INFORMATION STATEMENT
INTRODUCTION
This
Information Statement is being mailed or otherwise furnished to
shareholders of Sunshine Biopharma, Inc., a Colorado corporation
(the "Company"), on or about ___________ __, 2018, in connection
with a certain shareholder action taken by written consent of the
holders of a majority of our outstanding shares entitled to vote at
a meeting of shareholders to approve a reverse split (the "Reverse
Stock Split") of our issued and outstanding Common Stock, $0.001
par value per share (the "Common Stock") pursuant to which each
twenty (20) shares of our Common Stock issued and outstanding as of
the record date of the Reverse Stock Split will be combined and
consolidated into one (1) share of Common Stock immediately
following the Reverse Stock Split. The number of authorized shares
of our Common Stock shall remain at 3,000,000,000
shares.
Our
Board of Directors approved the Reverse Stock Split on November 27,
2018,
and recommended
that the Reverse Stock Split be approved by our shareholders. The
Reverse Stock Split requires the approval of holders of a majority
of the shares entitled to vote at a shareholder meeting. Under
Colorado law, we are permitted to obtain approval of the Reverse
Stock Split by written consent of the holders of outstanding shares
of voting capital stock having not less than the minimum number of
votes that would be necessary to approve the Reverse Stock Split at
a meeting at which all shares entitled to vote thereon were present
and voted. On November 27, 2018, holders of a majority of the
voting capital stock acted by written consent to approve the
Reverse Stock Split.
We have
elected not to call a special meeting of our shareholders in order
to eliminate the costs of and time involved in holding a special
meeting. Our management has concluded that it is in the best
interests of our Company to address this matter in the manner
stated herein.
Shareholders of
record at the close of business on November 27, 2018, are entitled
to receive this Information Statement. As the Reverse Stock Split
has been duly approved by shareholders holding a majority of our
voting capital stock, approval or consent of the remaining
shareholders is not required and is not being solicited hereby or
by any other means.
The
Reverse Stock Split will become effective upon filing of Articles
of Amendment to our Articles of Incorporation with the Secretary of
State of the State of Colorado (the “Amendment”). We
anticipate that the filing of the Amendment will occur after
dissemination of this Information Statement to our shareholders,
which is expected to occur on or about January 2,
2019.
We have
asked brokers and other custodians, nominees and fiduciaries to
forward this Information Statement to the beneficial owners of our
voting capital stock held of record by such persons and will
reimburse such persons for out-of-pocket expenses incurred in
forwarding such material.
This
Information Statement will serve as written notice to shareholders
pursuant to the Colorado Business Corporation Act.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY
The
date of this Information Statement is December __,
2018.
AMENDMENT TO ARTICLES OF INCORPORATION,
AS AMENDED, TO EFFECT A 20 FOR 1 REVERSE STOCK SPLIT
On
November 27, 2018, our Board of Directors voted to authorize and
recommend that our shareholders approve and effect the Reverse
Stock Split.
Also on
November 27, 2018, shareholders representing a majority of our
voting capital stock outstanding consented in writing to the
Reverse Stock Split. The terms of the Reverse Stock Split provide
for each twenty (20) of the outstanding shares of our Common Stock
on the date of the Reverse Stock Split (the "Old Shares") will be
automatically converted into one (1) share of our Common Stock (the
"New Shares"), thereby reducing the number of shares of our Common
Stock issued and outstanding. The Reverse Stock Split will not
change the par value designation of our Common Stock or change the
number of shares of our Common and Preferred Stock which are
currently authorized for issuance.
The
Reverse Stock Split will become effective upon filing of the
Amendment with the Secretary of State of the State of Colorado, but
our Board of Directors reserves the right to not make such filing
if it deems it appropriate not to do so.
Purpose and Effect of the Amendment
After
discussions with some of our shareholders, as well as discussions
with investment bankers who have worked with our Company, our Board
of Directors believes that the number of issued and outstanding
shares of our Common Stock is disproportionate to our current
balance sheet. In addition, because of the current low price of our
Common Stock, our credibility as a viable business enterprise is
negatively impacted. In this regard, certain investors view
low-priced stock as unattractive or, as a matter of policy, are
precluded from purchasing low-priced securities. However, certain
other investors may be attracted to low-priced stock because of the
greater trading volatility sometimes associated with such
securities. As of the date of this Information Statement, our
Common Stock falls within the definition of a "penny stock" set
forth in Rule 15g-9 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). It is doubtful that the
price of our Common Stock will increase as a result of the Reverse
Stock Split so as to allow the brokerage community to eliminate the
classification of our Common Stock as a "penny stock," which means
that broker-dealers will continue to be required to implement
additional sales practices required in connection with the sale of
our securities. For example, broker-dealers must make a special
suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to a sale of
penny stock. Also, a disclosure schedule must be prepared before
any transaction involving a penny stock, and disclosure is required
about (1) sales commissions payable to both the broker-dealer and
the registered representative; and (2) current quotations for the
securities. Monthly statements are also required to be sent
disclosing recent price information for the penny stock. Because of
these additional obligations, some brokers will not effect
transactions in penny stocks.
Because
brokerage commissions on low-priced stock generally represent a
higher percentage of the stock price than commissions on higher
priced stock, the current share price of our Common Stock can
result in individual stockholders paying transaction costs
(commissions, markups or markdowns) that represent a higher
percentage of their total share value than would be the case if the
share price were substantially higher. This factor also may limit
the willingness of institutions to purchase our Common Stock at its
current price levels.
Our
Board of Directors believes that some potential executives and
other employees are less likely to consider working for a company
with a low stock price, regardless of the size of the
company’s market capitalization. If the Reverse Stock Split
successfully increases the per share price of our Common Stock (of
which there can be no assurance), our Board of Directors believes
this increase could enhance our Company’s ability to attract
and retain key executives and other employees. The reduction in the
number of outstanding shares is expected to increase the bid price
of our Common Stock, although there can be no assurance that the
price will increase in inverse proportion to the ratio of the
Reverse Stock Split ratio.
If our
Common Stock price increases in the future and various aspects of
our business plan are successfully implemented which results in an
increase of our revenue base, we may in the future attempt to cause
our Common Stock to become listed on a national exchange. These
national exchanges have minimum listing and maintenance
requirements. By undertaking the Reverse Stock Split, we believe
that our opportunity to have our Common Stock listed on such a
national stock exchange will be enhanced. However, there can be no
assurances that our revenue base will increase, or that we will
cause an application to be filed to list our Common Stock for
trading on any national exchange, or if we do so, that our
application will be accepted, despite the Reverse Stock Split. The
market price of our Common Stock is also based on factors which may
be unrelated to the number of shares outstanding. These factors
include our performance, general economic and market conditions and
other factors, many of which are beyond our control.
For
these reasons our Board of Directors has chosen to adopt and
recommend the Reverse Stock Split.
The
Reverse Stock Split will affect all of our shareholders uniformly.
We will not issue fractional shares to those shareholders whose
holdings are not divisible by 20, but will round off any fractional
result to the next higher number. After the Effective Date of the
Reverse Stock Split, each stockholder will own a reduced number of
shares of our Common Stock, but will hold the same percentage of
the outstanding shares as such stockholder held prior to the
Effective Date. The number of shares of our Common Stock that may
be purchased upon the exercise of outstanding options or conversion
of outstanding Convertible Notes and the per share exercise or
conversion prices thereof will be adjusted appropriately to give
effect to the Reverse Stock Split as of the Effective
Date.
The
liquidity of our Common Stock may be adversely affected by the
reduced number of shares outstanding after the Reverse Stock Split.
In addition, the Reverse Stock Split will increase the number of
shareholders who own odd-lots. An odd-lot is fewer than 100 shares.
Such shareholders may experience an increase in the cost of selling
their shares and may have greater difficulty in making
sales.
The
Reverse Stock Split will not affect the par value of our Common
Stock. As a result, on the Effective Date, the stated capital on
our balance sheet attributable to our Common Stock will be reduced
in proportion with the exchange ratio for the Reverse Stock Split
and our additional paid-in capital account will be credited with
the amount by which the stated capital is reduced. These accounting
entries will have no impact on total stockholders’ equity.
All share and per share information will be retroactively adjusted
following the Effective Date to reflect the Reverse Stock Split for
all periods presented in future filings under the Exchange Act with
the Securities and Exchange Commission.
As a
result of the Reverse Stock Split, we will have an increased number
of authorized but unissued shares of our Common Stock available.
The Board of Directors has determined that the availability of
additional authorized but unissued shares may be beneficial to our
Company in the future. The availability of additional authorized
shares will allow the Board to issue shares for corporate purposes,
if appropriate opportunities should arise, without further action
by the stockholders or the time delay involved in obtaining
stockholder approval (except to the extent that approval is
otherwise required by applicable law). Such purposes could include
meeting requirements for capital expenditures or working capital
or, depending on the market conditions, effecting future
acquisitions of other businesses through the issuance of
shares.
In
addition, because the Reverse Stock Split will result in an
increased number of authorized but unissued shares of our Common
Stock, it may be construed as having an anti-takeover effect.
Although the Reverse Stock Split is not being proposed by the Board
for this purpose, in the future the Board could, subject to its
fiduciary duties and applicable law, use the increased number of
authorized but unissued shares to frustrate persons seeking to take
over or otherwise gain control of our Company by, for example,
privately placing shares with purchasers who might side with the
Board in opposing a hostile takeover bid. Shares of Common Stock
could also be issued to a holder that would thereafter have
sufficient voting power to assure that any proposal to amend or
repeal our Bylaws or certain provisions of our Articles of
Incorporation would not receive the requisite vote. Such uses of
our Common Stock could render more difficult, or discourage, an
attempt to acquire control of our Company if such transactions were
opposed by the Board.
The
Reverse Stock Split and the other terms of the Amendment will have
the following effects upon our Common Stock:
●
The number of
shares owned by each holder of Common Stock will be reduced by the
ratio of twenty (20) to one (1), reducing the total number of
shares of our Common Stock outstanding from 1,632,980,943 shares to
approximately 81,649,047 shares;
●
The number of
shares of Common Stock we are authorized to issue will remain at
3,000,000,000 shares; and
●
The par value of
our Common Stock will remain the same at $0.001 per
share.
The New
Shares will be fully paid and non-assessable. The Reverse Stock
Split will not change any of the other the terms of our Common
Stock. The New Shares will have the same voting rights and rights
to dividends and distributions and will be identical in all other
respects to the Old Shares. Each shareholder's percentage ownership
of the New Shares will not be altered.
Because
the authorized shares of our Common Stock will not be reduced, the
overall effect will be an increase in authorized but unissued
shares of our Common Stock as a result of the Reverse Stock
Split.
We have
no present intention of seeking to terminate our registration and
our reporting requirements under the Exchange Act.
Manner of Effecting the Reverse Stock Split
The
Reverse Stock Split will be effected by the filing of Articles of
Amendment to our Articles of Incorporation, as amended, with the
Secretary of State of the State of Colorado. The Reverse Stock
Split will become effective on the date of filing the Amendment
unless we specify otherwise (the "Effective Date").
We intend to file the Amendment with the Secretary
of State of the State of Colorado promptly after the twentieth
(20
th
)
day following the date on which this Information Statement is
mailed to the Stockholders. Notwithstanding the foregoing, we must
first notify FINRA of the intended Reverse Stock Split by filing
the Issuer Company Related Action Notification Form no later than
ten (10) days prior to the anticipated record date of such action.
Our failure to provide such notice may constitute fraud under
Section 10 of the Exchange Act.
We
currently expect to file the Amendment on or about January 2,
2019.
As soon
as practicable after the Effective Date, our transfer agent,
Corporate Stock Transfer, Inc., will send a letter of transmittal
to each holder of record of Old Shares outstanding on the Effective
Date. The letter of transmittal will contain instructions for the
surrender of certificates representing the Old Shares. Upon proper
completion and execution of the letter of transmittal and return
thereof, together with certificates representing the Old Shares, a
shareholder will be entitled to receive a certificate representing
the number of the New Shares into which his Old Shares have been
reclassified as a result of the Reverse Stock Split. Shareholders
should not submit any certificates until requested to do so. No new
certificate will be issued to a shareholder until such shareholder
has surrendered his outstanding certificates, together with the
properly completed and executed letter of transmittal. Until so
surrendered, each outstanding certificate representing the Old
Shares will be deemed for all corporate purposes after the
Effective Date to evidence ownership of the New Shares in the
appropriately reduced number.
No Rights of Appraisal
Under
the laws of the State of Colorado, shareholders are not entitled to
appraisal rights with respect to the Amendment, and we will not
independently provide shareholders with any such
right.
Vote Required
The
Amendment requires the approval of the holders of a majority of the
shares entitled to vote at a shareholder meeting on November 27,
2018. Holders of our Common Stock are entitled to one vote per
share on all matters submitted to a vote. There were 1,632,980,943
shares of our Common Stock outstanding as of November 27, 2018 plus
500,000 shares of our Series B Preferred Shares that represent an
aggregate of 500,000,000 votes for a total of 2,132,980,943
eligible votes. On that date, shareholders representing
1,197,568,897 votes (56.15%) entitled to vote at a meeting, which
is a majority of the shares outstanding, consented in writing to
the Amendment.
Certain Federal Income Tax Consequences of the Reverse Stock
Split
The
following is a summary of certain material federal income tax
consequences of the Reverse Stock Split, and does not purport to be
a complete discussion of all of the possible federal income tax
consequences of the Reverse Stock Split. It does not discuss any
state, local, foreign or minimum income or other U.S. federal tax
consequences. Also, it does not address the tax consequences to
shareholders who are subject to special tax rules, such as banks,
insurance companies, regulated investment companies, personal
holding companies, foreign entities, non-resident alien
individuals, broker-dealers and tax-exempt entities. The discussion
is based on the provisions of the United States federal income tax
law as of the date hereof, which is subject to change retroactively
as well as prospectively. This summary also assumes that the Old
Shares were, and the New Shares will be, held as a "capital asset,"
as defined in the Internal Revenue Code of 1986, as amended
(generally, property held for investment). The tax treatment of a
shareholder may vary depending upon the particular facts and
circumstances of such shareholder.
EACH
SHAREHOLDER SHOULD CONSULT WITH SUCH SHAREHOLDER'S OWN TAX ADVISOR
WITH RESPECT TO THE CONSEQUENCES OF THE REVERSE STOCK
SPLIT.
No gain
or loss should be recognized by a shareholder of our Company upon
such shareholder's exchange of Old Shares for New Shares pursuant
to the Reverse Stock Split. The aggregate tax basis of the New
Shares received in the Reverse Stock Split will be the same as the
shareholder's aggregate tax basis in the Old Shares exchanged
therefor. The shareholder's holding period for the New Shares will
include the period during which the shareholder held the Old Shares
surrendered in the Reverse Stock Split.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding ownership
of our Common Stock as of November 27, 2018, by (i) each person
known to us to own beneficially more than 5% of our Common Stock,
(ii) each director, (iii) each executive officer, and (iv) all
directors and executive officers as a group. This information is
exhibited on a pre-reverse split basis. Share ownership is deemed
to include all shares that may be acquired through the exercise or
conversion of any other security immediately or within the next
sixty days. Such shares that may be so acquired are also deemed
outstanding for purposes of calculating the percentage of ownership
for that individual or any group of which that individual is a
member. Unless otherwise indicated, the shareholders listed possess
sole voting and investment power with respect to the shares
shown.
|
Title of Class
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership
|
|
Percent of Common Class
|
|
Percent of Voting Shares
|
|
|
|
|
|
|
|
|
|
|
|
Common
Series B Preferred
|
|
Dr. Steve N. Slilaty
(1)
579 Rue Lajeunesse
Laval, Quebec
Canada H7X 3K4
|
|
332,398,597
(2)
500,000,000
(3)
|
|
20.4%
0%
|
|
15.6%
23.4%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Dr. Abderrazzak Merzouki
(1)
731 Place de l’Eeau Vive
Laval, Quebec
Canada H7Y 2E1
|
|
118,467,000
|
|
7.3%
|
|
5.6%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Camille Sebaaly
(1)
14464 Gouin West, #B
Montreal, Quebec
Canada H9H 1B1
|
|
246,703,300
(4)
|
|
15.1%
|
|
11.6%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All Officers and Directors
As Group (3 persons)
|
|
697,568,897
|
|
42.8%
|
|
56.2%
|
|
(1)
Officer
and Director.
|
|
(2)
Includes
215,014,224 shares held in the name of Advanomics Corporation. Dr.
Slilaty is an officer, director and principal shareholder of
Advanomics Corporation and, as a result, controls the disposition
of these shares.
|
|
(3)
Comprised of
500,000 shares of $0.10 par value Series “B” Preferred
Stock having 1,000 votes per share. The Series “B”
Preferred Stock is non-convertible, non-redeemable, non-retractable
and has a superior liquidation value of $0.10 per share.
|
|
(4)
Includes
129,468,927 shares held in the name of 4019318 Canada, Inc. Mr.
Sebaaly is the sole officer and director of this company and, as a
result, controls the disposition of these shares.
|
ADDITIONAL INFORMATION
We
are subject to the disclosure requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith, file
reports, information statements and other information, including
annual and quarterly reports on Form 10-K and 10-Q, respectively,
with the Securities and Exchange Commission (the
“SEC”). Reports and other information filed by the
Company can be inspected and copied at the public reference
facilities maintained by the SEC at Room 1580, 100 F Street, N.E.,
Washington, DC 20549. Copies of such material can also be obtained
upon written request addressed to the SEC Office of Freedom of
Information and Privacy Act Operations, Mail Stop 2736, Washington,
D.C. 20549 at prescribed rates. In addition, the SEC maintains a
web site on the Internet (http://www.sec.gov) that contains
reports, information statements and other information regarding
issuers that file electronically with the SEC through the
Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”).
The
following document, as filed with the SEC by the Company, is
incorporated herein by reference: Annual Report on Form 10-K for
the fiscal year ended December 31, 2017 and our Quarterly Report on
Form 10-Q for the nine months ended September 30,
2018.
You may request a copy of these filings, at no
cost, by writing Sunshine Biopharma, Inc. at 6500 Trans-Canada
Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5 or by
telephoning the Company at
(514) 426-6161
. Any statement contained in a document that is
incorporated by reference will be modified or superseded for all
purposes to the extent that a statement contained in this
Information Statement (or in any other document that is
subsequently filed with the SEC and incorporated by reference)
modifies or is contrary to such previous statement. Any statement
so modified or superseded will not be deemed a part of this
Information Statement except as so modified or
superseded.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN
ADDRESS
If hard copies of the materials are requested, we
will send only one Information Statement and other corporate
mailings to stockholders who share a single address unless we
received contrary instructions from any stockholder at that
address. This practice, known as “householding,” is
designed to reduce our printing and postage costs. However, the
Company will deliver promptly upon written or oral request a
separate copy of the Information Statement to a stockholder at a
shared address to which a single copy of the Information Statement
was delivered. You may make such a written or oral request by (a)
sending a written notification stating (i) your name, (ii) your
shared address, and (iii) the address to which the Company should
direct the additional copy of the Information Statement, to the
Company at 6500 Trans-Canada Highway, 4th Floor, Pointe-Claire,
Quebec, Canada H9R 0A5 or telephone at
(514)
426-6161
.
If
multiple stockholders sharing an address have received one copy of
this Information Statement or any other corporate mailing and would
prefer the Company to mail each stockholder a separate copy of
future mailings, you may mail notification to, or call the Company
at, its principal executive offices. Additionally, if current
stockholders with a shared address received multiple copies of this
Information Statement or other corporate mailings and would prefer
the Company to mail one copy of future mailings to stockholders at
the shared address, notification of such request may also be made
by mail or telephone to the Company’s principal executive
offices.
This
Information Statement is provided to the holders of our Common
Stock only for information purposes. Please read this Information
Statement carefully.
BY ORDER OF THE BOARD OF DIRECTORS
Dr.
Steve N. Slilaty,
Chairperson of
the Board
and Chief Executive Officer
Montreal,
Canada
_________
__, 2018