$371,000

$371,000

5.8%


8


 

 

Kyto Technology and Lif Science Inc

Condensed schedule of investments

As at December 31, 2020 - continued

 

 

Portfolio Company

Industry

Investment

Approx %

Ownership

Cost

Fair value

% of net

assets (a)

Convertible loan investments - not readily marketable

 

 

 

 

 

 

 

Achelios Therapeutics Inc.

Life science

Convertible Note

2.5%

$  100,000

$  119,200

1.9%

 

Achelios Therapeutics Inc.

Life science

Convertible Note

0.5%

25,000

28,540

0.4%

 

Achelios Therapeutics Inc.

Life science

Convertible Note

1.3%

50,000

53,595

0.8%

 

Avisi Technologies Inc

Life science

Convertible Note

1.0%

50,000

51,688

0.8%

 

Basepaws Inc

Life science

Convertible Note

1.1%

50,000

184,418

2.9%

 

Beam Semiconductor Inc

Technology

Convertible Note

1.0%

150,000

168,082

2.6%

 

Beam Semiconductor Inc

Technology

Convertible Note

0.3%

50,000

53,299

0.8%

 

Corinnova Inc

Life science

Convertible Note

0.7%

100,000

100,838

1.6%

 

Cyberdontics Inc

Life science

Convertible Note

0.8%

30,000

33,176

0.5%

 

Cyberdontics Inc

Life science

Convertible Note

0.8%

35,000

37,363

0.6%

 

Cyberdontics Inc

Life science

Convertible Note

0.8%

35,000

35,606

0.6%

 

Deep Blue Medical Advances Inc

Life science

Convertible Note

0.4%

50,000

50,123

0.8%

 

Every Key Inc

Technology

Convertible Note

1.1%

100,000

105,288

1.6%

 

Identical Inc

Life science

Convertible Note

1.4%

100,000

100,351

1.6%

 

INBay Technology Inc

Technology

Convertible Note

0.3%

50,000

58,734

0.9%

 

INBay Technology Inc

Technology

Convertible Note

0.2%

30,000

33,557

0.5%

 

INBay Technology Inc

Technology

Convertible Note

0.3%

50,000

55,162

0.9%

 

INBay Technology Inc

Technology

Convertible Note

0.3%

40,000

40,368

0.6%

 

Kiana Analytics Inc

Technology

Convertible Note

0.7%

100,000

100,107

1.6%

 

Kitotech Medical Inc

Life science

Convertible Note

1.3%

100,000

112,214

1.8%

 

Kitotech Medical Inc

Life science

Convertible Note

0.6%

75,000

75,284

1.2%

 

Lifewave Biomedical Inc

Life science

Convertible Note

0.8%

30,000

32,387

0.5%

 

Lifewave Biomedical Inc

Life science

Convertible Note

0.8%

70,000

73,774

1.2%

 

Light Line Medical Inc

Life science

Convertible Note

0.4%

30,000

38,031

0.6%

 

Light Line Medical Inc

Life science

Convertible Note

1.0%

70,000

131,049

2.0%

 

Navaux Inc

Life science

Convertible Note

1.2%

60,000

60,148

0.9%

 

Octagon Therapeutics Inc

Life science

Convertible Note

0.5%

50,000

50,493

0.8%

 

Octagon Therapeutics Inc

Life science

Convertible Note

0.5%

50,000

50,349

0.8%

 

Perikinetics Inc

Life science

Convertible Note

0.1%

100,000

100,838

1.6%

 

SageMedic  Corp

Life science

Convertible Note

0.4%

50,000

56,893

0.9%

 

SageMedic  Corp

Life science

Convertible Note

0.6%

75,000

75,608

1.2%

 

Sensing Electromagnetic Plus Corp

Technology

Convertible Note

0.1%

50,000

1

0.0%

 

Sensing Electromagnetic Plus Corp

Technology

Convertible Note

0.1%

11,048

1

0.0%

 

Valfix Medical Inc

Life science

Convertible Note

0.8%

50,000

50,000

0.8%

 

Xpan Inc

Life science

Convertible Note

0.9%

50,000

53,310

0.8%

 

Xpan Inc

Life science

Convertible Note

0.4%

25,000

26,052

0.4%

 

Xpan Inc

Life science

Convertible Note

0.4%

25,000

26,047

0.4%

Total convertible loan investments - not readily marketable

 

 

 

$2,166,048

$2,421,972

37.8%

 

 

 

 

 

 

 

 

Total investments

 

 

 

$5,136,545

$5,882,442

91.9%

 

(a) based on total assets of $6,399,543

 

 

 

 


9


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 1 – DESCRIPTION OF BUSINESS

 

Kyto Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999 under the name of B Twelve Inc. In August, 2002, the Company changed its name from B Twelve, Inc. to Kyto BioPharma Inc. and in May 2018, the name was changed again to Kyto Technology and Life Science, Inc. In July 2019, the Company was re-incorporated as a Delaware company. The Company operates virtually, from public locations, or the homes of its officers and does not lease any office space.

 

The Company was originally formed to acquire and develop proprietary drugs and had been looking at a number of strategies.  In April, 2018, the Board adopted a new business plan focused on the development of early stage technology and life science businesses through early stage investment funding. The Company has recruited a number of experienced investment consultants from a network that includes angel investors, corporate managers, and successful entrepreneurs across a number of technology and life science products and markets and relies on input from these advisors in conducting due diligence and making investment decisions. In order to offset the risk in early stage investing, the Company works with angel investment groups and participates only after these groups have completed due diligence and committed to invest, and does not typically invest more than $250,000 in any single investment. Generally, the Company’s investments represent less than 5% ownership interests, and the Company therefore has no effective control or influence over the management or commercial decisions of the companies in which it invests. The Company plans to generate revenue from realised gains from the sale of the businesses in which it has invested, or some or all of its shareholdings in those cases where portfolio companies go public. Generally, it is expected that investments will be realised from an exit within a period of four years following investment.  Such sales are outside its control and depend on merger and acquisition (“M&A”) transactions or an IPO which may result in cash or equity proceeds. Accordingly, it is difficult to forecast revenue, net income, and cash flow. At March 31, 2020, management determined that the Company was an investment company for purposes of ASC 946 disclosure, and committed to follow the specialized accounting and reporting guidance of contained therein.  Other than making its initial investments in its portfolio companies, the Company does not provide any financial support to any of its investees.

 

The Company has no regular employees, full-time or part-time. The chief executive officer of Kyto Technology and Life Science, Inc. is acting as a consultant to the Company and does not receive contractual compensation for his services in the form of cash. For the three months and nine months ended December 31, 2020 he was granted 0 and 215,000 stock options, respectively, and an ex-gratia bonus of $50,000.

 

The Company has created a portfolio of minority investments in early-stage start-up companies and derives its revenue opportunity from the sale of those investments.  Such sales are outside its control and depend on M&A transactions or IPOs which may result in cash or equity proceeds. Accordingly, it is difficult to forecast revenue, net income, and cash flow. The Company currently has approximately $560,000 in the bank and is now actively marketing a $3 million Series B round with a target close date of March 31, 2021. The average monthly expenses for the nine months ended December 31, 2020 were approximately $59,000 per month so the company has sufficient cash to fund its operations through the close of its Series B round if it simply manages its existing investments. However it plans to ramp up monthly expenditure to market and ensure the success of the Series B round, whereupon, if successful it will have sufficient funding for further investments and ongoing operations. In the event that the Series B close is delayed, management has the ability to slow down expenditure and defer future investment opportunities to balance its cash flow accordingly.  While there is a degree of uncertainty in this business model, the Company has two viable alternative options to ensure continuity of liquidity and ongoing operations. However, there is no assurance that the Company will be able to continue as a going concern, and stay at home orders, and general economic uncertainties arising out of the current Covid-19 epidemic create additional delay and uncertainty. To date there has been no disruption to the Company’s business operations, although some of its portfolio investment companies report delays in their programs.

 

At March 31, 2020, management determined that the Company was an investment company for purposes of ASC 946 disclosure, and committed to follow the specialized accounting and reporting guidance contained therein. Accordingly, a new company, Kyto Investments, Inc. (the “KI”) was incorporated in Delaware in December 2020 in preparation for a restructuring. The Company is an internally managed, closed-end investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

 

Immediately upon effectiveness of this Registration Statement, the Company will merge with Kyto Technology and Life Science, Inc., a Delaware corporation (the “Predecessor”), and the Company will be the surviving entity. As of the completion of the merger, the Company will constitute a “successor issuer” of the Predecessor for the purposes of Rule 414 under the Securities Act and may continue the Predecessor’s current offering by filing post-effective amendments to the Predecessor Registration Statements.


10


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 1 – DESCRIPTION OF BUSINESS (CONTINUED)

 

As a BDC, the Company is required to comply with certain regulatory requirements. See “Operating and Regulatory Environment”. The Company also intends to elect to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a RIC, the Company is required to comply with additional regulatory requirements. See “Taxation as a Regulated Investment Company.”

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 

(A)BASIS OF PRESENTATION  

 

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which the Company considers necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the three and nine months ended December 31, 2020 may not necessarily be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements of the Company for the year ended March 31, 2020, included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2020.

 

The company’s financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments. The company carries its liabilities at amounts payable, net of unamortized premiums or discounts. The company does not currently plan to elect to carry its liabilities at fair value. Net assets are calculated as the carrying amounts of assets, including the fair value of investments, less the carrying amounts of its liabilities.

 

(B)REVENUE RECOGNITION 

 

The Company derives revenue from the sale of investments. As a minority, early-stage investor, the Company does not have the ability to manage the timing or acceptance of liquidity events that will enable it to realize its investments, nor the ability to predict when they may happen, although as a guideline, it would typically expect such events to occur around four years after its investments are made. The Company will book the revenue from investment activities upon completion of sale and receipt of net proceeds, after deducting related transaction expenses. As an Investment Company, we recognize the net increase or decrease in fair market value of our investments as unrealized gain or loss from investments. The Company is in regular contact with the management of its portfolio investment companies to provide the basis for impairment reviews, revaluation assessments and forecasting future revenue and fund-raising needs.

 

(C)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 that includes the enactment date.

 

(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 three and nine months ended December 31, 2020 and March 31, 2020 include the valuation of investments, stock options and warrants.


11


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

(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 December 31, 2020 and March 31, 2020, respectively.

 

(F)CONCENTRATIONS 

 

The Company maintains its cash in bank checking and deposit accounts, which, at times, may exceed federally insured limits. As of December 31, 2020 the Company had approximately $214,000 of deposits in excess of federally insured limits (March 31, 2020 $0.). The Company has not experienced any losses in such accounts through December 31, 2020 and March 31, 2020, respectively.

 

(G)STOCK-BASED COMPENSATION 

 

Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” requires generally that all equity awards granted to employees and consultants 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. The Company granted 217,500 and 1,250,000 options to consultants and advisors during the three months ended December 31, 2020 and December 31, 2019, respectively. The Company granted 847,500 and 1,250,000 options to consultants and advisors during the nine months ended December 31, 2020 and December 31, 2019, respectively.

 

(H)NET INCOME (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 preferred stock, stock options and warrants, have not been included in the calculation, as their effect is anti-dilutive for the periods presented.

 

Number of shares used in calculating fully- diluted EPS

 

 

Three months

ended December

31, 2020

Nine months

ended December

31, 2020

 

Three months

ended December

31, 2019

Nine months

ended December

31, 2019

Common Stock

8,528,007

5,836,832

 

5,836,832

5,836,832

Series A preferred stock

4,200,000

4,200,000

 

4,200,000

3,705,694

Series B preferred stock

2,789,954

1,933,912

 

192,708

25,694

Options

2,157,500

1,842,873

 

1,100,000

308,492

Warrants

1,596,667

3,329,067

 

4,200,000

3,705,694

Total

19,272,128

17,142,683

 

15,529,540

13,582,408

 

(I)INVESTMENT AND VALUATION OF INVESTMENT AT FAIR VALUE 

 

The Company reviews the performance of the underlying investments including, management reports, press releases, web site announcements and progress reports, Carta equity updates, management interviews  and, where accessible, financial reports, to determine their current and future potential value and liquidity. In the event that management considers the value of an investment to be impaired, the carrying value of the investment will be written down by an impairment charge to reflect management’s estimated valuation. The Company recognized impairment of one of its investments which was written down by $61,046 in September 2019. The Company has not experienced any impairment write-downs in any  subsequent periods.


12


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.

 

The Company has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the extent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.

 

For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach or by ascertaining the most recent valuation of the portfolio company by reference to the basis of any recent financing transactions by that company. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and the fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The market approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our management and board.

 

In determining the appropriate fair value of an investment using these approaches, the most significant information and assumption may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, the principal market and enterprise values, environmental factors, among other factors.

 

The estimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been used had a broader market for the investments existed.

 

The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation. The three levels of valuation hierarchy are defined as follows:

 

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities

 

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

 

Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.


13


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

(J)SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS 

 

In March 2020, the Company adopted Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments.

 

In June 2016, the FASB issued ASU 2016-13 (as amended through November 2019), Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands disclosure requirements. ASU 2016-13 is effective for the Company beginning in the first quarter of 2020. The guidance will be applied using the modified-retrospective approach. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

 

In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.

 

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.

 

(K)VOLUNTARY CHANGE IN ACCOUNTING PRINCIPLE 

 

During the fourth quarter of the year ended March 31, 2020, the Company made a voluntary change in accounting principle by preparing the company’s financial statements using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946).

 

The Company made this voluntary change in principle because it believes that the Company now met the characteristics and requirement of being an investment company under ASC 946, and the presentation under ASC 946 better reflects the business purpose and enhances the comparability of its financial statements with many of its industry peers. In accordance with U.S. GAAP, the change was reflected in the financial statements through retrospective application as follows:

 

 

 

June 30, 2019

 

 

Prior to

 

Effect of

 

 

 

 

Change

 

Change

 

Adjusted

Cash

$

325,308

$

-

$

325,308

Receivable

 

1,000

 

-

 

1,000

Investment

 

-

 

1,821,545

 

1,821,545

Deferred fundraising expenses

 

124,013

 

-

 

124,013

Current assets

 

450,321

 

1,821,545

 

 

 

 

 

 

 

 

 

Investment

 

1,821,545

 

(1,821,545)

 

-

Total assets

$

2,271,866

$

-

$

2,271,866

 

There have been no further changes in the three or nine months ended December 31, 2020.


14


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

(L)RECLASSIFICATION POLICY 

 

Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on the previously reported net increase (decrease) in net assets resulting from operations.

 

NOTE 3 – COMMITMENTS AND CONTINGENCIES

 

The Company has no commitments or contingencies.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

At December 31, 2020 and March 31, 2020, the Company had accrued and owed $8,000 and $5,750, respectively, to officers of the Company for service fees, telephone and car allowance.

 

NOTE 5 – INVESTMENTS

 

The following table summarizes the Company’s investment portfolio at December 31, 2020 and March 31, 2020.

 

 

 

 

December 31, 2020 

 

March 31, 2020 

Number of portfolio companies

 

46

 

 

28

 

Fair value

$

5,882,442

 

$

2,665,499

 

Cost

 

$

3,466,545

 

$

2,726,545

 

% of portfolio at fair value

 

 

 

 

 

 

 

Convertible notes

 

2,421,972

31%

 

1,578,002

59%

 

Preferred stock

 

2,472,475

54%

 

651,497

24%

 

Common stock

 

391,995

4%

 

73,500

3%

 

SAFE

 

225,000

2%

 

126,500

5%

 

Other ownership units

 

371,000

9%

 

236,000

9%

 

Total

$

5,882,442

100%

$

2,665,499

100%

 

Our investment portfolio represents approximately 91.9% of our net assets at December 31, 2020 and 99.9% at March 31, 2020. For convertible loans the valuation is increased to reflect accrued interest. For preferred stock investments or convertible loans that convert to preferred stock, the Company values their investment at the price paid by investors unless there has been a subsequent round, in which case the Company uses a valuation midway between the price of its preferred stock and the price paid by investors in the latest funding round. For common stock of publicly traded portfolio companies the Company uses closing price on the last day of the quarter. For other investments including common stock, SAFEs and units, the investments are carried at cost unless there are other available metrics, such as relevant market multiples and comparable company valuations, company specific-financial data including actual and projected results and, independent third party valuation estimates


15


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 5 – INVESTMENTS (CONTINUED)

 

The following table presents fair value measurements of investments, by major class, as of December 31, 2020 and March 31, 2020, according to the fair value hierarchy:

 

Description

Level 1

Level 2

Level 3

Total

December 31, 2020

 

 

 

 

Convertible notes

-

-

$                2.421.972

$         2,421,972

Preferred stock

-

-

2,472,475

2,472,475

SAFEs

-

-

225,000

225,000

Common stock

-

-

391,995

391,995

Other ownership interests

-

-

371,000

371,000

Total

$                         -

$                        -

$                 5,882,442

$         5,882,442

 

 

 

 

 

Description

Level 1

Level 2

Level 3

Total

March 31, 2020

 

 

 

 

Convertible notes

-

-

$                 1,528,002

$         1,528,002

Preferred stock

-

-

701,497

701,497

SAFEs

-

-

73,500

73,500

Common stock

-

-

126,500

126,500

Other ownership interests

-

-

236,000

236,000

Total

$                         -

$                        -

$                 2,665,499

$         2,665,499

 

We focus on making our investments in the United States, Canada and Israel. The investments in Canada and Israel were denominated and can be settled in USD.

 

As of March 31, 2020

America

Canada

Rest of World

Total

Fair value beginning of year

$        2,170,499

$           245,000

$             250,000

$        2,665,499

New investments

1,935,000

425,000

50,000

2,410,000

Proceeds from sale of investments

-

-

-

-

Realized gains

-

-

-

-

Change in value of investments

656,188

129,374

21,381

806,943

Fair value December 31, 2020

$       4,761,687

$           799,374

$             321,381

$        5,882,442

 

 

 

 

 

 

 

 

 

 

As of March 31, 2019

America

Canada

Rest of World

Total

Fair value beginning of year

$        1,448,048

$            50,000

$                        -

$        1,498,048

New investments

783,497

195,000

250,000

1,228,497

Proceeds from sale of investments

-

-

-

-

Realized gains

-

-

-

-

Change in value of investments

(61,046)

-

-

(61,046)

Fair value March 31, 2020

$        2,170,499

$           245,000

$             250,000

$        2,665,499


16


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 5 – INVESTMENTS (CONTINUED)

 

Working on the experience of our technical advisors, we limit our investments to fintech, technology, and life sciences.

 

As of March 31, 2020

Fintech

Technology

Life science

Total

Fair value beginning of year

$               101,500

$              685,002

$                 1,878,997

$         2,665,499

New investments

-

325,000

2,085,000

2,410,000

Proceeds from sale of investments

-

-

-

-

Realized gains

-

-

-

-

Change in value of investments

24,530

74,158

708,255

806,943

Fair value December 31, 2020

$               126,030

$           1,084,160

$                4,672,252

$         5,882,442

 

 

 

 

 

As of March 31, 2019

Fintech

Technology

Life science

Total

Fair value beginning of year

$               101,500

$              262,548

$                 1,134,000

$         1,498,048

New investments

 

483,500

744,997

1,228,497

Proceeds from sale of investments

-

-

-

-

Realized gains

-

-

-

-

Change in value of investments

-

(61,046)

-

(61,046)

Fair value March 31, 2020

$               101,500

$              685,002

$                 1,878,997

$         2,665,499

 

We invest in early stage private companies developing products or solutions in the fields of fintech, technology and life sciences. Typically we are investing in interest bearing notes that may be convertible into equity securities upon the completion of qualified subsequent financings, preferred stock, SAFEs or other forms of ownership. Generally, these notes are subject to conversion upon completion of either a pre-agreed period, typically 2 to 3 years, or the closing of a qualified round of financing at a discount to the price of that round. In the absence of such subsequent round of financing, a portfolio company may extend the conversion period from time to time. In such circumstances management carefully reviews the underlying facts to evaluate any potential impairment issues. At the date of this report, management is not aware of any impairment issues relating to portfolio companies whether notes are extended or overdue, or for any other reasons.

 

As of March 31, 2020

Convertible

notes

Preferred

stock

SAFEs

Common

stock

Other

ownership

interests

Total

 

 

 

 

 

 

 

Fair value beginning of year

$       1,528,002

$         701,497

$        73,500

$       126,500

$        236,000

$    2,665,499

Conversions to preferred stock

 (597,984)

678,313

 (80,329)

-

-

-

New investments

935,000

1,025,000

150,000

200,000

100,000

2,410,000

Proceeds from sale of investments

-

-

-

-

-

-

Realized gains

-

-

-

-

-

-

Change in value of investments

556,954

67,665

81,829

65,495

35,000

806,943

Fair value December 31, 2020

$       2,421,972

$      2,472,475

$       225,000

$       391,995

$        371,000

$    5,882,442

 

 

 

 

 

 

 

As of March 31, 2019

Convertible

notes

Preferred

stock

SAFEs

Common

stock

Other

ownership

interests

Total

 

 

 

 

 

 

 

Fair value beginning of year

$          764,048

$         401,500

$                  -

$        126,500

$        206,000

$    1,498,048

New investments

825,000

299,997

73,500

-

30,000

1,228,497

Proceeds from sale of investments

-

-

-

-

-

-

Realized gains

-

-

-

-

-

-

Change in value of investments

(61,046)

-

-

-

-

(61,046)

Fair value March 31, 2020

$       1,528,002

$         701,497

$        73,500

$       126,500

$        236,000

$   2,665,499

 


17


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 6 – EQUITY

 

(A)PREFERRED STOCK 

 

Series A

 

As of December 31, 2020 and March 31, 2020, there are 4,200,000 shares of Series A preferred stock (“Series A”) designated at a par value of $.01 per share. These shares were sold as investment Units at $0.80 per Unit in a private placement to accredited investors. The Units consist of one Series A share and one warrant per Unit. The Series A can either be converted at the option of the holder into Common Shares at a conversion price of $0.80 per share or it shall be converted upon listing of the Company on Nasdaq, NYSE or OTC markets or can elect to receive $1.60 per share. In the event of any liquidation or winding up of the Company, the holders of the Series A shall be entitled to receive in preference to the holders of Common Shares, a per share amount equal to two times (2x) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference currently $1.60 per share). The shares of Series A shall be non-voting. As of December 31, 2020 and March 31, 2020, there are 4,200,000 shares of Series A outstanding.

 

Series B

 

As of December 31, 2020 and March 31, 2020, there are, 6,000,000 shares of Series B preferred stock (“Series B”) designated at a par value of $.01 per share. These shares were sold in a private placement to accredited investors. The Series B can either be converted at the option of the holder into Common Shares at a conversion price of $0.80 per share or it shall be converted upon listing of the Company on Nasdaq, NYSE or OTC markets or the closing of one or more of a series financings resulting in aggregate proceeds of $10,000,000. In the event the Company issues additional securities at a purchase price less than the conversion price or any liquidation or winding up of the Company, the holders of the Series B shall be entitled to receive in preference to the holders of Series A and Common Shares, a per share amount equal to the greater of i) one time (1x) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference – currently $0.80 per share) or ii) such amount per share as would have been payable had all shares of Series B been converted into common stock immediately prior to such liquidating event. The shares of Series B shall be voting on an as-converted basis with the common stock. As of December 31, 2020 and March 31, 2020, there are, respectively, 3,091,406 and 812,500 shares of Series B outstanding. The Company sold 753,906 shares of Series B preferred for $603,125 during the three months ended December 31, 2020 and2,278,906 shares of Series B preferred for $1,873,125 during the nine months ended December 31, 2020.

 

(B)COMMON STOCK 

 

The Company has authorized 40,000,000 shares of common stock at a par value of $0.01 per share. During the three months and nine months ended December 31, 2020, the Company sold 3,965,000 shares of common stock for proceeds $1,566,229 in response to the exercise of warrant and stock options. As of December 31, 2020, and March 31, 2020 respectively, a total of 9,801,932 and 5,836,832 shares of the Company’s common stock were issued and outstanding.

 

(C)STOCK OPTIONS 

 

In April 2018, the Company approved the introduction of the Kyto Technology and Life Science, Inc. Incentive Stock Option Plan for the benefit of employees, consultants and directors, with the objective of securing the benefit of services for stock options rather than cash salaries.

 

In July 2019, the majority of the shareholders of the Company approved the introduction of the Kyto Technology and Life Science 2019 Stock Option and Incentive Plan (“Plan”), and reserved 2 million shares for issuance to directors, officers, consultants and advisors. During the nine months ended December 31, 2020 and 2019, the Company issued a total of 847,500 and 1,250,000 non-qualified stock options to consultants and advisors vesting over terms of up to two years.

 

On December 16, 2020, the Board approved the Kyto Technology and Life Science, Inc. 2020 Non-Qualified Stock Option Plan (the “Plan”), pursuant to which non-employee directors and advisors can be awarded stock options to purchase shares of the Company’s common stock (the “Options”). Up to 2,000,000 shares of common stock can be issued pursuant to the Plan.


18


 

 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 6 – EQUITY (CONTINUED)

 

 

Number of

Options

granted

 

Weighted

average

exercise

price

Weighted

average

remaining

life years

Outstanding March 31, 2019

-

 

-

-

Granted

1,370,000

 

0.033

2.00

Exercised

-

 

-

-

Cancelled

-

 

-

-

Outstanding March 31, 2020

1,370,000

 

0.033

1.40

Granted

847,500

 

0.047

2.00

Exercised

(60,000)

 

0.078

-

Cancelled

-

 

-

-

Outstanding December 31, 2020

2,157,500

 

0.032

1.39

 

 

 

 

 

Exercisable March 31, 2020

619,863

 

0.035

1.40

Exercisable December 31, 2020

1,410,226

 

0.032

1.53

 

In connection with the grant of stock options the Company recognises the value of the related option expense using the Black Scholes model, with appropriate assumptions for option life, stock value, risk free interest rate, volatility, and cancellations.

 

 

December 31, 2020

Stock Price at grant date

$0.033 - $ 0.078

Exercise Price

$0.033 - $ 0.078

Term in Years

1.0 - 2.32

Volatility assumed

71% - 196%

Annual dividend rate

0.0%

Risk free discount rate

.12% - 2.0%

 

The compensation expense calculated at time of grant is amortised over the vesting period for the options granted. During the three months and nine months ended December 31, 2020 and 2019, the Company amortised $3,474 and $6,168, and $17,326 and $6,269 respectively, as option expense. The intrinsic value of outstanding options at December 31, 2020 was $70,300, and $18,593 of the option expense upon grant remained unamortized at December 31, 2020.

 

(D)WARRANTS  

 

In conjunction with the sale of Series A preferred stock Units, the Company issued 4,200,000 warrants to purchase common stock at a price of $1.20 per share for a period of three years. The Company values the warrants using the Black Scholes model, with appropriate assumptions for warrant life, stock value, risk free interest rate, and volatility.

 

On October 1, 2020 the Company filed a Tender Offering registration statement (“TO”) with the SEC accelerating the term of the Series A warrants, increasing the number of common shares that could be exercised by 50% and discounting the price from $1.20 to $0.60 per warrant with the intention of providing an inducement (“Inducement”) for warrant holders to early exercise. As a result of this inducement, the Company received $1,562,000 as a result of the exercise of these warrants and the related purchase of 3,905,000 shares of common stock.


19


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 6 – EQUITY (CONTINUED)

 

The exercised price prior and post Inducement both offer greater than the fair market stock price of $0.07 per share. As the warrants were out of money, the fair value of the modification of the original warrants (the reduction in exercise price) and the fair value of the post-modification warrants are both immaterial, there is no gain or loss from re-pricing, and no expense needs to be recognized from this Inducement.

 

 

Number of

warrants

Weighted average

exercise price

Weighted average

remaining life in

years

Outstanding March 31, 2019

2,612,500

$1.20

2.4

Granted

1,587,500

1.20

3.0

Exercised

-

-

-

Cancelled

-

-

-

Outstanding March 31, 2020

4,200,000

1.20

2.9

Granted

-

-

-

Exercised

(2,603,333)

0.60

-

Cancelled

-

-

-

 

 

 

 

Outstanding December 31, 2020

1,596,667

$1.20

2.2

 

 

 

 

 

 

 

 

Exercisable March 31, 2020

4,200,000

$1.20

 

Exercisable December 31, 2020

1,596,667

$1.20

 

 

At December 31, 2020 the value of the warrants was $0 as the Company did not bifurcate the value of Series A and warrants within the Units sold. The weighted average remaining life of the warrants at December 31, 2020 was 2.0 years. The intrinsic value of outstanding warrants at December 31, 2020 was $0.


20


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 7 – FINANCIAL HIGHLIGHTS

 

 

 

Three months ended

 

Nine months ended

 

 

December 31, 2020

 

December 31, 2019

 

December 31, 2020

 

December 31, 2019

Net asset value per basic share (a)

 

$0.75

 

$0.49

 

$0.95

 

$0.49

Net asset value per fully-diluted share (a)

 

( a )

 

( a )

 

$0.37

 

( a )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) per basic share (a)

 

($0.00)

 

($0.02)

 

$0.04

 

($0.07)

Net gain (loss) per fully-diluted share (a)

 

( a )

 

( a )

 

$0.02

 

( a )

 

 

 

 

 

 

 

 

 

Net realized and unrealized gain (loss) on investments per primary share (a)

 

$0.04

 

$0.00

 

$0.12

 

($0.01)

Net realized and unrealized gain (loss) on investments per fully-diluted share (a)

 

( a )

 

( a )

 

$0.05

 

( a )

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data

 

 

 

 

 

 

 

 

Net assets, end of period

 

$               6,399,543

 

$              2,852,699

 

$               6,399,543

 

$               2,852,699

 

 

 

 

 

 

 

 

 

Basic shares outstanding, during the period

 

8,528,007

 

5,836,832

 

6,737,152

 

5,836,832

Fully-diluted shares outstanding, during the period

 

( a )

 

( a )

 

17,142,683

 

( a )

 

 

 

 

 

 

 

 

 

Total operating expenses/net assets

 

5.20%

 

3.56%

 

8.32%

 

13.25%

Net income ( loss)/net assets

 

-0.06%

 

-3.24%

 

4.30%

 

-14.80%

Interest expense

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

(a) Per Share Data is based on weighted average number of  shares outstanding for the period.

 

 

 

 

       Earnings per share is not provided where the results would be anti-dilutive.

 

 

 

 


21


 

 

KYTO TECHNOLOGY AND LIFE SCIENCE INC.

 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

NOTE 8 – SUBSEQUENT EVENTS

 

Subsequent to December 31, 2020, the Company has received $325,000 from the sale of Series B shares, and invested $300,000 in 4 additional investments.

 

On January 8, 2021, Georges Benarroch resigned as Chairperson of the Board of Directors (the “Board”) of Kyto Technology and Life Science, Inc. (the “Company”), effective immediately. The Board appointed Paul Russo to the position of Chairperson of the Board, effective immediately.

 

On January 8, 2021, the Board voted to increase the size of the Board from two members to five members, creating a total of three vacancies, and appointed Jon S. Saxe, Peter D. Staple and Mike Baghramian (together, the “New Directors”) to fill the resulting vacancies, each to serve until his successor shall have been duly elected and qualified or until his earlier resignation or removal.

 

The Board also voted to form a compensation committee (the “Compensation Committee”), a corporate governance and nomination committee (the “Nomination Committee”), an audit committee (the “Audit Committee”) and an investment committee (the “Investment Committee”). Jon S. Saxe and Mike Baghramian will serve on the Compensation Committee. Peter D. Staple, Jon Saxe, Georges Benarroch and Paul Russo will serve on the Nomination Committee. Jon S. Saxe and Peter D. Staple will serve on the Audit Committee. Paul Russo, Jon Saxe, Peter Staple and Mike Baghramian will serve on the Investment Committee.

 

On January 8, 2021, in connection with the appointment of the New Directors, the Board voted to grant 120,000 Options to Jon Saxe, 105,000 Options to Peter Staple and 90,000 Options to Mike Baghramian.

 

There are no arrangements or understandings between any of the New Directors and any other persons pursuant to which a New Director was selected as a director. There are no transactions involving the Company and any of the New Directors that would be reportable under Item 404(a) of Regulation S-K.

 

On February 1, 2021, the Board of Directors (the “Board”) of Kyto Technology and Life Science, Inc. (the “Company”) approved the Employment Agreement between the Company and Paul Russo, the chief executive officer of the Company (the “Employment Agreement”). By agreement of the parties, the Employment Agreement is effective as of January 1, 2021. Pursuant to the Employment Agreement, Paul Russo will perform the duties and responsibility that are commensurate with the position of chief executive officer, reporting directly to the Board.

 

Pursuant to the Employment Agreement, Paul Russo will receive a base salary of $400,000 per year, 40% of which will be deferred until the Company’s common stock begins trading on the NASDAQ stock market. Paul Russo is entitled to an annual discretionary performance bonus targeted at 50% of his base salary at the discretion of the Board. Paul Russo will also receive a grant of options to purchase 800,000 shares of the Company’s common stock.

 

The Company has the right to terminate Paul Russo’s employment at any time. In the event of termination without cause, Paul Russo is entitled to receive six months of his annual base salary and the cost of six months of his life insurance policy.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS  

 

PLAN OF OPERATIONS

 

Kyto Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999 under the name of B Twelve Inc. In August, 2002, the Company changed its name from B Twelve, Inc. to Kyto BioPharma Inc. and in May 2018, the name was changed again to Kyto Technology and Life Science, Inc. In July 2019, the Company was re-incorporated as a Delaware company. The Company operates virtually, from public locations, or the homes of its officers and does not lease any office space.

 

The Company was originally formed to acquire and develop proprietary drugs and had been looking at a number of strategies to become active.  In April, 2018, the Board adopted a new business plan focused on the development of early stage technology and life science businesses through early stage investment funding. The Company has recruited a number of experienced investment advisors from a network that includes angel investors, corporate managers, and successful entrepreneurs across a number of technology and life science products and markets and relies on input from these advisors in conducting due diligence and making investment decisions to build its investment portfolio which aims to spread risk by making small investments in a large number of early stage business opportunities. In order to offset the risk in early stage investing, the Company works with angel investment groups and participates only after these groups have completed due diligence and committed to invest, and does not typically invest more than $250,000 in any single investment. Generally, the Company’s investments represent less than 5% ownership interests, and the Company therefore has no effective control or influence over the management or commercial decisions of the Companies in which it invests. The Company plans to generate income from realised gains from the sale of the businesses in which it has invested. Generally, it is expected that investments will be typically realised from an exit within a period of four years following investment or other liquidity events such as the IPO of a portfolio company.  Such exits are outside its control and depend on M&A transactions from third parties or market events which may result in cash or equity proceeds. Accordingly, it is difficult to forecast investment income, net change from realized and unrealized gains or (loss) from investment activities, and cash flow. At March 31, 2020, management determined that the Company was an investment company for purposes of ASC 946 disclosure, and committed to follow the specialized accounting and reporting guidance contained therein.

 

The Company has no regular employees, full-time or part-time. The chief executive officer of Kyto Technology and Life Science, Inc. is acting as a consultant to the Company and does not receive contractual compensation for his services in the form of cash. For the three months and nine months ended December 31, 2020 he was granted 0 and 215,000 stock options and an ex gratia bonus of $0 and $50,000, respectively.

 

The Company currently has approximately $560,000 in the bank and is now actively marketing a $3 million Series B round with a target close date of March 31, 2021. The average monthly expenses for the nine months ended December 31, 2020 were approximately $59,000 per month so the Company has sufficient cash to fund its operations through the close of its Series B round if it simply manages its existing investments. However, it plans to ramp up monthly expenditure to market and ensure the success of the Series B round, whereupon, if successful it will have sufficient funding for further investments and ongoing operations. In the event that the Series B close is delayed, management has the ability to slow down expenditure and defer future investment opportunities to balance its cash flow accordingly. While there is a degree of uncertainty in this business model, the Company has two viable alternative options to ensure continuity of liquidity and ongoing operations. However, there is no assurance that the Company will be able to continue as a going concern, and stay at home orders, and general economic uncertainties arising out of the current Covid-19 epidemic create additional delay and uncertainty. To date there has been no disruption to the Company’s business operations, and none have been reported among its portfolio investment companies.

 

Results of Operations

 

Net change in unrealized gain or loss from investments:

 

In the three months and nine months ended December 31, 2020, the Company recognized unrealized gains of $328,694 and $806,942 respectively, following the introduction of investment company accounting in the quarter ended September 30, 2020. For the prior year three months and nine months ended December 31, 2019 the Company reported an unrealized loss from investment of $0 and $61,046, respectively

 

Expenses:

 

Banking and professional fees of $91,669 and $168,212 were incurred for the three month and nine month periods ended December 31, 2020, respectively, while corresponding numbers for the periods ended December 31, 2019 were $9,063 and $38,015, respectively. The increase is principally due to an increase in legal expenses associated with the reorganization as an investment company.


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Other operating expenses of $241,047 and $363,983 were incurred for the three month and nine month periods ended December 31, 2020, respectively, while corresponding numbers for the periods ended December 31, 2019 were $90,242 and $331,191, respectively. The increase is principally due to a payment of an executive bonus of $185,000 paid in the three months ended December 31, 2020 compared to $22,000 for the three months ended December 31, 2019.

 

For the three months ended December 31, 2020 the Company’s net loss was $4,017 compared to a loss of $90,305 for the three months ended December 31, 2019. For the nine months ended December 31, 2020 the Company’s net gain was $275,252 compared to a loss of $412,302 for the nine months ended December 31, 2019.

 

Liquidity and Capital Resources

 

The Company had net assets of $6,399,543 and $2,667,611 at December 31, 2020 and March 31, 2020, respectively. Cash was $563,795 and $33,756 as at December 31, 2020 and March 31, 2020, respectively.

 

Cash from operating activities

 

The Company used net cash of $2,876,156 in operations during the nine months ended December 31, 2020 compared to $1,114,937 used in operations for the nine months ended December 31, 2019. Main reason for the higher level in 2020 was the increase value of investments made by the Company, from $803,497 in 2019 to $2,410,000 in 2020.

Cash from investing activities

No cash was used in investing activities in either year.

 

Cash from financing activities

 

The Company had a net cash inflow from financing activities of $3,406,195 in the nine months ended December 31, 2020 compared to $1,440,001 in the nine months ended December 31, 2019. From sale of common stock, the Company raised $1,566,229 and $0 in the nine months ended December 31, 2020 and 2019, respectively. From sale of preferred stock, the Company raised $1,873,125 of Series B and $$425,000 of Series A in the nine months ended December 31, 2020 and 2019, respectively.

 

The Company’s plan of operations for the next twelve months is to continue to focus its efforts on finding new sources of capital by means of private placements and an initial public offering (“IPO”) and to use this funding to fund additional investments as they become available, and to cover operating expenses, and to uplift its OTC filing status to NASDAQ to enhance shareholder liquidity.

 

CRITICAL ACCOUNTING POLICIES

 

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 three and nine months ended December 31, 2020 and the year ended March 31, 2020 include the valuation of investment, stock options and warrants.

 

INVESTMENT AND VALUATION OF INVESTMENT AT FAIR VALUE

 

The Company reviews the performance of the underlying investments including, management reports, press releases, web site announcements and progress reports, Carta equity updates, management interviews and, where accessible, financial reports, to determine their current and future potential value and liquidity. In the event that Management considers the value of an investment to be impaired, the carrying value of the investment will be written down by an impairment charge to reflect Management’s estimated valuation. The Company recognized impairment of one of its investments which was written down by $61,046 in September 2019. The Company has not experienced any impairment write-downs in any prior or subsequent periods.

 

The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.


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Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.

 

The Company has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the extent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.

 

For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach or by reference to the most recent financing done by the portfolio company. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and the fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The market approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our management and board.

 

In determining the appropriate fair value of an investment using these approaches, the most significant information and assumption may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparable, the principal market and enterprise values, environmental factors, among other factors.

 

The estimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been used had a broader market for the investments existed.

 

The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation. The three levels of valuation hierarchy are defined as follows:

 

Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities

 

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data

 

Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In March 2020, the Company adopted Accounting Standards Codification Topic 946, Financial Services—Investment Companies (ASC Topic 946). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply consolidation or equity method of accounting to its investments.

 

In June 2016, the FASB issued ASU 2016-13 (as amended through November 2019), Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables and held-to-maturity debt securities, which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands disclosure requirements. ASU 2016-13 is effective for the Company beginning in the first quarter of 2020. The guidance will be applied using the modified-retrospective approach. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

 

In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within that fiscal year. Early adoption is permitted. The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures.


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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.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of the date of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

IMPACT OF INFLATION

 

The Company does not foresee any implications being created by the current rate of inflation.

 

CONTRACTUAL OBLIGATION

 

The Company has no contractual obligations outside the normal course of business with its vendors, advisors, and consultants.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  

 

Not required for smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES  

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer/chief financial officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the quarter ended December 31, 2020 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of December 31, 2020. Notwithstanding this conclusion, we believe that our unaudited condensed financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.

 

Limitations on Effectiveness of Controls and Procedures

 

Our management, including our Chief Executive Officer and Chief Financial Officer (principal financial officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Internal Controls over Financial Reporting

 

During the quarter ended December 31, 2020, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.


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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS  

 

None

 

ITEM 1A. RISK FACTORS.  

 

Not required for smaller reporting company.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  

 

The Corporation filed a certificate of Designation in July 2019 for the issue of up to 6,000,000 shares of Series B Preferred stock to accredited investors under Rule 506 of Regulation D of the Securities Act 1933. As of the filing date, the Corporation had sold a total of 3,091,406 shares of Series B Preferred stock to accredited investors. The Corporation has submitted a Form D filing to the United States Securities and Exchange Commission for this Offering. The Company will use the net proceeds for investment purposes and operating expenses.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES  

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES  

 

Not applicable

 

ITEM 5. OTHER INFORMATION  

None

 

ITEM 6. EXHIBITS  

 

Index to Exhibits on page 28

 


27


 

 

INDEX TO EXHIBITS

 

EXHIBIT

NUMBER

 

DESCRIPTION

3(i)(a)

 

Articles of Incorporation of Kyto Technology and Life Science, Inc.**

 

 

 

3(i)(b)

 

Articles of Amendment changing name to Kyto Technology and Life Science, Inc.**

 

 

 

3(i)(b)

 

Delaware incorporation and revised articles of incorporation .**

 

 

 

3(ii)

 

Bylaws of Kyto Technology and Life Science, Inc.**

 

 

 

31.1

 

Section 302 Certification of principal executive officer.*

 

 

 

31.2

 

Section 302 Certification of principal financial and accounting officer.*

 

 

 

32.1

 

Certification of principal executive officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

 

 

 

32.2

 

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

 

 

 

 

*

Filed as Exhibit with this Form 10-Q.

**

Previously filed with Form 10-K or Form 10-Q.

 

***

Filed

 

 


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SIGNATURES

 

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

 

 

Kyto Technology and Life Science, Inc.

 

 

 

By:

/s/ Paul Russo

 

Paul Russo

Chief Executive Officer, principal executive officer

 

 

Date: February 16, 2021

 

SIGNATURES

 

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

 

 

Kyto Technology and Life Science, Inc.

 

 

 

By:

/s/ Simon Westbrook

 

Simon Westbrook

Principal financial and accounting officer

 

 

Date: February 16, 2021

 

 

 


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