Sunshine Biopharma, Inc - Quarter Report: 2020 September (Form 10-Q)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

Quarterly Report Under

the Securities Exchange Act of 1934

 

For Quarter Ended: September 30, 2020

 

Commission File Number: 000-52898

 

SUNSHINE BIOPHARMA, INC.

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

 

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

 

6500 Trans-Canada Highway

4th Floor

Pointe-Claire, Quebec, Canada H9R 0A5

 (Address of principal executive offices)

 

(514) 426-6161

(Issuer’s Telephone Number)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

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

 

	Large accelerated filer  ☐	Accelerated filer  ☐
	Non-accelerated filer  ☒	Smaller reporting company  ☒
		Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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

 

The number of shares of the registrant’s only class of Common Stock issued and outstanding as of November 10, 2020, was 332,419,296 shares.

 

	TABLE OF CONTENTS
	PART I FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	3
	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Month Periods Ended September 30, 2020 and 2019	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended September 30, 2020 and 2019	5
	Unaudited Condensed Statement of Shareholders' Equity	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4.	Controls and Procedures.	24

 

	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
	Signatures	28

 

 

PART I.  FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Sunshine Biopharma, Inc.
Unaudited Condensed Consolidated Balance Sheet
	September 30,	December 31,
	2020	2019
ASSETS
Current Assets:
Cash and cash equivalents	$488,708	$40,501
Accounts receivable	-	430
Inventory	26,201	15,910
Prepaid expenses	5,105	1,255
Deposits	7,590	7,590
Total Current Assets	527,604	65,686
		-
Equipment (net of $47,447 and $37,109 depreciation, respectively)	22,918	32,456
Patents (net of $58,918 amortization and $556,120 impairment)	-	-
TOTAL ASSETS	$550,522	$98,142
LIABILITIES
Current Liabilities:
Notes payable	530,209	586,307
Notes payable - related party	128,269	129,261
Accounts payable & accrued expenses	57,691	96,882
Interest payable	31,677	21,077
Total Current Liabilities	747,846	833,527
Long-term portion of notes payable	357,552	-
TOTAL LIABILITIES	1,105,398	833,527
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred Stock, Series B $0.10 par value per share; Authorized 1,000,000 Shares;
Issued and outstanding 1,000,000 and 500,000 at September 30, 2020 and December 31, 2019, respectively	100,000	50,000
Common Stock, $0.001 par value per share; Authorized 3,000,000,000 Shares;
Issued and outstanding 304,419,296 and 35,319,990 at September 30, 2020 and December 31, 2019, respectively	304,419	35,320
Capital paid in excess of par value	18,179,143	16,616,426
Accumulated comprehensive income	(3,504)	(2,495)
Accumulated (Deficit)	(19,134,934)	(17,434,636)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)	(554,876)	(735,385)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)	$550,522	$98,142

 

See Accompanying Notes To These Financial Statements 

 

 

Sunshine Biopharma, Inc.
Unaudited Condensed Consolidated Statement Of Operations and Comprehensive Income (Loss)
	3 Months Ended September 30,	3 Months Ended September 30,	9 Months Ended September 30,	9 Months Ended September 30,
	2020	2019	2020	2019
Sales	$17,150	$7,326	$43,397	$10,565
Cost of Sales	6,340	5,293	15,384	6,865
Gross Profit	10,810	2,033	28,013	3,700
General & Administrative Expenses:
Accounting	19,290	16,402	56,490	57,542
Consulting	3,823	48,222	7,731	70,238
Legal	6,895	13,219	50,970	52,188
Office	19,453	17,035	53,910	51,945
Officer & director remuneration	24,600	90,600	80,430	134,552
Rent	513	518	1,512	2,775
R&D	-	15,204	-	15,204
Depreciation	3,524	3,473	10,526	10,302
Total General & Administrative Expenses	78,098	204,673	261,569	394,746
Income (Loss) From Operations	(67,288)	(202,640)	(233,556)	(391,046)
Other Income (Expense):
Miscellaneous income	-	-	3,000	-
Interest income		5		5
Foreign exchange gain (loss)	(1,598)	961	6,404	(12,095)
Interest expense	(22,094)	(27,847)	(62,669)	(92,486)
Debt release	1,284	-	2,836	-
Loss on debt conversions	(608,899)	(120,720)	(1,416,313)	(185,814)
Total Other Income (Expense)	(631,307)	(147,601)	(1,466,742)	(290,390)
Net income (loss) before income taxes	(698,595)	(350,241)	(1,700,298)	(681,436)
Provision for income taxes	-	-	-	-
Net income (loss) from continuing operations	(698,595)	(350,241)	(1,700,298)	(681,436)
Net income (loss) on discontinued operations	-	-	-	(582,237)
Net Income (Loss)	(698,595)	(350,241)	(1,700,298)	(1,263,673)
Unrealized gain (loss) from foreign exchange translation	(144)	(115)	(1,009)	1,599
Comprehensive Income (Loss)	(698,739)	(350,356)	(1,701,307)	(1,262,074)
Basic income (loss) form continuing operations per common share	$0.00	$(0.04)	$(0.01)	$(0.15)
Basic income (loss) form discontinued operations per common share	$0.00	$0.00	$0.00	$(0.13)
Basic income (loss) per common share	$0.00	$(0.04)	$(0.01)	$(0.29)
Weighted Average Common Shares Outstanding	280,873,792	8,268,824	162,133,885	4,420,363

 

See Accompanying Notes To These Financial Statements 

 

 

Sunshine Biopharma, Inc.
Unaudited Condensed Consolidated Statement Of Cash Flows
	9 Months Ended	9 Months Ended
	September 30, 2020	September 30, 2019
Cash Flows From Operating Activities:
Net (Loss)	$(1,700,298)	$(1,263,673)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	10,505	10,302
Foreign exchange (gain) loss	(6,404)	12,095
Stock issued for services	50,000	136,490
Stock issued for payment of interest	42,233	7,905
Loss on debt conversion	1,416,313	190,494
Debt and interest release	(2,836)	-
Loss on disposition of subsidiary	-	582,237
(Increase) decrease in accounts receivable	430	-
(Increase) decrease in inventory	(10,291)	(17,778)
(Increase) in prepaid expenses	(3,850)	(1,814)
(Increase) in depsoits	-	(7,590)
Increase (decrease) in accounts payable and accrued expenses	(40,029)	(52,489)
Increase (decrease) in interest payable	10,600	35,862
Net Cash Flows (Used) in Operations	(233,627)	(367,959)
Cash Flows From Investing Activities:
Advances to discontinued operations	-	(14,416)
Purchase of equipment	(800)	-
Net Cash Flows (Used) in Investing Activities	(800)	(14,416)
Cash Flows From Financing Activities:
Proceeds from notes payable	676,643	376,000
Payments of notes payable	-	(53,000)
Advances from related parties	-	6,670
Note payable used to pay note origination fees	7,000	22,430
Net Cash Flows Provided by Financing Activities	683,643	352,100
Cash and Cash Equivalents at Beginning of Period	40,501	110,534
Net increase (decrease) in cash and cash equivalents	449,216	(30,275)
Foreign currency translation adjustment	(1,009)	1,714
Cash and Cash Equivalents at End of Period	$488,708	$81,973
Supplementary Disclosure Of Cash Flow Information:
Stock issued for note conversions including interest	$1,831,816	$151,169
Cash paid for interest	$-	$11,034
Cash paid for income taxes	$-	$-

 

  See Accompanying Notes To These Financial Statements

 

 

Sunshine Biopharma, Inc.
Unaudited Condensed Statement of Shareholders' Equity
	Number of Common Shares Issued	Common Stock	Capital Paid in Excess of Par Value	Number Of Preferred Shares Issued	Preferred Stock	Comprehensive Income	Accumulated Deficit	Total
Three Months Ended September 30, 2019
Balance at June 30, 2019	5,214,371	5,215	15,818,284	500,000	50,000	(2,024)	(16,687,777)	(816,302)
Common stock issued for the reduction of notes payable
and payment of interest	6,951,932	6,951	285,361					292,312
Common stock issued for services	3,405,000	3,405	128,085			-		131,490
Net (loss)						(115)	(350,241)	(350,356)
Balance at September 30, 2019	15,571,303	$15,571	$16,231,730	500,000	$50,000	$(2,139)	$(17,038,018)	(742,856)
Nine Months Ended September 30, 2019
Balance at December 31, 2018	4,282,620	4,283	15,668,047	500,000	50,000	(3,738)	(15,774,345)	(55,753)
Common stock issued for the reduction of notes payable
and payment of interest	7,883,683	7,883	435,598					443,481
Common stock issued for services	3,405,000	3,405	128,085			-		131,490
						-
Net income (loss)						1,599	(1,263,673)	(1,262,074)
Balance at September 30, 2019	15,571,303	$15,571	$16,231,730	500,000	$50,000	$(2,139)	$(17,038,018)	(742,856)
Three Months Ended September 30, 2020
Balance at June 30, 2020	269,821,248	269,820	17,542,616	500,000	50,000	(3,360)	(18,436,339)	(577,263)
Common stock issued for the reduction of notes payable
and payment of interest	34,598,048	34,599	636,527					671,125
Preferred stock issued for services				500,000	50,000			50,000
						-
Net (loss)						(144)	(698,595)	(698,739)
Balance at September 30, 2020	304,419,296	$304,419	$18,179,143	1,000,000	$100,000	$(3,504)	$(19,134,934)	(554,876)
Nine Months Ended September 30, 2020
Balance at December 31, 2019	35,319,990	35,320	16,616,426	500,000	50,000	(2,495)	(17,434,636)	(735,385)
Common stock issued for the reduction of notes payable
and payment of interest	269,099,306	269,099	1,562,717					1,831,816
Preferred stock issued for services				500,000	50,000			50,000
						-
Net (loss)						(1,009)	(1,700,298)	(1,701,307)
Balance at September 30, 2020	304,419,296	$304,419	$18,179,143	1,000,000	$100,000	$(3,504)	$(19,134,934)	(554,876)

 

  See Accompanying Notes To These Financial Statements

 

 

Sunshine Biopharma, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three and Nine Month Interim Periods Ended September 30, 2020 and 2019

 

Note 1 – Nature of Business and Basis of Presentation

 

Sunshine Biopharma, Inc. (the "Company") was originally incorporated under the name Mountain West Business Solutions, Inc. on August 31, 2006 in the State of Colorado. Until October 2009, the Company was operating as a business consultancy firm. Effective October 15, 2009, the Company acquired Sunshine Biopharma, Inc. in a transaction classified as a reverse acquisition. Sunshine Biopharma, Inc. was holding an exclusive license to a new anticancer drug bearing the laboratory name, Adva-27a. Upon completion of the reverse acquisition transaction, the Company changed its name to Sunshine Biopharma, Inc. and began operating as a pharmaceutical company focusing on the development of the licensed Adva-27a anticancer drug.

 

In July 2014, the Company formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”) for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. Sunshine Canada has signed licensing agreements for four (4) generic prescription drugs for treatment of breast cancer, prostate cancer and BPH (Benign Prostatic Hyperplasia).

 

On January 1, 2018, the Company acquired all of the issued and outstanding shares of Atlas Pharma Inc. (“Atlas”), a Canadian privately held analytical chemistry company. The purchase price for the shares was Eight Hundred Forty-Eight Thousand Dollars $848,000 Canadian ($676,748 US). The purchase price included a cash payment of $100,500 Canadian ($80,289 US), plus the issuance of 50,000 shares of the Company’s Common Stock valued at $238,000, and a promissory note (“Atlas Debt”) in the principal amount of $450,000 Canadian ($358,407 US), with interest payable at the rate of 3% per annum. Effective April 1, 2019, the Company re-assigned all of its stock in Atlas back to the original owner in exchange for the Atlas Debt. The loss on the disposition was $580,125. See “Discontinued Operations” below for a more detailed explanation of this disposition.

 

In March 2018, the Company formed NOX Pharmaceuticals, Inc., a wholly owned Colorado corporation and assigned all of the Company’s interest in the Adva27a anticancer drug to that company. NOX Pharmaceuticals Inc.’s mission is to research, develop and commercialize proprietary drugs including Adva-27a.

 

In December 2018, the Company launched its first over-the-counter product, Essential 9™, a nutritional supplement comprised of the nine (9) essential amino acids that the human body cannot synthesize. Essential 9tm 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 Dtm.

 

Effective April 6, 2020, the Company completed another 20 to 1 reverse split of its Common Stock, reducing the issued and outstanding shares of Common Stock from 1,193,501,925 to 59,675,417 (the “Second Reverse Stock Split”). The number of authorized Common Shares remained as previously established at 3,000,000,000 post-second split.

 

 

On May 22, 2020, the Company filed a patent application in the United States for a new treatment for Coronavirus infections. The Company’s patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease (Mpro), an enzyme that is essential for viral replication. The patent application has a priority date of May 22, 2020.

 

On June 17, 2020, the Company filed an amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State for the State of Colorado, to eliminate the Series “A” Preferred Shares consisting of Eight Hundred and Fifty Thousand (850,000) shares, par value $0.10 per share, and the designation thereof, which shares were returned to the status of undesignated shares of Preferred Stock. In addition, the Amendment also increased the number of authorized Series “B” Preferred Shares from Five Hundred Thousand (500,000) to One Million (1,000,000) shares.

 

Also on June 17, 2020, the Company issued Five Hundred Thousand (500,000) shares of Series “B” Preferred Stock in favor of Dr. Steve N. Slilaty, the Company’s CEO, in consideration for the COVID-19 treatment technology he developed. The Series “B” Preferred Stock is non-convertible, non-redeemable, non-retractable and has a superior liquidation value of $0.10 per share. Each share of Series “B” Preferred Stock is entitled to 1,000 votes per share.

 

The Company's financial statements reflect both the First and Second Reverse Stock Split on a retroactive basis and represent the consolidated activity of Sunshine Biopharma, Inc. and its subsidiaries (Sunshine Biopharma Canada Inc. and NOX Pharmaceuticals Inc.) herein collectively referred to as the "Company".

 

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s proprietary drug development program and other business activities.

 

Impact of Coronavirus (COVID-19) Pandemic

 

In March 2020, the World Health Organization declared Coronavirus and its associated disease, COVID-19, a global pandemic. Conditions surrounding the Coronavirus outbreak are evolving rapidly and government authorities around the world have implemented emergency measures to mitigate the spread of the virus. The outbreak and related mitigation measures have had and will continue to have a material adverse impact on the world economies and the Company's business activities. It is not possible for the Company to predict the duration or magnitude of the adverse conditions of the outbreak and their effects on the Company’s business or ability to raise funds. No adjustments have been made to the amounts reported in the Company's financial statements as a result of this matter.

 

Basis of Presentation of Unaudited Condensed Consolidated Financial Information

 

The unaudited financial statements of the Company for the three and nine month periods ended September 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of September 30, 2020 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on May 1, 2020. These financial statements should be read in conjunction with that report.

 

Recently Issued Accounting Pronouncements

 

In January 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-01, LEASES (TOPIC 842): LAND EASEMENT PRACTICAL EXPEDIENT FOR TRANSITION TO TOPIC 842. In February 2016, the FASB issued Accounting Standards Update No. 2016- 02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. The Company adopted this pronouncement on January 1, 2019. The Company's month-to-month arrangement for office space has no short-term or long-term asset or liability value.

 

 

Discontinued Operations

 

Effective April 1, 2019, the Company disposed of its Atlas Pharma Inc. subsidiary. As a consequence of the sale, the operating results and the assets and liabilities of the discontinued operations, which formerly comprised the Analytical Chemistry Services Operations, are presented separately in the Company's financial statements. Summarized financial information for the discontinued business is shown below. Prior period balances have been reclassified to present the operations of the Analytical Chemistry Services business as a discontinued operation.

 

Discontinued Operations Income Statement:

	Unaudited 9 Months and 3 Months Ended September 30, 2020	Unaudited 9 Months and 3 Months Ended September 30, 2019
Revenues	$-	$119,522
Cost of revenues	-	81,920
Gross profit	-	37,602
General & Administrative Expenses	-	36,196
Gain (Loss) from operations	-	1,406
Other income (expense) – Interest	-	(3,518)
Net Income (Loss) from discontinued operations	-	(2,112)
Loss on disposal	-	(580,125)
Total Net Income (Loss) from Discontinued Operations	$-	$(582,237)

 

  Discontinued Operations Balance Sheet:

 

	Unaudited September 30,  2020	Unaudited December 31, 2018
ASSETS
Cash and cash equivalents	$-	$4,682
Accounts receivable	-	94,955
Equipment (net of $-0- and $34,959 depreciation)	-	224,238
Goodwill	-	665,697
TOTAL ASSETS	-	989,572
LIABILITIES
Notes payable	-	4,657
Notes payable - related party	-	18,230
Advances - related party	-	10,248
Accounts payable and accrued expenses	-	70,597
TOTAL LIABILITIES	$-	103,732

  

 

Discontinued Operations Cash Flows:

 

Cash flows used in discontinued operations for the nine months ended September 30, 2020 and 2019 were $-0- and $8,510, respectively. There were no cash flows used in or provided by financing or investing activities during those periods.

 

Note 2 – Going Concern and Liquidity

 

As of September 30, 2020 and December 31, 2019, the Company had $488,708 and $40,501 in cash on hand, respectively, and limited revenue-producing business and other sources of income. Additionally, as of September 30, 2020 and December 31, 2019, the outstanding liabilities of the Company totaled $1,105,398 and $833,527, respectively.

 

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Based on the Company’s current financial projections, management believes it does not have sufficient existing cash resources to fund its current operations.

 

It is the Company’s current intention to raise debt and/or equity financing to fund ongoing operating expenses. There is no assurance that these events will be satisfactorily completed or on terms acceptable to the Company. Any issuance of convertible debt or equity securities, if accomplished, could cause substantial dilution to existing stockholders. Any failure by the Company to successfully implement these plans would have a material adverse effect on its business, including the possible inability to continue operations.

 

On September 8, 2020, the Company entered into a financing agreement providing for a commitment by the investor to disburse to the Company a minimum of $2,000,000 in convertible debt installments over the ensuing three to six months period. As of September 30, 2020, the Company has received a total of $300,000 in funding under this agreement.

 

Note 3 – Notes Payable

 

The Company’s Notes Payable at September 30, 2020 consisted of the following:

 

On April 1, 2017, the Company received monies in exchange for a Note Payable having a Face Value of $100,000 Canadian ($74,970 US at September 30, 2020) with interest payable quarterly at 9%, which Note was due April 1, 2019. The Note is convertible any time after issuance into $0.001 par value Common Stock at a price of $0.015 Canadian (approximately $0.011 US) per share. The Company estimates that the fair value of this convertible debt approximates the face value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion. In June 2018, the Company filed an action in the Superior Court of the Province of Quebec in the District of Montreal (Canada) against the holder of this Note. The complaint alleges among other things, claims of misrepresentations and misleading conduct resulting in damages to the Company in an amount of approximately $200,000 Canadian (approximately $143,000 US). The matter is currently pending. See “Legal Proceedings” below.

 

On September 10, 2018, the Company issued two Notes Payable having an aggregate Face Value of $36,500 with interest accruing at 8%. The two Notes were issued for services rendered to the Company and had maturity dates in June 2019. The Company was unable to pay the notes and on November 30, 2019 the Company issued a new Note which included accrued interest and accelerated interest of $7,059 for a total Face Value of $43,559. The new Note accrues interest at 8% and is convertible after 180 days from issuance into Common Stock at a price 35% below market value. The new Note was due August 31, 2020. During the nine months ended September 30, 2020, the entire principal amount of $43,559 of this Note plus accrued interest of $2,523 was converted into 14,198,048 shares of Common Stock valued at $86,685 resulting in a loss of $40,603.

 

On December 24, 2018, the Company received monies in exchange for a Note Payable having a Face Value of $87,000 with interest accruing at 8% was due December 24, 2019. The Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. As of September 30, 2020, the entire principal amount of $87,000 of this Note plus accrued interest of $9,639 was converted into 43,986,317 shares of Common Stock valued at $276,396 resulting in a loss of $161,036.

 

 

On January 8, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $54,000 with interest accruing at 8% was due January 8, 2020. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. During the nine month period ended September 30, 2020, the entire principal amount of $54,000 of this Note plus accrued interest of $9,814 was converted into 44,931,640 shares of Common Stock valued at $365,787 resulting in a loss of $301,973.

 

On February 5, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $37,450 with interest accruing at 8% was due October 10, 2019. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. As of September 30, 2020, the entire principal amount of $37,450 of this Note plus accrued interest of $2,996 was converted into 38,263,409 shares of Common Stock valued at $217,971 resulting in a loss of $182,790.

 

On July 2, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $40,000 with interest accruing at 8% was due April 30, 2020. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. During the nine month period ended September 30, 2020, the entire principal amount of $40,000 of this Note plus accrued interest of $1,600 was converted into 13,099,359 shares of Common Stock valued at $58,684 resulting in a loss of $17,084.

 

On July 26, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $50,000 with interest accruing at 8%, which became due July 26, 2020. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. During the nine month period ended September 30, 2020, the entire principal of $50,000 of this Note plus accrued interest of $4,909 was converted into 43,522,363 shares of Common Stock valued at $131,370 resulting in a loss of $76,461.

 

On September 12, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $43,000 with interest accruing at 8% is due July 15, 2020. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. During the nine month period ended September 30, 2020, the entire principal amount of $43,000 of this Note plus accrued interest of $1,720 was converted into 38,855,726 shares of Common Stock valued at $117,177 resulting in a loss of $72,457.

 

On December 14, 2019, the Company received monies in exchange for a Note Payable having a Face Value of $42,800 with interest accruing at 8% and which is due December 14, 2020. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. During the nine month period ended September 30, 2020, the entire principal amount of $42,800 of this Note plus accrued interest of $1,712 was converted into 18,592,605 shares of Common Stock valued at $81,796 resulting in a loss of $37,284.

 

A Note Payable dated December 31, 2018 having a Face Value of $26,893 and accruing interest at 12% was due December 31, 2019. On December 31, 2019, the Company renewed the Note, together with accrued interest of $3,227 for a 12-month period. The new Note has a Face Value of $30,120 and accrues interest at 12%. This Note is nonconvertible and matures on December 31, 2020.

 

A Note Payable dated December 31, 2018 having a Face Value of $136,744 and accruing interest at 12% was due December 31, 2019. On October 1, 2019, the holder of this note requested to convert $30,000 in principal amount into 1,500,000 shares of Common Stock, leaving a principal balance $106,744. On December 31, 2019, the Company renewed the remaining principal balance of this Note, together with accrued interest of $15,509 for a 12-month period. The new Note has a Face Value of $122,253 and accrues interest at 12%. This Note matures on December 31, 2020. During the nine month period ended September 30, 2020, a principal amount of $16,225 of this Note plus accrued interest of $9,775 was converted into 26,000,000 shares of Common Stock valued at $603,200 resulting in a loss of $577,200.

 

On April 17, 2020, the Company’s Canadian subsidiary received a CEBA Loan (Canada Emergency Business Account Loan) from CIBC (Canadian Imperial Bank of Commerce) in the principal amount of $40,000 Canadian ($29,352 US) as part of the Canadian government’s COVID-19 relief program. The CEBA Loan is non-interest bearing if repaid on or before December 31, 2022 (the “Termination Date”). The CEBA Loan is considered repaid in full if the borrower repays 75% of the Principal Amount on or before the Termination Date. If the CEBA Loan is not repaid in full on or before the Termination Date, the lender will automatically extend the term of the loan by three years until December 31, 2025 (the “Extension Period”). During the Extension Period, interest will be charged, and will accrue on the outstanding amount of the CEBA Loan at a fixed rate of 5% per year, calculated daily and compounded monthly. The outstanding balance of the CEBA Loan and all accrued interest will be due at the end of the Extension Period.

 

 

On April 27, 2020, the Company received a Paycheck Protection Program loan in the principal amount of $50,655 from the US Small Business Administration as part of the US government’s COVID-19 relief program. This loan accrues interest at the rate of 1% per annum. The Company is obligated to make payments of principal and interest totaling $2,133 each month commencing on November 27, 2020, with any remaining balances due and payable on or before April 27, 2022. The proceeds derived from this loan may only be used for payroll costs, interest on mortgages, rent and utilities (“Admissible Expenses”). In addition, the Paycheck Protection Program provides for conditional loan forgiveness if the Company utilizes at least 75% of the proceeds from the loan to pay Admissible Expenses. As of the date of this Report, all of the proceeds from this loan have been utilized for Admissible Expenses and the Company believes that it will qualify for forgiveness of the entire amount of the loan. 

 

On June 1, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $42,000 with interest accruing at 8% is due June 1, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On June 9, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $37,000 with interest accruing at 8% is due June 9, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On July 7, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $48,000 with interest accruing at 8% is due July 7, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On July 27, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $102,000 with interest accruing at 8% is due July 27, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On August 14, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $67,000 with interest accruing at 8% is due August 14, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On September 14, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due September 14, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

On September 24, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $50,000 with interest accruing at 5% is due September 24, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company estimates that the fair value of this convertible debt approximates the Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.

 

The Company assessed the conversion features of the notes above for derivative accounting consideration, per ASC 815, and determined that the embedded conversion features should not be classified as a derivative because the exercise price of the convertible notes does not exceed the market value of the company's shares on the conversion date.

 

At September 30, 2020 and December 31, 2019, total accrued interest on Notes Payable was $31,677 and $21,077, respectively.

 

 

Note 4 – Notes Payable - Related Party

 

Outstanding Notes Payable at September 30, 2020 held by related parties consist of the following:

 

A Note Payable dated December 31, 2018 held by the CEO of the Company having a Face Value of $117,535 Canadian ($86,118 US) and accruing interest at 12% was due December 31, 2019. On December 31, 2019, the Company renewed the Note together with accrued interest of $14,104 Canadian ($10,845 US) and cash advances made to the Company of $36,473 Canadian ($28,044 US) for a 12-month period. The new Note, which was converted to USD, now has a face Value of $128,269 US. This new Note is nonconvertible, accrues interest at 12% per annum and has a maturity date of December 31, 2020.

 

Note 5 – Shareholders’ Equity

 

Effective February 1, 2019, the Company completed a reverse stock split whereby 1 share of Common Stock was issued for every 20 shares of Common Stock then issued and outstanding, reducing the issued and outstanding shares of Common Stock from 1,713,046,242 to 85,652,400. The Company’s authorized capital of Common Stock remained as previously established at 3,000,000,000 shares.

 

Effective April 6, 2020, the Company completed a second reverse stock split whereby 1 share of Common Stock was issued for every 20 shares of Common Stock then issued and outstanding, reducing the issued and outstanding shares of Common Stock from 1,193,501,925 to 59,675,417. The number of authorized Common Shares remained as previously established at 3,000,000,000 shares.

 

The Company's financial statements reflect both of these reverse stock splits on a retroactive basis.

 

On June 17, 2020, the Company filed an amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State for the State of Colorado, to eliminate the Series “A” Preferred Shares consisting of Eight Hundred and Fifty Thousand (850,000) shares, par value $0.10 per share, and the designation thereof, which shares were returned to the status of undesignated shares of Preferred Stock. In addition, the Amendment also increased the number of authorized Series “B” Preferred Shares from Five Hundred Thousand (500,000) to One Million (1,000,000) shares.

 

Also on June 17, 2020, the Company issued Five Hundred Thousand (500,000) shares of Series “B” Preferred Stock in favor of Dr. Steve N. Slilaty, the Company’s CEO, in consideration for the COVID-19 treatment technology he developed. The Series “B” Preferred Stock is non-convertible, nonredeemable, non-retractable and has a superior liquidation value of $0.10 per share. Each share of Series “B” Preferred Stock is entitled to 1,000 votes per share.

 

During the nine months ended September 30, 2020, the Company issued a total of 269,099,306 shares of Common Stock valued at $1,831,816 for the conversion of outstanding notes payable, reducing the debt by $373,269 and interest payable by $42,233 and generating a loss on conversion of $1,416,313.

 

The Company declared no dividends through September 30, 2020.

 

 

Note 6 – Related Party Transactions

 

In addition to the related party transaction detailed in Notes 4 and 5 above, the Company paid its Officers and Directors cash compensation totaling $24,600 and 3,751 for the three months and $80,430 and $43,952 for the nine months ended September 30, 2020 and 2019, respectively. The Company also paid its Officers and Directors non-cash compensation in the form of shares of Common Stock valued $-0- and $74,100 for the three month periods ended September 30, 2020 and 2019 and $-0- and $74,100 for the nine month periods ended September 30, 2020 and 2019, respectively.

 

Note 7 – Financing Agreement

 

On September 8, 2020, the Company executed a Financing Agreement with RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide the Company with a minimum of $2 million in convertible debt financing over the next three to six months pursuant to the terms and conditions included in relevant Promissory Notes (the “Promissory Notes”). The Promissory Notes will bear interest at the rate of 5% per annum and will be fully convertible into shares of shares of the Company’s Common Stock at a conversion price equal to the market value of the Company’s Common Stock on the applicable conversion date or $0.30 per share, whichever is greater. The Promissory Notes will have a maturity date of two years from the date of issuance and must be fully converted on or before the maturity date. The Company has the right under these Promissory Notes to pay off all or any part of the Promissory Notes at any time without penalty.

 

On September 14 and 24, 2020, the Company received $250,000 and $50,000, respectively in funding under this agreement (see “Note 3 – Notes Payable” above).

  

Note 8 – Subsequent Events

 

On October 16 and November 4, 2020, the holder of a Note Payable dated December 31, 2019 elected to convert a total of $28,000 in principal into 28,000,000 shares of Common Stock leaving a principal balance of $78,028.

 

On October 20, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due October 20, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share.

 

ITEM 2. MANAGEMET’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

 

Overview and History

 

We were incorporated in the State of Colorado on August 31, 2006 under the name “Mountain West Business Solutions, Inc.” Until October 2009, our business was to provide management consulting with regard to accounting, computer and general business issues for small and home-office based companies.

 

In October 2009, we acquired Sunshine Biopharma, Inc., a Colorado corporation holding an exclusive license (the “License”) to a new anticancer drug bearing the laboratory name, Adva-27a. As a result of this transaction we changed our name to “Sunshine Biopharma, Inc.” and our officers and directors resigned their positions with us and were replaced by Sunshine Biopharma, Inc.’s management at the time, including our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille Sebaaly each of whom remain part of our current management. Our principal business became that of a pharmaceutical company focusing on the development of our licensed Adva-27a anticancer compound. In December 2015 we acquired all issued and pending patents pertaining to our Adva-27a technology and terminated the License.

 

In July 2014, we formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. In April and June 2016 Sunshine Canada signed licensing agreements for four (4) generic prescription drugs for the treatment of breast cancer, prostate cancer and BPH (Benign Prostatic Hyperplasia).

 

In January 2018, we acquired all of the issued and outstanding shares of Atlas Pharma Inc. (“Atlas”), a Health Canada certified company dedicated to chemical analysis of pharmaceutical and other industrial samples. Effective April 1, 2019, we re-assigned all of our stock in Atlas back to the original owner in exchange for the Atlas related debt. See “Discontinued Analytical Chemistry Services Operations” below for a more detailed explanation of this acquisition and the subsequent disposition thereof in April 2019.

 

In March 2018, we formed NOX Pharmaceuticals, Inc., a wholly owned Colorado corporation, and assigned all of our interest in our Adva-27a anticancer compound to that company. NOX Pharmaceuticals, Inc.’s mission is to research, develop and commercialize proprietary drugs including Adva-27a.

 

 

In December 2018, we completed the development of a new nutritional supplement which we trademarked Essential 9™. This new supplement is an over-the-counter tablet comprised of the nine amino acids which the human body cannot make. Essential 9™ has been authorized for marketing by Health Canada under NPN 80089663. On March 12, 2019, Essential 9™ became available for sale on Amazon.ca and shortly thereafter on Amazon.com.

 

Effective February 1, 2019, we completed a 20 to 1 reverse split of our $0.001 par value Common Stock reducing the issued and outstanding shares of Common Stock from 1,713,046,242 to 85,652,400 (the “First Reverse Stock Split”). The number of authorized shares of our $0.001 par value Common Stock remained at 3,000,000,000 shares.

 

In November 2019, we received Health Canada approval for a new Calcium-Vitamin D supplement. Health Canada issued NPN 80093432 through which it authorized us to manufacture and sell the new Calcium-Vitamin D supplement under the brand name Essential Calcium-Vitamin Dtm.

 

Effective April 6, 2020, we completed another 20 to 1 reverse split of our $0.001 par value Common Stock, reducing the issued and outstanding shares of Common Stock from 1,193,501,925 to 59,675,417 (the “Second Reverse Stock Split”). The authorized capital of our Common Stock remained as previously established at 3,000,000,000 shares. Except in the paragraphs describing the reverse stock splits, all references in this Report to our Common Stock as well as the price per share of Common Stock are presented on a post First and Second Reverse Stock Splits basis.

 

On May 22, 2020, we filed a patent application in the United States for a new treatment for Coronavirus infections, including COVID-19. Our patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease (Mpro), an enzyme that is essential for viral replication. The small molecules covered by the patent application were computer modelled and designed by Dr. Steve N. Slilaty, our CEO. The patent application has a priority date of May 22, 2020.

 

On June 17, 2020, we filed an amendment to our Articles of Incorporation (the “Amendment”) with the Secretary of State for the State of Colorado, to eliminate the Series “A” Preferred Shares consisting of Eight Hundred and Fifty Thousand (850,000) shares, par value $0.10 per share, and the designation thereof, such shares to be returned to the status of undesignated shares of Preferred Stock. In addition, the Amendment also increased the number of authorized Series “B” Preferred Shares from Five Hundred Thousand (500,000) to One Million (1,000,000) shares.

 

Also on June 17, 2020, our Board of Directors authorized the issuance of Five Hundred Thousand (500,000) shares of our Series “B” Preferred Stock in favor of Dr. Steve N. Slilaty, our CEO and a director, in consideration for his development of a new treatment for Coronavirus infections, including COVID-19. The Series “B” Preferred Stock is non-convertible, non-redeemable, non-retractable and has a superior liquidation value of $0.10 per share. Each share of Series “B” Preferred Stock is entitled to 1,000 votes per share.

 

Our principal place of business is located at 6500 Trans-Canada Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5. Our phone number is (514) 426-6161 and our website address is www.sunshinebiopharma.com.

 

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

 

Plan of Operation

 

Despite the fact that we now are generating revenues, we have elected to include a Plan of Operation to discuss our ongoing research and development activities relating to our proprietary drug development operations, as well as, our other business activities.

 

 

Proprietary Drug Development Operations

 

Coronavirus Treatment

 

Viruses carry minimal genetic information as they rely, for the most part, on host cellular machinery to multiply. Coronavirus has a positive-sense RNA genome consisting of approximately 30,000 nucleotides, a genome size that places Coronavirus among the larger sized viruses. A positive-sense RNA genome is effectively a messenger RNA which allows the virus to express its genes immediately upon gaining entry into the host cell without the need for any prior replication or transcription steps as is the case with negative-sense RNA or DNA viruses. This is part of what makes Coronavirus a highly aggressive pathogen. Many of the causative agents of serious human diseases are positive-sense RNA viruses, including Hepatitis C, Zeka, Polio, West Nile, Dengue, Cardiovirus, and many others. Some positive-sense RNA viruses, such as the rhinoviruses that cause the common cold, are less clinically serious but they are responsible for widespread morbidity on a yearly basis.

 

The initial genome expression products of Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of COVID-19, are two large polyproteins, referred to as pp1a and pp1ab. These two polyproteins are cleaved at 13 specific sites by the main Coronavirus virus encoded protease (Mpro or 3CLpro) to generate a number of mature viral proteins essential for viral replication. Mpro represents an attractive anti-viral drug development target as it plays a central role in the early stages of viral replication. The crystal structure of Mpro shows the presence of an active site Cysteine (Cys145) and a coordinated active site Histidine (His41), both of which are essential for the enzyme’s proteolytic activity. The following is a summary of the development to date of our Coronavirus Treatment project:

 

 

 

 

 

 

Adva-27a Anticancer Drug

 

Since inception, our proprietary drug development activities have been focused on the development of a small molecule called Adva-27a for the treatment of aggressive forms of cancer. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant Cancer cells including Pancreatic Cancer cells, Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages 4423-4432, October 2012). Sunshine Biopharma is direct owner of all issued and pending worldwide patents pertaining to Adva-27a including U.S. Patents Number 8,236,935 and 10,272,065.

 

Figure 1

 

 

 

Figure 2

   

 

Our preclinical studies to date have shown that:

 

 

   

 

 

 

 

 

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:

 

 

 

 

 

Adva-27a’s initial indication will be Pancreatic Cancer for which there are currently little or no treatment options available. We are planning to conduct our clinical trials at McGill University’s Jewish General Hospital in Montreal, Canada. All aspects of the clinical trials in Canada will employ FDA standards at all levels.

 

 

According to the American Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the U.S. each year.  While particularly effective against Multidrug Resistant Cancer, we believe Adva-27a can potentially treat all cancer types as it is general chemotherapy drug. We believe that upon successful completion of Phase I Clinical Trials we may receive one or more offers from large pharmaceutical companies to buyout or license our drug.  However, there are no assurances that our Phase I Trials will be successful, or if successful, that any pharmaceutical companies will make an acceptable offer to us.  In the event we do not consummate such a transaction, we will require significant capital in order to manufacture and market our new drug on our own. The following, Figure 3, is a space-filling molecular model of our Adva-27a.

 

 

Figure 3

 

Generic Pharmaceuticals Operations

 

In 2016, our Canadian wholly owned subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), signed Licensing Agreements with a major pharmaceutical company for four prescription generic drugs for the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. We have since been working towards commencement of marketing of these pharmaceutical products under our own, Sunshine Biopharma, label. These four generic products are as follows:

 

 

 

 

 

 

Sunshine Canada is currently in the process of securing a Drug Identification Number (“DIN”) for each of these products from Health Canada. We are also required to obtain a Drug Establishment License (“DEL”) from Health Canada. Upon receipt of the DEL and DIN’s, we will be able to accept orders for our own label SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride. We cannot estimate the timing for our obtaining either the DIN’s or the DEL due to variables involved that are out of our control. Figure 4 shows our 30-Pill blister pack of Anastrozole.

 

 

Figure 4

 

We currently have a number of additional Generic Pharmaceuticals under review for in-licensing. While no assurances can be provided that we will acquire the rights to any additional generic drugs, we believe that a larger product portfolio will provide us with more opportunities and a greater reach into the marketplace.

  

Various publicly available sources indicate that the worldwide sales of generic pharmaceuticals are approximately $200 billion per year. In the United States and Canada, the sales of generic pharmaceuticals are approximately $50 billion and $5 billion, respectively. The generic pharmaceuticals business is fairly competitive and there are several multinational players in the field including Teva (Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan (Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex (Canada). While no assurances can be provided, with our offering of Canadian approved products we believe that we will be able to access at least a small percentage of the generic pharmaceutical marketplace.

   

Nutritional Supplements Operations

 

In December 2018, we completed the development of Essential 9tm, 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 9tm product. Our Essential 9tm 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 9tm provides all 9 Essential Amino Acids in freeform and in the proportions recommended by Health Canada. Essential 9tm is currently available on Amazon.com and Amazon.ca. Figure 5 below shows our 60-Tablet Essential 9tm product.

 

 

Figure 5

  

 

              In November 2019, we received Health Canada approval for another nutritional supplement, a new Calcium-Vitamin D tablets. Health Canada issued NPN 80093432 through which it authorized us to manufacture and sell the new Calcium-Vitamin D supplement under the brand name Essential Calcium-Vitamin D™.

 

Vitamin D is a group of steroid-like molecules responsible for increasing intestinal absorption of calcium, magnesium, and phosphate. They are also involved in multiple other biological functions, including proper functioning of the immune system, promoting healthy growth of bone, and reduction of inflammation. The most important compounds in this group are Vitamin D2 (ergocalciferol) and Vitamin D3 (cholecalciferol). Sunshine Biopharma’s Essential Calcium-Vitamin D™ tablets contain both of these compounds as well as Calcium for optimum health benefits. We anticipate that Essential Calcium-Vitamin D™ will be available on Amazon.ca in early 2021.

 

Discontinued Analytical Chemistry Services Operations

 

On January 1, 2018, we acquired all of the issued and outstanding shares of Atlas Pharma Inc. (“Atlas”), a privately held Canadian company providing analytical chemistry testing services (“Atlas Business”). The purchase price for the shares was $848,000 Canadian ($676,748 US). The purchase price included a cash payment of $100,500 Canadian ($80,289 US), plus the issuance of 50,000 shares of the Company’s Common Stock valued at $238,000, and a promissory note in the principal amount of $450,000 Canadian ($358,407 US), with interest payable at the rate of 3% per annum (“Atlas Note”).

 

Effective April 1, 2019, we disposed of Atlas by re-assigning all of our stock in Atlas back to the original owner in exchange for the Atlas Note. As a consequence of the sale, the operating results and the assets and liabilities of the discontinued Atlas Business are presented separately in the Company's financial statements as Discontinued Operations. In additions, prior period balances have been reclassified to present the operations of the Atlas Business as Discontinued Operations.

 

Results Of Operations

 

Comparison of Results of Operations for the Nine Months ended September 30, 2020 and 2019

 

During the nine months ended September 30, 2020, we generated revenues of $43,397 from the sale of products generated by our Nutritional Supplements Operations, compared to revenues of $10,565 during the comparable period in 2019, an increase of $32,832. The 2019 revenues only reflected six months of sales as the products from our Nutritional Supplements Operations were launched in March 2019. The cost of sales for these revenues was $15,384 during the nine months ended September 30, 2020, compared to $6,865 during the nine months ended September 30, 2019.

 

General and Administrative Expenses during the nine months ended September 30, 2020 was $261,569, compared to $394,746 during the nine months ended September 30, 2019, a decrease of $133,177. The reason for this decrease was due to our continuing effort to reduce expenses across the board. In terms of specific expense categories that contributed to the decrease were executive compensation which decreased by $54,122 and consulting fees which decreased by $62,507. 

 

We incurred $1,416,313 in losses arising from debt conversion during the nine months ended September 30, 2020, compared to $185,814 in losses from debt conversion during the similar period in 2019. This large increase was due to the specific structure of our convertible debt combined with recent volatility in our stock price. We also incurred $62,669 in interest expense during the nine months ended September 30, 2020, compared to $92,486 in interest expense during the similar period in 2019. The decrease was a result of a more rapid rate of conversion by our debt holders. In addition, we incurred $582,237 in losses from discontinued operations during the nine month ended September 30, 2019 as a result of the sale of Atlas Pharma Inc. and termination of our Analytical Chemistry Services Operations. We did not incur this loss during the similar period in 2020.

 

As a result, we incurred a Net Loss of $1,700,298 ($0.01 per share) during the nine month period ended September 30, 2020, compared to a net loss of $1,263,673 ($0.15 per share) during the nine month period ended September 30, 2019.

 

 

Comparison of Results of Operations for the Three Months Ended September 30, 2020 and 2019

 

During the three months ended September 30, 2020, we generated $17,150 in revenues, compared to $7,326 in revenues for the same three months period of 2019, an increase of $9,824. All of these revenues were generated from our new Nutritional Supplements Operations which we launched in March 2019. The cost of sales for these revenues was $6,340 for the period ended September 30, 2020, compared to $5,293 for the same period in 2019. Our gross profit increased to $10,810 for the period ended September 30, 2020, compared to a gross profit of $2,033 for the same period in 2019.

 

General and Administrative expenses during the three month period ended September 30, 2020 were $78,098, compared to $204,673 incurred during the three month period ended September 30, 2019, a decrease of $126,575. The majority of this decrease was due to a decrease in executive compensation by $66,000 and a decrease in consulting fees by $44,399. These and other decreases are part of our ongoing effort to reduce expenses across the board. On the whole, we incurred a loss of $78,098 from our operations in the three month period ended September 30, 2020, compared to a loss of $204,673 in the similar period of 2019.

 

We incurred $22,094 in interest expense during the three months ended September 30, 2020, compared to $27,847 in interest expense during the similar period in 2019 as a result of increased debt. In addition, we incurred $608,899 in losses arising from debt conversion during the three months ended September 30, 2020, compared to $120,720 in losses from debt conversion during the similar period in 2019.

 

As a result, we incurred a net loss of $698,595 ($0.00 per share) for the three month period ended September 30, 2020, compared to a net loss of $350,241 ($0.04 per share) during the three month period ended September 30, 2019.

 

Liquidity and Capital Resources

 

As of September 30, 2020, we had cash or cash equivalents of $488,708.

 

Net cash used in operating activities was $233,627 during the nine month period ended September 30, 2020, compared to $367,959 for the nine month period ended September 30, 2019.  We anticipate that research and development and overhead expenses will increase in the future as we move forward with our expanded Proprietary Drug Development activities and our Generic Pharmaceuticals and Nutritional Supplements operations discussed above.

 

Cash flows provided by financing activities were $683,643 for the nine month periods ended September 30, 2019, compared to $352,100 during the nine months ended September 30, 2019.  Cash flows used in investing activities were $800 for the nine month period ended September 30, 2020, compared to $14,416 during the nine month period ended September 30, 2019.

 

During the nine months ended September 30, 2020, we issued a total of 269,099,306 shares of our Common Stock valued at $1,831,816 for the conversion of outstanding notes payable, reducing the debt by $373,269 and interest payable by $42,233 and generating a loss on conversion of $1,416,313.

During the nine month period ended September 30, 2019, we issued a total of 7,883,683 shares of our Common Stock valued at $443,481 for the conversion of outstanding notes payable, reducing debt by $241,160 and interest payable by $11,402 and generating a loss on conversion of $185,814.  

During the nine months ended September 30, 2020, we did not sell any of our capital stock for cash; however, we entered into the following new debt arrangements:

 

 

On April 17, 2020, our Canadian subsidiary received a CEBA Loan (Canada Emergency Business Account Loan) from CIBC (Canadian Imperial Bank of Commerce) in the principal amount of $40,000 Canadian ($29,352 US) as part of the Canadian government’s COVID-19 relief program. The CEBA Loan is non-interest bearing if repaid on or before December 31, 2022 (the “Termination Date”). The CEBA Loan is considered repaid in full if the borrower repays 75% of the Principal Amount on or before the Termination Date. If the CEBA Loan is not repaid in full on or before the Termination Date, the lender will automatically extend the term of the loan by three years until December 31, 2025 (the “Extension Period”). During the Extension Period, interest will be charged, and will accrue on the outstanding amount of the CEBA Loan at a fixed rate of 5% per year, calculated daily and compounded monthly. The outstanding balance of the CEBA Loan and all accrued interest will be due at the end of the Extension Period.

 

On April 27, 2020, we received a Paycheck Protection Program loan in the principal amount of $50,655 from the US Small Business Administration as part of the US government’s COVID-19 relief program. This loan accrues interest at the rate of 1% per annum. We are obligated to make payments of principal and interest totaling $2,133 each month commencing November 27, 2020, with any remaining balances due and payable on or before April 27, 2022. The proceeds derived from this loan may only be used for payroll costs, interest on mortgages, rent and utilities (“Admissible Expenses”). In addition, the Paycheck Protection Program provides for conditional loan forgiveness if we utilize at least 75% of the proceeds from the loan to pay Admissible Expenses. As of the date of this Report, all of the proceeds from this loan have been utilized for Admissible Expenses and we believe that we will qualify for forgiveness of the entire amount of the loan.

 

On June 1, 2020, we received monies in exchange for a Note Payable having a Face Value of $42,000 with interest accruing at 8% is due June 1, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value.

 

On June 9, 2020, we received monies in exchange for a Note Payable having a Face Value of $37,000 with interest accruing at 8% is due June 9, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value.

 

On July 7, 2020, we received monies in exchange for a Note Payable having a Face Value of $48,000 with interest accruing at 8% is due July 7, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value.

 

On July 27, 2020, we received monies in exchange for a Note Payable having a Face Value of $102,000 with interest accruing at 8% is due July 27, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value.

 

On August 14, 2020, we received monies in exchange for a Note Payable having a Face Value of $67,000 with interest accruing at 8% is due August 14, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value.

 

On September 14, 2020, we received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due September 14, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price of equal to $0.30 per share.

 

On September 24, 2020, we received monies in exchange for a Note Payable having a Face Value of $50,000 with interest accruing at 5% is due September 24, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share.

 

We are not generating adequate revenues from our operations to fully implement our business plan as set forth herein. As a result, our future success will depend on the future availability of financing, among other things. Such financing will be required to enable us to actualize our Proprietary Drug Development program and further develop our Generic Pharmaceuticals Operations and Nutritional Supplements plans. We intend to raise funds through private placements of our Common Stock and/or debt financing. We estimate that we will require approximately $20 million ($2 million for the Generic Pharmaceuticals and Nutritional Supplements operations and $18 million for the recently expanded Proprietary Drug Development program) to fully implement our business plan in the future and there are no assurances that we will be able to raise this capital. Our inability to obtain sufficient funds from external sources when needed will have a material adverse effect on our plan of operation, results of operations and financial condition.

 

 

Our cost of operations is expected to increase as we move forward with implementation of our business plan. We do not have sufficient funds to cover the anticipated increase in the relevant expenses. We need to raise additional capital in order to continue our existing operations and finance our expansion plans for the next year. If we are successful in raising additional funds, we expect our operations and business efforts to continue and expand. There are no assurances this will occur.

 

On September 8, 2020, we executed a Financing Agreement with RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide us with a minimum of $2 million in convertible debt financing over the next three to six months pursuant to the terms and conditions included in relevant Promissory Notes (the “Promissory Notes”). As of September 30, 2020, we have received a total of $300,000 in funding under this agreement.

 

The Promissory Notes will bear interest at the rate of 5% per annum and will be fully convertible into shares of our Common Stock at a conversion price equal to the market value of our Common Stock on the applicable conversion date or $0.30 per share, whichever is greater. The Promissory Notes will have a maturity date of two years from the date of issuance and must be fully converted on or before the maturity date. We have the right under these Promissory Notes to pay off all or any part of the Promissory Notes at any time without penalty.