ITEM 7. MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion should be read in conjunction with our audited
financial statements and notes thereto included
herein. In connection with, and because we desire to
take advantage of, the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995, we caution
readers regarding certain forward looking statements in the
following discussion and elsewhere in this Report and in any other
statement made by, or on our behalf, whether or not in future
filings with the Securities and Exchange
Commission. Forward looking statements are statements
not based on historical information and which relate to future
operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond our control and many of which, with respect to
future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could
cause actual results to differ materially from those expressed in
any forward looking statements made by, or on our
behalf. We disclaim any obligation to update forward
looking statements.
Overview
and History
We were
incorporated in the State of Colorado on August 31, 2006 under the
name “Mountain West Business Solutions, Inc.” Until
October 2009, our business was to provide management consulting
with regard to accounting, computer and general business issues for
small and home-office based companies.
In
October 2009, we acquired Sunshine Biopharma, Inc., a Colorado
corporation holding an exclusive license 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’s management at the time, including
our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille
Sebaaly each of whom remain part of our current management. Our
principal business became that of a pharmaceutical company focusing
on the development of our licensed Adva-27a anticancer compound. In
December 2015 we acquired all issued and pending patents pertaining
to our Adva-27a technology and terminated the license. See
“Part I, Item 1 – Business - Intellectual
Property,” below for a more detailed explanation of this
acquisition.
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 signed
licensing agreements for four (4) generic prescription drugs for
the treatment of cancer and BPH (Benign Prostatic
Hyperplasia).
In
January 2018, we acquired Atlas Pharma Inc., a certified company
dedicated to chemical analysis of pharmaceutical and other
industrial samples whose operations are authorized by a Drug
Establishment License issued by Health Canada.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a Colorado
corporation, and assigned all of our interest in our Adva-27a
anticancer compound to that company.
As a
result, we are now a holding company operating through these three
wholly owned subsidiaries.
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) 426-6161and our website address is
www.sunshinebiopharma.com.
We have
not been subject to any bankruptcy, receivership or similar
proceeding.
Going Concern
Our
financial statements accompanying this Report have been prepared
assuming that we will continue as a going concern, which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The financial
statements do not include any adjustment that might result from the
outcome of this uncertainty. We have a minimal operating history
and minimal revenues or earnings from operations. We have no
significant assets or financial resources. We will, in all
likelihood, sustain operating expenses without corresponding
revenues for the immediate future. See “Financial
Statements and Notes.”
Results Of Operations
Comparison of Results of Operations for the fiscal years ended
December 31, 2017 and 2016
During
our fiscal years ended December 31, 2017 and 2016, we did not
generate any revenues.
Total
expenses for our fiscal year ended December 31, 2017 were $857,190,
compared to $993,108 during our fiscal year ended December 31,
2016, a decrease of $135,918. The expense categories that saw
a decrease were consulting fees by $80,388, amortization and
depreciation by $54,102, research and development by $32,793, and
licenses by $19,203. The decreases in these categories
of expenses were offset to some extent by relatively modest
increases in legal fees, accounting fees and officer and director
compensation. The decrease in consulting fees in 2017 was due to
the fact that a substantial amount of the work required for setting
up the generic pharmaceuticals operations had been completed.
Similarly, we incurred no licensing fees in 2017 as we acquired the
Adva-27a rights and as a result, terminated the License Agreement
we had for the same with Advanomics Corporation. The license
expense of $19,203 we paid in 2016 was incurred in order to obtain
the rights for our four (4) generic products. See “Part I,
Item 1 – Business.”
We also
incurred $104,829 in interest expense and $76,929 in losses from
debt conversion during the year ended December 31, 2017, compared
to $34,732 in interest expense and $1,945,898 in losses from debt
conversion during the similar period in 2016. In addition, we
incurred a loss of $556,120 in 2016 as a result of impairment of
the patents we purchased in 2015. See “Part I, Item 1 –
Business.”
As
discussed elsewhere in this Report, including “Part I, Item 1
– Business” and “Part III, Item 13 –
Certain Relationships and Related Transactions and Director
Independence,” on October 8, 2015, we acquired U.S. Patent
Number 8,236,935 (the “US Patent”) for the anticancer
compound, Adva-27a from a related entity (Advanomics Corporation),
which includes all rights to this intellectual property within the
United States, in exchange for an interest-free note payable for
$4,320,000 (the “October Patent Purchase
Agreement”). On December 28, 2015, we acquired the
remaining worldwide issued and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 (the “Worldwide
Patents”) for the Adva-27a anticancer compound from the same
related entity (Advanomics Corporation) in exchange for a note
payable for $12,822,499 (the “December Patent Purchase
Agreement”).
We
believe that purchase of the US Patent and the Worldwide Patents
(the “Patents”) would facilitate our ability to obtain
the funding necessary to complete the development and FDA approval
process for Adva-27a. As a related party transaction, purchased
patents are required to be recorded at the purchase price or the
book value on the seller’s financial statements, whichever is
lower. Effective December 28, 2015, the parties agreed to amend the
October Patent Purchase Agreement and the December Patent Purchase
Agreement. Pursuant to the amendment agreements (the
“Amendments”), the Patents were purchased from a
related party, Advanomics Corporation, at Advanomics’ cost
less the amortization through December 28, 2015, the effective date
of the transfer. The Amendments amended the purchase price of the
Patents to $835,394, eliminated all cash payments obligations and
replaced the non-convertible notes totaling $17,142,499 with two
(2) convertible notes totaling $835,394 that automatically convert
into an aggregate of 321,305,415 shares of our Common Stock. We
needed to amend our Articles of Incorporation to establish
additional authorized common shares in order to issue this stock.
In July 2016, having completed the increase of our authorized
capital to 3 billion shares of Common Stock, we issued the
321,305,415 Common Shares to Advanomics thereby completing all
aspects of the patent purchase arrangements and securing direct
ownership of all worldwide patents and rights pertaining to
Adva-27a.
In
2016, following a review of the status of our intellectual
property, the remaining value of the Patents ($556,120) on our
Balance Sheet was impaired as required under applicable accounting
rules.
As a
result, we incurred a net loss of $3,496,687 (approximately $0.01
per share) for the year ended December 31, 2016, compared to a net
loss of $1,040,236 (approximately $0.00 per share) during the year
ended December 31, 2017.
Because
we did not generate revenue in the last two years, following is our
Plan of Operation.
Plan of Operation
As of
the date of this report we are operating through the following
wholly owned subsidiaries:
●
NOX
Pharmaceuticals, Inc., a recently formed Colorado company focused
on the research, development and commercialization of proprietary
drugs for the treatment of cancer including Adva-27a, a
multi-purpose anti-tumor compound targeted for the treatment of
multidrug resistant cancer;
●
Sunshine Biopharma
Canada Inc., a Canadian company formed in July 2014, which offers
generic prescription drugs for the treatment of cancer and other
acute and chronic indications; and
●
Atlas
Pharma Inc., a Canadian company acquired in January 2018, offers
certified chemical analysis of pharmaceutical and other industrial
samples.
NOX
Pharmaceuticals, Inc. and Atlas Pharma Inc. are not included in the
financials presented in this report.
See
Part 1, Item 1, Business, above, for a more detailed description of
these businesses.
Liquidity and Capital Resources
As of
December 31, 2017, we had cash or cash equivalents of
$107,532.
Net
cash used in operating activities was $543,520 during our fiscal
year ended December 31, 2017, compared to $314,182 during our
fiscal year ended December 31, 2016. We anticipate that
our cash requirements for our operations will increase in the
future before we reach profitability levels.
Cash
flows used in investing activities were $84,008 during our fiscal
year ended December 31, 2017. For the fiscal year ended
December 31, 2016, cash flows used in investing activities were
$3,439 arising primarily out of the purchase of laboratory and
generic drugs warehouse equipment in 2017. Net cash
flows provided by financing activities totaled $670,705 in 2017,
compared to $324,622 during our fiscal year ended December 31,
2016.
We have
issued convertible and non-convertible notes to both related and
unaffiliated parties in order to fund our operations. Following is
a description of our liquidity and capital resources events in
2017:
●
In December 2016,
we received monies from our CEO in exchange for a note payable
having a principal amount of $90,000 Canadian ($67,032 US) with
interest at 12% due March 31, 2017. The note was convertible any
time after the date of issuance into shares of our Common Stock at
a price 35% below market value. At the time, this note was
collateralized by all of our assets. 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, together with accrued interest of $3,021 Canadian ($2,271
US) and an additional principal amount of $3,000 Canadian ($2,247
US) was renewed for a 90-day period under the same terms and
conditions as the original note. The new note then having a face
value of $96,021 Canadian ($72,198 US) was due on June 30, 2017. On
June 30, 2017, the note, together with accrued interest of $2,873
Canadian ($2,005 US), was renewed for a 90-day period under the
same terms and conditions as the original note except that the new
note was not- convertible. The new note then having a face value of
$98,894 Canadian ($76,072US) was 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 June 2017 note. The note, then
having a principal balance of $101,885 Canadian ($81,640 US)
matured December 31, 2017. On December 31, 2017 the note was
renewed for a 12-month period under the same terms and conditions
as the September 2017 note except that this new note is unsecured
and nonconvertible. The new note has a face value of $104,942
Canadian ($83,649 US) and matures on December 31,
2018.
●
A note payable held
by a private individual who subsequently became a principal
shareholder of our Company, having a face value of $100,000 at
December 31, 2016 and a maturity date of March 31, 2017, accrues
interest at 12%. The Note is convertible any time from the date of
issuance into shares of our Common Stock at a 35% discount from
market price. On March 31, 2017, the note’s principal balance
of $100,000 plus accrued interest of $11,715 was renewed for a
period of 90 days under the same terms and conditions as the
original note. The new note then having a face value of $111,715
matured on June 30, 2017. On June 30, 2017, the note’s
principal balance of $111,715, plus accrued interest of $3,342 was
renewed for a period of 90 days under the same terms and conditions
as the original note. The new note then had a face value of
$115,057 and matured on September 30, 2017. On September 30, 2017,
the note’s principal balance of $115.057 plus accrued
interest of $3,480 was renewed for a period of 90 days under the
same terms and conditions as the original note. The new note then
had a principal balance of $118,537, which matured on December 31,
2017. On December 31, 2017 the note was renewed for a 12-month
period under the same terms and conditions as before. The new note
has a face value of $122,093 and matures on December 31,
2018.
●
A Note Payable
having a Face Value of $21,439 at December 31, 2016, and accruing
interest at 12% was due December 31, 2017. On December 31, 2017, we
renewed the note, together with accrued interest of $2,573, for a
12-month period. The new note has a Face Value of $24,012 and
accrues interest at 12%. This note is convertible anytime from the
date of issuance into shares of our Common Stock at a 35% discount
from market price and is due December 31, 2018.
●
On April 1, 2017,
we received monies in exchange for a note payable having a Face
Value of $100,000 Canadian ($79,710 US) with interest payable
quarterly at 9%, which is due April 1, 2019. The note is
convertible any time after issuance into shares of our Common Stock
at
a price of $0.015 Canadian
(approximately $0.012 US) per share.
●
On September 22,
2017, we received monies in exchange for a note having a Face Value
of $62,000, with interest accruing at 8%, which is due June 30,
2018. The note is convertible after 180 days from issuance into
shares of our Common Stock at a price 35% below market
value.
●
On October 26,
2017, we received monies in exchange for a note payable having a
Face Value of $115,000 with interest accruing at 8%, which is due
October 26, 2018. The note is convertible after 180 days from
issuance into shares of our Common Stock at a price 35% below
market value.
●
On November 14,
2017, we received monies in exchange for a note payable having a
Face Value of $113,000 with interest accruing at 8%, which is due
November 14, 2018. The note is convertible after 180 days from
issuance into shares of our Common Stock at a price 35% below
market value.
●
On December 1,
2017, we received monies in exchange for a note payable having a
Face Value of $50,000 Canadian ($39,855 US) with interest accruing
at 8%, due November 30, 2018. The note is convertible after 180
days from issuance into shares of our Common Stock at a price 35%
below market value.
●
On February 10,
2017, we received monies in exchange for a note payable having a
Face Value of $50,000 with interest accruing at 8%, which is due
November 20, 2017. The note is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value. In August 2017, the note was paid off with an
additional $17,422 as a prepayment penalty.
●
On April 26, 2017,
we received monies in exchange for a note payable having a Face
Value of $ 65,000 with interest accruing at 8%, which is due April
26, 2018. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
In October 2017, we issued
payment in the amount of $85,107 to pay off the note including a
prepayment penalty of $20,107.
●
On August 3, 2017,
we received monies in exchange for a note payable having a Face
Value of $80,000 with interest accruing at 8%, which is due August
3, 2018. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
●
On August 21, 2017,
we received monies in exchange for a note payable having a Face
Value of $83,000 with interest accruing at 8%, which is due May 30,
2018. The Note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
In February 2018, the note was
paid off with an additional $32, 370 as a prepayment
penalty.
●
On July 1, 2016, we
received monies in exchange for a note payable having a Face Value
of $55,000 with interest accruing at 10%, which is due April 1,
2017. The note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 40% below market value.
In December 2016 and January
2017, the note, together with $3,022 in accrued interest, was fully
converted into 47,528,125 shares of our Common Stock.
●
During the fiscal
year ended December 31, 2017, we issued an aggregate of 149,336,640
shares of our Common Stock as follows:
o
40,000,000
shares for cash in the amount of $100,000 Canadian or $78,312
US
o
11,004,167
shares for the purchase of laboratory and generic drugs warehouse
equipment valued at $56,700
o
42,000,000
shares valued at $336,000 as compensation to the Company’s
Directors and Officers
o
13,804,348
shares for services rendered to the Company by third parties valued
at $77,000
o
42,528,125
shares valued at $128,451 in connection with the conversion of
$48,500 in debt and interest of $3,022 resulting in a $76,929 loss
on conversion
Except
as indicated, we relied upon the exemption from registration
provided by Regulation D and Section 4(a)(1) of the Securities Act
of 1933, as amended, to issue the respective shares.
We are
not generating revenue from our operations, and our ability to
implement our business plan as set forth herein will depend on the
future availability of financing. Such financing will be
required to enable us to further develop our generic
pharmaceuticals business, proprietary drug development program, and
analytical chemistry operations acquired in January
2018. We intend to raise funds through private
placements of our Common Stock and/or debt financing. We estimate
that we will require approximately $8 million ($1 million for the
generic pharmaceutical operations, $1 million for expansion of the
analytical chemistry operations, and $6 million for the proprietary
drug development program) to fully implement our business plan in
the future and there are no assurances that we will be able to
raise this capital.
In late
2017 we signed an agreement with Jitney Trade Inc.
(“Jitney”), a Canadian broker-dealer, to raise up to
$10 million Canadian (approximately $8 million US) in a private
offering being undertaken only in Canada (the
“Offering”) in order to provide the funding we have
estimated we need to implement our business plan. The Offering
expired on February 28, 2018 without any funds having been raised.
As of the date of this Report, we are engaged in negotiations with
Jitney concerning the terms for extending the Offering. There are
no assurances that any funds will be raised for us in this
situation.
Our cost to
continue operations as they are now conducted is nominal, but these
are expected to increase as we move forward with implementation of
our enhanced business plan. We do not have sufficient
funds to cover the anticipated increase in the relevant
expenses. We need to raise additional funds in order to
continue our existing operations and planned
expansions.
Inflation
Although our
operations are influenced by general economic conditions, we do not
believe that inflation had a material effect on our results of
operations during our fiscal year ended December 31,
2017.
Critical Accounting Policies and Estimates
Critical Accounting Estimates
The
discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been
prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments
that affect the amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based
on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates
under different assumptions or conditions.
Leases
We
follow the guidance in SFAS No. 13 “
Accounting for Leases
,” as
amended, which requires us to evaluate the lease agreements we
enter into to determine whether they represent operating or capital
leases at the inception of the lease.
Recently Adopted Accounting Standards
In
November 2016, the FASB issued ASU No. 2016-17, Income Taxes (Topic
740): Balance Sheet Classification of Deferred Taxes. The standard
requires that deferred tax assets and liabilities be classified as
noncurrent on the balance sheet rather than being separated into
current and noncurrent. ASU 2016-17 is effective for fiscal years,
and interim periods within those years, beginning after December
15, 2017. Early adoption is permitted and the standard may be
applied either retrospectively or on a prospective basis to all
deferred tax assets and liabilities. We adopted ASU 2016-17 during
our first quarter of the year ended December 31, 2017, on a
retrospective basis. The adoption of 2016-17 had no impact on our
financial statements.
In
February 2017, the FASB issued ASU No. 2017-02, Leases (Topic 842),
to provide guidance on recognizing lease assets and lease
liabilities on the balance sheet and disclosing key information
about leasing arrangements, specifically differentiating between
different types of leases. The core principle of Topic 842 is that
a lessee should recognize the assets and liabilities that arise
from all leases. The recognition, measurement, and presentation of
expenses and cash flows arising from a lease by a lessee have not
significantly changed from previous GAAP. There continues to be a
differentiation between finance leases and operating leases.
However, the principal difference from previous guidance is that
the lease assets and lease liabilities arising from operating
leases should be recognized in the balance sheet. The accounting
applied by a lessor is largely unchanged from that applied under
previous GAAP. The amendments will be effective for fiscal years
beginning after December 15, 2018, including interim periods within
those fiscal years, and early adoption is permitted. In transition,
lessees and lessors are required to recognize and measure leases at
the beginning of the earliest period presented using a modified
retrospective approach.
The
modified retrospective approach includes a number of optional
practical expedients that entities may elect to apply. These
practical expedients relate to the identification and
classification of leases that commenced before the effective date,
initial direct costs for leases that commenced before the effective
date, and the ability to use hindsight in evaluating lessee options
to extend or terminate a lease or to purchase the underlying
asset.
An
entity that elects to apply the practical expedients will, in
effect, continue to account for leases that commence before the
effective date in accordance with previous GAAP unless the lease is
modified, except that lessees are required to recognize a
right-of-use asset and a lease liability for all operating leases
at each reporting date based on the present value of the remaining
minimum rental payments that were tracked and disclosed under
previous GAAP. We are currently evaluating the impact of these
amendments on our financial statements.
In
March 2017, the FASB issued ASU No. 2017-08, Revenue from Contracts
with Customers (Topic 606): Principal versus Agent Considerations,
to clarify the implementation guidance on principal versus agent
considerations and address how an entity should assess whether it
is the principal or the agent in contracts that include three or
more parties. The effective date and transition requirements for
these amendments are the same as the effective date and transition
requirements of ASU 2014-09 (discussed above). We are currently
evaluating the impact of these amendments on our financial
statements.
In
March 2017, the FASB issued ASU No. 2017-09, Compensation-Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting, to reduce complexity in accounting standards
involving several aspects of the accounting for employee
share-based payment transactions, including (1) the income tax
consequences, (2) classification of awards as either equity or
liabilities, and (3) classification on the statement of cash flows.
The amendments will be effective for financial statements issued
for fiscal years beginning after December 15, 2017, including
interim periods within those fiscal years, and early adoption is
permitted. Amendments related to the timing of when excess tax
benefits are recognized, minimum statutory withholding
requirements, forfeitures, and intrinsic value should be applied
using a modified retrospective transition method, amendments
related to the presentation of employee taxes paid on the statement
of cash flows when an employer withholds shares to meet the minimum
statutory withholding requirement should be applied
retrospectively, amendments requiring recognition of excess tax
benefits and tax deficiencies in the income statement and the
practical expedient for estimating expected term should be applied
prospectively, and amendments related to the presentation of excess
tax benefits on the statement of cash flows can be applied using
either a prospective transition method or a retrospective
transition method. An entity that elects early adoption must adopt
all of the amendments in the same period. We are currently
evaluating the impact of these amendments on our financial
statements.
In
April 2017, the FASB issued ASU No. 2017-10, Revenue from Contracts
with Customers (Topic 606): Identifying Performance Obligations and
Licensing, to clarify the following two aspects of Topic 606: 1)
identifying performance obligations, and 2) the licensing
implementation guidance. The effective date and transition
requirements for these amendments are the same as the effective
date and transition requirements of ASU 2014-09 (discussed above).
We are currently evaluating the impact of these amendments on our
financial statements.
In May
2017, the FASB issued ASU No. 2017-10, Revenue from Contracts with
Customers (Topic 606): Identifying Performance Obligations and
Licensing, to clarify certain core recognition principles including
collectability, sales tax presentation, noncash consideration,
contract modifications and completed contracts at transition and
disclosures no longer required if the full retrospective transition
method is adopted.
The
effective date and transition requirements for these amendments are
the same as the effective date and transition requirements of ASU
2014-09 (discussed above). We are currently evaluating the impact
of these amendments on our financial statements.
In
August 2017, the FASB issued ASU No. 2017-15, Statement of Cash
Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments, to clarify how certain cash receipts and cash payments
are presented and classified in the statement of cash flows. The
amendments should be applied using a retrospective transition
method, and are effective for fiscal years beginning after December
15, 2017, including interim periods within those fiscal years. We
are currently evaluating the impact of these amendments on our
financial statements.
In
November 2017, the FASB issued ASU No. 2017-18, Statement of Cash
Flows (Topic 230): Restricted Cash (a consensus of the FASB
Emerging Issues Task Force), to provide guidance on the
presentation of restricted cash or restricted cash equivalents in
the statement of cash flow. The amendments should be applied using
a retrospective transition method, and are effective for fiscal
years beginning after December 15, 2017, including interim periods
within those fiscal years. We are currently evaluating the impact
of these amendments on our financial statements.
Off-Balance Sheet Arrangements
We have
not entered into any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources and would be considered material to
investors.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
Reference is made
to the Financial Statements, the notes thereto, and the Report of
Independent Public Accountants thereon commencing at page F-1 of
this Report, which Financial Statements, notes and report are
incorporated herein by reference.
Sunshine Biopharma, Inc.
CONSOLIDATED
FINANCIAL STATEMENTS
With
Independent Accountant’s Audit Report
At
December 31, 2017 and 2016
TABLE
OF CONTENTS
|
Page
|
Independent
Accountant’s Audit Report
|
F-1
|
|
|
Consolidated
Balance Sheet
|
F-2
|
|
|
Consolidated
Statement of Operations
|
F-3
|
|
|
Consolidated
Statement of Cash Flows
|
F-4
|
|
|
Consolidated
Statement of Shareholders’ Equity
|
F-5
|
|
|
Notes
to Consolidated Financial Statements
|
F-6
|
Report of Independent Registered Public Accounting
Firm
To the shareholders and the board of directors of Sunshine
Biopharma, Inc.
Opinion on the Financial Statements
We have
audited the accompanying consolidated balance sheets of
Sunshine Biopharma, Inc.
(the
"Company") as of December 31, 2017 and 2016, the related statements
of operations, stockholders' equity (deficit), and cash flows for
the years then ended, and the related notes (collectively referred
to as the "financial statements"). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2017 and 2016, and the
results of its operations and its cash flows for the years then
ended, in conformity with accounting principles generally accepted
in the United
States.
Substantial Doubt about the Company’s Ability to Continue as
a Going Concern
The
accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note
3 to the financial statements, the Company has suffered recurring
losses from operations and has a significant accumulated deficit.
In addition, the Company continues to experience negative cash
flows from operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engage to perform,
an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ BF
Borgers CPA PC
We have
served as the Company's auditor since 2013.
Lakewood,
CO
April
2, 2018
Sunshine
Biopharma, Inc.
|
Consolidated
Balance Sheet
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
107,532
|
$
57,453
|
Prepaid
expenses
|
9,667
|
1,007
|
|
|
|
Total Current
Assets
|
117,199
|
58,460
|
|
|
|
Equipment (net of
$9,132 and $2,228 depreciation)
|
59,996
|
5,944
|
|
|
|
Patents (net of
$58,918 amortization
and $556,120
impairment)
|
-
|
-
|
|
|
|
Non-current asset -
Deposits
|
80,290
|
-
|
|
|
|
TOTAL
ASSETS
|
$
257,485
|
$
64,404
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Current portion of
notes payable
|
516,867
|
69,939
|
Current portion of
notes payable - related entity
|
205,742
|
167,032
|
Accounts
payable
|
19,314
|
28,122
|
Interest
payable
|
9,215
|
9,011
|
|
|
|
Total Curent
Liabilities
|
751,138
|
274,104
|
|
|
|
Long-term
liabilities - Notes payable
|
79,710
|
-
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
830,848
|
274,104
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Preferred Stock,
Series A, $0.10 par value per share;
Authorized
5,000,000 Shares; Issued
and outstanding -0-
shares
at December 31, 2017 and 2016,
respectively.
|
-
|
-
|
|
|
|
Preferred Stock,
Series B $0.10 par value per share;
Authorized 500,000
Shares; Issued
and outstanding 500,000 and 500,000
shares
at December 31, 2017 and 2016,
respectively.
|
50,000
|
50,000
|
|
|
|
Common Stock,
$0.001 par value per share;
Authorized 3,000,000,000 Shares;
Issued
and outstanding 918,736,498 and 769,399,858 at
December 31, 2017 and 2016, respectively
|
918,736
|
769,400
|
|
|
|
Reserved for
issuance 394,808,684 at December 31, 2017
|
|
|
|
|
|
Capital paid in
excess of par value
|
12,075,586
|
11,548,460
|
|
|
|
Accumulated other
comprehesive income
|
504
|
394
|
|
|
|
Accumulated
(Deficit)
|
(13,618,190
)
|
(12,577,954
)
|
|
|
|
TOTAL SHAREHOLDERS'
DEFICIT
|
(573,363
)
|
(209,700
)
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
$
257,485
|
$
64,404
|
|
|
|
S
ee Accompanying
Notes To These Financial Statements.
|
Sunshine
Biopharma, Inc.
|
Consolidated
Statement Of Operations and comprehensive loss
|
|
|
|
|
|
|
Revenue:
|
$
-
|
$
-
|
|
|
|
General &
Administrative Expenses
|
|
|
|
|
|
Accounting
|
81,643
|
70,413
|
Legal
|
75,908
|
57,955
|
Consulting
|
127,013
|
207,401
|
Office
|
45,726
|
45,215
|
Licenses
|
-
|
19,203
|
Officer &
director renumeration
|
520,271
|
499,397
|
Research &
development
|
-
|
32,793
|
Amortization &
depreciation
|
6,629
|
60,731
|
|
|
|
Total G &
A
|
857,190
|
993,108
|
|
|
|
(Loss) from
operations
|
(857,190
)
|
(993,108
)
|
|
|
|
Other
(expense):
|
|
|
Interest
expense
|
(104,829
)
|
(34,732
)
|
Loss on conversion
of notes payable
|
(76,929
)
|
(1,945,898
)
|
Loss on impairment
of patents
|
-
|
(556,120
)
|
Litigation
settlement proceeds
|
-
|
25,000
|
(Loss) from foreign
exchange transactions
|
(1,288
)
|
-
|
Gain on interest
forgiveness
|
-
|
381
|
Debt
release
|
-
|
7,790
|
|
|
|
Total Other
(Expense)
|
(183,046
)
|
(2,503,579
)
|
|
|
|
Net
(loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
|
|
|
Basic (Loss) per
common share
|
$
0.00
|
$
(0.01
)
|
|
|
|
Weighted Average
Common Shares Outstanding
|
872,685,608
|
424,874,458
|
|
|
|
Net Income
(Loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
Other comprehensive
income:
|
|
|
Unrealized foreign
currency Gain (Loss)
|
110
|
(346
)
|
Comprehensive
(Loss)
|
(1,040,126
)
|
(3,497,033
)
|
|
|
|
Basic (Loss) per
common share
|
(0.00
)
|
(0.01
)
|
|
|
|
Weighted Average
Common Shares Outstanding
|
872,685,608
|
424,874,458
|
See Accompanying Notes To These
Financial Statements.
Sunshine
Biopharma, Inc.
|
|
|
Consolidated
Statement Of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
Net
(Loss)
|
$
(1,040,236
)
|
$
(3,496,687
)
|
Amortization
and Depreciation
|
6,629
|
60,731
|
Stock
issued for services
|
427,400
|
702,300
|
Loss
on impairment of patents
|
-
|
556,120
|
Loss
on conversion of notes payable
|
76,929
|
1,945,898
|
Stock
issued for payment of interest
|
3,022
|
9,270
|
Debt
forgiveness
|
-
|
(1,313
)
|
(Increase)
decrease in prepaid expenses
|
(8,660
)
|
2,104
|
Increase
(decrease) in Accounts Payable
|
(8,808
)
|
(18,960
)
|
Increase
in Accounts Payable - related entity
|
-
|
(80,000
)
|
Increase(decrease)
in interest payable
|
204
|
6,355
|
|
|
|
Net Cash Flows (used) in Operations
|
(543,520
)
|
(314,182
)
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
Purchase
equipment
|
(3,718
)
|
(3,439
)
|
Deposits
on business acquisition
|
(80,290
)
|
-
|
|
|
|
Net Cash Flows (used) in Investing Activities
|
(84,008
)
|
(3,439
)
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
Proceed
from note payable
|
660,565
|
131,150
|
Notes
Payable - Interest expense
|
33,977
|
|
Payment
of notes payable
|
(115,000
)
|
-
|
Origination
fees
|
25,000
|
22,312
|
Notes
payable - related party
|
2,251
|
67,032
|
Note
payable related entity for patent purchase
|
-
|
-
|
Sale
of common stock
|
63,912
|
104,128
|
|
|
|
Net Cash Flows Provided by Financing Activities
|
670,705
|
324,622
|
|
|
|
|
|
|
Net
Increase (Decrease) In Cash and cash equivalents
|
43,177
|
7,001
|
Foreign
currency translation adjustment
|
6,902
|
(346
)
|
Cash
and cash equivalents at beginning of period
|
$
57,453
|
$
50,798
|
|
|
|
|
$
107,532
|
$
57,453
|
Supplementary Disclosure Of Cash Flow Information:
|
Cash
paid for interest
|
$
21,900
|
$
5,264
|
Cash
paid for income taxes
|
$
-
|
$
-
|
|
|
|
Stock
issued for services
|
$
427,400
|
$
702,300
|
Stock
issued for note conversions
|
$
128,451
|
$
3,077,950
|
Stock
issued to buy equipment
|
$
56,700
|
$
-
|
Loan
issued for interest
|
$
58,977
|
$
-
|
Stock
issued for payment of interest
|
$
3,022
|
$
-
|
|
|
|
See Accompanying Notes To These
Financial Statements.
Sunshine
Biopharma, Inc.
|
Statement of
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2015
|
198,265,118
|
$
198,265
|
$
8,235,217
|
500,000
|
$
50,000
|
$
740
|
$
(9,081,267
)
|
$
(597,045
)
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash
|
12,555,556
|
12,556
|
91,572
|
|
|
|
|
104,128
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
146,750,000
|
146,750
|
555,550
|
|
|
|
|
702,300
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of note payable
|
|
|
|
|
|
|
|
|
and payment of
interest
|
411,829,184
|
411,829
|
2,666,121
|
|
|
|
|
3,077,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
(346
)
|
(3,496,687
)
|
(3,497,033
)
|
Balance at
December 31, 2016
|
769,399,858
|
$
769,400
|
$
11,548,460
|
500,000
|
$
50,000
|
$
394
|
$
(12,577,954
)
|
$
(209,700
)
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash
|
34,000,000
|
34,000
|
29,912
|
|
|
|
|
63,912
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
61,804,348
|
61,804
|
365,596
|
|
|
|
|
427,400
|
|
|
|
|
|
|
|
|
|
Common stock issued for
equipment
|
11,004,167
|
11,004
|
45,696
|
|
|
|
|
56,700
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of note payable
|
|
|
|
|
|
|
|
|
and payment of
interest
|
42,528,125
|
42,528
|
85,923
|
|
|
|
|
128,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
110
|
(1,040,236
)
|
(1,040,126
)
|
Balance at
December 31, 2017
|
918,736,498
|
$
918,736
|
$
12,075,586
|
500,000
|
$
50,000
|
$
504
|
$
(13,618,190
)
|
$
(573,363
)
|
See Accompanying Notes To These Financial
Statements.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Note 1 – Description of Business
The
Company was originally incorporated under the name Mountain West
Business Solutions, Inc. (“MWBS”) on August 31, 2006 in
the State of Colorado. Effective October 15, 2009, MWBS acquired
Sunshine Biopharma, Inc. in a transaction classified as a reverse
acquisition. MWBS concurrently changed its name to Sunshine
Biopharma, Inc. and Sunshine Biopharma, Inc. changed its name to
Sunshine Etopo, Inc. In 2015, Sunshine Etopo, Inc. became inactive
and was recently dissolved.
On
January 1, 2018, the Company acquired Atlas Pharma Inc., a fully
certified Canadian company offering chemical analysis of
pharmaceutical and other industrial samples. As a result of this
and the recent formation of NOX Pharmaceuticals, Inc., Sunshine
Biopharma, Inc. is now operating through three wholly owned
subsidiaries, including:
●
NOX
Pharmaceuticals, Inc., a recently formed Colorado company focused
on the research, development and commercialization of proprietary
drugs for the treatment of cancer including Adva-27a, a
multi-purpose anti-tumor compound targeted for the treatment of
multidrug resistant cancer;
●
Sunshine Biopharma
Canada Inc., a Canadian company formed in July 2014, which offers
generic prescription drugs for the treatment of cancer and other
acute and chronic indications; and
●
Atlas Pharma Inc.,
a Canadian company acquired in January 2018, offering certified
chemical analysis of pharmaceutical and other industrial
samples.
The
financial statements represent the consolidated activity of
Sunshine Biopharma, Inc. and its subsidiaries (hereinafter
collectively referred to as the "Company"). The Company was
originally formed for the purposes of conducting research,
development and commercialization of drugs for the treatment of
various forms of cancer. The Company may also engage in any other
business that is permitted by law, as designated by the Board of
Directors of the Company. NOX Pharmaceuticals, Inc. and Atlas
Pharma Inc. are not included in the Company's 2017
financials.
During
the last year the Company has continued to raise money through
stock sales and borrowings.
The
Company’s activities are subject to significant risks and
uncertainties, including failing to secure additional funding to
operationalize the Company’s generic pharmaceuticals business
and proprietary drug development program.
Note 2 – Summary of Significant Accounting
Policies
This summary of significant accounting policies
is presented to assist the reader in understanding the
Company's financial statements. The consolidated
financial statements and notes are representations of the Company's
management, which is responsible for their integrity and
objectivity. These accounting policies conform to generally
accepted accounting principles and have
been consistently applied in the
preparation of the financial
statements.
PRINCIPLES OF CONSOLIDATION
The
accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary. All intercompany
accounts and transactions have been eliminated in
consolidation.
USE OF ESTIMATES
The preparation of financial
statements in conformity with U.S. generally
accepted accounting principles requires
management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosure of
contingent assets and liabilities at the date of
the financial statements and the reported
amounts of revenues and expenses
during the reporting period. The more
significant estimates and assumptions made
by management are valuation of equity
instruments, depreciation of property and
equipment, and deferred tax asset valuation.
Actual results could differ from those estimates as the current
economic environment has increased the degree of uncertainty
inherent in these estimates and assumptions.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
CASH AND CASH EQUIVALENTS
For
the Balance Sheets and Statements of
Cash Flows, all highly liquid investments with
maturity of 90 days or less are considered to be cash
equivalents. The Company had a cash balance of $107,532 and
$57,453 as of December 31, 2017 and December 31, 2016,
respectively. At times such cash balances may be in excess of the
FDIC limit of $250,000 or the equivalent in Canada.
PROPERTY AND EQUIPMENT
Property
and equipment is reviewed for recoverability when events or changes
in circumstances indicate that its carrying value may exceed future
undiscounted cash inflows. As of December 31, 2017 and 2016, the
Company had not identified any such impairment. Repairs and
maintenance are charged to operations when incurred and
improvements and renewals are capitalized.
Property
and equipment are stated at cost. Depreciation is calculated using
the straight-line method for financial reporting purposes and
accelerated methods for tax purposes. Their estimated useful lives
are as follows:
|
Office
Equipment:
|
5-7
Years
|
|
Laboratory
Equipment
|
5
Years
|
|
Vehicles
|
5
Years
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
INTELLECTUAL PROPERTY RIGHTS - PATENTS
The
cost of patents acquired is capitalized and will be amortized over
the shorter of the term of the patent life (20 years) or the
remaining life of the underlying patents.
The
Company evaluates recoverability of identifiable intangible assets
whenever events or changes in circumstances indicate that
intangible assets carrying amount may not be recoverable. Such
circumstances include, but are not limited to: (1) a significant
decrease in the market value of an asset, (2) a significant adverse
change in the extent or manner in which an asset is used, or (3) an
accumulation of cost significantly in excess of the amount
originally expected for the acquisition of an asset. The Company
measures the carrying amount of the assets against the estimated
undiscounted future cash flows associated with it.
There
was an impairment loss of $556,120 for the year ended December 31,
2016.
The
Company’s management determined that the expected cash flows
would be less than the carrying amount of assets being evaluated;
therefore an impairment loss was recognized. The impairment loss
was calculated as the amount by which the carrying amount of the
assets, exceed fair value.
EARNINGS PER SHARE
The
Company has adopted the
Financial
Accounting Standards Board
(FASB) ASC Topic 260 regarding
earnings / loss per share, which provides for calculation of
“basic” and “diluted” earnings / loss per
share. Basic earnings / loss per share includes no dilution and is
computed by dividing net income / loss available to common
shareholders by the weighted average common shares outstanding for
the period. Diluted earnings / loss per share reflect the potential
dilution of securities that could share in the earnings of an
entity similar to fully diluted earnings / loss per
share.
There
were no potentially dilutive instruments outstanding during the
period ended December 31, 2017 or the year ended December 31,
2016.
INCOME TAXES
In accordance with ASC 740 - Income Taxes, the provision for income
taxes is computed using the asset and liability method. The
liability method measures deferred income taxes by
applying enacted statutory rates in effect at the
balance sheet date to the differences between the tax
basis of assets and liabilities and their
reported amounts on the financial
statements. The resulting deferred tax assets or
liabilities have been adjusted to reflect changes in tax laws as
they occur. A valuation allowance is provided when it is
more likely than not that a deferred tax asset will not be
realized.
The Company expects to recognize the financial statement benefit of
an uncertain tax position only after considering the probability
that a tax authority would sustain the position in an examination.
For tax positions meeting a "more-likely-than-not" threshold, the
amount to be recognized in the financial statements will be the
benefit expected to be realized upon settlement with the tax
authority. For tax positions not meeting the threshold, no
financial statement benefit is recognized. As of December 31, 2017,
the Company had no uncertain tax positions. The Company recognizes
interest and penalties, if any, related to uncertain tax positions
as general and administrative expenses. The Company currently has
no federal or state tax examinations nor has it had any federal or
state examinations since its inception. To date, the Company has
not incurred any interest or tax penalties.
For Canadian and US tax purposes, the Company’s 2014 through
2016 tax years remain open for examination by the tax authorities
under the normal three-year statute of limitations.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
FUNCTIONAL CURRENCY
The
U.S. dollar is the functional currency of the Company which is
operating in the United States. The functional currency for the
Company's Canadian subsidiary is the Canadian dollar.
The
Company translates its Canadian subsidiary's financial statements
into U.S. dollars as follows:
●
Assets and
liabilities are translated at the exchange rate in effect as of the
financial statement date.
●
Income statement
accounts are translated using the weighted average exchange rate
for the period.
The
Company includes translation adjustments from currency exchange and
the effect of exchange rate changes on intercompany transactions of
a long-term investment nature as a separate component of
shareholders’ equity. There are currently no transactions of
a long-term
investment
nature, nor any gains or losses from non U.S. currency
transactions.
CONCENTRATION OF CREDIT RISKS
Financial
instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents, notes
receivables, deposits, and trade receivables. The Company places
its cash equivalents with high credit quality financial
institutions. As of December 31, 2017 and 2016 there were no trade
receivables.
FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
The
Company applies the provisions of accounting guidance, FASB Topic
ASC 825,
Financial
Instruments
. ASC 825 requires all entities to disclose the
fair value of financial instruments, both assets and liabilities
recognized and not recognized on the balance sheet, for which it is
practicable to estimate fair value, and defines fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties. As of
December 31, 2017 and 2016, the fair value of cash, accounts
receivable and notes receivable, accounts payable, accrued
expenses, and other payables approximated carrying value due to the
short maturity of the instruments, quoted market prices or interest
rates which fluctuate with market rates.
The
Company defines fair value as the price that would be received to
sell an asset or be paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The Company applies the following fair value hierarchy, which
prioritizes the inputs used to measure fair value into three levels
and bases the categorization within the hierarchy upon the lowest
level of input that is available and significant to the fair value
measurement. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements).
Level 1
— Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement
date.
Level 2
— Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly. If the asset or liability has a
specified (contractual) term, a Level 2 input must be observable
for substantially the full term of the asset or
liability.
Level 3
— Level 3 inputs are unobservable inputs for the asset or
liability in which there is little, if any, market activity for the
asset or liability at the measurement date.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
The
carrying value of financial assets and liabilities recorded at fair
value is measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a non-recurring basis are those
that are adjusted to fair value when a significant event occurs.
The Company had no financial assets or liabilities carried and
measured on a nonrecurring basis during the reporting periods.
Financial assets and liabilities measured on a recurring basis are
those that are adjusted to fair value each time a financial
statement is prepared.
NOTES PAYABLE
Borrowings
are recognized initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortized cost;
any difference between the proceeds (net of transaction costs) and
the redemption value is recognized in the income statement over the
period of the borrowings using the effective interest
method.
ACCOUNTING FOR DERIVATIVES LIABILITIES
The
Company evaluates stock options, stock warrants or other contracts
to determine if those contracts or embedded components of those
contracts qualify as derivatives to be separately accounted for
under the relevant sections of ASC Topic 815-40,
Derivative Instruments and Hedging: Contracts
in Entity’s Own Equity
. The result of this accounting
treatment could be that the fair value of a financial instrument is
classified as a derivative instrument and is marked-to-market at
each balance sheet date and recorded as a liability. In the event
that the fair value is recorded as a liability, the change in fair
value is recorded in the statement of operations as other income or
other expense.
Upon
conversion or exercise of a derivative instrument, the instrument
is marked to fair value at the conversion date and then that fair
value is reclassified to equity. Financial instruments that are
initially classified as equity that become subject to
reclassification under ASC Topic 815-40 are reclassified to a
liability account at the fair value of the instrument on the
reclassification date. The Company determined that none of the
Company’s financial instruments meet the criteria for
derivative accounting as of December 31, 2017 and
2016.
EQUITY INSTRUMENTS ISSUED TO NON-EMPLOYEES FOR AQUIRING GOODS OR
SERVICES
Issuances of the Company’s common stock or warrants for
acquiring goods or services are measured at the fair value of the
consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. The measurement date
for the fair value of the equity instruments issued to consultants
or vendors is determined at the earlier of (i) the date at which a
commitment for performance to earn the equity instruments is
reached (a “performance commitment” which would include
a penalty considered to be of a magnitude that is a sufficiently
large disincentive for nonperformance) or (ii) the date at which
performance is complete. When it is appropriate for the Company to
recognize the cost of a transaction during financial reporting
periods prior to the measurement date, for purposes of recognition
of costs during those periods, the equity instrument is measured at
the then-current fair values at each of those interim financial
reporting dates.
NONCASH EQUITY TRANSACTIONS
Shares of equity instruments issued for noncash consideration are
recorded at the estimated fair market value of the consideration
granted based on the estimated market value of the equity
instrument, or at the estimated value of the goods or services
received whichever is more readily determinable.
RELATED PARTIES
A party is considered to be related to the Company if the party
directly or indirectly or through one or more intermediaries,
controls, is controlled by, or is under common control with the
Company. Related parties also include principal owners of the
Company, its management, members of the immediate families of
principal owners of the Company and its management and other
parties with which the Company may deal if one party controls or
can significantly influence the management or operating policies of
the other to an extent that one of the transacting parties might be
prevented from fully pursuing its own separate interests. A party
which can significantly influence the management or operating
policies of the transacting parties or if it has an ownership
interest in one of the transacting parties and can significantly
influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own
separate interests is also a related party.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
GENERAL AND ADMINISTRATIVE EXPENSES
General
and administrative expenses consisted of professional service fees,
rent and utility expenses, meals, travel and entertainment
expenses, and other general and administrative overhead costs.
Expenses are recognized when incurred.
BASIC AND DILUTED NET GAIN (LOSS) PER SHARE
The Company computes loss per share in accordance with ASC
260,
Earnings per Share.
ASC 260 requires presentation of both
basic and diluted earnings per share (“EPS”) on the
face of the income statement.
Basic
net income (loss) per share is calculated by dividing net (loss) by
the weighted-average common shares outstanding. Diluted net income
per share is calculated by dividing net income by the
weighted-average common shares outstanding during the period using
the treasury stock method or the two-class method, whichever is
more dilutive. As the Company incurred net losses for the year
ended December 31, 2017 no potentially dilutive securities were
included in the calculation of diluted earnings per share as the
impact would have been anti-dilutive.
Therefore,
basic and dilutive net (loss) per share were the same as of
December 31, 2017 and 2016.
REVENUE RECOGNITION
The
Company is focused on the research, development and
commercialization of drugs for the treatment of various forms of
cancer. The Company does not expect to generate revenues until
clinical trials of its proposed products are completed. Once
completed, revenues would be recognized as its technology is
licensed or sold or its products become marketable.
IMPACT OF NEW ACCOUNTING STANDARDS
In
March 2017, the FASB issued ASU No. 2017-08, Receivables —
Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium
Amortization on Purchased Callable Debt Securities, to amend the
amortization period for certain purchased callable debt securities
held at a premium. The ASU shortens the amortization period for the
premium to the earliest call date. Under current Generally Accepted
Accounting Principles (“GAAP”), entities generally
amortize the premium as an adjustment of yield over the contractual
life of the instrument. The amendments should be applied on a
modified retrospective basis, and are effective for fiscal years
beginning after December 15, 2018. Early adoption is permitted,
including adoption in an interim period. The Company is currently
evaluating the impact of this amendment on its financial
statements.
In
February 2017, the FASB issued ASU No. 2017-05, Other
Income—Gains and Losses from the Derecognition of
Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of
Asset Derecognition Guidance and Accounting for Partial Sales of
Nonfinancial Assets, to clarify the scope of Subtopic 610-20, Other
Income—Gains and Losses from the Derecognition of
Nonfinancial Assets, and to add guidance for partial sales of
nonfinancial assets. Subtopic 610-20, which was issued in May 2014
as a part of ASU No. 2014-09, Revenue from Contracts with Customers
(Topic 606), provides guidance for recognizing gains and losses
from the transfer of nonfinancial assets in contracts with
noncustomers. The amendments are effective for fiscal years
beginning after December 15, 2017, including interim periods within
those fiscal years, which is the same time as the amendments in ASU
No. 2014-09, and early adoption is permitted. The Company is
currently evaluating the impact of this amendment on its financial
statements.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
In
January 2017, the FASB issued ASU No. 2017-03, Accounting Changes
and Error Corrections (Topic 250). The ASU adds SEC disclosure
requirements for both the quantitative and qualitative impacts that
certain recently issued accounting standards will have on the
financial statements of a registrant when such standards are
adopted in a future period. Specially, these disclosure
requirements apply to the adoption of ASU No. 2014- 09, Revenue
from Contracts with Customers (Topic 606); ASU No. 2016-02, Leases
(Topic 842); and ASU No. 2016-13, Financial Instruments —
Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments. The Company is currently
evaluating the impact of these amendments on its financial
statements.
Between
May 2014 and December 2016, the FASB issued several ASU’s on
Revenue from Contracts with Customers (Topic 606). These updates
will supersede nearly all existing revenue recognition guidance
under current U.S. generally accepted accounting principles (GAAP).
The core principle is to recognize revenues when promised goods or
services are transferred to customers in an amount that reflects
the consideration to which an entity expects to be entitled for
those goods or services.
A
five-step process has been defined to achieve this core principle,
and, in doing so, more judgment and estimates may be required
within the revenue recognition process than are required under
existing U.S. GAAP. The standards are effective for annual periods
beginning after December 15, 2017, and interim periods therein,
using either of the following transition methods: (i) a full
retrospective approach reflecting the application of the standards
in each prior reporting period with the option to elect certain
practical expedients, or (ii) a retrospective approach with the
cumulative effect of initially adopting the standards recognized at
the date of adoption (which includes additional footnote
disclosures). The Company is currently evaluating the impact of its
pending adoption of these standards on its financial statements and
has not yet determined the method by which it will adopt the
standard in 2018.
In
November 2016, the FASB issued ASU No. 2016-18, Statement of Cash
Flows (Topic 230): Restricted Cash (a consensus of the FASB
Emerging Issues Task Force), to provide guidance on the
presentation of restricted cash or restricted cash equivalents in
the statement of cash flow. The amendments should be applied using
a retrospective transition method, and are effective for fiscal
years beginning after December 15, 2017, including interim periods
within those fiscal years. The Company is currently evaluating the
impact of these amendments on its financial
statements.
DIRECTOR AND OFFICER COMPENSATION
For the
period ended December 31, 2017, the Company issued to the Board of
Directors 42,000,000 shares of par value $0.001 Common Stock valued
at $336,000 or $0.008 per share. During the year ended December 31,
2017, the Directors and Officers were paid $184,271 in cash. Of
this amount, $147,695 was paid to Advanomics Corporation, a company
controlled by the CEO of the Company.
For the
period ended December 31, 2016, the Company issued 78,000,000
shares of par value $0.001 Common Stock to the three Company
officers/directors valued at $241,800 or $0.0031 per share. The
Company also issued to the Board of Directors 36,000,000 shares of
$0.001 Common Stock valued at $252,000 or $0.0078 per share. In
addition, the Company paid its officers $5,597 in
cash.
LEGAL FEES
During
the years ended December 31, 2017 and 2016, legal fees were
incurred largely as a result of services provided to the Company to
assist with its regulatory requirements with the Securities and
Exchange Commission and a litigation in which it was involved and
since been resolved.
DATE OF MANAGEMENT’S REVIEW
Subsequent
events have been evaluated through March 29, 2018, which is the
date the Financial Statements were available to be
issued.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Note 3 – Going Concern
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates, among
other things, the realization of assets and satisfaction of
liabilities in the normal course of business. The Company had an
accumulated deficit of approximately $13,618,190 and $12,577,954 at
December 31, 2017 and 2016, respectively, had a net loss of
approximately $1,040,236 for the year ended December 31, 2017 and a
net loss of $3,496,687 for the fiscal year ended December 31, 2016,
and Shareholders’ Deficit of approximately $573,363 and
$209,700 at December 31, 2017 and 2016, respectively.
These
matters, among others, raise substantial doubt about the
Company’s ability to continue as a going concern. The Company
believes it can raise capital through equity sales and borrowing to
fund its operations. Management believes this will contribute
toward its subsequent profitability. The accompanying Financial
Statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going
concern.
Note 4 – Patents
The
following is a summary of the Patents held by the Company at
December 31, 2017 and 2016:
On
October 8, 2015, the Company acquired U.S. Patent Number 8,236,935
(the “US Patent”) for the Adva-27a anticancer compound
from Advanomics Corporation (“Advanomics”), a related
party, in exchange for an interest-free note payable for
$4,320,000. Effective December 28, 2015, the parties executed an
amendment pursuant to which this note payable for $4,320,000 was
cancelled and replaced with a new interest-free convertible note
having a face value of $210,519, comprised of $155,940 in principal
amount which is the Advanomics book value of the US Patent, plus
$54,579 as an adjustment for the currency exchange difference. The
new note is automatically convertible into 80,968,965 shares of the
Company’s Common Stock upon the Company increasing its
authorized capital to a level that would permit the issuance of
such shares.
On
December 28, 2015, the Company acquired the remaining worldwide
issued and pending patents under PCT/FR2007/000697 and
PCT/CA2014/000029 (the “Worldwide Patents”) for the
Adva-27a anticancer compound from Advanomics, a related party, in
exchange for a note payable for $12,822,499. Effective December 28,
2015, the parties executed an amendment pursuant to which this note
payable for $12,822,499 was cancelled and replaced with a new
interest-free convertible note having a face value of $624,875,
comprised of $462,870 in principal amount, which is the Advanomics
book value of the Worldwide Patents, plus $162,005 as an adjustment
for the currency exchange difference. The new note is automatically
convertible into 240,336,451 shares of the Company’s Common
Stock upon the Company increasing its authorized capital to a level
that would permit the issuance of such shares. The US Patent and
the Worldwide Patents are herein referred to as the
“Patents.”
The
Patents were therefore acquired from the related party (Advanomics)
for a total of $835,394, including a total of $216,584 in
adjustments for the currency exchange difference ($618,810 net).
Patents expire 20 years from the priority date and are therefore
amortized over 20 years. The oldest of the Patents expires on April
25, 2026 and therefore the Company has deemed that the Patents have
approximately 10 years remaining on their useful life.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
In July
2016, the Company issued 321,305,416 shares of $0.001 par value
Common Stock in exchange for notes payable totaling
$835,394.
|
|
|
|
|
|
Adva-27a US
Patent
|
$
|
$
155,940
|
Adva-27a Worldwide
Patents
|
$
|
$
462,870
|
|
|
|
Total
|
$
|
$
618,810
|
Less: accumulated
amortization
|
|
(62,690
)
|
Loss on
impairment
|
|
(556,120
)
|
Total
|
|
|
|
$
-0-
|
$
-0-
|
Note 5 – Capital Stock
The
Company’s authorized capital is comprised of 3,000,000,000
shares of $0.001 par value Common Stock and 30,000,000 shares of
$0.10 par value Preferred Stock, to have such rights and
preferences as the Directors of the Company have or may assign from
time to time. Out of the authorized Preferred Stock, the Company
has designated 850,000 shares as Series “A” Preferred
Stock (“Series A”). The Series A is convertible at any
time after issuance into 20 shares of the Company's Common Stock
with no further consideration, has full voting rights at 20 votes
per share, and has superior liquidation rights to the Common Stock.
During the year ended December 31, 2015, the Company authorized
500,000 shares of $0.10 par value Series “B” Preferred
Stock (“Series B”). The Series B Preferred Stock is
non-convertible, non-redeemable and non-retractable. It has
superior liquidation rights to the Common Stock at $0.10 per share
and gives the holder the right to 1,000 votes per share. All shares
of the Series B Preferred Stock are held by the CEO of the Company.
Through December 31, 2017 and December 31, 2016, the Company has
issued and outstanding a total of 918,736,498 and 769,399,858
shares of Common Stock, respectively. Through the same periods, the
Company has issued and outstanding a total of -0- and -0- shares of
Series A Preferred Stock and 500,000 and 500,000 shares of Series B
Preferred Stock, respectively.
During
the fiscal year ended December 31, 2017, the Company issued an
aggregate of 149,336,640 shares of its Common Stock as
follows:
●
40,000,000 shares
for cash in the amount of $100,000 Canadian or $78,312
US
●
11,004,167 shares
for the purchase of laboratory and generic drugs warehouse
equipment valued at $56,700
●
42,000,000 shares
valued at $336,000 as compensation to the Company’s Directors
and Officers
●
13,804,348 shares
for services rendered to the Company by third parties valued at
$77,000
●
42,528,125 valued
at $128,451 shares in connection with the conversion of $48,500 in
debt and interest of $3,022 resulting in a $76,929 loss on
conversion
During
the fiscal year ended December 31, 2016, the Company issued
411,829,184 shares of Common Stock for the conversion of $1,122,782
in debt and interest of $9,270 generating a loss of $1,945,898 on
conversion. The Company sold 12,555,556 shares of Common Stock for
cash of $104,128 and issued 146,750,000 shares of Common Stock in
exchange for services valued at $702,300. In 2016, 114,000,000
shares valued at $493,800 were issued to the Directors and Officers
of the Company. The Officers and Directors shares are restricted
and may not be sold without prior written consent of the Board of
Directors of the Company.
The
Company has declared no dividends since inception.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Note 6 – Earnings per Share
The
following table sets forth the computation of basic and diluted net
income per share for the years ended December 31:
|
|
|
Net (loss)
attributable to Common Stock
|
$
(1,040,236
)
|
$
(3,496,687
)
|
Basic weighted
average outstanding shares of Common Stock
|
872,685,608
|
424,874,458
|
Dilutive effects of
common share equivalents
|
-0-
|
-0-
|
Dilutive weighted
average outstanding shares of common stock
|
872,685,608
|
424,874,458
|
Net loss per share
of Common Stock
|
|
|
Basic and
Diluted
|
$
(0.00
)
|
$
(0.01
)
|
Note 7 – Income Taxes
The
Company files a United States federal income tax return and a
Canadian branch return on a calendar year basis. The Company and
its wholly-owned subsidiary, Sunshine Biopharma Canada Inc., have
not generated taxable income since inception.
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These
loss carryovers are limited under the Internal Revenue Code should
a significant change in ownership occur. The Company accounts for
income taxes pursuant to ASC 740.
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses and
other items. Loss carryovers are limited under the Internal Revenue
Code should a significant change in ownership occur.
The
Company follows FASB Statement Accounting Standards Codification
No. 740, “Accounting for Income Taxes”, which requires,
among other things, an asset and liability approach to calculating
deferred income taxes. The components of the deferred income tax
assets and liabilities arising under ASC No. 740 were as
follows:
There
were no deferred income taxes at December 31, 2017 and
2016.
The
types of temporary differences between the tax basis of assets and
their financial reporting amounts that give rise to a significant
portion of the deferred assets and liabilities are as
follows:
|
|
|
|
|
|
|
|
Deferred tax
assets:
|
|
|
|
|
Net operating loss
US
|
$
10,611,921
|
$
3,932,778
|
$
9,609,340
|
$
3,561,221
|
Net operating loss
Canada
|
266,498
|
71,421
|
202,188
|
46,099
|
Total
|
10,878,419
|
4,004,199
|
9,811,528
|
3,607,320
|
|
|
|
|
|
Valuation
allowance
|
(10,878,419
)
|
(4,004,199
)
|
(9,811,528
)
|
(3,607,320
)
|
|
|
|
|
|
Total deferred tax
asset
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
Net deferred tax
asset
|
$
-0-
|
$
-0-
|
$
-0-
|
$
-0-
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Deferred
income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These
loss carryovers are limited under the Internal Revenue Code should
a significant change in ownership occur.
At
December 31, 2017 and December 31, 2016, the Company had
approximately $10,611,921 and $9,609,340, respectively in unused
federal net operating loss carryforwards, which begin to expire
principally in the year 2029. A deferred tax asset at each date of
approximately $3,950,013 and $3,607,320 resulting from the loss
carryforwards has been offset by a 100% valuation allowance. The
change in the valuation allowance for the period ended December 31,
2017 and December 31, 2016 was approximately $342,693and $521,180,
respectively.
A
reconciliation of the U.S. statutory federal income tax rate to the
effective tax rate is as follows:
|
|
|
|
|
U.S. Federal
statutory graduated rate
|
34.00
%
|
34.00
%
|
State income tax
rate,
net of federal benefit
|
3.06
%
|
3.06
%
|
Net
rate
|
37.06
%
|
37.06
%
|
|
|
|
Net operating loss
used
|
0.00
%
|
0.00
%
|
Net operating loss
for which no tax
benefit is currently
available
|
-37.06
%
|
-37.06
%
|
|
0.00
%
|
0.00
%
|
The
Company’s income tax filings are subject to audit by various
taxing authorities. The Company’s open audit periods are
2014, 2015, and 2016, although, the statute of limitations for the
2014 tax year will expire effective March 15, 2018. In evaluating
the Company’s provisions and accruals, future taxable income,
and reversal of temporary differences, interpretations and tax
planning strategies are considered.
Note 8 – Notes Payable
Notes payable consist of the
following:
|
|
|
|
|
|
A Note
Payable having a Face Value of $21,439 at December 31, 2016 and
accruing interest at 12% was due December 31, 2017. On December 31,
2017, the Company renewed the note, together with accrued interest
of $2,573, for a 12-month period. The new note has a Face Value of
$24,012 and is due December 31, 2018. The new note accrues interest
at 12% and is convertible anytime from the date of issuance into
$0.001 par value Common Stock at a 35% discount from market price.
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.
|
$
24,012
|
$
21,439
|
|
|
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
On July 1, 2016,
the Company received monies in exchange
for a note payable
having a Face Value of $55,000 with interest
accruing at 10% is
due April 1, 2017. The Note is convertible after
180
days from issuance into $0.001 par value Common Stock at
a
price 40% below market value.
In December
2016, $6,500 of
the principal was
converted
into 5,000,000 shares
of
$0.001 par
value Common Stock
valued at $20,000 and generating a loss of
$13,500 on
conversion. In January 2017, the remaining principal
amount
of $48,500 together with accrued interest of $3,022 was
converted
into 42,528,125 shares of
$0.001 par value Common
Stock valued at
$128,451 and generating a loss of $76,929
on
conversion.
|
$
-0-
|
$
48,500
|
|
|
|
On February 10,
2017, the Company received $48,000 cash in exchange
for a
note payable having a Face Value of $50,000 with interest
accruing at 8%,
which is due November 20, 2017. The Note is
convertible after
180 days from issuance into $0.001 par value
Common Stock at a
price 35% below market value. In August
2017, the note was
paid off with additional $1,863 in accrued interest and
$15,559 as prepayment penalty
.
|
$
-0-
|
$
-0-
|
|
|
|
On April 1, 2017,
the Company received monies in exchange
for a note payable
having a Face Value of $100,000 Canadian
($79,710 US) with
interest payable quarterly at 9%, which is due
April 1, 2019. The
Note is convertible any time after issuance
into $0.001 par
value Common Stock at
a price of
$0.015 Canadian
(approximately $0.012 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.
|
$
79,710
|
$
-0-
|
|
|
|
On April 26, 2017,
the Company received $63,000 cash in exchange
for a note having a
Face Value of $ 65,000 with interest
accruing at 8%,
which is due April 26, 2018. The Note is convertible
after
180 days from issuance into $0.001 par value Common
Stock
at
a price 35% below market
value.
In August 2017 the
note was paid off
with additional $2,607 in accrued interest and $19,500 as
prepayment penalty
.
|
$
-0-
|
$
-0-
|
|
|
|
On August 3, 2017,
the Company received $76,000 in exchange
for a note payable
having a Face Value of $ 80,000 with interest
accruing at 8%,
which is due August 3, 2018. The 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.
|
$
80,000
|
$
-0-
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
On August 21, 2017,
the Company received $80,000 cash in exchange
for a note payable
having a Face Value of $ 83,000 with interest
accruing at 8% ,
which is due May 30, 2018. The 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.
|
$
83,000
|
$
-0-
|
|
|
|
On September 22,
2017, the Company received $60,000 cash in
exchange for a note
having a Face Value of $ 62,000 with
interest accruing
at 8%, which is due June 30, 2018. The 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.
|
$
62,000
|
$
-0-
|
|
|
|
On October 26,
2017, the Company received $110,000 cash in
exchange for a note
payable having a Face Value of $ 115,000
with interest
accruing at 8%, which is due October 26, 2018. The
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.
|
$
115,000
|
$
-0-
|
|
|
|
On November 14,
2017, the Company received $106,000 cash in
exchange for a note
payable having a Face Value of $ 113,000
with interest
accruing at 8%, which is due November 14, 2018. The
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.
|
$
113,000
|
$
-0-
|
|
|
|
On December 1, 2017
the Company received monies in
exchange for a note
having a Face Value of $ 50,000 Canadian
($39,855 US) with
interest accruing at 8%, due November 30,
2018. The 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.
|
$
39,855
|
$
-0-
|
|
|
|
Total Current
Debt
|
$
596,577
|
$
69,939
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Interest
expense for the years ended December 31, 2017 and 2016 was $79,833
and $34,732, respectively. The balance of interest payable at
December 31, 2017 and 2016 was $9,215 and $9,011, respectively.
Loss on conversion of notes payable for the years ended December
31, 2017 and 2016 was $76,929 and $1,945,898,
respectively.
Note 9 – Notes Payable Related Party
Notes payable to
related parties consist of the following:
|
|
|
|
|
|
A note payable held
by a private individual who subsequently
became a principal
shareholder of the Company having a face
value of $100,000
at December 31, 2016 and a maturity date
of March 31, 2017,
accrues interest at 12%. The Note is
convertible any
time from the date of issuance into $0.001 par
value Common Stock
at a 35% discount from market price. On
March 31, 2017, the
note’s principal balance of $100,000 plus
accrued interest of
$11,715 was renewed for a period of 90 days
under the same
terms and conditions as the original note. The
new note now having
a face value of $111,715 matures on June
30, 2017. On June
30, 2017, the note’s principal balance of
$111,715 plus
accrued interest of $3,342 was renewed for a
period of 90 days
under the same terms and conditions as the
original note. The
new note now having a face value of $115,057
matures on
September 30, 2017. On September 30, 2017, the
note’s
principal balance of $115.057 plus accrued interest of
$3,480
was renewed for a period of 90 days under the same
terms
and conditions as the original note. The new note now
having
a principal balance of $118,537 matures on December
31,
2017. On December 31, 2017 the note plus accrued interest of $3,556
was renewed for a
12-month period
under the same terms and conditions as before.
The new note has a
face value of $122,093 and matures on
December 31, 2018.
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.
|
$
122,093
|
$
100,000
|
|
|
|
In December 2016,
the Company received monies from its
CEO in exchange for
a note payable having a principal amount
of $90,000 Canadian
($67,032 US) with interest at 12% due
March 31, 2017. The
note was convertible any time after
the date of
issuance into $0.001 par value Common Stock
at a price 35%
below market value. This note was
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, together with
accrued interest of
$3,021 Canadian ($2,271 US) and an
additional
principal amount of $3,000 Canadian ($2,247 US)
paid to the Company
on March 28, 2017, was renewed for a
90-day period under
the same terms and conditions as the
original note. The
new note now having a face value of
$96,021 Canadian
($72,198 US) was due on June 30, 2017.
On June 30, 2017,
the note, together with accrued interest of
$2,873 Canadian
($2,005 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
face value of $98,894 Canadian
($76,072US) 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 nonconvertible. The new note
now having a
principal balance of $101,885 Canadian
($81,640 US)
matures December 31, 2017. On December
31, 2017 the note
was renewed for a 12-month period under
the same terms and
conditions as before except that this new
note is unsecured
and nonconvertible. The new note has a
face value of
$104,942 Canadian ($83,649 US) and matures
on December 31,
2018.
|
$
83,649
|
$
67,032
|
|
|
|
Total Current
Related Party Debt
|
$
205,742
|
$
167,032
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Note 10 – Related Party Transactions
In
December 2016, the Company received monies from our CEO in exchange
for a note payable having a principal of $90,000 Canadian ($67,032
US) with interest at 12% due March 31, 2017. The Note is
convertible any time after the date of issuance into shares of our
Common Stock at
a price 35% below
market value. We estimated that the fair value of the convertible
debt approximates the face value, so no value has been assigned to
the beneficial conversion feature.
This Note is
collateralized by all of the assets of the Company. On March 31,
2017, the note, together with accrued interest of $3,021 Canadian
($2,271 US) and an additional principal amount of $3,000 Canadian
($2,247 US) paid to the Company on March 28, 2017, was renewed for
a 90-day period under the same terms and conditions as the original
note. The new note now having a face value of $96,021 Canadian
($72,198 US) was due on June 30, 2017. On June 30, 2017, the note,
together with accrued interest of $2,873 Canadian ($2,005 US), was
renewed for a 90-day period under the same terms and conditions as
the original note except that the new note is nonconvertible. The
new note now having a face value of $98,894 Canadian ($76,072US) 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 nonconvertible. The
new note now having a principal balance of $101,885 Canadian
($81,640 US) matures December 31, 2017. On December 31, 2017, the
note was renewed for a 12-month period under the same terms and
conditions as the original note except that this note is unsecured
and non-convertible. The new note has a face value of $104,942
Canadian ($84,649 US) and matures on December 31,
2018.
A note
payable held by a private individual who subsequently became a
principal shareholder of the Company having a face value of
$100,000 at December 31, 2016 and a maturity date of March 31,
2017, accrues interest at 12%. The Note is convertible any time
from the date of issuance into $0.001 par value Common Stock at a
35% discount from market price. On March 31, 2017, the note’s
principal balance of $100,000 plus accrued interest of $11,715 was
renewed for a period of 90 days under the same terms and conditions
as the original note. The new note now having a face value of
$111,715 matures on June 30, 2017. On June 30, 2017, the
note’s principal balance of $111,715 plus accrued interest of
$3,342 was renewed for a period of 90 days under the same terms and
conditions as the original note. The new note now having a face
value of $115,057 matures on September 30, 2017. On September 30,
2017, the note’s principal balance of $115.057 plus accrued
interest of $3,480 was renewed for a period of 90 days under the
same terms and conditions as the original note. The new note now
having a principal balance of $118,537 matures on December 31,
2017. On December 31, 2017 the note was renewed for a 12-month
period under the same terms and conditions as before. The new note
has a face value of $122,093 and matures on December 31,
2018.
Until
June 1, 2017, the Company’s principal place of business was
located at 469 Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada
H3N R4. This was also the location of the
Company’s former licensor, Advanomics Corporation
(“Advanomics”), who provided this space to the Company
on a rent free basis in 2015 and 2016. Starting January
1, 2017, the Company took over the lease from Advanomics for this
space until it moved to its current location in June
2017.
In
February and April 2016, the Company paid $30,000 and $50,487 to
Advanomics for the balance of 2015 licensing fees.
In 2016, Advanomics Corporation paid
on behalf of the Company $13,725 Canadian in patenting fees.
Advanomics was fully reimbursed by the Company in January
2017.
Dr.
Steve N. Slilaty, the Company’s Chief Executive Officer and a
Director, is an Officer, Director and principal shareholder of
Advanomics.
During
the period ended December 31, 2017, the Company issued to its
Directors and Officers 42,000,000 shares of $0.001 par value Common
Stock valued at $336,000 or $0.008 per share. In addition, the
Directors and Officers were paid an aggregate of $184,271 for their
services in 2017. Of this amount, $147,695 was paid to Advanomics
Corporation, a company controlled by the CEO of the
Company.
During
the period ended December 31, 2016, the Company issued 78,000,000
shares of $0.001 par value Common Stock to the three Company
officers valued at $241,800 or $0.0031 per share. During the same
period, the Company also issued to the Board of Directors
36,000,000 shares of $0.001 par value Common Stock valued at
$252,000 or $0.0078 per share. In addition, the Company paid its
officers $5,597 in cash.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2017 and 2016
Note 11 – Royalties Payable
As part
of a subscription agreement entered into in February 2016, the
Company has an obligation to pay a royalty of 5% of net sales on
one of its generic products (Anastrozole) for a period of three (3)
years from the date of the first sale of that product. As of the
date hereof, the Company has not received revenues from the sale of
this product.
Note 12 – Acquisition of Atlas Pharma Inc.
In
December 2017, the Company issued a payment of $100,500 Canadian
($80,290 US) to Mr. Mohamed Belhai as a deposit towards the
acquisition of Atlas Pharma Inc. On January 1, 2018, the Company
entered into a Share Purchase Agreement with Mr. Mohamed Belhaj and
Atlas Pharma Inc. (the “Atlas Agreement”), wherein the
Company acquired all of the issued and outstanding shares (the
“Shares”) of Atlas Pharma Inc., (“Atlas”)
from Mr. Belhaj. The purchase price for the Shares was $848,000
Canadian (approximately $678,400 US). The purchase price included a
cash payment of $100,500 Canadian ($80,290 US), plus issuance of
20,000,000 shares of the Company’s Common Stock, plus a
promissory note in the principal amount of $450,000 Canadian
(approximately $360,000 US), with interest payable at the rate of
3% per annum. The Company is required to make payments of $10,000
per calendar quarter, due and payable on or before the end of each
such calendar quarter through December 31, 2023.
Note 13 – Subsequent Events
On
January 1, 2018, the Company acquired Atlas Pharma Inc., a
Montreal-based, fully certified analytical chemistry company
dedicated to chemical analysis of pharmaceutical and other
industrial samples. More information about Atlas Pharma is
available at
www.atlaspharmainc.ca
.
On
January 12, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$102,000.
On
February 6, 2018, the Company issued payment in the amount of
$51,613 to pay off approximately half of a note payable dated
August 3, 2017, and on February 12 and 21 the remainder was
converted into a total of 6,555,761 shares of the Company's Common
Stock.
On
February 7, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$150,000.
On
February 16, 2018, the Company issued payment in the amount of
$115,370 to pay off a note payable dated August 21,
2017.
On
February 20, 2018, the Company received monies in exchange for a
convertible note payable having a face value of
$85,000.
On
March 27, 2018, the holder of a convertible note having a face
value of $62,000 elected to convert $15,000 of the outstanding
principal amount into 2,727,273 shares of the Company's Common
Stock, leaving a principal balance of $47,000.