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, 2021
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 11, 2021, was 480,505,925
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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Item 1.
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Financial Statements
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3
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Consolidated Balance Sheets as of March 31, 2021 and December 31,
2020 (Unaudited)
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3
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Consolidated Statements of Operations for the Three Month Periods
Ended March 31, 2021 and 2020 (Unaudited)
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4
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Consolidated Statements of Cash Flows for the Three Month Periods
Ended March 31, 2021 and 2020 (Unaudited)
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5
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Consolidated
Statement of
Shareholders' Equity (Unaudited)
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6
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Notes to Consolidated Financial Statements
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7
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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13
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Item 3.
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Quantitative and Qualitative Disclosures About Market
Risk.
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20
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Item 4.
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Controls and Procedures.
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20
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PART II
OTHER INFORMATION
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Item 1.
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Legal Proceedings
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21
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Item 1A.
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Risk Factors
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22
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Item 2.
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Unregistered Sales of Equity Securities and Use of
Proceeds
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22
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Item 3.
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Defaults Upon Senior Securities
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22
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Item 4.
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Mine Safety Disclosures
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22
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Item 5.
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Other Information
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22
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Item 6.
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Exhibits
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22
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Signatures
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23
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PART I.
FINANCIAL
INFORMATION
Sunshine Biopharma, Inc.
Unaudited Consolidated Balance Sheets
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March 31,
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December 31,
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2021
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2020
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ASSETS
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Current
Assets:
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Cash
and cash equivalents
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$
1,796,596
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$
989,888
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Accounts
receivable
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-
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1,916
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Inventory
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26,660
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23,771
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Prepaid
expenses
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10,993
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2,778
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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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1,841,839
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1,025,943
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Equipment
(net of $54,565 and $51,485 depreciation,
respectively)
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16,629
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19,531
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Patents
(net of $58,918 amortization and $556,120 impairment)
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-
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-
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TOTAL
ASSETS
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$
1,858,468
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$
1,045,474
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LIABILITIES
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Current
Liabilities:
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Notes
payable
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521,028
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820,454
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Notes
payable - related party
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143,661
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143,661
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Accounts
payable & accrued expenses
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148,564
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62,870
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Interest
payable
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51,533
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24,320
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Total
Current Liabilities
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864,786
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1,051,305
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Long-term
portion of notes payable
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2,078,071
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949,006
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TOTAL
LIABILITIES
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2,942,857
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2,000,311
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COMMITMENTS
AND CONTINGENCIES
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SHAREHOLDERS'
EQUITY (DEFICIT)
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Preferred Stock, Series B $0.10 par value per share; Authorized
1,000,000 shares;
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Issued
and outstanding 1,000,000 shares
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100,000
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100,000
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Common
Stock, $0.001 par value per share; Authorized 3,000,000,000
Shares;
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Issued
and outstanding 465,005,925 and 346,419,296 March 31, 2021 and
December 31, 2020, respectively
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465,005
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346,418
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Capital
paid in excess of par value
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24,759,393
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18,820,343
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Accumulated
comprehensive income
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(4,934
)
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(2,871
)
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Accumulated
(Deficit)
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(26,403,853
)
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(20,218,727
)
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TOTAL
SHAREHOLDERS' EQUITY (DEFICIT)
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(1,084,389
)
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(954,837
)
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
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$
1,858,468
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$
1,045,474
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See
Accompanying Notes to These Financial Statements
3
Sunshine Biopharma, Inc.
Unaudited Consolidated Statements 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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2021
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2020
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Sales
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$
40,058
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$
11,102
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Cost
of sales
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18,520
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3,883
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Gross
profit
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21,538
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7,219
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General
& Administrative Expenses:
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Accounting
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41,400
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-
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Consulting
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10,893
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1,724
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Legal
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7,117
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19,347
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Office
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39,686
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12,129
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Officer
& director remuneration
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1,021,927
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3,830
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Patenting
fees
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6,193
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4,377
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R&D
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166,786
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-
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Depreciation
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3,182
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3,511
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Total
General & Administrative Expenses
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1,297,184
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44,918
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Loss
from Operations
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(1,275,646
)
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(37,699
)
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Other
Income (Expense):
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Foreign
exchange
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(14
)
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10,896
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Interest
expense
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(49,711
)
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(16,356
)
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Debt
release
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51,031
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-
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Loss
on debt conversions
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(4,910,786
)
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(51,100
)
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Total
Other Income (Expense)
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(4,909,480
)
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(56,560
)
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Net
Income (Loss) before income taxes
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(6,185,126
)
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(94,259
)
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Provision
for income taxes
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-
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-
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Net
Loss
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(6,185,126
)
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(94,259
)
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Unrealized Loss from foreign exchange
translation
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(2,063
)
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(1,341
)
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Comprehensive
Loss
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(6,187,189
)
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(95,600
)
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Basic
Loss per Common Share
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$
(0.01
)
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$
(0.00
)
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Weighted
Average Common Shares Outstanding
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438,794,543
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37,590,084
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See
Accompanying Notes to These Financial Statements.
4
Sunshine Biopharma, Inc.
Unaudited Consolidated Statements of Cash Flows
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3 Months
Ended
March
31, 2021
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3 Months
Ended
March
31, 2020
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Cash Flows From Operating Activities:
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Net
Loss
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$
(6,185,126
)
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$
(94,259
)
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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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3,182
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3,830
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Foreign
exchange (gain) loss
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14
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(10,896
)
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Stock
issued for services
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918,000
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-
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Stock
issued for payment interest
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6,851
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4,486
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Loss
on debt conversion
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4,910,786
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51,100
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Debt
release
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(51,031
)
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-
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(Increase)
decrease in accounts receivable
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1,916
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430
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(Increase)
decrease in inventory
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(2,889
)
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2,198
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(Increase)
in prepaid expenses
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(8,215
)
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(658
)
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Increase
(decrease) in Accounts Payable & accrued expenses
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81,568
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1,158
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Increase
(decrease) in interest payable
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27,589
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11,577
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Net Cash Flows (Used) in Operations
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(297,355
)
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(31,034
)
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Cash Flows From Investing Activities:
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-
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-
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Net Cash Flows (Used) in Investing Activities
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-
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-
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Cash Flows From Financing Activities:
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Proceeds
from notes payable
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1,150,000
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-
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Payments
of notes payable
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(48,000
)
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-
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Net Cash Flows Provided by Financing Activities
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1,102,000
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-
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|
|
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Cash and Cash Equivalents at Beginning of Period
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989,888
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40,501
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Net
increase (decrease) in cash and cash equivalents
|
804,645
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(31,034
)
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Foreign
currency translation adjustment
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2,063
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1,341
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Cash and Cash Equivalents at End of Period
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$
1,796,596
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$
10,808
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Supplementary Disclosure of Cash Flow Information:
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-
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Stock
issued for note conversions including interest
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$
5,139,637
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$
122,379
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Cash
paid for interest
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$
15,271
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$
-
|
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Cash
paid for income taxes
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$
-
|
$
-
|
See
Accompanying Notes to These Financial Statements
5
Sunshine Biopharma, Inc.
Unaudited Consolidated 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
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Comprehensive Income
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Accumulated Deficit
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Total
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Balance December 31, 2019
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35,319,990
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35,320
|
16,616,426
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500,000
|
50,000
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(2,495
)
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(17,434,636
)
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(735,385
)
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Common
Stock issued for the reduction of notes payable
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and
payment of interest
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24,355,427
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24,355
|
98,024
|
|
|
|
|
122,379
|
|
|
|
|
|
|
|
|
|
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|
Net
Loss
|
|
|
|
|
|
(1,341
)
|
(94,259
)
|
(95,600
)
|
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Balance at March 31, 2020
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59,675,417
|
$
59,675
|
$
16,714,450
|
500,000
|
$
50,000
|
$
(3,836
)
|
$
(17,528,895
)
|
(708,606
)
|
|
|
|
|
|
|
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|
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Balance December 31, 2020
|
346,419,296
|
346,418
|
18,820,343
|
1,000,000
|
100,000
|
(2,871
)
|
(20,218,727
)
|
(954,837
)
|
|
|
|
|
|
|
|
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Common
Stock issued for the reduction of notes payable
|
|
|
|
|
|
|
|
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and
payment of interest
|
58,586,629
|
58,587
|
5,081,050
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|
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5,139,637
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|
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Common
stock issued for services
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60,000,000
|
60,000
|
858,000
|
|
|
|
|
918,000
|
|
|
|
|
|
|
|
|
|
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|
Net
Loss
|
|
|
|
|
|
(2,063
)
|
(6,185,126
)
|
(6,187,189
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021
|
465,005,925
|
$
465,005
|
$
24,759,393
|
1,000,000
|
$
100,000
|
$
(4,934
)
|
$
(26,403,853
)
|
(1,084,389
)
|
See Accompanying Notes to These Financial
Statements
6
Sunshine Biopharma, Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three Month Interim Periods Ended March 31, 2021 and
2020
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 (the “License Agreement”). Upon completion of
the reverse acquisition transaction, the Company changed its name
to Sunshine Biopharma, Inc. and began operating as a pharmaceutical
company focusing on the development of the licensed Adva-27a
anticancer drug.
In October 2012, the Company published the results of its initial
preclinical studies of Adva-27a in the peer-reviewed
journal,
ANTICANCER RESEARCH. The studies were conducted in
collaboration with Binghamton University, a State University of New
York, and Ecole Polytechnique, Universite de Montreal. The
publication is entitled “Adva-27a, a Novel Podophyllotoxin
Derivative Found to Be Effective Against Multidrug Resistant Human
Cancer Cells” [ANTICANCER RESEARCH Volume 32, Pages 4423-4432
(2012)].
In July 2014, the Company formed a wholly owned Canadian
subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine
Canada”) for the purposes of offering generic pharmaceutical
products in Canada and elsewhere around the world. Sunshine Canada
has transitioned its focus to the development and marketing of
Science-Based Nutritional Supplements.
In
December 2015, the Company acquired all worldwide issued (US Patent
Number 8,236,935, and 10,272,065) and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 for the Adva-27a anticancer
compound from Advanomics Corporation, a related party, and
terminated the License Agreement. In 2016, the remaining value of
these patents was impaired. The Company is however continuing
development of the Adva-27a anticancer drug covered by these
patents.
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 Science-Based
Nutritional Supplements product, Essential-9
tm
,
an over-the-counter tablet comprised of the nine (9) essential
amino acids that the human body cannot make.
Essential-9
tm
has
been authorized for marketing by Health Canada under NPN
80089663.
Effective February 1, 2019, the Company completed a 20 to 1 reverse
split of its Common Stock, reducing the issued and outstanding
shares of Common Stock from 1,713,046,242 to 85,652,400 (the
“First Reverse Stock Split”). The Company’s
authorized capital of Common Stock remained as previously
established at 3,000,000,000 shares.
In November 2019, the Company received Health Canada approval for a
new Calcium-Vitamin D supplement. Health Canada issued NPN 80093432
through which it authorized the Company to manufacture and sell the
new Calcium-Vitamin D supplement under the brand name
“Essential Calcium-Vitamin-D
tm
.
Effective April 6, 2020, the Company completed another 20 to 1
reverse split of its Common Stock, reducing the issued and
outstanding shares of Common Stock from 1,193,501,925 to 59,675,417
(the “Second Reverse Stock Split”). The number of
Common Shares authorized for issuance remained as previously
established at 3,000,000,000 shares.
All references to the
Company’s Common Stock in this Report, including the
Company's financial statements reflect both the First and Second
Reverse Stock Split on a retroactive basis.
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 April 30, 2021, the Company filed
a PCT application containing new research results and extending
coverage to include the Coronavirus Papain-Like
protease, PLpro.
The priority date of May 22, 2020 has been maintained in the newly
filed PCT application.
7
On June 17, 2020, the Company filed an amendment to its Articles of
Incorporation (the “Amendment”) with the State of
Colorado, to eliminate the Series “A” Preferred Shares
consisting of Eight Hundred and Fifty Thousand (850,000) shares,
par value $0.10 per share, and the designation thereof, which
shares were returned to the status of undesignated shares of
Preferred Stock. In addition, the Amendment increased the number of
authorized Series “B” Preferred Shares from Five
Hundred Thousand (500,000) to One Million (1,000,000)
shares.
Also on June 17, 2020, the Company issued Five Hundred Thousand
(500,000) shares of Series “B” Preferred Stock in favor
of Dr. Steve N. Slilaty, the Company’s CEO, in consideration
for the COVID-19 treatment technology he developed. The Series
“B” Preferred Stock is non-convertible, non-redeemable,
non-retractable and has a superior liquidation value of $0.10 per
share. Each share of Series “B” Preferred Stock is
entitled to 1,000 votes per share.
This issuance brought the
total number of Series “B” Preferred Stock held by Dr.
Slilaty to 1,000,000 shares.
On
September 8, 2020, the Company executed a financing agreement with
RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide
the Company with a minimum of $2 million in convertible debt
financing during the ensuing three to six month period pursuant to
the terms and conditions included in relevant Promissory Notes (the
“Promissory Notes”). The Promissory Notes bear interest
at the rate of 5% per annum and are fully convertible into shares
of 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 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 to pay off all or any
part of the Promissory Notes at any time without penalty. As of
March 31, 2021, the Company has received a total of $2,054,000 in
funding under this agreement.
Effective
October 6, 2020, the Company entered into a Research Agreement (the
“Agreement”) with the University of Georgia Research
Foundation, Inc. (“UGARF”), representing the University
of Georgia (“UGA”). The purpose of the Agreement is to
memorialize the terms of the Company working together with UGA to
conduct the necessary research and development to advance the
Company’s Anti-Coronavirus lead compound, SBFM-PL4 (or
derivatives thereof) through various stages of preclinical
development, animal studies and clinical trials for Coronavirus
infections. The Agreement grants the Company an exclusive worldwide
license for all of the intellectual property developed by UGA,
whether alone or jointly with the Company.
On
January 26, 2021, the Company received a Notice of Allowances from
the Canadian Intellectual Property Office for a new patent
application covering Adva-27a. The newly issued patent contains new
subject matter and extends the proprietary protection of Adva-27a
in Canada until 2033.
On
February 4, 2021, the Company entered into an exclusive license
agreement with the University of Georgia (“UGA”) for
two Anti-Coronavirus compounds which UGA had previously developed
and patented. The Company and UGA will advance the development of
these two compounds in parallel with the Company’s own
Anti-Coronavirus compound, SBFM-PL4.
On
March 1, 2021, the Company launched a new eCommerce website,
Nutrition.SushineBiopharma.com. The site offers over 20
Science-Based Nutritional Supplements products ranging from
essential amino acids and rich protein powders to balanced vitamins
and crucial micronutrients. All of the Company’s
Science-Based Nutritional Supplements are manufactured and tested
in Canada under GMP conditions.
On
March 9, 2021, the Company received a Notice of Allowance from the
European Patent Office for a new patent application covering
Adva-27a. The newly issued patent contains new subject matter and
extends the proprietary protection of Adva-27a in Europe until
2033. The equivalent patent in the United States was issued in 2019
(US Patent Number 10,272,065).
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".
8
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, 2021 and 2020 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-X. 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 December 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, 2020
included in the Company’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission (the “SEC”)
on March 30, 2021. These financial statements should be read in
conjunction with that report.
Recently Issued Accounting Pronouncements
In
December 2019, the FASB issued ASU 2019-12 “Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes.”
This guidance removes certain exceptions to the general principles
in Topic 740 and provides consistent application of U.S. GAAP by
clarifying and amending existing guidance. The effective date of
the new guidance for public companies is for fiscal years beginning
after December 15, 2020 and interim periods within those fiscal
years. Early adoption is permitted. The Company is currently
evaluating the timing of adoption and impact of the updated
guidance on its financial statements.
9
Note 2 – Going Concern and Liquidity
As of
March 31, 2021 and December 31, 2020, the Company had $1,796,596
and $989,888 in cash on hand, respectively, and limited
revenue-producing business. Additionally, as of March 31, 2021 and
December 31, 2020, the outstanding liabilities of the Company
totaled $2,942,857 and $2,000,311, respectively. These factors
raise substantial doubts about the Company’s ability to
continue as a going concern.
The
consolidated financial statements included in this Report 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 past
experience, the Company believes that it will be able to raise the
necessary capital through debt and equity issuances to fund ongoing
operating expenses. The consolidated financial statements included
in this Report do not include any adjustments that may result from
the outcome of any going concern uncertainty.
There
is no assurance that these events will be satisfactorily completed.
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
The
Company’s Notes Payable at March 31, 2021 consisted of the
following:
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 matured on December 31, 2020. On August 27, 2020,
the holder of this Note transferred all of its interest therein to
a third party and on September 4, 2020, the Company agreed to
render the Note convertible at $0.001 per share. Through March 31,
2021, an aggregate principal amount of $111,225 of this Note plus
accrued interest of $9,775 was converted into 121,000,000 shares of
Common Stock valued at $5,822,600 resulting in a loss of
$5,701,600. The remaining principal balance of $11,028 of this Note
is currently past due and the Company is in discussion with the
holder to extend the due date.
On April 17, 2020, the Company’s Canadian subsidiary received
a CEBA Loan (Canada Emergency Business Account Loan) from CIBC
(Canadian Imperial Bank of Commerce) in the principal amount of
$40,000 Canadian ($29,352 US) as part of the Canadian
government’s COVID-19 relief program. The CEBA Loan is
non-interest bearing if repaid on or before December 31, 2022 (the
“Termination Date”). The CEBA Loan is considered repaid
in full if the borrower repays 75% of the Principal Amount on or
before the Termination Date. If the CEBA Loan is not repaid in full
on or before the Termination Date, the lender will automatically
extend the term of the loan by three years until December 31, 2025
(the “Extension Period”). During the Extension Period,
interest will be charged, and will accrue on the outstanding amount
of the CEBA Loan at a fixed rate of 5% per year, calculated daily
and compounded monthly. The outstanding balance of the CEBA Loan
and all accrued interest will be due at the end of the Extension
Period.
On April 27, 2020, the Company received a Paycheck Protection
Program loan ("PPP Loan") in the principal amount of $50,655 from
the US Small Business Administration (“SBA”) as part of
the US government’s COVID-19 relief program. This loan
accrues interest at the rate of 1% per annum. The Company is
obligated to make payments of principal and interest totaling
$2,133 each month commencing on November 27, 2020, with any
remaining balances due and payable on or before April 27, 2022. The
proceeds derived from this loan may only be used for payroll costs,
interest on mortgages, rent and utilities (“Admissible
Expenses”). In addition, the Paycheck Protection Program
provides for conditional loan forgiveness if the Company utilizes
at least 75% of the proceeds from the loan to pay Admissible
Expenses. On December 15, 2020, the Company applied to the funding
bank for forgiveness of this loan per SBA guidance. On December 18,
2020, the Company received notification that the funding bank has
approved forgiveness of the loan in its entirety and that it has
submitted a request to the SBA for final approval. On February 22,
2021, the funding bank informed the Company that the SBA has fully
forgiven the loan.
10
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. On
January 5, 2021, the Company paid off the entire principal balance
of this Note, together with accrued interest and prepayment
penalties of $15,271 by issuing cash payment of
$63,271.
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.
On January 29, 2021, the entire principal amount of $102,000 of
this Note plus accrued interest of $4,171 was converted into
5,044,456 shares of Common Stock valued at $484,268 resulting in a
loss of $378,097.
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. On February 22, 2021, the entire principal amount of $67,000
of this Note plus accrued interest of $2,680 was converted into
542,173 shares of Common Stock valued at $119,169 resulting in a
loss of $49,489.
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 analyzed the conversion feature of the
note for a beneficial conversion feature on the commitment date of
March 13, 2021 which is 180 days after the issuance date,
and
determined that there was no beneficial conversion feature on March
13, 2021.
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 analyzed the conversion feature of the
note for a beneficial conversion feature on the commitment date on
March 23, 2021 which is 180 days after the issuance date,
and
determined that there was no beneficial conversion feature on March
13, 2021.
On October 20, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 5% is due October 20, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on April
18, 2021 which is 180 days after the issuance date.
On November 19, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 8% is due August 19, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 35% below market
value. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
18, 2021 which is 180 days after the issuance date.
On November 24, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $260,000 with interest accruing
at 8% is due November 24, 2021. The Note is convertible after 180
days from issuance into Common Stock at a price 30% below market
value. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
23, 2021 which is 180 days after the issuance date.
On November 25, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $250,000 with interest accruing
at 5% is due November 25, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
24, 2021 which is 180 days after the issuance date.
On December 2, 2020, the Company received monies in exchange for a
Note Payable having a Face Value of $104,215 with interest accruing
at 5% is due December 2, 2022. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date on May
31, 2021 which is 180 days after the issuance date.
On January 12, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $150,000 with interest accruing
at 5% is due January 12, 2023. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.30 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date of July
11, 2021 which is 180 days after the issuance date.
11
On January 27, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $300,000 with interest accruing
at 5% is due January 27, 2023. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.50 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date of July
26, 2021 which is 180 days after the issuance date.
On February 12, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $700,000 with interest accruing
at 5% is due February 12, 2023. The Note is convertible after 180
days from issuance into Common Stock at a price equal to $0.60 per
share. The Company will analyze the conversion feature of the note
for a beneficial conversion feature on the commitment date of
August 11, 2021 which is 180 days after the issuance
date.
At March 31, 2021 and December 31, 2020, total accrued interest on
Notes Payable was $51,533 and $24,320, respectively.
Note 4 – Notes Payable - Related Party
Outstanding
Notes Payable at March 31, 2021 held by related parties consist of
the following:
A Note Payable dated December 31, 2019 held by the CEO of the
Company having a Face Value of $128,269 and accruing interest at
12% was due December 31, 2020. On December 31, 2020, the Company
renewed the Note together with accrued interest of $15,392 for a
12-month period. The new Note has a face Value of $143,661, accrues
interest at 12% per annum, and has a maturity date of December 31,
2021.
Note 5 – Shareholders’ Equity
During
the three months ended March 31, 2021 the Company issued a total of
58,586,629 shares of Common Stock for the conversion of outstanding
notes payable, reducing the debt by $222,000 and interest payable
by $6,851 and generating a loss on conversion of $4,910,786. In
addition, the Company issued 60,000,000 shares of Common Stock
valued at $918,000 to its Officers and Directors as compensation
for their services to the Company.
The
Company declared no dividends through March 31, 2021.
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 $103,927 and $3,830 for the three months ended March 31,
2021 and 2020, respectively.
Of these amounts,
$50,000 and $177,000 was paid to Advanomics Corporation (now known
as TRT Pharma Inc.), a company controlled by the CEO of the
Company, respectively
. In addition, the Company issued
60,000,000 shares of Common Stock valued at $918,000 to its
Officers and Directors during the three months ended March 31,
2021.
Note 7 – Subsequent Events
On April 5, 2021, the Company
received monies in exchange for a Note Payable
having a Face Value of $330,000 with interest accruing at 10%. The
Note is convertible after 180 days from issuance into Common Stock
at a price 35% below market.
On April 20, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $500,000 with interest accruing
at 5% is due April 20, 2023. The Note is convertible after 180 days
from issuance into Common Stock at a price equal to $0.30 per
share.
On April 22, 2021, the holder of a Note Payable dated December 31,
2019 elected to convert a total of $11,028 in principal and $4,472
in accrued interest into 15,500,000 shares of Common Stock leaving
a principal balance of $-0-.
12
ITEM 2.
MANAGEMENT’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.
Overview and Histor
y
We were
incorporated in the State of Colorado on August 31, 2006 under the
name “Mountain West Business Solutions, Inc.” Until
October 2009, our business was to provide management consulting
services to small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license (the
“License”) to a new anticancer drug bearing the
laboratory name, Adva-27a. As a result of this transaction we
changed our name to “Sunshine Biopharma, Inc.” and our
officers and directors resigned their positions with us and were
replaced by Sunshine Biopharma, Inc.’s management at the
time, including our current CEO, Dr. Steve N. Slilaty, and our
current CFO, Camille Sebaaly. Our principal business became that of
a pharmaceutical company focusing on the development of our
licensed Adva-27a anticancer compound. In December 2015 we acquired
all issued and pending patents pertaining to our Adva-27a
technology and terminated the License.
In
October 2012, we published the results of our initial preclinical
studies of Adva-27a in the peer-reviewed journal, ANTICANCER
RESEARCH. The preclinical studies were conducted in collaboration
with Binghamton University, a State University of New York, and
Ecole Polytechnique, Universite de Montreal. The publication is
entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found
to Be Effective Against Multidrug Resistant Human Cancer
Cells” [ANTICANCER RESEARCH Volume 32, Pages 4423-4432
(2012)].
In July
2014, we formed a wholly owned Canadian subsidiary, Sunshine
Biopharma Canada Inc. (“Sunshine Canada”), for the
purposes of offering generic pharmaceutical products in Canada and
elsewhere around the world.
Sunshine Canada has recently
transitioned its focus to the development and marketing of
Science-Based Nutritional Supplements
.
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 our first
Science-Based Nutritional Supplements product,
Essential-9
tm
.
This new supplement is an over-the-counter tablet comprised of the
nine (9) 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 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.
13
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 April 30, 2021, we
filed
a PCT application
containing new research results and extending coverage to include
the Coronavirus Papain-Like
protease, PLpro.
The priority date of May 22, 2020 has been maintained in the newly
filed PCT application.
On June
17, 2020, we filed an amendment to our Articles of Incorporation
(the “Amendment”) with the Secretary of State for the
State of Colorado, to eliminate the Series “A”
Preferred Shares consisting of Eight Hundred and Fifty Thousand
(850,000) shares, par value $0.10 per share, and the designation
thereof, such shares to be returned to the status of undesignated
shares of Preferred Stock. In addition, the Amendment increased the
number of authorized Series “B” Preferred Shares from
Five Hundred Thousand (500,000) to One Million (1,000,000)
shares.
Also on
June 17, 2020, our Board of Directors authorized the issuance of
Five Hundred Thousand (500,000) shares of our Series
“B” Preferred Stock in favor of Dr. Steve N. Slilaty,
our CEO and a director, in consideration for his development of a
new treatment for Coronavirus infections, including COVID-19. The
Series “B” Preferred Stock is non-convertible,
non-redeemable, non-retractable and has a superior liquidation
value of $0.10 per share. Each share of Series “B”
Preferred Stock is entitled to 1,000 votes per share. This issuance
brought the total number of Series “B” Preferred Stock
held by Dr. Slilaty to 1,000,000 shares.
On
September 8, 2020, we executed a financing agreement with RB
Capital Partners, Inc., La Jolla, CA, who agreed to provide us with
a minimum of $2 million in convertible debt financing during the
ensuing three to six month period pursuant to the terms and
conditions included in relevant Promissory Notes (the
“Promissory Notes”). As of the date of this Report, we
have received a total of $2,554,000 in funding under this
agreement. The Promissory Notes bear interest at the rate of 5% per
annum and are 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 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.
Effective October
6, 2020, we entered into a Research Agreement (the
“Agreement”) with the University of Georgia Research
Foundation, Inc. (“UGARF”), representing the University
of Georgia (“UGA”). The purpose of the Agreement is to
memorialize the terms of our working together with UGA to conduct
the necessary research and development to advance our
Anti-Coronavirus lead compound, SBFM-PL4 (or derivatives thereof)
through various stages of preclinical development, animal studies
and clinical trials for Coronavirus infections. The Agreement
grants us an exclusive worldwide license for all of the
intellectual property developed by UGA, whether alone or jointly
with us.
On
January 26, 2021, we received a Notice of Allowances from the
Canadian Intellectual Property Office for a new patent application
covering Adva-27a. The newly issued patent contains new subject
matter and extends the proprietary protection of Adva-27a in Canada
until 2033.
On
February 4, 2021, we entered into an exclusive license agreement
with the University of Georgia (“UGA”) for two
Anti-Coronavirus compounds which UGA had previously developed and
patented. In collaboration with UGA, we will advance the
development of these two compounds in parallel with our own
Anti-Coronavirus compound, SBFM-PL4.
On
March 1, 2021, we launched a new eCommerce website,
Nutrition.SushineBiopharma.com. The site has over 20 products
ranging from essential amino acids and rich protein powders to
balanced vitamins and crucial micronutrients. All of our
science-based nutritional supplements are manufactured and tested
in Canada under GMP conditions.
On
March 9, 2021, we received a Notice of Allowance from the European
Patent Office for a new patent application covering Adva-27a. The
newly issued patent contains new subject matter and extends the
proprietary protection of Adva-27a in Europe until 2033. The
equivalent patent in the United States was issued in 2019 (US
Patent Number 10,272,065).
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.
14
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.
Drug Development Operations
SBFM-PL4 Anti-Coronavirus Treatment
Viruses
carry minimal genetic information as they rely, for the most part,
on host cellular machinery to multiply. Coronavirus has a
positive-sense RNA genome consisting of approximately 30,000
nucleotides, a genome size that places it among the larger sized
viruses. A positive-sense RNA genome is effectively a messenger RNA
which allows the virus to express its genes immediately upon
gaining entry into the host cell without the need for any prior
replication or transcription steps as is the case with
negative-sense RNA or DNA viruses. This is part of what makes
Coronavirus a highly aggressive pathogen. Many of the causative
agents of serious human diseases are positive-sense RNA viruses,
including Hepatitis C, Zeka, Polio, West Nile, Dengue, Cardiovirus,
and many others. Some positive-sense RNA viruses, such as the
rhinoviruses that cause the common cold, are less clinically
serious but they are responsible for widespread morbidity on a
yearly basis.
The
initial genome expression products of Severe Acute Respiratory
Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of
COVID-19, are two large polyproteins, referred to as pp1a and
pp1ab. These two polyproteins are cleaved at 15 specific sites by
two virus encoded proteases (Mpro and PLpro) to generate 16
different non-structural proteins essential for viral replication.
Mpro and PLpro represent an attractive anti-viral drug development
targets as they play a central role in the early stages of viral
replication. The crystal structure of Mpro shows the presence of an
active site Cysteine (Cys145) and a coordinated active site
Histidine (His41), both of which are essential for the
enzyme’s proteolytic activity. Similarly, PLpro, also a
Cysteine Protease, has an active site Cysteine at position 112 and
a Histidine at 273. The following is a summary of the development
to date of our Coronavirus Treatment project:
●
On May 22, 2020, we
filed a patent application in the United States for a new treatment
for Coronavirus infections. Our patent application covers
composition subject matter pertaining to small molecules for
inhibition of the Coronavirus main protease (Mpro), an enzyme that
is essential for viral replication. The small molecules covered by
the patent application were computer modelled and designed by Dr.
Steve N. Slilaty, our CEO. The patent application has a priority
date of May 22, 2020.
●
In August 2020, we
completed the synthesis of four different potential inhibitors of
Coronavirus protease. These compounds are based on the technology
described in our patent application filed on May 22,
2020.
●
In September 2020,
we completed the screening of our four compounds and subsequently
identified a lead Anti-Coronavirus drug candidate (SBFM-PL4). The
screening which pinpointed the lead compound was performed at the
University of Georgia, College of Pharmacy under the leadership of
Dr. Scott D. Pegan, Director of the Center for Drug Discovery and
Interim Associate Head of Pharmaceutical and Biomedical
Sciences.
●
In October 2020, we
expanded our collaboration with Dr. Scott Pegan group by entering
into a research agreement with the University of Georgia to further
develop our Anti-Coronavirus lead compound, SBFM-PL4.
●
On February 1,
2021, we entered into an exclusive license agreement with the
University of Georgia for two Anti-Coronavirus compounds which the
University of Georgia had previously developed and patented. We are
currently advancing the development of these two compounds in
parallel with our SBFM-PL4 by conducting a transgenic mice study in
collaboration with the University of Georgia. The mice being used
in the study have been genetically engineered to express the human
angiotensin-converting enzyme 2 (hACE2) transmembrane protein in
their lungs making them susceptible to lethal infection by
SARS-CoV-2, the causative agent of COVID-19. The SARSCoV-2 virus
uses the hACE2 receptor to gain entry into human cells to
replicate. The goal of the study is to determine if our protease
inhibitors will protect the hACE2-transgenic mice from disease
progression and death following infection with SARS-CoV-2 virus.
Should these mice studies prove successful, we plan to submit the
results to the FDA for authorization to conduct testing on actual
COVID-19 patient volunteers in a Phase I clinical trial setting.
The implications of a COVID-19 treatment becoming available are
vast. This is particularly the case in view of the fact that some
of the variants emerging around the world are more virulent and may
escape neutralization by the current vaccines.
Adva-27a Anticancer Drug
Since
inception, our proprietary drug development activities has focused
on the development of a small molecule called Adva-27a for the
treatment of aggressive forms of cancer. A Topoisomerase II
inhibitor, Adva-27a has been shown to be effective at destroying
Multidrug Resistant Cancer cells including Pancreatic Cancer cells,
Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine
Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages
4423-4432, October 2012). Sunshine Biopharma is direct owner of all
issued and pending worldwide patents pertaining to Adva-27a
including U.S. Patents Number 8,236,935 and
10,272,065.
15
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).
16
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.
17
|
●
|
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, particularly those in which
Topoisomerase II has been amplified. We believe that upon
successful completion of Phase I Clinical Trials we may receive one
or more offers from large pharmaceutical companies to buyout or
license our drug. However, there are no assurances that our Phase I
Trials will be successful, or if successful, that any
pharmaceutical companies will make an acceptable offer to us. In
the event we do not consummate such a transaction, we will require
significant capital in order to manufacture and market our new drug
on our own. The following, Figure 3, is a space-filling molecular
model of our Adva-27a.
Figure 3
Generic Pharmaceuticals Operations
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. Due to unfavorable evolution of the
generic drugs marketplace, Sunshine Canada has recently terminated
its Generic Pharmaceuticals Operations and shifted its focus to the
development and marketing of Science-Based Nutritional
Supplements.
19
Science-Based Nutritional Supplements Operations
In
December 2018, we completed the development of Essential
9
™
, 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™ product. Our Essential 9™
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
™
provides
all 9 Essential Amino Acids in freeform and in the proportions
recommended by Health Canada. Essential 9
™
is
currently available on Amazon.com and Amazon.ca. Figure 4 below
shows our 60-Tablet Essential 9
™
product.
Figure
4
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.
On
March 1, 2021, we launched a new eCommerce website,
Nutrition.SushineBiopharma.com. The site has over 20 products
including Essential 9
tm
and Essential Calcium-Vitamin D™. All of our Science-Based
Nutritional Supplements are manufactured and tested in Canada under
GMP conditions.
Results of Operations
Comparison of Results of Operations for the Three Months Ended
March 31, 2021 and 2020
During
the three months ended March 31, 2021, we generated $40,058 in
revenues, compared to $11,102 in revenues for the same three month
period in 2020, an increase of $28,956. The increase is
attributable an enhanced advertising campaign we undertook in 2021.
All of these revenues were generated from our new Science-Based
Nutritional Supplements Operations which we launched in March 2019.
The direct cost for generating these revenues was $18,520 (46%) for
the period ended March 31, 2021, compared to $3,883 (35%) for the
same period in 2020. The increase in the cost of goods sold in 2021
is due to increased manufacturing cost. Our gross profit increased
to $21,538 for the period ended March 31, 2021, compared to a gross
profit of $7,219 for the same period in 2020.
General
and Administrative expenses during the three month period ended
March 31, 2021 were $1,297,184, compared to General and
Administrative expense of $44,918 incurred during the three month
period ended March 31, 2020, an increase of $1,252,266. Nearly all
categories of our General and Administrative expenses saw an
increase during the three month period ended March 31, 2021,
compared to the same period in 2020. Specifically, the increases
included accounting fees by $41,400, consulting fees by $9,169,
office expenses by $27,557, officer and director compensation by
$1,018,097, patenting fees by $1,816, and R&D by $166,786.
These increases were due to expansion of our drug development and
nutritional supplements operations. Overall, we incurred a loss of
$1,275,646 from our operations in the three month period ended
March 31, 2021, compared to a loss of $37,699 in the similar period
of 2020.
In
addition, we incurred $49,711 in interest expense during the three
months ended March 31, 2021, compared to $16,356 in interest
expense during the similar period in 2020. We also incurred
$4,910,786 in losses arising from debt conversion during the three
months ended March 31, 2021, compared to $51,100 in losses from
debt conversion during the similar period in 2020. These increases
were due to increased borrowings to fund our expanded drug
development and nutritional supplements operations.
As a
result, we incurred a net loss of $6,185,126 ($0.01 per share) for
the three month period ended March 31, 2021, compared to a net loss
of $95,600 ($0.00 per share) during the three month period ended
March 31, 2020.
Liquidity and Capital Resources
As
of March 31, 2021, we had cash or cash equivalents of
$1,796,596.
As discussed in
Note 2 to the consolidated financial statements included in this
Report for going concern, we have incurred significant continuing
losses in 2021 and 2020. Our total accumulated deficits as of March
31, 2021 and December 31, 2020 were $26.4 million and $20.2
million, respectively. Our ability to continue operating is highly
dependent upon continued funding from the debt and equity markets.
Based on past experience, we believe that we will be able to raise
the necessary capital to continue operations. Our historical and
ongoing dependence on proceeds from debt and/or equity issuances to
fund operating expenses could raise substantial doubt about our
ability to continue as a going concern. The consolidated financial
statements included in this Report have been prepared assuming that
our Company will continue as a going concern and, accordingly, do
not include any adjustments that may result from the outcome of
this uncertainty.
Net cash used in operating activities was $297,355
during the three month period ended March 31, 2021, compared to
$31,034 for the three month period ended March 31,
2020. We anticipate that overhead costs and other
expenses will increase in the future as we move forward with our
Proprietary Drug Development activities and our
Science-Based Nutritional Supplements operations
discussed above.
Cash
flows provided by financing activities were $1,102,000 for the
three month periods ended March 31, 2021, compared to $-0- during
the three months ended March 31, 2020. Cash flows used
in investing activities were $-0- for both, the three month period
ended March 31, 2021 and the same three month period ended in
2020.
During
the three month period ended March 31, 2021, we issued a total of
58,586,629 shares of our Common Stock valued at $5,139,637 for the
conversion of outstanding notes payable, reducing debt by $222,000
and interest payable by $6,851 and generating a loss on conversion
of $4,910,786.
21
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 months ended March 31, 2021, we did not sell any of our
capital stock for cash; however we entered into three (3) new debt
arrangements, including the following:
●
On January 12,
2021, we received monies in exchange for a Note Payable having a
Face Value of $150,000 with interest accruing at 5% is due January
12, 2023. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.60 per share.
●
On January 27,
2021, we received monies in exchange for a Note Payable having a
Face Value of $300,000 with interest accruing at 5% is due January
27, 2023. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.50 per share.
●
On February 12,
2021, we received monies in exchange for a Note Payable having a
Face Value of $700,000 with interest accruing at 5% is due February
12, 2023. The Note is convertible after 180 days from issuance into
Common Stock at a price equal to $0.60 per share.
On
September 8, 2020, we executed a financing agreement with RB
Capital Partners, Inc., La Jolla, CA, who agreed to provide us with
a minimum of $2 million in convertible debt financing during the
ensuing three to six month period pursuant to the terms and
conditions included in relevant Promissory Notes (the
“Promissory Notes”). As of the date of this Report, we
have received a total of $2,554,000 in funding under this
agreement. The Promissory Notes bear interest at the rate of 5% per
annum and are 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 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 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 Drug Development program
and further develop our Science-Based Nutritional Supplements
operation. We intend to raise funds through private placements of
our Common Stock and/or debt financing. We estimate that we will
require approximately $20 million (
approximately $18 million
for our Proprietary Drug Development projects and $2 million for
our Science-Based Nutritional Supplements operations
) to fully implement our business plan in the
future and there are no assurances that we will be able to raise
this capital. 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
.
We are
currently in discussion with various investment groups for
additional financing. There are no assurances that we will be
successful in raising any funds.
Our
cost 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 5, 2021, we
received monies in exchange for a Note Payable
having a Face Value of $330,000 with interest accruing at 10%. The
Note is convertible after 180 days from issuance into Common Stock
at a price 35% below market.
On
April 20, 2021, we received monies in exchange for a Note Payable
having a Face Value of $500,000 with interest accruing at 5% is due
April 20, 2023. The Note is convertible after 180 days from
issuance into Common Stock at a price equal to $0.30 per
share.
On
April 22, 2021, the holder of a Note Payable dated December 31,
2019 elected to convert a total of $11,028 in principal and $4,472
in accrued interest into 15,500,000 shares of Common Stock leaving
a principal balance of $-0-.
Off Balance Sheet Arrangements
None
ITEM 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.
22
ITEM 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.
Based
on this evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective as of March
31, 2021, at reasonable assurance level, for the following
reasons:
●
Ineffective control
environment and lack of qualified full-time CFO who has SEC
experience to focus on our financial affairs;
●
Lack of
qualified and sufficient personnel, and processes to adequately and
timely identify making any and all required public
disclosures;
●
Deficiencies
in the period-end reporting process and accounting
policies;
●
Inadequate
internal controls over the application of new accounting principles
or the application of existing accounting principles to new
transactions;
●
Inadequate
internal controls relating to the authorization, recognition,
capture, and review of transactions, facts, circumstances, and
events that could have a material impact on the Company’s
financial reporting process;
●
Deficient
revenue recognition policies;
●
Inadequate
internal controls with respect to inventory transactions;
and
●
Improper
and lack of timely accounting for accruals such as prepaid
expenses, accounts payable and accrued liabilities.
Our
Board of Directors has assigned a priority to the short-term and
long-term improvement of our internal control over financial
reporting. We are reviewing various potential solutions to remedy
the processes that would eliminate the issues that may arise due to
the absence of separation of duties within the financial reporting
functions. Additionally, the Board of Directors will work with
management to continuously review controls and procedures to
identified deficiencies and implement remediation within our
internal controls over financial reporting and our disclosure
controls and procedures.
We
believe that our financial statements presented in this 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, 2021, 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.
23
PART II. OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
To the
best of our management’s knowledge and belief, there are no
material claims that have been brought against us nor have there
been any claims threatened.
ITEM 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.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
During
the three month period ended March 31, 2021, we issued a total of
58,586,629 shares of our Common Stock valued at $5,139,637 for the
conversion of outstanding notes payable, reducing debt by $222,000
and interest payable by $6,851 and generating a loss on conversion
of $4,910,786.
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.
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.
DEFAULTS UPON SENIOR
SECURITIES
None.
ITEM 4.
MINE SAFETY DISCLOSURE
Not
Applicable.
ITEM 5.
OTHER INFORMATION
None.
24
ITEM 6.
EXHIBITS
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
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.
25
SIGNATURES
Pursuant
to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized
on May 11, 2021.
|
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SUNSHINE BIOPHARMA, INC.
|
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By:
|
s/ Dr.
Steve N. Slilaty
|
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Dr.
Steve N. Slilaty,
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|
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|
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Principal
Executive Officer
|
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By:
|
s/
Camille Sebaaly
|
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Camille
Sebaaly,
Principal
Financial Officer and
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Principal
Accounting Officer
|
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26
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