SUNSHINE BIOPHARMA, INC
10-Ks and 10-Qs
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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,
2020
☐
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)
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Colorado
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20-5566275
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(State
or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification No.)
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6500 Trans-Canada Highway
4th Floor
Pointe-Claire, Quebec, Canada H9R 0A5
(Address
of principal executive offices)
(514) 426-6161
(Registrant’s
Telephone Number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
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Title
of each class
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Name of
each exchange on which registered
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Common Stock, par value $0.001 per share
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OTC Markets Pink
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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 Exchange Act. Yes
☐
No
☑
Indicate
by check mark whether the registrant (1) has 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 whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes
☑
No
☐
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (§ 229.405 of this chapter) 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.
☑
No
☐
Yes
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):
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Large accelerated filer
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☐
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Accelerated filer
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Non-accelerated
filer
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☒
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Smaller reporting company
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☒
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Emerging
growth company
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☒
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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, 2020 was $2,790,475.
As of
March 30, 2021, the Registrant had 465,005,925 shares of Common
Stock issued and outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE - None
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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.
P
ART I
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
services to small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license (the
“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 Biopharma, Inc.’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.
In October 2012, we published the results of our
initial preclinical studies of Adva-27a in the peer-reviewed
journal,
ANTICANCER RESEARCH. The preclinical studies were
conducted in collaboration with Binghamton University, a State
University of New York. The publication is entitled
“Adva-27a, a Novel Podophyllotoxin Derivative Found to Be
Effective Against Multidrug Resistant Human Cancer Cells”
[ANTICANCER RESEARCH Volume 32, Pages 4423-4432
(2012)].
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. In April and June 2016 Sunshine Canada
signed licensing agreements for four (4) generic prescription drugs
for the treatment of breast cancer, prostate cancer and BPH (Benign
Prostatic Hyperplasia).
In
January 2018, we acquired all of the issued and outstanding shares
of Atlas Pharma Inc. (“Atlas”), a Health Canada
certified company dedicated to chemical analysis of pharmaceutical
and other industrial samples. Effective April 1, 2019, we
re-assigned all of our stock in Atlas back to the original owner in
exchange for the Atlas related debt. See “Discontinued
Analytical Chemistry Services Operations” below for a more
detailed explanation of this acquisition and the subsequent
disposition thereof in April 2019.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a wholly owned
Colorado corporation, and assigned all of our interest in our
Adva-27a anticancer compound to that company. NOX Pharmaceuticals,
Inc.’s mission is to research, develop and commercialize
proprietary drugs including Adva-27a.
In
December 2018, we completed the development of a new nutritional
supplement which we trademarked Essential 9™. This new
supplement is an over-the-counter tablet comprised of the nine
amino acids which the human body cannot make. Essential 9™
has been authorized for marketing by Health Canada under NPN
80089663. On March 12, 2019, Essential 9™ became available
for sale on Amazon.ca and shortly thereafter on
Amazon.com.
3
Effective February
1, 2019, we completed a 20 to 1 reverse split of our $0.001 par
value Common Stock reducing the issued and outstanding shares of
Common Stock from 1,713,046,242 to 85,652,400 (the “First
Reverse Stock Split”). The number of authorized shares of our
$0.001 par value Common Stock remained at 3,000,000,000
shares.
In
November 2019, we received Health Canada approval for a new
Calcium-Vitamin D supplement. Health Canada issued NPN 80093432
through which it authorized us to manufacture and sell the new
Calcium-Vitamin D supplement under the brand name Essential
Calcium-Vitamin D
tm
.
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) 426-6161 and our website
address is
www.sunshinebiopharma.com
.
Business Operations
2020 Events
Effective April 6,
2020, we completed another 20 to 1 reverse split of our $0.001 par
value Common Stock, reducing the issued and outstanding shares of
Common Stock from 1,193,501,925 to 59,675,417 (the “Second
Reverse Stock Split”). The authorized capital of our Common
Stock remained as previously established at 3,000,000,000 shares.
Except in the paragraphs describing the reverse stock splits, all
references in this Report to our Common Stock as well as the price
per share of Common Stock are presented on a post First and Second
Reverse Stock Splits basis.
On May
22, 2020, we filed a patent application in the United States for a
new treatment for Coronavirus infections, including COVID-19. Our
patent application covers composition subject matter pertaining to
small molecules for inhibition of the main Coronavirus protease
(Mpro), an enzyme that is essential for viral replication. The
small molecules covered by the patent application were computer
modelled and designed by Dr. Steve N. Slilaty, our CEO. The patent
application has a priority date of May 22, 2020.
On June
17, 2020, we filed an amendment to our Articles of Incorporation
(the “Amendment”) with the Secretary of State for the
State of Colorado, to eliminate the Series “A”
Preferred Shares consisting of Eight Hundred and Fifty Thousand
(850,000) shares, par value $0.10 per share, and the designation
thereof, such shares to be returned to the status of undesignated
shares of Preferred Stock. In addition, the Amendment increased the
number of authorized Series “B” Preferred Shares from
Five Hundred Thousand (500,000) to One Million (1,000,000)
shares.
Also on
June 17, 2020, our Board of Directors authorized the issuance of
Five Hundred Thousand (500,000) shares of our Series
“B” Preferred Stock in favor of Dr. Steve N. Slilaty,
our CEO and a director, in consideration for his development of a
new treatment for Coronavirus infections, including COVID-19. The
Series “B” Preferred Stock is non-convertible,
non-redeemable, non-retractable and has a superior liquidation
value of $0.10 per share. Each share of Series “B”
Preferred Stock is entitled to 1,000 votes per share. This issuance
brought the total number of Series “B” Preferred Stock
held by Dr. Slilaty to 1,000,000 shares.
On
September 8, 2020, we executed a financing agreement with RB
Capital Partners, Inc., La Jolla, CA, who has agreed to provide us
with a minimum of $2 million in convertible debt financing over the
next three to six months pursuant to the terms and conditions
included in relevant Promissory Notes (the “Promissory
Notes”). The Promissory Notes bear interest at the rate of 5%
per annum and are fully convertible into shares of shares of our
Common Stock at a conversion price equal to the market value of our
Common Stock on the applicable conversion date or $0.30 per share,
whichever is greater. The Promissory Notes have a maturity date of
two years from the date of issuance and must be fully converted on
or before the maturity date. We have the right under these
Promissory Notes to pay off all or any part of the Promissory Notes
at any time without penalty. As of the date of this Report, we have
received a total of $2,050,000 in funding under this
agreement.
Effective October
6, 2020, we entered into a Research Agreement (the
“Agreement”) with the University of Georgia Research
Foundation, Inc. (“UGARF”), representing the University
of Georgia (“UGA”). The purpose of the Agreement is to
memorialize the terms of our working together with UGA to conduct
the necessary research and development to advance our
Anti-Coronavirus lead compound, SBFM-PL4 (or derivatives thereof)
through various stages of preclinical development, animal studies
and clinical trials for Coronavirus infections. The Agreement
grants us an exclusive worldwide license for all of the
intellectual property developed by UGA, whether alone or jointly
with us.
4
Proprietary Drug Development Operations
SBFM-PL4 Anti-Coronavirus Treatment
Viruses
carry minimal genetic information as they rely, for the most part,
on host cellular machinery to multiply. Coronavirus has a
positive-sense RNA genome consisting of approximately 30,000
nucleotides, a genome size that places it among the larger sized
viruses. A positive-sense RNA genome is effectively a messenger RNA
which allows the virus to express its genes immediately upon
gaining entry into the host cell without the need for any prior
replication or transcription steps as is the case with
negative-sense RNA or DNA viruses. This is part of what makes
Coronavirus a highly aggressive pathogen. Many of the causative
agents of serious human diseases are positive-sense RNA viruses,
including Hepatitis C, Zeka, Polio, West Nile, Dengue, Cardiovirus,
and many others. Some positive-sense RNA viruses, such as the
rhinoviruses that cause the common cold, are less clinically
serious but they are responsible for widespread morbidity on a
yearly basis.
The
initial genome expression products of Severe Acute Respiratory
Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of
COVID-19, are two large polyproteins, referred to as pp1a and
pp1ab. These two polyproteins are cleaved at 15 specific sites by
two virus encoded proteases (Mpro and PLpro) to generate 16
different non-structural proteins essential for viral replication.
Mpro and PLpro represent an attractive anti-viral drug development
targets as they play a central role in the early stages of viral
replication. The crystal structure of Mpro shows the presence of an
active site Cysteine (Cys145) and a coordinated active site
Histidine (His41), both of which are essential for the
enzyme’s proteolytic activity. Similarly, PLpro, also a
Cysteine Protease, has an active site Cysteine at position 112 and
a Histidine at 273. The following is a summary of the development
to date of our Coronavirus Treatment project:
●
On May
22, 2020, we filed a patent application in the United States for a
new treatment for Coronavirus infections. Our patent application
covers composition subject matter pertaining to small molecules for
inhibition of the Coronavirus main protease (Mpro), an enzyme that
is essential for viral replication. The small molecules covered by
the patent application were computer modelled and designed by Dr.
Steve N. Slilaty, our CEO. The patent application has a priority
date of May 22, 2020.
●
In
August 2020, we completed the synthesis of four different potential
inhibitors of Coronavirus protease. These compounds are based on
the technology described in our patent application filed on May 22,
2020.
●
In
September 2020, we completed the screening of our four compounds
and subsequently identified a lead Anti-Coronavirus drug candidate
(SBFM-PL4). The screening which pinpointed the lead compound was
performed at the University of Georgia, College of Pharmacy under
the leadership of Dr. Scott D. Pegan, Director of the Center for
Drug Discovery and Interim Associate Head of Pharmaceutical and
Biomedical Sciences.
●
In
October 2020, we expanded our collaboration with Dr. Scott Pegan
group by entering into a research agreement with the University of
Georgia to further develop our Anti-Coronavirus lead compound,
SBFM-PL4. We will proceed by conducting the in vitro studies
followed by cell culture assays and assessment in Coronavirus
infected mice before entering human clinical trials.
●
On
February 1, 2021, we entered into an exclusive license agreement
with the University of Georgia for two Anti-Coronavirus compounds
which the University of Georgia had previously developed and
patented. We are currently advancing the development of these two
compounds in parallel with our SBFM-PL4 by conducting a transgenic
mice study in collaboration with the University of Georgia. The
mice being used in the study have been genetically engineered to
express the human angiotensin-converting enzyme 2 (hACE2)
transmembrane protein in their lungs making them susceptible to
lethal infection by SARS-CoV-2, the causative agent of COVID-19.
The SARSCoV-2 virus uses the hACE2 receptor to gain entry into
human cells to replicate. The goal of the study is to determine if
our protease inhibitors will protect the hACE2-transgenic mice from
disease progression and death following infection with SARS-CoV-2
virus. Should these mice studies prove successful, we plan to
submit the results to the FDA for authorization to conduct testing
on actual COVID-19 patient volunteers in a Phase I clinical trial
setting. The implications of a COVID-19 treatment becoming
available are vast. This is particularly the case in view of the
fact that some of the variants emerging around the world are more
virulent and may escape neutralization by the current
vaccines.
Adva-27a Anticancer Drug
Since
inception, our proprietary drug development activities has 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. Patents Number 8,236,935 and
10,272,065.
Figure
1
5
Adva-27a
is a GEM-difluorinated C-glycoside derivative of Podophyllotoxin
(see Figure 1). 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 however, Adva-27a is able to
penetrate and 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 greater cell killing activity
(see Figure 2).
Figure
2
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.
6
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)
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.
According to the
American Cancer Society, nearly 1.5 million new cases of cancer are
diagnosed in the U.S. each year. While particularly effective
against Multidrug Resistant Cancer, we believe Adva-27a can
potentially treat all cancer types, particularly those in which
Topoisomerase II has been amplified. 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
on our own. The following, Figure 3, is a space-filling molecular
model of our Adva-27a.
Figure 3
7
Generic Pharmaceuticals Operations
In
2016, our Canadian wholly owned subsidiary, Sunshine Biopharma
Canada Inc. (“Sunshine Canada”), signed Licensing
Agreements with a major pharmaceutical company for four
prescription generic drugs for the treatment of Breast Cancer,
Prostate Cancer and Enlarged Prostate. We have since 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)
Sunshine Canada is
currently in the process of securing a Drug Identification Number
(“DIN”) for each of these products from Health Canada.
We are also required to obtain 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 for our obtaining
either the DIN’s or the DEL due to variables involved that
are out of our control. Figure 4 shows our 30-Pill blister pack of
Anastrozole.
Figure
4
We
currently have a number of additional Generic Pharmaceuticals under
review for in-licensing. While no assurances can be provided that
we will acquire the rights to any additional generic drugs, we
believe that a larger product portfolio will provide us with more
opportunities and a greater reach into the
marketplace.
Various
publicly available sources indicate that the worldwide sales of
generic pharmaceuticals are over $500 billion per year. In the
United States and Canada, the sales of generic pharmaceuticals are
approximately $115 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 a small percentage of the generic pharmaceutical
marketplace.
8
Nutritional Supplements Operations
In
December 2018, we completed the development of Essential
9
tm
,
the first in a line of essential micronutrients products that we
are planning to launch. On December 14, 2018, Health Canada issued
NPN 80089663 through which it authorized Sunshine Biopharma Inc. to
manufacture and sell the Essential 9
tm
product. Our Essential 9
tm
nutritional supplement tablets contain a balanced formula of the 9
Essential Amino Acids that the human body cannot make. Essential
Amino Acids are 9 out of the 20 amino acids required for protein
synthesis. Proteins are involved in all body functions – From
the musculature and immune system to hormones and
neurotransmitters. Like vitamins, Essential Amino Acids cannot be
made by the human body and must be obtained through diet.
Deficiency in one or more of the 9 Essential Amino Acids can lead
to loss of muscle mass, fatigue, weight gain and reduced ability to
build muscle mass in athletes. Sunshine Biopharma’s Essential
9
tm
provides all 9 Essential Amino Acids in freeform and in the
proportions recommended by Health Canada. Essential 9
tm
is currently available on Amazon.com and Amazon.ca. Figure 5 below
shows our 60-Tablet Essential 9
tm
product.
Figure
5
In
November 2019, we received Health Canada approval for another
nutritional supplement, a new Calcium-Vitamin D tablets. Health
Canada issued NPN 80093432 through which it authorized us to
manufacture and sell the new Calcium-Vitamin D supplement under the
brand name Essential Calcium-Vitamin D™.
Vitamin
D is a group of steroid-like molecules responsible for increasing
intestinal absorption of calcium, magnesium, and phosphate. They
are also involved in multiple other biological functions, including
proper functioning of the immune system, promoting healthy growth
of bone, and reduction of inflammation. The most important
compounds in this group are Vitamin D2 (ergocalciferol) and Vitamin
D3 (cholecalciferol). Sunshine Biopharma’s Essential
Calcium-Vitamin D™ tablets contain both of these compounds as
well as Calcium for optimum health benefits. We anticipate that
Essential Calcium-Vitamin D™ will be available on Amazon.ca
in early 2021.
9
Discontinued Analytical Chemistry Services Operations
On
January 1, 2018, we acquired all of the issued and outstanding
shares of Atlas Pharma Inc. (“Atlas”), a privately held
Canadian company providing analytical chemistry testing services
(“Atlas Business”). The purchase price for the shares
was $848,000 Canadian ($676,748 US). The purchase price included
cash payment of $100,500 Canadian ($80,289 US), plus the issuance
of 50,000 shares of the Company’s Common Stock valued at
$238,000, and a promissory note in the principal amount of $450,000
Canadian ($358,407 US), with interest payable at the rate of 3% per
annum (“Atlas Note”).
Effective April 1,
2019, we disposed of Atlas by re-assigning all of our stock in
Atlas back to the original owner in exchange for the Atlas Note. As
a consequence of the sale, the operating results and the assets and
liabilities of the discontinued Atlas Business are presented
separately in the Company's financial statements as Discontinued
Operations. In additions, prior period balances have been
reclassified to present the operations of the Atlas Business as
Discontinued Operations.
Intellectual Property:
Licenses/Patents/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 (US Patent Number 8,236,935)
and India. The patent application filed in the U.S.
under PCT/CA2014/000029 has recently been issued (US Patent Number
10,272,065). The remaining international patent applications filed
under the same PCT are still pending.
In 2016
we signed Licensing 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.
In 2018
we completed the development of Essential 9
tm
,
our first nutritional supplement. On December 14, 2018, Health
Canada issued NPN 80089663 through which it authorized Sunshine
Biopharma Inc. to manufacture and sell the Essential 9
tm
product. We are currently preparing the necessary documents for
registration of our Essential 9
tm
trademark in the United States.
In
November 2019, we received Health Canada approval for another
nutritional supplement, a new Calcium-Vitamin D tablets. Health
Canada issued NPN 80093432 through which it authorized us to
manufacture and sell the new Calcium-Vitamin D supplement under the
brand name Essential Calcium-Vitamin D
tm
.
On May
22, 2020, we filed a patent application in the United States for a
new treatment for Coronavirus infections, including COVID-19. The
patent application covers composition subject matter pertaining to
small molecules for inhibition of the main Coronavirus protease
(Mpro), an enzyme that is essential for viral replication. The
United States Patent and Trademark Office publishes patent
applications twelve (12) to eighteen (18) months from the date of
filing.
On
February 1, 2021, we entered an exclusive license agreement with
the University of Georgia for two Anti-Coronavirus compounds which
the University of Georgia had previously developed and patented. In
collaboration with the University of Georgia, we are currently
advancing the development of these two compounds in parallel with
our own SBFM-PL4 compound.
Government Regulations
All of
our business operations, including the Proprietary Drug Development
Operations, the Generic Pharmaceutical Operations, and Nutritional
Supplements 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
and nutritional supplements is the U.S. Food and Drug
Administration (“FDA”). The Canadian counterpart to the
FDA is Health Canada. Both the FDA and Health Canada have similar
requirements for drugs and supplements to be approved for
marketing. In Canada, drugs and nutritional supplements are
authorized through the issuance by Health Canada of a Drug
Identification Number (DIN) and a Natural Product Number (NPN) on a
per product basis, respectively. In both the U.S. and Canada, the
quality standards for brand name drugs and generic drugs are the
same. In addition, the ingredients, manufacturing processes and
facilities for all drugs and supplements 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 requirements for that product.
In
connection with our development of the Anti-Coronavirus treatment,
SBFM-PL4, and the Anti-Cancer compound, Adva-27a, we will be
subject to significant regulations in the U.S. in order to obtain
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 and give the go ahead for the drug
developer 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
for “compassionate-use” if the drug treats terminally
ill patients with limited other 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 discussions with
clinicians and as a result we believe that Health Canada is
likely to grant us a so-called “fast-track” process on
the basis of the ongoing COVID-19 pandemic and the terminal nature
of the cancer type we are planning to treat. There are no
assurances this will occur.
10
Employees
As of
the date of this Report we have three (3) employees, comprised of
our management team. Presently, most of our development and
marketing activities are subcontracted out to specialized service
providers. As our business activities expand, we anticipate that we
will need additional employees in the areas of accounting,
regulatory affairs, marketing, sales and laboratory
personnel.
Competition
Our
Anti-Coronavirus drug development project is in direct competition
with over 34 companies working on vaccine or treatment options for
COVID-19. Among the companies working on vaccines are Pfizer,
Moderna, AstraZeneca, GlaxoSmithKline, Johnson & Johnson, and
Sanofi. The companies focused on treatments include AbbVie, Amgen,
Bayer, Biogen, Gilead, Eli Lilly, Novartis, Regeneron, Roche, and
Takeda. As of December 31, 2020, two (2) vaccines (Pfizer’s
and Moderna’s) and three (3) treatments (Regeneron’s,
Eli Lilly’s, and Gilead’s) have been approved by the
FDA for emergency use. While these vaccines and treatment options
are effective, we believe that additional, more convenient
treatment options continue to be essential as gaps, lapses, and
hospital admissions will likely persist. A treatment such as the
one we are developing which can be taken orally at home, will form
an important complement for vaccination and the current treatments
which must be administered intravenously.
In the
area of proprietary anticancer drug development, we are 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
Merck, Amgen, Roche, Pfizer, Bristol-Myers Squibb and Novartis, to
name a few, have on-going anticancer drug development programs and
some of the drugs they may develop could be in direct competition
with our own. Also, a number of small companies are also
working in the area of cancer therapy 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 billion. With our offering of Canadian approved
generic products, we believe that we will be able to access a small
percentage of the generic pharmaceuticals market.
Similarly, our
Essential 9
tm
and Essential Calcium-Vitamin D
tm
together with our other planned line of nutritional supplement
products fall directly within a very crowded and highly competitive
product sector. As of the date of this Report we believe, Essential
9
tm
is the only Essential Amino Acid product that comprises all 9
essential amino acids in tablet form. We also believe this may
provide us with a competitive advantage, at least for the near
future but there are no assurances that this will
occur.
I
TEM 1A. RISK FACTORS
We are
a smaller reporting company and not required to include this
disclosure in this Report.
I
TEM 1B. UNRESOLVED STAFF
COMMENTS
None.
I
TEM 2. PROPERTIES
Our
principal place of business is located at 6500 Trans-Canada
Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5. We pay a
monthly fee of $261 (Canadian), including applicable taxes for use
of the available space and services. We are not party to a lease
agreement in connection with this service. Additional office space
and conference rooms are available to us on a pay-per-use basis.
Our arrangement in connection with this office has no short-term or
long-term asset or liability value.
We
believe that our existing facilities and equipment are adequate. We
continuously review our anticipated requirements for facilities and
equipment, and on the basis of such reviews, may from time to time
acquire additional facilities or equipment, or dispose of some of
the existing space or equipment.
11
I
TEM 3. LEGAL PROCEEDINGS
In June
2018 we filed an action in the Superior Court of the Province of
Quebec in the District of Montreal (Canada) against one of our
existing shareholders residing in Quebec City (Canada) arising out
of a possible equity investment intended to be completed by August
2018. The complaint alleges among other things, claims of
misrepresentations and misleading conduct resulting in damages to
us in an amount of approximately $200,000 Canadian (approximately
$154,000 US). On April 1, 2019, a note payable held by the
defendant having a face value of $100,000 Canadian (approximately
$76,000 US) became due and payable (the “Subject
Note”). We elected not to pay the amount due under the
Subject Note and petitioned the courts to link this matter to the
ongoing litigation. On March 6, 2020, the Superior Court in the
District of Montreal granted our motion and the two proceedings
were linked. A date for the hearings to commence was subsequently
set for November 16, 2020. On November 10, 2020, we elected to pay
off the Subject Note together with accrued interest and terminate
the proceedings.
To the
best of our management’s knowledge and belief, there are no
other material claims that have been brought against us nor any
claims threatened.
I
TEM 4. MINE SAFETY
DISCLOSURES
Not
applicable.
12
P
ART II
I
TEM 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market Information
Trading
of our Common Stock commenced on the OTCBB 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.
In the
third quarter of 2016 our Common Stock began trading on OTC Markets
Pink (otcmarkets.com) because the price of our stock had dropped
below $0.01 per share.
Effective February
1, 2019 we completed a 20 to 1 reverse split of our $0.001 par
value Common Stock, reducing the issued and outstanding shares of
Common Stock from 1,713,046,242 to 85,652,400 (the “First
Reverse Stock Split”).
Effective April 6,
2020, we completed another 20 to 1 reverse split of our $0.001 par
value Common Stock, reducing the issued and outstanding shares of
Common Stock from 1,193,501,925 to 59,675,417 (the “Second
Reverse Stock Split”). The authorized capital of our $0.001
par value Common Stock remained as previously established at
3,000,000,000 shares.
The
table below sets forth the reported high and low transaction prices
for the periods indicated taking into account and giving
retroactive effect to the First and Second Reverse Stock
Split.
|
Quarter Ended
|
High
|
Low
|
|
|
|
|
|
March 31,
2019
|
$
0.1600
|
$
0.1600
|
|
June 30,
2019
|
$
0.0980
|
$
0.0700
|
|
September 30,
2019
|
$
0.0460
|
$
0.0360
|
|
December 31,
2019
|
$
0.0100
|
$
0.0080
|
|
March 31,
2020
|
$
0.0060
|
$
0.0020
|
|
June 30,
2020
|
$
0.0110
|
$
0.0070
|
|
September 30,
2020
|
$
0.0185
|
$
0.0170
|
|
December 31,
2020
|
$
0.0169
|
$
0.0150
|
As of March 29,
2021, the closing price of our Common Stock was $0.1060 per
share.
Trading
volume in our Common Stock varies between a few million 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 (“Commission” or
“SEC”) has 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.
13
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
147 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.”
Our
CEO, Dr. Steve N. Slilaty, holds all 1,000,000 shares of our Series
“B” Preferred Stock issued in 2015 and
2020.
Stock Transfer Agent
The
stock transfer agent for our securities is Equiniti Trust Company.
Their address is 1110 Centre Pointe Curve, Suite 101, Mendota
Heights, Minnesota 55120. Their phone number is (800) 468-9716 and
web address is www.shareowneronline.com.
14
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. In addition, we are subject
to similar reporting requirements in Canada and all reports and
information filed by us in Canada can be found at
www.sedar.com.
I
TEM 6. SELECTED FINANCIAL
DATA
Not
applicable.
I
TEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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
services to small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license (the
“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 Biopharma, Inc.’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.
15
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. In April and June 2016 Sunshine Canada
signed licensing agreements for four (4) generic prescription drugs
for the treatment of breast cancer, prostate cancer and BPH (Benign
Prostatic Hyperplasia).
In
January 2018, we acquired all of the issued and outstanding shares
of Atlas Pharma Inc. (“Atlas”), a Health Canada
certified company dedicated to chemical analysis of pharmaceutical
and other industrial samples. Effective April 1, 2019, we
re-assigned all of our stock in Atlas back to the original owner in
exchange for the Atlas related debt. See “Discontinued
Analytical Chemistry Services Operations” below for a more
detailed explanation of this acquisition and the subsequent
disposition thereof in April 2019.
In
December 2018, we completed the development of a new nutritional
supplement which we trademarked Essential 9™. This new
supplement is an over-the-counter tablet comprised of the nine
amino acids which the human body cannot make. Essential 9™
has been authorized for marketing by Health Canada under NPN
80089663. On March 12, 2019, Essential 9™ became available
for sale on Amazon.ca and shortly thereafter on
Amazon.com.
Effective February
1, 2019, we completed a 20 to 1 reverse split of our $0.001 par
value Common Stock reducing the issued and outstanding shares of
Common Stock from 1,713,046,242 to 85,652,400 (the “First
Reverse Stock Split”). The number of authorized shares of our
$0.001 par value Common Stock remained at 3,000,000,000
shares.
Effective April 6,
2020, we completed another 20 to 1 reverse split of our $0.001 par
value Common Stock, reducing the issued and outstanding shares of
Common Stock from 1,193,501,925 to 59,675,417 (the “Second
Reverse Stock Split”). The authorized capital of our Common
Stock remained as previously established at 3,000,000,000 shares.
Except in the paragraphs describing the reverse stock splits, all
references in this Report to our Common Stock as well as the price
per share of Common Stock are presented on a post First and Second
Reverse Stock Splits basis.
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) 426-6161 and our website address is
www.sunshinebiopharma.com.
We have
never been subject to any bankruptcy, receivership or similar
proceeding.
16
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 minimal revenues and
significant losses from operations. We will, in all likelihood,
sustain operating losses without corresponding revenues for the
immediate future. See “ITEM 8. Financial
Statements and Supplementary Data.”
Results Of Operations
Comparison of Results of Operations for the fiscal years ended
December 31, 2020 and 2019
During
our fiscal year ended December 31, 2020, we generated revenues of
$71,410, compared to revenues of $21,121 in 2019. All of these
revenues were generated from our Nutritional Supplements operations
which we launched in the first quarter of 2019. The cost of sales
in 2020 and 2019 for generating these revenues was $25,847 and
$11,050, respectively.
General
and administrative expenses for our fiscal year ended December 31,
2020 were $622,437, compared to $651,707 during our fiscal year
ended December 31, 2019, a decrease of $29,270. The expense
categories that saw a decrease included accounting, which decreased
by $7,729, legal fees by $17,609, consulting by $58,764, research
and development by $13,476, and executive compensation by $5,322.
The only general and administrative category that saw an increase
was office expenses which increased by $73,338 due to expenses
related to expansion of our Nutritional Supplements
operations.
We also
incurred $168,105 in interest expense and $2,057,513 in losses from
debt conversion during the year ended December 31, 2020, compared
to $115,901 in interest expense and $314,752 in losses from debt
conversion during the similar period in 2019. The increase in
interest expense and losses from debt conversion in 2020 was due to
an increase in issuance of convertible debt
instruments.
As a
result, we incurred a net loss of $2,784,091 (approximately $0.01
per share) for the year ended December 31, 2020, compared to a net
loss of $1,660,291 (approximately $0.15 per share) during the year
ended December 31, 2019.
Liquidity and Capital Resources
As of
December 31, 2020, we had cash and cash equivalents of
$989,888.
As
discussed in Note 3 to the consolidated financial statements
included in this Report for going concern, we have incurred
significant continuing losses in 2020 and 2019, and the total
accumulated deficits were $20.2 million and $17.4 million as of
December 31, 2020 and 2019, respectively. We also used cash for
operations of $657,299 and $495,798 for the years ended December
31, 2020 and 2019, respectively. Our ability to continue operating
is highly dependent upon continued funding from the debt and equity
markets. Based on past experience, we believe that we will be able
to raise the necessary capital to continue operations. We must
continue to rely on proceeds from debt and equity issuances to fund
ongoing operating expenses to date, which could raise substantial
doubt about our ability to continue as a going concern. The
consolidated financial statements included in this Report have been
prepared assuming that our Company will continue as a going concern
and, accordingly, do not include any adjustments that may result
from the outcome of this uncertainty.
Net
cash used in operating activities was $657,299 during our fiscal
year ended December 31, 2020, compared to $495,798 during our
fiscal year ended December 31, 2019. We anticipate that
our cash requirements for our operations will increase in the
future before we reach profitability levels
, of which there is
no assurance.
Cash
flows used in investing activities were $1,191 during our fiscal
year ended December 31, 2020. For the fiscal year ended
December 31, 2019, cash flows used in investing activities were
$15,276 arising primarily out of the purchase of computer and
related equipment. Net cash flows provided by financing
activities totaled $1,608,253 in 2020, compared to $442,255 during
our fiscal year ended December 31, 2019.
We have
issued convertible and non-convertible Notes Payable to both
related and unaffiliated parties in order to fund our operations.
Our
Notes Payable transactions at
December 31, 2020 consisted of the following:
●
On
April 1, 2017, we received monies in exchange for a Note Payable
having a Face Value of $100,000 Canadian (approximately $77,700 US)
with interest payable quarterly at 9%, which Note was due April 1,
2019. The Note is convertible any time after issuance into Common
Stock at a price of $0.015 Canadian (approximately $0.012 US) per
share. In June 2018, we filed an action in the Superior Court of
the Province of Quebec in the District of Montreal (Canada) against
the holder of this Note. The complaint alleges among other things,
claims of misrepresentations and misleading conduct resulting in
damages to us in an amount of approximately $200,000 Canadian
(approximately $155,400 US). A date for the hearings to commence
was set for November 16, 2020. On November 10, 2020, we elected to
pay off this Note together with accrued interest of $14,696
Canadian (approximately $11,400 US) and terminate the proceedings.
See “ITEM 3 Legal Proceedings.”
17
●
On September 10, 2018, we issued two Notes Payable
having an aggregate Face Value of $36,500 with interest accruing at
8%. The two Notes were issued for services rendered to us and had
maturity dates in June 2019. We were unable to pay the Notes and on
November 30, 2019 we issued a new Note which included accrued
interest and accelerated interest of $7,059 for a total Face Value
of $43,559. The new Note accrues interest at 8% and is convertible
after 180 days from issuance into Common Stock at a price 35% below
market value. The new Note was due August 31, 2020. During the year
ended December 31, 2020, the entire principal amount of $43,559 of
this Note plus accrued interest of $
2,
523 was converted into 14,198,048 shares of Common
Stock valued at $86,685 resulting in a loss of
$40,603.
●
On
December 24, 2018, we received monies in exchange for a Note
Payable having a Face Value of $87,000 with interest accruing at 8%
was due December 24, 2019. The Note was convertible after 180 days
from issuance Common Stock at a price 35% below market value. As of
December 31, 2020, the entire principal amount of $87,000 of this
Note plus accrued interest of $9,639 was converted into 43,986,317
shares of Common Stock valued at $276,396 resulting in a loss of
$161,036.
●
On
January 8, 2019, we received monies in exchange for a Note Payable
having a Face Value of $54,000 with interest accruing at 8% was due
January 8, 2020. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal
amount of $54,000 of this Note plus accrued interest of $9,814 was
converted into 44,931,640 shares of Common Stock valued at $365,787
resulting in a loss of $301,973.
●
On
February 5, 2019, we received monies in exchange for a Note Payable
having a Face Value of $37,450 with interest accruing at 8% was due
October 10, 2019. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal
amount of $37,450 of this Note plus accrued interest of $2,996 was
converted into 38,263,409 shares of Common Stock valued at $217,971
resulting in a loss of $182,790.
●
On
July 2, 2019, we received monies in exchange for a Note Payable
having a Face Value of $40,000 with interest accruing at 8% was due
April 30, 2020. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal
amount of $40,000 of this Note plus accrued interest of $1,600 was
converted into 13,099,359 shares of Common Stock valued at $58,684
resulting in a loss of $17,084.
●
On
July 26, 2019, we received monies in exchange for a Note Payable
having a Face Value of $50,000 with interest accruing at 8%, which
became due July 26, 2020. The Note is convertible after 180 days
from issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal of
$50,000 of this Note plus accrued interest of $4,909 was converted
into 43,522,363 shares of Common Stock valued at $131,370 resulting
in a loss of $76,461.
●
On
September 12, 2019, we received monies in exchange for a Note
Payable having a Face Value of $43,000 with interest accruing at 8%
is due July 15, 2020. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal
amount of $43,000 of this Note plus accrued interest of $1,720 was
converted into 38,855,726 shares of Common Stock valued at $117,177
resulting in a loss of $72,457.
●
On
December 14, 2019, we received monies in exchange for a Note
Payable having a Face Value of $42,800 with interest accruing at 8%
and which is due December 14, 2020. The Note is convertible after
180 days from issuance into Common Stock at a price 35% below
market value. During the year ended December 31, 2020, the entire
principal amount of $42,800 of this Note plus accrued interest of
$1,712 was converted into 18,592,605 shares of Common Stock valued
at $81,796 resulting in a loss of $37,284.
●
A
Note Payable dated December 31, 2019 having a Face Value of $30,120
and accruing interest at 12% was due December 31, 2020. On December
1, 2020, we paid off the entire principal balance of this Note,
together with accrued interest of $3,614 by issuing cash payment of
$33,734.
18
●
A
Note Payable dated December 31, 2018 having a Face Value of
$136,744 and accruing interest at 12% was due December 31, 2019. On
October 1, 2019, the holder of this note requested to convert
$30,000 in principal amount into 1,500,000 shares of Common Stock,
leaving a principal balance $106,744. On December 31, 2019, we
renewed the remaining principal balance of this Note, together with
accrued interest of $15,509 for a 12-month period. The new Note has
a Face Value of $122,253 and accrues interest at 12%. This Note
matures on December 31, 2020. On August 27, 2020, the holder of
this Note transferred all of its interest therein to a third party
and on September 4, 2020, we agreed to render the Note convertible
into Common Stock at $0.001 per share. During the year ended
December 31, 2020, an aggregate principal amount of $58,225 of this
Note plus accrued interest of $9,775 was converted into $68,000,000
shares of Common Stock valued at $1,286,400 resulting in a loss of
$1,218,400. This note is currently past due and we are currently in
discussion with the holder to extend the due date.
●
On
April 17, 2020, our Canadian subsidiary received a CEBA Loan
(Canada Emergency Business Account Loan) from CIBC (Canadian
Imperial Bank of Commerce) in the principal amount of $40,000
Canadian ($31,000 US) as part of the Canadian government’s
COVID-19 relief program. The CEBA Loan is non-interest bearing if
repaid on or before December 31, 2022 (the “Termination
Date”). The CEBA Loan is considered repaid in full if the
borrower repays 75% of the Principal Amount on or before the
Termination Date. If the CEBA Loan is not repaid in full on or
before the Termination Date, the lender will automatically extend
the term of the loan by three years until December 31, 2025 (the
“Extension Period”). During the Extension Period,
interest will be charged, and will accrue on the outstanding amount
of the CEBA Loan at a fixed rate of 5% per year, calculated daily
and compounded monthly. The outstanding balance of the CEBA Loan
and all accrued interest will be due at the end of the Extension
Period.
●
On
April 27, 2020, we received a Paycheck Protection Program loan in
the principal amount of $50,655 (“PPP Loan”) from the
US Small Business Administration (“SBA”) as part of the
US government’s COVID-19 relief program. This loan accrues
interest at the rate of 1% per annum. We are obligated to make
payments of principal and interest totaling $2,133 each month
commencing on November 27, 2020, with any remaining balances due
and payable on or before April 27, 2022. The proceeds derived from
this loan may only be used for payroll costs, interest on
mortgages, rent and utilities (“Admissible Expenses”).
In addition, the Paycheck Protection Program provides for
conditional loan forgiveness if we utilize at least 75% of the
proceeds from the PPP Loan to pay Admissible Expenses. On December
15, 2020, we applied to the funding bank for forgiveness of this
loan per SBA guidance. On December 18, 2020, we received
notification that the funding bank has approved forgiveness of our
PPP Loan in its entirety and that it has submitted a request to the
SBA for final approval. As of the date of this Report, no decision
has been rendered by the SBA.
●
On
June 1, 2020, we received monies in exchange for a Note Payable
having a Face Value of $42,000 with interest accruing at 8% is due
June 1, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 35% below market value. On December 2,
2020, we paid off the entire principal balance of this Note,
together with accrued interest and prepayment penalties of $13,435
by issuing cash payment of $55,435.
●
On
June 9, 2020, we received monies in exchange for a Note Payable
having a Face Value of $37,000 with interest accruing at 8% is due
June 9, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 35% below market value. On December 2,
2020, we paid off the entire principal balance of this Note,
together with accrued interest and prepayment penalties of $11,779
by issuing a cash payment of $48,779.
●
On July 7, 2020, we received monies in exchange for a Note Payable
having a Face Value of $48,000 with interest accruing at 8% is due
July 7, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 35% below market value.
We will analyze the
conversion feature of the note for a beneficial conversion feature
on the commitment date on January 3, 2021 which is 180 days after
the issuance date.
●
On July 27, 2020, we received monies in exchange for a Note Payable
having a Face Value of $102,000 with interest accruing at 8% is due
July 27, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 30% below market value.
We will analyze the conversion feature
of the note for a beneficial conversion feature on the commitment
date on January 23, 2021 which is 180 days after the issuance
date.
●
On August 14, 2020, we received monies in exchange for a Note
Payable having a Face Value of $67,000 with interest accruing at 8%
is due August 14, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 30% below market
value.
We will
analyze the conversion feature of the note for a beneficial
conversion feature on the commitment date on February 10, 2021
which is 180 days after the issuance date.
●
On September 14, 2020, we received monies in exchange for a Note
Payable having a Face Value of $250,000 with interest accruing at
5% is due September 14, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share.
We will
analyze the conversion feature of the note for a beneficial
conversion feature on the commitment date on March 13, 2021 which
is 180 days after the issuance date.
19
●
On September 24, 2020, we received monies in
exchange for a Note Payable having a Face Value of $50,000 with
interest accruing at 5% is due September 24, 2022. The Note is
convertible after 180 days from issuance into Common Stock at a
price equal to $0.30 per share.
We will analyze the conversion
feature of the note for a beneficial conversion feature on the
commitment date on March 23, 2021 which is 180 days after the
issuance date.
●
On October 20, 2020, we received monies in
exchange for a Note Payable having a Face Value of $250,000 with
interest accruing at 5% is due October 20, 2022. The Note is
convertible after 180 days from issuance into Common Stock at a
price equal to $0.30 per share.
We will analyze the conversion
feature of the note for a beneficial conversion feature on the
commitment date on April 18, 2021 which is 180 days after the
issuance date.
●
On November 19, 2020, we received monies in
exchange for a Note Payable having a Face Value of $250,000 with
interest accruing at 8% is due August 19,2021. The Note is
convertible after 180 days from issuance into Common Stock at a
price 35% below market value.
We will analyze the conversion
feature of the note for a beneficial conversion feature on the
commitment date on May 18, 2021 which is 180 days after the
issuance date.
●
On November 24, 2020, We received monies in
exchange for a Note Payable having a Face Value of $260,000 with
interest accruing at 8% is due November 24, 2021. The Note is
convertible after 180 days from issuance into Common Stock at a
price 30% below market value.
We will analyze the conversion
feature of the note for a beneficial conversion feature on the
commitment date on May 23, 2021 which is 180 days after the
issuance date.
●
On November 25, 2020, we received monies in
exchange for a Note Payable having a Face Value of $250,000 with
interest accruing at 5% is due November 25, 2022. The Note is
convertible after 180 days from issuance into Common Stock at a
price equal to $0.30 per share.
We will analyze the conversion
feature of the note for a beneficial conversion feature on the
commitment date on May 24, 2021 which is 180 days after the
issuance date.
●
On December 2, 2020, we received monies in exchange for a Note
Payable having a Face Value of $104,215 with interest accruing at
5% is due December 2, 2022. The Note is convertible after 180 days
from issuance into Common Stock at a price equal to $0.30 per
share.
We will
analyze the conversion feature of the note for a beneficial
conversion feature on the commitment date on May 31, 2021 which is
180 days after the issuance date.
●
A Note Payable dated December 31, 2019 held by our CEO having a
Face Value of $128,269 and accruing interest at 12% was due
December 31, 2020. On December 31, 2020, we renewed the Note
together with accrued interest of $15,392 for a 12-month period.
The new Note has a face Value of $143,661, accrues interest at 12%
per annum, and has a maturity date of December 31,
2021.
During
the fiscal year ended December 31, 2020, we issued an aggregate of
311,098,985 shares of our Common Stock valued at $2,515,015 in
connection with the conversion of $415,269 in debt and $42,233 in
interest resulting in a loss of $2,057,513.
We
relied upon the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, to issue the
respective shares. We used the proceeds derived from these notes
for implementation of our business plan and working
capital.
We are
not generating significant 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
Proprietary Drug Development program, Generic Pharmaceuticals
business, and Nutritional Supplements development and sales
operations. We intend to raise funds through private
placements of our Common Stock and/or debt financing. We estimate
that we will require approximately $20 million (approximately $18
million for our Proprietary Drug Development projects and $2
million for our Nutritional Supplements operations) to fully
implement our business plan in the future and there are no
assurances that we will be able to raise this capital.
Relevant thereto,
on September 8, 2020, we executed a financing agreement with RB
Capital Partners, Inc., La Jolla, CA, who has agreed to provide us
with a minimum of $2 million in convertible debt financing over the
next three to six months pursuant to the terms and conditions
included in relevant Promissory Notes (the “Promissory
Notes”). The Promissory Notes will bear interest at the rate
of 5% per annum and will be fully convertible into shares of shares
of the Company’s Common Stock at a conversion price equal to
the market value of the Company’s Common Stock on the
applicable conversion date or $0.30 per share, whichever is
greater. The Promissory Notes will have a maturity date of two
years from the date of issuance and must be fully converted on or
before the maturity date. The Company has the right under these
Promissory Notes to pay off all or any part of the Promissory Notes
at any time without penalty. As of the date of this Report, we have
received a total of $2,054,000 in funding under this
agreement.
We are
currently in discussion with various investment groups for
additional financing. There are no assurances that we will be
successful in raising any funds.
Our
cost to continue operations are expected to increase as we move
forward with implementation of our recently expanded business plan
to include the Anti-Coronavirus drug development project. 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 and expanded operations.
20
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,
2020.
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 ASC 842 “
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. Our Company is not party to
any lease agreements. Our corporate offices in Pointe-Claire,
Quebec (Canada) are on a month-to-month, pay-per-use basis. Our
arrangement in connection with this office has no short-term or
long-term asset or liability value.
Recently Adopted Accounting Standards
In
December 2019, the FASB issued ASU 2019-12 “Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes.”
This guidance removes certain exceptions to the general principles
in Topic 740 and provides consistent application of U.S. GAAP by
clarifying and amending existing guidance. The effective date of
the new guidance for public companies is for fiscal years beginning
after December 15, 2020 and interim periods within those
fiscal years. Early adoption is permitted. We are currently
evaluating the timing of adoption and impact of the updated
guidance 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.
I
TEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not
applicable.
I
TEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
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.
21
Sunshine Biopharma, Inc.
CONSOLIDATED
FINANCIAL STATEMENTS
With
Independent Accountant’s Audit Report
At
December 31, 2020 and 2019
TABLE
OF CONTENTS
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Page
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F-1
|
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F-2
|
|
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|
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F-3
|
|
|
|
|
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F-4
|
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F-5
|
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F-6
|
R
eport 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, 2020
and 2019, the related consolidated statements of operations and
comprehensive income (loss), shareholders' equity, and cash flows
for each of the two years in the period ended December 31, 2020,
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, 2020 and 2019, and the results of its
operations and its cash flows for each of the two years in the
period ended December 31, 2020, in conformity with accounting
principles generally accepted in the United States.
Going Concern Uncertainty
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 net capital deficiency
that raise substantial doubt about its 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 engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ B F Borgers CPA PC
We have served as the Company's auditor since 2013.
Lakewood, CO
March 30, 2021
F-1
|
Sunshine Biopharma, Inc.
|
|||||
|
C
onsolidated Balance Sheet
s
|
|
|
December
31,
|
December
31,
|
|
|
2020
|
2019
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
989,888
|
$
40,501
|
|
Accounts
receivable
|
1,916
|
430
|
|
Inventory
|
23,771
|
15,910
|
|
Prepaid
expenses
|
2,778
|
1,255
|
|
Deposits
|
7,590
|
7,590
|
|
Total Current
Assets
|
1,025,943
|
65,686
|
|
|
|
|
|
Equipment (net of
$51,485 and $37,109 depreciation, respectively)
|
19,531
|
32,456
|
|
Patents (net of
$58,918 amortization and $556,120 impairment)
|
-
|
-
|
|
|
|
|
|
TOTAL
ASSETS
|
$
1,045,474
|
$
98,142
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Notes
payable
|
820,454
|
586,307
|
|
Notes payable -
related party
|
143,661
|
129,261
|
|
Accounts payable
& accrued expenses
|
62,870
|
96,882
|
|
Interest
payable
|
24,320
|
21,077
|
|
Total Current
Liabilities
|
1,051,305
|
833,527
|
|
|
|
|
|
Long-term portion
of notes payable
|
949,006
|
-
|
|
|
|
|
|
TOTAL
LIABILITIES
|
2,000,311
|
833,527
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Preferred Stock,
Series B $0.10 par value per share; Authorized 1,000,000
Shares;
|
|
|
|
Issued and
outstanding 1,000,000 and 500,000 shares at December 31, 2020 and
December 31, 2019, respectively
|
100,000
|
50,000
|
|
|
|
|
|
Common Stock,
$0.001 value per share; Authorized 3,000,000,000
Shares;
|
|
|
|
Issued and
outstanding 346,419,296 and 35,319,990 at December 31, 2020 and
December 31, 2019, respectively
|
346,418
|
35,320
|
|
|
|
|
|
Capital paid in
excess of par value
|
18,820,343
|
16,616,426
|
|
|
|
|
|
Accumulated
comprehensive income
|
(2,871
)
|
(2,495
)
|
|
|
|
|
|
Accumulated
(Deficit)
|
(20,218,727
)
|
(17,434,636
)
|
|
|
|
|
|
TOTAL SHAREHOLDERS'
EQUITY (DEFICIT)
|
(954,837
)
|
(735,385
)
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$
1,045,474
|
$
98,142
|
See Accompanying Notes to These Financial
Statements.
F-2
|
Sunshine Biopharma, Inc.
|
||
|
C
onsolidated Statement of Operations and
Comprehensive Income (Loss)
|
|
|
December
31,
|
December
31,
|
|
|
2020
|
2019
|
|
Sales
|
$
71,410
|
$
21,121
|
|
Cost of
sales
|
25,847
|
11,050
|
|
Gross
profit
|
45,563
|
10,071
|
|
|
|
|
|
General &
Administrative Expenses:
|
|
|
|
Accounting
|
81,524
|
89,253
|
|
Consulting
|
15,360
|
74,124
|
|
Legal
|
89,587
|
107,196
|
|
Office
|
89,022
|
74,904
|
|
Officer &
director remuneration
|
271,930
|
277,252
|
|
R&D
|
60,948
|
15,204
|
|
Depreciation
|
14,066
|
13,774
|
|
Total General &
Administrative Expenses
|
622,437
|
651,707
|
|
|
|
|
|
Income (Loss) from
Operations
|
(576,874
)
|
(641,636
)
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
Loss on debt
conversions
|
(2,057,513
)
|
(314,752
)
|
|
Foreign exchange
gain (loss)
|
4,891
|
(15,099
)
|
|
Interest
expense
|
(168,105
)
|
(115,901
)
|
|
Miscellaneous
income
|
3,000
|
-
|
|
Debt
release
|
7,674
|
7,967
|
|
Interest
forgiveness
|
2,836
|
1,367
|
|
Total Other Income
(Expense)
|
(2,207,217
)
|
(436,418
)
|
|
|
|
|
|
Net income (loss)
before income taxes
|
(2,784,091
)
|
(1,078,054
)
|
|
Provision for
income taxes
|
-
|
-
|
|
Net income (loss)
from continuing operations
|
(2,784,091
)
|
(1,078,054
)
|
|
Net income (loss)
on discontinued operations
|
-
|
(582,237
)
|
|
Net Income
(Loss)
|
(2,784,091
)
|
(1,660,291
)
|
|
|
|
|
|
Unrealized gain
(loss) from foreign exchange translation
|
376
|
1,243
|
|
Comprehensive
Income (Loss)
|
(2,783,715
)
|
(1,659,048
)
|
|
|
|
|
|
|
|
|
|
Basic income (loss)
from continuing operations per common share
|
$
(0.01
)
|
$
(0.10
)
|
|
|
|
|
|
Basic income (loss)
from discontinued operations per common share
|
$
0.00
|
$
(0.05
)
|
|
|
|
|
|
Basic income (loss)
per common share
|
$
(0.01
)
|
$
(0.15
)
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding
|
204,096,338
|
10,932,813
|
See Accompanying
Notes to These Financial
Statements.
F-3
|
Sunshine Biopharma, Inc.
|
|||||
|
C
onsolidated Statement of Cash
Flows
|
|
|
December
31,
|
December
31,
|
|
|
2020
|
2019
|
|
Cash
Flows from Operating Activities:
|
|
|
|
Net Income
(Loss)
|
$
(2,784,091
)
|
$
(1,660,291
)
|
|
Adjustments to
reconcile net income (loss) to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
14,066
|
13,774
|
|
Foreign exchange
(gain) loss
|
(4,891
)
|
15,099
|
|
Stock issued for
services
|
50,000
|
261,690
|
|
Stock issued for
payment interest
|
42,233
|
17,197
|
|
Loss on debt
conversion
|
2,057,513
|
314,752
|
|
Gain on interest
and debt forgiveness
|
10,510
|
(9,334
)
|
|
Loss on disposition
of subsidiary
|
-
|
582,237
|
|
(Increase) in
accounts receivable
|
(1,486
)
|
(430
)
|
|
(Increase) decrease
in inventory
|
(7,861
)
|
(15,910
)
|
|
(Increase) in
prepaid expenses
|
(1,523
)
|
(7,676
)
|
|
(Increase) in
deposits
|
-
|
-
|
|
(Decrease) in
Accounts Payable & accrued expenses
|
(35,012
)
|
(18,692
)
|
|
Increase in
interest payable
|
3,243
|
11,786
|
|
Net
Cash Flows (Used) in Operations
|
(657,299
)
|
(495,798
)
|
|
|
|
|
|
Cash
Flows from Investing Activities:
|
|
|
|
Advances to
discontinued operations
|
-
|
(14,416
)
|
|
Purchase of
equipment
|
(1,191
)
|
(860
)
|
|
Net
Cash Flows (Used) in Investing Activities
|
(1,191
)
|
(15,276
)
|
|
|
|
|
|
Cash
Flows from Financing Activities:
|
|
|
|
Proceeds from notes
payable
|
1,674,246
|
441,230
|
|
Payments of notes
payable
|
(106,600
)
|
(53,000
)
|
|
Note payable -
interest expense
|
40,607
|
25,795
|
|
Note payable used
to pay note origination fees
|
-
|
28,230
|
|
Net
Cash Flows Provided by Financing Activities
|
1,608,253
|
442,255
|
|
|
|
|
|
Cash
and Cash Equivalents at Beginning of Period
|
40,501
|
115,216
|
|
Net Increase
(Decrease) In Cash and cash equivalents
|
949,763
|
(68,819
)
|
|
Foreign currency
translation adjustment
|
(376
)
|
(5,896
)
|
|
Cash
and Cash Equivalents at End of Period
|
$
989,888
|
$
40,501
|
|
|
|
|
|
Supplementary
Disclosure of Cash Flow Information:
|
|
|
|
Cash paid for
interest
|
$
20,963
|
$
-
|
|
Cash paid for
income taxes
|
$
-
|
$
-
|
|
Stock issued for
note conversions
|
$
2,515,015
|
$
717,726
|
See
Accompanying Notes to These Financial
Statements.
F-4
|
Sunshine Biopharma, Inc.
|
||||||||
|
Consolidated Statement of Shareholders' Equity
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
Common
Shares
Issued
|
Common
Stock
|
Capital
Paid
in
Excess
of Par
Value
|
Number
of
Preferred
Shares
Issued
|
Preferred
Stock
|
Comprehensive
Income
|
Accumulated
Deficit
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2018
|
4,282,620
|
4,283
|
15,668,047
|
500,000
|
50,000
|
(3,738
)
|
(15,774,345
)
|
(55,753
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
to directors
|
9,150,000
|
9,150
|
195,150
|
|
|
|
|
204,300
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for services
|
1,455,000
|
1,455
|
55,935
|
|
|
|
|
57,390
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
20,432,370
|
20,432
|
697,294
|
|
|
|
|
717,726
|
|
and payment
of interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
|
|
|
1,243
|
(1,660,291
)
|
(1,659,048
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2019
|
35,319,990
|
$
35,320
|
$
16,616,426
|
500,000
|
$
50,000
|
$
(2,495
)
|
$
(17,434,636
)
|
(735,385
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
311,098,985
|
311,098
|
2,203,917
|
|
|
|
|
2,515,015
|
|
and payment
of interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for
Reverse-Split
|
321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
issued for services
|
|
|
|
500,000
|
50,000
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
|
|
|
(376
)
|
(2,784,091
)
|
(2,784,467
)
|
|
Balance
at December 31, 2020
|
346,419,296
|
$
346,418
|
$
18,820,343
|
1,000,000
|
$
100,000
|
$
(2,871
)
|
$
(20,218,727
)
|
(954,837
)
|
See
Accompanying Notes to These Financial
Statements.
F-5
Sunshine Biopharma, Inc.
N
otes to Consolidated Financial
Statements
December
31, 2020 and 2019
Note 1 – Description of Business
Sunshine Biopharma, Inc. (the "Company") was originally
incorporated under the name Mountain West Business Solutions, Inc.
on August 31, 2006 in the State of Colorado. Until October 2009,
the Company was operating as a business consultancy
firm.
Effective October 15, 2009, the Company acquired Sunshine
Biopharma, Inc. in a transaction classified as a reverse
acquisition. Sunshine Biopharma, Inc. was holding an exclusive
license to a new anticancer drug bearing the laboratory name,
Adva-27a (the “License Agreement”). Upon completion of
the reverse acquisition transaction, the Company changed its name
to Sunshine Biopharma, Inc. and began operating as a pharmaceutical
company focusing on the development of the licensed Adva-27a
anticancer drug.
In October 2012, the Company published the results of its initial
preclinical studies of Adva-27a in the peer-reviewed
journal,
ANTICANCER RESEARCH. The preclinical studies were
conducted in collaboration with Binghamton University, a State
University of New York. The publication is entitled
“Adva-27a, a Novel Podophyllotoxin Derivative Found to Be
Effective Against Multidrug Resistant Human Cancer Cells”
[ANTICANCER RESEARCH Volume 32, Pages 4423-4432
(2012)].
In July 2014, the Company 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 signed licensing agreements for four (4) generic prescription
drugs for treatment of breast cancer, prostate cancer and BPH
(Benign Prostatic Hyperplasia).
In
December 2015, the Company acquired all worldwide issued (US Patent
Number 8,236,935, and 10,272,065) and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 for the Adva-27a anticancer
compound from Advanomics Corporation, a related party, in exchange
for an aggregate of 803,264 shares of Common Stock valued at
$835,394 and terminated the License Agreement. In 2016, the
remaining value of these patents was impaired. The Company is
however continuing development of the Adva-27a anticancer drug
covered by these patents.
On January 1, 2018, the Company acquired all of the issued and
outstanding shares of Atlas Pharma Inc. (“Atlas”), a
Canadian privately held analytical chemistry company. The purchase
price for the shares was Eight Hundred Forty-Eight Thousand Dollars
$848,000 Canadian ($676,748 US). The purchase price included cash
payment of $100,500 Canadian ($80,289 US), plus the issuance of
50,000 shares of the Company’s Common Stock valued at
$238,000, and a promissory note (“Atlas Debt”) in the
principal amount of $450,000 Canadian ($358,407 US), with interest
payable at the rate of 3% per annum. Effective April 1, 2019, the
Company re-assigned all of its stock in Atlas back to the original
owner in exchange for the Atlas Debt. The loss on the disposition
was $580,125. See Note 11, below for a more detailed explanation of
this disposition.
In March 2018, the Company formed NOX Pharmaceuticals, Inc., a
wholly owned Colorado corporation and assigned all of the
Company’s interest in the Adva27a anticancer drug to that
company. NOX Pharmaceuticals Inc.’s mission is to research,
develop and commercialize proprietary drugs including
Adva-27a.
In December 2018, the Company launched its first over-the-counter
product, Essential 9™, a nutritional supplement comprised of
the nine (9) essential amino acids that the human body cannot make.
Essential 9
tm
has been authorized for marketing by
Health Canada under NPN 80089663.
Effective February 1, 2019, the Company completed a 20 to 1 reverse
split of its Common Stock, reducing the issued and outstanding
shares of Common Stock from 1,713,046,242 to 85,652,400 (the
“First Reverse Stock Split”). The Company’s
authorized capital of Common Stock remained as previously
established at 3,000,000,000 shares.
In November 2019, the Company received Health Canada approval for a
new Calcium-Vitamin D supplement. Health Canada issued NPN 80093432
through which it authorized the Company to manufacture and sell the
new Calcium-Vitamin D supplement under the brand name Essential
Calcium-Vitamin D
tm
.
Effective April 6, 2020, the Company completed another 20 to 1
reverse split of its Common Stock, reducing the issued and
outstanding shares of Common Stock from 1,193,501,925 to 59,675,417
(the “Second Reverse Stock Split”). The Company’s
authorized capital of Common Stock remained as previously
established at 3,000,000,000 shares.
On May 22, 2020, the Company filed a patent application in the
United States for a new treatment for Coronavirus infections. The
Company’s patent application covers composition subject
matter pertaining to small molecules for inhibition of the main
Coronavirus protease (Mpro), an enzyme that is essential for viral
replication. The patent application has a priority date of May 22,
2020.
On June 17, 2020, the Company filed an amendment to its Articles of
Incorporation (the “Amendment”) with the State of
Colorado, to eliminate the Series “A” Preferred Shares
consisting of Eight Hundred and Fifty Thousand (850,000) shares,
par value $0.10 per share, and the designation thereof, which
shares were returned to the status of undesignated shares of
Preferred Stock. In addition, the Amendment increased the number of
authorized Series “B” Preferred Shares from Five
Hundred Thousand (500,000) to One Million (1,000,000)
shares.
F-6
Also on June 17, 2020, the Company issued Five Hundred Thousand
(500,000) shares of Series “B” Preferred Stock in favor
of Dr. Steve N. Slilaty, the Company’s CEO, in consideration
for the COVID-19 treatment technology he developed. The Series
“B” Preferred Stock is non-convertible, non-redeemable,
non-retractable and has a superior liquidation value of $0.10 per
share. Each share of Series “B” Preferred Stock is
entitled to 1,000 votes per share.
This issuance brought the
total number of Series “B” Preferred Stock held by Dr.
Slilaty to 1,000,000 shares.
On
September 8, 2020, the Company executed a financing agreement with
RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide
the Company with a minimum of $2 million in convertible debt
financing over the next three to six months pursuant to the terms
and conditions included in relevant Promissory Notes (the
“Promissory Notes”). The Promissory Notes will bear
interest at the rate of 5% per annum and will be fully convertible
into shares of shares of the Company’s Common Stock at a
conversion price equal to the market value of the Company’s
Common Stock on the applicable conversion date or $0.30 per share,
whichever is greater. The Promissory Notes will have a maturity
date of two years from the date of issuance and must be fully
converted on or before the maturity date. The Company has the right
under these Promissory Notes to pay off all or any part of the
Promissory Notes at any time without penalty. As of December 31,
2020, the Company has received a total of $1,350,000 in funding
under this agreement.
Effective
October 6, 2020, the Company entered into a Research Agreement (the
“Agreement”) with the University of Georgia Research
Foundation, Inc. (“UGARF”), representing the University
of Georgia (“UGA”). The purpose of the Agreement is to
memorialize the terms of the Company working together with UGA to
conduct the necessary research and development to advance the
Company’s Anti-Coronavirus lead compound, SBFM-PL4 (or
derivatives thereof) through various stages of preclinical
development, animal studies and clinical trials for Coronavirus
infections. The Agreement grants the Company an exclusive worldwide
license for all of the intellectual property developed by UGA,
whether alone or jointly with the Company.
The
Company's financial statements reflect both the First and Second
Reverse Stock Split on a retroactive basis and represent the
consolidated activity of Sunshine Biopharma, Inc. and its
subsidiaries (Sunshine Biopharma Canada Inc. and NOX
Pharmaceuticals Inc.) herein collectively referred to as the
"Company".
During
the last twelve month period the Company has continued to raise
money through the issuance of convertible debt. The Company’s
activities are subject to significant risks and uncertainties,
including failing to secure additional funding to operationalize
the Company’s proprietary drug development program and other
business activities.
Note 2 – Summary of Significant Accounting
Policies
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.
IMPACT OF CORONAVIRUS (COVID-19) PANDEMIC
In March 2020, the World Health Organization declared Coronavirus
and its associated disease, COVID-19, a global pandemic. Conditions
surrounding the Coronavirus outbreak are evolving rapidly and
government authorities around the world have implemented emergency
measures to mitigate the spread of the virus. The outbreak and
related mitigation measures have had and will continue to have a
material adverse impact on the world economies and the Company's
business activities. It is not possible for the Company to predict
the duration or magnitude of the adverse conditions of the outbreak
and their effects on the Company’s business or ability to
raise funds. No adjustments have been made to the amounts reported
in the Company's financial statements as a result of this
matter.
PRINCIPLES OF CONSOLIDATION
The
accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated in
consolidation.
F-7
USE OF ESTIMATES
The
preparation of financial statements in conformity with US 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.
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 $989,888 and
$40,501 as of December 31, 2020 and December 31, 2019,
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, 2020 and 2019, 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
|
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.
F-8
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, 2020
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 2017 through 2019
tax years remain open for examination by the tax authorities under
the normal three-year statute of limitations.
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 and trade
receivables. The Company places its cash equivalents with high
credit quality financial institutions.
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, 2020 and 2019, 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.
F-9
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.
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, 2020 and
2019.
EQUITY INSTRUMENTS ISSUED TO EMPLOYEES OR NON-EMPLOYEES FOR
AQUIRING GOODS OR SERVICES
The stock-based compensation expense for both employee and
non-employee awards is generally recognized on a straight-line
basis over the requisite service period of the award. The Company
accounts for stock-based compensation to employees in conformity
with the provisions of ASC Topic 718, Stock Based Compensation.
Stock-based compensation to employees consisting of stock option
grants and restricted shares are recognized in the statement of
operations based on their fair values at the date of grant. The
Company accounts for equity instruments issued to non-employees in
accordance with the provisions of ASC Topic 718, based upon the
fair-value of the underlying instrument.
F-10
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, 2020 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, 2020 and 2019.
REVENUE RECOGNITION
As of
January 1, 2018, the Company adopted ASU No. 201409, “Revenue
from Contracts with Customers” (ASC 606). Under the new
guidance, an entity will recognize revenue to depict the transfer
of promised goods or services to customers at an amount that the
entity expects to be entitled to in exchange for those goods or
services. A five-step model has been introduced for an entity to
apply when recognizing revenue. The new guidance also includes
enhanced disclosure requirements. The guidance was effective
January 1, 2018 and was applied on a modified retrospective basis.
The adoption did not have an impact on the Company's financial
statements. All of the revenues of the Company are the Company's
wholly owned Canadian subsidiary, which sells nutritional
supplements through Amazon.com and Amazon.ca.
In
Canada, governmental regulations require that companies recognize
revenues upon completion of the work by issuing an invoice and
remitting the applicable sales taxes (GST and QST) to the
appropriate government agency. The Company’s wholly owned
Canadian subsidiary's revenue recognition policy is in compliance
with these local regulations.
F-11
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2019, the FASB issued ASU 2019-12 “Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes.”
This guidance removes certain exceptions to the general principles
in Topic 740 and provides consistent application of U.S. GAAP by
clarifying and amending existing guidance. The effective date of
the new guidance for public companies is for fiscal years beginning
after December 15, 2020 and interim periods within those
fiscal years. Early adoption is permitted. The Company is currently
evaluating the timing of adoption and impact of the updated
guidance on its financial statements.
LEGAL FEES
During
the years ended December 31, 2020 and 2019, the legal fees incurred
were related to services provided to the Company to assist with its
regulatory requirements with the Securities and Exchange
Commission, patenting costs and one ongoing
litigation.
DATE OF MANAGEMENT’S REVIEW
Subsequent events have been evaluated through March 29, 2021, which
is the date the Financial Statements were available to be
issued.
Note 3 – Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.
In the
course of its life, the Company has had limited operations and
Working Capital deficit. This raises 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.
F-12
Note 4 – Patents
The
following is a summary of the patents held by the Company at
December 31, 2020 and 2019:
In
December 2015, the Company acquired all worldwide issued (US Patent
Number 8,236,935, and US Patent Number 10,272,065) and pending
patents under PCT/FR2007/000697 and PCT/CA2014/000029 for the
Adva-27a anticancer compound from Advanomics Corporation, a related
party, in exchange for an aggregate of 803,264 shares of Common
Stock valued at $835,394 and terminated the License Agreement. In
2016, the remaining value of these patents was impaired. The
Company is however continuing development of the Adva-27a
anticancer drug covered by these patents.
On May 22, 2020, the Company filed a patent application in the
United States for a new treatment for Coronavirus infections. The
Company’s patent application covers composition subject
matter pertaining to small molecules for inhibition of the main
Coronavirus protease (Mpro), an enzyme that is essential for viral
replication. The patent application has a priority date of May 22,
2020.
Note 5 – Capital Stock
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
had designated 850,000 shares as Series “A” Preferred
Stock (“Series A”). At December 31, 2020 and December
31, 2019, the Company had no issued and outstanding shares of
Series A. On June 17, 2020, the Company filed an amendment to its
Articles of Incorporation (the “Amendment”) eliminating
the Series A
shares
and the designation thereof, which shares were returned to the
status of undesignated shares of Preferred Stock. In addition to
eliminating the Series A shares, the Amendment also increased the
number of authorized Series B Preferred Shares from Five Hundred
Thousand (500,000) to One Million (1,000,000)
shares.
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.
On June 17, 2020, the Company issued Five Hundred Thousand
(500,000) shares of Series “B” Preferred Stock in favor
of the Company’s CEO, in consideration for the COVID-19
treatment technology he developed.
This issuance brought the
total number of Series B Preferred Stock held by the
Company’s CEO to 1,000,000 shares.
Through
December 31, 2020 and December 31, 2019, the Company has issued and
outstanding a total of 346,419,296 and 35,319,990 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 1,000,000 and 500,000 shares of Series B
Preferred Stock, respectively.
During
the fiscal year ended December 31, 2020, the Company issued an
aggregate of 311,098,985 shares of its Common Stock valued at
$2,515,015 in connection with the conversion of $415,269 in debt
and interest of $ 42,233 resulting in a $2,057,513 loss on
conversion.
During
the fiscal year ended December 31, 2019, the Company issued an
aggregate of 31,037,370 shares of its Common Stock as
follows:
●
9,150,000 shares
valued at $204,300 as compensation to the Company’s Directors
and Officers
●
1,455,000 shares
for services rendered to the Company by third parties valued at
$57,390
●
20,432,370 shares
valued at $717,726 in connection with the conversion of $385,778 in
debt and interest of $6,689 resulting in a $314,751 loss on
conversion
The
Company has declared no dividends since inception.
F-13
Note 6 – Earnings Per Share
The
following table sets forth the computation of basic and diluted net
income per share for the years ended December 31:
|
|
2020
|
2019
|
|
|
|
|
|
Net gain (loss)
attributable to Common Stock
|
$
(2,784,091)
|
$
(1,660,291
)
|
|
Basic weighted
average outstanding shares of Common Stock
|
204,096,338
|
10,392,813
|
|
Dilutive effects of
common share equivalents
|
-0-
|
-0-
|
|
Dilutive weighted
average outstanding shares of Common Stock
|
204,096,338
|
10,932,813
|
|
Net gain (loss) per
share attributable to Common Stock
|
$
(0.01
)
|
$
(0.15
)
|
Note 7 – Income Taxes
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 subsidiaries, 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 and
other items. 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,
“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:
|
|
December 31,
2020
|
December 31,
2019
|
||
|
|
Amount
|
Tax
Effect
|
Amount
|
Tax
Effect
|
|
|
|
|
|
|
|
Deferred tax
assets:
|
|
|
|
|
|
Net operating
loss
|
$
2,784,091
|
$
683,773
|
$
1,660,291
|
$
407,767
|
|
Other
differences
|
$
26,786
|
$
6,579
|
$
(686,984
)
|
$
(168,723
)
|
|
Net deferred tax
assets
|
$
2,810,877
|
$
690,352
|
$
973,307
|
$
239,044
|
|
Valuation
allowance
|
$
(2,810,877)
|
$
(690,352)
|
$
(973,307
)
|
$
(239,044
)
|
|
|
|
|
|
|
|
Total deferred tax
asset
|
$
-0-
|
$
-0-
|
$
-0-
|
$
-0-
|
|
|
|
|
|
|
|
Deferred tax
liabilities:
|
$
-0-
|
$
-0-
|
$
-0-
|
$
-0-
|
|
Net deferred tax
asset
|
$
-0-
|
$
-0-
|
$
-0-
|
$
-0-
|
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.
As of December 31, 2020, the Company had net operating loss carry
forwards of $10,611,921 that may be available to reduce future
years’ taxable income through 2037 and $5,329,161 may be
available to reduce future years’ taxable income
indefinitely.
At December
31, 2020 and December 31, 2019, a deferred tax asset at each date
of approximately $690,352 and $239,044, respectively, 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, 2020 and December 31, 2019 was approximately
$(451,307) and $149,054, respectively.
F-14
A
reconciliation of the U.S. statutory federal income tax rate to the
effective tax rate is as follows:
|
|
December
31,
2020
|
December
31,
2019
|
|
|
|
|
|
U.S. Federal
statutory graduated income tax rate
|
21.00
%
|
21.00
%
|
|
State income tax
rate, net of federal benefit
|
3.56
%
|
3.56
%
|
|
|
|
|
|
Net income tax
rate
|
24.56
%
|
24.56
%
|
|
|
|
|
|
Net operating loss
used
|
0.00
%
|
0.00
%
|
|
|
|
|
|
Net operating loss
for which no tax benefit is currently available
|
0.00
%
|
0.00
%
|
|
|
|
|
|
Canada Federal
statutory rate
|
15.00
%
|
15.00
%
|
|
Canada Provincial
rate
|
11.80
%
|
11.80
%
|
|
|
|
|
|
Net Canada
rate
|
26.80
%
|
26.80
%
|
|
|
|
|
|
Net operating loss
used (Canada)
|
0.00
%
|
0.00
%
|
|
Net operating loss
for which no tax benefit is currently available
(Canada)
|
-26.80
%
|
-26.80
%
|
The
Company’s income tax filings are subject to audit by various
taxation authorities. The Company’s open audit periods are
2018, 2019, and 2020, although, the statute of limitations for the
2018 tax year will expire effective October 15, 2020. In evaluating
the Company’s provisions and accruals, future taxable income,
and reversal of temporary differences, interpretations and tax
planning strategies are considered. The Company believes its
estimates are appropriate based on current facts and
circumstances.
Note 8 – Notes Payable
The Company’s Notes Payable at December 31, 2020 consisted of
the following:
On April 1, 2017, the Company received monies in exchange for a
Note Payable having a Face Value of $100,000 Canadian ($74,970 US
at September 30, 2020) with interest payable quarterly at 9%, which
Note was 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 $0.011 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. In June
2018, the Company filed an action in the Superior Court of the
Province of Quebec in the District of Montreal (Canada) against the
holder of this Note. The complaint alleges among other things,
claims of misrepresentations and misleading conduct resulting in
damages to the Company in an amount of approximately $200,000
Canadian (approximately $143,000 US). A date for the hearings to
commence was set for November 16, 2020. On November 10, 2020, the
Company elected to pay off the Note together with accrued interest
of $14,696 Canadian (approximately $10,500 US) and terminate the
proceedings.
F-15
On September 10, 2018, the Company issued two Notes Payable having
an aggregate Face Value of $36,500 with interest accruing at 8%.
The two Notes were issued for services rendered to the Company and
had maturity dates in June 2019. The Company was unable to pay the
notes and on November 30, 2019 the Company issued a new Note which
included accrued interest and accelerated interest of $7,059 for a
total Face Value of $43,559. The new Note accrues interest at 8%
and is convertible after 180 days from issuance into Common Stock
at a price 35% below market value. The new Note was due August 31,
2020. During the year ended December 31, 2020, the entire principal
amount of $43,559 of this Note plus accrued interest of
$
2,
523 was converted into
14,198,048 shares of Common Stock valued at $86,685 resulting in a
loss of $40,603.
On December 24, 2018, the Company received monies in exchange for a
Note Payable having a Face Value of $87,000 with interest accruing
at 8% was due December 24, 2019. The Note is convertible after 180
days from issuance into $0.001 par value Common Stock at a price
35% below market value. As of December 31, 2020, the entire
principal amount of $87,000 of this Note plus accrued interest of
$9,639 was converted into 43,986,317 shares of Common Stock valued
at $276,396 resulting in a loss of $161,036.
On January 8, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $54,000 with interest accruing
at 8% was due January 8, 2020. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. During the year ended December 31, 2020, the entire
principal amount of $54,000 of this Note plus accrued interest of
$9,814 was converted into 44,931,640 shares of Common Stock valued
at $365,787 resulting in a loss of $301,973.
On February 5, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $37,450 with interest accruing
at 8% was due October 10, 2019. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. During the year ended December 31, 2020, the entire
principal amount of $37,450 of this Note plus accrued interest of
$2,996 was converted into 38,263,409 shares of Common Stock valued
at $217,971 resulting in a loss of $182,790.
On July 2, 2019, the Company received monies in exchange for a Note
Payable having a Face Value of $40,000 with interest accruing at 8%
was due April 30, 2020. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the year ended December 31, 2020, the entire principal
amount of $40,000 of this Note plus accrued interest of $1,600 was
converted into 13,099,359 shares of Common Stock valued at $58,684
resulting in a loss of $17,084.
On July 26, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $50,000 with interest accruing
at 8%, which became due July 26, 2020. The Note is convertible
after 180 days from issuance into Common Stock at a price 35% below
market value. During the year ended December 31, 2020, the entire
principal of $50,000 of this Note plus accrued interest of $4,909
was converted into 43,522,363 shares of Common Stock valued at
$131,370 resulting in a loss of $76,461.
On September 12, 2019, the Company received monies in exchange for
a Note Payable having a Face Value of $43,000 with interest
accruing at 8% is due July 15, 2020. The Note is convertible after
180 days from issuance into Common Stock at a price 35% below
market value. During the year ended December 31, 2020, the entire
principal amount of $43,000 of this Note plus accrued interest of
$1,720 was converted into 38,855,726 shares of Common Stock valued
at $117,177 resulting in a loss of $72,457.
On December 14, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $42,800 with interest accruing
at 8% and which is due December 14, 2020. The Note is convertible
after 180 days from issuance into Common Stock at a price 35% below
market value. During the year ended December 31, 2020, the entire
principal amount of $42,800 of this Note plus accrued interest of
$1,712 was converted into 18,592,605 shares of Common Stock valued
at $81,796 resulting in a loss of $37,284.
A Note Payable dated December 31, 2019 having a Face Value of
$30,120 and accruing interest at 12% was due December 31, 2020. On
December 1, 2020, the Company paid off the entire principal balance
of this Note, together with accrued interest of $3,614 by issuing
cash payment of $33,734.
A Note Payable dated December 31, 2018 having a Face Value of
$136,744 and accruing interest at 12% was due December 31, 2019. On
October 1, 2019, the holder of this note requested to convert
$30,000 in principal amount into 1,500,000 shares of Common Stock,
leaving a principal balance $106,744. On December 31, 2019, the
Company renewed the remaining principal balance of this Note,
together with accrued interest of $15,509 for a 12-month period.
The new Note has a Face Value of $122,253 and accrues interest at
12%. This Note matures on December 31, 2020. On August 27, 2020,
the holder of this Note transferred all of its interest therein to
a third party and on September 4, 2020, the Company agreed to
render the Note convertible at $0.001 per share. During the year
ended December 31, 2020, an aggregate principal amount of $58,225
of this Note plus accrued interest of $9,775 was converted into
68,000,000 shares of Common Stock valued at $1,286,400 resulting in
a loss of $1,218,400. This note is currently past due and the
Company is in discussion with the holder to extend the due
date.
F-16
On April 17, 2020, the Company’s Canadian subsidiary received
a CEBA Loan (Canada Emergency Business Account Loan) from CIBC
(Canadian Imperial Bank of Commerce) in the principal amount of
$40,000 Canadian ($29,352 US) as part of the Canadian
government’s COVID-19 relief program. The CEBA Loan is
non-interest bearing if repaid on or before December 31, 2022 (the
“Termination Date”). The CEBA Loan is considered repaid
in full if the borrower repays 75% of the Principal Amount on or
before the Termination Date. If the CEBA Loan is not repaid in full
on or before the Termination Date, the lender will automatically
extend the term of the loan by three years until December 31, 2025
(the “Extension Period”). During the Extension Period,
interest will be charged, and will accrue on the outstanding amount
of the CEBA Loan at a fixed rate of 5% per year, calculated daily
and compounded monthly. The outstanding balance of the CEBA Loan
and all accrued interest will be due at the end of the Extension
Period.
On April 27, 2020, the Company received a Paycheck Protection
Program loan ("PPP Loan") in the principal amount of $50,655 from
the US Small Business Administration (“SBA”) as part of
the US government’s COVID-19 relief program. This loan
accrues interest at the rate of 1% per annum. The Company is
obligated to make payments of principal and interest totaling
$2,133 each month commencing on November 27, 2020, with any
remaining balances due and payable on or before April 27, 2022. The
proceeds derived from this loan may only be used for payroll costs,
interest on mortgages, rent and utilities (“Admissible
Expenses”). In addition, the Paycheck Protection Program
provides for conditional loan forgiveness if the Company utilizes
at least 75% of the proceeds from the loan to pay Admissible
Expenses. On December 15, 2020, the Company applied to the funding
bank for forgiveness of this loan per SBA guidance. On December 18,
2020, the Company received notification that the funding bank has
approved forgiveness of the loan in its entirety and that it has
submitted a request to the SBA for final approval. On February 22,
2021, the funding bank informed the Company that the SBA has fully
forgiven the loan.
On June 1, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $42,000 with interest accruing at 8%
is due June 1, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. On
December 2, 2020, the Company paid off the entire principal balance
of this Note, together with accrued interest and prepayment
penalties of $13,435 by issuing payment of $55,435.
On June 9, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $37,000 with interest accruing at 8%
is due June 9, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. On
December 2, 2020, the Company paid off the entire principal balance
of this Note, together with accrued interest and prepayment
penalties of $11,779 by issuing payment of $48,779.
On July 7, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $48,000 with interest accruing at 8%
is due July 7, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. The
Company will analyze the conversion feature of the note for a
beneficial conversion feature on the commitment date on January 3,
2021 which is 180 days after the issuance
date.
On July 27, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $102,000 with interest accruing
at 8% is due July 27, 2021. The Note is convertible after 180 days
from issuance into Common Stock at a price 30% below market value.
The Company will analyze the conversion feature of the note for a
beneficial conversion feature on the commitment date on January 23,
2021 which is 180 days after the issuance
date.
On August 14, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $67,000 with interest accruing
at 8% is due August 14, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 30% below market
value. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on
February 10, 2021 which is 180 days after the issuance
date.
On September 14, 2020, the Company received monies in exchange for
a Note Payable having a Face Value of $250,000 with interest
accruing at 5% is due September 14, 2022. The Note is convertible
after 180 days from issuance into Common Stock at a price equal to
$0.30 per share. The Company will analyze the conversion feature of
the note for a beneficial conversion feature on the commitment date
on March 13, 2021 which is 180 days after the issuance
date.
On September 24, 2020, the Company received monies in exchange for
a Note Payable having a Face Value of $50,000 with interest
accruing at 5% is due September 24, 2022. The Note is convertible
after 180 days from issuance into Common Stock at a price equal to
$0.30 per share. The Company will analyze the conversion feature of
the note for a beneficial conversion feature on the commitment date
on March 23, 2021 which is 180 days after the issuance
date.
F-17
On October 20, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 5% is due October 20, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on April
18, 2021 which is 180 days after the issuance
date.
On November 19, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 8% is due August 19, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
18, 2021 which is 180 days after the issuance
date.
On November 24, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $260,000 with interest accruing
at 8% is due November 24, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 30% below market
value. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
23, 2021 which is 180 days after the issuance
date.
On November 25, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 5% is due November 25, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
24, 2021 which is 180 days after the issuance
date.
On December 2, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $104,215 with interest accruing
at 5% is due December 2, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
31, 2021 which is 180 days after the issuance
date.
At December 31, 2020 and December 31, 2019, total accrued interest
on Notes Payable was $24,320 and $21,077,
respectively.
Note 9 – Notes Payable - Related Party
Outstanding Notes Payable at December 31, 2020 held by related
parties consist of the following:
A Note Payable dated December 31, 2019 held by the CEO of the
Company having a Face Value of $128,269 and accruing interest at
12% was due December 31, 2020. On December 31, 2020, the Company
renewed the Note together with accrued interest of $15,392 for a
12-month period. The new Note has a face Value of $143,661, accrues
interest at 12% per annum, and has a maturity date of December 31,
2021.
Note 10 – Related Party Transactions
In
addition to the transactions specified under Note 9 above, during
the period ended December 31, 2020, the Directors and Officers of
the Company were paid $221,930 in cash. Of this amount, $177,000
was paid to Advanomics Corporation (now known as TRT Pharma Inc.),
a company controlled by the CEO of the Company. In addition, during
the period ended December 31, 2020, the Company issued to its CEO
500,000 shares of Series B Preferred Stock valued at
$50,000.
For the
period ended December 31, 2019, the Company issued to the Board of
Directors 1,950,000 shares of Common Stock valued at $74,100,
3,300,000 shares of Common Stock valued at $99,000, and 3,900,000
shares of Common Stock valued at $31,200. The Company also issued
550,000 shares of Common Stock valued at $16,500 to the CFO for
consulting services rendered to the Company in 2019. During the
year ended December 31, 2019 the Directors and officers were paid
$72,916 in cash. Of this amount, $28,000 was paid to Advanomics
Corporation, a company controlled by the CEO of the
Company.
F-18
Note 11 – Acquisition and Disposition of Atlas Pharma
Inc.
On
January 1, 2018 the Company acquired all of the issued and
outstanding shares of Atlas Pharma Inc. (“Atlas”), a
privately held Canadian company providing analytical chemistry
testing services (“Atlas Business”). The purchase price
for the shares was $848,000 Canadian ($676,748 US). The purchase
price included cash payment of $100,500 Canadian ($80,289 US), plus
the issuance of 50,000 shares of the Company’s Common Stock
valued at $238,000, and a promissory note in the principal amount
of $450,000 Canadian ($358,407 US), with interest payable at the
rate of 3% per annum (“Atlas Note”). The following
table summarizes the allocation of the purchase price as of the
acquisition date:
|
Cash
|
$
4,942
|
|
Accounts
receivable
|
$
79,508
|
|
Prepaids
|
$
1,428
|
|
Property and
equipment
|
$
62,990
|
|
Goodwill
|
$
665,697
|
|
Liabilities assumed
($172,899 Canadian)
|
$
(137,817
)
|
|
|
|
|
Total
consideration
|
$
676,748
|
Effective
April 1, 2019, the Company disposed of Atlas by re-assigning all of
its stock in Atlas back to the original owner in exchange for the
Atlas Note. As a consequence of the sale, the operating results and
the assets and liabilities of the discontinued Atlas Business are
presented separately in the Company's financial statements.
Summarized financial information for the discontinued Atlas
Business is shown below. Prior period balances have been
reclassified to present the operations of the Atlas Business as
discontinued operations.
Discontinued
Operations Income Statement:
|
|
Audited
December
31,
2020
|
Audited
December
31,
2019
|
|
|
|
|
|
Revenues
|
$
0
|
$
119,522
|
|
Cost
of revenues
|
0
|
81,920
|
|
Gross
profit
|
0
|
37,602
|
|
|
|
|
|
General
and administrative expenses
|
0
|
36,196
|
|
Gain
(Loss) from operations
|
0
|
1,406
|
|
Other
income (expense) – Interest
|
0
)
|
(3,518
)
|
|
Net
Income (Loss) from operations
|
0
)
|
(2,112
)
|
|
|
|
|
|
Loss
on Disposal
|
0
|
(580,125
)
|
|
|
|
|
|
Net
Income (Loss) from Discontinued Operations
|
0
|
(582,237
)
|
|
|
|
|
F-19
The
individual assets and liabilities of the discontinued Atlas
Business are in the captions "Assets of Discontinued Operation" and
"Liabilities of Discontinued Operation" in the Consolidated Balance
Sheet. The carrying amounts of the major classes of assets and
liabilities included part of the discontinued business are
presented in the following table:
Discontinued
Operations Balance Sheets:
|
|
Audited
December
31,
2020
|
Audited
December
31,
2019
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash
and cash equivalents
|
$
-
|
$
-
|
|
Accounts
receivable
|
-
|
-
|
|
Total
Current Assets
|
-
|
-
|
|
|
|
|
|
Equipment
(net of $ 0 and $34,959 depreciation)
|
-
|
-
|
|
Goodwill
|
-
|
-
|
|
|
|
|
|
TOTAL
ASSETS
|
$
-
|
$
-
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
Notes
payable
|
-
|
-
|
|
Notes
payable - related party
|
-
|
-
|
|
Related
party advances
|
-
|
-
|
|
Accounts
payable & accrued expenses
|
-
|
-
|
|
Total
Current Liabilities
|
-
|
-
|
|
|
|
|
|
TOTAL
LIABILITIES
|
$
-
|
$
-
|
Discontinued
Operations Cash Flows:
Cash
flows used in discontinued operations for the period ended December
31, 2020 and 2019 were $-0-and $8,510, respectively. There were no
cash flows used in or provided by investing or financing activities
during those periods.
Note 12 – Leases
The
Company's arrangement in connection with its office space located
in Pointe-Claire, Quebec, Canada has no short-term or long-term
asset or liability value.
Note 13 – Subsequent Events
On January 5, 2021, the Company paid off a Note Payable dated July
7, 2020 by issuing cash payment in the amount of $63,271 comprised
of $48,000 in principal and $15,271 in accrued interest and
prepayment penalties.
On January 12, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $150,000 with interest accruing
at 5%. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.30 per share.
On January 12 and 28, and on March 3, 2021, the
holder of a
Note Payable dated December 31, 2019 elected to convert a total of
$53,000 in principal into 53,000,000 shares of Common Stock leaving
a principal balance of $11,028.
On January 27, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $300,000 with interest accruing
at 5%. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.50 per share.
On January 29, 2021, the
holder of a Note Payable dated July
27, 2020 elected to convert the entire principal amount of $102,000
and accrued interest of $4,171 into 5,044,456 shares of Common
Stock leaving a balance of $-0-.
On February 12, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $700,000 with interest accruing
at 5%. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.60 per share.
On February
22, 2021, the holder of a Note Payable dated August 14, 2020
elected to convert the entire principal amount of $67,000 and
accrued interest of $2,680 into 542,173 shares of Common Stock
leaving a balance of $-0-.
On
February 22, 2021, the funding bank informed the Company that the
SBA has fully forgiven the Company's PPP Loan dated April 27, 2020
in the amount of $50,655.
F-20
I
TEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
I
TEM 9A. CONTROLS AND
PROCEDURES
Disclosure Controls and Procedures
Disclosure
Controls and Procedures
–
Our
management, with the participation of our Chief Executive Officer,
Chief Financial Officer, and Chief Operations 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 and CFO, to allow timely decisions regarding
required disclosure.
Based
on this evaluation, our management, including our CEO and CFO,
concluded that our disclosure controls and procedures were not
effective as of December 31, 2020, 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 tracking and
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.
22
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, 2020, 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, 2020. 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 in December 2019, management believes
that, as of December 31, 2020, our internal control over financial
reporting were ineffective based in part on the issues discussed
above.
I
TEM 9B. OTHER INFORMATION
None.
23
P
ART III
I
TEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
Following is a list
of our officers and directors:
|
Name
|
|
Age
|
|
Position(s)
|
|
|
|
|
|
|
|
Dr.
Steve N. Slilaty
|
|
68
|
|
President,
Chief Executive Officer and Chairman
|
|
|
|
|
|
|
|
Dr.
Abderrazzak Merzouki
|
|
57
|
|
Chief
Operating Officer and Director
|
|
|
|
|
|
|
|
Camille
Sebaaly
|
|
60
|
|
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 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. Sunshine Biopharma is the third in a line of
biotechnology companies that Dr. Slilaty founded and
managed. The first,
Quantum Biotechnologies Inc.
later
known as
Qbiogene Inc.
, was
founded in 1991 and is now 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
, conducted an initial public offering 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 and reached a market cap
of $1 billion in 2000. Formerly, Dr. Slilaty was a
research team leader at the
Biotechnology Research Institute
(Montreal)
, a division of the
National Research Council of
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 was
the discovery of a new class of enzymes, the S24 Family of
Proteases (IUBMB Enzyme: EC 3.4.21.88) [
Proc. Natl. Acad. Sci. U.S.A.
84:
3987-3991 (1987)
]. In
addition, Dr. Slilaty (i) developed the first site-directed
mutagenesis system applicable to double-stranded DNA [
Analyt. Biochem.
185:
194-200 (1990)
], (ii) cloned the gene
for the first yeast-lytic enzyme (lytic b-1,3-glucanase)
[
J. Biol. Chem.
266:
1058-1063 (1991)
], (iii)
developed a new molecular strategy for increasing the rate of
enzyme reactions [
Protein
Engineering
4:
919-922 (1991)
], and (iv) constructed a
powerful new cloning system for genomic sequencing (TrueBlue®
Technology) [
Gene
213:
83-91 (1998)
]. Most
recently, Dr. Slilaty, in collaboration with Institut National des
Sciences Appliquée (France), State University of New York at
Binghamton (USA) and École Polytechnique, Université de
Montréal (Canada), designed, patented, and advanced the
development the first, and currently the only known anticancer
compound (Adva-27a) capable of destroying multidrug resistant
cancer cells [
Anticancer
Res.
32:
4423 (2011) and US Patent Numbers: 8,236,935
and 10,272,065
]. These and other works of Dr. Slilaty are
cited in research papers, editorials, review articles and
textbooks. Dr. Slilaty is the author of 18 original research papers
and 10 issued and pending. 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. Dr. Slilaty has received
research grants from the NIH and NSF and he is the recipient of the
1981 University of Arizona Foundation award for Meritorious
Performance in Teaching. 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.
24
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 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 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,
though some were filed late.
Code of Ethics
Our
board of directors adopted a code of ethics on April 15, 2020. A
copy of the same is available on our website at
www.sunshinebiopharma.com.
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 at such time as financing for our drug
development program is secured, of which there are no
assurances.
I
TEM 11. EXECUTIVE
COMPENSATION
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.
25
SUMMARY COMPENSATION TABLE
|
Name and Principal
Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock Awards ($)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Dr. Steve N. Slilaty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Chief
Executive Officer and Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
2018
|
|
|
|
85,000
(4)
|
|
|
|
-
|
|
|
|
200,100
(1)
|
|
|
|
-
|
|
|
|
285,100
|
|
|
|
|
|
2019
|
|
|
|
28,000
(4)
|
|
|
|
-
|
|
|
|
68,100
(2)
|
|
|
|
-
|
|
|
|
96,100
|
|
|
|
|
|
2020
|
|
|
|
177,000
(4)
|
|
|
|
-
|
|
|
|
50,000
(3)
|
|
|
|
-
|
|
|
|
227,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Camille Sebaaly
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer and Director
|
|
|
2018
|
|
|
|
37,500
|
|
|
|
-
|
|
|
|
200,100
(1)
|
|
|
|
-
|
|
|
|
237,600
|
|
|
|
|
|
2019
|
|
|
|
25,000
|
|
|
|
-
|
|
|
|
68,100
(2)
|
|
|
|
-
|
|
|
|
93,100
|
|
|
|
|
|
2020
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Abderrazzak Merzouki
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Operating Officer and Director
|
|
|
2018
|
|
|
|
32,415
|
|
|
|
-
|
|
|
|
200,100
(1)
|
|
|
|
-
|
|
|
|
232,515
|
|
|
|
|
|
2019
|
|
|
|
19,916
|
|
|
|
-
|
|
|
|
68,100
(2)
|
|
|
|
-
|
|
|
|
88,016
|
|
|
|
|
|
2020
|
|
|
|
24,930
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24,930
|
|
(1)
In 2018, each member of our Board
of Directors was issued 67,500 and 95,000 shares of our Common
Stock valued at $143,100 and $57,000,
respectively.
(2)
In 2019, each member of our Board
of Directors was issued 650,000, 1,100,000 and 1,300,000 shares of
our Common Stock valued at $24,700, $33,000 and $10,400,
respectively.
(3)
In consideration for services
valued at $50,000, our CEO 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. This issuance brought the total of Series “B”
Preferred Stock held by our CEO to 1,000,000
shares.
(4)
These amounts were paid to Advanomics Corporation
(now known as TRT Pharma Inc.), a company controlled by our
CEO.
Executive
compensation and 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 are
able to secure adequate funding for our operations.
26
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 compensation plans
as of the date of this Report. We may adopt such plans
in the future.
I
TEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
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
465,005,925 Common Shares and 1,000,000 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
|
|
Dr. Steve N. Slilaty
(1)
579 Rue Lajeunesse
Laval, Quebec
Canada H7X 3K4
|
|
24,204,670
(2)
|
|
5.21%
|
|
1.65%
|
|
|
Series B Preferred
|
|
|
|
1,000,000
(3)
|
|
100%
|
|
68.26%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Camille Sebaaly
(1)
14464 Gouin West, #B
Montreal, Quebec
Canada H9H 1B1
|
|
23,893,086
|
|
5.14%
|
|
1.63%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Dr. Abderrazzak Merzouki
(1)
731 Place de l’Eeau Vive
Laval, Quebec
Canada H7Y 2E1
|
|
23,343,975
|
|
5.02%
|
|
1.59%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All Officers and Directors
As Group (3 persons)
|
|
71,441,731
|
|
15.36%
|
|
73.14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Preferred
|
|
|
|
1,000,000
(3)
|
|
1
00%
|
|
68.26
%
|
|
(1)
Officer and
Director.
(2)
Includes 861,209 shares held in the
name of Advanomics Corporation (now known as TRT Pharma Inc.). Dr.
Slilaty is an officer, director and principal shareholder of TRT
Pharma Inc. and, as a result, controls the disposition of these
shares.
(3)
The Series B
Preferred shares entitle the holder to
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.
27
I
TEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related Party Transactions
A
Note Payable dated December 31, 2019 held by our CEO having a Face
Value of $128,269 and accruing interest at 12% was due December 31,
2020. On December 31, 2020, we renewed this Note together with
accrued interest of $15,392 for a 12-month period. The new Note has
a Face Value of $143,661, accrues interest at 12% per annum, and
has a maturity date of December 31, 2021.
On
January 1, 2018, as part of the acquisition of Atlas Pharma Inc.,
we issued a Note Payable in the amount of $450,000 Canadian
(approximately $358,407 US). The Note was nonconvertible and
accrued interest at the rate of 3% per annum. Payments on this note
were $10,000 Canadian (approximately $7,800 US) per quarter.
Post-acquisition, the holder of this Note stayed on as a director
and officer of Atlas Pharma Inc. We disposed of Atlas Pharma Inc.
on April 1, 2019 in exchange for this Note.
During
the period ended December 31, 2020, our Directors and Officers were
paid $221,930 in cash. Of this amount, $177,000 was paid to
Advanomics Corporation (now known as TRT Pharma Inc.), a company
controlled by our CEO. In addition, during the period ended
December 31, 2020, we issued to our CEO 500,000 shares of Series B
Preferred Stock valued at $50,000. This issuance brought the total
number of Series B Preferred Stock held by our CEO to 1,000,000
shares.
During
the year ended December 31, 2019, we issued to our Board of
Directors 1,950,000 shares of Common Stock valued at $74,100,
3,300,000 shares of Common Stock valued at $99,000, and 3,900,000
shares of Common Stock valued at $31,200. We also issued 550,000
shares of Common Stock valued at $16,500 to our CFO for consulting
services rendered to us in 2019. During the year ended December 31,
2019, our Directors and Officers were paid $72,916 in cash. Of this
amount, $28,000 was paid to Advanomics Corporation, a company
controlled by our CEO.
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.
I
TEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES
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 years ended December 31, 2020 and 2019:
|
|
December 31,
2020
|
December 31,
2019
|
|
Audit
Fees
|
$
64,800
|
$
64,800
|
|
Tax
Fees
|
-
|
-
|
|
All Other
Fees
|
-
|
-
|
|
Total
|
$
64,800
|
$
64,800
|
28
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, 2020 and 2019 and for
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 Audit Fees.
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.
P
ART IV
I
TEM 15. EXHIBITS, FINANCIAL STATEMENTS
SCHEDULES
The
following exhibits are included herewith:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
14
|
|
Code of
Ethics
|
|
|
|
|
|
|
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
|
29
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
|
30
S
IGNATURES
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:
March 30, 2021
|
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 March 30, 2021.
s/ Dr. Steve N. Slilaty
Dr.
Steve N. Slilaty, Director
s/ Camille Sebaaly
Camille
Sebaaly, Director
s/ Dr. Abderrazzak Merzouki
Dr.
Abderrazzak Merzouki, Director
31
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 Acquisition and Disposition Of Atlas Pharma IncNote 12 LeasesNote 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 Statements Schedules