NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September
30, 2021
NOTE
1 – DESCRIPTION OF BUSINESS
Kyto
Technology and Life Science, Inc. (the “Company”) 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 currently lease any office space.
The
Company was originally formed to acquire and develop proprietary drugs for the treatment of cancer, arthritis, and other autoimmune diseases
and had been evaluating a number of strategies. As of March 31, 2018, the Company had accumulated a deficit of $32,380,746 from all prior
operations. 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, sophisticated early-stage investors and successful entrepreneurs with experience 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
other sophisticated investors and participates only after these groups have completed due diligence and committed to invest, in effect
becoming lead investors. The Company then completes its own due diligence and invests under identical terms as the lead investors. The
Company will do follow-on investments in existing portfolio companies, assuming adequate progress, when portfolio companies initiate
new financing rounds. The Company currently 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 realized 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 realized from an exit within a period of four to five years following initial investment. Such
exits or liquidity events are outside the Company’s control and depend on merger and acquisition (“M&A”) transactions
or an initial public offering (“IPO”) which may result in cash or equity proceeds. Other than making its initial and, potentially,
follow-on investments in its portfolio companies, the Company does not provide any financial support to any of its investees.
The
Company has one regular employee – the CEO, Mr, Paul Russo. Prior to December 31, 2020, Mr. Russo was acting as a consultant to
the Company and did not receive contractual compensation for his services in the form of cash. As of January 1, 2021, Mr. Russo was engaged
as an employee of the Company at a salary of $400,000
per annum of which 60%
was paid monthly from January to April 2021, then 75%
from May 2021, with the balance being deferred to be paid once the Company lists and starts trading on the Nasdaq exchange. The full
terms of Mr. Russo’s employment are described in a Form 8-K filed on February 1, 2021, which was approved by the Compensation committee
of the Board of Directors on that date. During the three months and six months ended September 30, 2021, Mr. Russo received gross pay
of $90,000
and $170,000,
respectively. No consulting fees and no options were granted to him
during these periods. During the three months and six months ended September 30, 2020, Mr. Russo received no
payroll or consulting fees, however in the three
and six months ended September 30, 2020 he received a bonus of $50,000
and was granted options to purchase 215,000
shares of Common stock.
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 the Company’s 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. As of the date of this filing,
the Company had approximately $485,000 of cash to cover its operating expenses, and new investment requirements and is continuing to
raise additional funding on a recurring monthly basis. If successful, it will have sufficient funding for further investments and ongoing
operations. However, there is no assurance that the Company will be able to raise sufficient cash to cover its requirements on attractive
terms, if at all, and whether it will be able to continue as a going concern. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The accompanying condensed interim financial statements have been prepared assuming the Company
will continue to operate as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.
Stay at home orders and general economic uncertainties arising out of the current Covid-19 epidemic have created additional delays 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 Accounting Standards Codification Topic
946, Financial Services—Investment Companies (ASC Topic 946) disclosure, and adopted the specialized accounting and reporting
guidance contained therein. Accordingly, a new company, Kyto Investments, Inc. (“KI”) was incorporated in Delaware in December
2020 in preparation for a restructuring and an N-2 Registration Statement filed in March 2021 for review by the SEC. KI 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 N-2 Registration Statement,
the Company will merge with KI and the Company will be the surviving entity. As of the completion of the merger, the Company will constitute
a “successor issuer” for the purposes of Rule 414 under the Securities Act and may continue the current offering by filing
post-effective amendments to the Registration Statements. Prior to the merger, the Company had fewer than 100 non affiliated investors
and filed under the 1934 Act relying on exemption Rule 3( c )(1).
As
a BDC, the Company will be required to comply with certain regulatory requirements. 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. The
Company has prepared and submitted sequentially two N-2 Registration Statements to the SEC for review but has not yet received final
approval of its registration as at the filing date of this report.
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 months and six months ended September 30, 2021 may not necessarily
be indicative of results that may be expected for any succeeding quarter or for the entire fiscal year. The condensed balance sheet as
of March 31, 2021 was derived from the audited financial statements at that date, but does not include all the information and footnotes
required by U.S. GAAP. 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, 2021, included in the Annual Report on Form 10-K as filed with the Securities
and Exchange Commission (the “SEC”) on August 10, 2021.
The
Company’s condensed interim financial statements are prepared in accordance with U.S. GAAP, which requires the use of estimates,
assumptions and the exercise of subjective judgment as to future uncertainties. Actual results could differ from those estimates, assumptions,
and judgments. Significant items subject to such estimates will include determining the fair value of investments, revenue recognition,
income tax uncertainties, stock-based compensation, and other contingencies.
The
Company’s financial statements are prepared using the specialized accounting principles of 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 carrying amount of the Company’s financial instruments such as cash and payables approximates fair value due to the short maturity
of such instruments. Net assets are calculated as the carrying amounts of assets, including the fair value of investments, less the carrying
amounts of its liabilities.
(B)
INVESTMENT TRANSACTIONS AND NET REALIZED AND UNREALIZED GAIN OR LOSS ON INVESTMENTS
The
Company generates increases or decreases in its net assets from the sale of complete or partial investments following a merger or acquisition
(“M&A”) transaction or restructuring or from the revaluation of portfolio company investments to recognize changes in
their fair value, either upwards or downwards. 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 general guideline, it would expect such events to occur approximately four to five years after its investments are made. The Company
records the realized gains and losses from investment activities upon completion of sale and receipt of net proceeds, after deducting
related transaction expenses. Realized gains or losses on the sale of investments, or upon the determination that an investment balance,
or portion thereof, is not recoverable, are calculated using the specific identification method. The Company measures realized gains
or losses by calculating the difference between the net proceeds from the repayment or sale and the cost basis of the investment. Net
change in unrealized appreciation or depreciation reflects the change in the fair values of the Company’s portfolio investments
during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation when gains or losses
are realized. The Company is in periodic contact with the management of its portfolio investment companies to provide a basis for valuation
changes. The Company does not expect to receive interest and principal repayments on its convertible notes and generally expects these
notes to convert into equity securities upon completion of qualified subsequent financings. Accrued interest is recorded as an adjustment
to the fair value of the convertible notes.
(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, which 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 months and six months ended September 30, 2021 and September 30, 2020 include the valuation of the investment
portfolio, deferred tax assets, tax valuation allowance, stock options and warrants.
(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 September 30, 2021 and March 31, 2021, respectively.
(F)
CONCENTRATIONS
The
Company maintains its cash in bank checking and deposit accounts, which, at times, may exceed federally insured limits. As of September
30, 2021, and March 31, 2021, the Company’s bank balance exceeded the federally insured limit by approximately $70,000 and $1.2
million, respectively. The Company has not experienced any losses in such accounts through September 30, 2021.
(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 consultants and advisors 490,000 and 510,000 options during the three months ended September 30, 2021 and September
30, 2020, and 740,000 and 510,000 options during the six months ended September 30, 2021 and September 30, 2020, respectively.
(H)
NET EARNINGS PER COMMON SHARE
In
accordance with Statement of Financial Accounting Standards Accounting Standard Codification Topic 260, “Earnings per Share”,
basic earnings per common 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 common 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 consisting of preferred stock,
stock options and warrants. The following table sets out the number of shares used in calculating fully- diluted earnings per common
share using the if-converted method.
Weighted
Average method
Number
of shares used in calculating fully- diluted earnings per common shares
SCHEDULE OF EARNINGS PER SHARE
|
|
Three
months
ended
September 30,
2021
|
|
|
Six
months
ended
September 30,
2021
|
|
Common Stock
|
|
|
13,271,996
|
|
|
|
13,269,764
|
|
Common stock subscribed not issued
|
|
|
-
|
|
|
|
-
|
|
Series A preferred stock
|
|
|
4,200,000
|
|
|
|
4,200,000
|
|
Series B preferred stock
|
|
|
5,307,240
|
|
|
|
4,361,525
|
|
Options
|
|
|
2,962,792
|
|
|
|
2,835,262
|
|
Warrants
|
|
|
1,596,667
|
|
|
|
1,596,667
|
|
|
|
|
|
|
|
|
|
|
Total shares used in calculating fully-diluted earnings per common share
|
|
|
27,338,695
|
|
|
|
26,263,218
|
|
|
|
Three months
ended
September 30,
2020
|
|
|
Six
months
ended
September 30,
2020
|
|
Common Stock issued
|
|
|
5,836,832
|
|
|
|
5,836,832
|
|
Series A preferred stock
|
|
|
4,200,000
|
|
|
|
4,200,000
|
|
Series B preferred stock
|
|
|
1,830,208
|
|
|
|
1,250,595
|
|
Options
|
|
|
1,920,000
|
|
|
|
1,571,429
|
|
Warrants
|
|
|
4,200,000
|
|
|
|
4,200,000
|
|
|
|
|
|
|
|
|
|
|
Total shares used in calculating fully-diluted earnings per common share
|
|
|
17,987,040
|
|
|
|
17,058,856
|
|
(I
) INVESTMENT AND VALUATION OF INVESTMENT AT FAIR VALUE
The
Company reviews the performance of its investments based on available information, including management reports, press releases, web
site announcements and progress reports, third party equity updates, management interviews and, where accessible, financial reports,
to determine their fair values. In the event that management considers the fair value of an investment to be greater or less than the
current book value, the difference will be reflected as unrealized gains or losses in investments in the statements of operations.
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 U.S. 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 uses 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 uses 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 comprise most of our investment portfolio, fair value is estimated
by using the income, market, or back-solve approach. 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. The back solve method involves
comparing available data over a period of time and inferring a new valuation based on changes from a known starting point, for example
the cost of an 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 assumptions 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 company does business,
comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, the principal market and enterprise
values, environmental factors, subsequent financings by the portfolio investment, among other factors.
The
estimated fair values do 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.
Most of the Company’s investments are Level 3.
Critical
accounting policies and practices are the policies that are both most important to the portrayal of the Company’s financial condition
and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates
about matters that are inherently uncertain. These include estimates of the fair value of Level 3 investments and other estimates that
affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts
of certain revenues and expenses during the reporting period. It is likely that changes in these estimates will occur in the near term.
The Company’s estimates are inherently subjective in nature and actual results could differ materially from such estimates. See
“Note 1 – Significant Accounting Policies” to our financial statements as of March 31, 2021, as filed with the SEC
on August 10, 2021, for further detail regarding our critical accounting policies and recently issued or adopted accounting pronouncements.
(J)
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.
(K)
OTHER CURRENT ASSETS
Other
current assets principally include deferred offering costs. Since April 2019, the Company has conducted a series of sales of common and
preferred stock to fund its ongoing investment program and cost of operations. Typically, it expects that raising capital through the
sale of any series of securities, from start to finish, may take from six to nine months and in order to match the cost and benefits
of this process, the Company adopted a policy of capitalizing direct expenses incurred in the course of raising capital, with the intention
of netting accumulated expenses against proceeds from sale of equity, and reporting the net funds raised at the close. Direct expenses
include legal fees, investor relations fees, investor roadshows and meeting expenses, and related filing and printing fees. At September
30, 2021 and March 31, 2021, the Company had deferred $230,434 and $169,891, respectively, of such expenses, relating to the preparation
and filing of an N-2 Registration Statement.
NOTE
3 – COMMITMENTS AND CONTINGENCIES
The
Company has no commitments or contingencies as of the date of this filing. The Company may be subject to litigation during the normal
course of business but has not received any such claims to date.
NOTE
4 - RELATED PARTY TRANSACTIONS
At
September 30, 2021 and March 31, 2021, the Company had accrued and owed $87,000 and $51,420, respectively, to officers of the Company
for deferred payroll and consulting service fees.
At
September 30, 2021, officers or directors of the Company held board positions at four portfolio companies: Beam Semiconductor Inc., Trellis
Bioscience Inc., Exodos Life Sciences LP, and Achelios Therapeutics Inc.
NOTE
5 – INVESTMENTS
The
following table summarizes the Company’s investment portfolio at September 30, 2021 and March 31, 2021.
SUMMARY OF INVESTMENT PORTFOLIO
|
|
September 30, 2021
|
|
|
|
|
|
March 31, 2021
|
|
|
|
|
Number of portfolio companies
|
|
|
66
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
Fair value
|
|
$
|
10,442,813
|
|
|
|
|
|
|
$
|
6,821,407
|
|
|
|
|
|
Cost
|
|
|
7,904,636
|
|
|
|
|
|
|
|
5,686,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of portfolio at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
|
|
|
3,801,833
|
|
|
|
36.4
|
%
|
|
|
2,553,954
|
|
|
|
37.4
|
%
|
Preferrred stock
|
|
|
4,538,653
|
|
|
|
43.5
|
%
|
|
|
3,129,458
|
|
|
|
45.9
|
%
|
Common stock
|
|
|
956,327
|
|
|
|
9.2
|
%
|
|
|
391,995
|
|
|
|
5.7
|
%
|
SAFE
|
|
|
575,000
|
|
|
|
5.5
|
%
|
|
|
325,000
|
|
|
|
4.8
|
%
|
Other ownership units
|
|
|
571,000
|
|
|
|
5.5
|
%
|
|
|
421,000
|
|
|
|
6.2
|
%
|
Total
|
|
$
|
10,442,813
|
|
|
|
100
|
%
|
|
$
|
6,821,407
|
|
|
|
100
|
%
|
A
SAFE is a Simple Agreement for Future Equity in the form of a warrant to purchase equity stock in a future priced round.
Our
investment portfolio represents approximately 96% of our net assets at September 30, 2021 and 98% at March 31, 2021. Investments in early-stage
start-up private operating entities are valued based on available metrics, such as relevant market multiples and comparable company valuations,
company specific-financial data including subsequent financings, actual and projected results, and independent third-party valuation
estimates.
Significant
Unobservable Inputs for Level 3 Assets and Liabilities
In
accordance with FASB ASC 820, Fair Value Management, the tables below provide quantitative information about the Company’s
fair value measurements of its Level 3 assets as of September 30, 2021 and March 31, 2021. In addition to the techniques and inputs noted
in the tables above, according to the Company’s valuation policy, the Company may also use other valuation techniques and methodologies
when determining the Company’s fair value measurements. The tables below are not meant to be all-inclusive, but rather provide
information on the significant Level 3 inputs as they relate to the Company’s fair value measurements. To the extent an unobservable
input is not reflected in the tables below, such input is deemed insignificant with respect to the Company’s Level 3 fair value
measurements. Significant changes in the inputs in isolation would result in a significant change in the fair value measurement, depending
on the materiality of the investment.
The
following table summarizes the valuation techniques and significant unobservable inputs used for investments that are categorized within
Level 3 of the fair value hierarchy as of September 30, 2021 and March 31, 2021:
SCHEDULE OF INVESTMENTS
|
|
As
of September 30, 2021
|
|
|
|
Fair
Value
|
|
|
Valuation
Approach/ Technique
|
|
Unobservable
Inputs
|
|
Range/
Weighted Average
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes: Basepaws Inc
|
|
$
|
201,663
|
|
|
Market
approach based on indicative term sheet and last round of financing
|
|
As
if converted note and Series A term sheet of $37.5 million
|
|
50:50
weight
|
Convertible
notes: Promaxo Inc
|
|
|
183,876
|
|
|
Market
approach based on available comparables and financial performance
|
|
Conversion
prospects, market yield, remaining maturity
|
|
5%
yield
|
Convertible
notes: Other
|
|
|
3,416,294
|
|
|
Market
approach based on available comparables and financial performance
|
|
Conversion
prospects, market yield, remaining maturity
|
|
1-12%
yield
|
Preferred
stock in private companies” Shyft Moving Inc
|
|
|
269,820
|
|
|
Market
approach based on indicative term sheet and last round of financing
|
|
50/50
weighting to prior A-3 preferred and indicated pre Series B price. Forecast revenue from investor deck and 75% percentile for public
company peer valuation ratios
|
|
Based
on Series B valuation of $80 million
|
Preferred
stock in private companies: Seal Rock Therapeutics Inc
|
|
|
199,112
|
|
|
Market
approach based on indicative term sheet and last round of financing
|
|
50/50
weighting to prior Series seed preferred and indicated Note price. 75% percentile for public company peer valuation ratios
|
|
Based
on new Note indication of $80 million
|
Preferred
stock in private companies: Femto DX Inc
|
|
|
290,046
|
|
|
Market
approach based on indicative term sheet and last round of financing
|
|
50/50
weighting to prior Series B-2 preferred price and public market. 75% percentile for public company peer valuation ratios
|
|
Based
on Series B valuation of $170 million
|
Preferred
stock in private companies: Promaxo Inc
|
|
|
1,034,984
|
|
|
Market
approach based on available comparables and financial performance
|
|
a) Last round of financing for series B-2 price, 118% change in enterprise value @75th percentile b) revenue multiples 2021 13.3X 2022 9.3x
|
|
0%-168.3%
0.6x - 27.7x 0.5x - 59.4x
|
Preferred
stock in private companies: Other
|
|
|
2,744,691
|
|
|
Market
approach based on available comparables and financial performance
|
|
Market
approach based on available information from portfolio companies
|
|
Various
|
Common
stock in private companies
|
|
|
325,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Historic
or projected revenue and/or EBITDA multiples discounted for lack of marketability
|
|
Various
|
SAFE
|
|
|
575,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Precedent
and follow-on transactions adjusted for marketability
|
|
Various
|
Other
investments
|
|
|
571,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Precedent
and follow-on transactions adjusted for marketability
|
|
Various
|
Total
Investments
|
|
$
|
9,811,486
|
|
|
|
|
|
|
|
|
|
As
of March 31, 2021
|
|
|
|
Fair
Value
|
|
|
Valuation
Approach/ Technique
|
|
Unobservable
Inputs
|
|
Range/
Weighted Average
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes: Kitotech Medical Inc
|
|
$
|
326,871
|
|
|
Market
approach based on available comparables and financial performance
|
|
Market
cap of $28.51 million a, Public company 75th percentile As if converted 2020 note
|
|
Range
: $28.514 million
|
Convertible
notes
|
|
|
2,227,083
|
|
|
Market
approach based on available comparables and financial performance
|
|
Conversion
prospects, market yield, remaining maturity
|
|
1-12%
yield
|
Preferred
stock in private companies: Femto DX Inc
|
|
|
159,835
|
|
|
Market
approach based on available comparables and financial performance
|
|
Based
on Series B financing and public company peer multiples using 50:50 percentile
|
|
Market
value of invested capital $58.66 million
|
Preferred
stock in private companies: Neuroflow Inc
|
|
|
437,495
|
|
|
Market
approach based on available comparables and financial performance
|
|
Based
on Series Seed 2 and last round of financing - Series B
|
|
Market
value of invested capital $57.98 million
|
Preferred
stock in private companies: other
|
|
|
2,532,128
|
|
|
Market
approach based on available comparables and financial performance
|
|
Market
approach based on available information from portfolio companies
|
|
Various
|
Common
stock in private companies
|
|
|
300,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Historic
or projected revenue and/or EBITDA multiples
|
|
Various
|
SAFE
|
|
|
325,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Precedent
and follow-on transactions adjusted for marketability
|
|
Various
|
Other
investments
|
|
|
421,000
|
|
|
Market
approach based on available comparables and financial performance
|
|
Precedent
and follow-on transactions adjusted for marketability
|
|
Various
|
Total
Investments
|
|
$
|
6,729,412
|
|
|
|
|
|
|
|
The
following table presents fair value measurements of investments, by major class, as of September 30, 2021, and March 31, 2021, according
to the fair value hierarchy:
SCHEDULE OF INVESTMENTS AT FAIR VALUE MEASUREMENTS OF INVESTMENTS
|
|
As of September 30, 2021
|
|
|
|
Quoted prices in active markets for identical securities
|
|
|
Significant other observable inputs
|
|
|
Significant unobservable inputs
|
|
|
|
|
Description
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Total
|
|
Investments at Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Portfolio Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,801,833
|
|
|
$
|
3,801,833
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
4,538,653
|
|
|
|
4,538,653
|
|
Common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
325,000
|
|
|
|
325,000
|
|
SAFEs
|
|
|
-
|
|
|
|
-
|
|
|
|
575,000
|
|
|
|
575,000
|
|
Other ownership interests
|
|
|
-
|
|
|
|
-
|
|
|
|
571,000
|
|
|
|
571,000
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,811,486
|
|
|
|
9,811,486
|
|
Public Portfolio Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
631,327
|
|
|
|
-
|
|
|
|
-
|
|
|
|
631,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments at Fair value
|
|
$
|
631,327
|
|
|
$
|
-
|
|
|
$
|
9,811,486
|
|
|
$
|
10,442,813
|
|
|
|
As of March 31, 2021
|
|
Description
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments at Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private Portfolio Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,553,954
|
|
|
$
|
2,553,954
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
3,129,458
|
|
|
|
3,129,458
|
|
Common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
|
|
|
300,000
|
|
SAFEs
|
|
|
-
|
|
|
|
-
|
|
|
|
325,000
|
|
|
|
325,000
|
|
Other ownership interests
|
|
|
-
|
|
|
|
-
|
|
|
|
421,000
|
|
|
|
421,000
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,729,412
|
|
|
|
6,729,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Portfolio Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
91,995
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments at Fair value
|
|
$
|
91,995
|
|
|
$
|
-
|
|
|
$
|
6,729,412
|
|
|
$
|
6,821,407
|
|
As
of September 30, 2021, and March 31, 2021, all our investments were treated as Level 3 with the exception of two which are invested in
common stock of a public company and treated as Level 1.
We
focus on making our investments in the United States, Canada, and Israel. All investments are made and reported in U.S. dollars. Assets
that are denominated in foreign currencies are translated into U.S. dollars at closing rates of exchange on the date of valuation. Transactions
during the year are translated at the rate of exchange prevailing on the date of the transaction. The Company does not isolate that portion
of results of operations resulting from the changes in foreign exchange rates on securities from fluctuations resulting from changes
in market prices of such securities. Such foreign currency translation gains and losses are included in the net realized gains or losses
from investments and net changes in unrealized gain or losses from investments on the statement of operations.
SCHEDULE OF INVESTMENTS IN UNREALIZED GAIN OR LOSSES FOREIGN EXCHANGE RATES ON SECURITIES
|
|
America
|
|
|
Canada
|
|
|
Rest of World
|
|
|
Total
|
|
Fair value beginning of year March 31, 2021
|
|
$
|
5,486,011
|
|
|
$
|
907,560
|
|
|
$
|
427,836
|
|
|
$
|
6,821,407
|
|
New investments
|
|
|
1,668,091
|
|
|
|
200,000
|
|
|
|
350,000
|
|
|
|
2,218,091
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net change in unrealized gains included in condensed Statements of Operations
|
|
|
1,360,028
|
|
|
|
29,556
|
|
|
|
13,731
|
|
|
|
1,403,315
|
|
Fair value end of six months September 30, 2021
|
|
$
|
8,514,130
|
|
|
$
|
1,137,116
|
|
|
$
|
791,567
|
|
|
$
|
10,442,813
|
|
Changes in unrealized gains or losses for the period included in Condensed Statement of Operations for assets held at the end of the reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,403,315
|
|
|
|
America
|
|
|
Canada
|
|
|
Rest of World
|
|
|
Total
|
|
Fair value beginning of year March 31, 2020
|
|
$
|
2,170,499
|
|
|
$
|
245,000
|
|
|
$
|
250,000
|
|
|
$
|
2,665,499
|
|
New investments
|
|
|
540,000
|
|
|
|
150,000
|
|
|
|
50,000
|
|
|
|
740,000
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net change in unrealized gains included in condensed Statements of Operations
|
|
|
438,953
|
|
|
|
21,947
|
|
|
|
17,348
|
|
|
|
478,248
|
|
Fair value end of six months September 30, 2020
|
|
$
|
3,149,452
|
|
|
$
|
416,947
|
|
|
$
|
317,348
|
|
|
$
|
3,883,747
|
|
Changes in unrealized gains or losses for the period included in Condensed Statement of Operations for assets held at the end of the reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
478,248
|
|
Working
on the experience of our technical advisors, we limit our investments to fintech, technology, and life sciences.
|
|
Fintech
|
|
|
Technology
|
|
|
Life science
|
|
|
Total
|
|
Fair value beginning of year March 31, 2021
|
|
$
|
126,030
|
|
|
$
|
1,394,318
|
|
|
$
|
5,301,059
|
|
|
$
|
6,821,407
|
|
New investments
|
|
|
-
|
|
|
|
590,600
|
|
|
|
1,627,491
|
|
|
|
2,218,091
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net change in unrealized gains included in condensed Statements of Operations
|
|
|
-
|
|
|
|
45,531
|
|
|
|
1,357,784
|
|
|
|
1,403,315
|
|
Fair value end of six months September 30, 2021
|
|
$
|
126,030
|
|
|
$
|
2,030,449
|
|
|
$
|
8,286,334
|
|
|
$
|
10,442,813
|
|
Changes in unrealized gains or losses for the period included in Condensed Statement of Operations for assets held at the end of the reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,403,315
|
|
|
|
Fintech
|
|
|
Technology
|
|
|
Life science
|
|
|
Total
|
|
Fair value beginning of year March 31, 2020
|
|
$
|
101,500
|
|
|
$
|
685,002
|
|
|
$
|
1,878,997
|
|
|
$
|
2,665,499
|
|
New investments
|
|
|
-
|
|
|
|
-
|
|
|
|
740,000
|
|
|
|
740,000
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net change in unrealized gains included in condensed Statements of Operations
|
|
|
24,530
|
|
|
|
37,769
|
|
|
|
415,949
|
|
|
|
478,248
|
|
Fair value end of six months September 30, 2020
|
|
$
|
126,030
|
|
|
$
|
722,771
|
|
|
$
|
3,034,946
|
|
|
$
|
3,883,747
|
|
Changes in unrealized gains or losses for the period included in Condensed Statement of Operations for assets held at the end of the reporting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
478,248
|
|
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. Typically notes carry a two-year term and are then rolled over for additional
periods if no other maturity triggers have been achieved. If a convertible note investment were, in our judgment, to become impaired,
we would reverse the accrued interest and adjust the valuation to reflect management’s assessment of fair value. If a convertible
note investment exceeds its maturity date we would request the portfolio company to document an extension, as well as consider whether
the overdue note, along with all other available performance data and management reviews lead us to consider whether there should be
an adjustment in fair value of the investment. There were no transfers into or out of Level 3 during the three and six months ended September
30, 2021 and September 30, 2020.
SCHEDULE OF ADJUSTMENT IN FAIR VALUE TO REFLECT IMPAIRMENT OF INVESTMENT
|
|
Convertible notes
|
|
|
Preferred stock
|
|
|
Common stock
|
|
|
SAFEs
|
|
|
Other ownership interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value March 31, 2021
|
|
$
|
2,553,954
|
|
|
$
|
3,129,458
|
|
|
$
|
391,995
|
|
|
$
|
325,000
|
|
|
$
|
421,000
|
|
|
$
|
6,821,407
|
|
Conversions into preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
New investments
|
|
|
1,027,491
|
|
|
|
600,000
|
|
|
|
190,600
|
|
|
|
250,000
|
|
|
|
150,000
|
|
|
|
2,218,091
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized gains included in condensed Statements of Operations
|
|
|
220,388
|
|
|
|
809,195
|
|
|
|
373,732
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,403,315
|
|
Fair value September 30, 2021
|
|
$
|
3,801,833
|
|
|
$
|
4,538,653
|
|
|
$
|
956,327
|
|
|
$
|
575,000
|
|
|
$
|
571,000
|
|
|
$
|
10,442,813
|
|
|
|
Convertible notes
|
|
|
Preferred stock
|
|
|
Common stock
|
|
|
SAFEs
|
|
|
Other ownership interests
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value March 31, 2020
|
|
$
|
1,528,002
|
|
|
$
|
701,497
|
|
|
$
|
126,500
|
|
|
$
|
73,500
|
|
|
$
|
236,000
|
|
|
$
|
2,665,499
|
|
Conversions into preferred stock
|
|
|
(597,984
|
)
|
|
|
678,313
|
|
|
|
-
|
|
|
|
(80,329
|
)
|
|
|
-
|
|
|
|
-
|
|
New investments
|
|
|
100,000
|
|
|
|
440,000
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
740,000
|
|
Proceeds from sale of investments
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Realized gains
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized gains included in condensed Statements of Operations
|
|
|
178,986
|
|
|
|
279,433
|
|
|
|
(62,000
|
)
|
|
|
81,829
|
|
|
|
-
|
|
|
|
478,248
|
|
Fair value September 30, 2020
|
|
$
|
1,209,004
|
|
|
$
|
2,099,243
|
|
|
$
|
164,500
|
|
|
$
|
75,000
|
|
|
$
|
336,000
|
|
|
$
|
3,883,747
|
|
NOTE
6– EQUITY
Series
A
The
Company has sold 4,200,000 Series A Stock Units (“Units”) consisting of one share of Series A Preferred Stock and one warrant
to purchase a share of Common Stock at $0.80 per share. The Units were sold in a private placement to accredited investors. The Series
A Preferred Stock will be converted into shares of Common Stock upon listing of the Company on Nasdaq or NYSE. 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 shares of Common
Stock 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.
On
March 2, 2021, in preparation for an intended IPO, the Company made an offer to all its preferred shareholders to protect them against
the possibility that the IPO price might be less than their preferred stock price. Accordingly, Series A-1 and Series A-2 Preferred Stock
were created, and the holders of Series A Preferred Stock were granted an opportunity to purchase shares of Common Stock at $0.40 per
share. If shareholders purchased at least $6,000 of Common Stock, their shares of Series A Preferred Stock were exchanged for Series
A-1 which is guaranteed to convert into shares of Common Stock at the same price as the IPO price, and if shareholders purchased a pro-rated
amount of Common Stock their Series A Preferred Stock were exchanged for Series A-2 Preferred Stock which in turn is convertible into
shares of Common Stock at a discount of 10% to the IPO price. In all other respects the Series A-1 and Series A-2 Preferred Stock has
the same rights and obligations as the Series A Preferred Stock. As of September 30, 2021, 1,437,500 shares of Series A Preferred Stock
had been exchanged for Series A-1 Preferred Stock, and 2,212,500 shares of Series A Preferred Stock had been exchanged for Series A-2
Preferred Stock, respectively, leaving outstanding 550,000 shares of Series A Preferred Stock (“Series A”) designated at
a par value of $0.01 per share.
Series
B
There
were also 6,000,000 shares of Series B Preferred Stock (“Series B”) authorized designated at a par value of $0.01 per share.
The Series B can be converted into shares of Common Stock upon listing of the Company on Nasdaq. 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 Preferred Stock, a per share amount equal to two times (2 X) their original purchase price plus any declared but unpaid dividends (the
Liquidation Preference). The holders of Series B 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 cumulative rate of 10% 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 Series B shall be payable before
any dividends shall be declared or paid upon or set apart for the Common Stock.
On
March 2, 2021, in preparation for an intended future IPO, the Company made an offer to all its preferred shareholders to protect them
against the possibility that the IPO price might be less than their preferred stock price. Accordingly, Series B-1 and Series B-2 Preferred
Stock (“Series B-1” and “Series B-2”, respectively) were created, and the holders of the Series B were granted
an opportunity to purchase shares of Common Stock at $0.40 per share. If shareholders purchased at least $6,000 of Common Stock, their
Series B were exchanged for Series B-1 which is guaranteed to convert into shares of Common Stock at the same price as the IPO price,
and if shareholders purchased a pro-rated amount of Common Stock their Series B were exchanged for Series B-2 which converts into shares
of Common Stock at a discount of 10% to the IPO price. In all other respects, the Series B-1 and Series B-2 have the same rights and
obligations as the Series B. At September 30, 2021, 1,166,406 shares of Series B had been exchanged for Series B-1, and 2,176,250 shares
of Series B had been exchanged for Series B-2, respectively, leaving outstanding 286,250 shares of Series B. During the three and six
months ended September 30, 2021, the Company sold 1,591,250 and 2,282,500 shares of Series B-1 Preferred Stock for $1,273,000 and $1,826,001,
respectively.
As
of September 30, 2021, the Company authorized an additional 3,000,000 shares of Series B stock designated as Series B-3 Preferred (“Series
B-3”) bringing Series B to a total of 9,000,000 authorized shares with a par value of $0.01 per share. The Certificate of Designation
of the Series B-3 shares was filed with the Delaware Secretary of State on October 5, 2021. The Series B-3 will be offered for $0.80
per share and accrue a cumulative dividend of 10% per annum. The remaining terms and conditions are substantially the same as for all
other Series B shares, including mandatory conversion upon a majority vote of the Series B-3 shareholders, closing of a qualified financing
of at least $10 million, or listing on a public stock exchange.
B)
COMMON STOCK
The
Company has authorized 40,000,000 shares of common stock at a par value of $0.01 per share. As of September 30, 2021, and March 31, 2021
a total of 13,287,621 and 9,983,082 shares of the Company’s common stock were issued and outstanding, respectively.
During
the three and six months ended September 30, 2021, in connection with the amendment of Preferred Stock rights described in A above, the
Company sold 3,285,789 shares of Common Stock for $1,314,317 of which $1,191,442 was received and accrued as subscription liability at
March 31, 2021.
During
each of the three and six months ended September 30, 2021, the Company issued 18,750 shares of Common Stock for $618, respectively, in
connection with the exercise of stock options.
C)
STOCK OPTIONS
In
April 2018, the Board approved the introduction of the Kyto Technology and Life Science, Inc. Incentive Stock Option Plan (“the
2018 Plan”) reserving 2,697,085 shares for issuance to employees, consultants and directors, with the objective of securing the
benefit of services for stock options rather than cash salaries.
In
July 2019, the Board approved the introduction of the Kyto Technology and Life Science 2019 Stock Option and Incentive Plan (“2019
Plan”), and reserved 2 million shares for issuance to directors, officers, consultants and advisors. Options granted under the
2019 Plan expire May 21, 2029.
In
December 2020, the Board approved the introduction of the Kyto Technology and Life Science 2020 Non Qualified Stock Option Plan (“2020
Plan”), and reserved 2 million shares for issuance to directors, officers, consultants and advisors. Options granted under the
2020 Plan expire December 16, 2030.
During
the three months ended September 30, 2021, and September 30, 2020, the Company issued a total of 490,000 and 510,000 non-qualified stock
options, respectively, to consultants and advisors vesting over terms of two years. During the corresponding six months ended September
30, 2021, and September 30, 2020, the Company issued a total of 740,000 and 630,000 non-qualified stock options, respectively.
SCHEDULE OF OPTIONS VESTED
|
|
Number of options granted
|
|
|
Weighted average exercise price
|
|
|
Weighted average remaining life years
|
|
Outstanding March 31, 2021
|
|
|
2,634,250
|
|
|
$
|
0.05
|
|
|
|
8.13
|
|
Granted
|
|
|
740,000
|
|
|
|
0.07
|
|
|
|
9.42
|
|
Exercised
|
|
|
(18,750
|
)
|
|
|
(0.03
|
)
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding September 30, 2021
|
|
|
3,355,500
|
|
|
$
|
0.06
|
|
|
|
8.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable September 30, 2021
|
|
|
2,085,041
|
|
|
$
|
0.04
|
|
|
|
8.90
|
|
In
connection with the grant of stock options the Company recognizes 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.
SCHEDULE OF FAIR VALUE ASSUMPTIONS - STOCK OPTIONS
|
|
September
30, 2021
|
|
|
March
31, 2021
|
|
Stock Price at grant date
|
|
$
|
0.07
|
|
|
$
|
0.033
-
$ 0.078
|
|
Exercise Price
|
|
$
|
0.07
|
|
|
$
|
0.033
-
$ 0.078
|
|
Term in Years
|
|
|
0
-
2.00
|
|
|
|
0
-
2.00
|
|
Volatility assumed
|
|
|
196
|
%
|
|
|
71%
- 196
|
%
|
Annual dividend rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Risk free discount rate
|
|
|
0.12
|
%
|
|
|
0.12%
- 2.0
|
%
|
The
compensation expense calculated at time of grant is recognized over the vesting period for the options granted. During the three and
six months ended September 30, 2021 the Company recognized $10,897
and $21,454,
respectively, as stock-based compensation expense. For the corresponding three and six months ended September 30, 2020, the Company recognized
$12,805 and
$13,851,
respectively.
The
intrinsic value of outstanding options at September 30, 2021 was $62,580,
and $56,987
of the option expense upon grant remained
unrecognized at September 30, 2021 with a remaining vesting period of 1.44
years.
D)
WARRANTS
In
conjunction with the sale of Series A 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 did not bifurcate the value of the warrants as the fair value of the warrant was determined
to be de minimis. The Company has not issued any warrants since September, 2019. At September 30, 2021 and March 31, 2021 the fair value
of the warrants was de minimis.
SCHEDULE OF WARRANTS
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
|
Weighted average remaining life
in years
|
|
Outstanding March 31, 2020
|
|
|
4,200,000
|
|
|
$
|
1.20
|
|
|
|
2.9
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
(2,603,333
|
)
|
|
$
|
1.20
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding September 30, 2020
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable March 31, 2020
|
|
|
4,200,000
|
|
|
$
|
1.20
|
|
|
|
2.9
|
|
Exercisable September 30, 2020
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.4
|
|
|
|
Number of warrants
|
|
|
Weighted average exercise price
|
|
|
Weighted average remaining life
in years
|
|
Outstanding March 31, 2021
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.4
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Cancelled
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Outstanding September 30, 2021
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable March 31, 2021
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.4
|
|
Exercisable September 30, 2021
|
|
|
1,596,667
|
|
|
$
|
1.20
|
|
|
|
1.1
|
|
The
Company values the warrants using the Black Scholes model, with appropriate assumptions for warrant life, stock value, risk free interest
rate, and volatility. The assumptions used for warrant valuation were as follows:
SCHEDULE OF FAIR VALUE ASSUMPTIONS - STOCK OPTIONS
Stock Price at grant date
|
|
$
|
0.006
|
|
Exercise Price
|
|
$
|
1.200
|
|
Term in Years
|
|
|
3.00
|
|
Volatility assumed
|
|
|
73
|
%
|
Annual dividend rate
|
|
|
0.0
|
%
|
Risk free discount rate
|
|
|
1.79
|
%
|
NOTE
7 – FINANCIAL HIGHLIGHTS
SCHEDULE OF FINANCIAL HIGHLIGHTS
Per share data ( a)
|
|
Three months
ended
|
|
|
Three months
ended
|
|
|
Six months
ended
|
|
|
Six months
ended
|
|
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
|
September 30,
2021
|
|
|
September 30,
2020
|
|
Net asset value
|
|
$
|
0.82
|
|
|
$
|
0.72
|
|
|
$
|
0.82
|
|
|
$
|
0.72
|
|
Net investment loss
|
|
$
|
(0.03
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.03
|
)
|
Net unrealized gain on investments
|
|
$
|
0.10
|
|
|
$
|
0.05
|
|
|
$
|
0.11
|
|
|
$
|
0.08
|
|
Net increase in net assets
|
|
$
|
0.08
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios and Supplemental Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period
|
|
$
|
10,817,894
|
|
|
$
|
4,230,731
|
|
|
$
|
10,817,894
|
|
|
$
|
4,230,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, end of period
|
|
|
13,271,996
|
|
|
|
5,836,832
|
|
|
|
13,269,764
|
|
|
|
5,836,832
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses/net assets
|
|
|
3.3
|
%
|
|
|
3.8
|
%
|
|
|
6.8
|
%
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment loss/net assets
|
|
|
3.3
|
%
|
|
|
3.8
|
%
|
|
|
6.8
|
%
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total return
|
|
|
9.2
|
%
|
|
|
7.5
|
%
|
|
|
6.1
|
%
|
|
|
6.6
|
%
|
(a)
|
|
Per share data is based on the weighted average number of common shares outstanding at the
end of the period.
|
NOTE
8 - SUBSEQUENT EVENTS
On
October 5, 2021, the Company filed a Form 8-K announcing the Designation of 3,000,000 million shares of B-3 Preferred Stock. As of November
13, 2021, the Company has sold $546,000 of shares of Series B-3 Preferred Stock and invested $300,000 in three follow-on investments.