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.

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