ITEM 1. BUSINESS
(A) BUSINESS DEVELOPMENT
Kyto Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999 under the name of B12 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.
The Company was originally formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other autoimmune diseases 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 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 committed to invest, and does not invest more than $250,000 in any single investment. The Company plans to generate revenue from two sources: (i) the sale of advisory services to its target investments and (ii) realised gains from the sale of the businesses in which it has invested. Generally, it is expected that investments will be realised from an exit within a period of four years following investment.
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 compensation.
B) REPORTS TO SECURITY HOLDERS
The Bylaws of Kyto Technology and Life Science, Inc. are silent regarding an annual report to shareholders. Kyto Technology and Life Science, Inc. is a reporting company and files reports with the U.S. Securities and Exchange Commission (SEC). The Company is required to file quarterly reports (Form 10-Q) and an annual report (Form 10-K) with the SEC. The annual report includes audited financial statements.
Any materials that the Company filed with the Securities and Exchange Commission may be read and copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further, you may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SECD-0330. The Company is an electronic filer and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. That site is http://www.sec.gov.
ITEM 2.
ITEM 2. DESCRIPTION OF PROPERTY
The Company operates its business virtually from third party premises, or the homes of its directors and officers.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation of any type whatsoever pending or threatened by or against the Company, its officers and directors.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The following discussions should be read in conjunction with the financial statements and related notes which are included in this Form 10-K for the year ending March 31, 2019. Statements made below which are not historical facts are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, general economic conditions and our ability to find and realize our investments.
(A) MARKET INFORMATION
As of February 23, 2011, our stock quotation coverage moved from the FINRA operated OTC Bulletin Board to the OTC Markets Group, Inc.'s OTCQB under the same symbol "KBPH."
Our common stock has traded on the OTC Bulletin Board (R), or OTCBB, since August 4, 2005. The Company's common stock is quoted on the Electronic Bulletin Board of the OTC market, under the trading symbol KBPH. The following table sets forth, for the calendar quarters indicated, the high and low closing prices for our common stock as reported by OTCBB for fiscal years ended March 31, 2019 and 2018. The quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not represent actual transactions. The market for the common stock has been sporadic and there have been long periods during which there were few, if any, transactions in the common stock and no reported quotations. Accordingly, reliance should not be placed on the quotes listed below, as the trades and depth of the market may be limited, and therefore, such quotes may not be a true indication of the current market value of the Company's common stock.
Common Stock
High
Low
Fiscal Year Ended March 31, 2019
First quarter
$
2.35
$
2.35
Second quarter
$
2.35
$
2.35
Third quarter
$
2.35
$
2.35
Fourth quarter
$
2.35
$
2.35
Fiscal Year Ended March 31, 2018
First quarter
$
2.40
$
2.35
Second quarter
$
2.35
$
2.35
Third quarter
$
2.35
$
2.35
Fourth quarter
$
2.35
$
2.35
There were 5,836,832 shares of common stock outstanding as of the end of the fiscal year ended March 31, 2019.
(B) HOLDERS
According to information provided to us by the transfer agent for our shares of Common Stock, as of March 31, 2019, there were 14 holders of record of the shares of Common Stock, including depositories. Based upon information we have received from some of these record owners, we believe there are approximately 100 beneficial holders of our shares of Common Stock.
(C) DIVIDENDS
The Company has not paid any dividends to date and has no plans to do so in the foreseeable future.
The holders of Class A and B Preferred Stock shall be entitled to receive out of any funds of the Corporation at a time legally available for the declaration of dividends, dividends at a rate as shall be established within the sole discretion of the Board of Directors and under such terms and conditions as the Board shall prescribe, provided, however, that in the event dividends shall be declared, dividends on issued and outstanding Class A and B Preferred Stock shall be payable before any dividends shall be declared or paid upon or set apart for the Common Stock, all such dividends being noncumulative in nature.
(D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
The Company has authorized the creation of the Kyto Technology and Life Science, Inc. Incentive Stock Option Plan for the benefit of employees, consultants and directors. A pool of 2,697,085 shares was allocated to the option pool. These options have subsequently vested and been exercised, as a result of which there are no options outstanding or available for grant as of March 31, 2019.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
(A) PLAN OF OPERATION & LIQUIDITY
The Company has not been profitable and since its inception in March 1999 has had no revenue until the current fiscal year. In April, 2018, the Board adopted a new business plan focussed on the development of early stage technology and life science businesses through a combination of small investment funding and a range of technical and advisory business services. In order to fund the new business plan, the Company converted $320,000 of related party debt and accrued liabilities and raised $1,770,000 in cash from the sale of investment units under the terms of a private placement offered to accredited investors.
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 which may result in cash or equity proceeds. The Company currently has $388,000 in the bank and expects to secure an additional $300,000 within the next two months as a final call on sales of Series A Preferred stock units, as the marketing of a $3 million higher-valued Series B round is commenced with a target close date of October 2019. The average monthly expenses for the year ended March 31, 2019 were $22,000 per month so the Company has sufficient cash to fund its operations for the remainder of its financial year ended March 31, 2020 if it simply manages its existing investments. However, it plans to ramp up monthly expenditure to an average of $48,000 per month 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 two viable alternative options to ensure continuity of liquidity and ongoing operations: the ability to slow down expenditure or defer future investment opportunities to balance its cash flow accordingly.
(B) RESULTS OF OPERATIONS
Revenue: The Company depends on the emergence of liquidity situations to realize its investments in portfolio companies but does not have any ability to influence such events. During the year ended March 31, 2019 there were no liquidation transactions and accordingly the Company did not generate any revenue from investments. The Company also provides advisory services to certain of its portfolio companies and during the year ended March 31, 2019, the Company recognized $9,000 revenue from advisory fees.
General and Administration expenses: General and administration expenses include professional fees incurred in the course of SEC filing and compliance, and travel and conference fees associated with fund raising and review of investment deal-flow. The Company incurred expenses of $239,082 and $90,827 in the years ended March 31, 2019 and 2018, respectively. The increase of 163% reflects the increased level of new business activity as the Company raised funding from private placements, and researched and evaluated investment candidates during the year ended March 31, 2019.
For the years ended March 31, 2019 and 2019, the Company’s net loss was $230,107 and $90,827, respectively.
(C) LIQUIDITY AND CAPITAL RESOURCES
Working capital:
The Company had a working capital surplus of $65,684 at March 31, 2019 and a working capital deficit of $(316,956) as of March 31, 2018. Cash was $93,634 and $4 as of March 31, 2019 and 2018, respectively.
Cash from operating activities:
The Company’s cash outflow from operations for the years ended March 31, 2019 and 2018 was $205,225 and $31,319, respectively.
Cash from financing activities:
The Company’s net cash flow from financing activities for the years ended March 31, 2019 and 2018 was $1,796,903 and $31,323, respectively. During the year ended March 31, 2019, the Company raised $1,770,000 from private placements of preferred investment units from accredited investors.
The Company has adopted a new business plan to assist early stage technology and life science companies by leveraging its network of experienced industry specialists to provide a combination of professional advisory services and investment, and thereby accelerate their development.
(D) OFF-BALANCE SHEET ARRANGEMENT
None.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached audited financial statements for Kyto Technology and Life Science, Inc. for the fiscal years ended March 31, 2019 and 2018 can be found beginning on page.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
The Company did not change accountants during the year and as of the date of these financial statements there are no disagreements with the findings of their accountants.
ITEM 9A.
ITEM 9A. 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 year ended March 31, 2019 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 March 31, 2019
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting principles, or GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
With the participation of our Chief Executive Officer/ Chief Financial Officer (principal financial officer), our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2019 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation and the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of March 31, 2019 based on the COSO framework criteria. Management has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.
These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. Accordingly, we have determined that these control deficiencies as described above together constitute a material weakness.
In light of this material weakness, we performed additional analyses and procedures in order to conclude that our financial statements for the year ended March 31, 2019 included in this Annual Report on Form 10-K were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our financial statements for the year ended March 31, 2019 are fairly stated, in all material respects, in accordance with US GAAP.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.
Limitations on Effectiveness of Controls and Procedures
Our management, including our Chief Executive 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.
Changes in Internal Controls
During the fiscal year ended March 31, 2019, we have engaged a third-party bookkeeping and accounting service to post accounting entries and reconcile our bank accounts. While this creates segregation of duties between the bookkeeping function and management supervision and control, we still remain a small company and therefore do not believe that these
changes in our internal control over financial reporting should be regarded as material.
Item 9B.
Item 9B. Other Information.
We do not have any information required to be disclosed in a report on Form 8-K during the fourth quarter of fiscal 2018 that was not reported.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
(A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
Name
Age
Position
Georges Benarroch
Director
Paul Russo
Chief executive officer and director
Simon Westbrook
Chief financial officer
The business experience of the persons listed above during the past five years are as follows:
Mr. GEORGES BENARROCH, DIRECTOR
Mr. Benarroch has been a director of the Company since May 5, 2000. He was elected as President and Chief Executive Officer effective February 27, 2006. Mr. Benarroch is the President and Chief Executive Officer of Comindus Finance Inc. Mr. Benarroch has 40 years of investment banking as well as money management experience. Mr. Benarroch has raised financing for numerous companies, public as well as private and has managed for 35 years investment firms, in the USA, Canada and Europe. As well he has been the CEO of a Canadian multibillion dollar asset management firm. Mr. Benarroch resigned as President and Chief Executive Officer of KBPH on April 26, 2018 but remains as a Director.
Dr. PAUL RUSSO, CHIEF EXECUTIVE OFFICER & DIRECTOR
Dr. Russo is the Co-founder and CEO of Kyto Technology and Life Science, Inc. He is also the Founder & Chairman of GEO Semiconductor (www.geosemi.com) since 2014, after having served as Chairman & CEO from its founding in 2008. Dr. Russo also serves as a Director of InBay (www.inbaytech.com), Irystec (www.irystec.com), Semplus (www.sempluscorp.com) and several other technology ventures (Peekaboo, Dynamount, Illuminati, Thrive, and other technology startups). Dr. Russo is heavily involved with the Band of Angels, the Keiretsu Forum and other similar organizations which review over 1,000 start-ups' business plans per year. He is also a Board Advisor to BWG, LLC. Dr. Russo has served as an outside director of ATI Technologies from 2001 through its acquisition by AMD in 2006.
Prior to founding GEO Semiconductor, Dr. Russo founded Silicon Optix in 2000, a privately held fabless semiconductor company, serving as its Chairman & CEO through 2008. Prior to Silicon Optix, Dr. Russo was the founder, Chairman and CEO of Genesis Microchip (acquired by ST Micro in 2007) following Genesis Microchip’s NASD IPO in 1998.
Prior to founding Genesis, he was General Manager of the General Electric Microelectronics Center, Senior Manager of General Electric’s Industrial Electronics Development Lab and Head, Microsystems Research at RCA's David Sarnoff Research Center. While at RCA, Dr. Russo worked on the world first CMOS microprocessor and pioneered the first use of microprocessors in global communications, programmable video games, TV manufacturing automation and automotive engine control.
Mr. SIMON WESTBROOK, CHIEF FINANCIAL OFFICER
Effective March 15, 2018, Simon Westbrook was appointed the Company's Chief Financial Officer. In 2009, Mr. Westbrook founded Aargo Inc, a company specializing in financial consulting services to corporations in various tech-related industries. Prior to Aargo, Inc., Mr. Westbrook was CFO of Amber Networks, Inc., and the Chief Financial Officer of Sage, Inc. (NASDAQ: SAGI), a Silicon Valley company specializing in flat panel displays. Before joining Sage, Mr. Westbrook held a number of senior financial positions at Creative Technology (NASDAQ: CREAF), a leading PC multimedia company, and Atari Corp (AMEX: ATC), the video game and home computer company both in the USA and overseas. At various times, he has held positions as an advisory board member of the Silicon Valley Financial Executives Institute, and various technology start-up companies where he has assisted in strategic planning, fund raising and team development. Simon is a Chartered Accountant and holds a Masters in Economics from Trinity College, Cambridge in the UK.
(B) IDENTIFY SIGNIFICANT EMPLOYEES
The Company does not currently have, nor expect to receive a significant contribution from, employees that are not executive officers.
(C) FAMILY RELATIONSHIPS
There are no directors, executive officers or persons nominated or persons chosen by the Company to become a director or executive officer of the Company who are directly related to an individual who currently holds the position of director or executive officer or is nominated to one of the said positions.
(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
There are no material events that have occurred in the last five years that would affect the evaluation of the ability or integrity of any director, person nominated to become a director, executive officer, promoter or control person of the Company.
(E) AUDIT COMMITTEE
The Company has currently no audit committee. The Board of Directors approved the financial statements for the previous year.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
(A) SUMMARY COMPENSATION TABLE
The following table sets forth all annual and long-term compensation for services in all capacities rendered to Kyto by its executive officers and directors for each of the last two most recently completed fiscal years ended
OPTION/SAR GRANTS TABLE
Name and position
Options, beginning of year
Granted
Vested
Exercised
Options, end of year
Georges Benarroch, Director
-
-
-
-
-
Paul Russo, Chief executive officer
-
2,697,085
2,697,085
2,697,085
-
Simon Westbrook, Chief financial officer
-
-
-
-
-
(B) LONG-TERM INCENTIVE ("LTIP") AWARDS TABLE
None
(C) COMPENSATION OF DIRECTORS
All directors hold office until the next annual meeting of stockholders and until their successors have been duly elected and qualified. There are no agreements with respect to the election and compensation of directors. The Board of Directors appoints officers annually and each executive officer serves at the discretion of the Board of Directors. The Company does not have any standing committees at this time.
The Company does not currently maintain insurance for the benefit of the directors and officers of Kyto against liabilities incurred by them in their capacity as directors or officers of Kyto. Kyto does not maintain a pension plan for its employees, officers or directors.
None of the directors or senior officers of Kyto and no associate of any of the directors or senior officers of Kyto was indebted to the Company during the financial period ended March 31, 2019 of Kyto other than for routine indebtedness.
(D) EMPLOYMENT CONTRACTS
None
(E) REPORT ON REPRICING OF OPTIONS/SARS
None
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following persons (including any group as defined in Regulation S-B, Section 228.403) are known to the Company, as the issuer, to be beneficial owner of more than five percent (5%) of any class of the said issuer's voting securities.
Title of class
Name & address of beneficial owner
Common shares
Percentage of class
Common
Comindus Finance Corp, Florida, USA
2,697,085
46.2%
Common
Paul Russo, Los Altos, California, USA
2,697,085
46.2%
(B) SECURITY OWNERSHIP OF MANAGEMENT
(C) CHANGES IN CONTROL
There is no such arrangement which may result in a change in control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A) CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Detail of related party transactions are described in notes 3 of the Financial Statements.
At March 31, 2018, a balance of $311,430 was payable to a director, chairman and major shareholder of the Company in respect of expenses and fees incurred by him on behalf of the Company. At June 30, 2018, a total of $314,901 of the related party loans and accrued liabilities were converted into 400,000 investment units (“Units”) consisting of 400,000 shares of Series A preferred stock, and 400,000 Warrants to purchase common stock at $1.20 per share. The units were valued at $0.80 per unit. (See Note 5.) The Company recorded a loss on conversion of related party debt of $5,099 and $0 respectively, during the years ended March 31, 2019 and March 31, 2018.
Directors fees are also included in accrued liabilities - related parties. Directors fees for the years ended March 31, 2019 and 2018 were $0 and $24,000, respectively, and were included in general and administrative expense in the accompanying statements of operations. At March 31, 2019 and 2018, the Company had accrued and owed $2,250 and $0, respectively, to Paul Russo for car and telephone allowance. At March 31, 2019 and 2018, the Company had accrued and owed $5,000 and $0, respectively to Simon Westbrook for unpaid consulting fees.
(B) TRANSACTIONS WITH PROMOTERS
Georges Benarroch would be considered as a promoter of the Company. Georges Benarroch is the president of Comindus Finance Corp, holding 2,697,085 shares of the Company common stock represented by 46.2% of total issued and outstanding shares.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) Audit Fees
RBSM LLP, Independent Registered Public Accounting firm billed an aggregate of $37,500 and $37,500 for audit of our annual financial statements for the fiscal years ended March 31, 2019 and 2018. These amounts include the review of our related Forms 10Q during the years audited.
(2) Audit Related Fees
No other professional services were rendered by RBSM LLP for audit related services rendered during the fiscal years ended March 31, 2019 and 2018.
(3) Tax Fees
No professional services were rendered by RBSM LLP for tax compliance, tax advice, and tax planning the fiscal years ended March 31, 2019 and 2018.
ITEM 15.
ITEM 15. EXHIBITS AND REPORTS ON FORM 10-K
(A) LISTING OF 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(ii)
Bylaws of Kyto Technology and Life Science, Inc.*
31.1
Section 302 Certification of the principal executive officer and the principal financial and accounting officer**
32.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the principal executive officer and principal financial accounting officer**
* Filed as Exhibit to Company's Form 10-SB on September 12th, 2003, with the Securities and Exchange Commission
** Filed as Exhibit with this Form 10-K.
(B) Code of Ethics
Kyto Technology and Life Science, Inc. will conduct its business honestly and ethically wherever we operate in the world. We will constantly improve the quality of our services, products and operations and will create a reputation for honesty, fairness, respect, responsibility, and integrity, trust and sound business judgment. No illegal or unethical conduct on the part of officers, directors, employees or affiliates is in the company's best interest. Kyto Technology and Life Science, Inc. will not compromise its principles for short-term advantage. The ethical performance of this company is the sum of the ethics of those who work here. Thus, we are all expected to adhere to high standards of personal integrity.
Officers, directors, and employees of the company must never permit their personal interests to conflict, or appear to conflict, with the interests of the company, its clients or affiliates. Officers, directors and employees must be particularly careful to avoid representing Kyto Technology and Life Science, Inc. in any transaction with others with whom there is any outside business affiliation or relationship. Officers, directors, and employees shall avoid using their company contacts to advance their private business or personal interests at the expense of the company, its clients or affiliates.
No bribes, kickbacks or other similar remuneration or consideration shall be given to any person or organization in order to attract or influence business activity. Officers, directors and employees shall avoid gifts, gratuities, fees, bonuses or excessive entertainment, in order to attract or influence business activity.
Officers, directors and employees of Kyto Technology and Life Science, Inc. will often come into contact with, or have possession of, proprietary, confidential or business-sensitive information and must take appropriate steps to assure that such information is strictly safeguarded. This information - whether it is on behalf of our company or any of our clients or affiliates - could include strategic business plans, operating results, marketing strategies, customer lists, personnel records, upcoming acquisitions and divestitures, new investments, and manufacturing costs, processes and methods. Proprietary, confidential and sensitive business information about this company, other companies, individuals and entities should be treated with sensitivity and discretion and only be disseminated on a need-to-know basis.
Misuse of material inside information in connection with trading in the company's securities can expose an individual to civil liability and penalties. Directors, officers, and employees in possession of material information not available to the public are "insiders." Spouses, friends, suppliers, brokers, and others outside the company who may have acquired the information directly or indirectly from a director, officer or employee are also "insiders." The Act prohibits insiders from trading in, or recommending the sale or purchase of, the company's securities, while such inside information is regarded as "material," or if it is important enough to influence you or any other person in the purchase or sale of securities of any company with which we do business, which could be affected by the inside information.
The following guidelines should be followed in dealing with inside information:
Until the company has publicly released the material information, an employee must not disclose it to anyone except those within the company whose positions require use of the information.
Employees must not buy or sell the company's securities when they have knowledge of material information concerning the company until it has been disclosed to the public and the public has had sufficient time to absorb the information.
Employees shall not buy or sell securities of another corporation, the value of which is likely to be affected by an action by the company of which the employee is aware and which has not been publicly disclosed.
Officers, directors and employees will seek to report all information accurately and honestly, and as otherwise required by applicable reporting requirements.
Officers, directors and employees will refrain from gathering competitor intelligence by illegitimate means and refrain from acting on knowledge, which has been gathered in such a manner. The officers, directors and employees of Kyto Technology and Life Science, Inc. will seek to avoid exaggerating or disparaging comparisons of the services and competence of their competitors.
Officers, directors and employees will obey all Equal Employment Opportunity laws and act with respect and responsibility towards others in all of their dealings. Officers, directors and employees will remain personally balanced so that their personal life will not interfere with their ability to deliver quality products or services to the company and its clients.
Officers, directors and employees agree to disclose unethical, dishonest, fraudulent and illegal behavior, or the violation of company policies and procedures, directly to management.
Violation of this Code of Ethics can result in discipline, including possible termination. The degree of discipline relates in part to whether there was a voluntary disclosure of any ethical violation and whether or not the violator cooperated in any subsequent investigation.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its be signed on its behalf by the undersigned, thereunto duly authorized.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
DATE: May 16, 2019
By: / s/ Simon Westbrook
Name: Simon Westbrook
Chief Financial Officer,
Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Paul Russo
Chief Executive Officer
May 16, 2019
Paul Russo
/s/ Georges Benarroch
Director
May 16, 2019
Georges Benarroch
/s/ Simon Westbrook
Chief Financial Officer
May 16, 2019
Simon Westbrook
Kyto Technology and Life Science, Inc.
Financial Statements
Report of Independent Registered Public Accounting Firm
Balance Sheets as of March 31, 2019 and 2018
Statements of Operations for the years ended March 31, 2019 and 2018
Statement of Stockholders' Deficit for the years ended March 31, 2019 and 2018
Statements of Cash Flows for the years ended March 31, 2019 and 2018
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Kyto Technology and Life Science, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Kyto Technology and Life Science, Inc. (the Company) as of March 31, 2019 and 2018, and the related statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two year period ended March, 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two year period ended March 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2011
/s/RBSM LLP
Henderson, NV
May 16, 2019
The accompanying notes are an integral part of these audited financial statements.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) NATURE OF BUSINESS
Kyto Technology and Life Science, Inc. was formed as a Florida corporation on March 5, 1999 under the name of B12 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.
The Company was originally formed to acquire and develop innovative minimally toxic and non-immunosuppressive proprietary drugs for the treatment of cancer, arthritis, and other proliferate and autoimmune diseases 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 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 committed to invest and does not plan to invest more than $250,000 in any single investment. The Company plans to generate revenue from two sources: (i) the sale of advisory services to its target investments and (ii) realised gains from the sale of the businesses in which it has invested. Generally, it is expected that investments will be realised from an exit within a period of four years.
(B) LIQUIDITY
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 which may result in cash or equity proceeds. The Company currently has $388,000 in the bank and expects to secure an additional $300,000 within the next two months as a final call on sales of Series A Preferred stock units, as the marketing of a $3 million higher-valued Series B round is commenced with a target close date of October 2019. The average monthly expenses for the year ended March 31, 2019 were $22,000 per month so the Company has sufficient cash to fund its operations for the remainder of its financial year ended March 31, 2020 if it simply manages its existing investments. However it plans to ramp up monthly expenditure to an average of $48,000 per month 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 two viable alternative options to ensure continuity of liquidity and ongoing operations: the ability to slow down expenditure or defer future investment opportunities to balance its cash flow accordingly.
(C) REVENUE RECOGNITION
The Company derives revenue from two sources: proceeds from the sale of investments and fees earned from the provision of financial advisory services to portfolio investment companies. As a minority, early-stage investor, the Company does not have the ability to manage the timing or acceptance of liquidity events that will realize its investments, nor the ability to predict when they may happen, although as a guideline, it would 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. The Company does not recognize any revenue from unrealized gains. The Company is in regular contact with the management of its portfolio investment companies and, from time to time, provides investment advice on a meeting or project basis under its advisory agreements. The services are invoiced, and the revenue recognized, upon completion.
(D) INCOME TAXES
The Company accounts for income taxes under the Financial Accounting Standards Accounting Standard Codification Topic 740 "Accounting for Income Taxes" ("Topic 740"). Under Topic 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Topic 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period, which includes the enactment date.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) USE OF ESTIMATES
In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period presented. Actual results may differ from these estimates.
Significant estimates during the fiscal year ended March 31, 2019 and 2018 include the valuation allowance of stock options and warrants.
(F) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents at March 31, 2019 and 2018, respectively.
(G) CONCENTRATIONS
The Company maintains its cash in bank checking and deposit accounts, which, at times, may exceed federally insured limits. As of March 31, 2019 and 2018, the Company did not have any deposits in excess of federally insured limits. The Company has not experienced any losses in such accounts through March 31, 2019 and 2018, respectively.
(H) STOCK-BASED COMPENSATION
Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” requires generally that all equity awards granted to employees be accounted for at “fair value.” This fair value is measured at grant date for stock settled awards, and at subsequent exercise or settlement for cash-settled awards. Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using the Black Scholes options pricing model. The Company did not grant any options or warrants prior to March 31, 2018.
(I) NET LOSS PER COMMON SHARE
In accordance with Statement of Financial Accounting Standards Accounting Standard Codification Topic 260, "Earnings per Share", basic earnings per share is computed by dividing the net income less preferred dividends for the period by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net income less preferred dividends by the weighted average number of common shares outstanding including the effect of common stock equivalents. Common stock equivalents, consisting of stock options and warrants, have not been included in the calculation, as their effect is anti-dilutive for the periods presented.
(J) INVESTMENTS
The Company carries investments at the lower of cost or fair market value. These investments are accounted for as cost method investments in accordance with ASC 325 as we own less than 20% of the voting securities and do not have the ability to exercise significant influence over operating and financial policies of the entities. The Company reviews the performance of the underlying investments 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.
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS
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.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(K) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
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.
(L) SIGNIFICANT RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
NOTE 2 COMMITMENTS AND CONTINGENCIES
The Company has no commitments or contingencies.
NOTE 3 RELATED PARTY TRANSACTIONS
At March 31, 2018, a balance of $311,430 was payable to a director, chairman and major shareholder of the Company in respect of expenses and fees incurred by him on behalf of the Company. At June 30, 2018, a total of $314,901 of the related party loans and accrued liabilities were converted into 400,000 investment units (“Units”) consisting of 400,000 shares of Series A preferred stock, and 400,000 Warrants to purchase common stock at $1.20 per share. The units were valued at $0.80 per unit. (See Note 5.) The Company recorded a loss on conversion of related party debt of $5,099 and $0 respectively, during the years ended March 31, 2019 and March 31, 2018.
Directors fees are also included in accrued liabilities - related parties. Directors fees for the years ended March 31, 2019 and 2018 were $0 and $24,000, respectively, and were included in general and administrative expense in the accompanying statements of operations. At March 31, 2019 and 2018, the Company had accrued and owed $2,250 and $0, respectively, to Paul Russo for car and telephone allowance. At March 31, 2019 and 2018, the Company had accrued and owed $5,000 and $0, respectively to Simon Westbrook for consulting fees.
NOTE 4 STOCKHOLDERS' DEFICIENCY
STOCKHOLDERS DEFICIENCY
As reflected in the accompanying financial statements, the Company has minimal revenues, a net loss of $230,107, and an accumulated deficit of $32,610,853 at March 31, 2019.
EARNINGS PER SHARE
Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. Diluted net loss per share is not reported where the diluted earnings per share would be anti-dilutive. The following reconciles amounts reported in the financial statements for the years ended:
Net loss available to common shareholders
$
(230,107)
$
(90,827)
Weighted average common shares outstanding
4,768,369
3,139,747
Basic and diluted net loss per share
$
(0.05)
$
(0.03)
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 5 INCOME TAXES
On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future).
The Company had no income tax provision for the years ended March 31, 2019 and 2018 because the Company had net operating losses for federal and state tax purposes. The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382/383, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation or eliminate them entirely. An ownership change pursuant to Section 382/383 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited or eliminate them entirely.
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
The Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero.
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below:
At March 31, 2019 and 2018, the Company had net operating loss carry forwards for federal and state income tax purposes of approximately $6.5 million and $6.9 million, respectively. These loss carryforwards expire within fifteen to twenty years of the respective tax years and may be used to offset future taxable income through 2038.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 5 INCOME TAXES (CONTINUED)
The TCJA, also introduces a limitation on the amount of NOLs that a corporation may deduct in a single tax year under section 172(a) equal to the lesser of the available NOL carryover or 80 percent of a taxpayer’s pre-NOL deduction taxable income (the “80-percent limitation”). This limitation applies only to losses arising in tax years that begin after Dec. 31, 2017 based upon section 172(e)(1) of the amended statute.
The utilization of the net operating loss carry forwards is dependent upon the ability to generate sufficient taxable income during the carry forward period. In addition, utilization of these carry forwards may be limited due to ownership changes rules, as defined in the Internal Revenue Code 382/383. The Company has not determined if an ownership change has occurred that would limit the use of the net operating losses or eliminate them entirely.
The Company’s tax returns are subject to examination by tax authorities beginning with the year ended March 31, 2015 (or the tax year ended March 31, 2013 if the Company were to utilize its NOLs).
NOTE 6 EQUITY
(A) PREFERRED STOCK
As of March 31, 2019 and March 31, 2018, there are 4,000,000 shares of Series A preferred stock (“Series A”) authorized at a par value of $1.00 per share. The Company has outstanding 2,612,500 shares of Series A as a result of the sale during the year ended March 31, 2018 of 2,212,500 Units at $0.80 per Unit in a private placement to accredited investors for $2,212,500, and 400,000 Units for the conversion of $320,000 of related party debt. The Units consist of one Series A share and one warrant per Unit. The Series A can either be converted into Common Shares upon listing of the Company on Nasdaq or 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 (2 X) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference). All share issuances and obligations are recognized on the books and stock register, however, as at the date of this report certificates have not been delivered as a result of administrative delays in transferring to the Company’s selected stock transfer agent. On March 26, 2019 the Board approved resolutions to increase the authorized share capital from 2 million to 4 million Series A Preferred Shares, and the number of units to be sold in the private placement from 3 million to 4 million, subject to demand and investment requirements as determined from time to time by the Board.
There are also 1,500,000 shares of Series B preferred stock (“Series B”) authorized at a par value of $0.80 per share. No Series B was issued or outstanding as at March 31, 2019 or March 31, 2018. The Series B can either be converted into Common Shares upon listing of the Company on Nasdaq or elect to receive $1.60 per share. In the event of 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 Common Shares and Series A, a per share amount equal to two times (2 X) their original purchase price plus any declared but unpaid dividends (the Liquidation Preference)
(B) COMMON STOCK
The Company has authorized 100,000,000 shares of common stock at a par value of $0.0001 per share. As of March 31, 2019, and March 31, 2018 a total of 5,836,832 and 3,139,747 shares of the Company’s common stock were issued and outstanding, respectively.
(C) PRIVATE PLACEMENT
In April 2018, in a non-brokered private placement, as extended and amended from time to time, the Company offered accredited investors an opportunity to purchase a minimum of 875,000 and maximum of 3,000,000 Units. These Units consist of one Series A (convertible into one common share) and one warrant (exercisable into one common share at $1.20 per share for a period of three years). The Preferred Shares can be converted into Common Shares upon listing of the Company on NASDAQ, or redeemed for $1.60 per share. In the event of any liquidation or winding up of the Company, the holders of preferred shares shall be entitled to receive in preference to the holders of Common Shares a per share amount equal to (2x) the Original Purchase price plus any declared but unpaid dividends (“Liquidation preference”). The Units are priced at $0.80 per unit.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 6 EQUITY (CONTINUED)
(C) PRIVATE PLACEMENT (CONTINUED)
In April 2018, a total of $320,000 of related party loans and accrued liabilities were converted into Units consisting of 400,000 shares of Series A, and 400,000 Warrants to purchase common stock at $1.20 per share. Additionally, since April 2018, the Company has sold 2,212,500 investment units to accredited investors in a private placement for $1,770,000 in cash.
(D) 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 the year ended March 31, 2018, the Company granted a total of 2,697,085 options at an exercise price of $0.006 per share. During the year ended March 31, 2019, 2,697,085 options vested upon the closing of the private placement and were exercised for $16,182.
Number of options
Weighted average exercise price
$
Weighted average remaining life
in years
Outstanding March 31, 2018
-
-
-
Granted
2,697,085
-
Exercised
(2,697,085)
-
Cancelled
-
-
-
Outstanding March 31, 2019
-
-
-
Exercisable March 31, 2019
-
-
-
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. The assumptions used for options granted in the year ended March 31, 2019 were as follows:
Stock Price at grant date
$
0.006
Exercise Price
$
0.006
Term in Years
1.00
Volatility assumed
73.0%
Annual dividend rate
0.0%
Risk free discount rate
1.79%
The compensation expense calculated at time of grant is amortised over the vesting period for the options granted. During the year ended March 31, 2019, the Company amortised $4,613 as option expense.
KYTO TECHNOLOGY AND LIFE SCIENCE, INC.
NOTES TO FINANCIAL STATEMENTS MARCH 31, 2019
NOTE 6 EQUITY (CONTINUED)
(E) WARRANTS
In conjunction with the sale of stock Units, the Company issued 2,612,200 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.
Number of warrants
Weighted average exercise price
$
Weighted average remaining life in years
Outstanding March 31, 2018
-
-
-
Granted
2,612,500
1.20
3.00
Exercised
-
-
-
Cancelled
-
-
-
Outstanding March 31, 2019
2,612,500
1.20
2.41
Exercisable March 31, 2019
2,612,500
-
2.41
At March 31, 2019 the value of the warrants was $0 as the Company did not bifurcate the value of Series A and warrants within the Units sold. There were no warrants issued or outstanding at March 31, 2018.
NOTE 7 SUBSEQUENT EVENTS
Since March 31, 2019, the Company has raised $525,000 from the sale of 656,250 Series A preferred stock units through private placements.
Since March 31, 2019, the Company has invested $123,500 in two additional investment opportunities.
In April 2019, the Board authorized and paid a bonus of $50,000 to the chief executive officer in recognition of his success in fund raising.