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:
March
31, 2020
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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6500 Trans-Canada Highway
4th Floor
Pointe-Claire, Quebec, Canada H9R 0A5
(Address of principal executive offices)
(514) 426-6161
(Issuer’s Telephone Number)
Securities
registered pursuant to Section 12(b) of the Act: None
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
☑
No
☐
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
☑
No
☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer”, “smaller reporting company”, and
“emerging growth company” in Rule 12b-2 of the Exchange
Act. (Check one)
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Large
accelerated filer
☐
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Accelerated
filer
☐
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Non-accelerated
filer
☒
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Smaller
reporting company
☒
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Emerging
growth company
☒
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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 Exchange
Act).
☐
Yes
☑
No
The number of shares of the registrant’s only class of Common
Stock issued and outstanding as of May 18, 2020, was 112,888,999
shares.
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TABLE OF CONTENTS
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PART I
FINANCIAL INFORMATION
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Page No.
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3
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3
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4
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5
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6
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7
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13
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20
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20
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PART II
OTHER INFORMATION
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21
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22
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22
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22
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22
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22
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23
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2
PART I.
F
INANCIAL INFORMATION
Sunshine Biopharma, Inc.
Unaudited
Consolidated
B
alance
Shee
t
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March
31,
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December
31,
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2020
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2019
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ASSETS
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Current
Assets:
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Cash and cash
equivalents
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$
10,808
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$
40,501
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Accounts
receivable
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-
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430
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Inventory
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13,712
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15,910
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Prepaid
expenses
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1,913
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1,255
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Deposits
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7,590
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7,590
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Total Current
Assets
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34,023
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65,686
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Equipment (net of
$39,883 and $37,109 depreciation, respectively)
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29,665
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32,456
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TOTAL
ASSETS
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$
63,688
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$
98,142
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LIABILITIES AND
SHAREHOLDERS' EQUITY
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Current
Liabilities:
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Notes
payable
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513,407
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586,307
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Notes payable -
related party
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128,269
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129,261
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Accounts payable
and accrued expenses
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97,964
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96,882
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Interest
payable
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32,654
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21,077
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Total Current
Liabilities
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772,294
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833,527
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TOTAL
LIABILITIES
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772,294
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833,527
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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 and outstanding -0- shares
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-
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-
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Preferred Stock,
Series B $0.10 par value per share;
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Authorized 500,000
shares; Issued and outstanding 500,000 shares
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50,000
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50,000
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Common Stock,
$0.001 par value per share; Authorized 3,000,000,000
Shares;
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Issued and
outstanding 59,675,417 and 35,319,990 at March 31, 2020 and
December 31, 2019, respectively
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59,675
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35,320
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Capital paid in
excess of par value
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16,714,450
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16,616,426
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Accumulated other
comprehensive income
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(3,836
)
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(2,495
)
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Accumulated
Earnings (Deficit)
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(17,528,895
)
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(17,434,636
)
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TOTAL SHAREHOLDERS'
EQUITY (DEFICIT)
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(708,606
)
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(735,385
)
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TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY (DEFICIT)
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$
63,688
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$
98,142
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See Accompanying
Notes To These Financial Statements
3
Sunshine Biopharma, Inc.
Unaudited Consolidated Statement of Operations and Comprehensive
Income (Loss)
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3
Months
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3
Months
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Ended
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Ended
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March
31,
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March
31,
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2020
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2019
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Revenues:
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$
11,102
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$
206
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Cost of
revenues
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3,883
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112
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Gross
profit
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7,219
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94
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General &
Administrative Expenses:
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Accounting
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-
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17,000
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Consulting
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1,724
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11,076
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Legal
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23,724
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32,656
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Office
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11,622
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16,708
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Officer &
director remuneration
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3,830
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40,201
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Rent
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507
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1,248
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Depreciation
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3,511
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3,414
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Total General &
Administrative Expenses
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44,918
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122,303
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Income (Loss) from
operations
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(37,699
)
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(122,209
)
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Other Income
(Expenses):
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Foreign exchange
gain (loss)
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10,896
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(9,616
)
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Interest
expense
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(16,356
)
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(46,297
)
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Loss on conversion
of notes payable
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(51,100
)
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(22,308
)
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Total Other Income
(Expenses)
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(56,560
)
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(78,221
)
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Income (Loss)
before income taxes
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(94,259
)
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(200,430
)
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Income tax
provision
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-
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-
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Net income (loss)
from continuing operations
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(94,259
)
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(200,430
)
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Net income (loss)
on discontinued operations
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-
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(2,112
)
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Net Income
(Loss)
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$
(94,259
)
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$
(202,542
)
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Other comprehensive
income (loss) foreign exchange
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(1,341
)
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(785
)
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Comprehensive
Income (Loss)
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(95,600
)
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(203,327
)
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Basic Income (Loss)
from continuing operations per Common Share
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$
(0.00
)
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$
(0.05
)
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Basic Income (Loss)
from discontinued operations per Common Share
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$
0.00
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$
(0.00
)
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Basic Income (Loss)
per Common Share
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$
(0.00
)
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$
(0.05
)
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Weighted Average
Common Shares Outstanding
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37,590,084
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4,304,735
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See Accompanying
Notes To These Financial Statements
4
Sunshine
Biopharma, Inc.
Unaudited
Consolidated Statement of
C
ash
Flows
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3
Months
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3
Months
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Ended
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Ended
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March
31,
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March
31,
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2020
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2019
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Cash
Flows From Operating Activities:
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Net Income
(Loss)
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$
(94,259
)
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$
(202,542
)
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Adjustments to
reconcile net loss to net cash used in operating
activities:
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Depreciation and
amortization
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3,830
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16,475
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Foreign exchange
(gain) loss
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(10,896
)
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9,616
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Rent from ASC 842
lease calculation
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-
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3,389
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Stock issued for
interest
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4,486
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-
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Loss on debt
conversion
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51,100
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22,308
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(Increase) decrease
in accounts receivable
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430
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(24,242
)
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(Increase) decrease
in inventory
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2,198
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(13,237
)
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(Increase) in
prepaid expenses
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(658
)
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(2,402
)
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Increase (decrease)
in Accounts Payable & accrued expenses
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1,158
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(53,426
)
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Increase (decrease)
in interest payable
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11,577
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10,102
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Net
Cash Flows (Used) in Operations
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(31,034
)
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(233,959
)
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Cash
Flows From Financing Activities:
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Proceeds from notes
payable
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-
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249,500
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Payments of notes
payable
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-
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(53,767
)
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Advances from
related parties
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-
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2,993
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Notes payable used
to pay origination fees and interest
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-
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15,930
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Net
Cash Flows Provided by Financing Activities
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-
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214,656
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Cash
and Cash Equivalents at Beginning of Period
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40,501
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115,216
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Net increase
(decrease) in cash and cash equivalents
|
(31,034
)
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(19,302
)
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Foreign currency
translation adjustment
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1,341
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(785
)
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Cash
and Cash Equivalents at End of Period
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$
10,808
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$
95,129
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Supplementary
Disclosure Of Cash Flow Information:
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Stock issued for
note conversions including interest
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$
122,379
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$
47,308
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Cash paid for
interest
|
$
-
|
$
11,034
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Cash paid for
income taxes
|
$
-
|
$
-
|
See Accompanying
Notes To These Financial Statements
5
Sunshine Biopharma, Inc.
U
naudited Statement of
Shareholders' Equity
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Number of Common
Shares Issued
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Common
Stock
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Capital Paid in
Excess of Par Value
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Number of
Preferred Shares Issued
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Preferred
Stock
|
Comprehensive
Income
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Accumulated
Deficit
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Total
|
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|
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Balance at December 31,
2018
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4,282,620
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$
4,283
|
$
15,668,047
|
500,000
|
$
50,000
|
$
(3,738
)
|
$
(15,774,345
)
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(55,753
)
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Common Stock issued
for the reduction of
notes payable and
payment of interest
|
184,829
|
185
|
47,123
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|
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47,308
|
|
|
|
|
|
|
|
|
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|
Net
(loss)
|
|
|
|
|
|
(785
)
|
(202,542
)
|
(203,327
)
|
|
Balance at March 31, 2019
|
4,467,449
|
$
4,468
|
$
15,715,170
|
500,000
|
$
50,000
|
$
(4,523
)
|
$
(15,976,887
)
|
(211,772
)
|
|
|
|
|
|
|
|
|
|
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|
Balance at December
31, 2019
|
35,319,990
|
35,320
|
16,616,426
|
500,000
|
50,000
|
(2,495
)
|
(17,434,636
)
|
(735,385
)
|
|
|
|
|
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|
|
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|
Common Stock issued
for the reduction of
notes payable and
payment of interest
|
24,355,427
|
24,355
|
98,024
|
|
|
|
|
122,379
|
|
|
|
|
|
|
|
|
|
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|
Net
(loss)
|
|
|
|
|
|
(1,341
)
|
(94,259
)
|
(95,600
)
|
|
Balance at March 31, 2020
|
59,675,417
|
$
59,675
|
$
16,714,450
|
500,000
|
$
50,000
|
$
(3,836
)
|
$
(17,528,895
)
|
(708,606
)
|
See Accompanying
Notes To These Financial Statements
6
Sunshine Biopharma, Inc.
N
otes to Unaudited Consolidated Financial
Statements
For the Three Month Interim Periods Ended March 31, 2020 and
2019
Note 1 – Nature of Business and Basis of
Presentation
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. 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 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).
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 a 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 “
Discontinued Operations
” 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
tm
,
a dietary supplement comprised of the nine essential amino acids
that the human body cannot synthesize. 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 $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 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 $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 number of
authorized Common Shares remained as previously established at
3,000,000,000 post-second split.
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".
7
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.
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.
Basis of Presentation of Unaudited Financial
Information
The
unaudited financial statements of the Company for the three month
period ended March 31, 2020 and 2019 have been prepared in
accordance with accounting principles generally accepted in the
United States of America for interim financial information and
pursuant to the requirements for reporting on Form 10-Q and
Regulation S-K. Accordingly, they do not include all the
information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements. However, such information reflects all
adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for the fair
presentation of the financial position and the results of
operations. Results shown for interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year.
The balance sheet information as of March 31, 2020 was derived from
the audited financial statements included in the Company's
financial statements as of and for the year ended December 31, 2019
included in the Company’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the “SEC”)
on May 1, 2020. These financial statements should be read in
conjunction with that report.
Recently Issued Accounting Pronouncements
In January 2018, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) No. 2018-01, LEASES (TOPIC 842): LAND EASEMENT
PRACTICAL EXPEDIENT FOR TRANSITION TO TOPIC 842. In February 2016,
the FASB issued Accounting Standards Update No. 2016- 02, Leases
(Topic 842), to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on
the balance sheet and disclosing key information about leasing
transactions. The Company adopted this pronouncement on January 1,
2019. The Company's month-to-month arrangement for office space has
no short-term or long-term asset or liability
value.
Discontinued Operations
Effective
April 1, 2019 the Company disposed of its Atlas Pharma Inc.
subsidiary. As a consequence of the sale, the operating results and
the assets and liabilities of the discontinued operations, which
formerly comprised the Analytical Chemistry Services Operations are
presented separately in the Company's financial statements.
Summarized financial information for the discontinued business is
shown below. Prior period balances have been reclassified to
present the operations of the Analytical Chemistry Services
business as a discontinued operation.
Discontinued
Operations Income Statement:
|
|
Unaudited
|
Unaudited
|
|
|
3
Month Ended
|
3
Month Ended
|
|
|
March 31,
2020
|
March 31,
2019
|
|
|
|
|
|
Revenues
|
$
-
|
$
119,522
|
|
Cost of
revenues
|
-
|
81,920
|
|
Gross
profit
|
-
|
37,602
|
|
|
|
|
|
General &
Administrative Expenses
|
-
|
36,196
|
|
Gain (Loss) from
operations
|
-
|
1,406
|
|
|
|
|
|
Other income
(expense) – Interest
|
-
|
(3,518
)
|
|
Net Income (Loss)
from discontinued operations
|
$
-
|
$
(2,112
)
|
8
Discontinued
Operations Balance Sheet:
|
|
Unaudited
|
Unaudited
|
|
|
March 31,
2020
|
March 31,
2019
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
-
|
$
4,682
|
|
Accounts
receivable
|
-
|
94,955
|
|
Total Current
Assets
|
-
|
99,637
|
|
|
|
|
|
Equipment (net of
$-0- and $34,959 depreciation)
|
-
|
224,238
|
|
Goodwill
|
-
|
665,697
|
|
|
|
|
|
TOTAL
ASSETS
|
-
|
989,572
|
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
Liabilities:
|
|
|
|
Notes
payable
|
-
|
4,657
|
|
Notes payable -
related party
|
-
|
18,230
|
|
Related party
advances
|
-
|
10,248
|
|
Accounts payable
and accrued expenses
|
-
|
70,597
|
|
Total Current
Liabilities
|
-
|
103,732
|
|
|
|
|
|
TOTAL
LIABILITIES
|
$
-
|
$
103,732
|
Discontinued
Operations Cash Flows:
Cash
flows used in discontinued operations for the nine months ended
March 31, 2020 and 2019 were $-0- and $8,510, respectively. There
were no cash flows used in or provided by financing or investing
activities during those periods.
Earnings per Share
Earnings
per share is computed using the weighted average number of Common
Shares outstanding during the period. The Company has adopted ASC
260, “Earnings per Share”.
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. A deferred tax
asset at each date has been offset by a 100% valuation
allowance.
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.
Local
governmental regulations in Canada 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 revenue
recognition policy is in compliance with these local
regulations.
Note 2 – Going Concern and Liquidity
As of
March 31, 2020 and December 31, 2019, the Company had $10,808 and
$40,501 in cash on hand, respectively, and limited
revenue-producing business and other sources of income.
Additionally, as of March 31, 2020 and December 31, 2019, the
outstanding liabilities of the Company totaled $772,294 and
$833,527, respectively.
9
In the
Company’s financial statements for the fiscal years ended
December 31, 2019, and 2018, the Reports of the Independent
Registered Public Accounting Firm included an explanatory paragraph
that describes substantial doubt about the Company’s ability
to continue as a going concern. These financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and
commitments in the normal course of business. Based on the
Company’s current financial projections, management believes
it does not have sufficient existing cash resources to fund its
current limited operations.
It is
the Company’s current intention to raise debt and/or equity
financing to fund ongoing operating expenses. There is no assurance
that these events will be satisfactorily completed or at terms
acceptable to the Company. Any issuance of convertible debt or
equity securities, if accomplished, could cause substantial
dilution to existing stockholders. Any failure by the Company to
successfully implement these plans would have a material adverse
effect on its business, including the possible inability to
continue operations.
Note 3 – Notes Payable
Outstanding
Notes Payable at March 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 ($70,490 US at
March 31, 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). The matter is currently
pending. See “PART II, Item 1, Legal Proceedings”,
below.
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 $0.001 par
value Common Stock at a price 35% below market value. The new Note
is due August 31, 2020. 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.
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% is 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 March 31, 2020, a total principal
amount of $62,000 of this Note plus accrued interest of $5,342 was
converted into 14,606,229 shares of Common Stock valued at $121,665
resulting in a loss of $54,323. The remaining principal balance of
this note at March 31, 2020 was $25,000.
During the three
month period ended March 31, 2020, a total principal amount of
$26,500 of this Note plus accrued interest of $2,886 was converted
into 11,255,748 shares of Common Stock valued at $63,695 resulting
in a loss of $34,309. This note is past due and is currently
payable on demand.
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%
is due January 8, 2020. The Note is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value. The Company estimates that the fair value of this
convertible debt approximates the face value, so no value has been
assigned to the beneficial conversion feature. Any gain or loss
will be recognized at conversion.
This note is past
due and is currently payable on demand.
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% is due October 10, 2019. The Note is convertible after 180
days from issuance into $0.001 par value Common Stock at a price
35% below market value. A principal amount of $5,265 of this Note
plus accrued interest of $-0- was converted in 2019 into 450,000
shares of Common Stock valued at $6,300 resulting in a loss of
$1,035. At March 31, 2020, the remaining principal balance of this
note was $32,185.
This note is past
due and is currently payable on demand.
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% is due
April 30, 2020. The Note is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value. During the three months period ended March 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 and a
remaining principal balance of $-0-.
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%
is due July 26, 2020. The Note is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value. The Company estimates that the fair value of this
convertible debt approximates the Face Value, so no value has been
assigned to the beneficial conversion feature. Any gain or loss
will be recognized at conversion.
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 $0.001 par value Common Stock at a price 35%
below market value. The Company estimates that the fair value of
this convertible debt approximates the Face Value, so no value has
been assigned to the beneficial conversion feature. Any gain or
loss will be recognized at conversion.
10
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% is due December 14, 2020. The Note is convertible after 180
days from issuance into $0.001 par value Common Stock at a price
35% below market value. The Company estimates that the fair value
of this convertible debt approximates the Face Value, so no value
has been assigned to the beneficial conversion feature. Any gain or
loss will be recognized at conversion.
A Note
Payable dated December 31, 2018 having a Face Value of $26,893 and
accruing interest at 12% was due December 31, 2019. On December 31,
2019, the Company renewed the Note, together with accrued interest
of $3,227 for a 12-month period. The new Note has a Face Value of
$30,120 and accrues interest at 12%. This Note is nonconvertible
and matures on December 31, 2020.
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 is
nonconvertible and matures on December 31, 2020.
At
March 31, 2020 and December 31, 2019, total accrued interest on
Notes Payable was $32,654 and $21,077, respectively.
Note 4 – Notes Payable - Related Party
Outstanding
Notes Payable at March 31, 2020 held by related parties consist of
the following:
A Note
Payable dated December 31, 2018 held by the CEO of the Company
having a Face Value of $117,535 Canadian ($86,118 US) and accruing
interest at 12% was due December 31, 2019. On December 31, 2019,
the Company renewed the Note together with accrued interest of
$14,104 Canadian ($10,845 US) and cash advances made to the Company
of $36,473 Canadian ($28,044 US) for a 12-month period. The new
Note, which was converted to USD, now has a face Value of $128,269
US. This new Note is nonconvertible, accrues interest at 12% per
annum and has a maturity date of December 31, 2020.
Note 5 – Shareholders’ Equity
During
the three months ended March 31, 2020 the Company issued a total of
24,355,427 shares of $0.001 par value Common Stock for the
conversion of outstanding notes payable, reducing the debt by
$66,500 and interest payable by $4,486 and generating a loss on
conversion of $51,393.
The
Company declared no dividends through March 31, 2020.
11
Note 6 – Related Party Transactions
In
addition to the related party transaction detailed in Note 4 above,
the Company paid its Officers and Directors cash compensation
totaling $3,830 and $40,201 for the three months ended March 31,
2020 and 2019, respectively.
Note 7 – Subsequent Events
On
April 16, 20, and 23, and May 5, and 13, 2020, the holder of a note
payable dated September 12, 2019 elected to convert a total of
$43,000 in principal and $1,720 in accrued interest into 38,855,726
shares of Common Stock leaving a principal balance of
$-0-.
On May
5, 2020 the holder of a note payable dated December 24, 2018
elected to convert a total of $12,000 in principal and $1,999 in
accrued interest into 14,357,856 shares of Common Stock leaving a
principal balance of $13,000.
12
ITEM 2.
M
ANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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.
We were
incorporated in the State of Colorado on August 31, 2006 under the
name “Mountain West Business Solutions, Inc.” Until
October 2009, our business was to provide management consulting
with regard to accounting, computer and general business issues for
small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license (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 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 dietary
supplement which we trademarked Essential 9
tm
.
This dietary supplement is an over-the-counter tablet comprised of
the nine amino acids which the human body cannot make. Essential
9
tm
has been authorized for marketing by Health Canada under NPN
80089663. On March 12, 2019 Essential 9
tm
became available for sale on Amazon.ca and on March 23, 2019 we
recorded our first revenues of Essential 9
tm
sales.
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.
13
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
.
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
not been subject to any bankruptcy, receivership or similar
proceeding.
Plan of Operation
Despite
the fact that we now are generating revenues, we have elected to
include a Plan of Operation to discuss our ongoing research and
development activities relating to our proprietary drug development
operations, as well as, our other business activities.
Proprietary Drug Development Operations
Since
inception, our proprietary drug development activities have been
focused on the development of a small molecule called Adva-27a for
the treatment of aggressive forms of cancer. A Topoisomerase II
inhibitor, Adva-27a has been shown to be effective at destroying
Multidrug Resistant Cancer cells including Pancreatic Cancer cells,
Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine
Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages
4423-4432, October 2012). Sunshine Biopharma is direct owner of all
issued and pending worldwide patents pertaining to Adva-27a
including U.S. Patents Number 8,236,935 and
10,272,065.
Figure
1
14
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.
|
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
.
15
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 as it is general
chemotherapy drug. 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
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)
|
16
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 approximately $200 billion per year. In
the United States and Canada, the sales of generic pharmaceuticals
are approximately $50 billion and $5 billion, respectively. The
generic pharmaceuticals business is fairly competitive and there
are several multinational players in the field including Teva
(Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan
(Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex
(Canada). While no assurances can be provided, with our offering of
Canadian approved products we believe that we will be able to
access at least a small percentage of the generic pharmaceutical
marketplace.
Dietary 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
dietary
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.
17
Figure
5
In November 2019, we received Health Canada approval for another
dietary 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
promoting the healthy growth and remodeling of bone, cell growth,
neuromuscular and immune functions, 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 the third quarter of
2020.
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 a
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.
Results Of Operations
Comparison of Results of Operations for the Three Months Ended
March 31, 2020 and 2019
During
the three months ended March 31, 2020, we generated $11,102 in
revenues, compared to $206 in revenues for the same three months
period of 2019, an increase of $10,896. All of these revenues were
generated from our new Dietary Supplements Operations which we
launched in March 2019. The direct cost for generating these
revenues was $3,883 for the period ended March 31, 2020, compared
to $112 for the same period in 2019. Our gross profit increased to
$7,219 for the period ended March 31, 2020, compared to a gross
profit of $94 for the same period in 2019.
18
General
and Administrative expenses during the three month period ended
March 31, 2020 were $44,918, compared to General and Administrative
expense of $122,303 incurred during the three month period ended
March 31, 2019, a decrease of $77,385. Nearly all categories of our
General and Administrative expenses saw a decrease during the three
month period ended March 31, 2020, compared to the same period in
2019. Specifically, the decreases included accounting fees by
$17,000, consulting fees by $9,352, legal fees by $8,932, office
expenses by $5,086, and officer and director compensation by
$36,371. These decreases were part of a cost-cutting effort we
initiated in the beginning of 2020 and plan to continue going
forward. Overall, we incurred a loss of $37,699 from our operations
in the three month period ended March 31, 2020, compared to a loss
of $122,209 in the similar period of 2019, an $84,510
improvement.
In the
area of other expenses, we incurred $16,356 in interest expense
during the three months ended March 31, 2020, compared to $46,297
in interest expense during the similar period in 2019 due to
reduced borrowings. In addition, we incurred $51,393 in losses
arising from debt conversion during the three months ended March
31, 2020, compared to $22,308 in losses from debt conversion during
the similar period in 2019.
As a
result, we incurred a net loss of $94,259 ($0.00 per share) for the
three month period ended March 31, 2020, compared to a net loss of
$202,542 ($0.05 per share) during the three month period ended
March 31, 2019.
Liquidity and Capital Resources
As
of March 31, 2019, we had cash or cash equivalents of
$10,808.
Net cash used in operating activities was $31,034
during the three month period ended March 31, 2020, compared to
$233,959 for the three month period ended March 31,
2019. We anticipate that overhead costs and other
expenses will increase in the future as we move forward with our
Proprietary Drug Development activities and expansion of our
Generic Pharmaceuticals and Dietary Supplements operations
discussed above.
Cash
flows provided by financing activities were $-0- for the three
month periods ended March 31, 2019, compared to $214,656 during the
three months ended March 31, 2019. Cash flows used in
investing activities were $-0- for both, the three month period
ended March 31, 2020 and the same three month period ended in
2019.
During
the three months ended March 31, 2020, we issued a total of
24,355,427 shares of our Common Stock valued at $122,379 for the
conversion of outstanding notes payable, reducing the debt by
$66,500 and interest payable by $4,486 and generating a loss on
conversion of $51,393.
During
the three month period ended March 31, 2019, we issued a total of
184,829 shares of our Common Stock valued at $47,308 for the
conversion of outstanding notes payable, reducing debt by $25,000
and interest payable by $-0- and generating a loss on conversion of
$22,308.
During
the three months ended March 31, 2020, we did not sell any of our
capital stock for cash or entered into any new debt
arrangements.
We are not generating adequate revenues from our
operations to fully implement our business plan as set forth
herein. As a result, our future success will depend on the future
availability of financing, among other things. Such financing will
be required to enable us to actualize our Proprietary Drug
Development program and further develop our Generic Pharmaceuticals
operations and Dietary Supplements plans. We intend to raise funds
through private placements of our Common Stock and/or debt
financing. We estimate that we will require approximately $7
million ($2 million for the Generic Pharmaceuticals and Dietary
Supplements operations and $5 million for the Proprietary Drug
Development program) to fully implement our business plan in the
future and there are no assurances that we will be able to raise
this capital. 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
.
19
Our
cost of operations is expected to increase as we move forward with
implementation of our business plan. We do not have sufficient
funds to cover the anticipated increase in the relevant expenses.
We need to raise additional capital in order to continue our
existing operations and finance our expansion plans for the next
year. If we are successful in raising additional funds, we expect
our operations and business efforts to continue and expand. There
are no assurances this will occur.
Subsequent Events
On
April 16, 20, and 23, and May 5, and 13, 2020, the holder of a note
payable dated September 12, 2019 elected to convert a total of
$43,000 in principal and $1,720 in accrued interest into 38,855,726
shares of Common Stock leaving a principal balance of
$-0-.
On May
5, 2020 the holder of a note payable dated December 24, 2018
elected to convert a total of $12,000 in principal and $1,999 in
accrued interest into 14,357,856 shares of Common Stock leaving a
principal balance of $13,000.
Off Balance Sheet Arrangements
None
We
are a smaller reporting company and are not required to provide the
information under this item pursuant to Regulation
S-K.
Disclosure
Controls and Procedures
–
Our
management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) as of the end of
the period covered by this Report.
These
controls are designed to ensure that information required to be
disclosed in the reports we file or submit pursuant to the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management,
including our CEO and CFO to allow timely decisions regarding
required disclosure.
Based
on this evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective as of March
31, 2020, at reasonable assurance level, for the following
reasons:
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Ineffective control
environment and lack of qualified full-time CFO who has SEC
experience to focus on our financial affairs;
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Lack of
qualified and sufficient personnel, and processes to adequately and
timely identify making any and all required public
disclosures;
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Deficiencies
in the period-end reporting process and accounting
policies;
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Inadequate internal
controls over the application of new accounting principles or the
application of existing accounting principles to new
transactions;
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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;
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20
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Deficient
revenue recognition policies;
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Inadequate
internal controls with respect to inventory transactions;
and
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Improper and lack
of timely accounting for accruals such as prepaid expenses,
accounts payable and accrued liabilities.
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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 quarterly
report on 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
– 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
the three month period ended March 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.
PART II. OTHER INFORMATION
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. We have elected not to pay the
amount due and to petition 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 April 7, 2020, however due to the ongoing Coronavirus
(COVID-19) Pandemic, the date has been postponed until further
notice.
To the
best of our management’s knowledge and belief, there are no
other material claims that have been brought against us nor have
there been any claims threatened.
21
We
are a smaller reporting company and are not required to provide the
information under this item pursuant to Regulation
S-K.
During
the three months ended March 31, 2020, we issued a total of
24,355,427 shares of our Common Stock valued at $122,379 for the
conversion of outstanding notes payable, reducing the debt by
$66,500 and interest payable by $4,486 and generating a loss on
conversion of $51,393.
During
the three month period ended March 31, 2019, we issued a total of
184,829 shares of our Common Stock valued at $47,308 for the
conversion of outstanding notes payable, reducing debt by $25,000
and interest payable by $-0- and generating a loss on conversion of
$22,308.
We
relied upon the exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933, as amended, to issue these
shares.
Other
than reduction of debt from the conversion of the outstanding
convertible notes payable described above, we did not receive any
direct proceeds from the issuance of these shares. The proceeds
from the convertible notes payable were used for working
capital.
ITEM 3.
D
EFAULTS UPON SENIOR
SECURITIES
None.
Not
Applicable.
None.
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Exhibit
No.
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Description
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Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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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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101.INS
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XBRL
Instance Document*
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101.SCH
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XBRL
Schema Document*
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101.CAL
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XBRL
Calculation Linkbase Document*
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101.DEF
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XBRL
Definition Linkbase Document*
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101.LAB
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XBRL
Label Linkbase Document*
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101.PRE
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XBRL
Presentation Linkbase Document*
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______________________
*
Pursuant to Rule 406T of Regulation S-T, these interactive data
files are not deemed filed or part of a registration statement or
prospectus for purposes of Section 11 or 12 of the Securities Act
or Section 18 of the Securities Exchange Act and otherwise not
subject to liability.
22
S
IGNATURES
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 May 18, 2020.
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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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23
TABLE OF CONTENTS
Part IItem 1. Financial StatementsNote 1 Nature Of Business and Basis Of PresentationNote 2 Going Concern and LiquidityNote 3 Notes PayableNote 4 Notes Payable - Related PartyNote 5 Shareholders EquityNote 6 Related Party TransactionsNote 7 Subsequent EventsItem 2. Management S Discussion and Analysis Of Financial Condition andItem 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