SUNSHINE BIOPHARMA, INC
10-Ks and 10-Qs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
September
30, 2020
Commission File Number:
000-52898
SUNSHINE BIOPHARMA, INC.
(Exact name of small business issuer as specified in its
charter)
|
Colorado
|
|
20-5566275
|
|
(State
of other jurisdiction of incorporation)
|
|
(IRS
Employer ID No.)
|
6500 Trans-Canada Highway
4th Floor
Pointe-Claire, Quebec, Canada H9R 0A5
(Address of principal executive offices)
(514) 426-6161
(Issuer’s Telephone Number)
Securities
registered pursuant to Section 12(b) of the Act: None
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)
|
|
Large
accelerated filer
☐
|
Accelerated
filer
☐
|
|
|
Non-accelerated
filer
☒
|
Smaller
reporting company
☒
|
|
|
|
Emerging
growth company
☒
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act).
☐
Yes
☑
No
The number of shares of the registrant’s only class of Common
Stock issued and outstanding as of November 10, 2020, was
332,419,296 shares.
|
|
TABLE OF CONTENTS
|
|
|
|
Page No.
|
|
|
|
|
|
|
3
|
||
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
6
|
|
|
|
7
|
|
|
14
|
||
|
24
|
||
|
24
|
|
|
|
|
|
|
|
|
|
26
|
||
|
26
|
||
|
26
|
||
|
26
|
||
|
26
|
||
|
26
|
||
|
27
|
||
|
|
28
|
|
P
ART I.
FINANCIAL
INFORMATION
|
Sunshine Biopharma,
Inc.
|
|
|
|
U
naudited Condensed Consolidated Balance
Sheet
|
|
|
|
|
|
|
|
|
September
30,
|
December
31,
|
|
|
2020
|
2019
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
Assets:
|
|
|
|
Cash and cash
equivalents
|
$
488,708
|
$
40,501
|
|
Accounts
receivable
|
-
|
430
|
|
Inventory
|
26,201
|
15,910
|
|
Prepaid
expenses
|
5,105
|
1,255
|
|
Deposits
|
7,590
|
7,590
|
|
Total Current
Assets
|
527,604
|
65,686
|
|
|
|
-
|
|
Equipment (net of
$47,447 and $37,109 depreciation, respectively)
|
22,918
|
32,456
|
|
Patents (net of
$58,918 amortization and $556,120 impairment)
|
-
|
-
|
|
|
|
|
|
TOTAL
ASSETS
|
$
550,522
|
$
98,142
|
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
Liabilities:
|
|
|
|
Notes
payable
|
530,209
|
586,307
|
|
Notes payable -
related party
|
128,269
|
129,261
|
|
Accounts payable
& accrued expenses
|
57,691
|
96,882
|
|
Interest
payable
|
31,677
|
21,077
|
|
Total Current
Liabilities
|
747,846
|
833,527
|
|
|
|
|
|
Long-term portion
of notes payable
|
357,552
|
-
|
|
|
|
|
|
TOTAL
LIABILITIES
|
1,105,398
|
833,527
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
Preferred Stock,
Series B $0.10 par value per share; Authorized 1,000,000
Shares;
|
|
|
|
Issued and
outstanding 1,000,000 and 500,000 at September 30, 2020 and
December 31, 2019, respectively
|
100,000
|
50,000
|
|
|
|
|
|
Common Stock,
$0.001 par value per share; Authorized 3,000,000,000
Shares;
|
|
|
|
Issued and
outstanding 304,419,296 and 35,319,990 at September 30, 2020 and
December 31, 2019, respectively
|
304,419
|
35,320
|
|
|
|
|
|
Capital paid in
excess of par value
|
18,179,143
|
16,616,426
|
|
|
|
|
|
Accumulated
comprehensive income
|
(3,504
)
|
(2,495
)
|
|
|
|
|
|
Accumulated
(Deficit)
|
(19,134,934
)
|
(17,434,636
)
|
|
|
|
|
|
TOTAL SHAREHOLDERS'
EQUITY (DEFICIT)
|
(554,876
)
|
(735,385
)
|
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY (DEFICIT)
|
$
550,522
|
$
98,142
|
See Accompanying Notes To These Financial
Statements
3
|
Sunshine Biopharma,
Inc.
|
|
|
|
|
|
U
naudited Condensed Consolidated Statement Of Operations
and Comprehensive Income (Loss)
|
|
|
||
|
|
|
|
|
|
|
|
3 Months
Ended
September 30,
|
3 Months
Ended
September 30,
|
9 Months
Ended
September 30,
|
9 Months
Ended
September 30,
|
|
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
|
|
Sales
|
$
17,150
|
$
7,326
|
$
43,397
|
$
10,565
|
|
Cost of
Sales
|
6,340
|
5,293
|
15,384
|
6,865
|
|
Gross
Profit
|
10,810
|
2,033
|
28,013
|
3,700
|
|
|
|
|
|
|
|
General &
Administrative Expenses:
|
|
|
|
|
|
Accounting
|
19,290
|
16,402
|
56,490
|
57,542
|
|
Consulting
|
3,823
|
48,222
|
7,731
|
70,238
|
|
Legal
|
6,895
|
13,219
|
50,970
|
52,188
|
|
Office
|
19,453
|
17,035
|
53,910
|
51,945
|
|
Officer &
director remuneration
|
24,600
|
90,600
|
80,430
|
134,552
|
|
Rent
|
513
|
518
|
1,512
|
2,775
|
|
R&D
|
-
|
15,204
|
-
|
15,204
|
|
Depreciation
|
3,524
|
3,473
|
10,526
|
10,302
|
|
Total General &
Administrative Expenses
|
78,098
|
204,673
|
261,569
|
394,746
|
|
|
|
|
|
|
|
Income (Loss) From
Operations
|
(67,288
)
|
(202,640
)
|
(233,556
)
|
(391,046
)
|
|
|
|
|
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
Miscellaneous
income
|
-
|
-
|
3,000
|
-
|
|
Interest
income
|
|
5
|
|
5
|
|
Foreign exchange
gain (loss)
|
(1,598
)
|
961
|
6,404
|
(12,095
)
|
|
Interest
expense
|
(22,094
)
|
(27,847
)
|
(62,669
)
|
(92,486
)
|
|
Debt
release
|
1,284
|
-
|
2,836
|
-
|
|
Loss on debt
conversions
|
(608,899
)
|
(120,720
)
|
(1,416,313
)
|
(185,814
)
|
|
Total Other Income
(Expense)
|
(631,307
)
|
(147,601
)
|
(1,466,742
)
|
(290,390
)
|
|
|
|
|
|
|
|
Net income (loss)
before income taxes
|
(698,595
)
|
(350,241
)
|
(1,700,298
)
|
(681,436
)
|
|
Provision for
income taxes
|
-
|
-
|
-
|
-
|
|
Net income (loss)
from continuing operations
|
(698,595
)
|
(350,241
)
|
(1,700,298
)
|
(681,436
)
|
|
Net income (loss)
on discontinued operations
|
-
|
-
|
-
|
(582,237
)
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
(698,595
)
|
(350,241
)
|
(1,700,298
)
|
(1,263,673
)
|
|
|
|
|
|
|
|
Unrealized gain
(loss) from foreign exchange translation
|
(144
)
|
(115
)
|
(1,009
)
|
1,599
|
|
Comprehensive
Income (Loss)
|
(698,739
)
|
(350,356
)
|
(1,701,307
)
|
(1,262,074
)
|
|
|
|
|
|
|
|
Basic income (loss)
form continuing operations per common share
|
$
0.00
|
$
(0.04
)
|
$
(0.01
)
|
$
(0.15
)
|
|
|
|
|
|
|
|
Basic income (loss)
form discontinued operations per common share
|
$
0.00
|
$
0.00
|
$
0.00
|
$
(0.13
)
|
|
|
|
|
|
|
|
Basic income (loss)
per common share
|
$
0.00
|
$
(0.04
)
|
$
(0.01
)
|
$
(0.29
)
|
|
|
|
|
|
|
|
Weighted Average
Common Shares Outstanding
|
280,873,792
|
8,268,824
|
162,133,885
|
4,420,363
|
See Accompanying Notes To These Financial
Statements
4
|
Sunshine Biopharma,
Inc.
|
|
|
|
U
naudited Condensed Consolidated Statement Of Cash
Flows
|
|
|
|
|
|
|
|
|
9 Months
Ended
|
9 Months
Ended
|
|
|
September 30,
2020
|
September 30,
2019
|
|
Cash
Flows From Operating Activities:
|
|
|
|
Net
(Loss)
|
$
(1,700,298
)
|
$
(1,263,673
)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
10,505
|
10,302
|
|
Foreign exchange
(gain) loss
|
(6,404
)
|
12,095
|
|
Stock issued for
services
|
50,000
|
136,490
|
|
Stock issued for
payment of interest
|
42,233
|
7,905
|
|
Loss on debt
conversion
|
1,416,313
|
190,494
|
|
Debt and interest
release
|
(2,836
)
|
-
|
|
Loss on disposition
of subsidiary
|
-
|
582,237
|
|
(Increase) decrease
in accounts receivable
|
430
|
-
|
|
(Increase) decrease
in inventory
|
(10,291
)
|
(17,778
)
|
|
(Increase) in
prepaid expenses
|
(3,850
)
|
(1,814
)
|
|
(Increase) in
depsoits
|
-
|
(7,590
)
|
|
Increase (decrease)
in accounts payable and accrued expenses
|
(40,029
)
|
(52,489
)
|
|
Increase (decrease)
in interest payable
|
10,600
|
35,862
|
|
Net
Cash Flows (Used) in Operations
|
(233,627
)
|
(367,959
)
|
|
|
|
|
|
Cash
Flows From Investing Activities:
|
|
|
|
Advances to
discontinued operations
|
-
|
(14,416
)
|
|
Purchase of
equipment
|
(800
)
|
-
|
|
Net
Cash Flows (Used) in Investing Activities
|
(800
)
|
(14,416
)
|
|
|
|
|
|
Cash
Flows From Financing Activities:
|
|
|
|
Proceeds from notes
payable
|
676,643
|
376,000
|
|
Payments of notes
payable
|
-
|
(53,000
)
|
|
Advances from
related parties
|
-
|
6,670
|
|
Note payable used
to pay note origination fees
|
7,000
|
22,430
|
|
Net
Cash Flows Provided by Financing Activities
|
683,643
|
352,100
|
|
|
|
|
|
Cash
and Cash Equivalents at Beginning of Period
|
40,501
|
110,534
|
|
Net increase
(decrease) in cash and cash equivalents
|
449,216
|
(30,275
)
|
|
Foreign currency
translation adjustment
|
(1,009
)
|
1,714
|
|
Cash
and Cash Equivalents at End of Period
|
$
488,708
|
$
81,973
|
|
|
|
|
|
Supplementary
Disclosure Of Cash Flow Information:
|
|
|
|
Stock issued for
note conversions including interest
|
$
1,831,816
|
$
151,169
|
|
Cash paid for
interest
|
$
-
|
$
11,034
|
|
Cash paid for
income taxes
|
$
-
|
$
-
|
See
Accompanying Notes To These Financial
Statements
5
|
Sunshine Biopharma,
Inc.
|
|
|
|
|
|
|
|
|
|
U
naudited Condensed Statement of Shareholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Common Shares
Issued
|
Common
Stock
|
Capital Paid in Excess of Par
Value
|
Number Of Preferred Shares
Issued
|
Preferred
Stock
|
Comprehensive
Income
|
Accumulated
Deficit
|
Total
|
|
Three
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30,
2019
|
5,214,371
|
5,215
|
15,818,284
|
500,000
|
50,000
|
(2,024
)
|
(16,687,777
)
|
(816,302
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
6,951,932
|
6,951
|
285,361
|
|
|
|
|
292,312
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for services
|
3,405,000
|
3,405
|
128,085
|
|
|
-
|
|
131,490
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss)
|
|
|
|
|
|
(115
)
|
(350,241
)
|
(350,356
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2019
|
15,571,303
|
$
15,571
|
$
16,231,730
|
500,000
|
$
50,000
|
$
(2,139
)
|
$
(17,038,018
)
|
(742,856
)
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December
31, 2018
|
4,282,620
|
4,283
|
15,668,047
|
500,000
|
50,000
|
(3,738
)
|
(15,774,345
)
|
(55,753
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
7,883,683
|
7,883
|
435,598
|
|
|
|
|
443,481
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for services
|
3,405,000
|
3,405
|
128,085
|
|
|
-
|
|
131,490
|
|
|
|
|
|
|
|
-
|
|
|
|
Net income
(loss)
|
|
|
|
|
|
1,599
|
(1,263,673
)
|
(1,262,074
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2019
|
15,571,303
|
$
15,571
|
$
16,231,730
|
500,000
|
$
50,000
|
$
(2,139
)
|
$
(17,038,018
)
|
(742,856
)
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30,
2020
|
269,821,248
|
269,820
|
17,542,616
|
500,000
|
50,000
|
(3,360
)
|
(18,436,339
)
|
(577,263
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
34,598,048
|
34,599
|
636,527
|
|
|
|
|
671,125
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
issued for services
|
|
|
|
500,000
|
50,000
|
|
|
50,000
|
|
|
|
|
|
|
|
-
|
|
|
|
Net
(loss)
|
|
|
|
|
|
(144
)
|
(698,595
)
|
(698,739
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2020
|
304,419,296
|
$
304,419
|
$
18,179,143
|
1,000,000
|
$
100,000
|
$
(3,504
)
|
$
(19,134,934
)
|
(554,876
)
|
|
|
|
|
|
|
|
|
|
|
|
Nine
Months Ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December
31, 2019
|
35,319,990
|
35,320
|
16,616,426
|
500,000
|
50,000
|
(2,495
)
|
(17,434,636
)
|
(735,385
)
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for the reduction of notes payable
|
|
|
|
|
|
|
|
|
|
and payment of
interest
|
269,099,306
|
269,099
|
1,562,717
|
|
|
|
|
1,831,816
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
issued for services
|
|
|
|
500,000
|
50,000
|
|
|
50,000
|
|
|
|
|
|
|
|
-
|
|
|
|
Net
(loss)
|
|
|
|
|
|
(1,009
)
|
(1,700,298
)
|
(1,701,307
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
September 30, 2020
|
304,419,296
|
$
304,419
|
$
18,179,143
|
1,000,000
|
$
100,000
|
$
(3,504
)
|
$
(19,134,934
)
|
(554,876
)
|
See
Accompanying Notes To These Financial
Statements
6
Sunshine Biopharma, Inc.
N
otes to Unaudited Condensed
Consolidated Financial Statements
For the Three and Nine Month Interim Periods Ended September 30,
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
™
,
a nutritional supplement comprised of the nine (9) 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 Common Stock, reducing the issued and outstanding
shares of Common Stock from 1,713,046,242 to 85,652,400 (the
“First Reverse Stock Split”). The Company’s
authorized capital of Common Stock remained as previously
established at 3,000,000,000 shares.
In November 2019, the Company received Health Canada approval for a
new Calcium-Vitamin D supplement. Health Canada issued NPN 80093432
through which it authorized the Company to manufacture and sell the
new Calcium-Vitamin D supplement under the brand name Essential
Calcium-Vitamin D
tm
.
Effective April 6, 2020, the Company completed another 20 to 1
reverse split of its Common Stock, reducing the issued and
outstanding shares of Common Stock from 1,193,501,925 to 59,675,417
(the “Second Reverse Stock Split”). The number of
authorized Common Shares remained as previously established at
3,000,000,000 post-second split.
7
On May 22, 2020, the Company filed a patent application in the
United States for a new treatment for Coronavirus infections. The
Company’s patent application covers composition subject
matter pertaining to small molecules for inhibition of the main
Coronavirus protease (Mpro), an enzyme that is essential for viral
replication. The patent application has a priority date of May 22,
2020.
On June 17, 2020, the Company filed an amendment to its Articles of
Incorporation (the “Amendment”) with the Secretary of
State for the State of Colorado, to eliminate the Series
“A” Preferred Shares consisting of Eight Hundred and
Fifty Thousand (850,000) shares, par value $0.10 per share, and the
designation thereof, which shares were returned to the status of
undesignated shares of Preferred Stock. In addition, the Amendment
also increased the number of authorized Series “B”
Preferred Shares from Five Hundred Thousand (500,000) to One
Million (1,000,000) shares.
Also on June 17, 2020, the Company issued Five Hundred Thousand
(500,000) shares of Series “B” Preferred Stock in favor
of Dr. Steve N. Slilaty, the Company’s CEO, in consideration
for the COVID-19 treatment technology he developed. The Series
“B” Preferred Stock is non-convertible, non-redeemable,
non-retractable and has a superior liquidation value of $0.10 per
share. Each share of Series “B” Preferred Stock is
entitled to 1,000 votes per share.
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".
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 Condensed Consolidated Financial
Information
The unaudited financial statements of the Company for the three and
nine month periods ended September 30, 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 September 30, 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.
8
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
9 Months and 3
Months Ended
September 30,
2020
|
Unaudited
9 Months and 3
Months Ended
September 30,
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
)
|
|
Loss
on disposal
|
-
|
(580,125
)
|
|
Total
Net Income (Loss) from Discontinued
Operations
|
$
-
|
$
(582,237
)
|
Discontinued
Operations Balance Sheet:
|
|
Unaudited
September 30,
2020
|
Unaudited
December 31,
2018
|
|
ASSETS
|
|
|
|
Cash
and cash equivalents
|
$
-
|
$
4,682
|
|
Accounts
receivable
|
-
|
94,955
|
|
Equipment (net of $-0- and $34,959
depreciation)
|
-
|
224,238
|
|
Goodwill
|
-
|
665,697
|
|
TOTAL
ASSETS
|
-
|
989,572
|
|
|
|
|
|
LIABILITIES
|
|
|
|
Notes
payable
|
-
|
4,657
|
|
Notes
payable - related party
|
-
|
18,230
|
|
Advances - related
party
|
-
|
10,248
|
|
Accounts payable and accrued
expenses
|
-
|
70,597
|
|
TOTAL
LIABILITIES
|
$
-
|
103,732
|
9
Discontinued
Operations Cash Flows:
Cash flows used in discontinued operations for the nine months
ended September 30, 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.
Note 2 – Going Concern and Liquidity
As of September 30, 2020 and December 31, 2019, the Company had
$488,708 and $40,501 in cash on hand, respectively, and limited
revenue-producing business and other sources of income.
Additionally, as of September 30, 2020 and December 31, 2019,
the outstanding liabilities of the Company totaled $1,105,398 and
$833,527, respectively.
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
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 on
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.
On
September 8, 2020, the Company entered into a financing agreement
providing for a commitment by the investor to disburse to the
Company a minimum of $2,000,000 in convertible debt installments
over the ensuing three to six months period. As of September 30,
2020, the Company has received a total of $300,000 in funding under
this agreement.
Note 3 – Notes Payable
The Company’s Notes Payable at September 30, 2020 consisted
of the following:
On April 1, 2017, the Company received monies in exchange for a
Note Payable having a Face Value of $100,000 Canadian ($74,970 US
at September 30, 2020) with interest payable quarterly at 9%, which
Note was due April 1, 2019. The Note is convertible any time after
issuance into $0.001 par value Common Stock at a price of $0.015
Canadian (approximately $0.011 US) per share. The Company estimates
that the fair value of this convertible debt approximates the face
value, so no value has been assigned to the beneficial conversion
feature. Any gain or loss will be recognized at conversion. In June
2018, the Company filed an action in the Superior Court of the
Province of Quebec in the District of Montreal (Canada) against the
holder of this Note. The complaint alleges among other things,
claims of misrepresentations and misleading conduct resulting in
damages to the Company in an amount of approximately $200,000
Canadian (approximately $143,000 US). The matter is currently
pending. See “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 Common Stock
at a price 35% below market value. The new Note was due August 31,
2020. During the nine months ended September 30, 2020, the entire
principal amount of $43,559 of this Note plus accrued interest of
$
2,
523 was converted into
14,198,048 shares of Common Stock valued at $86,685 resulting in a
loss of $40,603.
On December 24, 2018, the Company received monies in exchange for a
Note Payable having a Face Value of $87,000 with interest accruing
at 8% was due December 24, 2019. The Note is convertible after 180
days from issuance into $0.001 par value Common Stock at a price
35% below market value. As of September 30, 2020, the entire
principal amount of $87,000 of this Note plus accrued interest of
$9,639 was converted into 43,986,317 shares of Common Stock valued
at $276,396 resulting in a loss of $161,036.
10
On January 8, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $54,000 with interest accruing
at 8% was due January 8, 2020. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. During the nine month period ended September 30, 2020, the
entire principal amount of $54,000 of this Note plus accrued
interest of $9,814 was converted into 44,931,640 shares of Common
Stock valued at $365,787 resulting in a loss of
$301,973.
On February 5, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $37,450 with interest accruing
at 8% was due October 10, 2019. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. As of September 30, 2020, the entire principal amount of
$37,450 of this Note plus accrued interest of $2,996 was
converted into 38,263,409 shares of Common Stock valued
at $217,971 resulting in a loss of $182,790.
On July 2, 2019, the Company received monies in exchange for a Note
Payable having a Face Value of $40,000 with interest accruing at 8%
was due April 30, 2020. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value.
During the nine month period ended September 30, 2020, the entire
principal amount of $40,000 of this Note plus accrued interest of
$1,600 was converted into 13,099,359 shares of Common Stock valued
at $58,684 resulting in a loss of $17,084.
On July 26, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $50,000 with interest accruing
at 8%, which became due July 26, 2020. The Note is convertible
after 180 days from issuance into Common Stock at a price 35% below
market value. During the nine month period ended September 30,
2020, the entire principal of $50,000 of this Note plus accrued
interest of $4,909 was converted into 43,522,363 shares of Common
Stock valued at $131,370 resulting in a loss
of $76,461.
On September 12, 2019, the Company received monies in exchange for
a Note Payable having a Face Value of $43,000 with interest
accruing at 8% is due July 15, 2020. The Note is convertible after
180 days from issuance into Common Stock at a price 35% below
market value. During the nine month period ended September 30,
2020, the entire principal amount of $43,000 of this Note plus
accrued interest of $1,720 was converted into 38,855,726 shares of
Common Stock valued at $117,177 resulting in a loss of
$72,457.
On December 14, 2019, the Company received monies in exchange for a
Note Payable having a Face Value of $42,800 with interest accruing
at 8% and which is due December 14, 2020. The Note is convertible
after 180 days from issuance into Common Stock at a price 35% below
market value. During the nine month period ended September 30,
2020, the entire principal amount of $42,800 of this Note plus
accrued interest of $1,712 was converted into 18,592,605 shares of
Common Stock valued at $81,796 resulting in a loss of
$37,284.
A Note Payable dated December 31, 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 matures on December 31, 2020. During the nine month
period ended September 30, 2020, a principal amount of $16,225 of
this Note plus accrued interest of $9,775 was converted into
26,000,000 shares of Common Stock valued at $603,200 resulting in a
loss of $577,200.
On April 17, 2020, the Company’s Canadian subsidiary received
a CEBA Loan (Canada Emergency Business Account Loan) from CIBC
(Canadian Imperial Bank of Commerce) in the principal amount of
$40,000 Canadian ($29,352 US) as part of the Canadian
government’s COVID-19 relief program. The CEBA Loan is
non-interest bearing if repaid on or before December 31, 2022 (the
“Termination Date”). The CEBA Loan is considered repaid
in full if the borrower repays 75% of the Principal Amount on or
before the Termination Date. If the CEBA Loan is not repaid in full
on or before the Termination Date, the lender will automatically
extend the term of the loan by three years until December 31, 2025
(the “Extension Period”). During the Extension Period,
interest will be charged, and will accrue on the outstanding amount
of the CEBA Loan at a fixed rate of 5% per year, calculated daily
and compounded monthly. The outstanding balance of the CEBA Loan
and all accrued interest will be due at the end of the Extension
Period.
11
On April 27, 2020, the Company received a Paycheck Protection
Program loan in the principal amount of $50,655 from the US Small
Business Administration as part of the US government’s
COVID-19 relief program. This loan accrues interest at the rate of
1% per annum. The Company is obligated to make payments of
principal and interest totaling $2,133 each month commencing on
November 27, 2020, with any remaining balances due and payable on
or before April 27, 2022. The proceeds derived from this loan may
only be used for payroll costs, interest on mortgages, rent and
utilities (“Admissible Expenses”). In addition, the
Paycheck Protection Program provides for conditional loan
forgiveness if the Company utilizes at least 75% of the proceeds
from the loan to pay Admissible Expenses. As of the date of this
Report, all of the proceeds from this loan have been utilized for
Admissible Expenses and the Company believes that it will qualify
for forgiveness of the entire amount of the
loan.
On June 1, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $42,000 with interest accruing at 8%
is due June 1, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. 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 June 9, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $37,000 with interest accruing at 8%
is due June 9, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. 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 July 7, 2020, the Company received monies in exchange for a Note
Payable having a Face Value of $48,000 with interest accruing at 8%
is due July 7, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 35% below market value. The
Company 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 July 27, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $102,000 with interest accruing
at 8% is due July 27, 2021. The Note is convertible after 180 days
from issuance into Common Stock at a price 30% below market value.
The Company 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 August 14, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $67,000 with interest accruing
at 8% is due August 14, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 30% below market
value. The Company 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 14, 2020, the Company received monies in exchange for
a Note Payable having a Face Value of $250,000 with interest
accruing at 5% is due September 14, 2022. The Note is convertible
after 180 days from issuance into Common Stock at a price equal to
$0.30 per share. The Company 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 24, 2020, the Company received monies in exchange for
a Note Payable having a Face Value of $50,000 with interest
accruing at 5% is due September 24, 2022. The Note is convertible
after 180 days from issuance into Common Stock at a price equal to
$0.30 per share. The Company 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.
The Company assessed the conversion features of the notes above for
derivative accounting consideration, per ASC 815, and determined
that the embedded conversion features should not be classified as a
derivative because the exercise price of the convertible notes does
not exceed the market value of the company's shares on the
conversion date.
At September 30, 2020 and December 31, 2019, total accrued interest
on Notes Payable was $31,677 and $21,077,
respectively.
12
Note 4 – Notes Payable - Related Party
Outstanding Notes Payable at September 30, 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
Effective February 1, 2019, the Company completed a reverse stock
split whereby 1 share of Common Stock was issued for every 20
shares of Common Stock then issued and outstanding, reducing the
issued and outstanding shares of Common Stock from 1,713,046,242 to
85,652,400. The Company’s authorized capital of Common Stock
remained as previously established at 3,000,000,000
shares.
Effective April 6, 2020, the Company completed a second reverse
stock split whereby 1 share of Common Stock was issued for every 20
shares of Common Stock then issued and outstanding, reducing the
issued and outstanding shares of Common Stock from 1,193,501,925 to
59,675,417. The number of authorized Common Shares remained as
previously established at 3,000,000,000 shares.
The Company's financial statements reflect both of these reverse
stock splits on a retroactive basis.
On June 17, 2020, the Company filed an amendment to its Articles of
Incorporation (the “Amendment”) with the Secretary of
State for the State of Colorado, to eliminate the Series
“A” Preferred Shares consisting of Eight Hundred and
Fifty Thousand (850,000) shares, par value $0.10 per share, and the
designation thereof, which shares were returned to the status of
undesignated shares of Preferred Stock. In addition, the Amendment
also increased the number of authorized Series “B”
Preferred Shares from Five Hundred Thousand (500,000) to One
Million (1,000,000) shares.
Also on June 17, 2020, the Company issued Five Hundred Thousand
(500,000) shares of Series “B” Preferred Stock in favor
of Dr. Steve N. Slilaty, the Company’s CEO, in consideration
for the COVID-19 treatment technology he developed. The Series
“B” Preferred Stock is non-convertible,
nonredeemable, non-retractable and has a superior liquidation
value of $0.10 per share. Each share of Series “B”
Preferred Stock is entitled to 1,000 votes per share.
During the nine months ended September 30, 2020, the Company issued
a total of 269,099,306 shares of Common Stock valued at $1,831,816
for the conversion of outstanding notes payable, reducing the debt
by $373,269 and interest payable by $42,233 and generating a
loss on conversion of $1,416,313.
The Company declared no dividends through September 30,
2020.
13
Note 6 – Related Party Transactions
In addition to the related party transaction detailed in Notes 4
and 5 above, the Company paid its Officers and Directors cash
compensation totaling $24,600 and 3,751 for the three months and
$80,430 and $43,952 for the nine months ended September 30, 2020
and 2019, respectively. The Company also paid its Officers and
Directors non-cash compensation in the form of shares of Common
Stock valued $-0- and $74,100 for the three month periods ended
September 30, 2020 and 2019 and $-0- and $74,100 for the nine month
periods ended September 30, 2020 and 2019,
respectively.
Note 7 – Financing Agreement
On
September 8, 2020, the Company executed a Financing Agreement with
RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide
the Company with a minimum of $2 million in convertible debt
financing over the next three to six months pursuant to the terms
and conditions included in relevant Promissory Notes (the
“Promissory Notes”). The Promissory Notes will bear
interest at the rate of 5% per annum and will be fully convertible
into shares of shares of the Company’s Common Stock at a
conversion price equal to the market value of the Company’s
Common Stock on the applicable conversion date or $0.30 per share,
whichever is greater. The Promissory Notes will have a maturity
date of two years from the date of issuance and must be fully
converted on or before the maturity date. The Company has the right
under these Promissory Notes to pay off all or any part of the
Promissory Notes at any time without penalty.
On
September 14 and 24, 2020, the Company received $250,000 and
$50,000, respectively in funding under this agreement (see
“Note 3 – Notes Payable” above).
Note 8 – Subsequent Events
On October 16 and November 4, 2020, the
holder of a Note
Payable dated December 31, 2019 elected to convert a total of
$28,000 in principal into 28,000,000 shares of Common Stock leaving
a principal balance of $78,028.
On October 20, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 5% is due October 20, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share.
I
TEM
2.
MANAGEMET’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
condensed 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.
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.
14
In
December 2018, we completed the development of a new nutritional
supplement which we trademarked Essential 9
™
. This
new supplement is an over-the-counter tablet comprised of the nine
amino acids which the human body cannot make. Essential
9
™
has been
authorized for marketing by Health Canada under NPN 80089663. On
March 12, 2019, Essential 9
™
became
available for sale on Amazon.ca and shortly thereafter on
Amazon.com.
Effective February
1, 2019, we completed a 20 to 1 reverse split of our $0.001 par
value Common Stock reducing the issued and outstanding shares of
Common Stock from 1,713,046,242 to 85,652,400 (the “First
Reverse Stock Split”). The number of authorized shares of our
$0.001 par value Common Stock remained at 3,000,000,000
shares.
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.
On May
22, 2020, we filed a patent application in the United States for a
new treatment for Coronavirus infections, including COVID-19. Our
patent application covers composition subject matter pertaining to
small molecules for inhibition of the main Coronavirus protease
(Mpro), an enzyme that is essential for viral replication. The
small molecules covered by the patent application were computer
modelled and designed by Dr. Steve N. Slilaty, our CEO. The patent
application has a priority date of May 22, 2020.
On June
17, 2020, we filed an amendment to our Articles of Incorporation
(the “Amendment”) with the Secretary of State for the
State of Colorado, to eliminate the Series “A”
Preferred Shares consisting of Eight Hundred and Fifty Thousand
(850,000) shares, par value $0.10 per share, and the designation
thereof, such shares to be returned to the status of undesignated
shares of Preferred Stock. In addition, the Amendment also
increased the number of authorized Series “B” Preferred
Shares from Five Hundred Thousand (500,000) to One Million
(1,000,000) shares.
Also on
June 17, 2020, our Board of Directors authorized the issuance of
Five Hundred Thousand (500,000) shares of our Series
“B” Preferred Stock in favor of Dr. Steve N. Slilaty,
our CEO and a director, in consideration for his development of a
new treatment for Coronavirus infections, including COVID-19. The
Series “B” Preferred Stock is non-convertible,
non-redeemable, non-retractable and has a superior liquidation
value of $0.10 per share. Each share of Series “B”
Preferred Stock is entitled to 1,000 votes per share.
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.
15
Proprietary Drug Development Operations
Coronavirus Treatment
Viruses
carry minimal genetic information as they rely, for the most part,
on host cellular machinery to multiply. Coronavirus has a
positive-sense RNA genome consisting of approximately 30,000
nucleotides, a genome size that places Coronavirus among the larger
sized viruses. A positive-sense RNA genome is effectively a
messenger RNA which allows the virus to express its genes
immediately upon gaining entry into the host cell without the need
for any prior replication or transcription steps as is the case
with negative-sense RNA or DNA viruses. This is part of what makes
Coronavirus a highly aggressive pathogen. Many of the causative
agents of serious human diseases are positive-sense RNA viruses,
including Hepatitis C, Zeka, Polio, West Nile, Dengue, Cardiovirus,
and many others. Some positive-sense RNA viruses, such as the
rhinoviruses that cause the common cold, are less clinically
serious but they are responsible for widespread morbidity on a
yearly basis.
The
initial genome expression products of Severe Acute Respiratory
Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of
COVID-19, are two large polyproteins, referred to as pp1a and
pp1ab. These two polyproteins are cleaved at 13 specific sites by
the main Coronavirus virus encoded protease (Mpro or 3CLpro) to
generate a number of mature viral proteins essential for viral
replication. Mpro represents an attractive anti-viral drug
development target as it plays a central role in the early stages
of viral replication. The crystal structure of Mpro shows the
presence of an active site Cysteine (Cys145) and a coordinated
active site Histidine (His41), both of which are essential for the
enzyme’s proteolytic activity. The following is a summary of
the development to date of our Coronavirus Treatment
project:
●
On May 22, 2020, we
filed a patent application in the United States for a new treatment
for Coronavirus infections. Our patent application covers
composition subject matter pertaining to small molecules for
inhibition of the Coronavirus main protease (Mpro), an enzyme that
is essential for viral replication. The small molecules covered by
the patent application were computer modelled and designed by Dr.
Steve N. Slilaty, our CEO. The patent application has a priority
date of May 22, 2020.
●
In August 2020, we
completed the synthesis of four different potential inhibitors of
Coronavirus protease. These compounds are based on the technology
described in our patent application filed on May 22,
2020.
●
In September 2020,
we completed the screening of our four compounds and subsequently
identified a lead Anti-Coronavirus drug candidate (SBFM-PL4). The
screening which pinpointed the lead compound was performed at the
University of Georgia, College of Pharmacy under the leadership of
Dr. Scott D. Pegan, Director of the Center for Drug Discovery and
Interim Associate Head of Pharmaceutical and Biomedical
Sciences.
●
In October 2020, we
expanded our collaboration with Dr. Scott Pegan group by entering
into a research agreement with the University of Georgia to further
develop our Anti-Coronavirus lead compound, SBFM-PL4. We will
proceed by conducting the in vitro studies followed by cell culture
assays and assessment in Coronavirus infected mice before entering
human clinical trials.
16
Adva-27a Anticancer Drug
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
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
17
Our
preclinical studies to date have shown that:
●
Adva-27a
is effective at killing different types of Multidrug Resistant
cancer cells, including Pancreatic Cancer Cells (Panc-1), Breast
Cancer Cells (MCF-7/MDR), Small-Cell Lung Cancer Cells (H69AR), and
Uterine Sarcoma Cells (MES-SA/Dx5).
●
Adva-27a
is unaffected by P-Glycoprotein, the enzyme responsible for making
cancer cells resistant to anti-tumor drugs.
●
Adva-27a
has excellent clearance time (half-life = 54 minutes) as indicated
by human microsomes stability studies and pharmacokinetics data in
rats.
●
Adva-27a
clearance is independent of Cytochrome P450, a mechanism that is
less likely to produce toxic intermediates.
●
Adva-27a
is an excellent inhibitor of Topoisomerase II with an IC50 of only
13.7 micromolar (this number has recently been reduce to 1.44
micromolar as a result of resolving the two isomeric forms of
Adva-27a).
●
Adva-27a
has shown excellent pharmacokinetics profile as indicated by
studies done in rats.
●
Adva-27a
does not inhibit tubulin assembly.
These
and other preclinical data have been published in ANTICANCER
RESEARCH, a peer-reviewed International Journal of Cancer Research
and Treatment. The publication which is entitled “Adva-27a, a
Novel Podophyllotoxin Derivative Found to Be Effective Against
Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH
32: 4423-4432 (2012)] is available on our website at
www.sunshinebiopharma.com
.
We have
been delayed in our clinical development program due to lack of
funding. Our fund raising efforts are continuing and as soon as
adequate financing is in place we will continue our clinical
development program of Adva-27a by conducting the following next
sequence of steps:
●
GMP
Manufacturing of 2 kilogram for use in IND-Enabling Studies and
Phase I Clinical Trials
●
IND-Enabling
Studies
●
Regulatory
Filing (Fast-Track Status Anticipated)
●
Phase I
Clinical Trials (Pancreatic Cancer Indication)
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.
18
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)
19
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.
Nutritional Supplements Operations
In
December 2018, we completed the development of Essential
9
tm
, the first in a
line of essential micronutrients products that we are planning to
launch. On December 14, 2018, Health Canada issued NPN 80089663
through which it authorized Sunshine Biopharma Inc. to manufacture
and sell the Essential 9
tm
product. Our Essential
9
tm
nutritional
supplement tablets contain a balanced formula of the 9 Essential
Amino Acids that the human body cannot make. Essential Amino Acids
are 9 out of the 20 amino acids required for protein synthesis.
Proteins are involved in all body functions – From the
musculature and immune system to hormones and neurotransmitters.
Like vitamins, Essential Amino Acids cannot be made by the human
body and must be obtained through diet. Deficiency in one or more
of the 9 Essential Amino Acids can lead to loss of muscle mass,
fatigue, weight gain and reduced ability to build muscle mass in
athletes. Sunshine Biopharma’s Essential 9
tm
provides all 9 Essential Amino
Acids in freeform and in the proportions recommended by Health
Canada. Essential 9
tm
is currently available on Amazon.com and Amazon.ca. Figure 5 below
shows our 60-Tablet Essential 9
tm
product.
Figure
5
20
In November 2019, we received Health Canada approval for another
nutritional supplement, a new Calcium-Vitamin D tablets. Health
Canada issued NPN 80093432 through which it authorized us to
manufacture and sell the new Calcium-Vitamin D supplement under the
brand name Essential Calcium-Vitamin D™.
Vitamin
D is a group of steroid-like molecules responsible for increasing
intestinal absorption of calcium, magnesium, and phosphate. They
are also involved in multiple other biological functions, including
proper functioning of the immune system, promoting healthy growth
of bone, and reduction of inflammation. The most important
compounds in this group are Vitamin D2 (ergocalciferol) and Vitamin
D3 (cholecalciferol). Sunshine Biopharma’s Essential
Calcium-Vitamin D™ tablets contain both of these compounds as
well as Calcium for optimum health benefits. We anticipate that
Essential Calcium-Vitamin D™ will be available on Amazon.ca
in early 2021.
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 Nine Months ended
September 30, 2020 and 2019
During
the nine months ended September 30, 2020, we generated revenues of
$43,397 from the sale of products generated by our Nutritional
Supplements Operations, compared to revenues of $10,565 during the
comparable period in 2019, an increase of $32,832. The 2019
revenues only reflected six months of sales as the products from
our Nutritional Supplements Operations were launched in March 2019.
The cost of sales for these revenues was $15,384 during the nine
months ended September 30, 2020, compared to $6,865 during the nine
months ended September 30, 2019.
General
and Administrative Expenses during the nine months ended September
30, 2020 was $261,569, compared to $394,746 during the nine months
ended September 30, 2019, a decrease of $133,177. The reason for
this decrease was due to our continuing effort to reduce expenses
across the board. In terms of specific expense categories that
contributed to the decrease were executive compensation which
decreased by $54,122 and consulting fees which decreased by
$62,507.
We
incurred $1,416,313 in losses arising from debt conversion during
the nine months ended September 30, 2020, compared to $185,814 in
losses from debt conversion during the similar period in 2019. This
large increase was due to the specific structure of our convertible
debt combined with recent volatility in our stock price. We also
incurred $62,669 in interest expense during the nine months ended
September 30, 2020, compared to $92,486 in interest expense during
the similar period in 2019. The decrease was a result of a more
rapid rate of conversion by our debt holders. In addition, we
incurred $582,237 in losses from discontinued operations during the
nine month ended September 30, 2019 as a result of the sale of
Atlas Pharma Inc. and termination of our Analytical Chemistry
Services Operations. We did not incur this loss during the similar
period in 2020.
As a
result, we incurred a Net Loss of $1,700,298 ($0.01 per share)
during the nine month period ended September 30, 2020, compared to
a net loss of $1,263,673 ($0.15 per share) during the nine month
period ended September 30, 2019.
21
Comparison of Results of Operations for the Three Months Ended
September 30, 2020 and 2019
During
the three months ended September 30, 2020, we generated $17,150 in
revenues, compared to $7,326 in revenues for the same three months
period of 2019, an increase of $9,824. All of these revenues were
generated from our new Nutritional Supplements Operations which we
launched in March 2019. The cost of sales for these revenues was
$6,340 for the period ended September 30, 2020, compared to $5,293
for the same period in 2019. Our gross profit increased to $10,810
for the period ended September 30, 2020, compared to a gross profit
of $2,033 for the same period in 2019.
General
and Administrative expenses during the three month period ended
September 30, 2020 were $78,098, compared to $204,673 incurred
during the three month period ended September 30, 2019, a decrease
of $126,575. The majority of this decrease was due to a decrease in
executive compensation by $66,000 and a decrease in consulting fees
by $44,399. These and other decreases are part of our ongoing
effort to reduce expenses across the board. On the whole, we
incurred a loss of $78,098 from our operations in the three month
period ended September 30, 2020, compared to a loss of $204,673 in
the similar period of 2019.
We
incurred $22,094 in interest expense during the three months ended
September 30, 2020, compared to $27,847 in interest expense during
the similar period in 2019 as a result of increased debt. In
addition, we incurred $608,899 in losses arising from debt
conversion during the three months ended September 30, 2020,
compared to $120,720 in losses from debt conversion during the
similar period in 2019.
As a
result, we incurred a net loss of $698,595 ($0.00 per share) for
the three month period ended September 30, 2020, compared to a net
loss of $350,241 ($0.04 per share) during the three month period
ended September 30, 2019.
Liquidity and Capital Resources
As of
September
30, 2020, we had cash or cash equivalents of
$488,708.
Net cash used in operating activities was $233,627
during the nine month period ended
September
30, 2020, compared to $367,959 for the nine month
period ended
September
30,
2019. We anticipate that research and development and
overhead expenses will increase in the future as we move forward
with our expanded Proprietary Drug Development activities and
our
Generic Pharmaceuticals and Nutritional Supplements
operations
discussed
above.
Cash flows provided by financing activities were
$683,643 for the nine month periods ended
September
30, 2019, compared to $352,100 during
the nine months ended
September
30, 2019. Cash flows used in investing
activities were $800 for the nine month period ended
September
30, 2020, compared to
$14,416 during the nine month period ended
September
30, 2019.
During
the nine months ended September 30, 2020, we issued a total of
269,099,306 shares of our Common Stock valued at $1,831,816 for the
conversion of outstanding notes payable, reducing the debt by
$373,269 and interest payable by $42,233 and generating a loss on
conversion of $1,416,313.
During
the nine month period ended September 30, 2019, we issued a total
of 7,883,683 shares of our Common Stock valued at $443,481 for the
conversion of outstanding notes payable, reducing debt by $241,160
and interest payable by $11,402 and generating a loss on conversion
of $185,814.
During
the nine months ended September 30, 2020, we did not sell any of
our capital stock for cash; however, we entered into the following
new debt arrangements:
22
On
April 17, 2020, our Canadian subsidiary received a CEBA Loan
(Canada Emergency Business Account Loan) from CIBC (Canadian
Imperial Bank of Commerce) in the principal amount of $40,000
Canadian ($29,352 US) as part of the Canadian government’s
COVID-19 relief program. The CEBA Loan is non-interest bearing if
repaid on or before December 31, 2022 (the “Termination
Date”). The CEBA Loan is considered repaid in full if the
borrower repays 75% of the Principal Amount on or before the
Termination Date. If the CEBA Loan is not repaid in full on or
before the Termination Date, the lender will automatically extend
the term of the loan by three years until December 31, 2025 (the
“Extension Period”). During the Extension Period,
interest will be charged, and will accrue on the outstanding amount
of the CEBA Loan at a fixed rate of 5% per year, calculated daily
and compounded monthly. The outstanding balance of the CEBA Loan
and all accrued interest will be due at the end of the Extension
Period.
On
April 27, 2020, we received a Paycheck Protection Program loan in
the principal amount of $50,655 from the US Small Business
Administration as part of the US government’s COVID-19 relief
program. This loan accrues interest at the rate of 1% per annum. We
are obligated to make payments of principal and interest totaling
$2,133 each month commencing November 27, 2020, with any remaining
balances due and payable on or before April 27, 2022. The proceeds
derived from this loan may only be used for payroll costs, interest
on mortgages, rent and utilities (“Admissible
Expenses”). In addition, the Paycheck Protection Program
provides for conditional loan forgiveness if we utilize at least
75% of the proceeds from the loan to pay Admissible Expenses. As of
the date of this Report, all of the proceeds from this loan have
been utilized for Admissible Expenses and we believe that we will
qualify for forgiveness of the entire amount of the
loan.
On June
1, 2020, we received monies in exchange for a Note Payable having a
Face Value of $42,000 with interest accruing at 8% is due June 1,
2021. The Note is convertible after 180 days from issuance into
Common Stock at a price 35% below market value.
On June
9, 2020, we received monies in exchange for a Note Payable having a
Face Value of $37,000 with interest accruing at 8% is due June 9,
2021. The Note is convertible after 180 days from issuance into
Common Stock at a price 35% below market value.
On
July 7, 2020, we received monies in exchange for a Note Payable
having a Face Value of $48,000 with interest accruing at 8% is due
July 7, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 35% below market value.
On
July 27, 2020, we received monies in exchange for a Note Payable
having a Face Value of $102,000 with interest accruing at 8% is due
July 27, 2021. The Note is convertible after 180 days from issuance
into Common Stock at a price 30% below market value.
On
August 14, 2020, we received monies in exchange for a Note Payable
having a Face Value of $67,000 with interest accruing at 8% is due
August 14, 2021. The Note is convertible after 180 days from
issuance into Common Stock at a price 30% below market
value.
On
September 14, 2020, we received monies in exchange for a Note
Payable having a Face Value of $250,000 with interest accruing at
5% is due September 14, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price of equal to $0.30
per share.
On
September 24, 2020, we received monies in exchange for a Note
Payable having a Face Value of $50,000 with interest accruing at 5%
is due September 24, 2022. The Note is convertible after 180 days
from issuance into Common Stock at a price equal to $0.30 per
share.
We 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 Nutritional 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 $20
million ($2 million for the Generic Pharmaceuticals and Nutritional
Supplements operations and $18 million for the recently expanded
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
.
23
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.
On
September 8, 2020, we executed a Financing Agreement with RB
Capital Partners, Inc., La Jolla, CA, who has agreed to provide us
with a minimum of $2 million in convertible debt financing over the
next three to six months pursuant to the terms and conditions
included in relevant Promissory Notes (the “Promissory
Notes”). As of September 30, 2020, we have received a total
of $300,000 in funding under this agreement.
The
Promissory Notes will bear interest at the rate of 5% per annum and
will be fully convertible into shares of our Common Stock at a
conversion price equal to the market value of our Common Stock on
the applicable conversion date or $0.30 per share, whichever is
greater. The Promissory Notes will have a maturity date of two
years from the date of issuance and must be fully converted on or
before the maturity date. We have the right under these Promissory
Notes to pay off all or any part of the Promissory Notes at any
time without penalty.
We
intend to use the proceeds from this financing for development of
our recently announced Coronavirus treatment on a priority basis
and the clinical development of Adva-27a, our flagship anticancer
compound targeted for pancreatic cancer.
Subsequent Events
On
October 16 and November 4, 2020, the holder of a Note Payable dated
December 31, 2019 elected to convert a total of $28,000 in
principal into 28,000,000 shares of Common Stock leaving a
principal balance of $78,028.
On
October 19, 2020, we received monies in exchange for a Note Payable
having a Face Value of $250,000 with interest accruing at 5% is due
October 19, 2022. The Note is convertible after 180 days from
issuance into Common Stock at a price
equal to $0.30 per share
.
Off Balance Sheet Arrangements
None
I
TEM
3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
We
are a smaller reporting company and are not required to provide the
information under this item pursuant to Regulation
S-K.
I
TEM
4.
CONTROLS AND
PROCEDURES.
Disclosure
Controls and Procedures
–
Our
management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our
disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the “Exchange Act”) as of the end of
the period covered by this Report.
These
controls are designed to ensure that information required to be
disclosed in the reports we file or submit pursuant to the
Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and
forms of the Securities and Exchange Commission, and that such
information is accumulated and communicated to our management,
including our CEO and CFO to allow timely decisions regarding
required disclosure.
24
Based
on this evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective as of
September 30, 2020, at reasonable assurance level, for the
following reasons:
●
Ineffective
control environment and lack of qualified full-time CFO who has SEC
experience to focus on our financial affairs;
●
Lack of
qualified and sufficient personnel, and processes to adequately and
timely identify making any and all required public
disclosures;
●
Deficiencies
in the period-end reporting process and accounting
policies;
●
Inadequate
internal controls over the application of new accounting principles
or the application of existing accounting principles to new
transactions;
●
Inadequate
internal controls relating to the authorization, recognition,
capture, and review of transactions, facts, circumstances, and
events that could have a material impact on the Company’s
financial reporting process;
●
Deficient
revenue recognition policies;
●
Inadequate
internal controls with respect to inventory transactions;
and
●
Improper
and lack of timely accounting for accruals such as prepaid
expenses, accounts payable and accrued liabilities.
Our
Board of Directors has assigned a priority to the short-term and
long-term improvement of our internal control over financial
reporting. We are reviewing various potential solutions to remedy
the processes that would eliminate the issues that may arise due to
the absence of separation of duties within the financial reporting
functions. Additionally, the Board of Directors will 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 nine month period ended September 30, 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.
25
P
ART II. OTHER INFORMATION
I
TEM
1.
LEGAL
PROCEEDINGS
In June
2018 we filed an action in the Superior Court of the Province of
Quebec in the District of Montreal (Canada) against one of our
existing shareholders residing in Quebec City (Canada) arising out
of a possible equity investment intended to be completed by August
2018. The complaint alleges among other things, claims of
misrepresentations and misleading conduct resulting in damages to
us in an amount of approximately $200,000 Canadian (approximately
$154,000 US). On April 1, 2019, a note payable held by the
defendant having a face value of $100,000 Canadian (approximately
$76,000 US) became due and payable. 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 has been set for
November 16, 2020.
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.
I
TEM
1A.
RISK
FACTORS
We
are a smaller reporting company and are not required to provide the
information under this item pursuant to Regulation
S-K.
I
TEM
2.
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
During
the nine months ended September 30, 2020, we issued a total of
269,099,306 shares of our Common Stock valued at $1,831,816 for the
conversion of outstanding notes payable, reducing the debt by
$373,269 and interest payable by $42,233 and generating a loss on
conversion of $1,416,313.
During
the nine month period ended September 30, 2019, we issued a total
of 7,883,683 shares of our Common Stock valued at $443,481 for the
conversion of outstanding notes payable, reducing debt by $241,160
and interest payable by $11,402 and generating a loss on conversion
of $185,814.
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.
On
September 8, 2020, we executed a Financing Agreement with RB
Capital Partners, Inc., La Jolla, CA, who has agreed to provide us
with a minimum of $2 million in convertible debt financing over the
next three to six months pursuant to the terms and conditions
included in relevant Promissory Notes (the “Promissory
Notes”). As of September 30, 2020, we have received a total
of $300,000 in funding under this agreement.
The
Promissory Notes will bear interest at the rate of 5% per annum and
will be fully convertible into shares of our Common Stock at a
conversion price equal to the market value of our Common Stock on
the applicable conversion date or $0.30 per share, whichever is
greater. The Promissory Notes will have a maturity date of two
years from the date of issuance and must be fully converted on or
before the maturity date. We have the right under these Promissory
Notes to pay off all or any part of the Promissory Notes at any
time without penalty.
We
intend to use the proceeds from this financing for development of
our recently announced Coronavirus treatment on a priority basis
and the clinical development of Adva-27a, our flagship anticancer
compound targeted for pancreatic cancer.
We
relied upon the exemption from registration provided by Section
4(a)(2) of the Securities Act of 1933, as amended, to issue these
notes.
I
TEM
3.
DEFAULTS UPON SENIOR
SECURITIES
None.
I
TEM
4.
MINE SAFETY
DISCLOSURE
Not
Applicable.
I
TEM
5.
OTHER
INFORMATION
None.
26
I
TEM
6.
EXHIBITS
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32
|
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
|
XBRL
Instance Document*
|
|
101.SCH
|
|
XBRL
Schema Document*
|
|
101.CAL
|
|
XBRL
Calculation Linkbase Document*
|
|
101.DEF
|
|
XBRL
Definition Linkbase Document*
|
|
101.LAB
|
|
XBRL
Label Linkbase Document*
|
|
101.PRE
|
|
XBRL
Presentation Linkbase Document*
|
______________________
*
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.
27
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 November 10, 2020.
|
|
SUNSHINE BIOPHARMA, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
s/ Dr.
Steve N. Slilaty
|
|
|
|
|
Dr.
Steve N. Slilaty,
|
|
|
|
|
Principal
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
s/
Camille Sebaaly
|
|
|
|
|
Camille
Sebaaly,
Principal
Financial Officer and
|
|
|
|
|
Principal
Accounting Officer
|
|
28
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 Financing AgreementNote 8 Subsequent EventsItem 2. Managemet S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 2. Managemet 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