In the Company’s financial statements for the fiscal years ended December 31, 2019, and 2018, the Reports of the Independent Registered Public Accounting Firm included an explanatory paragraph that describes substantial doubt about the Company’s ability to continue as a going concern. These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfactionsettlement of liabilities and commitments in the normal course of business. Since inception, the Company has had recurring operating losses and negative operating cash flows. These factors raise substantial doubt aboutBased on the Company’s abilitycurrent financial projections, management believes it does not have sufficient existing cash resources to continue as a going concern.fund its current limited operations.
Note 3 – Notes Payable
On April 1, 2017 the Company received monies in exchange for a Note Payable having a face valueFace Value of $21,439 and a maturity date of December$100,000 Canadian ($70,490 US at March 31, 20172020) with interest payable quarterly at 9%, which Note was entered into on December 31, 2016. Thisdue April 1, 2019. The Note accrues interest at a rate of 12% per annum and is convertible any time after December 31, 2016issuance into $0.001 par value Common Stock at a price 35% below market value.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 “PART II, Item 1, Legal Proceedings”, below.
On April 1, 2017,December 24, 2018, the Company received $100,000 Canadian ($80,130 US)monies in exchange for a note payableNote Payable having a face valueFace Value of $100,000 Canadian and$87,000 with interest accruing interest at the rate of 9% per annum.8% is due December 24, 2019. The note, due on April 1, 2019,Note is convertible anytime after April 1, 2017180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. As of $0.015 Canadian (approximately $0.012 US) per share. Payments onMarch 31, 2020, a total principal amount of $62,000 of this Note plus accrued interest of $5,342 was converted into 14,606,229 shares of Common Stock valued at $121,665 resulting in a loss of $54,323. The remaining principal balance of this note are comprisedat March 31, 2020 was $25,000.During the three month period ended March 31, 2020, a total principal amount of $26,500 of this Note plus accrued interest only amountsof $2,886 was converted into 11,255,748 shares of Common Stock valued at $63,695 resulting in a loss of $34,309. This note is past due and is currently payable on the last day of each calendar quarter. 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.demand.
On April 26, 2017,January 8, 2019, the Company received net proceeds of $63,000monies in exchange for a note payableNote Payable having a face valueFace Value of $65,000 and$54,000 with interest accruing interest at the rate of 8% per annum.is due January 8, 2020. The note, due on April 26, 2018,Note is convertible after 180 days from issuance into $0.001 par value 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. This note is past due and is currently payable on demand.
On August 3, 2017,February 5, 2019, the Company received net proceeds of $76,000monies in exchange for a note payableNote Payable having a faceFace Value of $37,450 with interest accruing at 8% is due October 10, 2019. The Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. A principal amount of $80,000$5,265 of this Note plus accrued interest of $-0- was converted in 2019 into 450,000 shares of Common Stock valued at $6,300 resulting in a loss of $1,035. At March 31, 2020, the remaining principal balance of this note was $32,185. This note is past due and is currently payable on demand.
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% is due April 30, 2020. The Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. During the three months period ended March 31, 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 and a remaining principal balance of $-0-.
On July 26, 2019, the rateCompany received monies in exchange for a Note Payable having a Face Value of $50,000 with interest accruing at 8% per annum.is due July 26, 2020. The note, due on August 3, 2018,Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the face value,Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.
On August 21, 2017,September 12, 2019, the Company received net proceeds of $80,000monies in exchange for a note payableNote Payable having a face valueFace Value of $83,000 and$43,000 with interest accruing interest at the rate of 8% per annum.is due July 15, 2020. The note, due on May 30, 2018,Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the face value,Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.
On September 22, 2017,December 14, 2019, the Company received net proceeds of $60,000monies in exchange for a note payableNote Payable having a face valueFace Value of $62,000 and$42,800 with interest accruing interest at the rate of 8% per annum.is due December 14, 2020. The note, due on June 30, 2018,Note is convertible after 180 days from issuance into $0.001 par value Common Stock at a price 35% below market value. The Company estimates that the fair value of this convertible debt approximates the face value,Face Value, so no value has been assigned to the beneficial conversion feature. Any gain or loss will be recognized at conversion.
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 is nonconvertible and matures on December 31, 2020.
At September 30, 2017March 31, 2020 and December 31, 2016,2019, total accrued interest on Notes Payable was $6,014$32,654 and $9,011,$21,077, respectively.
Note 4 – Notes Payable - Related Party
A Note Payable dated December 2016,31, 2018 held by the CEO of the Company received monies from its CEO in exchange for a note payable having a principal amountFace Value of $90,000$117,535 Canadian ($67,03286,118 US) withand accruing interest at 12% was due MarchDecember 31, 2017. The note is convertible any time after2019. On December 31, 2019, the date of issuance into $0.001 par value Common Stock at a price 35% below market value. The Company estimated thatrenewed the fair value of the 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. This note is collateralized by all of the assets of the Company. In the event of default, the interest rate will increased to 18% per annum and a penalty of $1,000 Canadian ($752 US) per day will accrue. On March 31, 2017, the note,Note together with accrued interest of $3,021$14,104 Canadian ($2,27110,845 US) and an additional principal amount of $3,000 Canadian ($2,247 US) paidcash advances made to the Company on March 28, 2017, was renewedof $36,473 Canadian ($28,044 US) for a 90-day period under the same terms and conditions as the original note.12-month period. The new noteNote, which was converted to USD, now havinghas a face valueValue of $96,021 Canadian ($72,198 US) was due on June 30, 2017. On June 30, 2017, the note, together with accrued$128,269 US. This new Note is nonconvertible, accrues interest of $2,873 Canadian ($2,005 US), was renewed for a 90-day period under the same termsat 12% per annum and conditions as the original note except that the new note is non-convertible. The new note now having a face value of $98,894 Canadian ($76,072 US) is due on September 30, 2017. On September 30, 2017, the note, together with accrued interest of $2,991 Canadian ($2,397 US), was renewed for a 90-day period under the same terms and conditions as the original note except that the new note is non-convertible. The new note now having a principal balance of $101,885 Canadian ($81,640 US) matures December 31, 2017.
Note 5 – Issuance of Common StockShareholders’ Equity
During the ninethree months ended September 30, 2017,March 31, 2020 the Company issued a total of 149,336,64024,355,427 shares of $0.001 par value Common Stock. Of these 42,528,125 shares valued at $128,451 were issued uponStock for the conversion of outstanding notes payable, reducing the debt by $48,500$66,500 and interest payable by $3,022$4,486 and generating a loss on conversion of $76,929. The remaining 106,808,515 shares were issued by the Company as follows:
The Company declared no dividends through September 30, 2017.March 31, 2020.
Note 106 – Related Party Transactions
In addition to the related party transactionstransaction detailed in Note 4 above, during the three and nine month period ended September 30, 2017 and 2016, the Company paid its Officers and Directors cash and stock compensation totaling $10,359$3,830 and $376 and $401,739 and $255,719, respectively. Included in the amounts allocated to the Officers and Directors during$40,201 for the three months ended March 31, 2020 and nine month periods ended September 30, 2017 were $-0- and $60,114 paid to Advanomics Corporation, a company controlled by the CEO of the Company.2019, respectively.
Note 117 – Subsequent Events
On October 26, 2017,April 16, 20, and 23, and May 5, and 13, 2020, the Company issued payment in the amountholder of $85,107 to pay off a note payable havingdated September 12, 2019 elected to convert a total of $43,000 in principal and $1,720 in accrued interest into 38,855,726 shares of Common Stock leaving a principal amountbalance of $65,000, accrued interest of $2,607 and prepayment penalty of $17,500. The note had a maturity date of April 26, 2018.$-0-.
On October 26, 2017,May 5, 2020 the Company received monies in exchange forholder of a convertible note payable havingdated December 24, 2018 elected to convert a face valuetotal of $115,000.$12,000 in principal and $1,999 in accrued interest into 14,357,856 shares of Common Stock leaving a principal balance of $13,000.
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.
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. Effective
In October 15, 2009, we executed an agreement to acquireacquired Sunshine Biopharma, Inc., a Colorado corporation in exchange forholding an exclusive license (the “License”) to a new anticancer drug bearing the issuance of 21,962,000 shares of our Common Stock and 850,000 shares of Convertible Preferred Stock, each convertible into twenty (20) shares of our Common Stock.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. The majorityOur principal business became that of the Common Shares and all of the Convertible Preferred Shares we issued for this transaction were issued to Advanomics Corporation, a privately held Canadian company (“Advanomics”). On December 21, 2011, Advanomics exercised its right to convert the 850,000 shares of Series “A” Preferred Stock it held in our Company into 17,000,000 shares of Common Stock.
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 globe.world. In April and June 2016 Sunshine Canada has recently signed licensing agreements for four (4) generic prescription drugs for the treatment of breast cancer, prostate cancer and BPH (Benign Prostatic Hyperplasia).
In March 2018, we have becomeformed NOX Pharmaceuticals, Inc., a fully integrated pharmaceutical company offering genericwholly 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 for the treatment of cancer and other acute and chronic indications.including Adva-27a.
In December 2018, we completed the development of a new dietary supplement which we trademarked Essential 9tm. This dietary supplement is an over-the-counter tablet comprised of the nine 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 on March 23, 2019 we recorded our first revenues of Essential 9tm sales.
Effective AugustFebruary 1, 20172019, we movedcompleted 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.
Our principal place of business to is located at 6500 Trans-Canada Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5. Our new phone number is (514) 426-6161 and our website address is www.sunshinebiopharma.com.www.sunshinebiopharma.com.
We have not been subject to any bankruptcy, receivership or similar proceeding.
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
Figure 1
Figure 2
Our interest expense of $27,427 during the three months ended September 30, 2017 was $15,298 more than we incurred during the similar period in 2016 duepreclinical studies to a prepayment penalty of $15,559 incurred in connection the early payoff of one of our notes payable (see Note 3 to the Financial Statements). Finally, we incurred no losses arising from debt conversion during the three months ended September 30, 2017, but incurred a loss on debt conversions of $1,465,646 during the three months ended September 30, 2016.date have shown that:
| ● | Adva-27a is effective at killing different types of Multidrug Resistant cancer cells, including Pancreatic Cancer Cells (Panc-1), Breast Cancer Cells (MCF-7/MDR), Small-Cell Lung Cancer Cells (H69AR), and Uterine Sarcoma Cells (MES-SA/Dx5). |
| ● | Adva-27a is unaffected by P-Glycoprotein, the enzyme responsible for making cancer cells resistant to anti-tumor drugs. |
| ● | Adva-27a has excellent clearance time (half-life = 54 minutes) as indicated by human microsomes stability studies and pharmacokinetics data in rats. |
| ● | Adva-27a clearance is independent of Cytochrome P450, a mechanism that is less likely to produce toxic intermediates. |
| ● | Adva-27a is an excellent inhibitor of Topoisomerase II with an IC50 of only 13.7 micromolar (this number has recently been reduce to 1.44 micromolar as a result of resolving the two isomeric forms of Adva-27a). |
| ● | Adva-27a has shown excellent pharmacokinetics profile as indicated by studies done in rats. |
| ● | Adva-27a does not inhibit tubulin assembly. |
These and administrative expenses during the nine month period ended September 30, 2017 were $695,013, comparedother 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 $657,011 incurred during the nine month period ended September 30, 2016, an increase of $38,002. Some components ofBe Effective Against Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH 32: 4423-4432 (2012)] is available on our general and administrative expense increased while others decreased during the nine month period ended September 30, 2017, compared to the corresponding period of 2016. The expense categories that saw an increase included accounting fees, legal fees, and executive compensation. The increase of $46,452 in legal fees during the nine months ended September 30, 2017, was due to patenting costs associated with office actions on pending patent applications. Officer and director compensation increased by $146,020 in the nine months ended September 30, 2017, compared to the same period in 2016. The $7,516 increase in accounting fees was due to a general increase in business activities. These increases were offset by decreases in consulting fees, license fees and research & development expenses incurred during the nine months ended September 30, 2017, compared to the similar period in 2016. The decrease of $2,084 in consulting fees, $36,472 in license fees and $32,793 in research & development expenses were a result of the shifting of our activities towards the development of our Generic Pharmaceuticals Operations. In addition, we saw a decrease of $40,311 in our amortization & depreciation due to write-downs. See “Plan of Operation” below.website at www.sunshinebiopharma.com.
We incurred $46,169have been delayed in interest expense duringour 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 nine months ended September 30, 2017, compared to $29,080 in interest expense during the similar period in 2016. However, we incurred $76,929 in losses arising from debt conversion during the nine months ended September 30, 2017, compared to $1,719,304 in losses from debt conversion during the similar period in 2016, a decreasefollowing next sequence of $1,642,375 as a result of a smaller amount of convertible notes outstanding. We also received $25,000 from the settlement of litigation in 2016 that we did not receive during the nine months ended September 30, 2017.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 research, development and commercialization of proprietary drugs for the treatment of various forms of cancer. In July 2014, we formed Sunshine Biopharma Canada Inc., a Canadian wholly owned subsidiary, for the purposes of conducting generic pharmaceuticals businessclinical trials in Canada and elsewhere aroundwill employ FDA standards at all levels.
According to the world. During 2016, we intensified our activitiesAmerican Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the generic pharmaceuticals areaU.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 continuedmay receive one or more offers from large pharmaceutical companies to pursuebuyout or license our proprietary anticancerdrug. 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 development efforts. Accordingly, we have becomeon our own. The following, Figure 3, is a fully integrated pharmaceutical company offering generic and proprietary drugs for the treatmentspace-filling molecular model of cancer and other acute and chronic indications. Below we describe our Generic Pharmaceuticals Operations followed by our Proprietary Drug Development Program.Adva-27a.
Figure 3
Generic Pharmaceuticals Operations
In 2016, our Canadian wholly owned subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), signed Cross ReferencingLicensing Agreements with a major pharmaceutical company for four prescription generic drugs for the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. We will market and sellhave since been working towards commencement of marketing of these new pharmaceutical products under our own, Sunshine Biopharma, label. These four generic products are as follows:
| ● | Anastrozole (brand name Arimidex® by AstraZeneca) for treatment of Breast Cancer; |
| ● | Letrozole (brand name Femara® by Novartis) for treatment of Breast Cancer; |
| ● | Bicalutamide (brand name Casodex® by AstraZeneca) for treatment of Prostate Cancer; |
| ● | Finasteride (brand name Propecia® by Merck) for treatment of BPH (Benign Prostatic Hyperplasia) |
Sunshine Canada is currently in the process of preparing the documentation for filing applications forsecuring a Drug Identification Number (“DIN”) for each of its four (4) genericthese 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 and the DIN’s due to variables involved that are out of our control. The Figure below4 shows our 30-Pill blister pack of Anastrozole.
Figure 4
We currently have twenty three (23)a number of additional Generic Pharmaceuticals under review for in-licensing. While no assurances can be provided when completed, thisthat we will bring our Generic Products portfolioacquire the rights to a total of twenty seven (27). Weany additional generic drugs, we believe that a larger product portfolio provideswill provide us with more opportunities and a greater reach into the marketplace. We hope to further build our generics portfolio of “SBI” label Generic Pharmaceuticals over time.
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 pharmaceuticalspharmaceutical marketplace.
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 promoting the healthy growth and remodeling of bone, cell growth, neuromuscular and immune functions, and reduction of inflammation. The early stage preclinical studiesmost 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 the third quarter of 2020.
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 lead compound, Adva-27a, were successfully completedstock in Atlas back to the original owner in exchange for the Atlas Note. As a consequence of the sale, the operating results and the resultsassets 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 published in ANTICANCER RESEARCH 32: 4423-4432 (2012). We have been delayed in our implementation of our clinical development program duereclassified 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 conductingpresent the next sequence of steps comprisedoperations of the following:Atlas Business as Discontinued Operations.
2019.
In the area of other expenses, we incurred $16,356 in interest expense during the three months ended March 31, 2020, compared to $46,297 in interest expense during the similar period in 2019 due to reduced borrowings. In addition, we incurred $51,393 in 2016losses arising from debt conversion during the three months ended March 31, 2020, compared to $22,308 in losses from debt conversion during the similar period in 2019.
As a result, we signed Cross Referencing Agreements withincurred a major pharmaceutical company for four (4) prescription generic drugsnet loss of $94,259 ($0.00 per share) for the treatmentthree month period ended March 31, 2020, compared to a net loss of Breast Cancer, Prostate Cancer and Enlarged Prostate. These agreements give us$202,542 ($0.05 per share) during the right to register the four (4) generic products, Anastrozole, Letrozole, Bicalutamide and Finasteride in Canada under our own label and obtain a DIN for each in order to be able to place them on the market.
Liquidity and Capital Resources
As of September 30, 2017,March 31, 2019, we had cash or cash equivalents of $188,086.$10,808.
Net cash used in operating activities was $334,038$31,034 during the ninethree month period ended September 30, 2017,March 31, 2020, compared to $282,988$233,959 for the ninethree month period ended September 30, 2016.March 31, 2019. We anticipate that overhead costs and other expenses will increase in the future as we move forward with our proprietary drug developmentProprietary Drug Development activities and expansion of our offering of generic pharmaceutical products asGeneric Pharmaceuticals and Dietary Supplements operations discussed above.
Cash flows fromprovided by financing activities were $456,541$-0- for the ninethree month periods ended September 30, 2017,March 31, 2019, compared to $255,293$214,656 during the ninethree months ended September 30, 2016.March 31, 2019. Cash flows used byin investing activities were $-0- for both, the three month period ended March 31, 2020 and $2,343 for the ninesame three month periodsperiod ended September 30, 2017 and 2016, respectively.
in 2019.
During the ninethree months ended September 30, 2017,March 31, 2020, we issued a total of 149,336,64024,355,427 shares of our Common Stock. Of these, 42,528,125 sharesStock valued at $128,451 were issued upon$122,379 for the conversion of outstanding notes payable, reducing ourthe debt by $48,500$66,500 and interest payable by $3,022$4,486 and generating a loss on conversion of $76,929. The remaining 106,808,515 shares were issued as follows:$51,393.
We are not generating revenueadequate revenues from our operations and our ability to fully implement our business plan as set forth hereinherein. As a result, our future success will depend on the future availability of financing.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 businessGeneric Pharmaceuticals operations and proprietary drug development program.Dietary 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 $6$7 million ($12 million for the generic pharmaceuticalGeneric Pharmaceuticals and Dietary Supplements operations and $5 million for the proprietary drug developmentProprietary 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 cost to continueof operations as they are now conducted is nominal, but these are 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 fundscapital in order to continue our existing operations toand finance our expansion plans to expand our operations 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 October 26, 2017, we issued payment inApril 16, 20, and 23, and May 5, and 13, 2020, the amountholder of $85,107 to pay off a note payable havingdated September 12, 2019 elected to convert a total of $43,000 in principal and $1,720 in accrued interest into 38,855,726 shares of Common Stock leaving a principal amountbalance of $65,000, accrued interest of $2,607 and prepayment penalty of $17,500. The note had a maturity date of April 26, 2018.$-0-.
On October 26, 2017, we received monies in exchange forMay 5, 2020 the holder of a convertible note payable havingdated December 24, 2018 elected to convert a face valuetotal of $115,000.$12,000 in principal and $1,999 in accrued interest into 14,357,856 shares of Common Stock leaving a principal balance of $13,000.
Off Balance Sheet Arrangements
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
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/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 September 30, 2017,March 31, 2020, at reasonable assurance level, for the following reasons:
| ● | Ineffective control environment and lack of qualified full-time CFO who has SEC experience to focus on our financial affairs; |
| ● | Lack of qualified and sufficient personnel, and processes to adequately and timely identify making any and all required public disclosures; |
| ● | Deficiencies in the period-end reporting process and accounting policies; |
| ● | Inadequate internal controls over the application of new accounting principles or the application of existing accounting principles to new transactions; |
| ● | Inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the Company’s financial reporting process; |
| ● | Deficient revenue recognition policies; |
| ● | Inadequate internal controls with respect to inventory transactions; and |
| ● | Improper and lack of timely accounting for accruals such as prepaid expenses, accounts payable and accrued liabilities. |
Our Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. We are reviewing various potential solutions to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Additionally, the Board of Directors will 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 annualquarterly report on Form 10-K10-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 ninethree month period ended September 30, 2017,March 31, 2020, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
In November 2014,June 2018 we entered intofiled an action in the Superior Court of the Province of Quebec in the District of Montreal (Canada) against one of our existing shareholders residing in Quebec City (Canada) arising out of a Manufacturing Services Agreement with Lonza Ltd. and Lonza Sales Ltd. (hereinafter jointly referred to as “Lonza”), whereby we engaged Lonzapossible equity investment intended to be completed by August 2018. The complaint alleges among other things, claims of misrepresentations and misleading conduct resulting in damages to us in an amount of approximately $200,000 Canadian (approximately $154,000 US). On April 1, 2019, a note payable held by the manufacturerdefendant having a face value of $100,000 Canadian (approximately $76,000 US) became due and payable. We have elected not to pay the amount due and to petition the courts to link this matter to the ongoing litigation. On March 6, 2020, the Superior Court in the District of Montreal granted our motion and the two proceedings were linked. A date for the hearings to commence was subsequently set for April 7, 2020, however due to the ongoing Coronavirus (COVID-19) Pandemic, the date has been postponed until further notice.
To the best of our Adva-27a anticancer drug. In June 2015 we received a sample of the pilot manufacturing run for evaluation. Our laboratory analyses showedmanagement’s knowledge and belief, there are no other material claims that while the sample meets the required biological specifications, the amount of material generated (the “Yield”) by the pilot run was found to be significantly lower than planned. During the course of our discussions concerning the problem of the low Yield, Lonza informedhave been brought against us that they required us to pay them $687,818 prior to moving forward withnor have there been any activity pertaining to the manufacturing agreement we have with them. We have repeatedly indicated to Lonza that a clear path defining exactly how the extremely low Yield issue would be addressed is imperative prior to us making any payments. As of the date of this report, neither party has changed its position.claims threatened.
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
During the ninethree months ended September 30, 2017,March 31, 2020, we issued a total of 149,336,64024,355,427 shares of our Common Stock. Of these, 42,528,125 sharesStock valued at $128,451 were issued upon$122,379 for the conversion of outstanding notes payable, reducing ourthe debt by $48,500$66,500 and interest payable by $3,022$4,486 and generating a loss on conversion of $76,929. The remaining 106,808,515 shares were issued as follows:$51,393.
Not ApplicableApplicable.
| Exhibit No. | Description | ||
| Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
| Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
| Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | XBRL Instance Document* | |
| 101.SCH | XBRL Schema Document* | |
| 101.CAL | XBRL Calculation Linkbase Document* | |
| 101.DEF | XBRL Definition Linkbase Document* | |
| 101.LAB | XBRL Label Linkbase Document* | |
| 101.PRE | XBRL Presentation Linkbase Document* |
______________________
* Pursuant to Rule 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability.
Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on November 15, 2017.May 18, 2020.
| SUNSHINE BIOPHARMA, INC. | |||
| By: | s/ Dr. Steve N. Slilaty | ||
| Dr. Steve N. Slilaty, | |||
| Principal Executive Officer | |||
| By: | s/ Camille Sebaaly | ||
Camille Sebaaly, Principal Financial Officer and | |||
| Principal Accounting Officer | |||
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