Sunshine Biopharma, Inc - Quarter Report: 2021 March (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: March 31, 2021

 

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 May 11, 2021, was 480,505,925 shares.

 

 

	TABLE OF CONTENTS
	PART I FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (Unaudited)	3
	Consolidated Statements of Operations for the Three Month Periods Ended March 31, 2021 and 2020 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Three Month Periods Ended March 31, 2021 and 2020 (Unaudited)	5
	Consolidated Statement of Shareholders' Equity (Unaudited)	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	20
Item 4.	Controls and Procedures.	20

 

	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
	Signatures	23

 

 

PART I.  FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Sunshine Biopharma, Inc.

Unaudited Consolidated Balance Sheets

	March 31,	December 31,
	2021	2020
ASSETS
Current Assets:
Cash and cash equivalents	$1,796,596	$989,888
Accounts receivable	-	1,916
Inventory	26,660	23,771
Prepaid expenses	10,993	2,778
Deposits	7,590	7,590
Total Current Assets	1,841,839	1,025,943
Equipment (net of $54,565 and $51,485 depreciation, respectively)	16,629	19,531
Patents (net of $58,918 amortization and $556,120 impairment)	-	-
TOTAL ASSETS	$1,858,468	$1,045,474
LIABILITIES
Current Liabilities:
Notes payable	521,028	820,454
Notes payable - related party	143,661	143,661
Accounts payable & accrued expenses	148,564	62,870
Interest payable	51,533	24,320
Total Current Liabilities	864,786	1,051,305
Long-term portion of notes payable	2,078,071	949,006
TOTAL LIABILITIES	2,942,857	2,000,311
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 shares	100,000	100,000
Common Stock, $0.001 par value per share; Authorized 3,000,000,000 Shares;
Issued and outstanding 465,005,925 and 346,419,296 March 31, 2021 and December 31, 2020, respectively	465,005	346,418
Capital paid in excess of par value	24,759,393	18,820,343
Accumulated comprehensive income	(4,934)	(2,871)
Accumulated (Deficit)	(26,403,853)	(20,218,727)
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)	(1,084,389)	(954,837)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)	$1,858,468	$1,045,474

 

 

Sunshine Biopharma, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss)

	3 Months	3 Months
	Ended	Ended
	March 31,	March 31,
	2021	2020
Sales	$40,058	$11,102
Cost of sales	18,520	3,883
Gross profit	21,538	7,219
General & Administrative Expenses:
Accounting	41,400	-
Consulting	10,893	1,724
Legal	7,117	19,347
Office	39,686	12,129
Officer & director remuneration	1,021,927	3,830
Patenting fees	6,193	4,377
R&D	166,786	-
Depreciation	3,182	3,511
Total General & Administrative Expenses	1,297,184	44,918
Loss from Operations	(1,275,646)	(37,699)
Other Income (Expense):
Foreign exchange	(14)	10,896
Interest expense	(49,711)	(16,356)
Debt release	51,031	-
Loss on debt conversions	(4,910,786)	(51,100)
Total Other Income (Expense)	(4,909,480)	(56,560)
Net Income (Loss) before income taxes	(6,185,126)	(94,259)
Provision for income taxes	-	-
Net Loss	(6,185,126)	(94,259)
Unrealized Loss from foreign exchange translation	(2,063)	(1,341)
Comprehensive Loss	(6,187,189)	(95,600)
Basic Loss per Common Share	$(0.01)	$(0.00)
Weighted Average Common Shares Outstanding	438,794,543	37,590,084

 

 

Sunshine Biopharma, Inc.

Unaudited Consolidated Statements of Cash Flows

	3 Months Ended March 31, 2021	3 Months Ended March 31, 2020
Cash Flows From Operating Activities:
Net Loss	$(6,185,126)	$(94,259)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,182	3,830
Foreign exchange (gain) loss	14	(10,896)
Stock issued for services	918,000	-
Stock issued for payment interest	6,851	4,486
Loss on debt conversion	4,910,786	51,100
Debt release	(51,031)	-
(Increase) decrease in accounts receivable	1,916	430
(Increase) decrease in inventory	(2,889)	2,198
(Increase) in prepaid expenses	(8,215)	(658)
Increase (decrease) in Accounts Payable & accrued expenses	81,568	1,158
Increase (decrease) in interest payable	27,589	11,577
Net Cash Flows (Used) in Operations	(297,355)	(31,034)
Cash Flows From Investing Activities:
	-	-
Net Cash Flows (Used) in Investing Activities	-	-
Cash Flows From Financing Activities:
Proceeds from notes payable	1,150,000	-
Payments of notes payable	(48,000)	-
Net Cash Flows Provided by Financing Activities	1,102,000	-
Cash and Cash Equivalents at Beginning of Period	989,888	40,501
Net increase (decrease) in cash and cash equivalents	804,645	(31,034)
Foreign currency translation adjustment	2,063	1,341
Cash and Cash Equivalents at End of Period	$1,796,596	$10,808
Supplementary Disclosure of Cash Flow Information:	-
Stock issued for note conversions including interest	$5,139,637	$122,379
Cash paid for interest	$15,271	$-
Cash paid for income taxes	$-	$-

 

 

Sunshine Biopharma, Inc.

Unaudited Consolidated 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
Balance 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	24,355,427	24,355	98,024					122,379
Net Loss						(1,341)	(94,259)	(95,600)
Balance at March 31, 2020	59,675,417	$59,675	$16,714,450	500,000	$50,000	$(3,836)	$(17,528,895)	(708,606)
Balance December 31, 2020	346,419,296	346,418	18,820,343	1,000,000	100,000	(2,871)	(20,218,727)	(954,837)
Common Stock issued for the reduction of notes payable
and payment of interest	58,586,629	58,587	5,081,050					5,139,637
Common stock issued for services	60,000,000	60,000	858,000					918,000
Net Loss						(2,063)	(6,185,126)	(6,187,189)
Balance at March 31, 2021	465,005,925	$465,005	$24,759,393	1,000,000	$100,000	$(4,934)	$(26,403,853)	(1,084,389)

 

 

Sunshine Biopharma, Inc.

Notes to Unaudited Consolidated Financial Statements

For the Three Month Interim Periods Ended March 31, 2021 and 2020

 

Note 1 – Nature of Business and Basis of Presentation

 

Sunshine Biopharma, Inc. (the "Company") was originally incorporated under the name Mountain West Business Solutions, Inc. on August 31, 2006 in the State of Colorado. Until October 2009, the Company was operating as a business consultancy firm.

 

Effective October 15, 2009, the Company acquired Sunshine Biopharma, Inc. in a transaction classified as a reverse acquisition. Sunshine Biopharma, Inc. was holding an exclusive license to a new anticancer drug bearing the laboratory name, Adva-27a (the “License Agreement”). Upon completion of the reverse acquisition transaction, the Company changed its name to Sunshine Biopharma, Inc. and began operating as a pharmaceutical company focusing on the development of the licensed Adva-27a anticancer drug.

 

In October 2012, the Company published the results of its initial preclinical studies of Adva-27a in the peer-reviewed journal, ANTICANCER RESEARCH. The studies were conducted in collaboration with Binghamton University, a State University of New York, and Ecole Polytechnique, Universite de Montreal. The publication is entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH Volume 32, Pages 4423-4432 (2012)].

 

In July 2014, the Company formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”) for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. Sunshine Canada has transitioned its focus to the development and marketing of Science-Based Nutritional Supplements.

 

In December 2015, the Company acquired all worldwide issued (US Patent Number 8,236,935, and 10,272,065) and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 for the Adva-27a anticancer compound from Advanomics Corporation, a related party, and terminated the License Agreement. In 2016, the remaining value of these patents was impaired. The Company is however continuing development of the Adva-27a anticancer drug covered by these patents.

 

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

 

In December 2018, the Company launched its first Science-Based Nutritional Supplements product, Essential-9tm, an over-the-counter tablet comprised of the nine (9) essential amino acids that the human body cannot make. 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 Common Shares authorized for issuance remained as previously established at 3,000,000,000 shares. All references to the Company’s Common Stock in this Report, including the Company's financial statements reflect both the First and Second Reverse Stock Split on a retroactive basis.

 

On May 22, 2020, the Company filed a patent application in the United States for a new treatment for Coronavirus infections. The Company’s patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease, Mpro, an enzyme that is essential for viral replication. The patent application has a priority date of May 22, 2020. On April 30, 2021, the Company filed a PCT application containing new research results and extending coverage to include the Coronavirus Papain-Like protease, PLpro. The priority date of May 22, 2020 has been maintained in the newly filed PCT application.

 

 

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

 

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

 

On September 8, 2020, the Company executed a financing agreement with RB Capital Partners, Inc., La Jolla, CA, who has agreed to provide the Company with a minimum of $2 million in convertible debt financing during the ensuing three to six month period pursuant to the terms and conditions included in relevant Promissory Notes (the “Promissory Notes”). The Promissory Notes bear interest at the rate of 5% per annum and are fully convertible into shares of the Company’s Common Stock at a conversion price equal to the market value of the Company’s Common Stock on the applicable conversion date or $0.30 per share, whichever is greater. The Promissory Notes have a maturity date of two years from the date of issuance and must be fully converted on or before the maturity date. The Company has the right to pay off all or any part of the Promissory Notes at any time without penalty. As of March 31, 2021, the Company has received a total of $2,054,000 in funding under this agreement.

 

Effective October 6, 2020, the Company entered into a Research Agreement (the “Agreement”) with the University of Georgia Research Foundation, Inc. (“UGARF”), representing the University of Georgia (“UGA”). The purpose of the Agreement is to memorialize the terms of the Company working together with UGA to conduct the necessary research and development to advance the Company’s Anti-Coronavirus lead compound, SBFM-PL4 (or derivatives thereof) through various stages of preclinical development, animal studies and clinical trials for Coronavirus infections. The Agreement grants the Company an exclusive worldwide license for all of the intellectual property developed by UGA, whether alone or jointly with the Company.

 

On January 26, 2021, the Company received a Notice of Allowances from the Canadian Intellectual Property Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Canada until 2033.

 

On February 4, 2021, the Company entered into an exclusive license agreement with the University of Georgia (“UGA”) for two Anti-Coronavirus compounds which UGA had previously developed and patented. The Company and UGA will advance the development of these two compounds in parallel with the Company’s own Anti-Coronavirus compound, SBFM-PL4.

 

On March 1, 2021, the Company launched a new eCommerce website, Nutrition.SushineBiopharma.com. The site offers over 20 Science-Based Nutritional Supplements products ranging from essential amino acids and rich protein powders to balanced vitamins and crucial micronutrients. All of the Company’s Science-Based Nutritional Supplements are manufactured and tested in Canada under GMP conditions.

 

On March 9, 2021, the Company received a Notice of Allowance from the European Patent Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Europe until 2033. The equivalent patent in the United States was issued in 2019 (US Patent Number 10,272,065).

 

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

 

 

Impact of Coronavirus (COVID-19) Pandemic

  

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

 

Basis of Presentation of Unaudited Financial Information

 

The unaudited financial statements of the Company for the three month period ended March 31, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2020 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2021. These financial statements should be read in conjunction with that report.

 

Recently Issued Accounting Pronouncements

 

In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance removes certain exceptions to the general principles in Topic 740 and provides consistent application of U.S. GAAP by clarifying and amending existing guidance. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of the updated guidance on its financial statements.

  

 

Note 2 – Going Concern and Liquidity

 

As of March 31, 2021 and December 31, 2020, the Company had $1,796,596 and $989,888 in cash on hand, respectively, and limited revenue-producing business. Additionally, as of March 31, 2021 and December 31, 2020, the outstanding liabilities of the Company totaled $2,942,857 and $2,000,311, respectively. These factors raise substantial doubts about the Company’s ability to continue as a going concern.

 

The consolidated financial statements included in this Report have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Based on past experience, the Company believes that it will be able to raise the necessary capital through debt and equity issuances to fund ongoing operating expenses. The consolidated financial statements included in this Report do not include any adjustments that may result from the outcome of any going concern uncertainty.

  

There is no assurance that these events will be satisfactorily completed. Any issuance of convertible debt or equity securities, if accomplished, could cause substantial dilution to existing stockholders. Any failure by the Company to successfully implement these plans would have a material adverse effect on its business, including the possible inability to continue operations.

 

Note 3 – Notes Payable

 

The Company’s Notes Payable at March 31, 2021 consisted of the following:

 

A Note Payable dated December 31, 2018 having a Face Value of $136,744 and accruing interest at 12% was due December 31, 2019. On October 1, 2019, the holder of this note requested to convert $30,000 in principal amount into 1,500,000 shares of Common Stock, leaving a principal balance $106,744. On December 31, 2019, the Company renewed the remaining principal balance of this Note, together with accrued interest of $15,509 for a 12-month period. The new Note has a Face Value of $122,253 and accrues interest at 12%. This Note matured on December 31, 2020. On August 27, 2020, the holder of this Note transferred all of its interest therein to a third party and on September 4, 2020, the Company agreed to render the Note convertible at $0.001 per share. Through March 31, 2021, an aggregate principal amount of $111,225 of this Note plus accrued interest of $9,775 was converted into 121,000,000 shares of Common Stock valued at $5,822,600 resulting in a loss of $5,701,600. The remaining principal balance of $11,028 of this Note is currently past due and the Company is in discussion with the holder to extend the due date.

 

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

 

On April 27, 2020, the Company received a Paycheck Protection Program loan ("PPP Loan") in the principal amount of $50,655 from the US Small Business Administration (“SBA”) as part of the US government’s COVID-19 relief program. This loan accrues interest at the rate of 1% per annum. The Company is obligated to make payments of principal and interest totaling $2,133 each month commencing on November 27, 2020, with any remaining balances due and payable on or before April 27, 2022. The proceeds derived from this loan may only be used for payroll costs, interest on mortgages, rent and utilities (“Admissible Expenses”). In addition, the Paycheck Protection Program provides for conditional loan forgiveness if the Company utilizes at least 75% of the proceeds from the loan to pay Admissible Expenses. On December 15, 2020, the Company applied to the funding bank for forgiveness of this loan per SBA guidance. On December 18, 2020, the Company received notification that the funding bank has approved forgiveness of the loan in its entirety and that it has submitted a request to the SBA for final approval. On February 22, 2021, the funding bank informed the Company that the SBA has fully forgiven the loan.

 

 

On July 7, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $48,000 with interest accruing at 8% is due July 7, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. On January 5, 2021, the Company paid off the entire principal balance of this Note, together with accrued interest and prepayment penalties of $15,271 by issuing cash payment of $63,271.

 

On July 27, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $102,000 with interest accruing at 8% is due July 27, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value. On January 29, 2021, the entire principal amount of $102,000 of this Note plus accrued interest of $4,171 was converted into 5,044,456 shares of Common Stock valued at $484,268 resulting in a loss of $378,097.

 

On August 14, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $67,000 with interest accruing at 8% is due August 14, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value. On February 22, 2021, the entire principal amount of $67,000 of this Note plus accrued interest of $2,680 was converted into 542,173 shares of Common Stock valued at $119,169 resulting in a loss of $49,489.

 

On September 14, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due September 14, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company analyzed the conversion feature of the note for a beneficial conversion feature on the commitment date of March 13, 2021 which is 180 days after the issuance date, and determined that there was no beneficial conversion feature on March 13, 2021.

 

On September 24, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $50,000 with interest accruing at 5% is due September 24, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company analyzed the conversion feature of the note for a beneficial conversion feature on the commitment date on March 23, 2021 which is 180 days after the issuance date, and determined that there was no beneficial conversion feature on March 13, 2021.

 

On October 20, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due October 20, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date on April 18, 2021 which is 180 days after the issuance date.

 

On November 19, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 8% is due August 19, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market value. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date on May 18, 2021 which is 180 days after the issuance date.

 

On November 24, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $260,000 with interest accruing at 8% is due November 24, 2021. The Note is convertible after 180 days from issuance into Common Stock at a price 30% below market value. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date on May 23, 2021 which is 180 days after the issuance date.

 

On November 25, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $250,000 with interest accruing at 5% is due November 25, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date on May 24, 2021 which is 180 days after the issuance date.

 

On December 2, 2020, the Company received monies in exchange for a Note Payable having a Face Value of $104,215 with interest accruing at 5% is due December 2, 2022. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date on May 31, 2021 which is 180 days after the issuance date.

 

On January 12, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $150,000 with interest accruing at 5% is due January 12, 2023. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date of July 11, 2021 which is 180 days after the issuance date.

 

 

On January 27, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $300,000 with interest accruing at 5% is due January 27, 2023. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.50 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date of July 26, 2021 which is 180 days after the issuance date.

 

On February 12, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $700,000 with interest accruing at 5% is due February 12, 2023. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.60 per share. The Company will analyze the conversion feature of the note for a beneficial conversion feature on the commitment date of August  11, 2021 which is 180 days after the issuance date.

 

At March 31, 2021 and December 31, 2020, total accrued interest on Notes Payable was $51,533 and $24,320, respectively.

 

Note 4 – Notes Payable - Related Party

 

Outstanding Notes Payable at March 31, 2021 held by related parties consist of the following:

 

A Note Payable dated December 31, 2019 held by the CEO of the Company having a Face Value of $128,269 and accruing interest at 12% was due December 31, 2020. On December 31, 2020, the Company renewed the Note together with accrued interest of $15,392 for a 12-month period. The new Note has a face Value of $143,661, accrues interest at 12% per annum, and has a maturity date of December 31, 2021.

 

Note 5 – Shareholders’ Equity

 

During the three months ended March 31, 2021 the Company issued a total of 58,586,629 shares of Common Stock for the conversion of outstanding notes payable, reducing the debt by $222,000 and interest payable by $6,851 and generating a loss on conversion of $4,910,786. In addition, the Company issued 60,000,000 shares of Common Stock valued at $918,000 to its Officers and Directors as compensation for their services to the Company.

 

The Company declared no dividends through March 31, 2021.

 

Note 6 – Related Party Transactions

 

In addition to the related party transaction detailed in Note 4 above, the Company paid its Officers and Directors cash compensation totaling $103,927 and $3,830 for the three months ended March 31, 2021 and 2020, respectively. Of these amounts, $50,000 and $177,000 was paid to Advanomics Corporation (now known as TRT Pharma Inc.), a company controlled by the CEO of the Company, respectively. In addition, the Company issued 60,000,000 shares of Common Stock valued at $918,000 to its Officers and Directors during the three months ended March 31, 2021.

  

Note 7 – Subsequent Events

 

On April 5, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $330,000 with interest accruing at 10%. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market.

 

On April 20, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $500,000 with interest accruing at 5% is due April 20, 2023. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share.

 

On April 22, 2021, the holder of a Note Payable dated December 31, 2019 elected to convert a total of $11,028 in principal and $4,472 in accrued interest into 15,500,000 shares of Common Stock leaving a principal balance of $-0-.

 

 

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.” Until October 2009, our business was to provide management consulting services to small and home-office based companies.

 

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

 

In October 2012, we published the results of our initial preclinical studies of Adva-27a in the peer-reviewed journal, ANTICANCER RESEARCH. The preclinical studies were conducted in collaboration with Binghamton University, a State University of New York, and Ecole Polytechnique, Universite de Montreal. The publication is entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH Volume 32, Pages 4423-4432 (2012)].

 

In July 2014, we formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. Sunshine Canada has recently transitioned its focus to the development and marketing of Science-Based Nutritional Supplements.

 

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

 

In December 2018, we completed the development of our first Science-Based Nutritional Supplements product, Essential-9tm. This new supplement is an over-the-counter tablet comprised of the nine (9) amino acids which the human body cannot make. Essential-9tm has been authorized for marketing by Health Canada under NPN 80089663. On March 12, 2019, Essential-9tm 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 April 30, 2021, we filed a PCT application containing new research results and extending coverage to include the Coronavirus Papain-Like protease, PLpro. The priority date of May 22, 2020 has been maintained in the newly filed PCT application.

 

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

 

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

 

On September 8, 2020, we executed a financing agreement with RB Capital Partners, Inc., La Jolla, CA, who agreed to provide us with a minimum of $2 million in convertible debt financing during the ensuing three to six month period pursuant to the terms and conditions included in relevant Promissory Notes (the “Promissory Notes”). As of the date of this Report, we have received a total of $2,554,000 in funding under this agreement. The Promissory Notes bear interest at the rate of 5% per annum and are fully convertible into shares of our Common Stock at a conversion price equal to the market value of our Common Stock on the applicable conversion date or $0.30 per share, whichever is greater. The Promissory Notes have a maturity date of two years from the date of issuance and must be fully converted on or before the maturity date. We have the right under these Promissory Notes to pay off all or any part of the Promissory Notes at any time without penalty.

 

Effective October 6, 2020, we entered into a Research Agreement (the “Agreement”) with the University of Georgia Research Foundation, Inc. (“UGARF”), representing the University of Georgia (“UGA”). The purpose of the Agreement is to memorialize the terms of our working together with UGA to conduct the necessary research and development to advance our Anti-Coronavirus lead compound, SBFM-PL4 (or derivatives thereof) through various stages of preclinical development, animal studies and clinical trials for Coronavirus infections. The Agreement grants us an exclusive worldwide license for all of the intellectual property developed by UGA, whether alone or jointly with us.

 

On January 26, 2021, we received a Notice of Allowances from the Canadian Intellectual Property Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Canada until 2033.

 

On February 4, 2021, we entered into an exclusive license agreement with the University of Georgia (“UGA”) for two Anti-Coronavirus compounds which UGA had previously developed and patented. In collaboration with UGA, we will advance the development of these two compounds in parallel with our own Anti-Coronavirus compound, SBFM-PL4.

 

On March 1, 2021, we launched a new eCommerce website, Nutrition.SushineBiopharma.com. The site has over 20 products ranging from essential amino acids and rich protein powders to balanced vitamins and crucial micronutrients. All of our science-based nutritional supplements are manufactured and tested in Canada under GMP conditions.

 

On March 9, 2021, we received a Notice of Allowance from the European Patent Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Europe until 2033. The equivalent patent in the United States was issued in 2019 (US Patent Number 10,272,065).

 

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

 

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

 

 

 

Drug Development Operations

 

SBFM-PL4 Anti-Coronavirus Treatment

 

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

 

The initial genome expression products of Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2), the causative agent of COVID-19, are two large polyproteins, referred to as pp1a and pp1ab. These two polyproteins are cleaved at 15 specific sites by two virus encoded proteases (Mpro and PLpro) to generate 16 different non-structural proteins essential for viral replication. Mpro and PLpro represent an attractive anti-viral drug development targets as they play a central role in the early stages of viral replication. The crystal structure of Mpro shows the presence of an active site Cysteine (Cys145) and a coordinated active site Histidine (His41), both of which are essential for the enzyme’s proteolytic activity. Similarly, PLpro, also a Cysteine Protease, has an active site Cysteine at position 112 and a Histidine at 273. The following is a summary of the development to date of our Coronavirus Treatment project:

 

 

 

 

 

 

Adva-27a Anticancer Drug

 

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

 

Figure 1

 

Adva-27a is a GEM-difluorinated C-glycoside derivative of Podophyllotoxin (see Figure 1). Another derivative of Podophyllotoxin called Etoposide is currently on the market and is used to treat various types of cancer including leukemia, lymphoma, testicular cancer, lung cancer, brain cancer, prostate cancer, bladder cancer, colon cancer, ovarian cancer, liver cancer and several other forms of cancer. Etoposide is one of the most widely used anticancer drugs. Adva-27a and Etoposide are similar in that they both attack the same target in cancer cells, namely the DNA unwinding enzyme, Topoisomerase II. Unlike Etoposide however, Adva-27a is able to penetrate and destroy Multidrug Resistant Cancer cells. Adva-27a is the only compound known today that is capable of destroying Multidrug Resistant Cancer. In addition, Adva-27a has been shown to have distinct and more desirable biological and pharmacological properties compared to Etoposide. In side-by-side studies using Multidrug Resistant Breast Cancer cells and Etoposide as a reference, Adva-27a showed markedly greater cell killing activity (see Figure 2).

 

 

 

Figure 2

 

Our preclinical studies to date have shown that:

 

 

 

 

 

●	Adva-27a clearance is independent of Cytochrome P450, a mechanism that is less likely to produce toxic intermediates.

 

●	Adva-27a is an excellent inhibitor of Topoisomerase II with an IC50 of only 13.7 micromolar (this number has recently been reduce to 1.44 micromolar as a result of resolving the two isomeric forms of Adva-27a).

 

●	Adva-27a has shown excellent pharmacokinetics profile as indicated by studies done in rats.

 

●	Adva-27a does not inhibit tubulin assembly.

 

These and other preclinical data have been published in ANTICANCER RESEARCH, a peer-reviewed International Journal of Cancer Research and Treatment. The publication which is entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH 32: 4423-4432 (2012)] is available on our website at www.sunshinebiopharma.com.

 

We have been delayed in our clinical development program due to lack of funding. Our fund raising efforts are continuing and as soon as adequate financing is in place we will continue our clinical development program of Adva-27a by conducting the following next sequence of steps:

 

●	GMP Manufacturing of 2 kilogram for use in IND-Enabling Studies and Phase I Clinical Trials

 

●	IND-Enabling Studies

 

●	Regulatory Filing (Fast-Track Status Anticipated)

 

●	Phase I Clinical Trials (Pancreatic Cancer Indication)

 

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

 

 

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

 

 

 

Figure 3

 

 

Generic Pharmaceuticals Operations

 

In July 2014, we formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”) for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. Due to unfavorable evolution of the generic drugs marketplace, Sunshine Canada has recently terminated its Generic Pharmaceuticals Operations and shifted its focus to the development and marketing of Science-Based Nutritional Supplements.

  

 

 

 

 

 

Figure 4

 

 

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

 

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

 

On March 1, 2021, we launched a new eCommerce website, Nutrition.SushineBiopharma.com. The site has over 20 products including Essential 9tm and Essential Calcium-Vitamin D™. All of our Science-Based Nutritional Supplements are manufactured and tested in Canada under GMP conditions.

 

Results of Operations

 

Comparison of Results of Operations for the Three Months Ended March 31, 2021 and 2020

 

During the three months ended March 31, 2021, we generated $40,058 in revenues, compared to $11,102 in revenues for the same three month period in 2020, an increase of $28,956. The increase is attributable an enhanced advertising campaign we undertook in 2021. All of these revenues were generated from our new Science-Based Nutritional Supplements Operations which we launched in March 2019. The direct cost for generating these revenues was $18,520 (46%) for the period ended March 31, 2021, compared to $3,883 (35%) for the same period in 2020. The increase in the cost of goods sold in 2021 is due to increased manufacturing cost. Our gross profit increased to $21,538 for the period ended March 31, 2021, compared to a gross profit of $7,219 for the same period in 2020.

 

General and Administrative expenses during the three month period ended March 31, 2021 were $1,297,184, compared to General and Administrative expense of $44,918 incurred during the three month period ended March 31, 2020, an increase of $1,252,266. Nearly all categories of our General and Administrative expenses saw an increase during the three month period ended March 31, 2021, compared to the same period in 2020. Specifically, the increases included accounting fees by $41,400, consulting fees by $9,169, office expenses by $27,557, officer and director compensation by $1,018,097, patenting fees by $1,816, and R&D by $166,786. These increases were due to expansion of our drug development and nutritional supplements operations. Overall, we incurred a loss of $1,275,646 from our operations in the three month period ended March 31, 2021, compared to a loss of $37,699 in the similar period of 2020.

 

In addition, we incurred $49,711 in interest expense during the three months ended March 31, 2021, compared to $16,356 in interest expense during the similar period in 2020. We also incurred $4,910,786 in losses arising from debt conversion during the three months ended March 31, 2021, compared to $51,100 in losses from debt conversion during the similar period in 2020. These increases were due to increased borrowings to fund our expanded drug development and nutritional supplements operations.

 

As a result, we incurred a net loss of $6,185,126 ($0.01 per share) for the three month period ended March 31, 2021, compared to a net loss of $95,600 ($0.00 per share) during the three month period ended March 31, 2020.

 

Liquidity and Capital Resources

 

As of March 31, 2021, we had cash or cash equivalents of $1,796,596.

 

As discussed in Note 2 to the consolidated financial statements included in this Report for going concern, we have incurred significant continuing losses in 2021 and 2020. Our total accumulated deficits as of March 31, 2021 and December 31, 2020 were $26.4 million and $20.2 million, respectively. Our ability to continue operating is highly dependent upon continued funding from the debt and equity markets. Based on past experience, we believe that we will be able to raise the necessary capital to continue operations. Our historical and ongoing dependence on proceeds from debt and/or equity issuances to fund operating expenses could raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements included in this Report have been prepared assuming that our Company will continue as a going concern and, accordingly, do not include any adjustments that may result from the outcome of this uncertainty.

 

Net cash used in operating activities was $297,355 during the three month period ended March 31, 2021, compared to $31,034 for the three month period ended March 31, 2020.  We anticipate that overhead costs and other expenses will increase in the future as we move forward with our Proprietary Drug Development activities and our Science-Based Nutritional Supplements operations discussed above.

 

Cash flows provided by financing activities were $1,102,000 for the three month periods ended March 31, 2021, compared to $-0- during the three months ended March 31, 2020.  Cash flows used in investing activities were $-0- for both, the three month period ended March 31, 2021 and the same three month period ended in 2020.

 

During the three month period ended March 31, 2021, we issued a total of 58,586,629 shares of our Common Stock valued at $5,139,637 for the conversion of outstanding notes payable, reducing debt by $222,000 and interest payable by $6,851 and generating a loss on conversion of $4,910,786.

 

 

During the three months ended March 31, 2020, we issued a total of 24,355,427 shares of our Common Stock valued at $122,379 for the conversion of outstanding notes payable, reducing the debt by $66,500 and interest payable by $4,486 and generating a loss on conversion of $51,393.

 

During the three months ended March 31, 2021, we did not sell any of our capital stock for cash; however we entered into three (3) new debt arrangements, including the following:

 

 

 

 

On September 8, 2020, we executed a financing agreement with RB Capital Partners, Inc., La Jolla, CA, who agreed to provide us with a minimum of $2 million in convertible debt financing during the ensuing three to six month period pursuant to the terms and conditions included in relevant Promissory Notes (the “Promissory Notes”). As of the date of this Report, we have received a total of $2,554,000 in funding under this agreement. The Promissory Notes bear interest at the rate of 5% per annum and are fully convertible into shares of our Common Stock at a conversion price equal to the market value of our Common Stock on the applicable conversion date or $0.30 per share, whichever is greater. The Promissory Notes have a maturity date of two years from the date of issuance and must be fully converted on or before the maturity date. We have the right under these Promissory Notes to pay off all or any part of the Promissory Notes at any time without penalty.

 

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

 

We are currently in discussion with various investment groups for additional financing. There are no assurances that we will be successful in raising any funds.

 

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

 

Subsequent Events

 

On April 5, 2021, we received monies in exchange for a Note Payable having a Face Value of $330,000 with interest accruing at 10%. The Note is convertible after 180 days from issuance into Common Stock at a price 35% below market.

 

On April 20, 2021, we received monies in exchange for a Note Payable having a Face Value of $500,000 with interest accruing at 5% is due April 20, 2023. The Note is convertible after 180 days from issuance into Common Stock at a price equal to $0.30 per share.

 

On April 22, 2021, the holder of a Note Payable dated December 31, 2019 elected to convert a total of $11,028 in principal and $4,472 in accrued interest into 15,500,000 shares of Common Stock leaving a principal balance of $-0-.

 

Off Balance Sheet Arrangements

 

None

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

 

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Disclosure Controls and Procedures – Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report.

 

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were not effective as of March 31, 2021, at reasonable assurance level, for the following reasons:

 

 

 

 

Our Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. We are reviewing various potential solutions to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Additionally, the Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.

 

We believe that our financial statements presented in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

 

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

 

Changes in Internal Control over Financial Reporting – There were no changes in our internal control over financial reporting during the three month period ended March 31, 2021, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

To the best of our management’s knowledge and belief, there are no material claims that have been brought against us nor have there been any claims threatened.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the three month period ended March 31, 2021, we issued a total of 58,586,629 shares of our Common Stock valued at $5,139,637 for the conversion of outstanding notes payable, reducing debt by $222,000 and interest payable by $6,851 and generating a loss on conversion of $4,910,786.

 

During the three months ended March 31, 2020, we issued a total of 24,355,427 shares of our Common Stock valued at $122,379 for the conversion of outstanding notes payable, reducing the debt by $66,500 and interest payable by $4,486 and generating a loss on conversion of $51,393.

 

We relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, to issue these shares.

 

Other than reduction of debt from the conversion of the outstanding convertible notes payable described above, we did not receive any direct proceeds from the issuance of these shares. The proceeds from the convertible notes payable were used for working capital.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 

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

 

101.INS		XBRL Instance Document*
101.SCH		XBRL Schema Document*
101.CAL		XBRL Calculation Linkbase Document*
101.DEF		XBRL Definition Linkbase Document*
101.LAB		XBRL Label Linkbase Document*
101.PRE		XBRL Presentation Linkbase Document*

______________________

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on May 11, 2021.

 

	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