Sunshine Biopharma, Inc - Quarter Report: 2011 March (Form 10-Q)

sbfm_10q.htm

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, 2011

Commission File Number: 000-52898

SUNSHINE BIOPHARMA INC.

(Exact name of small business issuer as specified in its charter)

Colorado		20-5566275
(State of other jurisdiction of incorporation)		(IRS Employer ID No.)

2015 Peel Street

5th Floor

Montreal, Quebec, Canada H3A 1T8

(Address of principal executive offices)

(514) 764-9698

(Issuer’s Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes þ No o.

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 o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

The number of shares of the registrant’s only class of common stock issued and outstanding as of May 10, 2011, was 30,711,342 shares.

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION

		Page No.

Item 1.	Financial Statements		3

	Consolidated Balance Sheet as of March 31, 2011 (unaudited)		3
	Unaudited Statement of Operations for the Three Month Period Ended March 31, 2011		4
	Unaudited Statement of Shareholders’ Equity		5
	Unaudited Consolidated Statement of Cash Flows for the for the Three Month Periods Ended March 31, 2011 and 2010		7
	Notes to Consolidated Financial Statements		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation.		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		14
Item 4.	Controls and Procedures.		14

	PART II
	OTHER INFORMATION

Item 1.	Legal Proceedings.		15
Item 1A.	Risk Factors		15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		15
Item 3.	Defaults Upon Senior Securities.		15
Item 4.	[Removed and Reserved]		15
Item 5.	Other Information.		15
Item 6.	Exhibits.		15
	Signatures		16

PART I.

ITEM 1. FINANCIAL STATEMENTS

Sunshine Biopharma, Inc.

(fka Mountain West Business Solutions, Inc.)

Consolidated Balance Sheet

(A Development Stage Company)

	Unaudited			Audited
	March 31,			December 31,
	2011			2010
ASSETS

Current Assets:

Cash and cash equivalents	$	118,061		$	162,391
Prepaid expenses		41,273			45,233

Total Current Assets		159,334			207,624


TOTAL ASSETS	$	159,334		$	207,624

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable		330			11,404

TOTAL LIABILITIES		330			11,404


SHAREHOLDERS' EQUITY

Preferred stock, $.10 par value per share;
Authorized 5,000,000 Shares; Issued
and outstanding 850,000 shares.		73,000			73,000

Common Stock, $.001 per share;
Authorized 200,000,000 Shares; Issued
and outstanding 30,691,342 (2010)		30,711			30,691
and 30,711,342 (March 2011)

Capital paid in excess of par value		1,843,021			1,831,041

Accumulated other comprehesive (Loss)		0			0

(Deficit) accumulated during the development stage		(1,787,728	)		(1,738,512	)

TOTAL SHAREHOLDERS' EQUITY		159,004			196,220

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	159,334		$	207,624

See Accompanying Notes To These Financial Statements.

Sunshine Biopharma, Inc.

(fka Mountain West Business Solutions, Inc.)

Unaudited Consolidated Statement Of Operations

(A Development Stage Company)

	3 Months Ended March 31, 2011			3 Months Ended March 31, 2010			August 17, 2009 (inception)through March 31, 2011




Revenue:	$	-		$	-		$	-

General & Administrative Expenses

Accounting		3,250			6,295			22,645
Consulting		-			-			147,357
Incorporation Cost		-			-			3,000
Legal		4,111			16,273			115,187
Licenses		-			-			250,000
Office		3,650			115			5,119
Merger costs		-			-			155,150
Professional Services		-			-			47,000
Public Relations		15,119			8,366			69,383
Research and Development		17,650			-			17,650
Stock Transfer Fees		5,436			3,600			9,261
Writedown of intangible assets		-			50,000			945,976

Total G & A		49,216			84,649			1,787,728

Net (Loss)	$	(49,216	)	$	(84,649	)	$	(1,787,728	)

Basic (Loss) per common share		(0.00	)

Weighted Average Common Shares Outstanding		30,677,674

See Accompanying Notes To These Financial Statements.

Sunshine Biopharma, Inc.

(fka Mountain West Business Solutions, Inc.)

(A Development Stage Company)

Unaudited Statement of Shareholders' Equity

	Number Of Common Shares Issued				Capital Paid in Excess of Par Value			Number Of Preferred Shares Issued				Stock Subscription Receivable						Deficit accumulated During the development stage
			Common Stock							Preferred Stock					Comprehensive Income
			Common Stock							Preferred Stock					Comprehensive Income						Total
Balance at August 17, 2009 (Inception)		-	$	-	$	-			-	$	-	$	-					$	-		$	-

August 17, 2009 issued 703,118 shares of par value $.001 common stock for services valued at or $.004 per share		703,118		703		2,297																3,000

August 19, 2009 issued 218,388 shares of par value $.001 common stock for services valued at or $.004 per share		218,388		218		714																932

August 20, 2009 issued 17,109,194 shares of par value $.001 common stock and 730,000 share of par value $0.10 preferred stock for license agreement Advanomics: Common valued at or $.004 per share and Preferred valued at or $.086 per share		17,109,194		17,109		55,891			850,000		73,000											146,000

September 24, 2009 :

Private Placement-The Company undertook to sell 2,220,552 shares of par value $.001 common stock for cash of $649,000 or $.2922 per share. Company bought 1,150,693 share of par value $.001 stock for cash of $336,312 or $.2922 per share; the remaining 1,069,859 shares were collected forcash of $312,688 in October 2009.		1,150,693		1,151		335,161																336,312

September 24, 2009 Common stock subscription (see notation above) for 1,069,074 shares of par value $.001 common stock valued at $.2922 per share													(312,688	)		312,688						-

September 30, 2009 issued 1,710,748 shares of par value $.001 common stock for asset purchase from Sunshine Bio Investment valued at or $.2922 per share		1,710,748		1,711		498,289					-											500,000

Net (Loss)																			(650,130	)		(650,130	)

Balance at September 30, 2009		20,892,141		20,892		892,352			850,000		73,000		(312,688	)		312,688			(650,130	)		336,114

October 31, 2009 issuance of common stock subscription, upon receipt of cash 1,069,859 shs of par value $.001 common stock valued at $.2922 per share		1,069,859		1,070		311,618							312,688			(312,688	)					312,688

October 31, 2009 Outstanding stock of MWBS counted as issued for MWBS net deficit		888,000		888		(30,353	)															(29,465	)

Subtotal-at October 31, 2009 reverse merger date for accounting purposes		22,850,000		22,850		1,173,617			850,000		73,000		-			-			(650,130	)		619,337

November 16, 2009 Note conversions, several, Principle of $26,500 and interest of $2,965		6,810,000		6,810		22,655																29,465

Fractional Shares		7																				-

Net (Loss)																			(551,000	)		(551,000	)

Balance at December 31, 2009		29,660,007		29,660		1,196,272			850,000		73,000		-						(1,201,130	)		97,802

Sunshine Biopharma, Inc.

(fka Mountain West Business Solutions, Inc.)

(A Development Stage Company)

Unaudited Statement of Shareholders' Equity Continued

	Number Of						Capital Paid			Number Of				Stock Subscription Receivable				Deficit accumulated during the development stage
	Common			Common Stock			in Excess			Preferred		Preferred Stock				Comprehensive Income
	Shares Issued			Common Stock			of Par Value			Shares Issued		Preferred Stock				Comprehensive Income					Total

June 2, 2010 issued 1,675,000shares of par value $.001 common stockfor services valued at or $.94 per share		1,675,000			1,675			1,572,825														1,574,500

September 30, 2010 reversed issuance of 1,625,000 shares of par value $.001 common stock for services valued at or $.94 per share		(1,625,000	)		(1,625	)		(1,525,875	)													(1,527,500	)

September 30, 2010 issued 166,667 shares of par value $.001 common stock for cash at or $.60 per share		166,667			167			99,833														100,000

October 1, 2010 issued 217,000shares of par value $.001 common stock for services valued at or $.60 per share		217,000			217			129,983														130,200

October 29, 2010 issued 100,000shares of par value $.001 common stock for services valued at or $.60 per share		100,000			100			59,900														60,000

October 31, 2010 issued 419,334shares of par value $.001 common stock for cash at or $.60 per share		419,334			419			251,181														251,600

November 30, 2010 issued 78,334 shares of par value $.001 common stock for cash at or $.60 per share		78,334			78			46,922														47,000

Net (Loss)															-				(537,382	)		(537,382	)

Balance at December 30, 2010		30,691,342		$	30,691		$	1,831,040			850,000	$	73,000	$	-	$	-	$	(1,738,512	)	$	196,220

March 29, 2011 issued 20,000shares of par value $.001 common stockfor services valued at or $.60 per share		20,000			20			11,980														12,000

Net (Loss)															-				(49,216	)		(49,216	)

Balance at March 31, 2011 (Unaudited)		30,711,342		$	30,711		$	1,843,020			850,000	$	73,000	$	-	$	-	$	(1,787,728	)	$	159,004

See Accompanying Notes To These Financial Statements.

Sunshine Biopharma, Inc.

(fka Mountain West Business Solutions, Inc.)

Unaudited Consolidated Statement Of Cash Flows

(A Development Stage Company)

	3 Months Ended March 31,			3 Months Ended March 31,			August 17, 2009 (inception) through March 31,
	2011			2010			2011
Cash Flows From Operating Activities:

Net (Loss)	$	(49,216	)	$	(1,285,779	)	$	(1,787,728	)

Adjustments to reconcile net loss to net cash used in
operating activities:

Stock issued for licenses, services, and other assets		12,000			0			899,132
Increase in prepaid expenses		3,960			0			(41,273	)
Increase in Accounts Payable		(11,074	)		1,673			330

Net Cash Flows (used) in operations		(44,330	)		(1,284,106	)		(929,539	)

Cash Flows From Investing Activities:

Net Cash Flows (used) in Investing activities		-			-			-

Cash Flows From Financing Activities:

Issuance of common stock		0			0			1,047,600

Net Cash Flows provided by financing activities		0			0			1,047,600

Net Increase (Decrease) In Cash and cash equivalents		(44,330	)		(1,284,106	)		118,061
Cash and cash equivalents at beginning of period		162,391			112,116			-

Cash and cash equivalents at end of period	$	118,061		$	(1,171,990	)	$	118,061

Supplementary Disclosure Of Cash Flow Information:

Stock issued for services, licenses and other assets	$	12,000		$	-		$	661,932
Stock issued for note conversions	$	-		$	-		$	29,465
Stock issued for net deficit of MWBS	$	-		$	-		$	(29,465	)
Cash paid for interest	$	-		$	-		$	-
Cash paid for income taxes	$	-		$	-		$	-

See Accompanying Notes To These Financial Statements.

Sunshine Biopharma, Inc

Notes To Unaudited Financial Statements

For The Three Month Interim Period Ended March 31, 2011

Note 1 - Unaudited Financial Information

The unaudited financial information included for the three month interim period ended March 31, 2011 was taken from the books and records without audit. However, such information reflects all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary to reflect properly the results of the interim periods presented. The results of operations for the three month interim period ended March 31, 2011 are not necessarily indicative of the results expected for the fiscal year ended December 31, 2011.

Note 2 - Financial Statements

For a complete set of footnotes, reference is made to the Company’s Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission and the audited financial statements included therein.

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 History

We were incorporated in the State of Colorado on August 31, 2006 under the name “Mountain West Business Solutions, Inc.” During our fiscal year ended July 31, 2009 our business was to provide management consulting with regard to accounting, computer and general business issues for small and home-office based companies. Effective October 15, 2009, we executed an agreement to acquire Sunshine Biopharma, Inc., a Colorado corporation (“SBI”), in exchange for the issuance of 21,962,000 shares of our Common Stock and 850,000 shares of Convertible Preferred Stock, each convertible into twenty (20) shares of our Common Stock (the “Agreement”). As a result of this transaction our officers and directors resigned their positions with us and were replaced by our current management. Also as a result of this transaction we have changed our name to “Sunshine Biopharma, Inc.” As of the date of this report we are a pharmaceutical company focused on the research, development and commercialization of drugs for the treatment of various forms of cancer.

In January 2010, our Board of Directors adopted a resolution changing our fiscal year from July 31 to December 31, effective December 31, 2009. Article VIII, Section 2 of our Bylaws provides the authority for our Board of Directors to establish our fiscal year on a date in their sole discretion. Our Board undertook this resolution in order to have the fiscal year coincide with the fiscal year end for our wholly owned operating subsidiary company.

On April 19, 2010, the holders of a majority of our voting securities executed their written consent to amend our Articles of Incorporation to increase our authorized capital stock from 50,000,000 shares of Common Stock, par value $.001 per share, and 1,000,000 shares of Preferred Stock, to 200,000,000 shares of Common Stock having a par value of $.001 per share and 5,000,000 shares of Preferred Stock, $.10 par value per share.

Our principal place of business is located at 2015 Peel Street, 5th Floor, Montreal, Quebec, Canada H3A 1T8. Our phone number is (514) 764-9698 and our website address is www.sunshinebiopharma.com.

We have not been subject to any bankruptcy, receivership or similar proceeding.

Results Of Operations

Comparison of Results of Operations for the three months ended March 31, 2011 and 2010

For the three months ended March 31, 2011 and 2010 we did not generate any revenues.

General and administrative expenses during the three month period ended March 31, 2011 were $49,216 compared to general and administrative expense of $84,649 incurred during the three month period ended March 31, 2010, a decrease of $35,433. During the aforesaid period in 2010, our general and administrative expense included $50,000 write down of intangible assets which we did not incur in the three month period ended March 31, 2011. In addition, we were able to cut costs of legal and accounting fees. These reduced expenses were partially offset by increases in office costs, public relations fees and $17,650 in research and development costs. As a result, we incurred a net loss of ($49,216) (less than $0.01 per share) for the three month period ended March 31, 2011, compared to a net loss of ($84,649) during the three month period ended March 31, 2010.

Because we did not generate any revenues since our inception, following is our plan of operation.

Plan of Operation

Our current business plan is that of a pharmaceutical company focused on the research, development and commercialization of drugs for the treatment of various forms of cancer. Our lead compound, Adva-27a, a multi-purpose anti-tumor compound, has entered preclinical stage with plans to conduct Phase I clinical trials at The Research Foundation of the State University of New York, a not-for-profit educational corporation duly organized and existing under the laws of the State of New York, acting for and on behalf of Binghamton University. See “Clinical Trials” below. We have licensed our technology on an exclusive basis from Advanomics Corporation, a privately held Canadian company (“Advanomics”), and we are planning to initiate our own research and development program as soon as practicable, once financing is in place. There are no assurances that we will obtain the financing necessary to allow us to implement this aspect of our business plan or to enter clinical trials.

Carbon-Difluoride Technology

Many therapeutically important compounds contain diester bonds that link different parts of the molecule together. Diester bonds are naturally unstable often leading to suboptimal performance when the molecule is administered to patients. Diester bonds have specific three-dimensional, as well as electrostatic properties that cannot be easily mimicked by other bonds. Bonds that do not mimic the diester bond correctly invariably render the compound inactive. In collaboration with Institut National des Sciences Appliquées de Rouen in France (“INSA”), Advanomics has developed a way to replace the diester bond with a Carbon-Difluoride bond which acts as a diester isostere. An isostere is a different chemical structure that mimics the properties of the original. In the body, Carbon-Difluoride compounds are resistant to metabolic degradation but recognized similarly to the diester compounds (See Figure 1).

Figure 1

While no assurances can be provided, we are planning to expand our product line through acquisitions and/or in-licensing as well as in-house research & development.

Our Lead Compound (Adva-27a)

Our initial drug candidate is Adva-27a, a Carbon-Difluoride derivative of Etoposide, targeted for various forms of cancer. If sufficient funding can be obtained, Adva-27a is expected to enter Phase I clinical trials for breast cancer and prostate cancer in the US by mid to late 2012. Etoposide is currently on the market and has been for over 20 years. It is sold under different brand names by various drug companies including, VePesid, VP-16, Etopophos and Vumon (Bristol-Myers Squibb, the original developer), Toposar (Pfizer), Lastet (Nippon Kayaku Ltd) and Etoposide (TEVA, Bedford Laboratories, Supergen, American Pharmaceutical Partners, Watson Pharmaceuticals, and Genpharm). Etoposide is an effective anti-tumor compound and is currently in use to treat various types of cancer including leukemia, lymphoma, testicular cancer, breast cancer, lung cancer, brain cancer, prostate cancer, bladder cancer, colon cancer, ovarian cancer, liver cancer and several other forms of cancer. It is also being tested in clinical trials against other types of cancer such as Kaposi's sarcoma. Etoposide is administered both intravenously and orally as liquid capsules.

Etoposide suffers from molecular instability leading to reduced efficacy and high toxicity. Using its Carbon-Difluoride platform technology (see Figure 1), Advanomics has constructed several Difluoro derivatives of Etoposide by replacing the labile diester bond between the sugar and the toxin moieties of Etoposide molecule with a Carbon-Difluoride bond (Figure 1). All Difluoro substituted constructs were found to be completely stable. Advanomics subsequently tested these constructs for their ability to kill cancer cells in vitro by conducting side-by-side experiments against the standard Etoposide compound. The results of these studies, which have been published in our patent application PCT/FR2007/000697, are summarized in Table 1. One of the constructs, Adva-27a, showed enhanced cancer cell killing activity over the existing Etoposide molecule (see Table 1).

This new compound, which we have given the chemical name difluoro-etoposide, is entering Phase I clinical trials in the US and Canada by mid to late 2012. Subject to receipt of financing, we anticipate the Phase I clinical trials to be completed by mid to late 2013 at which time we will apply for limited marketing approval (see Clinical Trials below).

Table 1

Clinical Trials

We are currently negotiating an agreement with McGill University’s Jewish General Hospital in Montreal (Canada) to conduct Phase I clinical trials for our lead compound, Adva-27a, for lung cancer. All aspects of the planned clinical trials in Canada will employ FDA standards at all levels.

In addition, effective January 17, 2011, we executed a Research Agreement (the “Agreement”) with The Research Foundation of the State University of New York (“SUNY”), a not-for-profit educational corporation duly organized and existing under the laws of the State of New York, acting for and on behalf of Binghamton University. The purpose of the Agreement is to memorialize the terms of our working together with Binghamton University to conduct the necessary research and development to advance our lead compound, Adva-27a (difluoro-etoposide) or its derivative, Adva-32a, through various stages of preclinical development, animal studies and Phase I clinical trials for breast cancer and prostate cancer. The Agreement shall be in force for a period of three (3) years from the Effective Date and shall be renewed automatically for additional one (1) year periods until the project is completed, unless the research is completed prior to the initial three year term of the Agreement. The relationship between us and The Research Foundation of the State University of New York is exclusive for breast cancer and prostate cancer in the United States.

All of the work in respect of the project to be performed within the framework of the Agreement shall be financed by the Parties working together to secure grants by acting as co-applicants and submitting funding applications to various Federal, State, local and private sources. The Agreement is subject to the procurement of funding. In the event that said funding is not obtained or is subsequently disrupted, cancelled or otherwise found to be insufficient to complete the project, the Agreement shall terminate at that time. To date, funding has been provided by us. As of the date of this report no definitive agreement is in place to provide full funding and there can be no assurances that such funding will be secured in an amount sufficient to conduct the project, or at all, but based upon existing discussions our management is confident that the parties to the Agreement will secure such funding in the near future.

The Agreement also provides for Binghamton University to have an option to continue the development of Adva-27a and/or Adva-32a through Phase II, Phase III and other clinical trials until full FDA approval for breast cancer and prostate cancer is obtained on terms to be mutually agreed in the future.

We anticipate the clinical trials will be completed by mid to late 2013, at which time we together with our licensor will file for limited marketing approval with the regulatory authorities in Canada and the FDA in the U.S. (see Marketing below).

Marketing

According to the American Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the U.S. each year. Given the terminal and limited treatment options available for the indications Advanomics is planning to study, we anticipate being granted limited marketing approval (“compassionate-use”) for our Adva-27a following receipt of funding and a successful Phase I. There are no assurances that either will occur. Such limited approval will allow us to make the drug available to various hospitals and health care centers for experimental therapy and/or “compassionate-use,” thereby generating some revenues. Similarly to the existing Etoposide, our Adva-27a product will be a single-treatment blister-pack comprised of 20 gel-caps each containing 50 milligrams of Adva-27a (difluoro-etoposide) for a total of 1 gram per pack.

Liquidity and Capital Resources

As of March 31, 2011, we had cash or cash equivalents of $118,061.

Net cash used in operating activities was $44,330 during the three month period ended March 31, 2011, compared to $1,284,106 for the three month period ended March 31, 2010. We anticipate that overhead costs in current operations will increase in the future once our research and development activities discussed above increase.

Cash flows provided or used in investing activities were $0 for the three month periods ended March 31, 2011 and 2010. Cash flows provided or used by financing activities were also $0 for the three month periods ended March 31, 2011 and 2010.

During our fiscal year ended December 31, 2010, we conducted a private placement of our Common Stock whereby we sold 664,335 shares at a price of $0.60 per share and received proceeds of $398,600 therefrom.

We are not generating revenue from our operations, and our ability to implement our business plan for the future will depend on the future availability of financing. Such financing will be required to enable us to further develop our testing, research and development capabilities and continue operations. We intend to raise funds through private placements of our common stock, through short-term borrowing and by application for grants in conjunction with SUNY Binghamton with whom we have contracted to perform Phase 1 testing of our Adva-27a drug. We estimate that we will require approximately $7.5 million in debt and/or equity capital to fully implement our business plan in the future and there are no assurances that we will be able to raise this capital. While we have engaged in discussions with various investment banking firms and venture capitalists to provide these funds, as of the date of this report we have not reached any agreement with any party that has agreed to provide us with the capital necessary to effectuate our new business plan or otherwise enter into a strategic alliance to provide such funding. Our inability to obtain sufficient funds from external sources when needed will have a material adverse effect on our plan of operation, results of operations and financial condition.

Our cost to continue operations as they are now conducted is nominal, but these are expected to increase once we commence Phase I clinical trials. We do not have sufficient funds to cover the anticipated increase in these expenses. We need to raise additional funds in order to continue our existing operations, to initiate research and development activities, and to finance our plans to expand our operations for the next year. If we are successful in raising additional funds, our research and development efforts will continue and expand.

Inflation

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the three month period ended March 31, 2011.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

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.

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, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2011, at the reasonable assurance level. We believe that our consolidated financial statements presented in this Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

Inherent Limitations - Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

Changes in Internal Control over Financial Reporting - There were no changes in our internal control over financial reporting during the three month period ended March 31, 2011, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

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, 2011 we issued 20,000 shares of our Common Stock as part of a private offering we commenced whereby we are offering up to 6,000,000 shares of our Common Stock at a price of $0.60 per share. We relied upon the exemption from registration provided by Regulation D and Regulation S as promulgated under the Securities Act of 1933, as amended, to issue these shares. All proceeds derived from this private offering have been used for research and development activities and general and administrative expense.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. [Removed and reserved.]

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibit No.		Description

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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 10, 2011.

	SUNSHINE BIOPHARMA, INC.

	By:	/s/ Dr. Steve N. Slilaty
		Dr. Steve N. Slilaty, Principal Executive Officer


	By:	/s/ Camille Sebaaly
		Camille Sebaaly, Principal Financial Officer and Principal Accounting Officer