SUNSHINE BIOPHARMA, INC
10-Ks and 10-Qs
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended:
June 30, 2016
Commission File Number:
000-52898
SUNSHINE BIOPHARMA INC.
(Exact name of small business issuer as specified in its charter)
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Colorado
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20-5566275
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(State of other jurisdiction of incorporation)
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(IRS Employer ID No.)
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469 Jean-Talon West
3rd Floor
Montreal, Quebec, Canada H3N 1R4
(Address of principal executive offices)
(514) 764-9698
(Issuer’s Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of 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 and post such files). Yes
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No
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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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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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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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes
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No
The number of shares of the registrant’s only class of common stock issued and outstanding as of August 15, 2016, was 601,487,325 shares.
TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
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Page No.
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Item 1.
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Financial Statements
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3
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Unaudited Consolidated Balance Sheet as of June 30, 2016
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3
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Unaudited Consolidated Statement of Operations for the three and six month Period Ended June 30, 2016
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4
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Unaudited Consolidated Statement of Cash Flows for the for the six month Period Ended June 30, 2016 and 2015
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5
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Notes to Unaudited Consolidated Financial Statements
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6
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation.
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12
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk.
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18
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Item 4.
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Controls and Procedures.
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19
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PART II
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OTHER INFORMATION
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Item 1.
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Legal Proceedings
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20
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Item 1A.
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Risk Factors
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20
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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20
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Item 3.
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Defaults Upon Senior Securities
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20
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Item 4.
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Mine Safety Disclosures
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20
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Item 5.
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Other Information
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20
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Item 6.
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Exhibits
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20
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Signatures
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21
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2
Sunshine Biopharma, Inc.
Consolidated Balance Sheet
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Unaudited
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Audited
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June 30,
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December 31,
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2016
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2015
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
73,922
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$
50,798
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Receivables and Prepaid expenses
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-
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3,111
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Total Current Assets
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73,922
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53,909
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Equipment (net of $1,028 and $479 depreciation resepctively)
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6,109
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4,314
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Patents (net of $33,430 and $3,772 amortization respectively)
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585,380
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615,038
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TOTAL ASSETS
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$
665,441
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$
673,261
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities
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Current portion of notes payable
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324,142
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305,178
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Current portion of notes payable - related party
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835,394
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835,394
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Accounts payable
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35,706
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46,591
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Accounts payable - related party
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-
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80,487
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Accrued expenses
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2,055
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-
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Interest payable
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16,487
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2,656
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Total current liabilities
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1,213,784
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1,270,306
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TOTAL LIABILITIES
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1,213,784
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1,270,306
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COMMITMENTS AND CONTINGENCIES
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SHAREHOLDERS' EQUITY (DEFICIT)
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Preferred stock. Series A $0.10 par value per share;
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Authorized 850,000 Shares; Issued
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and outstanding -0- shares.
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Preferred stock. Series B $0.10 par value per share;
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Authorized 500,000 Shares; Issued
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and outstanding 500,000 shares.
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50,000
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50,000
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Common Stock. $0.001 per share;
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Authorized 500,000,000 Shares; Issued
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and outstanding 274,431,909 and 198,265,118 at
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June 30, 2016 and December 31, 2015 respectively
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274,432
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198,265
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Capital paid in excess of par value
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8,992,992
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8,235,217
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Accumulated comprehensive income
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2,074
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740
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Accumulated (Deficit)
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(9,867,871
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(9,081,267
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TOTAL SHAREHOLDERS' EQUITY (DEFICIT)
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(548,373
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(597,045
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
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$
665,411
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$
673,261
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See Accompanying Notes To These Financial Statements.
3
Sunshine Biopharma, Inc.
Unaudited Consolidated Statement Of Operations
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Unaudited
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Unaudited
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Unaudited
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Unaudited
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3 Months
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3 Months
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6 Months
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6 Months
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Ended
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Ended
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Ended
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Ended
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June 30,
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June 30,
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June 30,
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June 30,
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2016
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2015
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2016
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2015
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Revenue:
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$
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$
1,708
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$
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$
1,708
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General & Administrative Expenses
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Accounting
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6,169
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52,160
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12,969
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57,560
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Amortization & Depreciation
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14,962
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-
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30,206
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Consulting
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118,239
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81,421
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132,423
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101,421
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Legal
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15,690
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34,391
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43,789
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77,242
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Licenses
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7,761
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144,108
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7,761
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194,108
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Office
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8,663
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2,300
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11,932
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5,724
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Officer & Director remuneration
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255,343
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50,000
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255,343
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50,000
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Research & Development
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32,793
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-
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32,793
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Stock Transfer Fees
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3,363
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5,485
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5,449
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Travel
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8,330
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8,330
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8,635
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Total G & A
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471,313
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369,865
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540,995
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494,690
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(Loss) from operations
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(471,313
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(368,157
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(540,995
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(492,982
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Other Income (expense):
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-
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Foreign exchange gain
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-
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-
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Interest expense
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(9,997
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(33,226
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(16,951
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(39,431
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Litigation settlement proceeds
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-
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25,000
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Loss on debt conversions
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(116,129
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(253,658
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(279,466
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Total Other (Expense)
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(9,997
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(149,355
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(245,609
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(318,897
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Net (loss)
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$
(481,310
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$
(517,512
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$
(786,604
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$
(811,879
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Basic (Loss) per common share
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$
0.00
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$
0.00
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$
0.00
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$
(0.01
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Weighted Average Common Shares Outstanding
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262,370,859
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119,908,405
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238,983,449
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99,538,757
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Net Income (Loss)
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$
(481,310
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$
(517,512
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$
(786,604
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$
(811,879
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Other comprehensive income:
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Gain from foreign exchange translation
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11,325
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4,357
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(1,334
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4,357
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Comprehensive (Loss)
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(393,644
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(513,155
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(698,938
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(807,522
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Basic (Loss) per common share
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$
0.00
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$
0.00
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$
0.00
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$
(0.01
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Weighted Average Common Shares Outstanding
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262,370,859
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119,908,405
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238,983,449
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99,538,757
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See Accompanying Notes To These Financial Statements.
4
Sunshine Biopharma, Inc.
Unaudited Consolidated Statement Of Cash Flows
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Unaudited
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Unaudited
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6 Months
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6 Months
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Ended
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Ended
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June 30,
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June 30,
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2016
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2015
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Cash Flows From Operating Activities:
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Net Income (Loss)
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$
(786,604
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$
(811,879
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Adjustments to reconcile net loss to net cash used in
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operating activities:
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Depreciation and amortization
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30,206
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-
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Stock issued for licenses, services, and other assets
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352,000
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116,500
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Stock issued for payment interest
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3,120
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3,180
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Loss on debt conversion
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253,658
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288,931
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Stock issued for payment of expenses
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-
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-
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(Increase) In accounts receivable
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-
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(1,933
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(Increase) decrease in prepaid expenses
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3,111
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(11,589
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Increase (decrease) in Accounts Payable & accrued expenses
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(89,317
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901
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Increase in interest payable
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13,831
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(6,354
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Net Cash Flows (used) in operations
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(219,995
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(422,243
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Cash Flows From Investing Activities:
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Purchase of equipment
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(2,343
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-
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Net Cash Flows (used) in Investing activities
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(2,343
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-
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Cash Flows From Financing Activities:
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Proceed from note payable
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131,150
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152,840
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Note payable used to pay expenses
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9,160
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Note payable used to pay origionation fees & interest
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8,850
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33,140
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Sale of common stock
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104,128
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236,550
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Net Cash Flows provided by financing activities
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244,128
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431,690
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Net Increase (Decrease) In Cash and cash equivalents
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21,790
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9,447
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Foreign currency translation adjustment
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1,334
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4,357
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Cash and cash equivalents at beginning of period
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50,798
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143,423
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Cash and cash equivalents at end of period
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$
73,922
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$
157,227
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Supplementary Disclosure Of Cash Flow Information:
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Stock issued for services, licenses and other assets
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$
100,000
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$
116,500
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Stock issued for note conversions including interest
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$
377,814
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$
576,735
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Stock issued for interest
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$
-
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$
-
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Cash paid for interest
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$
-
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$
-
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Cash paid for income taxes
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$
-
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$
-
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See Accompanying Notes To These Financial Statements.
5
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
Note 1 – Description of Business
Mountain West Business Solutions, Inc. (“MWBS”) was incorporated on August 31, 2006 in the State of Colorado. Sunshine Etopo, Inc. (formerly Sunshine Biopharma, Inc.) was incorporated in the State of Colorado on August 17, 2009. Effective October 15, 2009, MWBS was acquired by Sunshine Etopo, Inc. in a transaction classified as a reverse acquisition. MWBS concurrently
changed its name to Sunshine Biopharma, Inc. Sunshine Etopo, Inc. has been inactive and was recently dissolved. In July 2014, the Company formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. The financial statements represent the consolidated activity of Sunshine Biopharma, Inc. and Sunshine Biopharma Canada Inc. (hereinafter together referred to as the "Company"). The Company was formed for the purposes of conducting research, development and commercialization of drugs for the treatment
of various forms of cancer. The Company may also engage in any other business that is permitted by law, as designated by the Board of Directors of the Company.
The Company’s wholly owned Canadian Subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”) was formed for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the globe. Sunshine Canada has recently signed licensing agreements for four (4) generic prescription drugs for treatment of cancer and BPH (Benign Prostatic
Hyperplasia). In addition, Sunshine Canada is currently evaluating several other generic products for in-licensing and is working on securing a Drug Establishment License (“DEL”) and a Drug Identification Number (“DIN”) per product from Health Canada. Once the DEL and the DIN’s are secured, Sunshine Canada will begin its generic pharmaceuticals marketing and sales program in Canada and overseas.
During the last three month period the Company has continued to raise money through stock sales and borrowings.
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s generics business and proprietary drug development program.
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.
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.
6
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. The more significant estimates and assumptions made by management are valuation of equity instruments, depreciation of property and equipment, and deferred tax asset valuation. Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
CASH AND CASH EQUIVALENTS
For the Balance Sheets and Statement 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 $73,922 and $50,798 as of June 30, 2016 and December 31, 2015, respectively. At times such cash balances may be in excess of the FDIC limit of $250,000.
EARNINGS PER SHARE
The Company has adopted the 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.
Other than the Notes Payable specified under Note 5 below, there were no potentially dilutive instruments outstanding during the interim period ended June 30, 2016 or the year ended December 31, 2015.
INCOME TAXES
The Company follows the asset and liability method of accounting for deferred income taxes. The asset and liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial accounting and tax bases of assets and liabilities. The Company accounts for income taxes pursuant to
ASC 740. There was no increase in liabilities for unrecognized tax benefits as a result of this implementation. The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expense.
FOREIGN CURRENCY
The Company has a wholly owned subsidiary in Canada and the functional currency for that subsidiary is Canadian dollars. However, the reporting currency for the Company is in U.S. dollars. To come to this conclusion the Company considered the direction of ASC section 830-10-55.
Selling Price and Market – As an office is located in Canada; the Company is performing consulting services to Canadian based customers on a limited basis. The Company has not had any product sales but anticipates the majority of its customers will pay in U.S. dollars. This indicates the functional currency is U.S. dollars.
Financing – The Company’s financing has been generated largely in U.S. dollars from the United States. This indicates the functional currency is U.S. dollars.
Expenses – The majority of expense are paid in U.S. dollars. The expenses generated in PRC are paid by a monthly or weekly cash transfer from the U.S. when the expenses are due, resulting in very little foreign currency exposure. This indicates the functional currency is U.S. dollars.
Intercompany Transactions – The Company has a few transactions each month between the U.S. and Canadian office. This indicates the functional currency is U.S. dollars.
7
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
REVENUE RECOGNITION
Since inception, the Company has been focused on the research, development and commercialization of drugs for the treatment of various forms of cancer. Following its recent entry into the generic pharmaceuticals business, the Company has become a fully integrated pharmaceutical company offering generic and proprietary drugs for the treatment of cancer and other acute and
chronic indications. The Company intends to recognize revenues from the sales of generic pharmaceuticals, if or when they occur, at the times the funds from such sales are received. In the event the Company provides consulting services in the future, revenues from such services will be recognized when the services are rendered and invoiced.
GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since inception, the Company has had recurring operating losses and negative operating cash flows. These factors raise substantial doubt about the Company’s ability to
continue as a going concern.
The Company’s continuation as a going concern is dependent on its ability to obtain additional financing to fund operations, implement its business model, and ultimately, to attain profitable operations. The Company will need to secure additional funds through various means, including equity and debt financing or any similar financing. There can be no assurance that
the Company will be able to obtain additional debt or equity financing, if and when needed, on terms acceptable to the Company, or at all. Any additional equity or debt financing may involve substantial dilution to the Company’s stockholders, restrictive covenants or high interest costs. The Company’s long-term liquidity also depends upon its ability to generate revenues and achieve profitability.
The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
See the Notes in the 2015 10-K consolidated financial statements for a complete summary of the Company’s significant accounting policies.
Note 3 – Unaudited Financial Information
The unaudited financial information included for the three and six month interim periods ended June 30, 2016 was taken from the books and records of the Company without audit. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to reflect properly the results of the interim
periods presented. The results of operations for the three and six month interim periods ended June 30, 2016 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2016.
Note 4 – Notes Payable
A Note Payable having a face value of $19,142 was entered into on December 31, 2015. This Note accrues interest at a rate of 12% per annum. This is a non-convertible note due on December 31, 2016.
A Note having a principal balance of $83,000 as of December 31, 2015 was fully converted, together with $3,320 of accrued interest thereon, into $0.001 par value Common Stock during the three month period ended March 31, 2016. In connection therewith, 9,906,049 shares of $0.001 par value Common Stock valued at $146,658 were issued generating a loss of $63,658 on conversion.
8
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
A Note having a face value of $203,036 with interest of 12% was due June 30, 2016. This Note was convertible after December 31, 2015 into $0.001 par value Common Stock at a price 35% below market value. During the period ended June 30, 2016, a total of $38,036 in principal was converted into $0.001 par value Common Stock leaving a principal balance of $165,000. In connection
with this conversion, 7,705,186 shares of $0.001 par value Common Stock valued at $231,156 were issued generating a loss of $193,120 on conversion. On July 1, 2016, the Company executed a new note payable having a face value of $174,852.00 comprised of the principal amount of this Note ($165,000.00) plus all accrued interest accrued thereon ($9,852.00). The new note is due on March 31, 2017. It also accrues interest at 12% and is convertible at a price 35% below market value.
On February 18, 2016, the Company received monies in exchange for a note due November 18, 2016 having a face value of $85,000 and accruing interest at 8%. The Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the face value,
so no value has been assigned to the beneficial conversion feature.
On June 30, 2016, the Company received net proceeds of $49,150 in exchange for a note payable executed on July 1, 2016 having a face value of $55,000 and accruing interest at the rate of 10% per annum. The Note, due on April 1, 2017, is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 40% below market value. The Company estimates that
the fair value of this convertible debt approximates the face value, so no value has been assigned to the beneficial conversion feature.
At June 30, 2016 and December 31, 2015, accrued interest on Notes Payable was $16,487 and $2,656, respectively.
Note 5 – Notes Payable Related Entity
On October 8, 2015, the Company acquired U.S. Patent Number 8,236,935 (the “Patent”) for the anticancer compound, Adva-27a, which includes all rights to this intellectual property within the
United States in exchange for an interest-free note payable for $4,320,000 with annual payments of $360,000
due and payable on or before December 31 commencing in 2016 and continuing until paid in full. The note was collateralized by the Patent. Pursuant to an amended agreement effective December 28, 2015, this note was cancelled and replaced with a new note having a face value of $210,519, comprised of $155,940 in principal amount which is the seller’s (Advanomics Corporation, a related party) book value of the Patent plus $54,579 as an adjustment for the currency exchange difference. This new, interest-free
note was automatically convertible into 80,968,965 shares of the Company’s $0.001 par value Common Stock upon the Company completing an increase in its authorized capital such that a sufficient number of Common Shares is available for issuance. On July 6, 2016, the Company amended its Articles of Incorporation, increasing its authorized capital to 3,000,000,000 shares of $0.001 par value Common Stock and on July 8, 2016 the Company issued 80,968,965 shares of $0.001 par value Common Stock to Advanomics
Corporation in exchange for cancellation of this note (see Note 12).
On December 28, 2015 the Company acquired the worldwide issued and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 (the “Patents”) for the anticancer compound, Adva-27a, which include all worldwide rights to this intellectual property in exchange for a note
payable for $12,822,499,
with interest accruing at 2% per year beginning January 1, 2016 and quarterly payments of $70,000 plus interest commencing the end of March 2016 and continuing until December 2020 when the entire principal balance and all accrued interest will be due. The note was collateralized by the Patents. Pursuant to an amended agreement, effective December 28, 2015, this note was cancelled and replaced with a new convertible note having a face value of $624,875, comprised of $462,870 in principal amount which is the seller’s
(Advanomics Corporation, a related party) book value of the Patents, plus a $162,005 amount as an adjustment for the currency exchange difference. This new, interest-free note is automatically convertible into 240,336,451 shares of $0.001 par value Common Stock upon the Company completing an increase in its authorized capital such that a sufficient number of Common Shares are available for issuance. On July 6, 2016, the Company amended its Articles of Incorporation, increasing its authorized capital to 3,000,000,000
shares of $0.001 par value Common Stock and on July 8, 2016 the Company issued 240,336,451 shares of $0.001 par value Common Stock to Advanomics Corporation in exchange for cancellation of this note (see Note 12).
Note 6 – Issuance of Common Stock
During the six months ended June 30, 2016, the Company issued a total of 76,166,791 shares of $0.001 par value Common Stock. Of these 17,611,235 shares valued at $377,814 were issued upon partial conversion of outstanding notes payable, reducing the debt by $121,036 and interest payable by $3,320 and generating a loss on conversion of $256,778 during this six month period.
In addition, the Company issued 7,000,000 shares of $0.001 par value Common Stock for $105,000 Canadian (approximately $79,128 US) and 5,555,556 shares of $0.001 par value Common Stock for $25,000.
The Company also issued 10,000,000 shares of $0.001 par value Common Stock to an unrelated party for services valued at $100,000 or $0.01 per share, the market value of the shares at the time of issuance. These services are for a two year period but were fully expensed during the period ended June 30, 2016.
In addition, the Company issued 36,000,000 shares of $0.001 par value Common Stock for services rendered to the Company by its Directors valued at $252,000 or $0.007 per share, the market value of the shares at the time of issuance.
The Company declared no dividends through June 30, 2016.
9
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
Note 7 – Issuance of Series “B” Preferred Stock
During the year ended December 31, 2015, the Company authorized 500,000 shares of $0.10 par value Series “B” Preferred Stock. 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
500,000 shares of Series “B” Preferred Stock were issued to the CEO of the Company in exchange for services valued at $50,000.
Note 8 – Earnings (Loss) Per Share
Earnings (loss) per share is computed using the weighted average number of Common Shares outstanding during the period. The Company has adopted ASC 260 (formerly SFAS128), “Earnings per Share”.
Note 9 – Financial Statements
For a complete set of footnotes, reference is made to the Company’s Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission and the audited financial statements and notes included therein.
Note 10 – Income Taxes
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses and other items. Loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.
Deferred income tax arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.
At the year ended December 31, 2015 and the six month period ended June 30, 2016, the Company had approximately $9,867,871 and $9,081,267, respectively, in unused federal net operating loss carryforwards, which begin to expire principally in the year 2026. A deferred tax asset at each date of approximately $3,811,959 and $3,508,093 respectively resulting from the loss
carry forwards has been offset by a 100% valuation allowance. The change in the valuation allowance for the periods ended June 30, 2016 and December 31, 2015 was approximately $303,866 and $843,206, respectively.
Note 11 – Related Party Transactions
Certain members of the Company’s management, including Dr. Steve N. Slilaty, the Company’s President, CEO and a Director and Camille Sebaaly, the Company’s CFO, Secretary and a Director, hold similar positions with Advanomics Corporation, the seller of the Adva-27a patents recently acquired by the Company (see Note 5).
Note 12 – Subsequent Events
On July 1, 2016, the Company issued 5,750,000 shares of $0.001 par value Common Stock in exchange for services.
On July 1, 2016, the Company executed a Convertible Promissory Note payable having a face value of $55,000.00. The proceeds from this Note were received by the Company on June 30, 2016 and were recorded in the Financial Statements as Current Liability.
10
Sunshine Biopharma, Inc.
Notes To Unaudited Consolidated Financial Statements
For The Three and Six Month Interim Periods Ended June 30, 2016
On July 1, 2016, the Company executed a Convertible Promissory Note payable having a face value of $174,852.00 comprised of the principal amount ($165,000) and all accrued interest ($9,852) on the Convertible Promissory Note payable that matured on June 30, 2016 (see Note 4).
On July 6, 2016, the Company amended its Articles of Incorporation, increasing its authorized capital to 3,000,000,000 shares of Common Stock, $0.001 par value per share, and 30,000,000 shares of Preferred Stock, $0.10 par value per share.
On July 8, 2016, the Company issued 321,305,416 shares of $0.001 par value Common Stock to Advanomics Corporation (“Advanomics”), a related party, in exchange for cancellation of the two notes payable specified above under Note 5 totaling $835,394 held by Advanomics.
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The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward
looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.
Overview and History
We were incorporated in the State of Colorado on August 31, 2006 under the name “Mountain West Business Solutions, Inc.” Until October 2009, our business was to provide management consulting with regard to accounting, computer and general business issues for small and home-office based companies. Effective October 15, 2009, we executed
an agreement to acquire Sunshine Biopharma, Inc., a Colorado corporation, in exchange for the issuance of 21,962,000 shares of our Common Stock and 850,000 shares of Convertible Preferred Stock, each convertible into twenty (20) shares of our Common Stock. 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 our current management. The majority of the Common Shares and all of the Convertible
Preferred Shares we issued for this transaction were issued to Advanomics Corporation, a privately held Canadian company (“Advanomics”). As a result of the issuance of this stock, Advanomics became a related party. On December 21, 2011, Advanomics exercised its right to convert the 850,000 shares of Series “A” Preferred Stock it held in our Company into 17,000,000 shares of Common Stock.
We operated under a technology license agreement with Advanomics until December 2015, at which time we acquired all of the worldwide right to the technology and became direct owner of all issued and pending patents pertaining to our technology.
See “Plan of Operation – Intellectual Property” below
.
Our principal place of business is located at 469 Jean-Talon West, 3
rd
Floor, Montreal, Quebec, Canada H3N 1R4. Our phone number is (514) 764-9698 and our website address is
www.sunshinebiopharma.com
.
We have not been subject to any bankruptcy, receivership or similar proceeding.
Results Of Operations
Comparison of Results of Operations for the six months ended June 30, 2016 and 2015
For the six months ended June 30, 2016 and 2015, we did not generate any significant revenue.
General and administrative expenses during the six month period ended June 30, 2016 were $540,995, compared to general and administrative expense of $494,690 incurred during the six month period ended June 30, 2015, an increase of $46,305. This difference is primarily attributable to a decrease of $186,347 in licensing fees during the six months ended
June 30, 2016 that we incurred during 2015 because we acquired the patent rights which were previously the subject of the license fee. See “Plan of Operation – Intellectual Property” below. We also incurred a decrease of $78,044 in legal and accounting fees during the six months ended June 30, 2016, compared to the similar period in 2015 and consulting fees decreased by $57,998 during the six months ended June 30, 2016 compared to 2015, as we shifted such services towards the development and
expansion of our Generic Pharmaceuticals Business. See “Plan of Operation” below. Our executive compensation increased by $205,343 during the six months ended June 30, 2016, compared to the similar period in 2015, as a result of stock issued to each of our officers and directors during the second quarter of 2016. We incurred $30,206 in amortization and depreciation during the six months ended June 30, 2016 which we did not incur during the same period in 2015. This amount of amortization and depreciation
is largely related to the patents we purchased in 2015. We incurred $32,793 in research and development (R&D) expenses during the six months ended June 30, 2016, compared to no R&D expenditure during the similar period in 2015 as our management was then concentrating on developing our newly launched Generics Pharmaceuticals Business. We also incurred $16,951 in interest expense during the six months ended June 30, 2016, compared to $39,431 in interest expense during the similar period in 2015
as a result of decreased borrowings. However, we incurred $253,658 in losses arising from debt conversion during the six months ended June 30, 2016, compared to $279,466 on losses from debt conversion during the six months ended June 30, 2015, a difference of $25,808 because we had less convertible debt outstanding in the six months ended June 30, 2016. Finally, we received $25,000 in litigation settlement proceeds during the six months ended June 30, 2016 that we did not receive in 2015.
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As a result, we incurred a net loss of $786,604 ($0.00 per share) for the six month period ended June 30, 2016, compared to a net loss of $811,879 ($0.01 per share) during the six month period ended June 30, 2015.
Comparison of Results of Operations for the three months ended June 30, 2016 and 2015
General and administrative expenses during the three month period ended June 30, 2016 were $471,313, compared to general and administrative expense of $369,865 incurred during the three month period ended June 30, 2015, an increase of $101,448. The various components of our general and administrative expense varied significantly from prior results of operations.
Specifically, licensing fees decreased by $136,347 during the three months ended June 30, 2016 compared to the similar period in 2015 because we acquired the patent rights which were previously the subject of the license fee. See “Plan of Operation – Intellectual Property” below. Consulting fees increased by $36,818 during the three months
ended June 30, 2016 compared to the similar period in 2015 as a result of shifting of the services rendered towards the development and expansion of our Generic Pharmaceuticals Business. See “Plan of Operation” below. Executive Compensation increased by $205,343 during the three months ended June 30, 2016, compared to the similar period in 2015, as a result of stock issued to each of our officers and directors during the second quarter of 2016. We also incurred a decrease of $78,813 in legal and accounting
fees during the three months ended June 30, 2016, compared to the similar period in 2015. We incurred $14,962 in amortization and depreciation during the three months ended June 30, 2016 which we did not incur during the same period in 2015. We incurred $32,793 in R&D charges during the three months ended June 30, 2016, compared to no R&D charges during the similar period in 2015 as our management concentrated on developing our newly launched Generics Pharmaceuticals Business. See “Plan
of Operation” below. We also incurred $9,997 in interest expense during the three months ended June 30, 2016, compared to $33,226 in interest expense during the similar period in 2015 as a result of decreased borrowings. However, we incurred $116,129 in losses arising from debt conversion during the three months ended June 30, 2015, but during the corresponding period in 2016 we had no losses from debt conversion.
Because we did not generate any significant revenues during our prior two fiscal years, following is our Plan of Operation.
Plan of Operation
Until recently, we have been operating as a pharmaceutical company focused on the research, development and commercialization of drugs for the treatment of various forms of cancer. Following our recent entry and expansion into the generic pharmaceuticals business, we have become a fully integrated pharmaceutical company offering generic and proprietary drugs
for the treatment of cancer and other acute and chronic indications. In what follows, we describe our generic pharmaceuticals operations followed by our proprietary drug development activities.
Generic Pharmaceuticals Operations
On July 25, 2015, we formed Sunshine Biopharma Canada Inc. (“Sunshine Canada”), a Canadian wholly owned subsidiary for the purposes of conducting generic pharmaceuticals business in Canada and elsewhere around the globe. Sunshine Canada recently signed Cross Referencing Agreements with a major pharmaceutical company for four prescription generic drugs for
the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. We will market and sell these new pharmaceutical products under our own Sunshine Biopharma label. These four generic products are as follows:
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Anastrozole (brand name Arimidex® by AstraZenica) for treatment of Breast Cancer
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Letrozole (brand name Femara® by Novartis) for treatment of Breast Cancer
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Bicalutamide (brand name Casodex® by AstraZenica) for treatment of Prostate Cancer
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Finasteride (brand name Propecia® by Merck) for treatment of BPH (Benign Prostatic Hyperplasia)
Worldwide sales of the brand name version of these products as reported by the respective owner of the registered trademark are as follows:
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Arimidex® $250M in 2015
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Femara® $380M in 2014
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Casodex® $267M in 2015
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Propecia® $183M in 2015
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Sunshine is currently in the process of securing a Drug Identification Number (“DIN”) for each of these products from Health Canada. The Company is also working on finding an appropriate facility and obtaining a Drug Establishment License (“DEL”) from Health Canada. Upon receipt of the DEL and DIN’s, Sunshine will be able to accept orders
for its own label SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride. Sunshine expects to build a much larger portfolio of “SBI” label Generic Pharmaceuticals over time.
While no assurances can be provided and subject to the availability of adequate financing, of which there is no assurance, we anticipate that profits from the sales of Generic Products will be used to finance the Company’s proprietary drug development program including Adva-27a, the Sunshine’s flagship anticancer compound. In addition to near-term revenue
generation, building the generics business infrastructure and securing the proper permits will render Sunshine Canada appropriately positioned for the marketing and distribution of our proprietary Adva-27a drug candidate, provided that Adva-27a is approved for such marketing and distribution, of which there can be no assurance.
Proprietary Drug Development Operations
Since inception, our proprietary drug development activities have been focused on the development of a small molecule called Adva-27a for the treatment of aggressive cancers. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant cancer cells including Pancreatic Cancer cells, Breast Cancer cells, Small-Cell Lung Cancer
cells and Uterine Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages 4423-4432, October 2012). Sunshine Biopharma is direct owner of all issued and pending worldwide patents pertaining to Adva-27a including U.S. Patent Number 8,236,935 (See “Intellectual Property” below).
Adva-27a Preclinical Studies
Adva-27a is a GEM-difluorinated C-glycoside derivative of Podophyllotoxin, targeted for various forms of cancer. If we are successful in our current financing efforts, Adva-27a is expected to enter Phase I clinical trials for pancreatic cancer and, in parallel, multidrug resistant breast cancer in late 2017. See “Clinical Development Path” and “Clinical
Trials” below. 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. Like Etoposide, Adva-27a is a Topoisomerase II inhibitor; however, unlike Etoposide and other anti-tumor drugs currently in use, Adva-27a is able to destroy
Multidrug Resistant cancer cells. Adva-27a is a new chemical entity and has been shown to have distinct and more desirable biological properties compared to Etoposide. Most notably, Adva-27a is very effective against Multidrug Resistant breast cancer cells while Etoposide has no activity against this aggressive form of cancer (see Figure 1). In other side-by-side studies against Etoposide as a reference, Adva-27a showed markedly improved cell killing activity in various other
cancer types. Our preclinical studies to date have shown that:
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Adva-27a is effective at killing different types of Multidrug Resistant cancer cells, including:
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Pancreatic Cancer Cells (Panc-1)
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Adva-27a is unaffected by P-Glycoprotein, the enzyme responsible for making cancer cells resistant to anti-tumor drugs.
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Adva-27a has excellent clearance time (half-life = 54 minutes) as indicated by human microsomes stability studies and pharmacokinetics data in rats.
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Adva-27a clearance is independent of Cytochrome P450, a mechanism that is less likely to produce toxic intermediates.
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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).
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Adva-27a has shown excellent pharmacokinetics profile as indicated by studies done in rats.
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Adva-27a does not inhibit tubulin assembly.
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These and other preclinical data have been published in ANTICANCER RESEARCH, a peer-reviewed International Journal of Cancer Research and Treatment. The manuscript entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells” appeared in print in the October 2012 issue of the journal
[ANTICANCER RESEARCH
32
: 4423-4432 (2012)]. A copy of the full manuscript as it appeared in the journal is available on our website at
www.sunshinebiopharma.com
.
Figure 1
Clinical Development Path
The early stage preclinical studies for our lead compound, Adva-27a, were successfully completed and the results have been published in ANTICANCER RESEARCH
32
: 4423-4432 (2012). We have been delayed in our implementation of 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 next sequence of steps comprised of the following. There are no assurances we will be successful in our fund raising efforts:
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GMP Manufacturing of 2 kilogram for use in IND-Enabling Studies and Phase I Clinical Trials
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Phase I Clinical Trials (Pancreatic Cancer and Multidrug Resistant Breast Cancer)
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GMP Manufacturing
On November 14, 2014, we entered into a Manufacturing Services Agreement with Lonza Ltd. and Lonza Sales Ltd. (hereinafter jointly referred to as “Lonza”), whereby we engaged Lonza to be the manufacturer of our Adva-27a anticancer drug (the “Lonza Agreement”). Lonza is one of the world’s leading and most-trusted manufacturers of
pharmaceutical ingredients. Headquartered in Basel, Switzerland, Lonza has more than 40 major manufacturing facilities worldwide. The Lonza Agreement was effective November 10, 2014, has a term of 5 years, and may be extended or terminated earlier as provided in the Lonza Agreement.
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In June 2015 we received a sample of the scale-up manufacturing process for evaluation and confirmation of adherence to specifications. Based upon our laboratory analyses, the sample meets all of the required chemical, physical and biological specifications. The amount of material (the “Yield”) generated by this pilot run was found to
be significantly lower than anticipated and we are currently working towards finding possible solutions to increase the Yield.
Clinical Trials
Adva-27a’s initial indication will be pancreatic cancer and multidrug resistant breast cancer for which there are currently little or no treatment options available. In June 2011 we concluded an agreement with McGill University’s Jewish General Hospital in Montreal, Canada to conduct Phase I clinical trials for these two indications. All
aspects of the planned clinical trials in Canada will employ FDA standards at all levels. Subject to obtaining the necessary financing, we now anticipate that Phase I clinical trials will commence in mid to late 2017 and we estimate that it will take 18 months to complete, at which time we expect to receive limited marketing approval for “compassionate-use” under the FDA and similar guidelines in Canada. See “Potential Opportunities” below.
Potential Opportunities
According to the American Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the U.S. each year. Given the terminal and limited treatment options available for the pancreatic cancer and multidrug resistant breast cancer indications we are planning to study, we anticipate being granted limited marketing approval (“compassionate-use”)
for our Adva-27a following receipt of funding and a successful Phase I clinical trial. There are no assurances that either will occur. Such limited approval will allow us to make the drug available to various hospitals and health care centers for experimental therapy and/or “compassionate-use”, thereby generating some revenues in the near-term.
We believe that upon successful completion of Phase I Clinical Trials we may receive one or more offers from large pharmaceutical companies to buyout or license our drug. However, there are no assurances that our Phase I Trials will be successful, or if successful, that any pharmaceutical companies will make an acceptable offer to us. In the event
we do not consummate such a transaction, we will require significant capital in order to manufacture and market our new drug.
Intellectual Property
Effective October 8, 2015, we executed a Patent Purchase Agreement (the “October Purchase Agreement”), with Advanomics, a related party, pursuant to which we acquired all of the right, title and interest in and to U.S. Patent Number 8,236,935 (the “US Patent”) for our anticancer compound, Adva-27a. On December 28, 2015, we executed a
second Patent Purchase Agreement (the “December Purchase Agreement”), with Advanomics, pursuant to which we acquired all of the right, title and interest in and to all of the remaining worldwide rights covered by issued and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 (the “Worldwide Patents”) for our anticancer compound, Adva-27a.
Effective December 28, 2015, we entered into amendments (the “Amendments”) of these Purchase Agreements pursuant to which the total purchase price was reduced from $17,142,499 to $618,810, the book value of this intellectual property on the financial statements of Advanomics. Further, the Amendments provided for automatic conversion of the promissory
notes representing the new purchase price into an aggregate of 321,305,416 shares of our Common Stock once we increase our authorized capital such that these shares can be issued. The October and December Purchase Agreements and Amendments thereof provide us with direct ownership of all worldwide patents and rights pertaining to Adva-27a.
Our Lead Anti-Cancer Compound, Adva-27a, in 3D
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Liquidity and Capital Resources
As of June 30, 2016, we had cash or cash equivalents of $73,922.
Net cash used in operating activities was $219,995 during the six month period ended June 30, 2016, compared to $422,243 for the six month period ended June 30, 2015. We anticipate that overhead costs in current operations will increase in the future as we move forward with our Generic Pharmaceuticals and Proprietary Drug Developments operations
discussed above.
Cash flows from financing activities were $244,128 for the six month periods ended June 30, 2016, compared to $431,690 during the six months ended June 30, 2015. Cash flows used by investing activities were $2,343 for the six months ended June 30, 2016, compared to $0 for the six month periods ended June 30, 2015.
At June 30, 2016, we had issued and outstanding 274,431,909 shares of our Common Stock. During the six months ended June 30, 2016, we issued a total of 76,166,791 shares of our Common Stock. Of these, 17,611,235 shares valued at $377,814 were issued pursuant to conversion of outstanding convertible notes payable, reducing debt by $121,036 and interest payable by $3,320
and generating a loss on conversion of $256,778 for the period.
We also issued 7,000,000 shares of Common Stock for $105,000 Canadian (approximately $79,128 US) to finance our Generic Pharmaceuticals operations and 5,555,556 shares of Common Stock for $25,000 to pay for our filing expenses.
In addition, we issued 10,000,000 shares of $0.001 par value Common Stock for consulting services valued at $100,000 or $0.01 per share. These services are for a two year period but were fully expensed during the period ended June 30, 2016.
We also issued 36,000,000 shares of our Common Stock for services rendered to us by our current directors, valued at $252,000 or $0.007 per share.
We are not generating revenue from our operations, and our ability to implement our business plan for the future will depend on the future availability of financing. Such financing will be required to enable us to continue our Generic Pharmaceuticals business and Proprietary Drug Development operations. We intend to raise funds through private placements
of our Common Stock and through short-term borrowing. We estimate that we will require approximately $5 million in debt and/or equity capital to fully implement our business plan in the future and there are no assurances that we will be able to raise this capital. While we have engaged in discussions with various investment banking firms and venture capitalists to provide us these funds, as of the date of this report we have not reached any agreement with any party that has agreed to provide us with the capital
necessary to effectuate our business plan. Our inability to obtain sufficient funds from external sources when needed will have a material adverse effect on our plan of operation, results of operations and financial condition.
Our cost to continue operations as they are now conducted is nominal, but these are expected to increase as we advance our Generic Pharmaceuticals business and we commence Phase I clinical trials. We do not have sufficient funds to cover the anticipated increase in these expenses. We need to raise additional funds in order to continue our existing operations
and advance our plans to expand our operations for the next year. If we are successful in raising additional funds, our Generic Pharmaceuticals business and Proprietary Drug Development efforts will continue and expand.
Subsequent Events
On July 1, 2016, we issued 5,750,000 shares of our $0.001 par value Common Stock in exchange for services.
On July 1, 2016, we executed a Convertible Promissory Note payable having a face value of $55,000.00. The proceeds from this Note were received by us on June 30, 2016 and were recorded in our Financial Statements included in this report as a current liability.
On July 1, 2016, we executed a Convertible Promissory Note payable having a face value of $174,852, comprised of the principal amount ($165,000.00) and all accrued interest ($9,852.00) on the Convertible Promissory Note payable that matured on June 30, 2016. See Note 4 to Financial Statements.
On July 6, 2016, we amended our Articles of Incorporation, increasing our authorized capital to 3,000,000,000 shares of Common Stock, $0.001 par value per share, and 30,000,000 shares of Preferred Stock, $0.10 par value per share.
On July 8, 2016, we issued 321,305,416 shares of our $0.001 par value Common Stock to Advanomics Corporation (“Advanomics”), a related party, in exchange for cancellation of the two notes payable applicable to our acquisition of two patent rights discussed above and in Note 5 to our Financial Statements, in the principal amount of $835,394
held by Advanomics.
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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 the six month period ended June 30, 2016.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated 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. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
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Disclosure Controls and Procedures
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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.
These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and
communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2016, at the reasonable assurance level. We believe that our consolidated financial statements presented in this Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for
all periods presented herein.
Inherent Limitations
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Our management, including our Chief Executive Officer and Chief Financial Officer, do 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 the six month period ended June 30, 2016, 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.
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We are not party to any material legal proceedings, nor have any such actions been threatened against us.
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
During the six months ended June 30, 2016, we issued a total of 76,166,791 shares of our $0.001 par value Common Stock. Of these, 17,611,235 shares valued at $377,814 were issued pursuant to convertible notes, which reduced debt by $121,036 and interest payable by $3,320 and generating a loss on conversion of $256,778 for the period ended June 30, 2016. We relied upon
the exemption from registration provided by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended to issue these shares.
We also issued 7,000,000 shares of our $0.001 par value Common Stock for $105,000 Canadian (approximately $79,128 US) and 5,555,556 shares of our $0.001 par value Common Stock for $25,000. We relied upon the exemption from registration provided by Regulation S promulgated under the Securities Act of 1933, as amended, to issue these shares. We used the proceeds for the
Generic Pharmaceuticals operations and working capital, respectively.
In addition, we also issued 10,000,000 shares of our $0.001 par value Common Stock having a market value of $100,000 or $0.01 per share, to an unaffiliated company that is assisting us in the development
, marketing, sales and distribution contracts of our newly launched Generic Pharmaceuticals Business more fully described above under “Plan
of Operation – Generic Pharmaceuticals Operations.”
These services are for a two year period but were fully expensed during the period ended June 30, 2016. We relied upon the exemption from registration provided by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended, to issue these shares.
We also issued 36,000,000 shares of $0.001 par value Common Stock for services rendered to us by our Directors valued at $252,000 or $0.007 per share. We relied upon the exemption from registration provided by Section 4(a)(2) promulgated under the Securities Act of 1933, as amended, to issue these shares.
None
Not Applicable
None
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Exhibit No.
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Description
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31.1
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on August 15, 2016.
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SUNSHINE BIOPHARMA, INC.
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By:
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s/ Dr. Steve N. Slilaty
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Dr. Steve N. Slilaty,
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Principal Executive Officer
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By:
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s/ Camille Sebaaly
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Camille Sebaaly,
Principal Financial Officer and
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Principal Accounting Officer
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TABLE OF CONTENTS
Part IItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosureItem 5. Other InformationItem 6. Exhibits