SUNSHINE BIOPHARMA, INC
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
__________________
FORM
10-K
__________________
(Mark one)
☑
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,
2017
☐
TRANSITION
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF1934 for the transition period from ________________
to________________________.
Commission File Number
000-52898
SUNSHINE BIOPHARMA, INC.
(Exact name of registrant
as specified in its charter)
|
Colorado
|
|
20-5566275
|
|
(State or other jurisdiction of
Incorporation or organization)
|
|
(I.R.S. Employer Identification
No.)
|
6500
Trans-Canada Highway
4th Floor
Pointe-Claire, Quebec, Canada H9R 0A5
(Address of principal
executive offices)
514) 426-6161
(Issuer’s
Telephone Number)
Securities registered pursuant to
Section 12(b) of the Act:
None
Securities registered pursuant to
Section 12(g) of the Act:
|
Title of each
class
|
|
Name of each exchange on which
registered
|
|
Common Stock,
par value $0.001 per share
|
|
OTC
MARKETS
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes
☐
No
☑
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13
or Section 15(d) of the Securities Act. Yes
☐
No
☑
Indicate by check mark whether
the issuer (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
☑
No
☐
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
☑
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer,”
“accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check
one):
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated
filer
|
☐
(Do not check if a smaller reporting
company)
|
Smaller reporting company
|
☒
|
|
|
|
Emerging
growth company
|
☐
|
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. ☐
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes
☐
No
☑
State the aggregate market value
of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant’s most
recently completed second fiscal quarter on June 30, 2017 was
$4,664,479.
As of March 28, 2018, the
Registrant had 948,019,532 shares of Common Stock issued and
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE - None
TABLE OF CONTENTS
|
|
Page No.
|
|
|
Index
|
|
|
|
|
|
|
|
PART
I
|
3
|
|
|
|
|
|
|
Item
1.
|
Business
|
3
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
8
|
|
|
|
|
|
Item
1B.
|
Unresolved
Staff Comments
|
8
|
|
|
|
|
|
Item
2
|
Properties
|
9
|
|
|
|
|
|
Item
3.
|
Legal
Proceedings
|
9
|
|
|
|
|
|
Item
4.
|
Mine
Safety Disclosures
|
9
|
|
|
|
|
|
PART
II
|
10
|
|
|
|
|
|
|
Item
5.
|
Market
for the Registrant’s Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
10
|
|
|
|
|
|
Item
6.
|
Selected
Financial Data
|
12
|
|
|
|
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
|
|
|
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
17
|
|
|
|
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
17
|
|
|
|
|
|
Item
9.
|
Changes
in and Disagreements on Accounting and Financial
Disclosure
|
19
|
|
|
|
|
|
Item
9A.
|
Controls
and Procedures
|
19
|
|
|
|
|
|
Item
9B.
|
Other
Information
|
20
|
|
|
|
|
|
PART
III
|
21
|
|
|
|
|
|
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
21
|
|
|
|
|
|
Item
11.
|
Executive
Compensation
|
22
|
|
|
|
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
24
|
|
|
|
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
25
|
|
|
|
|
|
Item
14.
|
Principal
Accounting Fees and Services
|
26
|
|
|
|
|
|
PART
IV
|
27
|
|
|
|
|
|
|
Item
15.
|
Exhibits,
Financial Statement Schedules
|
27
|
|
|
|
|
|
|
Signatures
|
28
|
2
FORWARD LOOKING STATEMENTS
This
Annual Report on Form 10-K contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Act of 1934. The statements regarding
Sunshine Biopharma Inc. contained in this Report that are not
historical in nature, particularly those that utilize terminology
such as “may,” “will,”
“should,” “likely,” “expects,”
“anticipates,” “estimates,”
“believes” or “plans,” or comparable
terminology, are forward-looking statements based on current
expectations and assumptions, and entail various risks and
uncertainties that could cause actual results to differ materially
from those expressed in such forward-looking
statements.
Important factors
known to us that could cause such material differences are
identified in this Report. We undertake no obligation to correct or
update any forward-looking statements, whether as a result of new
information, future events or otherwise. You are advised, however,
to consult any future disclosures we make on related subjects in
future reports to the SEC.
History
We were
incorporated in the State of Colorado on August 31, 2006 under the
name “Mountain West Business Solutions, Inc.” Until
October 2009, our business was to provide management consulting
with regard to accounting, computer and general business issues for
small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license to a new anticancer drug
bearing the laboratory name, Adva-27a. As a result of this
transaction we changed our name to “Sunshine Biopharma, Inc.
and our officers and directors resigned their positions with us and
were replaced by Sunshine’s management at the time, including
our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille
Sebaaly each of whom remain part of our current management. Our
principal business became that of a pharmaceutical company focusing
on the development of our licensed Adva-27a anticancer compound. In
December 2015 we acquired all issued and pending patents pertaining
to our Adva-27a technology and terminated the license. See
“Part I, Item 1 – Business - Intellectual
Property,” below for a more detailed explanation of this
acquisition.
In July
2014, we formed a wholly owned Canadian subsidiary, Sunshine
Biopharma Canada Inc. (“Sunshine Canada”), for the
purposes of offering generic pharmaceutical products in Canada and
elsewhere around the world. Sunshine Canada has recently signed
licensing agreements for four (4) generic prescription drugs for
the treatment of cancer and BPH (Benign Prostatic
Hyperplasia).
In
January 2018, we acquired Atlas Pharma Inc., a certified company
dedicated to chemical analysis of pharmaceutical and other
industrial samples whose operations are authorized by a Drug
Establishment License issued by Health Canada.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a Colorado
corporation and assigned all of our interest in our Adva-27a
anticancer compound to that company.
Our
principal place of business is located at
6500 Trans-Canada Highway, 4th Floor,
Pointe-Claire, Quebec, Canada H9R 0A5.
. Our phone number is
(514) 426-6161and our website address is
www.sunshinebiopharma.com.
Business Operations
As of
the date of this report we are operating through the following
wholly owned subsidiaries:
●
NOX
Pharmaceuticals, Inc., a recently formed Colorado company focused
on the research, development and commercialization of proprietary
drugs for the treatment of cancer including Adva-27a, a
multi-purpose anti-tumor compound targeted for the treatment of
multidrug resistant cancer;
●
Sunshine Biopharma
Canada Inc., a Canadian company, which offers generic prescription
drugs for the treatment of cancer and other acute and chronic
indications; and
●
Atlas Pharma Inc.,
a Canadian company acquired in January 2018, offering certified
chemical analysis of pharmaceutical and other industrial
samples.
3
Proprietary Drug Development Operations
Since
inception, our proprietary drug development activities have been
focused on the development of a small molecule called Adva-27a for
the treatment of aggressive forms of cancer. A Topoisomerase II
inhibitor, Adva-27a has been shown to be effective at destroying
Multidrug Resistant Cancer cells including Pancreatic Cancer cells,
Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine
Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages
4423-4432, October 2012). Sunshine Biopharma is direct owner of all
issued and pending worldwide patents pertaining to Adva-27a
including U.S. Patent Number 8,236,935. See “Part I, Item 1
– Business - Intellectual Property.”
Adva-27a is a
GEM-difluorinated C-glycoside derivative of Podophyllotoxin.
Another derivative of Podophyllotoxin called Etoposide is currently
on the market and is used to treat various types of cancer
including leukemia, lymphoma, testicular cancer, lung cancer, brain
cancer, prostate cancer, bladder cancer, colon cancer, ovarian
cancer, liver cancer and several other forms of cancer. Etoposide
is one of the most widely used anticancer drugs. Adva-27a and
Etoposide are similar in that they both attack the same target in
cancer cells, namely the DNA unwinding enzyme, Topoisomerase II.
Unlike Etoposide, and other anti-tumor drugs currently in use,
Adva-27a is able to destroy Multidrug Resistant Cancer cells.
Adva-27a is the only compound known today that is capable of
destroying Multidrug Resistant Cancer. In addition, Adva-27a has
been shown to have distinct and more desirable biological and
pharmacological properties compared to Etoposide. In side-by-side
studies using Multidrug Resistant Breast Cancer cells and Etoposide
as a reference, Adva-27a showed markedly improved cell killing
activity (see Figure below). Our preclinical studies to date have
shown that:
●
Adva-27a is
effective at killing different types of Multidrug Resistant cancer
cells, including Pancreatic Cancer Cells (Panc-1), Breast Cancer
Cells (MCF-7/MDR), Small-Cell Lung Cancer Cells (H69AR), and
Uterine Sarcoma Cells (MES-SA/Dx5).
●
Adva-27a is
unaffected by P-Glycoprotein, the enzyme responsible for making
cancer cells resistant to anti-tumor drugs.
●
Adva-27a has
excellent clearance time (half-life = 54 minutes) as indicated by
human microsomes stability studies and pharmacokinetics data in
rats.
●
Adva-27a
clearance is independent of Cytochrome P450, a mechanism that is
less likely to produce toxic intermediates.
●
Adva-27a is an
excellent inhibitor of Topoisomerase II with an IC50 of only 13.7
micromolar (this number has recently been reduce to 1.44 micromolar
as a result of resolving the two isomeric forms of
Adva-27a).
●
Adva-27a has
shown excellent pharmacokinetics profile as indicated by studies
done in rats.
●
Adva-27a does
not inhibit tubulin assembly.
These
and other preclinical data have been published in ANTICANCER
RESEARCH, a peer-reviewed International Journal of Cancer Research
and Treatment. The publication which is entitled “Adva-27a, a
Novel Podophyllotoxin Derivative Found to Be Effective Against
Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH
32: 4423-4432 (2012)] is available on our website at
www.sunshinebiopharma.com
.
We have
been delayed in our clinical development program due to lack of
funding. Our fund raising efforts are continuing and as soon as
adequate financing is in place we will continue our clinical
development program of Adva-27a by conducting the following next
sequence of steps:
●
GMP
Manufacturing of 2 kilogram for use in IND-Enabling Studies and
Phase I Clinical Trials
●
IND-Enabling
Studies
●
Regulatory
Filing (Fast-Track Status Anticipated)
●
Phase I Clinical
Trials (Pancreatic Cancer Indication)
4
On
November 14, 2014, we entered into a Manufacturing Services
Agreement with Lonza Ltd. and Lonza Sales Ltd. (hereinafter jointly
referred to as “Lonza”), whereby we engaged Lonza to be
the manufacturer of our Adva-27a anticancer drug. In June 2015 we
received a sample of the pilot manufacturing run for evaluation.
Our laboratory analyses showed that, while the sample meets all of
the required chemical, physical and biological specifications, the
amount of material generated (the “Yield”) by the pilot
run was found to be significantly lower than anticipated. We are
currently working towards finding possible solutions to increase
the Yield and define a path forward. During the course of our
discussions concerning the problem of the low Yield, Lonza informed
us that they required us to pay them $687,818 prior to moving
forward with any activity pertaining to the manufacturing agreement
we have with them. We have repeatedly indicated to Lonza that a
clear path defining exactly how the extremely low Yield issue would
be addressed is imperative prior to us making any payments. As of
the date of this report, neither party has changed its position.
See “Part I, Item 3 – Legal
Proceedings.”
Adva-27a’s
initial indication will be pancreatic cancer for which there are
currently little or no treatment options available. We are planning
to conduct our clinical trials at McGill University’s Jewish
General Hospital in Montreal, Canada. All aspects of the clinical
trials in Canada will employ FDA standards at all levels. Subject
to obtaining the necessary financing, we now anticipate that Phase
I clinical trials will commence in mid-2019 and we estimate that it
will take 18 months to complete, at which time we expect to receive
limited marketing approval for “compassionate-use”
under the FDA and similar guidelines in Canada.
According to the
American Cancer Society, nearly 1.5 million new cases of cancer are
diagnosed in the U.S. each year. Given the terminal and
limited treatment options available for the pancreatic cancer and
multidrug resistant breast cancer indications we are planning to
study, we anticipate being granted limited marketing approval
(“compassionate-use”) for our Adva-27a following
receipt of funding and a successful Phase I clinical
trial. There are no assurances that either will
occur. Such limited approval will allow us to make the
drug available to various hospitals and health care centers for
experimental therapy and/or “compassionate-use”,
thereby generating revenues in the near-term.
We
believe that upon successful completion of Phase I Clinical Trials
we may receive one or more offers from large pharmaceutical
companies to buyout or license our drug. However, there
are no assurances that our Phase I Trials will be successful, or if
successful, that any pharmaceutical companies will make an
acceptable offer to us. In the event we do not
consummate such a transaction, we will require significant capital
in order to manufacture and market our new drug.
Our Lead Anti-Cancer Compound, Adva-27a, in 3D
5
Generic Pharmaceuticals Operations
In
2016, our Canadian wholly owned subsidiary, Sunshine Biopharma
Canada Inc. (“Sunshine Canada”), signed Cross
Referencing Agreements with a major pharmaceutical company for four
prescription generic drugs for the treatment of Breast Cancer,
Prostate Cancer and Enlarged Prostate. Following this acquisition
we have been working towards commencement of marketing of these
pharmaceutical products under our own Sunshine Biopharma label.
These four generic products are as follows:
●
Anastrozole
(brand name Arimidex® by AstraZeneca) for treatment of Breast
Cancer;
●
Letrozole (brand
name Femara® by Novartis) for treatment of Breast
Cancer;
●
Bicalutamide
(brand name Casodex® by AstraZeneca) for treatment of Prostate
Cancer;
●
Finasteride
(brand name Propecia® by Merck) for treatment of BPH (Benign
Prostatic Hyperplasia)
Worldwide sales of
the brand name version of these products as reported by the
respective pharmaceutical company, owner of the registered
trademark are as follows:
●
Arimidex®
$232M in 2016
●
Femara®
$380M in 2014
●
Casodex®
$247M in 2016
●
Propecia®
$183M in 2015
Sunshine Canada is
currently in the process of securing a Drug Identification Number
(“DIN”) for each of these products from Health Canada.
We are planning to use part of the already approved Atlas Pharma
Inc. space as a drug warehouse to facilitate the process of
obtaining a Drug Establishment License (“DEL”) from
Health Canada. Upon receipt of the DEL and DIN’s, we will be
able to accept orders for our own label SBI-Anastrozole,
SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride. We cannot
estimate the timing in our obtaining either the DIN’s or the
DEL due to variables involved that are out of our control. The
figure below shows our 30-Pill blister pack of
Anastrozole.
We
currently have twenty three (23) additional Generic Pharmaceuticals
under review for in-licensing. While no assurances can be provided
that we will acquire the rights to all or any of these drugs, we
are confident we will acquire most, if not all of these rights.. We
believe that a larger product portfolio will provide us with more
opportunities and a greater reach into the marketplace. We hope to
further build our generics portfolio of “SBI” label
Generic Pharmaceuticals over time. There are no assurances this
will occur.
Various
publicly available sources indicate that the worldwide sales of
generic pharmaceuticals are approximately $200 billion per year. In
the United States and Canada, the sales of generic pharmaceuticals
are approximately $50 billion and $5 billion, respectively. The
generic pharmaceuticals business is fairly competitive and there
are several multinational players in the field including Teva
(Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan
(Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex
(Canada). While no assurances can be provided, with our offering of
Canadian approved products we believe that we will be able to
access at least a small percentage of the generic pharmaceuticals
marketplace.
As part
of a subscription agreement entered into in 2016, we have an
obligation to pay a royalty of 5% of net sales on one of our
generic products (Anastrozole) for a period of three (3) years from
the date of the first sale of that product. As of the date of this
Report we have not yet commenced marketing efforts and no sales or
royalty payments have been made.
While
no assurances can be provided and subject to the availability of
adequate financing, of which there is no assurance, we anticipate
that profits from the sales of Generic Products will be used to
finance our proprietary drug development program, including
Adva-27a, our flagship anticancer compound. In addition to
near-term revenue generation, building the generics business
infrastructure and securing the proper permits will render us
appropriately positioned for the marketing and distribution of our
proprietary Adva-27a drug candidate, provided that Adva-27a is
approved for such marketing and distribution, of which there can be
no assurance.
6
Subsequent Event -- Analytical Chemistry Services
Operations
On
January 1, 2018, we entered into an agreement (the “Atlas
Agreement”) to acquire Atlas Pharma Inc.
(“Atlas”), . The purchase price was $848,000 Canadian
(approximately $678,400 US). Payment of the purchase price was
comprised of (i) a cash payment of $100,500 Canadian (approximately
$80,400 US); (ii) the issuance of 20,000,000 shares of our Common
Stock, and (iii) a promissory note in the principal amount of
$450,000 Canadian (approximately $360,000 US), with interest
payable at the rate of 3% per annum. We are required to make
payments of $10,000 Canadian (approximately $8,000 US) per calendar
quarter, due and payable on or before the end of each such calendar
quarter through December 31, 2023.
Atlas
is a certified company dedicated to chemical analysis of
pharmaceutical and other industrial samples. Atlas Pharma has 9
full-time employees and generated revenues of approximately
$500,000 Canadian (approximately $400,000 US) in 2017. Housed in a
5,250 square foot facility, Atlas’s operations are authorized
by a Drug Establishment License (DEL) issued by Health Canada and
are fully compliant with the requirements of Good Manufacturing
Practices (GMP). Atlas is also registered with the
FDA.
We
intend to expand Atlas’ business operations by purchasing
additional equipment and hiring more technical and sales personnel.
Part of the expansion will include the development and addition of
new tests and new sample testing capabilities.
Intellectual Property
Effective October
8, 2015, we executed a Patent Purchase Agreement (the
“October Purchase Agreement”), with Advanomics, a
related party, pursuant to which we acquired all of the right,
title and interest in and to U.S. Patent Number 8,236,935 (the
“US Patent”) for our anticancer compound,
Adva-27a. On December 28, 2015, we executed a second
Patent Purchase Agreement (the “December Purchase
Agreement”), with Advanomics, pursuant to which we acquired
all of the right, title and interest in and to all of the remaining
worldwide rights covered by issued and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 (the “Worldwide
Patents”) for our anticancer compound, Adva-27a.
Effective December
28, 2015, we entered into amendments (the “Amendments”)
of these Purchase Agreements pursuant to which the total purchase
price was reduced from $17,142,499 to $618,810, the book value of
this intellectual property on the financial statements of
Advanomics. Further, the Amendments provided for
automatic conversion of the promissory notes representing the new
purchase price into an aggregate of 321,305,415 shares of our
Common Stock once we increase our authorized capital such that
these shares can be issued. In July 2016 we increased
our authorized capital and issued the 321,305,415 Common shares to
Advanomics thereby completing all aspects of the patent purchase
arrangements and securing direct ownership of all worldwide patents
and rights pertaining to Adva-27a.
In
addition, in 2016 we signed Cross Referencing Agreements with a
major pharmaceutical company for four (4) prescription generic
drugs for the treatment of Breast Cancer, Prostate Cancer and
Enlarged Prostate. These agreements give us the right to register
the four (4) generic products, Anastrozole, Letrozole, Bicalutamide
and Finasteride in Canada under our own label and obtain a DIN for
each in order to be able to place them on the market.
Our new
wholly owned subsidiary, Atlas Pharma Inc., which we acquired on
January 1, 2018 holds a Drug Establishment License from Health
Canada and is registered with the FDA. Atlas Pharma Inc. is the
owner of a relatively large portfolio of analytical chemistry
methodology and Standard Operating Procedure. This intellectual
property is protected as company secrets and controlled through
employee and management confidentiality agreements.
Government Regulations
All of
our business operations, including the Generic Pharmaceutical
Operations, the Proprietary Drug Development Operations, and our
newly acquired Analytical Chemistry Services Operations are subject
to extensive and frequently changing federal, state, provincial and
local laws and regulations.
In the
U.S, the Federal Government agency responsible for regulating drugs
is the U.S. Food and Drug Administration (“FDA”). The
Canadian counterpart to the FDA is the Health Products and Food
Branch (“HPFB”) of Health Canada. Both the FDA and HPFB
have similar requirements for a drug to be approved for marketing.
In addition, the quality standards for brand name drugs and generic
drugs are the same. The ingredients, manufacturing processes and
facilities for all drugs must meet the guidelines for Good
Manufacturing Practices (“GMP”). Moreover, all drug
manufacturers must perform a series of tests, both during and after
production, to show that every drug batch made meets the regulatory
agency’s requirements for that product.
7
In connection with
our development of the new chemical entity, Adva-27a, we will be
subject to significant regulations in the U.S. in order to obtain
the approval of the FDA to offer our product on the
market. The approximate procedure for obtaining FDA
approval involves an initial filing of an IND application following
which the FDA would review the application and if all the data are
in order and acceptable would give the go ahead for the drug
sponsor to proceed with Phase I clinical (human)
trials. Following completion of Phase I, the results are
filed with the FDA and a request is made to proceed to Phase
II. Similarly, following completion of Phase II the data are
filed with the FDA and a request is made to proceed to Phase
III. Following completion of Phase III, a request is made for
marketing approval. Depending on various issues and
considerations, the FDA could provide limited marketing approval on
a humanitarian basis if the drug treats terminally ill patients
with limited treatment options available. As of the date
of this Report we have not made any filings with the FDA or other
regulatory bodies in other jurisdictions. We have however had
extensive discussions with clinicians at the McGill
University’s Jewish General Hospital in Montreal where we
plan to undertake our Phase I study for pancreatic cancer and
multidrug resistant breast cancer they believe that Health
Canada is likely to grant us a so-called fast-track process on
the basis of the terminal nature of the cancer types which we will
be treating. There are no assurances this will
occur.
Employees
As of
the date of this Report we have three (3) employees, our
management. In addition, our new wholly owned subsidiary
acquired on January 1, 2018, Atlas Pharma Inc., has 9 full-time
employees. We anticipate that if we receive financing we will need
additional employees in both our generic pharmaceutical and
proprietary drug development operations including accounting,
regulatory affairs, marketing, sales and laboratory
personnel.
Competition
In the
area of proprietary anticancer drug development, we will be
competing with large publicly and privately held companies engaged
in developing new cancer therapies. There are numerous other
entities engaged in this business that have greater resources, both
financial and otherwise, than the resources presently available to
us. Nearly all major pharmaceutical companies including
Amgen, Roche, Pfizer, Bristol-Myers Squibb and Novartis, to name
just a few, have on-going anti-cancer drug development programs and
some of the drug they may develop could be in direct competition
with our drug. Also, a number of small companies are
also working in the area of cancer and could develop drugs that may
be in competition with ours. However, none of these
competitor companies can use molecules similar to ours as they
would be infringing our patents.
The
generic pharmaceuticals business is fairly competitive and there
are many players in the field including several multinationals such
as Teva (Israel), Novartis - Sandoz (Switzerland), Hospira (USA),
Mylan (Netherlands), Sanofi (France), Fresenius Kabi (Germany) and
Apotex (Canada)with annual sales in the range of approximately $2
billion to over $10. With our offering of Canadian approved generic
products, we believe that we will be able to access at least a
small percentage of the generic pharmaceuticals
market.
Trademarks-Tradenames
We are
the exclusive owner of all worldwide rights pertaining to Adva-27a
covered by PCT/FR2007/000697 and PCT/CA2014/000029. The
patent applications filed under PCT/FR2007/000697 have been issued
in Europe, Canada, the United States (8,236,935) and elsewhere
around the world. The patent applications recently filed
internationally under PCT/CA2014/000029 are still
pending.
We are
also the owner of Cross Referencing Agreements for four (4) generic
drugs which we will market and sell under the tradenames
SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and
SBI-Finasteride.
We are
a smaller reporting company and not required to include this
disclosure in our Form 10-K annual report.
None.
8
Until
June 1, 2017, our principal place of business was located at 469
Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada, H3N
1R4. This was also the location of our former licensor,
Advanomics Corporation, who provided this space to us on a rent
free basis in 2015 and 2016. Dr. Steve N. Slilaty, our
Chief Executive Officer and a Director, is an Officer, Director and
principal shareholder of Advanomics. Effective January
1, 2017 we took over the lease from Advanomics and this space
became exclusively our own.
On June
1, 2017 we moved our place of business to our current location at
6500 Trans-Canada Highway, 4th Floor, Pointe-Claire, Quebec, Canada
H9R 0A5, which is an online virtual executive office. We pay a
monthly rate of $188 (Canadian), including tax, for this location.
Pursuant to our lease agreement our landlord is able to provide us
with increased or decreased office space as may be requested by us
from time to time.
In
February 2015 we filed an action in the Circuit Court of the 11th
Judicial Circuit for Miami-Date County, Florida against Justin
Keener, d/b/a JMJ Financial, arising out of a convertible note that
we issued to the defendant. The complaint alleged among
other things, claims of usury, fraudulent inducement, breach of
contract, and injunctive and declaratory relief. This
matter was settled during the first calendar quarter of
2016. We received a one-time payment of $25,000 as part
of the terms of settlement.
On
November 14, 2014, we entered into a Manufacturing Services
Agreement with Lonza Ltd. and Lonza Sales Ltd. (hereinafter jointly
referred to as “Lonza”), whereby we engaged Lonza to be
the manufacturer of our Adva-27a anticancer drug. In June 2016 we
received a sample of the pilot manufacturing run for evaluation.
Our laboratory analyses showed that, while the sample meets all of
the required chemical, physical and biological specifications, the
amount of material generated (the “Yield”) by the pilot
run was found to be significantly lower than anticipated. We are
currently working towards finding possible solutions to increase
the Yield and define a path forward. During the course of our
discussions concerning the problem of the low Yield, Lonza informed
us that they required us to pay them $687,818 prior to moving
forward with any activity pertaining to the manufacturing agreement
we have with them. We have repeatedly indicated to Lonza that a
clear path defining exactly how the extremely low Yield issue would
be addressed is imperative prior to us making any payments. We
issued a letter to them in June 2017 advising of our position. As
of the date of this Report we have not received a response to our
letter and no further action has been taken by either
party.
To the
best of our management’s knowledge and belief, there are no
other material claims that have been brought against us nor have
there been any claims threatened.
Not
applicable.
9
Market Information
Trading
of our Common Stock commenced on the OTC MARKETS in September 2007
under the symbol “MWBN.” Effective November
30, 2009, the trading symbol for our Common Stock was changed to
“SBFM” as a result of our name change discussed
above.
The
table below sets forth the reported high and low bid prices for the
periods indicated. The bid prices shown reflect
quotations between dealers, without adjustment for markups,
markdowns or commissions, and may not represent actual transactions
in our Common Stock.
|
Quarter
Ended
|
High
|
Low
|
|
|
|
|
|
March 31,
2016
|
$
0.0088
|
$
0.0052
|
|
June 30,
2016
|
$
0.0110
|
$
0.0061
|
|
September 30,
2016
|
$
0.0039
|
$
0.0030
|
|
December 31,
2016
|
$
0.0040
|
$
0.0032
|
|
March 31,
2017
|
$
0.0025
|
$
0.0025
|
|
June 30,
2017
|
$
0.0134
|
$
0.0110
|
|
September 30,
2017
|
$
0.0155
|
$
0.0141
|
|
December 31,
2017
|
$
0.0130
|
$
0.0100
|
As of
March 27, 2018, the closing bid price of our Common Stock was
$0.009 per share.
Trading
volume in our Common Stock varies between a few hundred thousand
shares to several million shares per day. As a result,
the trading price of our Common Stock is subject to significant
fluctuations.
The Securities Enforcement and Penny Stock Reform Act of
1990
The
Securities and Exchange Commission has also adopted rules that
regulate broker-dealer practices in connection with transactions in
penny stocks. Penny stocks are generally equity
securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume
information with respect to transactions in such securities is
provided by the exchange or system).
As of
the date of this Report, our Common Stock is defined as a
“penny stock” under the Securities and Exchange
Act. It is anticipated that our Common Stock will remain
a penny stock for the foreseeable future. The
classification of penny stock makes it more difficult for a
broker-dealer to sell the stock into a secondary market, which
makes it more difficult for a purchaser to liquidate his/her
investment. Any broker-dealer engaged by the purchaser
for the purpose of selling his or her shares in us will be subject
to Rules 15g-1 through 15g-10 of the Securities and Exchange
Act. Rather than creating a need to comply with those
rules, some broker-dealers will refuse to attempt to sell penny
stock.
10
The
penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from those rules, to deliver
a standardized risk disclosure document prepared by the Commission,
which:
●
contains a
description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
●
contains a
description of the broker's or dealer's duties to the customer and
of the rights and remedies available to the customer with respect
to a violation to such duties or other requirements of the
Securities Act of 1934, as amended;
●
contains a
brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the bid and ask price;
●
contains a
toll-free telephone number for inquiries on disciplinary
actions;
●
defines
significant terms in the disclosure document or in the conduct of
trading penny stocks; and
●
contains such
other information and is in such form (including language, type,
size and format) as the Securities and Exchange Commission shall
require by rule or regulation;
The
broker-dealer also must provide, prior to effecting any transaction
in a penny stock, to the customer:
●
the
bid and offer quotations for the penny stock;
●
the
compensation of the broker-dealer and its salesperson in the
transaction;
●
the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the
market for such stock; and
●
monthly account
statements showing the market value of each penny stock held in the
customer's account.
In addition, the
penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must
make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchaser's
written acknowledgment of the receipt of a risk disclosure
statement, a written agreement to transactions involving penny
stocks, and a signed and dated copy of a written suitability
statement. These disclosure requirements will have the
effect of reducing the trading activity in the secondary market for
our stock because it will be subject to these penny stock
rules. Therefore, stockholders may have difficulty
selling their securities.
Holders
We had
149 holders of record of our Common Stock as of the date of this
Report, not including those persons who hold their shares in
“street name.”
Stock Transfer Agent
The
stock transfer agent for our securities is Corporate Stock
Transfer, Inc. Their address is 3200 Cherry Creek South
Drive, Suite 430, Denver, Colorado, 80209. Their phone
number is (303) 282-4800.
Dividends
We have
not paid any dividends since our incorporation and do not
anticipate the payment of dividends in the foreseeable future. At
present, our policy is to retain earnings, if any, to develop and
market our products. The payment of dividends in the
future will depend upon, among other factors, our earnings, capital
requirements, and operating financial conditions.
Reports
We are
subject to certain reporting requirements and furnish annual
financial reports to our stockholders, certified by our independent
accountants, and furnish unaudited quarterly financial reports in
our quarterly reports filed electronically with the
SEC. All reports and information filed by us can be
found at the SEC website,
www.sec.gov
.
11
Not
applicable.
The
following discussion should be read in conjunction with our audited
financial statements and notes thereto included
herein. In connection with, and because we desire to
take advantage of, the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995, we caution
readers regarding certain forward looking statements in the
following discussion and elsewhere in this Report and in any other
statement made by, or on our behalf, whether or not in future
filings with the Securities and Exchange
Commission. Forward looking statements are statements
not based on historical information and which relate to future
operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond our control and many of which, with respect to
future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward looking statements made by, or on our
behalf. We disclaim any obligation to update forward
looking statements.
Overview
and History
We were
incorporated in the State of Colorado on August 31, 2006 under the
name “Mountain West Business Solutions, Inc.” Until
October 2009, our business was to provide management consulting
with regard to accounting, computer and general business issues for
small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license to a new anticancer drug
bearing the laboratory name, Adva-27a. As a result of this
transaction we changed our name to “Sunshine Biopharma, Inc.
and our officers and directors resigned their positions with us and
were replaced by Sunshine’s management at the time, including
our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille
Sebaaly each of whom remain part of our current management. Our
principal business became that of a pharmaceutical company focusing
on the development of our licensed Adva-27a anticancer compound. In
December 2015 we acquired all issued and pending patents pertaining
to our Adva-27a technology and terminated the license. See
“Part I, Item 1 – Business - Intellectual
Property,” below for a more detailed explanation of this
acquisition.
In July
2014, we formed a wholly owned Canadian subsidiary, Sunshine
Biopharma Canada Inc. (“Sunshine Canada”), for the
purposes of offering generic pharmaceutical products in Canada and
elsewhere around the world. Sunshine Canada has recently signed
licensing agreements for four (4) generic prescription drugs for
the treatment of cancer and BPH (Benign Prostatic
Hyperplasia).
In
January 2018, we acquired Atlas Pharma Inc., a certified company
dedicated to chemical analysis of pharmaceutical and other
industrial samples whose operations are authorized by a Drug
Establishment License issued by Health Canada.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a Colorado
corporation, and assigned all of our interest in our Adva-27a
anticancer compound to that company.
As a
result, we are now a holding company operating through these three
wholly owned subsidiaries.
Our
principal place of business is located at
6500 Trans-Canada Highway, 4th Floor,
Pointe-Claire, Quebec, Canada H9R 0A5.
Our phone number is
(514) 426-6161and our website address is
www.sunshinebiopharma.com.
We have
not been subject to any bankruptcy, receivership or similar
proceeding.
Going Concern
Our
financial statements accompanying this Report have been prepared
assuming that we will continue as a going concern, which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The financial
statements do not include any adjustment that might result from the
outcome of this uncertainty. We have a minimal operating history
and minimal revenues or earnings from operations. We have no
significant assets or financial resources. We will, in all
likelihood, sustain operating expenses without corresponding
revenues for the immediate future. See “Financial
Statements and Notes.”
12
Results Of Operations
Comparison of Results of Operations for the fiscal years ended
December 31, 2017 and 2016
During
our fiscal years ended December 31, 2017 and 2016, we did not
generate any revenues.
Total
expenses for our fiscal year ended December 31, 2017 were $857,190,
compared to $993,108 during our fiscal year ended December 31,
2016, a decrease of $135,918. The expense categories that saw
a decrease were consulting fees by $80,388, amortization and
depreciation by $54,102, research and development by $32,793, and
licenses by $19,203. The decreases in these categories
of expenses were offset to some extent by relatively modest
increases in legal fees, accounting fees and officer and director
compensation. The decrease in consulting fees in 2017 was due to
the fact that a substantial amount of the work required for setting
up the generic pharmaceuticals operations had been completed.
Similarly, we incurred no licensing fees in 2017 as we acquired the
Adva-27a rights and as a result, terminated the License Agreement
we had for the same with Advanomics Corporation. The license
expense of $19,203 we paid in 2016 was incurred in order to obtain
the rights for our four (4) generic products. See “Part I,
Item 1 – Business.”
We also
incurred $104,829 in interest expense and $76,929 in losses from
debt conversion during the year ended December 31, 2017, compared
to $34,732 in interest expense and $1,945,898 in losses from debt
conversion during the similar period in 2016. In addition, we
incurred a loss of $556,120 in 2016 as a result of impairment of
the patents we purchased in 2015. See “Part I, Item 1 –
Business.”
As
discussed elsewhere in this Report, including “Part I, Item 1
– Business” and “Part III, Item 13 –
Certain Relationships and Related Transactions and Director
Independence,” on October 8, 2015, we acquired U.S. Patent
Number 8,236,935 (the “US Patent”) for the anticancer
compound, Adva-27a from a related entity (Advanomics Corporation),
which includes all rights to this intellectual property within the
United States, in exchange for an interest-free note payable for
$4,320,000 (the “October Patent Purchase
Agreement”). On December 28, 2015, we acquired the
remaining worldwide issued and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 (the “Worldwide
Patents”) for the Adva-27a anticancer compound from the same
related entity (Advanomics Corporation) in exchange for a note
payable for $12,822,499 (the “December Patent Purchase
Agreement”).
We
believe that purchase of the US Patent and the Worldwide Patents
(the “Patents”) would facilitate our ability to obtain
the funding necessary to complete the development and FDA approval
process for Adva-27a. As a related party transaction, purchased
patents are required to be recorded at the purchase price or the
book value on the seller’s financial statements, whichever is
lower. Effective December 28, 2015, the parties agreed to amend the
October Patent Purchase Agreement and the December Patent Purchase
Agreement. Pursuant to the amendment agreements (the
“Amendments”), the Patents were purchased from a
related party, Advanomics Corporation, at Advanomics’ cost
less the amortization through December 28, 2015, the effective date
of the transfer. The Amendments amended the purchase price of the
Patents to $835,394, eliminated all cash payments obligations and
replaced the non-convertible notes totaling $17,142,499 with two
(2) convertible notes totaling $835,394 that automatically convert
into an aggregate of 321,305,415 shares of our Common Stock. We
needed to amend our Articles of Incorporation to establish
additional authorized common shares in order to issue this stock.
In July 2016, having completed the increase of our authorized
capital to 3 billion shares of Common Stock, we issued the
321,305,415 Common Shares to Advanomics thereby completing all
aspects of the patent purchase arrangements and securing direct
ownership of all worldwide patents and rights pertaining to
Adva-27a.
In
2016, following a review of the status of our intellectual
property, the remaining value of the Patents ($556,120) on our
Balance Sheet was impaired as required under applicable accounting
rules.
As a
result, we incurred a net loss of $3,496,687 (approximately $0.01
per share) for the year ended December 31, 2016, compared to a net
loss of $1,040,236 (approximately $0.00 per share) during the year
ended December 31, 2017.
Because
we did not generate revenue in the last two years, following is our
Plan of Operation.
Plan of Operation
As of
the date of this report we are operating through the following
wholly owned subsidiaries:
●
NOX
Pharmaceuticals, Inc., a recently formed Colorado company focused
on the research, development and commercialization of proprietary
drugs for the treatment of cancer including Adva-27a, a
multi-purpose anti-tumor compound targeted for the treatment of
multidrug resistant cancer;
●
Sunshine Biopharma
Canada Inc., a Canadian company formed in July 2014, which offers
generic prescription drugs for the treatment of cancer and other
acute and chronic indications; and
●
Atlas
Pharma Inc., a Canadian company acquired in January 2018, offers
certified chemical analysis of pharmaceutical and other industrial
samples.
NOX
Pharmaceuticals, Inc. and Atlas Pharma Inc. are not included in the
financials presented in this report.
13
See
Part 1, Item 1, Business, above, for a more detailed description of
these businesses.
Liquidity and Capital Resources
As of
December 31, 2017, we had cash or cash equivalents of
$107,532.
Net
cash used in operating activities was $543,520 during our fiscal
year ended December 31, 2017, compared to $314,182 during our
fiscal year ended December 31, 2016. We anticipate that
our cash requirements for our operations will increase in the
future before we reach profitability levels.
Cash
flows used in investing activities were $84,008 during our fiscal
year ended December 31, 2017. For the fiscal year ended
December 31, 2016, cash flows used in investing activities were
$3,439 arising primarily out of the purchase of laboratory and
generic drugs warehouse equipment in 2017. Net cash
flows provided by financing activities totaled $670,705 in 2017,
compared to $324,622 during our fiscal year ended December 31,
2016.
We have
issued convertible and non-convertible notes to both related and
unaffiliated parties in order to fund our operations. Following is
a description of our liquidity and capital resources events in
2017:
●
In December 2016,
we received monies from our CEO in exchange for a note payable
having a principal amount of $90,000 Canadian ($67,032 US) with
interest at 12% due March 31, 2017. The note was convertible any
time after the date of issuance into shares of our Common Stock at
a price 35% below market value. At the time, this note was
collateralized by all of our assets. In the event of default, the
interest rate will increased to 18% per annum and a penalty of
$1,000 Canadian ($752 US) per day will accrue. On March 31, 2017,
the note, together with accrued interest of $3,021 Canadian ($2,271
US) and an additional principal amount of $3,000 Canadian ($2,247
US) was renewed for a 90-day period under the same terms and
conditions as the original note. The new note then having a face
value of $96,021 Canadian ($72,198 US) was due on June 30, 2017. On
June 30, 2017, the note, together with accrued interest of $2,873
Canadian ($2,005 US), was renewed for a 90-day period under the
same terms and conditions as the original note except that the new
note was not- convertible. The new note then having a face value of
$98,894 Canadian ($76,072US) was due on September 30, 2017. On
September 30, 2017, the note, together with accrued interest of
$2,991 Canadian ($2,397 US) was renewed for a 90-day period under
the same terms and conditions as the June 2017 note. The note, then
having a principal balance of $101,885 Canadian ($81,640 US)
matured December 31, 2017. On December 31, 2017 the note was
renewed for a 12-month period under the same terms and conditions
as the September 2017 note except that this new note is unsecured
and nonconvertible. The new note has a face value of $104,942
Canadian ($83,649 US) and matures on December 31,
2018.
●
A note payable held
by a private individual who subsequently became a principal
shareholder of our Company, having a face value of $100,000 at
December 31, 2016 and a maturity date of March 31, 2017, accrues
interest at 12%. The Note is convertible any time from the date of
issuance into shares of our Common Stock at a 35% discount from
market price. On March 31, 2017, the note’s principal balance
of $100,000 plus accrued interest of $11,715 was renewed for a
period of 90 days under the same terms and conditions as the
original note. The new note then having a face value of $111,715
matured on June 30, 2017. On June 30, 2017, the note’s
principal balance of $111,715, plus accrued interest of $3,342 was
renewed for a period of 90 days under the same terms and conditions
as the original note. The new note then had a face value of
$115,057 and matured on September 30, 2017. On September 30, 2017,
the note’s principal balance of $115.057 plus accrued
interest of $3,480 was renewed for a period of 90 days under the
same terms and conditions as the original note. The new note then
had a principal balance of $118,537, which matured on December 31,
2017. On December 31, 2017 the note was renewed for a 12-month
period under the same terms and conditions as before. The new note
has a face value of $122,093 and matures on December 31,
2018.
●
A Note Payable
having a Face Value of $21,439 at December 31, 2016, and accruing
interest at 12% was due December 31, 2017. On December 31, 2017, we
renewed the note, together with accrued interest of $2,573, for a
12-month period. The new note has a Face Value of $24,012 and
accrues interest at 12%. This note is convertible anytime from the
date of issuance into shares of our Common Stock at a 35% discount
from market price and is due December 31, 2018.
14
●
On April 1, 2017,
we received monies in exchange for a note payable having a Face
Value of $100,000 Canadian ($79,710 US) with interest payable
quarterly at 9%, which is due April 1, 2019. The note is
convertible any time after issuance into shares of our Common Stock
at
a price of $0.015 Canadian
(approximately $0.012 US) per share.
●
On September 22,
2017, we received monies in exchange for a note having a Face Value
of $62,000, with interest accruing at 8%, which is due June 30,
2018. The note is convertible after 180 days from issuance into
shares of our Common Stock at a price 35% below market
value.
●
On October 26,
2017, we received monies in exchange for a note payable having a
Face Value of $115,000 with interest accruing at 8%, which is due
October 26, 2018. The note is convertible after 180 days from
issuance into shares of our Common Stock at a price 35% below
market value.
●
On November 14,
2017, we received monies in exchange for a note payable having a
Face Value of $113,000 with interest accruing at 8%, which is due
November 14, 2018. The note is convertible after 180 days from
issuance into shares of our Common Stock at a price 35% below
market value.
●
On December 1,
2017, we received monies in exchange for a note payable having a
Face Value of $50,000 Canadian ($39,855 US) with interest accruing
at 8%, due November 30, 2018. The note is convertible after 180
days from issuance into shares of our Common Stock at a price 35%
below market value.
●
On February 10,
2017, we received monies in exchange for a note payable having a
Face Value of $50,000 with interest accruing at 8%, which is due
November 20, 2017. The note is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value. In August 2017, the note was paid off with an
additional $17,422 as a prepayment penalty.
●
On April 26, 2017,
we received monies in exchange for a note payable having a Face
Value of $ 65,000 with interest accruing at 8%, which is due April
26, 2018. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
In October 2017, we issued
payment in the amount of $85,107 to pay off the note including a
prepayment penalty of $20,107.
●
On August 3, 2017,
we received monies in exchange for a note payable having a Face
Value of $80,000 with interest accruing at 8%, which is due August
3, 2018. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
●
On August 21, 2017,
we received monies in exchange for a note payable having a Face
Value of $83,000 with interest accruing at 8%, which is due May 30,
2018. The Note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
In February 2018, the note was
paid off with an additional $32, 370 as a prepayment
penalty.
●
On July 1, 2016, we
received monies in exchange for a note payable having a Face Value
of $55,000 with interest accruing at 10%, which is due April 1,
2017. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 40% below market value.
In December 2016 and January
2017, the note, together with $3,022 in accrued interest, was fully
converted into 47,528,125 shares of our Common Stock.
●
During the fiscal
year ended December 31, 2017, we issued an aggregate of 149,336,640
shares of our Common Stock as follows:
o
40,000,000
shares for cash in the amount of $100,000 Canadian or $78,312
US
o
11,004,167
shares for the purchase of laboratory and generic drugs warehouse
equipment valued at $56,700
o
42,000,000
shares valued at $336,000 as compensation to the Company’s
Directors and Officers
o
13,804,348
shares for services rendered to the Company by third parties valued
at $77,000
o
42,528,125
shares valued at $128,451 in connection with the conversion of
$48,500 in debt and interest of $3,022 resulting in a $76,929 loss
on conversion
Except
as indicated, we relied upon the exemption from registration
provided by Regulation D and Section 4(a)(1) of the Securities Act
of 1933, as amended, to issue the respective shares.
We are
not generating revenue from our operations, and our ability to
implement our business plan as set forth herein will depend on the
future availability of financing. Such financing will be
required to enable us to further develop our generic
pharmaceuticals business, proprietary drug development program, and
analytical chemistry operations acquired in January
2018. We intend to raise funds through private
placements of our Common Stock and/or debt financing. We estimate
that we will require approximately $8 million ($1 million for the
generic pharmaceutical operations, $1 million for expansion of the
analytical chemistry operations, and $6 million for the proprietary
drug development program) to fully implement our business plan in
the future and there are no assurances that we will be able to
raise this capital.
15
In late
2017 we signed an agreement with Jitney Trade Inc.
(“Jitney”), a Canadian broker-dealer, to raise up to
$10 million Canadian (approximately $8 million US) in a private
offering being undertaken only in Canada (the
“Offering”) in order to provide the funding we have
estimated we need to implement our business plan. The Offering
expired on February 28, 2018 without any funds having been raised.
As of the date of this Report, we are engaged in negotiations with
Jitney concerning the terms for extending the Offering. There are
no assurances that any funds will be raised for us in this
situation.
Our cost to
continue operations as they are now conducted is nominal, but these
are expected to increase as we move forward with implementation of
our enhanced business plan. We do not have sufficient
funds to cover the anticipated increase in the relevant
expenses. We need to raise additional funds in order to
continue our existing operations and planned
expansions.
Inflation
Although our
operations are influenced by general economic conditions, we do not
believe that inflation had a material effect on our results of
operations during our fiscal year ended December 31,
2017.
Critical Accounting Policies and Estimates
Critical Accounting Estimates
The
discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments
that affect the amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based
on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates
under different assumptions or conditions.
Leases
We
follow the guidance in SFAS No. 13 “
Accounting for Leases
,” as
amended, which requires us to evaluate the lease agreements we
enter into to determine whether they represent operating or capital
leases at the inception of the lease.
Recently Adopted Accounting Standards
In
November 2016, the FASB issued ASU No. 2016-17, Income Taxes (Topic
740): Balance Sheet Classification of Deferred Taxes. The standard
requires that deferred tax assets and liabilities be classified as
noncurrent on the balance sheet rather than being separated into
current and noncurrent. ASU 2016-17 is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2017. Early adoption is permitted and the standard may be
applied either retrospectively or on a prospective basis to all
deferred tax assets and liabilities. We adopted ASU 2016-17 during
our first quarter of the year ended December 31, 2017, on a
retrospective basis. The adoption of 2016-17 had no impact on our
financial statements.
In
February 2017, the FASB issued ASU No. 2017-02, Leases (Topic 842),
to provide guidance on recognizing lease assets and lease
liabilities on the balance sheet and disclosing key information
about leasing arrangements, specifically differentiating between
different types of leases. The core principle of Topic 842 is that
a lessee should recognize the assets and liabilities that arise
from all leases. The recognition, measurement, and presentation of
expenses and cash flows arising from a lease by a lessee have not
significantly changed from previous GAAP. There continues to be a
differentiation between finance leases and operating leases.
However, the principal difference from previous guidance is that
the lease assets and lease liabilities arising from operating
leases should be recognized in the balance sheet. The accounting
applied by a lessor is largely unchanged from that applied under
previous GAAP. The amendments will be effective for fiscal years
beginning after December 15, 2018, including interim periods within
those fiscal years, and early adoption is permitted. In transition,
lessees and lessors are required to recognize and measure leases at
the beginning of the earliest period presented using a modified
retrospective approach.
The
modified retrospective approach includes a number of optional
practical expedients that entities may elect to apply. These
practical expedients relate to the identification and
classification of leases that commenced before the effective date,
initial direct costs for leases that commenced before the effective
date, and the ability to use hindsight in evaluating lessee options
to extend or terminate a lease or to purchase the underlying
asset.
An
entity that elects to apply the practical expedients will, in
effect, continue to account for leases that commence before the
effective date in accordance with previous GAAP unless the lease is
modified, except that lessees are required to recognize a
right-of-use asset and a lease liability for all operating leases
at each reporting date based on the present value of the remaining
minimum rental payments that were tracked and disclosed under
previous GAAP. We are currently evaluating the impact of these
amendments on our financial statements.
16
In
March 2017, the FASB issued ASU No. 2017-08, Revenue from Contracts
with Customers (Topic 606): Principal versus Agent Considerations,
to clarify the implementation guidance on principal versus agent
considerations and address how an entity should assess whether it
is the principal or the agent in contracts that include three or
more parties. The effective date and transition requirements for
these amendments are the same as the effective date and transition
requirements of ASU 2014-09 (discussed above). We are currently
evaluating the impact of these amendments on our financial
statements.
In
March 2017, the FASB issued ASU No. 2017-09, Compensation-Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting, to reduce complexity in accounting standards
involving several aspects of the accounting for employee
share-based payment transactions, including (1) the income tax
consequences, (2) classification of awards as either equity or
liabilities, and (3) classification on the statement of cash flows.
The amendments will be effective for financial statements issued
for fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years, and early adoption is
permitted. Amendments related to the timing of when excess tax
benefits are recognized, minimum statutory withholding
requirements, forfeitures, and intrinsic value should be applied
using a modified retrospective transition method, amendments
related to the presentation of employee taxes paid on the statement
of cash flows when an employer withholds shares to meet the minimum
statutory withholding requirement should be applied
retrospectively, amendments requiring recognition of excess tax
benefits and tax deficiencies in the income statement and the
practical expedient for estimating expected term should be applied
prospectively, and amendments related to the presentation of excess
tax benefits on the statement of cash flows can be applied using
either a prospective transition method or a retrospective
transition method. An entity that elects early adoption must adopt
all of the amendments in the same period. We are currently
evaluating the impact of these amendments on our financial
statements.
In
April 2017, the FASB issued ASU No. 2017-10, Revenue from Contracts
with Customers (Topic 606): Identifying Performance Obligations and
Licensing, to clarify the following two aspects of Topic 606: 1)
identifying performance obligations, and 2) the licensing
implementation guidance. The effective date and transition
requirements for these amendments are the same as the effective
date and transition requirements of ASU 2014-09 (discussed above).
We are currently evaluating the impact of these amendments on our
financial statements.
In May
2017, the FASB issued ASU No. 2017-10, Revenue from Contracts with
Customers (Topic 606): Identifying Performance Obligations and
Licensing, to clarify certain core recognition principles including
collectability, sales tax presentation, noncash consideration,
contract modifications and completed contracts at transition and
disclosures no longer required if the full retrospective transition
method is adopted.
The
effective date and transition requirements for these amendments are
the same as the effective date and transition requirements of ASU
2014-09 (discussed above). We are currently evaluating the impact
of these amendments on our financial statements.
In
August 2017, the FASB issued ASU No. 2017-15, Statement of Cash
Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments, to clarify how certain cash receipts and cash payments
are presented and classified in the statement of cash flows. The
amendments should be applied using a retrospective transition
method, and are effective for fiscal years beginning after December
15, 2017, including interim periods within those fiscal years. We
are currently evaluating the impact of these amendments on our
financial statements.
In
November 2017, the FASB issued ASU No. 2017-18, Statement of Cash
Flows (Topic 230): Restricted Cash (a consensus of the FASB
Emerging Issues Task Force), to provide guidance on the
presentation of restricted cash or restricted cash equivalents in
the statement of cash flow. The amendments should be applied using
a retrospective transition method, and are effective for fiscal
years beginning after December 15, 2017, including interim periods
within those fiscal years. We are currently evaluating the impact
of these amendments on our financial statements.
Off-Balance Sheet Arrangements
We have
not entered into 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 and would be considered material to
investors.
Not
applicable.
Reference is made
to the Financial Statements, the notes thereto, and the Report of
Independent Public Accountants thereon commencing at page F-1 of
this Report, which Financial Statements, notes and report are
incorporated herein by reference.
17
Sunshine Biopharma, Inc.
CONSOLIDATED
FINANCIAL STATEMENTS
With
Independent Accountant’s Audit Report
At
December 31, 2017 and 2016
18
TABLE
OF CONTENTS
|
|
Page
|
|
Independent
Accountant’s Audit Report
|
F-1
|
|
|
|
|
Consolidated
Balance Sheet
|
F-2
|
|
|
|
|
Consolidated
Statement of Operations
|
F-3
|
|
|
|
|
Consolidated
Statement of Cash Flows
|
F-4
|
|
|
|
|
Consolidated
Statement of Shareholders’ Equity
|
F-5
|
|
|
|
|
Notes
to Consolidated Financial Statements
|
F-6
|
F-1
Report of Independent Registered Public Accounting
Firm
To the shareholders and the board of directors of Sunshine
Biopharma, Inc.
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheets of
Sunshine Biopharma, Inc.
(the
"Company") as of December 31, 2017 and 2016, the related statements
of operations, stockholders' equity (deficit), and cash flows for
the years then ended, 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 December 31, 2017 and 2016, and the
results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted
in the United
States.
Substantial Doubt about the Company’s Ability to Continue as
a Going Concern
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
3 to the financial statements, the Company has suffered recurring
losses from operations and has a significant accumulated deficit.
In addition, the Company continues to experience negative cash
flows from operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
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 engage 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.
/s/ BF
Borgers CPA PC
We have
served as the Company's auditor since 2013.
Lakewood,
CO
April
2, 2018
F-2
|
Sunshine
Biopharma, Inc.
|
|||||
|
Consolidated
Balance Sheet
|
|
|
December
31,
|
December
31,
|
|
|
2017
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
107,532
|
$
57,453
|
|
Prepaid
expenses
|
9,667
|
1,007
|
|
|
|
|
|
Total Current
Assets
|
117,199
|
58,460
|
|
|
|
|
|
Equipment (net of
$9,132 and $2,228 depreciation)
|
59,996
|
5,944
|
|
|
|
|
|
Patents (net of
$58,918 amortization
and $556,120
impairment)
|
-
|
-
|
|
|
|
|
|
Non-current asset -
Deposits
|
80,290
|
-
|
|
|
|
|
|
TOTAL
ASSETS
|
$
257,485
|
$
64,404
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Current portion of
notes payable
|
516,867
|
69,939
|
|
Current portion of
notes payable - related entity
|
205,742
|
167,032
|
|
Accounts
payable
|
19,314
|
28,122
|
|
Interest
payable
|
9,215
|
9,011
|
|
|
|
|
|
Total Curent
Liabilities
|
751,138
|
274,104
|
|
|
|
|
|
Long-term
liabilities - Notes payable
|
79,710
|
-
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
830,848
|
274,104
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
Preferred Stock,
Series A, $0.10 par value per share;
Authorized
5,000,000 Shares; Issued
and outstanding -0-
shares
at December 31, 2017 and 2016,
respectively.
|
-
|
-
|
|
|
|
|
|
Preferred Stock,
Series B $0.10 par value per share;
Authorized 500,000
Shares; Issued
and outstanding 500,000 and 500,000
shares
at December 31, 2017 and 2016,
respectively.
|
50,000
|
50,000
|
|
|
|
|
|
Common Stock,
$0.001 par value per share;
Authorized 3,000,000,000 Shares;
Issued
and outstanding 918,736,498 and 769,399,858 at
December 31, 2017 and 2016, respectively
|
918,736
|
769,400
|
|
|
|
|
|
Reserved for
issuance 394,808,684 at December 31, 2017
|
|
|
|
|
|
|
|
Capital paid in
excess of par value
|
12,075,586
|
11,548,460
|
|
|
|
|
|
Accumulated other
comprehesive income
|
504
|
394
|
|
|
|
|
|
Accumulated
(Deficit)
|
(13,618,190
)
|
(12,577,954
)
|
|
|
|
|
|
TOTAL SHAREHOLDERS'
DEFICIT
|
(573,363
)
|
(209,700
)
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
$
257,485
|
$
64,404
|
|
|
|
|
|
S
ee Accompanying
Notes To These Financial Statements.
|
||
F-3
|
Sunshine
Biopharma, Inc.
|
|||
|
Consolidated
Statement Of Operations and comprehensive loss
|
|
|
December
31,
|
December
31,
|
|
|
2017
|
2016
|
|
Revenue:
|
$
-
|
$
-
|
|
|
|
|
|
General &
Administrative Expenses
|
|
|
|
|
|
|
|
Accounting
|
81,643
|
70,413
|
|
Legal
|
75,908
|
57,955
|
|
Consulting
|
127,013
|
207,401
|
|
Office
|
45,726
|
45,215
|
|
Licenses
|
-
|
19,203
|
|
Officer &
director renumeration
|
520,271
|
499,397
|
|
Research &
development
|
-
|
32,793
|
|
Amortization &
depreciation
|
6,629
|
60,731
|
|
|
|
|
|
Total G &
A
|
857,190
|
993,108
|
|
|
|
|
|
(Loss) from
operations
|
(857,190
)
|
(993,108
)
|
|
|
|
|
|
Other
(expense):
|
|
|
|
Interest
expense
|
(104,829
)
|
(34,732
)
|
|
Loss on conversion
of notes payable
|
(76,929
)
|
(1,945,898
)
|
|
Loss on impairment
of patents
|
-
|
(556,120
)
|
|
Litigation
settlement proceeds
|
-
|
25,000
|
|
(Loss) from foreign
exchange transactions
|
(1,288
)
|
-
|
|
Gain on interest
forgiveness
|
-
|
381
|
|
Debt
release
|
-
|
7,790
|
|
|
|
|
|
Total Other
(Expense)
|
(183,046
)
|
(2,503,579
)
|
|
|
|
|
|
Net
(loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
|
|
|
|
|
Basic (Loss) per
common share
|
$
0.00
|
$
(0.01
)
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding
|
872,685,608
|
424,874,458
|
|
|
|
|
|
Net Income
(Loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
|
Other comprehensive
income:
|
|
|
|
Unrealized foreign
currency Gain (Loss)
|
110
|
(346
)
|
|
Comprehensive
(Loss)
|
(1,040,126
)
|
(3,497,033
)
|
|
|
|
|
|
Basic (Loss) per
common share
|
(0.00
)
|
(0.01
)
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding
|
872,685,608
|
424,874,458
|
See Accompanying Notes To These
Financial Statements.
F-4
|
Sunshine
Biopharma, Inc.
|
|
|
|
Consolidated
Statement Of Cash Flows
|
|
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
|
2017
|
2016
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
Net
(Loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
|
Amortization
and Depreciation
|
6,629
|
60,731
|
|
Stock
issued for services
|
427,400
|
702,300
|
|
Loss
on impairment of patents
|
-
|
556,120
|
|
Loss
on conversion of notes payable
|
76,929
|
1,945,898
|
|
Stock
issued for payment of interest
|
3,022
|
9,270
|
|
Debt
forgiveness
|
-
|
(1,313
)
|
|
(Increase)
decrease in prepaid expenses
|
(8,660
)
|
2,104
|
|
Increase
(decrease) in Accounts Payable
|
(8,808
)
|
(18,960
)
|
|
Increase
in Accounts Payable - related entity
|
-
|
(80,000
)
|
|
Increase(decrease)
in interest payable
|
204
|
6,355
|
|
|
|
|
|
Net Cash Flows (used) in Operations
|
(543,520
)
|
(314,182
)
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
Purchase
equipment
|
(3,718
)
|
(3,439
)
|
|
Deposits
on business acquisition
|
(80,290
)
|
-
|
|
|
|
|
|
Net Cash Flows (used) in Investing Activities
|
(84,008
)
|
(3,439
)
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
Proceed
from note payable
|
660,565
|
131,150
|
|
Notes
Payable - Interest expense
|
33,977
|
|
|
Payment
of notes payable
|
(115,000
)
|
-
|
|
Origination
fees
|
25,000
|
22,312
|
|
Notes
payable - related party
|
2,251
|
67,032
|
|
Note
payable related entity for patent purchase
|
-
|
-
|
|
Sale
of common stock
|
63,912
|
104,128
|
|
|
|
|
|
Net Cash Flows Provided by Financing Activities
|
670,705
|
324,622
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) In Cash and cash equivalents
|
43,177
|
7,001
|
|
Foreign
currency translation adjustment
|
6,902
|
(346
)
|
|
Cash
and cash equivalents at beginning of period
|
$
57,453
|
$
50,798
|
|
|
|
|
|
|
$
107,532
|
$
57,453
|
|
Supplementary Disclosure Of Cash Flow Information:
|
||
|
Cash
paid for interest
|
$
21,900
|
$
5,264
|
|
Cash
paid for income taxes
|
$
-
|
$
-
|
|
|
|
|
|
Stock
issued for services
|
$
427,400
|
$
702,300
|
|
Stock
issued for note conversions
|
$
128,451
|
$
3,077,950
|
|
Stock
issued to buy equipment
|
$
56,700
|
$
-
|
|
Loan
issued for interest
|
$
58,977
|
$
-
|
|
Stock
issued for payment of interest
|
$
3,022
|
$
-
|
|
|
|
|
See Accompanying Notes To These
Financial Statements.
F-5
|
Sunshine
Biopharma, Inc.
|
|||||||||
|
Statement of
Shareholders' Equity
|
|
|
Number
Of
|
|
Capital
Paid
|
Number
Of
|
|
|
|
|
|
|
Common
|
Common
|
in
Excess
|
Preferred
|
Preferred
|
Comprehensive
|
Accumulated
|
|
|
|
Shares
Issued
|
Stock
|
of Par
Value
|
Shares
Issued
|
Stock
|
Income
|
deficit
|
Total
|
|
Balance at
December 31, 2015
|
198,265,118
|
$
198,265
|
$
8,235,217
|
500,000
|
$
50,000
|
$
740
|
$
(9,081,267
)
|
$
(597,045
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash
|
12,555,556
|
12,556
|
91,572
|
|
|
|
|
104,128
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
146,750,000
|
146,750
|
555,550
|
|
|
|
|
702,300
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of note payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
411,829,184
|
411,829
|
2,666,121
|
|
|
|
|
3,077,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
(346
)
|
(3,496,687
)
|
(3,497,033
)
|
|
Balance at
December 31, 2016
|
769,399,858
|
$
769,400
|
$
11,548,460
|
500,000
|
$
50,000
|
$
394
|
$
(12,577,954
)
|
$
(209,700
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash
|
34,000,000
|
34,000
|
29,912
|
|
|
|
|
63,912
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
61,804,348
|
61,804
|
365,596
|
|
|
|
|
427,400
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
equipment
|
11,004,167
|
11,004
|
45,696
|
|
|
|
|
56,700
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of note payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
42,528,125
|
42,528
|
85,923
|
|
|
|
|
128,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
110
|
(1,040,236
)
|
(1,040,126
)
|
|
Balance at
December 31, 2017
|
918,736,498
|
$
918,736
|
$
12,075,586
|
500,000
|
$
50,000
|
$
504
|
$
(13,618,190
)
|
$
(573,363
)
|
See Accompanying Notes To These Financial
Statements.
F-6
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
The
Company was originally incorporated under the name Mountain West
Business Solutions, Inc. (“MWBS”) on August 31, 2006 in
the State of Colorado. Effective October 15, 2009, MWBS acquired
Sunshine Biopharma, Inc. in a transaction classified as a reverse
acquisition. MWBS concurrently changed its name to Sunshine
Biopharma, Inc. and Sunshine Biopharma, Inc. changed its name to
Sunshine Etopo, Inc. In 2015, Sunshine Etopo, Inc. became inactive
and was recently dissolved.
On
January 1, 2018, the Company acquired Atlas Pharma Inc., a fully
certified Canadian company offering chemical analysis of
pharmaceutical and other industrial samples. As a result of this
and the recent formation of NOX Pharmaceuticals, Inc., Sunshine
Biopharma, Inc. is now operating through three wholly owned
subsidiaries, including:
●
NOX
Pharmaceuticals, Inc., a recently formed Colorado company focused
on the research, development and commercialization of proprietary
drugs for the treatment of cancer including Adva-27a, a
multi-purpose anti-tumor compound targeted for the treatment of
multidrug resistant cancer;
●
Sunshine Biopharma
Canada Inc., a Canadian company formed in July 2014, which offers
generic prescription drugs for the treatment of cancer and other
acute and chronic indications; and
●
Atlas Pharma Inc.,
a Canadian company acquired in January 2018, offering certified
chemical analysis of pharmaceutical and other industrial
samples.
The
financial statements represent the consolidated activity of
Sunshine Biopharma, Inc. and its subsidiaries (hereinafter
collectively referred to as the "Company"). The Company was
originally formed for the purposes of conducting research,
development and commercialization of drugs for the treatment of
various forms of cancer. The Company may also engage in any other
business that is permitted by law, as designated by the Board of
Directors of the Company. NOX Pharmaceuticals, Inc. and Atlas
Pharma Inc. are not included in the Company's 2017
financials.
During
the last year the Company has continued to raise money through
stock sales and borrowings.
The
Company’s activities are subject to significant risks and
uncertainties, including failing to secure additional funding to
operationalize the Company’s generic pharmaceuticals business
and proprietary drug development program.
This summary of significant accounting policies
is presented to assist the reader in understanding the
Company's financial statements. The consolidated
financial statements and notes are representations of the Company's
management, which is responsible for their integrity and
objectivity. These accounting policies conform to generally
accepted accounting principles and have
been consistently applied in the
preparation of the financial
statements.
PRINCIPLES OF CONSOLIDATION
The
accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary. All intercompany
accounts and transactions have been eliminated in
consolidation.
USE OF ESTIMATES
The preparation of financial
statements in conformity with U.S. generally
accepted accounting principles requires
management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported
amounts of revenues and expenses
during the reporting period. The more
significant estimates and assumptions made
by management are valuation of equity
instruments, depreciation of property and
equipment, and deferred tax asset valuation.
Actual results could differ from those estimates as the current
economic environment has increased the degree of uncertainty
inherent in these estimates and assumptions.
F-7
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
CASH AND CASH EQUIVALENTS
For
the Balance Sheets and Statements of
Cash Flows, all highly liquid investments with
maturity of 90 days or less are considered to be cash
equivalents. The Company had a cash balance of $107,532 and
$57,453 as of December 31, 2017 and December 31, 2016,
respectively. At times such cash balances may be in excess of the
FDIC limit of $250,000 or the equivalent in Canada.
PROPERTY AND EQUIPMENT
Property
and equipment is reviewed for recoverability when events or changes
in circumstances indicate that its carrying value may exceed future
undiscounted cash inflows. As of December 31, 2017 and 2016, the
Company had not identified any such impairment. Repairs and
maintenance are charged to operations when incurred and
improvements and renewals are capitalized.
Property
and equipment are stated at cost. Depreciation is calculated using
the straight-line method for financial reporting purposes and
accelerated methods for tax purposes. Their estimated useful lives
are as follows:
|
|
Office
Equipment:
|
5-7
Years
|
|
|
Laboratory
Equipment
|
5
Years
|
|
|
Vehicles
|
5
Years
|
F-8
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
INTELLECTUAL PROPERTY RIGHTS - PATENTS
The
cost of patents acquired is capitalized and will be amortized over
the shorter of the term of the patent life (20 years) or the
remaining life of the underlying patents.
The
Company evaluates recoverability of identifiable intangible assets
whenever events or changes in circumstances indicate that
intangible assets carrying amount may not be recoverable. Such
circumstances include, but are not limited to: (1) a significant
decrease in the market value of an asset, (2) a significant adverse
change in the extent or manner in which an asset is used, or (3) an
accumulation of cost significantly in excess of the amount
originally expected for the acquisition of an asset. The Company
measures the carrying amount of the assets against the estimated
undiscounted future cash flows associated with it.
There
was an impairment loss of $556,120 for the year ended December 31,
2016.
The
Company’s management determined that the expected cash flows
would be less than the carrying amount of assets being evaluated;
therefore an impairment loss was recognized. The impairment loss
was calculated as the amount by which the carrying amount of the
assets, exceed fair value.
EARNINGS PER SHARE
The
Company has adopted the
Financial
Accounting Standards Board
(FASB) ASC Topic 260 regarding
earnings / loss per share, which provides for calculation of
“basic” and “diluted” earnings / loss per
share. Basic earnings / loss per share includes no dilution and is
computed by dividing net income / loss available to common
shareholders by the weighted average common shares outstanding for
the period. Diluted earnings / loss per share reflect the potential
dilution of securities that could share in the earnings of an
entity similar to fully diluted earnings / loss per
share.
There
were no potentially dilutive instruments outstanding during the
period ended December 31, 2017 or the year ended December 31,
2016.
INCOME TAXES
In accordance with ASC 740 - Income Taxes, the provision for income
taxes is computed using the asset and liability method. The
liability method measures deferred income taxes by
applying enacted statutory rates in effect at the
balance sheet date to the differences between the tax
basis of assets and liabilities and their
reported amounts on the financial
statements. The resulting deferred tax assets or
liabilities have been adjusted to reflect changes in tax laws as
they occur. A valuation allowance is provided when it is
more likely than not that a deferred tax asset will not be
realized.
The Company expects to recognize the financial statement benefit of
an uncertain tax position only after considering the probability
that a tax authority would sustain the position in an examination.
For tax positions meeting a "more-likely-than-not" threshold, the
amount to be recognized in the financial statements will be the
benefit expected to be realized upon settlement with the tax
authority. For tax positions not meeting the threshold, no
financial statement benefit is recognized. As of December 31, 2017,
the Company had no uncertain tax positions. The Company recognizes
interest and penalties, if any, related to uncertain tax positions
as general and administrative expenses. The Company currently has
no federal or state tax examinations nor has it had any federal or
state examinations since its inception. To date, the Company has
not incurred any interest or tax penalties.
For Canadian and US tax purposes, the Company’s 2014 through
2016 tax years remain open for examination by the tax authorities
under the normal three-year statute of limitations.
F-9
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
FUNCTIONAL CURRENCY
The
U.S. dollar is the functional currency of the Company which is
operating in the United States. The functional currency for the
Company's Canadian subsidiary is the Canadian dollar.
The
Company translates its Canadian subsidiary's financial statements
into U.S. dollars as follows:
●
Assets and
liabilities are translated at the exchange rate in effect as of the
financial statement date.
●
Income statement
accounts are translated using the weighted average exchange rate
for the period.
The
Company includes translation adjustments from currency exchange and
the effect of exchange rate changes on intercompany transactions of
a long-term investment nature as a separate component of
shareholders’ equity. There are currently no transactions of
a long-term
investment
nature, nor any gains or losses from non U.S. currency
transactions.
CONCENTRATION OF CREDIT RISKS
Financial
instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents, notes
receivables, deposits, and trade receivables. The Company places
its cash equivalents with high credit quality financial
institutions. As of December 31, 2017 and 2016 there were no trade
receivables.
FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
The
Company applies the provisions of accounting guidance, FASB Topic
ASC 825,
Financial
Instruments
. ASC 825 requires all entities to disclose the
fair value of financial instruments, both assets and liabilities
recognized and not recognized on the balance sheet, for which it is
practicable to estimate fair value, and defines fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. As of
December 31, 2017 and 2016, the fair value of cash, accounts
receivable and notes receivable, accounts payable, accrued
expenses, and other payables approximated carrying value due to the
short maturity of the instruments, quoted market prices or interest
rates which fluctuate with market rates.
The
Company defines fair value as the price that would be received to
sell an asset or be paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The Company applies the following fair value hierarchy, which
prioritizes the inputs used to measure fair value into three levels
and bases the categorization within the hierarchy upon the lowest
level of input that is available and significant to the fair value
measurement. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements).
Level 1
— Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement
date.
Level 2
— Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly. If the asset or liability has a
specified (contractual) term, a Level 2 input must be observable
for substantially the full term of the asset or
liability.
Level 3
— Level 3 inputs are unobservable inputs for the asset or
liability in which there is little, if any, market activity for the
asset or liability at the measurement date.
F-10
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
The
carrying value of financial assets and liabilities recorded at fair
value is measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a non-recurring basis are those
that are adjusted to fair value when a significant event occurs.
The Company had no financial assets or liabilities carried and
measured on a nonrecurring basis during the reporting periods.
Financial assets and liabilities measured on a recurring basis are
those that are adjusted to fair value each time a financial
statement is prepared.
NOTES PAYABLE
Borrowings
are recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortized cost;
any difference between the proceeds (net of transaction costs) and
the redemption value is recognized in the income statement over the
period of the borrowings using the effective interest
method.
ACCOUNTING FOR DERIVATIVES LIABILITIES
The
Company evaluates stock options, stock warrants or other contracts
to determine if those contracts or embedded components of those
contracts qualify as derivatives to be separately accounted for
under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts
in Entity’s Own Equity
. The result of this accounting
treatment could be that the fair value of a financial instrument is
classified as a derivative instrument and is marked-to-market at
each balance sheet date and recorded as a liability. In the event
that the fair value is recorded as a liability, the change in fair
value is recorded in the statement of operations as other income or
other expense.
Upon
conversion or exercise of a derivative instrument, the instrument
is marked to fair value at the conversion date and then that fair
value is reclassified to equity. Financial instruments that are
initially classified as equity that become subject to
reclassification under ASC Topic 815-40 are reclassified to a
liability account at the fair value of the instrument on the
reclassification date. The Company determined that none of the
Company’s financial instruments meet the criteria for
derivative accounting as of December 31, 2017 and
2016.
EQUITY INSTRUMENTS ISSUED TO NON-EMPLOYEES FOR AQUIRING GOODS OR
SERVICES
Issuances of the Company’s common stock or warrants for
acquiring goods or services are measured at the fair value of the
consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. The measurement date
for the fair value of the equity instruments issued to consultants
or vendors is determined at the earlier of (i) the date at which a
commitment for performance to earn the equity instruments is
reached (a “performance commitment” which would include
a penalty considered to be of a magnitude that is a sufficiently
large disincentive for nonperformance) or (ii) the date at which
performance is complete. When it is appropriate for the Company to
recognize the cost of a transaction during financial reporting
periods prior to the measurement date, for purposes of recognition
of costs during those periods, the equity instrument is measured at
the then-current fair values at each of those interim financial
reporting dates.
NONCASH EQUITY TRANSACTIONS
Shares of equity instruments issued for noncash consideration are
recorded at the estimated fair market value of the consideration
granted based on the estimated market value of the equity
instrument, or at the estimated value of the goods or services
received whichever is more readily determinable.
RELATED PARTIES
A party is considered to be related to the Company if the party
directly or indirectly or through one or more intermediaries,
controls, is controlled by, or is under common control with the
Company. Related parties also include principal owners of the
Company, its management, members of the immediate families of
principal owners of the Company and its management and other
parties with which the Company may deal if one party controls or
can significantly influence the management or operating policies of
the other to an extent that one of the transacting parties might be
prevented from fully pursuing its own separate interests. A party
which can significantly influence the management or operating
policies of the transacting parties or if it has an ownership
interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own
separate interests is also a related party.
F-11
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
GENERAL AND ADMINISTRATIVE EXPENSES
General
and administrative expenses consisted of professional service fees,
rent and utility expenses, meals, travel and entertainment
expenses, and other general and administrative overhead costs.
Expenses are recognized when incurred.
BASIC AND DILUTED NET GAIN (LOSS) PER SHARE
The Company computes loss per share in accordance with ASC
260,
Earnings per Share.
ASC 260 requires presentation of both
basic and diluted earnings per share (“EPS”) on the
face of the income statement.
Basic
net income (loss) per share is calculated by dividing net (loss) by
the weighted-average common shares outstanding. Diluted net income
per share is calculated by dividing net income by the
weighted-average common shares outstanding during the period using
the treasury stock method or the two-class method, whichever is
more dilutive. As the Company incurred net losses for the year
ended December 31, 2017 no potentially dilutive securities were
included in the calculation of diluted earnings per share as the
impact would have been anti-dilutive.
Therefore,
basic and dilutive net (loss) per share were the same as of
December 31, 2017 and 2016.
REVENUE RECOGNITION
The
Company is focused on the research, development and
commercialization of drugs for the treatment of various forms of
cancer. The Company does not expect to generate revenues until
clinical trials of its proposed products are completed. Once
completed, revenues would be recognized as its technology is
licensed or sold or its products become marketable.
IMPACT OF NEW ACCOUNTING STANDARDS
In
March 2017, the FASB issued ASU No. 2017-08, Receivables —
Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium
Amortization on Purchased Callable Debt Securities, to amend the
amortization period for certain purchased callable debt securities
held at a premium. The ASU shortens the amortization period for the
premium to the earliest call date. Under current Generally Accepted
Accounting Principles (“GAAP”), entities generally
amortize the premium as an adjustment of yield over the contractual
life of the instrument. The amendments should be applied on a
modified retrospective basis, and are effective for fiscal years
beginning after December 15, 2018. Early adoption is permitted,
including adoption in an interim period. The Company is currently
evaluating the impact of this amendment on its financial
statements.
In
February 2017, the FASB issued ASU No. 2017-05, Other
Income—Gains and Losses from the Derecognition of
Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of
Asset Derecognition Guidance and Accounting for Partial Sales of
Nonfinancial Assets, to clarify the scope of Subtopic 610-20, Other
Income—Gains and Losses from the Derecognition of
Nonfinancial Assets, and to add guidance for partial sales of
nonfinancial assets. Subtopic 610-20, which was issued in May 2014
as a part of ASU No. 2014-09, Revenue from Contracts with Customers
(Topic 606), provides guidance for recognizing gains and losses
from the transfer of nonfinancial assets in contracts with
noncustomers. The amendments are effective for fiscal years
beginning after December 15, 2017, including interim periods within
those fiscal years, which is the same time as the amendments in ASU
No. 2014-09, and early adoption is permitted. The Company is
currently evaluating the impact of this amendment on its financial
statements.
F-12
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
In
January 2017, the FASB issued ASU No. 2017-03, Accounting Changes
and Error Corrections (Topic 250). The ASU adds SEC disclosure
requirements for both the quantitative and qualitative impacts that
certain recently issued accounting standards will have on the
financial statements of a registrant when such standards are
adopted in a future period. Specially, these disclosure
requirements apply to the adoption of ASU No. 2014- 09, Revenue
from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases
(Topic 842); and ASU No. 2016-13, Financial Instruments —
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments. The Company is currently
evaluating the impact of these amendments on its financial
statements.
Between
May 2014 and December 2016, the FASB issued several ASU’s on
Revenue from Contracts with Customers (Topic 606). These updates
will supersede nearly all existing revenue recognition guidance
under current U.S. generally accepted accounting principles (GAAP).
The core principle is to recognize revenues when promised goods or
services are transferred to customers in an amount that reflects
the consideration to which an entity expects to be entitled for
those goods or services.
A
five-step process has been defined to achieve this core principle,
and, in doing so, more judgment and estimates may be required
within the revenue recognition process than are required under
existing U.S. GAAP. The standards are effective for annual periods
beginning after December 15, 2017, and interim periods therein,
using either of the following transition methods: (i) a full
retrospective approach reflecting the application of the standards
in each prior reporting period with the option to elect certain
practical expedients, or (ii) a retrospective approach with the
cumulative effect of initially adopting the standards recognized at
the date of adoption (which includes additional footnote
disclosures). The Company is currently evaluating the impact of its
pending adoption of these standards on its financial statements and
has not yet determined the method by which it will adopt the
standard in 2018.
In
November 2016, the FASB issued ASU No. 2016-18, Statement of Cash
Flows (Topic 230): Restricted Cash (a consensus of the FASB
Emerging Issues Task Force), to provide guidance on the
presentation of restricted cash or restricted cash equivalents in
the statement of cash flow. The amendments should be applied using
a retrospective transition method, and are effective for fiscal
years beginning after December 15, 2017, including interim periods
within those fiscal years. The Company is currently evaluating the
impact of these amendments on its financial
statements.
DIRECTOR AND OFFICER COMPENSATION
For the
period ended December 31, 2017, the Company issued to the Board of
Directors 42,000,000 shares of par value $0.001 Common Stock valued
at $336,000 or $0.008 per share. During the year ended December 31,
2017, the Directors and Officers were paid $184,271 in cash. Of
this amount, $147,695 was paid to Advanomics Corporation, a company
controlled by the CEO of the Company.
For the
period ended December 31, 2016, the Company issued 78,000,000
shares of par value $0.001 Common Stock to the three Company
officers/directors valued at $241,800 or $0.0031 per share. The
Company also issued to the Board of Directors 36,000,000 shares of
$0.001 Common Stock valued at $252,000 or $0.0078 per share. In
addition, the Company paid its officers $5,597 in
cash.
LEGAL FEES
During
the years ended December 31, 2017 and 2016, legal fees were
incurred largely as a result of services provided to the Company to
assist with its regulatory requirements with the Securities and
Exchange Commission and a litigation in which it was involved and
since been resolved.
DATE OF MANAGEMENT’S REVIEW
Subsequent
events have been evaluated through March 29, 2018, which is the
date the Financial Statements were available to be
issued.
F-13
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates, among
other things, the realization of assets and satisfaction of
liabilities in the normal course of business. The Company had an
accumulated deficit of approximately $13,618,190 and $12,577,954 at
December 31, 2017 and 2016, respectively, had a net loss of
approximately $1,040,236 for the year ended December 31, 2017 and a
net loss of $3,496,687 for the fiscal year ended December 31, 2016,
and Shareholders’ Deficit of approximately $573,363 and
$209,700 at December 31, 2017 and 2016, respectively.
These
matters, among others, raise substantial doubt about the
Company’s ability to continue as a going concern. The Company
believes it can raise capital through equity sales and borrowing to
fund its operations. Management believes this will contribute
toward its subsequent profitability. The accompanying Financial
Statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going
concern.
The
following is a summary of the Patents held by the Company at
December 31, 2017 and 2016:
On
October 8, 2015, the Company acquired U.S. Patent Number 8,236,935
(the “US Patent”) for the Adva-27a anticancer compound
from Advanomics Corporation (“Advanomics”), a related
party, in exchange for an interest-free note payable for
$4,320,000. Effective December 28, 2015, the parties executed an
amendment pursuant to which this note payable for $4,320,000 was
cancelled and replaced with a new interest-free convertible note
having a face value of $210,519, comprised of $155,940 in principal
amount which is the Advanomics book value of the US Patent, plus
$54,579 as an adjustment for the currency exchange difference. The
new note is automatically convertible into 80,968,965 shares of the
Company’s Common Stock upon the Company increasing its
authorized capital to a level that would permit the issuance of
such shares.
On
December 28, 2015, the Company acquired the remaining worldwide
issued and pending patents under PCT/FR2007/000697 and
PCT/CA2014/000029 (the “Worldwide Patents”) for the
Adva-27a anticancer compound from Advanomics, a related party, in
exchange for a note payable for $12,822,499. Effective December 28,
2015, the parties executed an amendment pursuant to which this note
payable for $12,822,499 was cancelled and replaced with a new
interest-free convertible note having a face value of $624,875,
comprised of $462,870 in principal amount, which is the Advanomics
book value of the Worldwide Patents, plus $162,005 as an adjustment
for the currency exchange difference. The new note is automatically
convertible into 240,336,451 shares of the Company’s Common
Stock upon the Company increasing its authorized capital to a level
that would permit the issuance of such shares. The US Patent and
the Worldwide Patents are herein referred to as the
“Patents.”
The
Patents were therefore acquired from the related party (Advanomics)
for a total of $835,394, including a total of $216,584 in
adjustments for the currency exchange difference ($618,810 net).
Patents expire 20 years from the priority date and are therefore
amortized over 20 years. The oldest of the Patents expires on April
25, 2026 and therefore the Company has deemed that the Patents have
approximately 10 years remaining on their useful life.
F-14
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
In July
2016, the Company issued 321,305,416 shares of $0.001 par value
Common Stock in exchange for notes payable totaling
$835,394.
|
|
December
31,
2017
|
December
31,
2016
|
|
|
|
|
|
Adva-27a US
Patent
|
$
|
$
155,940
|
|
Adva-27a Worldwide
Patents
|
$
|
$
462,870
|
|
|
|
|
|
Total
|
$
|
$
618,810
|
|
Less: accumulated
amortization
|
|
(62,690
)
|
|
Loss on
impairment
|
|
(556,120
)
|
|
Total
|
|
|
|
|
$
-0-
|
$
-0-
|
The
Company’s authorized capital is comprised of 3,000,000,000
shares of $0.001 par value Common Stock and 30,000,000 shares of
$0.10 par value Preferred Stock, to have such rights and
preferences as the Directors of the Company have or may assign from
time to time. Out of the authorized Preferred Stock, the Company
has designated 850,000 shares as Series “A” Preferred
Stock (“Series A”). The Series A is convertible at any
time after issuance into 20 shares of the Company's Common Stock
with no further consideration, has full voting rights at 20 votes
per share, and has superior liquidation rights to the Common Stock.
During the year ended December 31, 2015, the Company authorized
500,000 shares of $0.10 par value Series “B” Preferred
Stock (“Series B”). The Series B Preferred Stock is
non-convertible, non-redeemable and non-retractable. It has
superior liquidation rights to the Common Stock at $0.10 per share
and gives the holder the right to 1,000 votes per share. All shares
of the Series B Preferred Stock are held by the CEO of the Company.
Through December 31, 2017 and December 31, 2016, the Company has
issued and outstanding a total of 918,736,498 and 769,399,858
shares of Common Stock, respectively. Through the same periods, the
Company has issued and outstanding a total of -0- and -0- shares of
Series A Preferred Stock and 500,000 and 500,000 shares of Series B
Preferred Stock, respectively.
During
the fiscal year ended December 31, 2017, the Company issued an
aggregate of 149,336,640 shares of its Common Stock as
follows:
●
40,000,000 shares
for cash in the amount of $100,000 Canadian or $78,312
US
●
11,004,167 shares
for the purchase of laboratory and generic drugs warehouse
equipment valued at $56,700
●
42,000,000 shares
valued at $336,000 as compensation to the Company’s Directors
and Officers
●
13,804,348 shares
for services rendered to the Company by third parties valued at
$77,000
●
42,528,125 valued
at $128,451 shares in connection with the conversion of $48,500 in
debt and interest of $3,022 resulting in a $76,929 loss on
conversion
During
the fiscal year ended December 31, 2016, the Company issued
411,829,184 shares of Common Stock for the conversion of $1,122,782
in debt and interest of $9,270 generating a loss of $1,945,898 on
conversion. The Company sold 12,555,556 shares of Common Stock for
cash of $104,128 and issued 146,750,000 shares of Common Stock in
exchange for services valued at $702,300. In 2016, 114,000,000
shares valued at $493,800 were issued to the Directors and Officers
of the Company. The Officers and Directors shares are restricted
and may not be sold without prior written consent of the Board of
Directors of the Company.
The
Company has declared no dividends since inception.
F-15
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
The
following table sets forth the computation of basic and diluted net
income per share for the years ended December 31:
|
|
2017
|
2016
|
|
Net (loss)
attributable to Common Stock
|
$
(1,040,236
)
|
$
(3,496,687
)
|
|
Basic weighted
average outstanding shares of Common Stock
|
872,685,608
|
424,874,458
|
|
Dilutive effects of
common share equivalents
|
-0-
|
-0-
|
|
Dilutive weighted
average outstanding shares of common stock
|
872,685,608
|
424,874,458
|
|
Net loss per share
of Common Stock
|
|
|
|
Basic and
Diluted
|
$
(0.00
)
|
$
(0.01
)
|
The
Company files a United States federal income tax return and a
Canadian branch return on a calendar year basis. The Company and
its wholly-owned subsidiary, Sunshine Biopharma Canada Inc., have
not generated taxable income since inception.
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These
loss carryovers are limited under the Internal Revenue Code should
a significant change in ownership occur. The Company accounts for
income taxes pursuant to ASC 740.
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses and
other items. Loss carryovers are limited under the Internal Revenue
Code should a significant change in ownership occur.
The
Company follows FASB Statement Accounting Standards Codification
No. 740, “Accounting for Income Taxes”, which requires,
among other things, an asset and liability approach to calculating
deferred income taxes. The components of the deferred income tax
assets and liabilities arising under ASC No. 740 were as
follows:
There
were no deferred income taxes at December 31, 2017 and
2016.
The
types of temporary differences between the tax basis of assets and
their financial reporting amounts that give rise to a significant
portion of the deferred assets and liabilities are as
follows:
|
|
December 31,
2017
|
December 31,
2016
|
||
|
|
Temporary
Difference
|
Tax
Effect
|
Temporary
Difference
|
Tax
Effect
|
|
Deferred tax
assets:
|
|
|
|
|
|
Net operating loss
US
|
$
10,611,921
|
$
3,932,778
|
$
9,609,340
|
$
3,561,221
|
|
Net operating loss
Canada
|
266,498
|
71,421
|
202,188
|
46,099
|
|
Total
|
10,878,419
|
4,004,199
|
9,811,528
|
3,607,320
|
|
|
|
|
|
|
|
Valuation
allowance
|
(10,878,419
)
|
(4,004,199
)
|
(9,811,528
)
|
(3,607,320
)
|
|
|
|
|
|
|
|
Total deferred tax
asset
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
Net deferred tax
asset
|
$
-0-
|
$
-0-
|
$
-0-
|
$
-0-
|
F-16
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These
loss carryovers are limited under the Internal Revenue Code should
a significant change in ownership occur.
At
December 31, 2017 and December 31, 2016, the Company had
approximately $10,611,921 and $9,609,340, respectively in unused
federal net operating loss carryforwards, which begin to expire
principally in the year 2029. A deferred tax asset at each date of
approximately $3,950,013 and $3,607,320 resulting from the loss
carryforwards has been offset by a 100% valuation allowance. The
change in the valuation allowance for the period ended December 31,
2017 and December 31, 2016 was approximately $342,693and $521,180,
respectively.
A
reconciliation of the U.S. statutory federal income tax rate to the
effective tax rate is as follows:
|
|
December
31,
|
|
|
|
2017
|
2016
|
|
U.S. Federal
statutory graduated rate
|
34.00
%
|
34.00
%
|
|
State income tax
rate,
net of federal benefit
|
3.06
%
|
3.06
%
|
|
Net
rate
|
37.06
%
|
37.06
%
|
|
|
|
|
|
Net operating loss
used
|
0.00
%
|
0.00
%
|
|
Net operating loss
for which no tax
benefit is currently
available
|
-37.06
%
|
-37.06
%
|
|
|
0.00
%
|
0.00
%
|
The
Company’s income tax filings are subject to audit by various
taxing authorities. The Company’s open audit periods are
2014, 2015, and 2016, although, the statute of limitations for the
2014 tax year will expire effective March 15, 2018. In evaluating
the Company’s provisions and accruals, future taxable income,
and reversal of temporary differences, interpretations and tax
planning strategies are considered.
|
Notes payable consist of the
following:
|
2017
|
2016
|
|
|
|
|
|
A Note
Payable having a Face Value of $21,439 at December 31, 2016 and
accruing interest at 12% was due December 31, 2017. On December 31,
2017, the Company renewed the note, together with accrued interest
of $2,573, for a 12-month period. The new note has a Face Value of
$24,012 and is due December 31, 2018. The new note accrues interest
at 12% and is convertible anytime from the date of issuance into
$0.001 par value Common Stock at a 35% discount from market price.
The Company estimates that the fair value of this convertible debt
approximates the face value, so no value has been assigned to the
beneficial conversion feature. Any gain or loss will be recognized
at conversion.
|
$
24,012
|
$
21,439
|
|
|
|
|
F-17
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
|
On July 1, 2016,
the Company received monies in exchange
for a note payable
having a Face Value of $55,000 with interest
accruing at 10% is
due April 1, 2017. The Note is convertible after
180
days from issuance into $0.001 par value Common Stock at
a
price 40% below market value.
In December
2016, $6,500 of
the principal was
converted
into 5,000,000 shares
of
$0.001 par
value Common Stock
valued at $20,000 and generating a loss of
$13,500 on
conversion. In January 2017, the remaining principal
amount
of $48,500 together with accrued interest of $3,022 was
converted
into 42,528,125 shares of
$0.001 par value Common
Stock valued at
$128,451 and generating a loss of $76,929
on
conversion.
|
$
-0-
|
$
48,500
|
|
|
|
|
|
On February 10,
2017, the Company received $48,000 cash in exchange
for a
note payable having a Face Value of $50,000 with interest
accruing at 8%,
which is due November 20, 2017. The Note is
convertible after
180 days from issuance into $0.001 par value
Common Stock at a
price 35% below market value. In August
2017, the note was
paid off with additional $1,863 in accrued interest and
$15,559 as prepayment penalty
.
|
$
-0-
|
$
-0-
|
|
|
|
|
|
On April 1, 2017,
the Company received monies in exchange
for a note payable
having a Face Value of $100,000 Canadian
($79,710 US) with
interest payable quarterly at 9%, which is due
April 1, 2019. The
Note is convertible any time after issuance
into $0.001 par
value Common Stock at
a price of
$0.015 Canadian
(approximately $0.012 US) per share.
The
Company
estimates that
the
fair
value of this convertible debt approximates the face value, so
no
value
has been assigned to the beneficial conversion feature.
Any
gain or loss will be recognized at conversion.
|
$
79,710
|
$
-0-
|
|
|
|
|
|
On April 26, 2017,
the Company received $63,000 cash in exchange
for a note having a
Face Value of $ 65,000 with interest
accruing at 8%,
which is due April 26, 2018. The Note is convertible
after
180 days from issuance into $0.001 par value Common
Stock
at
a price 35% below market
value.
In August 2017 the
note was paid off
with additional $2,607 in accrued interest and $19,500 as
prepayment penalty
.
|
$
-0-
|
$
-0-
|
|
|
|
|
|
On August 3, 2017,
the Company received $76,000 in exchange
for a note payable
having a Face Value of $ 80,000 with interest
accruing at 8%,
which is due August 3, 2018. The Note is convertible
after
180 days from issuance into $0.001 par value Common
Stock
at
a price 35% below market value. The
Company estimates that
the
fair value of this convertible debt approximates the face
value,
so
no value has been assigned to the beneficial conversion
feature.
Any gain or loss will be
recognized at conversion.
|
$
80,000
|
$
-0-
|
F-18
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
|
On August 21, 2017,
the Company received $80,000 cash in exchange
for a note payable
having a Face Value of $ 83,000 with interest
accruing at 8% ,
which is due May 30, 2018. The Note is convertible
after
180 days from issuance into $0.001 par value Common
Stock
at
a price 35% below market value. The
Company estimates that
the
fair value of this convertible debt approximates the face
value,
so
no value has been assigned to the beneficial conversion
feature.
Any gain or loss
will be recognized at conversion.
|
$
83,000
|
$
-0-
|
|
|
|
|
|
On September 22,
2017, the Company received $60,000 cash in
exchange for a note
having a Face Value of $ 62,000 with
interest accruing
at 8%, which is due June 30, 2018. The Note is
convertible after
180 days from issuance into $0.001 par
value Common Stock
at
a price 35% below market
value.
The
Company estimates that the fair value of this convertible
debt
approximates
the face value, so no value has been assigned
to the beneficial conversion feature.
Any
gain or loss will be
recognized at
conversion.
|
$
62,000
|
$
-0-
|
|
|
|
|
|
On October 26,
2017, the Company received $110,000 cash in
exchange for a note
payable having a Face Value of $ 115,000
with interest
accruing at 8%, which is due October 26, 2018. The
Note is
convertible after 180 days from issuance into $0.001 par
value
Common Stock at
a price 35% below
market value. The
Company
estimates that the fair value of this convertible debt
approximates
the face value, so no value has been assigned to the
beneficial conversion feature.
Any gain or
loss will be recognized
at
conversion.
|
$
115,000
|
$
-0-
|
|
|
|
|
|
On November 14,
2017, the Company received $106,000 cash in
exchange for a note
payable having a Face Value of $ 113,000
with interest
accruing at 8%, which is due November 14, 2018. The
Note is
convertible after 180 days from issuance into $0.001
par
value Common Stock at
a price 35%
below market value.
The
Company estimates that the fair value of this convertible
debt
approximates
the face value, so no value has been assigned to
the beneficial conversion feature.
Any gain or loss will
be
recognized at
conversion.
|
$
113,000
|
$
-0-
|
|
|
|
|
|
On December 1, 2017
the Company received monies in
exchange for a note
having a Face Value of $ 50,000 Canadian
($39,855 US) with
interest accruing at 8%, due November 30,
2018. The Note is
convertible after 180 days from issuance
into $0.001 par
value Common Stock at
a price 35%
below
market
value. The Company estimates that the fair value of this
convertible
debt approximates the face value, so no value has been
assigned to the beneficial conversion
feature.
Any gain or loss will be
recognized at
conversion.
|
$
39,855
|
$
-0-
|
|
|
|
|
|
Total Current
Debt
|
$
596,577
|
$
69,939
|
F-19
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Interest
expense for the years ended December 31, 2017 and 2016 was $79,833
and $34,732, respectively. The balance of interest payable at
December 31, 2017 and 2016 was $9,215 and $9,011, respectively.
Loss on conversion of notes payable for the years ended December
31, 2017 and 2016 was $76,929 and $1,945,898,
respectively.
|
Notes payable to
related parties consist of the following:
|
2017
|
2016
|
|
|
|
|
|
A note payable held
by a private individual who subsequently
became a principal
shareholder of the Company having a face
value of $100,000
at December 31, 2016 and a maturity date
of March 31, 2017,
accrues interest at 12%. The Note is
convertible any
time from the date of issuance into $0.001 par
value Common Stock
at a 35% discount from market price. On
March 31, 2017, the
note’s principal balance of $100,000 plus
accrued interest of
$11,715 was renewed for a period of 90 days
under the same
terms and conditions as the original note. The
new note now having
a face value of $111,715 matures on June
30, 2017. On June
30, 2017, the note’s principal balance of
$111,715 plus
accrued interest of $3,342 was renewed for a
period of 90 days
under the same terms and conditions as the
original note. The
new note now having a face value of $115,057
matures on
September 30, 2017. On September 30, 2017, the
note’s
principal balance of $115.057 plus accrued interest of
$3,480
was renewed for a period of 90 days under the same
terms
and conditions as the original note. The new note now
having
a principal balance of $118,537 matures on December
31,
2017. On December 31, 2017 the note plus accrued interest of $3,556
was renewed for a
12-month period
under the same terms and conditions as before.
The new note has a
face value of $122,093 and matures on
December 31, 2018.
The Company estimates that the fair value
of this convertible
debt approximates the face value, so no value
has been assigned
to the beneficial conversion feature. Any
gain or loss will
be recognized at conversion.
|
$
122,093
|
$
100,000
|
|
|
|
|
|
In December 2016,
the Company received monies from its
CEO in exchange for
a note payable having a principal amount
of $90,000 Canadian
($67,032 US) with interest at 12% due
March 31, 2017. The
note was convertible any time after
the date of
issuance into $0.001 par value Common Stock
at a price 35%
below market value. This note was
collateralized by
all of the assets of the Company. In the
event of default,
the interest rate will increased to 18% per
annum and a penalty
of $1,000 Canadian ($752 US) per day
will accrue. On
March 31, 2017, the note, together with
accrued interest of
$3,021 Canadian ($2,271 US) and an
additional
principal amount of $3,000 Canadian ($2,247 US)
paid to the Company
on March 28, 2017, was renewed for a
90-day period under
the same terms and conditions as the
original note. The
new note now having a face value of
$96,021 Canadian
($72,198 US) was due on June 30, 2017.
On June 30, 2017,
the note, together with accrued interest of
$2,873 Canadian
($2,005 US), was renewed for a 90-day
period under the
same terms and conditions as the original
note except that
the new note is non-convertible. The new
note now having a
face value of $98,894 Canadian
($76,072US) is due
on September 30, 2017. On September
30, 2017, the note,
together with accrued interest of $2,991
Canadian ($2,397
US) was renewed for a 90-day period
under the same
terms and conditions as the original note
except that the new
note is nonconvertible. The new note
now having a
principal balance of $101,885 Canadian
($81,640 US)
matures December 31, 2017. On December
31, 2017 the note
was renewed for a 12-month period under
the same terms and
conditions as before except that this new
note is unsecured
and nonconvertible. The new note has a
face value of
$104,942 Canadian ($83,649 US) and matures
on December 31,
2018.
|
$
83,649
|
$
67,032
|
|
|
|
|
|
Total Current
Related Party Debt
|
$
205,742
|
$
167,032
|
F-20
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
In
December 2016, the Company received monies from our CEO in exchange
for a note payable having a principal of $90,000 Canadian ($67,032
US) with interest at 12% due March 31, 2017. The Note is
convertible any time after the date of issuance into shares of our
Common Stock at
a price 35% below
market value. We estimated that the fair value of the convertible
debt approximates the face value, so no value has been assigned to
the beneficial conversion feature.
This Note is
collateralized by all of the assets of the Company. On March 31,
2017, the note, together with accrued interest of $3,021 Canadian
($2,271 US) and an additional principal amount of $3,000 Canadian
($2,247 US) paid to the Company on March 28, 2017, was renewed for
a 90-day period under the same terms and conditions as the original
note. The new note now having a face value of $96,021 Canadian
($72,198 US) was due on June 30, 2017. On June 30, 2017, the note,
together with accrued interest of $2,873 Canadian ($2,005 US), was
renewed for a 90-day period under the same terms and conditions as
the original note except that the new note is nonconvertible. The
new note now having a face value of $98,894 Canadian ($76,072US) is
due on September 30, 2017. On September 30, 2017, the note,
together with accrued interest of $2,991 Canadian ($2,397 US), was
renewed for a 90-day period under the same terms and conditions as
the original note except that the new note is nonconvertible. The
new note now having a principal balance of $101,885 Canadian
($81,640 US) matures December 31, 2017. On December 31, 2017, the
note was renewed for a 12-month period under the same terms and
conditions as the original note except that this note is unsecured
and non-convertible. The new note has a face value of $104,942
Canadian ($84,649 US) and matures on December 31,
2018.
A note
payable held by a private individual who subsequently became a
principal shareholder of the Company having a face value of
$100,000 at December 31, 2016 and a maturity date of March 31,
2017, accrues interest at 12%. The Note is convertible any time
from the date of issuance into $0.001 par value Common Stock at a
35% discount from market price. On March 31, 2017, the note’s
principal balance of $100,000 plus accrued interest of $11,715 was
renewed for a period of 90 days under the same terms and conditions
as the original note. The new note now having a face value of
$111,715 matures on June 30, 2017. On June 30, 2017, the
note’s principal balance of $111,715 plus accrued interest of
$3,342 was renewed for a period of 90 days under the same terms and
conditions as the original note. The new note now having a face
value of $115,057 matures on September 30, 2017. On September 30,
2017, the note’s principal balance of $115.057 plus accrued
interest of $3,480 was renewed for a period of 90 days under the
same terms and conditions as the original note. The new note now
having a principal balance of $118,537 matures on December 31,
2017. On December 31, 2017 the note was renewed for a 12-month
period under the same terms and conditions as before. The new note
has a face value of $122,093 and matures on December 31,
2018.
Until
June 1, 2017, the Company’s principal place of business was
located at 469 Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada
H3N R4. This was also the location of the
Company’s former licensor, Advanomics Corporation
(“Advanomics”), who provided this space to the Company
on a rent free basis in 2015 and 2016. Starting January
1, 2017, the Company took over the lease from Advanomics for this
space until it moved to its current location in June
2017.
In
February and April 2016, the Company paid $30,000 and $50,487 to
Advanomics for the balance of 2015 licensing fees.
In 2016, Advanomics Corporation paid
on behalf of the Company $13,725 Canadian in patenting fees.
Advanomics was fully reimbursed by the Company in January
2017.
Dr.
Steve N. Slilaty, the Company’s Chief Executive Officer and a
Director, is an Officer, Director and principal shareholder of
Advanomics.
During
the period ended December 31, 2017, the Company issued to its
Directors and Officers 42,000,000 shares of $0.001 par value Common
Stock valued at $336,000 or $0.008 per share. In addition, the
Directors and Officers were paid an aggregate of $184,271 for their
services in 2017. Of this amount, $147,695 was paid to Advanomics
Corporation, a company controlled by the CEO of the
Company.
During
the period ended December 31, 2016, the Company issued 78,000,000
shares of $0.001 par value Common Stock to the three Company
officers valued at $241,800 or $0.0031 per share. During the same
period, the Company also issued to the Board of Directors
36,000,000 shares of $0.001 par value Common Stock valued at
$252,000 or $0.0078 per share. In addition, the Company paid its
officers $5,597 in cash.
F-21
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
As part
of a subscription agreement entered into in February 2016, the
Company has an obligation to pay a royalty of 5% of net sales on
one of its generic products (Anastrozole) for a period of three (3)
years from the date of the first sale of that product. As of the
date hereof, the Company has not received revenues from the sale of
this product.
In
December 2017, the Company issued a payment of $100,500 Canadian
($80,290 US) to Mr. Mohamed Belhai as a deposit towards the
acquisition of Atlas Pharma Inc. On January 1, 2018, the Company
entered into a Share Purchase Agreement with Mr. Mohamed Belhaj and
Atlas Pharma Inc. (the “Atlas Agreement”), wherein the
Company acquired all of the issued and outstanding shares (the
“Shares”) of Atlas Pharma Inc., (“Atlas”)
from Mr. Belhaj. The purchase price for the Shares was $848,000
Canadian (approximately $678,400 US). The purchase price included a
cash payment of $100,500 Canadian ($80,290 US), plus issuance of
20,000,000 shares of the Company’s Common Stock, plus a
promissory note in the principal amount of $450,000 Canadian
(approximately $360,000 US), with interest payable at the rate of
3% per annum. The Company is required to make payments of $10,000
per calendar quarter, due and payable on or before the end of each
such calendar quarter through December 31, 2023.
On
January 1, 2018, the Company acquired Atlas Pharma Inc., a
Montreal-based, fully certified analytical chemistry company
dedicated to chemical analysis of pharmaceutical and other
industrial samples. More information about Atlas Pharma is
available at
www.atlaspharmainc.ca
.
On
January 12, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$102,000.
On
February 6, 2018, the Company issued payment in the amount of
$51,613 to pay off approximately half of a note payable dated
August 3, 2017, and on February 12 and 21 the remainder was
converted into a total of 6,555,761 shares of the Company's Common
Stock.
On
February 7, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$150,000.
On
February 16, 2018, the Company issued payment in the amount of
$115,370 to pay off a note payable dated August 21,
2017.
On
February 20, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$85,000.
On
March 27, 2018, the holder of a convertible note having a face
value of $62,000 elected to convert $15,000 of the outstanding
principal amount into 2,727,273 shares of the Company's Common
Stock, leaving a principal balance of $47,000.
F-22
None
Disclosure Controls and Procedures
Disclosure
Controls and Procedures
–
Our
management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) as of the end of
the period covered by this Report.
These
controls are designed to ensure that information required to be
disclosed in the reports we file or submit pursuant to the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management,
including our CEO/CFO to allow timely decisions regarding required
disclosure.
Based
on this evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective as of
December 31, 2017, at reasonable assurance level, for the following
reasons:
●
ineffective
control environment and lack of qualified full-time CFO who has SEC
experience to focus on our financial affairs;
●
lack
of qualified and sufficient personnel, and processes to adequately
and timely identify making any and all required public
disclosures;
●
deficiencies in
the period-end reporting process and accounting
policies;
●
inadequate
internal controls over the application of new accounting principles
or the application of existing accounting principles to new
transactions;
●
inadequate
internal controls relating to the authorization, recognition,
capture, and review of transactions, facts, circumstances, and
events that could have a material impact on the company’s
financial reporting process;
●
deficient
revenue recognition policies;
●
inadequate
internal controls with respect to inventory transactions;
and
●
improper and
lack of timely accounting for accruals such as prepaid expenses,
accounts payable and accrued liabilities.
Our
Board of Directors has assigned a priority to the short-term and
long-term improvement of our internal control over financial
reporting. We are reviewing various potential solutions to remedy
the processes that would eliminate the issues that may arise due to
the absence of separation of duties within the financial reporting
functions. Additionally, the Board of Directors will work with
management to continuously review controls and procedures to
identified deficiencies and implement remediation within our
internal controls over financial reporting and our disclosure
controls and procedures.
We
believe that our financial statements presented in this annual
report on Form 10-K fairly present, in all material respects, our
financial position, results of operations, and cash flows for all
periods presented herein.
19
Inherent
Limitations
– Our management, including our Chief
Executive Officer and Chief Financial Officer, does not expect that
our disclosure controls and procedures will prevent all error 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. The design of any system of controls 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. 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 our company
have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and
that breakdown can occur because of simple error or mistake. In
particular, many of our current processes rely upon manual reviews
and processes to ensure that neither human error nor system
weakness has resulted in erroneous reporting of financial
data.
Changes in
Internal Control over Financial Reporting
– There were
no changes in our internal control over financial reporting during
our fiscal year ended December 31, 2017, which were identified in
conjunction with management’s evaluation required by
paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act,
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
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.
Management Report on Internal Control over Financial
Reporting
Our
management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule
13a-15(f) or 15d-15(f) promulgated under the Exchange
Act. Those rules define internal control over financial
reporting as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and
includes those policies and procedures that:
●
Pertain to the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the company;
●
Provide
reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and the receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the Company;
and
●
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisitions, use or disposition of the
company’s assets that could have a material effect on the
financial statements.
Because
of its inherent limitations, internal controls over financial
reporting may not prevent or detect
misstatements. 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 of compliance with the policies or procedures may
deteriorate.
Management assessed
the effectiveness of our internal control over financial reporting
as of December 31, 2017. In making this assessment, our management
used the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).
Based
on an assessment carried out March 25-26, 2018, management believes
that, as of December 31, 2017, our internal control over financial
reporting were ineffective based in part on the issues discussed
above.
None.
20
Following is a list
of our officers and directors:
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
|
|
Dr.
Steve N. Slilaty
|
|
65
|
|
President,
Chief Executive Officer, and Chairman
|
|
|
|
|
|
|
|
Dr.
Abderrazzak Merzouki
|
|
54
|
|
Chief
Operating Officer and Director
|
|
|
|
|
|
|
|
Camille
Sebaaly
|
|
57
|
|
Chief
Financial Officer, Secretary and Director
|
Our
directors serve as directors until our next Annual Meeting of
Stockholders and the election and qualification of the
director’s respective successor or until the director’s
earlier death, removal or resignation.
Following is biographical information of our current
management:
Dr. Steve N. Slilaty
was appointed as our CEO, President and Chairman of our Board of
Directors on October 15, 2009. Dr. Slilaty is an
accomplished scientist and business executive. His scientific
publications are widely cited including university textbooks.
Sunshine Biopharma is the third in a line of biotechnology
companies that Dr. Slilaty founded and managed through their early
and mid-stages of development. The first,
Quantum Biotechnologies Inc.
later
known as
Qbiogene Inc.
, was
founded in 1991 and grew to over $60 million in annual
sales. Today,
Qbiogene
is a member of a family of
companies owned by
MP
Biomedicals
, one of the largest international suppliers of
biotechnology reagents and other research products. The
second company which Dr. Slilaty founded,
Genomics One Corporation
, later known
as
Alert B&C
Corporation
, conducted an initial public offering (IPO) of
its capital stock in 1999 and, on the basis of its ownership of Dr.
Slilaty’s patented TrueBlue® Technology,
Genomics One
became one of the key
participants in the Human Genome Project. Formerly a
research team leader of the
Biotechnology Research Institute
, a
division of the
National Research
Council of Canada
, Dr. Slilaty also served as a consultant
in a management and advisory capacity for a major Canadian
biotechnology company between 1995 and 1997 during which time the
company completed one of the largest biotechnology IPO‘s in
Canada. Dr. Slilaty is one of the pioneers of Gene Therapy
having developed the first gene delivery system applicable to
humans in 1983 [Science 220:725-727 (1983)]. Dr. Slilaty's other
distinguished scientific career accomplishments include the
discovery of a new class of enzymes, the S24 Family of Proteases
(IUBMB Enzyme Nomenclature: EC 3.4.21.88), development of the first
site-directed mutagenesis system applicable to double-stranded DNA,
cloning the gene for the first yeast-lytic enzyme (lytic
b-1,3-glucanase), developing a new molecular strategy for
increasing the rate of enzyme reactions, inventing a powerful new
cloning system for genomic cloning and gene discovery
(TrueBlue® Technology) and developing a new transcriptomics
technology for generating entire RNA profiles. These and other
works of Dr. Slilaty are cited in research papers, editorials,
review articles and textbooks. Dr. Slilaty received his
Ph.D. degree in Molecular Biology from the University of Arizona in
1983 and Bachelor of Science degree in Genetics and Biochemistry
from Cornell University in 1976. In addition, Dr.
Slilaty holds a position as Adjunct Professor at Université du
Québec in the Department of Microbiology and
Biotechnology. He devotes approximately 50% of his time
to our business affairs.
Dr. Abderrazzak
Merzouki
was appointed as a Director and our Chief Operating
Officer in February 2016. In addition to his new
positions with our Company, since January 2016 he has been
self-employed as a consultant in the fields of biotechnology and
pharmacology. From July 2007 through December 2016, Dr.
Merzouki worked at the Institute of Biomedical Engineering in the
Department of Chemical Engineering at Ecole Polytechnique de
Montreal, where he taught and acted as a senior scientist involved
in the research and development of plasmid and siRNA-based
therapies. Dr. Merzouki is a molecular biologist and an
immunologist with extensive experience in the area of gene therapy
where he performed several preclinical studies for pharmaceutical
companies involving the use of adenoviral vectors for cancer
therapy and plasmid vectors for the treatment of peripheral
arterial occlusions. Dr. Merzouki also has extensive
expertise in the design of expression vectors, and production and
purification of recombinant proteins. He developed
technologies for production of biogeneric therapeutic proteins for
the treatment of various diseases including cancer, diabetes,
hepatitis and multiple sclerosis. Dr. Merzouki obtained
his Ph.D. in Virology and Immunology from Institut Armand-Frappier
in Quebec and received his post-doctoral training at the University
of British Columbia and the BC Center for Excellence in HIV/AIDS
research. Dr. Merzouki has over 30 publications and 70
communications in various, highly respected scientific journals in
the field of cellular and molecular biology. He will
devote approximately 50% of his time to our business
affairs.
21
Camille Sebaaly
was
appointed as our Chief Financial Officer, Secretary and a Director
of our Company on October 15, 2009. Since 2001, Mr.
Sebaaly has been self-employed as a business consultant, primarily
in the biotechnology and biopharmaceutical sectors. He
held a number of senior executive positions in various areas
including, financial management, business development, project
management and finance. As an executive and an entrepreneur, he
combines expertise in strategic planning and finance with strong
skills in business development and deal structure and
negotiations. In addition, Mr. Sebaaly worked in
operations, general management, investor relations, marketing and
business development with emphasis on international business and
marketing of advanced technologies including hydrogen generation
and energy saving. In the area of marketing, Mr. Sebaaly
has evaluated market demands and opportunities, created strategic
marketing and business development plans, designed marketing
communications and launched market penetration
programs. Mr. Sebaaly was a cofounder of Advanomics
Corporation with Dr. Slilaty. Mr. Sebaaly graduated from
State University of New York at Buffalo with an Electrical and
Computer Engineering Degree in 1987. He devotes
approximately 50% of his time to our business affairs.
There
are no family relationships between any of our former or current
officers and directors.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16(a) of the Securities Exchange Act of 1934 (the “34
Act”) requires our officers and directors and persons owning
more than ten percent of the Common Stock, to file initial reports
of ownership and changes in ownership with the Securities and
Exchange Commission (“SEC”). Additionally,
Item 405 of Regulation S-K under the 34 Act requires us to
identify in our Form 10-K and proxy statement those individuals for
whom one of the above referenced reports was not filed on a timely
basis during the most recent year or prior years. To our best
knowledge, all reports that were required to be filed were filed,
but were filed late.
Code of Ethics
Our
board of directors has not adopted a code of ethics but plans to do
so in the near future.
Committees of the Board of Directors
There
are no committees of the Board of Directors but it is anticipated
that we will establish an audit committee, nominating committee and
governance committee once independent directors are appointed,
which is expected to occur in the near future.
The
following table sets forth information concerning all cash and
non-cash compensation awarded to, earned by or paid to our
executive officers. We do not currently have an established policy
to provide compensation to members of our Board of Directors for
their services in that capacity, although we may choose to adopt a
policy in the future.
22
SUMMARY COMPENSATION TABLE
|
|
|
|
Salary
|
Bonus
|
Option
Awards
|
All Other
Compensation
|
Total
|
|
Name and
Principal Position
|
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
|
|
|
|
|
|
|
|
|
Dr. Steve N. Slilaty
,
Chief Executive
Officer and Director
|
|
2015
|
-0-
|
|
|
50,000
(1)
|
50,000
|
|
|
|
2016
|
1,000
|
|
|
164,600
(2)
|
165,600
|
|
|
|
2017
|
155,641
(4)
|
|
|
112,000
(3)
|
267,641
|
|
|
|
|
|
|
|
|
|
|
Camille Sebaaly
,
Chief Financial
Officer and Director
|
|
2015
|
-0-
|
|
|
-0-
|
-0-
|
|
|
|
2016
|
4,597
|
|
|
164,600
(2)
|
169,197
|
|
|
|
2017
|
16,099
|
|
|
112,000
(3)
|
128,099
|
|
|
|
|
|
|
|
|
|
|
Abderrazzak Merzouki
,
Chief Operating
Officer and Director
|
|
2015
|
-0-
|
|
|
-0-
|
-0-
|
|
|
|
2016
|
-0-
|
|
|
164,600
(2)
|
164,600
|
|
|
|
2017
|
12,531
|
|
|
112,000
(3)
|
124,531
|
(1)
In consideration for services
valued at $50,000, Dr. Slilaty was issued 500,000 shares of Series
“B” Preferred Stock having 1,000 votes per share. The
Series “B” Preferred Stock is non-convertible,
non-redeemable, non-retractable and has a stated value of $0.10 per
share. These shares of Series B Preferred Stock are restricted and
may not be sold or transferred without prior written consent of the
Board of Directors of the Company.
(2)
In 2016, each member of our Board
of Directors was issued 26,000,000 and 12,000,000 shares of our
Common Stock valued at $80,600 and 84,000, respectively. These
Officers and Directors shares are restricted and may not be sold
without prior written consent of the Board of Directors of the
Company.
(3)
In 2017, each member of our Board
of Directors was issued 14,000,000 shares of our Common Stock
valued at $112,000. These Officers and Directors shares are
restricted and may not be sold without prior written consent of the
Board of Directors of the Company.
(4)
Includes
$147,695 paid to Advanomics Corporation, a company controlled by
our CEO.
Salaries are
established by our Board of Directors. We currently do
not have a Compensation Committee but expect to have one in place
in the future once we have independent directors. We
have not and do not expect to pay any other compensation to our
current executive officers or directors until such time as we are
able to secure adequate funding for our operations.
Employment Agreements
None of
our executive officers is party to an employment agreement with
us.
Stock Plan
We have
not adopted any stock option or other employee plans as of the date
of this Report. We may adopt such plans in the
future.
23
The
following table sets forth certain information regarding the
ownership of Common Stock and Preferred Stock voting with the
Common Stock as of the date of this Report by (i) each person known
to us to own more than 5% of our outstanding Common Stock as of the
date of this Report, (ii) each of our directors, (iii) each of our
executive officers, and (iv) all of our directors and executive
officers as a group. Unless otherwise indicated, all
shares are owned directly and the indicated person has sole voting
and investment power. The information provided is based upon
945,292,259 Common Shares and 500,000 Series B Preferred Shares
issued and outstanding as of the date of this Report.
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership
|
|
Percent of Common Class
|
|
Percent of Voting Shares
|
|
|
|
|
|
|
|
|
|
|
|
Common
Series B Preferred
|
|
Dr. Steve N. Slilaty
(1)
579 rue Lajeunesse
Laval, Quebec
Canada H7X 3K4
|
|
267,398,597
(2)
500,000,000
(3)
|
|
28.2%
0%
|
|
18.5%
34.5%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Dr. Abderrazzak Merrzouki
(1)
731 Place de l’Eeau Vive
Laval, Quebec
Canada H7Y 2E1
|
|
53,467,000
|
|
5.6%
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Camille Sebally
(1)
14464 Gouin West, #B
Montreal, Quebec
Canada H9H 1B1
|
|
181,703,300
(4)
|
|
19.2%
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Dr. Nabil Dabar
150 Cote Vertu, Suite 200
Montreal, Quebec
Canada H4N 1C6
|
|
49,219,661
|
|
5.2%
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All Officers and Directors
As Group (3 persons)
|
|
502,568,897
|
|
53.0%
|
|
69.2%
|
(1)
Officer and
Director.
(2)
Includes 215,014,224 shares held
in the name of Advanomics Corporation. Dr. Slilaty is an officer,
director and principal shareholder of Advanomics Corporation and,
as a result, controls the disposition of these
shares.
(3)
Comprised of 500,000 shares of
$0.10 par value Series “B” Preferred Stock having 1,000
votes per share. The Series “B” Preferred Stock is
non-convertible, non-redeemable, non-retractable and has a superior
liquidation value of $0.10 per share.
See
“PART II, Item 13 –
Certain Relationships and Related Party Transactions and Director
Independence.”
(4)
Includes
129,488,927 shares held in the name of 4019318 Canada, Inc. Mr.
Sebaaly is the sole officer and director of this company and, as a
result, controls the disposition of these
shares.
24
Related Party Transactions
On
November 27, 2014, we issued a note payable in the principal amount
of $128,000 to an individual who subsequently became a principal
shareholder. The note accrues interest at 10% per annum and was
convertible into shares of our Common Stock at a price of $0.20 per
share. On June 30, 2015, we renewed this note with the addition of
accrued interest of $7,540 and an origination fee of $25,600. The
new Note had a face value of $161,140 and accrued interest at 12%
per annum. The new note was due December 31, 2015, and was
convertible any time from the date of issuance into shares of our
Common Stock at a 35% discount from market price. On December 31,
2015, we again renewed this note with the addition of accrued
interest amounting to $9,668 and an origination fee of $32,228. The
new note now has a face value of $203,036 and accrues interest at
12% per annum. The new note was due June 30, 2016 and was
convertible anytime from the date of issuance into shares of our
Common Stock at a 35% discount from market price. In January 2016,
$38,036 of the principal was converted, leaving a principal balance
of $165,000. In connection therewith, 7,705,186 shares of our
Common Stock, valued $231,156 were issued generating a loss on
conversion of $193,120. On June 30, 2016, we renewed this note
again with the addition of accrued interest amounting to $9,852.
The renewed note had a face value of $174,852 and accrues interest
at 12% per annum. It was due on March 31, 2017. In October 2016,
$74,852 of the principal amount was converted, leaving a principal
balance of $100,000. On March 31, 2017, the note’s principal
balance of $100,000 plus accrued interest of $11,715 was renewed
for a period of 90 days under the same terms and conditions as the
previous note. The new note now had a face value of $111,715 and
matured on June 30, 2017. On June 30, 2017, the note’s
principal balance of $111,715 plus accrued interest of $3,342 was
renewed for a period of 90 days under the same terms and conditions
as its predecessor. The new note had a face value of $115,057 and
matured on September 30, 2017. On September 30, 2017, the
note’s principal balance of $115.057 plus accrued interest of
$3,480 was renewed for a period of 90 days under the same terms and
conditions as the previous note. The new note had a principal
balance of $118,537 and matured on December 31, 2017. On December
31, 2017 the note was renewed for a 12-month period under the same
terms and conditions as the prior note. The new note has a face
value of $122,093 and matures on December 31, 2018.
In
December 2016, we received monies from our CEO in exchange for a
note payable having a principal amount of $90,000 Canadian ($67,032
US) with interest at 12%. The note was convertible any time after
the date of issuance into shares of our Common Stock at
a price 35% below market value. In
addition, the
note was collateralized by all our assets. On
March 31, 2017, the note, together with all accrued interest
thereon and an additional principal amount of $3,000 Canadian paid
to us in March 2017, was renewed for a 90-day period under the same
terms and conditions as the original note. The new note now having
a face value of $96,021 Canadian ($72,198 US) was due on June 30,
2017. On June 30, 2017, the note, together with accrued interest of
$2,873 Canadian ($2,005 US), was renewed for a 90-day period under
the same terms and conditions as the original note except that the
new note is nonconvertible. The new note now having a face value of
$98,894 Canadian ($76,072US) was due on September 30, 2017. On
September 30, 2017, the note, together with accrued interest of
$2,991 Canadian ($2,397 US), was renewed for a 90-day period under
the same terms and conditions as its predecessor. The new note now
having a principal balance of $101,885 Canadian ($81,640 US)
matured on December 31, 2017. On December 31, 2017 the note was
renewed for a 12-month period under the same terms and conditions
as before except that this new note is unsecured and now
non-convertible. The new note has a face value of $104,942 Canadian
($83,649 US) and matures on December 31, 2018.
On
October 8, 2015, we acquired U.S. Patent Number 8,236,935 (the
“US Patent”) for the anticancer compound, Adva-27a from
a related entity (Advanomics Corporation), which includes all
rights to this intellectual property within the United States, in
exchange for an interest-free note payable for $4,320,000 (the
“October Patent Purchase Agreement”). On
December 28, 2015, we acquired the remaining worldwide issued and
pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 (the
“Worldwide Patents”) for the Adva-27a anticancer
compound from the same related entity (Advanomics Corporation) in
exchange for a note payable for $12,822,499 (the “December
Patent Purchase Agreement”). We believe that purchase of the
US Patent and the Worldwide Patents (the “Patents”)
would facilitate our ability to obtain the funding necessary to
complete the development and FDA approval process for Adva-27a. In
related party transactions, purchased patents are required to be
recorded at the purchase price or the book value on the
seller’s financial statements, whichever is lower. Effective
December 28, 2015, the parties agreed to amend the October Patent
Purchase Agreement and the December Patent Purchase Agreement.
Pursuant to the amendment agreements (the
“Amendments”), the Patents were purchased from the
related party, Advanomics Corporation, at Advanomics’ cost
less the amortization through December 28, 2015, the effective date
of the transfer. The Amendments amended the purchase price of the
Patents to $835,394, eliminated all cash payments obligations and
replaced the non-convertible notes totaling $17,142,499 with two
(2) convertible notes totaling $835,394 that automatically convert
into an aggregate of 321,305,415 shares of our Common Stock when we
successfully amend our Articles of Incorporation to increase our
authorized capital of Common Stock to 3 billion. In July 2016,
having completed the increase of our authorized capital to 3
billion shares of Common Stock, we issued the 321,305,415 Common
Shares to Advanomics thereby completing all aspects of the patent
purchase arrangements and securing direct ownership of all
worldwide patents and rights pertaining to Adva-27a.
25
In 2016
and 2017 our principal place of business was located at 469
Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada, H3N
1R4. This was also the location of our former licensor,
Advanomics Corporation, who provided this space to us on a rent
free basis.. Dr. Steve N. Slilaty, our Chief Executive
Officer and a Director, is an Officer, Director and principal
shareholder of Advanomics. Starting January 1, 2017 we
took over the lease from Advanomics until we moved to our current
location on June 1, 2017.
In
February and April 2016, we paid $30,000 and $50,487 to Advanomics
for the balance of 2015 licensing fees.
During
the fiscal year ended December 31, 2016, Advanomics Corporation
paid on our behalf $13,725 Canadian in patenting fees. Advanomics
was fully reimbursed by us in January 2017.
During
the fiscal ended December 31, 2017, we issued to our Board of
Directors 42,000,000 shares of par value $0.001 Common Stock valued
at $336,000 or $0.008 per share. During the same period, our
Directors and Officers were paid $184,271 in cash. Of this amount,
$147,695 was paid to Advanomics Corporation, a company controlled
by our CEO.
During
the period ended December 31, 2016, we issued 78,000,000 shares of
par value $0.001 Common Stock to our Directors and Officers valued
at $241,800 or $0.0031 per share. We also issued to the Board of
Directors 36,000,000 shares of $0.001Common Stock valued at
$252,000 or $0.0078 per share. In addition, we paid or Directors
and Officers $5,597 in cash.
Certain
members of our management, including Dr. Steve N. Slilaty, our
President, CEO and a Director and Camille Sebaaly, our Secretary,
CFO and a Director, hold similar positions with
Advanomics.
There
are no other related party transactions that are required to be
disclosed pursuant to Regulation S-K promulgated under the
Securities Act of 1933, as amended.
Director Independence
None of
our current directors are deemed “independent” pursuant
to SEC rules. We anticipate appointing independent
directors in the foreseeable future.
Fees Paid to Independent Registered Public Accounting
Firms
The
following table presents fees for professional audit services
rendered by B F Borgers CPA PC, our independent auditors, during
our fiscal year ended December 31, 2017 and 2016:
|
|
December
31,
2017
|
December
31,
2016
|
|
Audit
Fees
|
$
21.600
|
$
21,600
|
|
|
|
|
|
Tax
Fees
|
|
|
|
All Other
Fees
|
|
|
|
Total
|
$
21,600
|
$
21,600
|
Audit Fees
. Consist of amounts billed
for professional services rendered for the audit of our annual
financial statements included in our Annual Reports on Forms 10-K
for our fiscal years ended December 31, 2017 and 2014 and reviews
of our interim financial statements included in our Quarterly
Reports on Form 10-Q.
Tax Fees
. Consists of amounts
billed for professional services rendered for tax return
preparation, tax planning and tax advice.
All Other Fees
. Consists of
amounts billed for services other than those noted
above.
We do
not have an audit committee and as a result our entire board of
directors performs the duties of an audit committee. Our
board of directors evaluates the scope and cost of the engagement
of an auditor before the auditor renders audit and non-audit
services.
26
The
following exhibits are included herewith:
|
Exhibit No.
|
|
Description
|
|
|
List of
Subsidiaries
|
|
|
|
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
18 U.S.C. Section 1350
|
|
101.INS
|
XBRL
Instances Document
|
|
|
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
Following
are a list of exhibits which we previously filed in other reports
which we filed with the SEC, including the Exhibit No., description
of the exhibit and the identity of the Report where the exhibit was
filed.
|
No.
|
|
Description
|
|
Filed With
|
|
Date
|
|
|
Articles
of Incorporation
|
|
Form
SB-2 Registration Statement
|
|
October
19, 2007
|
|
|
|
Bylaws
|
|
Form
SB-2 Registration Statement
|
|
October
19, 2007
|
|
|
|
Articles
of Amendment (Name Change)
|
|
Form
8-K Dated November 2, 2009
|
|
November
6, 2009
|
|
|
|
Statement
of Share and Equity Capital Exchange
|
|
Form
10-Q For Quarter Ended 06/30/10
|
|
August
4, 2010
|
|
|
|
Articles
of Amendment (Add Preferred and Series A Preferred to
Authorized)
|
|
Form
10-Q For Quarter Ended 06/30/10
|
|
August
4, 2010
|
|
|
|
Share
Exchange Agreement with Sunshine Biopharma, Inc.
|
|
Form
8-K Dated October 15, 2009
|
|
October
20, 2009
|
|
|
|
License
Agreement with Advanomics, Inc.
|
|
Form
8-K/A1 Dated October 15, 2009
|
|
January
19, 2010
|
|
|
|
Amendment
No. 1 to License Agreement with Advanomics, Inc.
|
|
Form
8-K/A1 Dated October 15, 2009
|
|
January
19, 2010
|
|
|
|
Research
Agreement with The Research Foundation of the State University of
New York
|
|
Form
8-K Dated January 17, 2011
|
|
January
19, 2011
|
|
|
|
Research
Agreement with Jewish General Hospital
|
|
Form
8-K Dated June 14, 2011
|
|
June
17, 2011
|
|
|
|
Amendment
No. 2 to License Agreement with Advanomics
|
|
Form
8-K Dated December 21, 2011
|
|
December
27, 2011
|
|
|
|
Investment
Agreement with Dutchess Investment Group II
|
|
Form 8-K dated
April 28, 2014
|
|
April 28,
2014
|
|
|
|
Registration
Rights Agreement with Dutchess Investment Group II
|
|
“
|
|
“
|
|
|
|
Patent
Purchase Agreement with Advanomics Corporation
|
|
Form
8-K dated October 8, 2016
|
|
October 9,
2016
|
|
|
|
Second
Patent Purchase Agreement with Advanomics Corporation
|
|
Form 8-K dated
December 28, 2015
|
|
December 28,
2015
|
|
|
|
Amendment
No. 1 to Patent Purchase Agreement with Advanomics Corporation
dated October 8, 2016, including Secured Convertible Promissory
Note.
|
|
Form 8-K dated
March 14, 2016
|
|
March 14,
2016
|
|
|
|
Amendment
No. 1 to Patent Purchase Agreement with Advanomics Corporation
dated December 28, 2016, including Secured Convertible Promissory
Note
|
|
Form 8-K dated
March 14, 2016
|
|
March 14,
2016
|
27
SIGNATURES
Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this Annual Report to be
signed on its behalf by the undersigned thereunder duly
authorized.
|
|
SUNSHINE BIOPHARMA, INC.
|
|
|
|
|
|
|
|
|
Dated:
April 2, 2018
|
By:
|
/s/ Dr.
Steve N. Slilaty
|
|
|
|
|
Dr.
Steve N. Slilaty, Principal Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Camille Sebaaly
|
|
|
|
|
Camille
Sebaaly, Principal Financial and Accounting Officer
|
|
|
|
|
|
|
In
accordance with the Exchange Act, this Annual Report has been
signed below by the following persons on behalf of the registrant
and in the capacities indicated on April 2, 2018.
s/ Dr. Steve N. Slilaty
Dr.
Steve N. Slilaty, Director
s/ Camille Sebaaly
Camille
Sebaaly, Director
s/ Dr. Abderrazzak Merzouki
Dr.
Abderrazzak Merzouki, Director
28
TABLE OF CONTENTS
Part IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Mine Safety DisclosuresPart IIItem 5. Market For Registrant S Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity SecuritiesItem 6. Selected Financial DataItem 7. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataNote 1 Description Of BusinessNote 2 Summary Of Significant Accounting PoliciesNote 3 Going ConcernNote 4 PatentsNote 5 Capital StockNote 6 Earnings Per ShareNote 7 Income TaxesNote 8 Notes PayableNote 9 Notes Payable Related PartyNote 10 Related Party TransactionsNote 11 Royalties PayableNote 12 Acquisition Of Atlas Pharma IncNote 13 Subsequent EventsItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPart IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions and Director IndependenceItem 14. Principal Accounting Fees and ServicesPart IVItem 15. Exhibits, Financial Statement Schedules