I
TEM
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. In April and June 2016 Sunshine Canada
signed licensing agreements for four (4) generic prescription drugs
for the treatment of breast cancer, prostate cancer and BPH (Benign
Prostatic Hyperplasia).
In
January 2018, we acquired all of the issued and outstanding shares
of Atlas Pharma Inc., a Health Canada certified company dedicated
to chemical analysis of pharmaceutical and other industrial
samples.
In
March 2018, we formed NOX Pharmaceuticals, Inc., a wholly owned
Colorado corporation and assigned all of our interest in our
Adva-27a anticancer compound to that company.
In
December 2018, we launched our first over-the-counter Essential
Brand
tm
product, Essential 9
tm
,
a dietary supplement comprised of the nine amino acids which the
human body cannot synthesize. Essential 9
tm
has been authorized for marketing by Health Canada under NPN
80089663.
Effective February
1, 2019, we completed a 20 to 1 reverse split of our $0.001 par
value Common Stock reducing the issued and outstanding shares of
Common Stock from 1,713,046,242 to 85,652,400 (the “Reverse
Stock Split”). All references in this report to our issued
and outstanding Common Stock as well as price per share of our
Common Stock are presented on a post Reverse Stock Split
basis.
Our
principal place of business is located at
6500 Trans-Canada Highway, 4th Floor,
Pointe-Claire, Quebec, Canada H9R 0A5.
Our phone number is
(514) 426-6161 and our website address is
www.sunshinebiopharma.com
.
We have
never 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, 2018 and 2017
During
our fiscal years ended December 31, 2018 we generated revenues of
$447,200 from the operations of our new wholly owned subsidiary,
Atlas Pharma Inc. (“Atlas”), which we acquired on
January 1, 2018. The direct cost for generating these revenues was
$359,300, which is comprised of Atlas related salaries, laboratory
supplies, rent and depreciation. We did not generate any revenues
in 2017 or prior thereto.
General
and administrative expenses for our fiscal year ended December 31,
2018 were $1,222,656, compared to $857,190 during our fiscal year
ended December 31, 2017, an increase of $365,466. The expense
categories that saw an increase included accounting and legal fees,
which increased by $109,406, office expenses by $103,305, and
executive compensation by $234,944. These increases were offset to
some extent by a decrease in consulting fees by $90,768. The
decrease in consulting fees was due to the fact that a substantial
amount of the work required for our various operations was
performed in-house.
We also
incurred $159,420 in interest expense and $871,726 in losses from
debt conversion during the year ended December 31, 2018, compared
to $104,829 in interest expense and $76,929 in losses from debt
conversion during the similar period in 2017. The increase in
interest expense and losses from debt conversion in 2018 was due to
an increase in issuance of convertible debt instruments in order to
finance operations.
As a
result, we incurred a net loss of $2,156,155 (approximately $0.04
per share) for the year ended December 31, 2018, compared to a net
loss of $1,040,236 (approximately $0.02 per share) during the year
ended December 31, 2017.
Liquidity and Capital Resources
As of
December 31, 2018, we had cash and cash equivalents of
$115,216.
Net
cash used in operating activities was $512,806 during our fiscal
year ended December 31, 2018, compared to $543,520 during our
fiscal year ended December 31, 2017. 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 $13,908 during our fiscal
year ended December 31, 2018. For the fiscal year ended
December 31, 2017, cash flows used in investing activities were
$84,008 arising primarily out of the purchase of laboratory
equipment. Net cash flows provided by financing
activities totaled $527,640 in 2018, compared to $670,705 during
our fiscal year ended December 31, 2017.
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
2018:
●
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 increase 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. On
December 31, 2018 the note, together with interest of $9,227, was
renewed for a 12-month period under the same terms and conditions
as the previous note. The new has a face value of $117,535 Canadian
($86,118 US) and matures on December 31, 2019.
●
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. On December 31, 2018 the note, together with accrued interest
of $14,651was renewed for a 12-month period. The new Note has a
face value of $136,744 and matures on December 31, 2019. The new
note is nonconvertible.
●
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 December 31, 2018 we renewed this note, together with accrued
interest of $2,881, for a 12-month period. The new note has a Face
Value of $26,893 and accrues interest at 12%. This new note is not
convertible.
●
On
January 1, 2018, as part of the acquisition of Atlas Pharma Inc.,
we issued a note payable in the amount of $450,000 Canadian
($358,407 US) and accruing interest at the rate of 3% per annum.
The note is due on December 31, 2023. Payments on this note are
$10,000 Canadian (approximately $8,000 US) per quarter. The
outstanding principal balance at December 31, 2018 was $310,079.
The note is not convertible but is secured by our Atlas Pharma Inc.
shares
.
●
On
January 12, 2018 we received monies in exchange for a Note Payable
having a Face Value of $102,000 with interest accruing at 8%, which
was due October 30, 2018. The Note is convertible after 180 days
from issuance into shares of our Common Stock at a price 35% below
market value. The Note, together with accrued interest of $4,080
was converted in 2018 into 3,569,333 shares of our Common Stock.
.
●
On
February 7, 2018, we received monies in exchange for a Note Payable
having a Face Value of $150,000 with interest accruing at 8%, which
became due February 7, 2019. The note was paid off in 2018 in part
by cash of $48,000 and the remainder, together with accrued
interest of $5,073, was converted into 5,710,642 shares of our
Common Stock.
●
On
February 20, 2018, we received monies in exchange for a Note
Payable having a Face Value of $85,000 with interest accruing at
8%, which became due November 30, 2018. The Note, together with
accrued interest of $3,400, was converted in 2018 into 4,376,238
shares of our Common Stock.
●
On May
29, 2018, we received monies in exchange for a Note Payable having
a Face Value of $26,750 with interest accruing at 8%, which became
due February 29, 2019. The note, together with accrued interest of
$1,353, was converted into 4,003,265 shares of our Common
Stock.
●
On June
27, 2018, we received monies in exchange for a Note Payable having
a Face Value of $53,000 with interest accruing at 8%, which is due
April 15, 2019. The Note, together with accrued interest of $5,332,
was paid by cash on January 1, 2019.
●
On
August 17, 2018, we received monies in exchange for a Note Payable
having a Face Value of $53,000 with interest accruing at 8%, which
is due April 15, 2019. The Note is convertible after 180 days from
issuance into shares of our Common Stock at a price 35% below
market value. Interest accrued at December 31, 2018 was $1,557. We
estimate that the fair value of this convertible debt approximates
the face value, so no value has been assigned to the beneficial
conversion feature. Any gain or loss will be recognized at
conversion.
●
On
September 10, 2018, we received monies in exchange for a Note
Payable having a Face Value of $20,000 with interest accruing at
8%, which is due April 15, 2019. The Note is convertible after 180
days from issuance into shares of our Common Stock at a price 35%
below market value. Interest accrued at December 31, 2018 was $487.
We estimate that the fair value of this convertible debt
approximates the face value, so no value has been assigned to the
beneficial conversion feature. Any gain or loss will be recognized
at conversion
.
●
On
September 10, 2018, we received monies in exchange for a Note
Payable having a Face Value of $16,500 with interest accruing at
8%, which is due April 15, 2019. The Note is convertible after 180
days from issuance into shares of our Common Stock at a price 35%
below market value. Interest accrued at December 31, 2018 was $401.
We estimate that the fair value of this convertible debt
approximates the face value, so no value has been assigned to the
beneficial conversion feature. Any gain or loss will be recognized
at conversion.
●
On
October 23, 2018, we received monies in exchange for a Note Payable
having a Face Value of $90,000 with interest accruing at 8%, which
is due October 23, 2019. The Note is convertible after 180 days
from issuance into shares of our Common Stock at a price 35% below
market value. Interest accrued at December 31, 2018 was $1,361. We
estimate that the fair value of this convertible debt approximates
the face value, so no value has been assigned to the beneficial
conversion feature. Any gain or loss will be recognized at
conversion.
●
On
December 24, 2018, we received monies in exchange for a Note
Payable having a Face Value of $87,000 with interest accruing at
8%, which is due October 23, 2019. The Note is convertible after
180 days from issuance into shares of our Common Stock at a price
35% below market value. Interest accrued at December 31, 2018 was
$153. We estimate 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.
●
During
the fiscal year ended December 31, 2018, we issued an aggregate of
39,715,488 shares of our Common Stock as follows:
o
1,000,000 shares
for the acquisition of Atlas Pharma Inc.
o
1,456,737 shares
for the purchase of laboratory and generic drugs warehouse
equipment valued at $174,808
o
9,750,000 shares
valued at $600,300 as compensation to our Directors and
Officers
o
632,500 shares for
services rendered to us by third parties valued at
$83,400
o
26,876,251 valued
at $1,589,099 shares in connection with the conversion of $684,318
in debt and interest of $32,808 resulting in a $871,973 loss on
conversion
We
relied upon the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, to issue the
respective shares.
We are
not generating significant 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
proprietary drug development program, generic pharmaceuticals
business, dietary supplements sales, and analytical chemistry
operations. We intend to raise funds through private
placements of our Common Stock and/or debt financing. We estimate
that we will require approximately $10 million ($1 million for the
generic pharmaceutical operations, $1 million for expansion of the
analytical chemistry operations, $1 million for the development of
dietary supplements sales and $7 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 in order to provide the funding we have estimated we need
to implement our business plan (the “Offering”). The
Offering, including a six-month extension, expired on August 31,
2018 without any funds having been raised. We are currently in
discussion with various investment groups for financing. There are
no assurances that we will be successful in raising any
funds.
Our
cost to continue operations 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,
2018.
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 ASC 840 “
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
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.
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.
I
TEM 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, 2018 and 2017
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, 2018 and 2017,
the related consolidated statements of operations and comprehensive
loss, shareholders' 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, 2018 and 2017 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.
Going Concern Uncertainty
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’s limited
operations and Working Capital deficit raise substantial doubt
about its ability to continue as a going concern. 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 audit. 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 audits to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or
fraud.
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
12, 2019
Sunshine Biopharma, Inc.
|
|
|
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
Current
Assets:
|
|
|
Cash
and cash equivalents
|
$
115,216
|
$
107,532
|
Accounts
receivable
|
94,955
|
-
|
Prepaid
expenses
|
1,341
|
9,667
|
|
|
|
Total
Current Assets
|
211,512
|
117,199
|
|
|
|
Equipment
(net of $57,964 and $9,132 depreciation)
|
269,362
|
59,996
|
|
|
|
Patents
(net of $58,918 amortization and $556,120 impairment)
|
-
|
-
|
|
|
|
Non-Current
Asset:
|
|
|
Goodwill
|
665,697
|
|
Deposits
|
-
|
80,290
|
|
|
|
|
$
1,146,571
|
$
257,485
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
Liabilities:
|
|
|
Current
portion of notes payable
|
419,663
|
516,867
|
Current
portion of notes payable - Related party
|
243,094
|
205,742
|
Related
party advances
|
49,349
|
|
Accounts
payable & accrued expenses
|
191,080
|
19,314
|
|
9,291
|
9,215
|
|
|
|
|
912,477
|
751,138
|
|
|
|
Long-Term
Liabilities - Related party note payable
|
289,847
|
79,710
|
|
|
|
TOTAL
LIABILITIES
|
1,202,324
|
830,848
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
Preferred Stock, Series A, $0.10 par value per share; Authorized
850,000 shares;
Issued
and outstanding -0- shares at December 31, 2018 and
2017.
|
-
|
-
|
|
|
|
Preferred Stock, Series B $0.10 par value per share; Authorized
500,000 Shares;
Issued
and outstanding 500,000 at December 31, 2018 and 2017.
|
50,000
|
50,000
|
|
|
|
Common Stock, $0.001 par value per share; Authorized 3,000,000,000
Shares;
Issued
and outstanding 85,652,400 and 45,936,825 at December 31, 2018 and
2017, respectively
|
85,652
|
45,936
|
Reserved
for issuance 97,321,836 At December 31, 2018
|
|
|
|
|
|
Capital
paid in excess of par value
|
15,586,678
|
12,948,387
|
|
|
|
Accumulated
other comprehesive Income (Loss)
|
(3,738
)
|
504
|
|
|
|
|
(15,774,345
)
|
(13,618,190
)
|
|
|
|
TOTAL
SHAREHOLDERS' DEFICIT
|
(55,753
)
|
(573,363
)
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' DEFICIT
|
$
1,146,571
|
$
257,485
|
See Accompanying Notes To These Financial Statements.
Sunshine Biopharma, Inc.
|
|
|
Consolidated Statement Of Operations and Comprehensive
Loss
|
|
|
|
|
|
|
Revenues
|
$
447,200
|
$
-
|
|
391,081
|
-
|
|
|
|
|
56,119
|
-
|
|
|
|
General
& Administrative Expenses:
|
|
|
Accounting
|
153,889
|
81,643
|
Legal
|
113,068
|
75,908
|
Consulting
|
36,245
|
127,013
|
Office
|
149,031
|
45,726
|
Officer
& Director remuneration
|
755,215
|
520,271
|
Research
& Development
|
12,800
|
-
|
Amortization
& Depreciation
|
2,408
|
6,629
|
|
|
|
Total
General & Administative
|
1,222,656
|
857,190
|
|
|
|
Income
(Loss) from Operations
|
(1,166,537
)
|
(857,190
)
|
|
|
|
Other
Expenses:
|
|
|
Interest
expense
|
(159,420
)
|
(104,829
)
|
Loss
on conversion of notes payable
|
(871,726
)
|
(76,929
)
|
Gain
(Loss) from foreign exchange transactions
|
41,528
|
(1,288
)
|
|
|
|
Total
Other Expenses
|
(989,618
)
|
(183,046
)
|
|
|
|
Net
(loss)
|
$
(2,156,155
)
|
$
(1,040,236
)
|
|
|
|
Basic
Gain (Loss) per Common Share
|
$
(0.04
)
|
$
(0.02
)
|
|
|
|
Weighted
Average Common Shares Outstanding
|
60,936,164
|
43,634,280
|
|
|
|
Net
Income (Loss)
|
$
(2,156,155
)
|
$
(1,040,236
)
|
|
|
|
Unrealized
Comprehensive Gain (Loss) from foreign exchange
transactions
|
(4,242
)
|
110
|
|
|
|
Comprehensive
Income (Loss)
|
(2,160,397
)
|
(1,040,126
)
|
|
|
|
Basic
(Loss) per Common Share
|
(0.04
)
|
(0.02
)
|
|
|
|
Weighted
Average Common Shares Outstanding
|
60,936,164
|
43,634,280
|
See Accompanying Notes To These Financial
Statements.
Sunshine Biopharma, Inc.
|
|
|
Consolidated Statement Of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Operating Activities:
|
|
|
Net
(Loss)
|
$
(2,156,155
)
|
$
(1,040,236
)
|
Depreciation
and amortization
|
49,361
|
6,629
|
Foreign
exchange gain
|
(42,399
)
|
|
Stock
issued for services
|
676,100
|
427,400
|
Loss
on conversion of notes payable
|
871,973
|
76,929
|
Stock
issued for payment of interest
|
33,977
|
3,022
|
Interest
forgiven
|
(247
)
|
-
|
Increase
(decrease) in accounts receivable
|
(15,447
)
|
|
Increase
(decrease) in prepaid expenses
|
8,326
|
(8,660
)
|
Increase
(decrease) in Accounts Payable
|
61,629
|
(8,808
)
|
Increase
(decrease) in interest payable
|
76
|
204
|
|
|
|
Net
Cash Flows (Used) in Operations
|
(512,806
)
|
(543,520
)
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
Cash
received from purchase of subsidiary
|
4,942
|
|
Purchase
equipment
|
(18,850
)
|
(3,718
)
|
Deposits
on business acquisition
|
-
|
(80,290
)
|
|
|
|
Net
Cash Flows (Used) in Investing Activities
|
(13,908
)
|
(84,008
)
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
Proceed
from note payable
|
609,885
|
660,565
|
Note
payable - Interest expense
|
26,759
|
33,977
|
Payment
of notes payable
|
(194,184
)
|
(115,000
)
|
Advances
from related parties
|
29,930
|
2,251
|
Note
payable used to pay expenses
|
36,500
|
|
Note
payable used to pay origination fees & interest
|
18,750
|
25,000
|
Sale
of common stock
|
-
|
63,912
|
|
|
|
Net
Cash Flows Provided by Financing Activities
|
527,640
|
670,705
|
|
|
|
Net
Increase (Decrease) In Cash and Cash Equivalents
|
926
|
43,177
|
Foreign
currency translation adjustment
|
6,758
|
6,902
|
Cash
and cash equivalents at beginning of period
|
$
107,532
|
$
57,453
|
|
|
|
Cash
and cash equivalents at end of period
|
$
115,216
|
$
107,532
|
|
|
Supplementary Disclosure of Cash Flow Information:
|
|
Cash
paid for interest
|
$
23,496
|
$
21,900
|
Stock
issued for acquisition of Atlas Pharma Inc.
|
$
238,000
|
$
-
|
Stock
issued for services
|
$
676,100
|
$
427,400
|
Stock
issued for note and accrued interest conversions
|
$
1,589,099
|
$
128,451
|
Stock
issued to buy equipment
|
$
174,808
|
$
56,700
|
Loan
issued for interest
|
$
45,509
|
$
58,977
|
See Accompanying Notes To These Financial
Statements.
Sunshine Biopharma, Inc.
|
|
|
|
|
|
|
|
|
Statement of Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2016
|
38,469,993
|
$
38,470
|
$
12,279,390
|
500,000
|
$
50,000
|
$
394
|
$
(12,577,954
)
|
$
(209,700
)
|
|
|
|
|
|
|
|
|
|
Common stock issued for
cash
|
1,700,000
|
1,700
|
62,212
|
|
|
|
|
63,912
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
3,090,217
|
3,090
|
424,310
|
|
|
|
|
427,400
|
|
|
|
|
|
|
|
|
|
Common stock issued for
equipment
|
550,208
|
550
|
56,150
|
|
|
|
|
56,700
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of notes payable
|
|
|
|
|
|
|
|
|
and payment of
interest
|
2,126,406
|
2,126
|
126,325
|
|
|
|
|
128,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
110
|
(1,040,236
)
|
(1,040,126
)
|
Balance at
December 31, 2017
|
45,936,825
|
$
45,936
|
$
12,948,387
|
500,000
|
$
50,000
|
$
504
|
$
(13,618,190
)
|
$
(573,363
)
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
acquisition of Atlas Pharma, Inc.
|
1,000,000
|
1,000
|
237,000
|
|
|
|
|
238,000
|
|
|
|
|
|
|
|
|
|
Common stock issued for
services
|
10,382,500
|
10,383
|
665,718
|
|
|
|
|
676,100
|
|
|
|
|
|
|
|
|
|
Common stock issued for
equipment
|
1,456,737
|
1,457
|
173,351
|
|
|
|
|
174,808
|
|
|
|
|
|
|
|
|
|
Common stock issued for the
reduction of notes payable
and payment of
interest
|
26,876,338
|
26,876
|
1,562,223
|
|
|
|
|
1,589,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
-
|
-
|
-
|
|
|
(4,242
)
|
(2,156,155
)
|
(2,160,397
)
|
Balance at
December 31, 2018
|
85,652,400
|
$
85,652
|
$
15,586,678
|
500,000
|
$
50,000
|
$
(3,738
)
|
$
(15,774,345
)
|
$
(55,753
)
|
See Accompanying Notes To These Financial
Statements.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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 July
25, 2014, the Company formed a Canadian wholly owned subsidiary,
Sunshine Biopharma Canada Inc., for the purposes of offering
generic prescription drugs and over-the-counter dietary
supplements.
On
January 1, 2018, the Company acquired Atlas Pharma Inc., a Health
Canada certified Canadian company offering chemical analysis of
pharmaceutical and other industrial samples.
On
March 23, 2018, the Company formed NOX Pharmaceuticals, Inc., a
Colorado company that now holds all of the patents and intellectual
property pertaining to Sunshine Biopharma Inc.’s proprietary
drugs including Adva-27a, a multi-purpose anti-tumor compound
targeted for the treatment of multidrug resistant
cancer.
On
December 17, 2018, the Company launched its first over-the-counter
product, Essential 9
tm
,
a dietary supplement comprised of the nine amino acids which the
human body cannot synthesize. Essential 9
tm
has been authorized for marketing by Health Canada under NPN
80089663.
The
following are Sunshine Biopharma, Inc.’s
subsidiaries:
●
NOX Pharmaceuticals
Inc., a wholly owned Colorado company;
●
Sunshine Biopharma
Canada Inc., a wholly owned Canadian company; and
●
Atlas Pharma Inc.,
a wholly owned Canadian company.
Effective
February 1, 2019, the Company completed a 20 to 1 reverse split of
its $0.001 par value Common Stock reducing the issued and
outstanding shares of Common Stock from 1,713,046,242 to 85,652,400
(“Reverse Stock Split”).
The
financial statements reflect the Reverse Stock Split on a
retroactive basis and 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.
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.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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.
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 $115,216 and
$107,532 as of December 31, 2018 and December 31, 2017,
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, 201
8
and 201
7
, 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
|
INTELLECTUAL PROPERTY RIGHTS - PATENTS
The
cost of patents acquired is capitalized and is amortized over the
remaining life of the 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.
The
Company’s management determined that the expected cash flows
would be less than the carrying amount of certain intangible
assets; therefore an impairment loss was recognized in 2016. The
impairment loss was calculated as the amount by which the carrying
amount of the intangible assets exceeded 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.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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, 2018
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 2015 through
2017 tax years remain open for examination by the tax authorities
under the normal three-year statute of limitations.
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 subsidiaries 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 and trade
receivables. The Company places its cash equivalents with high
credit quality financial institutions.
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, 2018 and 2017, 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).
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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.
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, 2018 and
2017.
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.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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.
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, 2018 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, 2018 and 2017.
COMMON STOCK
The
Company completed a 20 to 1 reverse stock split of the $.001 par
value Common Stock affective February 1, 2019. All shares in this
filing have been restated to reflect the 20 to 1 reverse
split.
REVENUE RECOGNITION
As of
January 1, 2018, the Company adopted ASU No. 201409, “Revenue
from Contracts with Customers” (ASU 201409). Under the new
guidance, an entity will recognize revenue to depict the transfer
of promised goods or services to customers at an amount that the
entity expects to be entitled to in exchange for those goods or
services. A five-step model has been introduced for an entity to
apply when recognizing revenue. The new guidance also includes
enhanced disclosure requirements. The guidance was effective
January 1, 2018 and was applied on a modified retospective basis.
The adoption did not have an impact on the Company's financial
statements. All of the revenues of the Company are generated by
Atlas Pharma Inc., the Company's wholly owned Canadian subsidiary,
which provides laboratory testing services. Performance obligations
for testing services are recognized as revenue at a point in time
on the date results are delivered to a customer which is when
control is transferred.
Local
governmental regulations require that companies recognize revenues
upon completion of the work by issuing an invoice and remitting the
applicable sales taxes (GST and QST) to the appropriate government
agency. Atlas Pharma Inc.'s revenue recognition policy is in
compliance with these local regulations.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In
February 2016, the FASB issued Accounting Standards Update No.
2016-02, “Leases (Topic 842)” (“ASU
2016-02”). ASU 2016-02 will require lessees to recognize on
the balance sheet the assets and liabilities for the rights and
obligations created by those leases. Under ASU 2016-02, a lessee
will be required to recognize assets and liabilities for leases
with terms of more than 12 months. Lessor accounting remains
substantially similar to current GAAP. In addition, disclosures of
leasing activities are to be expanded to include qualitative along
with specific quantitative information. ASU 2016-02 will be
effective in fiscal years beginning after December 15, 2018 (with
early adoption permitted). ASU 2016-02 mandates a modified
retrospective transition method. The Company is currently
evaluating the potential impact of adopting this guidance on our
consolidated financial statements.
DIRECTOR AND OFFICER COMPENSATION
For the
period ended December 31, 2018, the Company issued 4,050,000 shares
of par value $0.001 Common Stock valued at $429,300 or $0.106 per
share and 5,700,000 shares of par value $0.001 Common Stock to the
Board of Directors valued at $171,000 or $0.03 per share. During
the year ended December 31, 2018 the Directors and officers were
paid $154,915 in cash. Of this amount, $85,000 was paid to
Advanomics Corporation, a company controlled by the CEO of the
Company.
For the
period ended December 31, 2017, the Company issued 2,100,000 of par
value $0.001 Common Stock to the three Company officers valued at
$336,000 or $0.16 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.
LEGAL FEES
During
the years ended December 31, 2018 and 2017, the legal fees incurred
were related to services provided to the Company to assist with its
regulatory requirements with the Securities and Exchange
Commission, patenting costs and one ongoing
litigation.
DATE OF MANAGEMENT’S REVIEW
Subsequent
events have been evaluated through April 12, 2019, which is the
date the Financial Statements were available to be
issued.
Note 3 – Going Concern
In the
course of its life the Company has had limited operations and
Working Capital deficit. This raises 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.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
Note 4 – Patents
The
following is a summary of the patents held by the Company at
December 31, 2018 and 2017:
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 4,048,449 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 12,016,823 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.
In July
2016, the Company issued 16,065,271 shares of $0.001 par value
Common Stock in exchange for the aforementioned patents related
notes payable totaling $835,394. In 2016, the remaining value of
these patents was impaired. The Company is however continuing
development of the Adva-27a anticancer drug covered by these
patents.
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, 2018 and December 31, 2017, the Company has
issued and outstanding a total of 85,652,
400
and 45,936,825 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. Effective February 1, 2019, the Company completed a
20 to 1 reverse split of its $0.001 par value Common Stock. All
stock and price per share amounts in this report have been restated
to reflect the 20 to 1 reverse split.
During
the fiscal year ended December 31, 2018, the Company issued an
aggregate of 39,715,575 shares of its Common Stock as
follows:
●
1,000,000 shares
for the acquisition of Atlas Pharma Inc.
●
1,456,737 shares
for the purchase of laboratory and generic drugs warehouse
equipment valued at $174,808
●
9,750,000 shares
valued at $600,300 as compensation to the Company’s Directors
and Officers
●
632,500
shares for services rendered to the Company by third parties valued
at $75,800
●
26,876,338 shares
valued at $1,589,099 connection with the conversion of $684,318 in
debt and interest of $32,808 resulting in a $871,973 loss on
conversion
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
During
the fiscal year ended December 31, 2017, the Company issued an
aggregate of 7,466,832 shares of its Common Stock as
follows:
●
1,700,000 shares
for cash in the amount of $100,000 Canadian or $78,312
US
●
550,208
shares for the purchase of laboratory and generic drugs warehouse
equipment valued at $56,700
●
2,400,000 shares
valued at $336,000 as compensation to the Company’s Directors
and Officers
●
690,218
shares for services rendered to the Company by third parties valued
at $77,000
●
2,126,406 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.
The
Company has declared no dividends since inception.
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
|
$
(2,156,155
)
|
$
(1,040,236
)
|
Basic weighted
average outstanding shares of Common
Stock
|
60,936,164
|
43,634,280
|
Dilutive effects of
common share equivalents
|
-0-
|
-0-
|
Dilutive weighted average
outstanding shares of common
stock
|
60,936,164
|
43,634,280
|
Net
(loss) attributable to Common Stock
|
$
(0.04
)
|
$
(0.02
)
|
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 subsidiaries, Sunshine Biopharma
Canada Inc. and Atlas Pharma 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.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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:
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
|
$
12,156,020
|
$
2,997,675
|
$
10,611,921
|
$
3,932,778
|
Net
operating loss Canada
|
298,661
|
80,041
|
266,498
|
71,421
|
Total
|
12,454,681
|
3,077,716
|
10,878,419
|
4,004,199
|
Valuation
allowance
|
(12,454,681
)
|
(3,077,716
)
|
(10,878,419
)
|
( 4,004,199
)
|
Total
deferred tax asset
|
-0-
|
-0-
|
-0-
|
-0-
|
Net
deferred tax asset
|
-0-
|
-0-
|
-
|
-
|
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, 2018 and December 31, 2017, the Company had
approximately $12,454,681 and $10,878,419 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 $3,077,716 and $4,004,199 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,
2018 and December 31, 2017 was approximately $926,483 and $342,693,
respectively
.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
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
|
21.00
%
|
34.00
%
|
State income tax rate,
net of federal benefit
|
4.12
%
|
3.06
%
|
|
25.12
%
|
37.06
%
|
|
|
|
|
0.00
%
|
0.00
%
|
Net
operating loss for which no
tax
benefit is currently available
|
-25.12
%
|
-37.06
%
|
|
0.00
%
|
0.00
%
|
|
|
|
Canada Federal statutory rate
|
15.00
%
|
15.00
%
|
|
11.80
%
|
11.80
%
|
|
26.80
%
|
26.80
%
|
|
|
|
Net operating loss use
d
(Canada)
|
0.00
%
|
0.00
%
|
Net
operating loss for which no tax
benefit
is currently available
(Canada)
|
-26.80
%
|
-26.80
%
|
|
0.00
%
|
0.00
%
|
The
Company’s income tax filings are subject to audit by various
taxation authorities. The Company’s open audit periods are
2015, 2016, and 2017, although, the statute of limitations for the
2015 tax year will expire effective March 15, 2019. In evaluating
the Company’s provisions and accruals, future taxable income,
and reversal of temporary differences, interpretations and tax
planning strategies are considered. The Company believes its
estimates are appropriate based on current facts and
circumstances.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
Note 8 – Notes Payable
Notes
payable consist of the following:
|
|
|
|
|
|
A Note Payable
having a Face Value of $24,012 at December 31, 2016 and accruing
interest at 12% was due December 31, 2017 (“2016
Note”). On December 31, 2017, the Company renewed the 2016
Note, together with accrued interest of $2,573, for a 12-month
period (“2017 Note”). On December 31, 2018 the Company
renewed the 2017 Note, together with accrued interest of $2,881,
for a 12-month period (“2018 Note”). The 2018 Note has
a Face Value of $26,893 and accrues interest at 12%. The 2018 Note
is nonconvertible.
|
$
26,893
|
$
24,012
|
|
|
|
On January 12, 2018
the Company received monies in exchange for a Note Payable having a
Face Value of $102,000 with interest accruing at 8% is due October
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 Note, together with
accrued interest of $4,080 was converted in 2018 into 3,569,333
shares of Common Stock valued at $166,085 resulting in a loss of
$60,005.
|
$
-0-
|
-0-
|
|
|
|
On February 7,
2018, the Company received monies in exchange for a Note Payable
having a Face Value of $150,000 with interest accruing at 8% is due
February 7, 2019. The Note is convertible after 180 days from
issuance into $0.001 par value Common Stock at
a price 35% below market value.
The note
was paid off in 2018 in part by cash of $48,000 and the remainder,
together with accrued interest of $5,073, was converted into
5,710,642 shares of Common Stock valued at $183,411 resulting in a
loss of $76,338.
|
$
-0-
|
$
-0-
|
|
|
|
On February 20,
2018, the Company received monies in exchange for a Note Payable
having a Face Value of $85,000 with interest accruing at 8% is 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 Note,
together with accrued interest of $3,400, was converted in 2018
into 4,376,238 shares of Common Stock valued at $281,663 resulting
in a loss of $193,263.
|
$
-0-
|
$
-0-
|
|
|
|
On May 29, 2018,
the Company received monies in exchange for a Note Payable having a
Face Value of $26,750 with interest accruing at 8% is due February
29, 2019. The Note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
The note, together with
accrued interest of $1,353, was converted into 4,003,265 shares of
Common Stock valued at $192,157 resulting in a loss of
$164,054.
|
$
-0-
|
$
-0-
|
|
|
|
On June 27, 2018,
the Company received monies in exchange for a Note Payable having a
Face Value of $53,000 with interest accruing at 8% is due April 15,
2019. The Note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35%
below market value.
Interest accrued at
December 31, 2018 was $2,137. We estimate 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.
|
$
53,000
|
$
-0-
|
|
|
|
On August 17, 2018,
the Company received monies in exchange for a Note Payable having a
Face Value of $53,000 with interest accruing at 8% is due April 15,
2019. The Note is convertible after 180 days from issuance into
$0.001 par value Common Stock at
a
price 35% below market value.
Interest accrued at December
31, 2018 was $1,557.
We estimate 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.
|
$
53,000
|
$
-0-
|
|
|
|
On September 10,
2018, the Company received monies in exchange for two Notes Payable
having an aggregate Face Value of $36,500 with interest accruing at
8% are due June 20, 2019. Interest accrued at December 31, 2018 was
$888.
|
$
36,500
|
$
-0-
|
|
|
|
On October 23,
2018, the Company received monies in exchange for a Note Payable
having a Face Value of $90,000 with interest accruing at 8% is due
October 23, 2019. The Note is convertible after 180 days from
issuance into $0.001 par value Common Stock at
a
price 35%
below market value.
Interest accrued at December 31, 2018
was $1,361.
We estimate 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.
|
$
90,000
|
$
-0-
|
On December 24,
2018, the Company received monies in exchange
for a
Note Payable having a Face Value of $87,000 with
interest
accruing
at 8% is due October 23, 2019. The Note is convertible after 180
days from issuance into $0.001 par value Common Stock at
a
price
35% below market value.
Interest accrued at December 31,
2018 was $153.
We estimate 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.
|
$
87,000
|
$
-0-
|
|
|
|
On April 1, 2017 the Company received monies in
exchange
for a Note Payable having a Face Value of
$100,000 Canadian
($73,270US) at December 31, 2018 and ($79,710 US)
at December 31, 2017 with interest payable quarterly at
9%
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.
We
estimate 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.
|
$
73,270
|
$
79,710
|
|
|
|
On August 3, 2017 the, Company received monies in
exchange
for a Note Payable having a Face Value of $
80,000 with interest
accruing at 8% 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. A
principal amount of
$40,000 of
this note plus accrued interest of $1,712 was
converted in 2018 into 327,788 shares of Common
Stock valued at $70,507 resulting in a loss of $28,795. The
remaining principal
amount of $40,000 together with accrued interest
of $1,613 was paid in cash reducing the balance to
$-0-
|
$
-0-
|
$
80,000
|
|
|
|
On August 21, 2017 the Company received monies in
exchange
for a Note Payable having a Face Value of $
83,000 with interest
accruing at 8% 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 Note, plus accrued
interest of $3,419, was paid off in 2018.
|
$
-0-
|
$
83,000
|
|
|
|
On September 22,
2017 the Company received monies in exchange for a note having a
Face Value of $ 62,000 with interest accruing at 8% 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 note, together with
accrued interest of $2,480 was converted in 2018 into 790,590
shares of Common Stock valued at $107,056 resulting in a loss of
$42,576.
|
$
-0-
|
$
62,000
|
|
|
|
On October 26, 2017 the Company received monies
in
exchange for a Note Payable having a Face Value
of $ 115,000
with interest accruing at 8% 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 note, together with
accrued interest of $6,126, was converted in
2018
into
2,921,146 shares of Common Stock valued at $208,661 resulting in a
loss of $87,535.
|
$
-0-
|
$
62,000
|
|
|
|
On November 14, 2017, the Company received monies
in
exchange for a Note Payable having a Face Value
of $ 113,000
with interest accruing at 8% 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 Note, together with
accrued interest of $7,018 was
converted in 2018 into 4,917,251 shares of Common
Stock valued at $351,999 resulting in a loss of
$231,981.
|
$
-0-
|
$
115,000
|
|
|
|
On December 1, 2017, the Company received monies
in
exchange for a Note Payable having a Face Value
of $50,000
Canadian ($38,568 US) at December 31, 2018 and
($39,855 US) at December 31, 2017 with interest accruing at 8% is
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 Note, together with accrued
interest of $1,566 was converted in 2018 into 260,000 shares of
Common
Stock valued at $27,560 resulting in a gain of
$12,574.
|
$
-0-
|
$
113,000
|
|
|
|
Total
Notes Payable
|
$
419,663
|
$
596,577
|
Interest
expense for the years ended December 31, 2018 and 2017 was $159,420
and $79,674, respectively. The balance of interest payable at
December 31, 2018 and 2017 was $9,291 and $9,215, respectively.
Loss on conversion of notes payable for the years ended December
31, 2018 and 2017 was $871,973 and $76,929
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 became a principal shareholder of the
Company having a Face Value of $118,537 at September 30, 2017 and
a maturity date of December 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 December 31, 2017 the Note together with accrued interest
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. On December 31, 2018 the Note,
together with accrued interest of $14,651 was renewed for a
12-month period. The new Note has a Face value of $136,744 and
matures on December 31, 2019. The new Note is nonconvertible. This
individual ceased to be a principal shareholder of the Company in
the third quarter of 2018
|
$
136,744
|
$
122,093
|
|
|
|
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
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 12month 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. On
December 31, 2018 the note was renewed for a 12-month period under
the same terms and conditions as the previous note. The new note
together with interest of $9,227, has a face value of $86,118 US
($117,535 CAD) and matures on December 31, 2019.
|
86,118
|
83,649
|
|
|
|
On January 1, 2018
as part of the acquisition of Atlas Pharma Inc., the Company issued
a note payable in the amount of $450,000 Canadian ($358,407 US) and
accruing interest at the rate of 3% per annum. The note is due on
December 31, 2023. Payments on this note are $10,000 Canadian
(approximately $8,000 US) per quarter. The outstanding principal
balance at December 31, 2018 was $310,079. The note is
nonconvertible and is secured by the Atlas Pharma Inc. shares held
by the Company. The holder of this note is currently a director and
officer of Atlas Pharma Inc.
|
$
310,079
|
$
-0-
|
|
|
|
Total Notes Payable
Related Party
|
$
532,941
|
$
205,742
|
|
|
|
Long-Term
Portion
|
$
289,847
|
$
79,710
|
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
Note 10 – Related Party Transactions
In
addition to the transactions specified under Note 9 above, during
the period ended December 31, 2018, the Company issued 4,050,000
shares of par value $0.001 Common Stock valued at $429,300 or
$0.106 per share and 5,700,000 shares of par value $0.001 Common
Stock to the Board of Directors valued at $171,000 or $0.03 per
share. During the year ended December 31, 2018 the Directors and
Officers were paid $154,915 in cash. Of this amount, $85,000 was
paid to Advanomics Corporation, a company controlled by the CEO of
the Company.
For the
period ended December 31, 2017, the Company issued 2,100,000 of par
value $0.001 Common Stock to the three Company officers 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.
During
the year ended December 31, 2018, certain Directors of the Company
made interest free cash advances to the Company totaling
$49,349.
Note 11 – Royalties Payable
As part
of a subscription agreement entered into in 2016, the Company had
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. In September 2018,
50,000 shares of the Company’s Common Stock valued at $5,900
were issued in exchange for cancellation of this royalty
obligation.
Note 12 – Acquisition of Atlas Pharma Inc.
On
January 1, 2018 the Company acquired all of the issued and
outstanding shares of Atlas Pharma Inc. (“Atlas”), a
Canadian privately held company. The purchase price for the shares
was Eight Hundred Forty Thousand Dollars $848,000 Canadian
($676,748 US). The purchase price included a cash payment of
$100,500 Canadian ($80,289 US), plus the issuance of 1,000,000
shares of the Company’s Common Stock valued at $238,000 or
$0.238 per share, and a promissory note in the principal amount of
$450,000 Canadian ($358,407 US), with interest payable at the rate
of 3% per annum. Atlas is a certified company dedicated to chemical
analysis of pharmaceutical and other industrial samples.
Atlas’ operations are authorized by a Drug Establishment
License issued by Health Canada. Atlas is also registered with the
FDA. The Company has performed analysis of the fair market value of
Atlas Pharma Inc. assets and liabilities. The following table
summarizes the allocation of the purchase price as of the
acquisition date:
Cash
|
$
4,942
|
Accounts
receivable
|
$
79,508
|
Prepaids
|
$
1,428
|
Property
and equipment
|
$
62,990
|
Goodwill
|
$
665,697
|
Less:
Liabilities assumed ($172,899 Canadian)
|
$
(137,817
)
|
Total
consideration
|
$
676,748
|
Note 13 – Accounts Receivable
Accounts
receivable consist of trade accounts arising in the normal course
of business and are classified as current assets and carried at
original invoice amounts less an estimate for doubtful receivables
based on a review of outstanding balances on a monthly basis. The
estimate of allowance for doubtful accounts is based on the
Company's bad debt experience, market conditions, and aging of
accounts receivable, among other factors. If the financial
condition of the Company's customers deteriorates resulting in the
customer's inability to pay the Company's receivables as they come
due, additional allowances for doubtful accounts will be
required.
Sunshine Biopharma, Inc.
Notes
to Consolidated Financial Statements
December
31, 2018 and 2017
Note 14 – Commitments
The
Company’s subsidiary, Atlas Pharma Inc., has entered into
long-term lease agreements for the rental of buildings which call
for minimum aggregate lease payments of $150,347 Canadian
(approximately $115,767 US) and additional lease payments based on
operating expenses. The lease expires on May 21, 2021. Minimum
lease payments for the next three years are $62,213 (approximately
$47,904 US) in 2019, $62,213
(approximately
$47,904 US)
in 2020, and $25,921
(approximately
$19,959 US)
in 2021.
Note 15 – Subsequent Events
On
January 1, 2019, the Company paid $69,931 to pay off the principal
($53,000) and accrued interest ($16,931) on a note payable dated
June 27, 2018.
On
January 8, 2019, the Company received net proceeds of $50,500 in
exchange for a note payable having a face value of $54,000 and
accruing interest at the rate of 8% per annum. The note, due on
January 8, 2020, is convertible after 180 days from issuance into
$0.001 par value Common Stock at a price 35% below market
value.
On
January 10, 2019, the Company received net proceeds of $38,000 in
exchange for a note payable having a face value of $40,660 and
accruing interest at the rate of 8% per annum. The note, due on
October 10, 2019, is convertible after 180 days from issuance into
$0.001 par value Common Stock at a price 35% below market
value.
On
February 5, 2019, the Company received net proceeds of $35,000 in
exchange for a note payable having a face value of $37,450 and
accruing interest at the rate of 8% per annum. The note, due on
October 10, 2019, is convertible after 180 days from issuance into
$0.001 par value Common Stock at a price 35% below market
value.
On
February 11, 2019, the Company received net proceeds of $50,000 in
exchange for a note payable having a face value of $52,000 and
accruing interest at the rate of 8% per annum. The note, due on
November 30, 2019, is convertible after 180 days from issuance into
$0.001 par value Common Stock at a price 35% below market
value.
On
March 4 and 13, 2019 the holder of a note payable dated August 17,
2018 elected to convert $25,000 in principal into 3,696,581 shares
of Common Stock leaving a principal balance of
$28,000.
On March 18, 2019, the Company received net proceeds of $38,000 in
exchange for a note payable having a face value of $40,660 and
accruing interest at the rate of 8% per annum. The note, due on
December 18, 2019, is convertible after 180 days from issuance into
$0.001 par value Common Stock at a price 35% below market
value.
On
March 18, 2019, the Company received another $38,000 of net
proceeds in exchange for a note payable having a face value of
$40,660 and accruing interest at the rate of 8% per annum. The
note, due on December 18, 2019, is convertible after 180 days from
issuance into $0.001 par value Common Stock at a price 35% below
market value.