SecProbe.io

CORRESP
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filename1.htm

Division
of Corporate Finance

Office
of Life Sciences

Securities
and Exchange Commission

Washington,
D.C. 20549

    Re:
    Kyto
    Technology & Life Science, Inc.

    Form
    10-K for the fiscal year ended March 31, 2021

    Filed
    August 10, 2021

    File
    Number 000-50390

SEC
Comment

Cover
page:

    1.
    Please
    confirm you will update the cover page in future filings to include the most recent version required by the Form 10-K.

Confirmed.

Notes
to the Financial Statements

Note
1 Nature of Business and Summary of Significant Accounting Policies (L) Basis of Accounting and Recent Accounting Pronouncements, page
F-16

    2a.
    You
    state that in March 2020, you adopted Topic 946. Please address the following:

    Provide
    us an analysis of how you meet the criteria to report under ASC 946. Specifically address ASC 946-10-15-5 through 15-9 and ASC 946-10-55.

The
Company’s business plan is focused on the development of early-stage technology and life science businesses through early-stage
investment funding relying on exemption 3(c)(1) to continue reporting as a 1934 Act filer from April 2018 to February 2022 . Additionally,
between April 2018 and March 2022, the Company has raised approximately $13.5 million in equity capital from accredited investors with
the objective to invest money raised in early-stage start-up companies in technology, life sciences, and fintech.

The
Company’s primary business activity involves investing cash, usually in the securities of other entities not under common management,
for current income, appreciation, or both. The Company believes that its financial statements should be prepared using the specialized
accounting principles under FASB Codification Topic 946, Financial Services – Investment Companies (ASC 946) (Investment
Company accounting) because the Company intends to operate in a manner that is consistent with the attributes necessary for an entity
to use investment company accounting and report its investment assets at fair value. In addition, the Company believes that recognizing
the Company’s assets at fair value on a recurring basis as required by ASC 946 will provide investors with useful information about
the performance of the Company’s investments and provide a more appropriate basis of comparison to other entities with similar
investment objectives (for example, business development companies (BDCs), which use Investment Company accounting).

The
following is an analysis of the key provisions of ASC 946 that support our conclusion that the Company met and continues to meet the
reporting criteria under ASC 946. An investment company, as described in ASC 946-10-15-6, has the following fundamental characteristics:

(a)
an entity that (i) obtains funds from one or more investors and provides the investor(s) with investment management services and (ii)
commits to its investor(s) that its business purpose and only substantive activities are investing the funds solely for returns from
capital appreciation, investment income, or both.

    ●
    As
    of March 2020, we estimated that the Company had approximately 81 third-party beneficial holders of its common and preferred shares.
    Of the approximately 5.8 million shares of common and 5.0 million shares of preferred (Series A and B) outstanding as of March 31,
    2020 and approximately 10 million shares of common and 7.8 million shares of preferred (Series A and B) outstanding as of March 31,
    2021, over 79 % are held by non-affiliated shareholders.

The
Company’s objective is to generate attractive, risk-adjusted total returns for its shareholders by making investments that it believes
compensates it appropriately for the risks associated with them. The Company spreads its risk by taking minority positions, typically
less than 5%, and is not in a position to manage or control the investments it makes in its portfolio company investments. It provides
advice to its portfolio companies only when requested. The Company does not get involved in any business relationships, financial guarantees,
and purchases to or from them, asset sharing, or activities other than investment for gain.

Given
these business objectives, in conducting its business the Company expects to make gains on its investment, as and when portfolio companies
have an exit transaction either via being acquired or a public transaction via an initial public offering. The Company’s primary
source of income is expected to be the liquidation of its investments via exit transactions entered into by its portfolio companies (i.e.,
realized gains from its sales of investments). As a result, we believe that the Company meets the requirements of (a) above.

(b)
the entity or its affiliates do not obtain or have the objective of obtaining returns or benefits from an investee or its affiliates
that are not normally attributable to ownership interests or that are other than capital appreciation or investment income.

    ●
    Substantially
    all of the Company’s activities, assets, and liabilities are related to the Company’s investment activities. The Company’s
    primary source of income has been and is expected to continue to be appreciation of investments in its portfolio companies

As
a result, we believe that the Company meets the requirements of (b) above.

ASC
946-10-15-7 provides that an investment company also has the following typical characteristics:

a)
It has more than one investment.

    ●
    The
    Company has investments in over 70 companies.

b)
It has more than one investor.

    ●
    As
    of March 2020, we estimated that the Company had approximately 81 beneficial holders of its common and preferred shares.

c)
It has investors that are not related parties of the parent entity (if there is a parent) and the investment manager.

    ●
    Currently,
    as of March 22, 2022, of the approximately 16 million common shares and 13.2 million preferred shares outstanding, over 79% are held
    by non-affiliated shareholders.

d)
It has ownership interests in the form of equity or partnership interests.

    ●
    The
    Company has ownership interests in the form of common and preferred shares.

e)
It manages substantially all of its investments on a fair value basis.

    ●
    The
    Company manages all of its investments on a fair value basis. Further, fair value is a key component of how the Company evaluates
    the performance of its investments.

The
Company has all of the above typical characteristics, thereby further supporting our conclusion that the Company met and continues to
meet the definition of an investment company under ASC 946.

Paragraphs
946-10-55-4 through 55-10 provide additional guidance for determining whether the Company has the fundamental characteristics of an investment
company. We have evaluated each as follows:

Evidence
of an Entity’s Business Purpose and Substantive Activities

946-10-55-4:
An investment company should have no substantive activities other than its investing activities and should not have significant assets
or liabilities other than those relating to its investing activities, subject to the exception in the following paragraph.

    ●
    The
    Company advises the Staff that the Company does not have substantive activities other than its investing activities. Further, the
    Company does not have significant assets or liabilities other than those relating to its investing activities.

946-10-55-5:
An investment company may provide investing-related services (for example, investment advisory or transfer agent services) to other entities,
directly or indirectly through an investment in an entity that provides those services, as long as those services are not substantive.
However, an investment company may provide substantive investing-related services, directly or indirectly through an investment in an
entity that provides those services, if the substantive services are provided to the investment company only.

    ●
    The
    Company does not provide investing-related services to other entities.

946-10-55-6:
Evidence of the entity’s business purpose and substantive activities may be included in the entity’s offering memorandum,
publications distributed by the entity, and other corporate or partnership documents that indicate the investment objectives of the entity.
Evidence of the entity’s business purpose and substantive activities also may include the manner in which the entity presents itself
to other parties (such as potential investors or potential investees). For example, an entity that presents its business to its investors
as having the objective of investing for capital appreciation has characteristics that are consistent with the business purpose and substantive
activities of an investment company. Alternatively, an entity that presents itself as an investor whose objective is jointly developing,
producing, or marketing products with its investees has characteristics that are inconsistent with the business purpose and substantive
activities of an investment company.

    ●
    The
    following is an overview, which we use in our public communications to shareholders and other interested parties to describe the
    Company and its business. It presents a clear emphasis on investing activities, and serves as the foundation for our conclusion that
    we continue to meet the definition of an investment company under ASC 946:

The
Company primarily invests in private corporate convertible debt and equity securities. At December 31, 2021, the Company had invested
$9.0 million in 133 investments across 69 unrelated portfolio companies. The investments are in the form of equity, convertible notes,
SAFEs or other ownership units and are carried on a fair value basis.

The
Company’s business description clearly evidences that its focus is solely around investing activities. This description is included
in its filings with the Commission, including Forms 10-Q and 10-K, as well as the registration statement on Form N-2. The Company does
not present itself as an investor whose focus is to jointly develop, produce or market products with its investees.

946-10-55-7:
An entity’s investment plans also provide evidence of its business purpose and substantive activities. Accordingly, an investment
company whose business purpose and substantive activities include realizing capital appreciation should have an exit strategy for how
it plans to realize the capital appreciation of its investments. Although the entity may not yet have determined the specific method
or timing of disposing of an investment, the fact that it has identified potential exit strategies through which it can realize capital
appreciation provides evidence that its business purpose and substantive activities are consistent with those of an investment company.
The entity need not document specific exit strategies for each individual investment held for the purpose of realizing capital appreciation
but should identify potential exit strategies for different types or portfolios of investments held with the purpose of realizing capital
appreciation.

Disposal
of investments only during liquidation or to satisfy investor redemptions are not exit strategies. Therefore, an entity should have a
plan to dispose of its investments before liquidation when its business purpose and substantive activities include realizing capital
appreciation. An investment company whose business purpose and substantive activities are to invest for returns only from investment
income does not require an exit strategy for its investments.

    ●
    As
    stated above, substantially all of the Company’s assets are held for capital appreciation, with the expectation that there
    will be M&A activity among the portfolio companies bringing realized gains and liquid proceeds within a period of 4 to 5 years
    from date of investment. With respect to these holdings, the Company frequently cites its limited level of portfolio turnover. The
    Company’s investments in its portfolio companies are generally not actively traded.

946-10-55-8:
An entity would not be an investment company if the entity or its affiliates obtain or have the objective of obtaining returns or benefits
from an investee or its affiliates that are not normally attributable to ownership interests or that are other than capital appreciation
or investment income. Examples of relationships and activities that would be inconsistent with the characteristics of an investment company
include any of the following:

a.
The entity or its affiliates acquire, use, exchange, or exploit the processes, assets, or technology of an investee or its affiliates.
This includes the entity or its affiliates having disproportionate or exclusive rights to acquire assets, technology, products, or services
of an investee or its affiliates (for example, by holding an option to purchase an asset from an investee if the asset’s development
is deemed successful).

b.
There are other arrangements between the entity or its affiliates and an investee or its affiliates to jointly develop, produce, market,
or provide products or services.

c.
An investee or its affiliates provide financing guarantees or assets to serve as collateral for borrowing arrangements of the entity
or its affiliates to provide returns or with the objective of providing returns other than capital appreciation or investment income.
The guidance in this paragraph does not prohibit an investment company from using its investments in its investees as collateral for
any of its borrowings.

d.
An affiliate of the entity holds an option to purchase from the entity ownership interests in an investee at an amount other than fair
value.

e.
There are transactions between the entity or its affiliates and an investee or its affiliates that meet any of the following:

    1.
    They
    are on terms that are unavailable to entities that are not affiliates of the investee.

    2.
    They
    are not at fair value or are not conducted at arm’s length.

    3.
    They
    represent a substantive portion of the investee’s or the entity’s business activities, including business activities
    of affiliates of the entity or affiliates of the investee.

    ●
    In
    reviewing the guidance provided by ASC 946-10-55-8 (a. through e.) above, the Company notes that it does not obtain or have the objective
    of obtaining returns or benefits from an investee or its affiliates that are not normally attributable to ownership interests or
    that are other than capital appreciation or possibly investment income.

As
of March 31, 2021 and 2020, the Company held equity and debt investments in numerous companies, which represented 83% and 99% of the
Company’s total assets and net asset value, respectively. All investment made were negotiated on an arm’s-length basis. We
further note that the Company has no significant influence with respect to these investees. Accordingly, the Company’s only substantive
activities are investing its funds solely for returns from capital appreciation and/or investment income.

946-10-55-9:
An investment company may have a strategy to invest in more than one investee in the same industry, market, or geographical area to benefit
from synergies that increase the returns from capital appreciation and investment income from those investments. Transactions between
an entity’s investees should not affect the entity’s assessment of whether it is an investment company unless those transactions
result in the entity obtaining returns or benefits other than capital appreciation or investment income.

    ●
    To
    our knowledge, there are no transactions among the Company’s investees that would result in the Company’s obtaining returns
    or benefits other than capital appreciation or investment income.

946-10-55-10
:An investment company may provide both of the f