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Table of
Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June
30, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File Number: 001-41282
SUNSHINE BIOPHARMA, INC.
(Exact name of registrant as specified in its charter)
Colorado |
|
20-5566275 |
(State
of other jurisdiction of incorporation) |
|
(IRS
Employer ID No.) |
6500 Trans-Canada Highway
4th Floor
Pointe-Claire,
Quebec,
Canada
H9R 0A5
(Address of principal executive offices)
(514)
426-6161
(Issuer’s Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange on Which
Registered |
Common Stock
Common Stock Purchase Warrants
|
SBFM
SBFMW
|
The
NASDAQ Stock Market LLC
The
NASDAQ Stock Market LLC
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days:
Yes ☑
No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☑
No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule
12b-2 of the Exchange Act. (Check one)
|
Large accelerated filer ☐ |
Accelerated filer ☐ |
|
Non-accelerated filer ☒ |
Smaller reporting company
☒ |
|
|
Emerging growth company
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The number of shares of the registrant’s common stock, par value
$0.001, issued and outstanding as of August 3, 2022, was
18,885,632 shares.
TABLE OF
CONTENTS
PART I. FINANCIAL
INFORMATION
Item 1.
Financial Statements
Sunshine Biopharma, Inc.
Condensed
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
June
30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
41,727,775 |
|
|
$ |
2,045,167 |
|
Accounts receivable |
|
|
24 |
|
|
|
7,798 |
|
Inventory |
|
|
205,371 |
|
|
|
105,650 |
|
Prepaid expenses |
|
|
48,562 |
|
|
|
29,625 |
|
Deposits |
|
|
7,590 |
|
|
|
7,590 |
|
Total Current
Assets |
|
|
41,989,322 |
|
|
|
2,195,830 |
|
|
|
|
|
|
|
|
|
|
Equipment (net of
$69,202 and $64,106 depreciation
respectively) |
|
|
1,642 |
|
|
|
7,061 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
41,990,964 |
|
|
$ |
2,202,891 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
104,684 |
|
|
$ |
42,942 |
|
Interest
payable |
|
|
– |
|
|
|
48,287 |
|
Total Current
Liabilities |
|
|
104,684 |
|
|
|
91,229 |
|
|
|
|
|
|
|
|
|
|
Long-term portion
of notes payable |
|
|
– |
|
|
|
1,900,000 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES |
|
|
104,684 |
|
|
|
1,991,229 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock,
Series B $0.10
par value per share; 1,000,000
shares authorized; 10,000 and
1,000,000
shares issued and outstanding as of June 30, 2022 and December 31,
2021, respectively |
|
|
1,000 |
|
|
|
100,000 |
|
Common Stock,
$0.001
par value per share; 3,000,000,000
shares authorized; 18,885,632 and
2,591,240 shares
issued and outstanding as of June 30, 2022 and December 31, 2021,
respectively |
|
|
18,886 |
|
|
|
2,591 |
|
Capital paid in excess of par value |
|
|
76,331,451 |
|
|
|
32,787,384 |
|
Accumulated comprehensive (loss) |
|
|
(34,777 |
) |
|
|
(23,139 |
) |
Accumulated
(Deficit) |
|
|
(34,430,280 |
) |
|
|
(32,655,174 |
) |
|
|
|
|
|
|
|
|
|
TOTAL
SHAREHOLDERS' EQUITY |
|
|
41,886,280 |
|
|
|
211,662 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
$ |
41,990,964 |
|
|
$ |
2,202,891 |
|
See Accompanying Notes.
Sunshine Biopharma, Inc.
Condensed
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Months Ended |
|
|
6 Months Ended |
|
|
|
June
30, |
|
|
June
30, |
|
|
June
30, |
|
|
June
30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
150,307 |
|
|
$ |
52,874 |
|
|
$ |
272,952 |
|
|
$ |
92,932 |
|
Cost of sales |
|
|
74,683 |
|
|
|
18,515 |
|
|
|
134,528 |
|
|
|
37,035 |
|
Gross profit |
|
|
75,624 |
|
|
|
34,359 |
|
|
|
138,424 |
|
|
|
55,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting |
|
|
41,060 |
|
|
|
19,800 |
|
|
|
114,860 |
|
|
|
61,200 |
|
Advertising |
|
|
87,680 |
|
|
|
– |
|
|
|
182,720 |
|
|
|
– |
|
Consulting |
|
|
101,683 |
|
|
|
21,677 |
|
|
|
107,181 |
|
|
|
32,570 |
|
Legal |
|
|
109,130 |
|
|
|
95,034 |
|
|
|
245,355 |
|
|
|
102,151 |
|
Office |
|
|
90,407 |
|
|
|
61,117 |
|
|
|
372,912 |
|
|
|
100,803 |
|
Officer and director remuneration |
|
|
290,000 |
|
|
|
22,000 |
|
|
|
610,000 |
|
|
|
1,043,927 |
|
Patent fees |
|
|
3,230 |
|
|
|
8,377 |
|
|
|
11,564 |
|
|
|
14,570 |
|
R&D |
|
|
45,943 |
|
|
|
191,760 |
|
|
|
407,595 |
|
|
|
358,546 |
|
Depreciation |
|
|
2,287 |
|
|
|
3,192 |
|
|
|
5,397 |
|
|
|
6,374 |
|
Total General and
Administrative Expenses |
|
|
771,420 |
|
|
|
422,957 |
|
|
|
2,057,584 |
|
|
|
1,720,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from
operations |
|
|
(695,796 |
) |
|
|
(388,598 |
) |
|
|
(1,919,160 |
) |
|
|
(1,664,244 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
|
29 |
|
|
|
8 |
|
|
|
20 |
|
|
|
(6 |
) |
Interest income |
|
|
146,043 |
|
|
|
2 |
|
|
|
146,046 |
|
|
|
2 |
|
Interest expense |
|
|
– |
|
|
|
(195,630 |
) |
|
|
(12,864 |
) |
|
|
(245,341 |
) |
Debt release |
|
|
10,852 |
|
|
|
221 |
|
|
|
10,852 |
|
|
|
51,252 |
|
Loss on debt
conversions |
|
|
– |
|
|
|
(2,295,057 |
) |
|
|
– |
|
|
|
(7,205,843 |
) |
Total Other
Income (Expense) |
|
|
156,924 |
|
|
|
(2,490,456 |
) |
|
|
144,054 |
|
|
|
(7,399,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) before income taxes |
|
|
(538,872 |
) |
|
|
(2,879,054 |
) |
|
|
(1,775,106 |
) |
|
|
(9,064,180 |
) |
Provision for
income taxes |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Net (Loss) |
|
$ |
(538,872 |
) |
|
$ |
(2,879,054 |
) |
|
$ |
(1,775,106 |
) |
|
$ |
(9,064,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from
foreign exchange translation |
|
|
(12,645 |
) |
|
|
(6,702 |
) |
|
|
(11,638 |
) |
|
|
(8,765 |
) |
Comprehensive
(Loss) |
|
$ |
(551,517 |
) |
|
$ |
(2,885,756 |
) |
|
$ |
(1,786,744 |
) |
|
$ |
(9,072,945 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (Loss) per common
share |
|
$ |
(0.03 |
) |
|
$ |
(1.21 |
) |
|
$ |
(0.18 |
) |
|
$ |
(3.96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares
Outstanding (Basic) |
|
|
15,849,518 |
|
|
|
2,392,602 |
|
|
|
9,691,265 |
|
|
|
2,293,836 |
|
See Accompanying Notes.
Sunshine Biopharma, Inc.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
6 Months Ended |
|
|
|
June
30, |
|
|
June
30, |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Cash Flows From
Operating Activities: |
|
|
|
|
|
|
|
|
Net
(Loss) |
|
$ |
(1,775,106 |
) |
|
$ |
(9,064,180 |
) |
Adjustments to reconcile net loss to
net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
5,397 |
|
|
|
6,374 |
|
Foreign exchange
(gain) loss |
|
|
(20 |
) |
|
|
(6 |
) |
Stock issued for
services |
|
|
– |
|
|
|
918,000 |
|
Stock issued for
payment interest |
|
|
– |
|
|
|
38,422 |
|
Loss on debt
conversion |
|
|
– |
|
|
|
7,205,843 |
|
Debt release |
|
|
(10,852 |
) |
|
|
(51,252 |
) |
Decrease in
accounts receivable |
|
|
7,774 |
|
|
|
1,916 |
|
(Increase)
decrease in inventory |
|
|
(99,721 |
) |
|
|
(27,736 |
) |
(Increase) in
prepaid expenses |
|
|
(18,937 |
) |
|
|
(12,907 |
) |
Increase
(decrease) in accounts payable and accrued expenses |
|
|
61,742 |
|
|
|
35,524 |
|
Increase (decrease) in interest payable |
|
|
(48,287 |
) |
|
|
33,795 |
|
Net Cash
Flows (Used) in Operations |
|
|
(1,878,010 |
) |
|
|
(916,207 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities: |
|
|
|
|
|
|
|
|
Proceeds public
offering net |
|
|
43,560,363 |
|
|
|
1,918,500 |
|
Note payable to
pay fees |
|
|
(99,000 |
) |
|
|
61,500 |
|
Payments of notes payable |
|
|
(1,900,000 |
) |
|
|
(327,352 |
) |
Net Cash
Flows Provided by Financing Activities |
|
|
41,561,363 |
|
|
|
1,652,648 |
|
|
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents at Beginning of Period |
|
|
2,045,167 |
|
|
|
989,888 |
|
Net increase in
cash and cash equivalents |
|
|
39,683,353 |
|
|
|
736,441 |
|
Effect of exchange
rate changes on cash |
|
|
(12,383 |
) |
|
|
– |
|
Foreign currency
translation adjustment |
|
|
11,638 |
|
|
|
8,765 |
|
Cash
and Cash Equivalents at End of Period |
|
$ |
41,727,775 |
|
|
$ |
1,735,094 |
|
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Information: |
|
|
|
|
|
|
|
|
Stock
issued for note conversions including interest |
|
$ |
– |
|
|
$ |
8,237,072 |
|
Cash
paid for interest |
|
$ |
61,151 |
|
|
$ |
142,152 |
|
Cash
paid for income taxes |
|
$ |
– |
|
|
$ |
– |
|
See Accompanying Notes.
Sunshine Biopharma, Inc.
Condensed
Consolidated Statements of Shareholders' Equity (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number Of
Common |
|
|
|
|
|
Capital Paid in
Excess |
|
|
Number Of
Preferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Common |
|
|
of Par |
|
|
Shares |
|
|
Preferred |
|
|
Comprehensive |
|
|
Accumulated |
|
|
|
|
|
|
Issued |
|
|
Stock |
|
|
Value |
|
|
Issued |
|
|
Stock |
|
|
Income |
|
|
Deficit |
|
|
Total |
|
Three Month Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2022 |
|
|
7,149,778 |
|
|
$ |
7,150 |
|
|
$ |
47,219,498 |
|
|
|
10,000 |
|
|
$ |
1,000 |
|
|
$ |
(22,132 |
) |
|
$ |
(33,891,408 |
) |
|
$ |
13,314,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and pre-funded warrants issued in an underwritten
public offering, net of issuance costs |
|
|
2,472,820 |
|
|
|
2,473 |
|
|
|
16,750,442 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
16,752,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of
warrants |
|
|
9,263,034 |
|
|
|
9,263 |
|
|
|
12,361,511 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
12,370,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(12,645 |
) |
|
|
(538,872 |
) |
|
|
(551,517 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2022 |
|
|
18,885,632 |
|
|
$ |
18,886 |
|
|
$ |
76,331,451 |
|
|
|
10,000 |
|
|
|
1,000 |
|
|
$ |
(34,777 |
) |
|
$ |
(34,430,280 |
) |
|
|
41,886,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Month
Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2021 |
|
|
2,595,620 |
|
|
$ |
2,596 |
|
|
$ |
32,787,379 |
|
|
|
1,000,000 |
|
|
$ |
100,000 |
|
|
$ |
(23,139 |
) |
|
$ |
(32,655,174 |
) |
|
$ |
211,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and pre-funded warrants issued in an underwritten
public offering, net of issuance costs |
|
|
6,656,526 |
|
|
|
6,657 |
|
|
|
30,360,528 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
30,367,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of
warrants |
|
|
9,633,486 |
|
|
|
9,633 |
|
|
|
13,183,544 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
13,193,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock purchased from related party |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(990,000 |
) |
|
|
(99,000 |
) |
|
|
– |
|
|
|
– |
|
|
|
(99,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(11,638 |
) |
|
|
(1,775,106 |
) |
|
|
(1,786,744 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2022 |
|
|
18,885,632 |
|
|
$ |
18,886 |
|
|
$ |
76,331,451 |
|
|
|
10,000 |
|
|
|
1,000 |
|
|
$ |
(34,777 |
) |
|
$ |
(34,430,280 |
) |
|
|
41,886,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Month Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March
31, 2021 |
|
|
2,325,030 |
|
|
$ |
2,325 |
|
|
$ |
25,222,073 |
|
|
|
1,000,000 |
|
|
$ |
100,000 |
|
|
$ |
(4,934 |
) |
|
$ |
(26,403,853 |
) |
|
$ |
(1,084,389 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for the reduction of notes payable and payment
of interest |
|
|
105,437 |
|
|
|
105 |
|
|
|
3,097,330 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,097,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(6,702 |
) |
|
|
(2,879,054 |
) |
|
|
(2,885,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2021 |
|
|
2,430,466 |
|
|
$ |
2,430 |
|
|
$ |
28,319,403 |
|
|
|
1,000,000 |
|
|
$ |
100,000 |
|
|
$ |
(11,636 |
) |
|
$ |
(29,282,907 |
) |
|
$ |
(872,710 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Month Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2020 |
|
|
1,732,096 |
|
|
$ |
1,732 |
|
|
$ |
19,165,029 |
|
|
|
1,000,000 |
|
|
$ |
100,000 |
|
|
$ |
(2,871 |
) |
|
$ |
(20,218,727 |
) |
|
$ |
(954,837 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for the reduction of note payable and payment
of interest |
|
|
398,370 |
|
|
|
398 |
|
|
|
8,236,674 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
8,237,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services |
|
|
300,000 |
|
|
|
300 |
|
|
|
917,700 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
918,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(8,765 |
) |
|
|
(9,064,180 |
) |
|
|
(9,072,945 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2021 |
|
|
2,430,466 |
|
|
$ |
2,430 |
|
|
$ |
28,319,403 |
|
|
|
1,000,000 |
|
|
$ |
100,000 |
|
|
$ |
(11,636 |
) |
|
$ |
(29,282,907 |
) |
|
$ |
(872,710 |
) |
See Accompanying Notes.
Sunshine Biopharma, Inc.
Notes to
Unaudited Condensed Consolidated Financial Statements
For the Six Month Interim Periods Ended June 30, 2022 and
2021
Note 1 – Nature of
Business
Sunshine Biopharma, Inc. (the “Company”) was originally
incorporated under the name Mountain West Business Solutions, Inc.
on August 31, 2006, in the State of Colorado. Until October 2009,
the Company was operating as a business consultancy firm.
Effective October 15, 2009, the Company acquired Sunshine
Biopharma, Inc. in a transaction classified as a reverse
acquisition. Sunshine Biopharma, Inc. held an exclusive license to
a new anticancer drug bearing the laboratory name, Adva-27a (the
“License Agreement”). Upon completion of the reverse acquisition
transaction, the Company changed its name to Sunshine Biopharma,
Inc. and began operating as a pharmaceutical company focusing on
the development of the licensed Adva-27a anticancer drug.
In December 2015, the Company acquired all worldwide issued (US
Patent Number 8,236,935, and 10,272,065) and pending patents under
PCT/FR2007/000697 and PCT/CA2014/000029 for the Adva-27a anticancer
compound from Advanomics Corporation, a related party, and
terminated the License Agreement. In 2016, the remaining value of
these patents was impaired. The Company is however continuing
development of the Adva-27a anticancer drug covered by these
patents.
In December 2018, the Company launched its first Science-Based
Nutritional Supplements product, Essential 9™, an over-the-counter
capsule comprised of the nine (9) essential amino acids that the
human body cannot make. Essential 9™ has been
authorized for marketing by Health Canada under NPN 80089663.
On May 22, 2020, the Company filed a provisional patent application
in the United States for a new treatment for Coronavirus
infections. The Company’s patent application covers composition
subject matter pertaining to small molecules for inhibition of the
main Coronavirus protease, Mpro, an enzyme that is essential for
viral replication. The patent application has a priority date of
May 22, 2020. On April 30, 2021, the Company filed a PCT
application containing new research results and extending coverage
to include the Coronavirus Papain-Like protease, PLpro. The
priority date of May 22, 2020 has been maintained in the newly
filed PCT application. The Company’s lead Anti-Coronavirus compound
arising from these patents bears the laboratory name SBFM-PL4.
On January 26, 2021, the Company received a Notice of Allowances
from the Canadian Intellectual Property Office for a new patent
application covering Adva-27a. The newly issued patent contains new
subject matter and extends the proprietary protection of Adva-27a
in Canada until 2033.
On March 9, 2021, the Company received a Notice of Allowance from
the European Patent Office for a new patent application covering
Adva-27a. The newly issued patent contains new subject matter and
extends the proprietary protection of Adva-27a in Europe until
2033. The equivalent patent in the United States was issued in 2019
(US Patent Number 10,272,065).
On October 1, 2021, the Company filed a patent application for a
potential new treatment for neurodegenerative disorders. The patent
application contains experimental results showing that certain mRNA
molecules provide protective effects against oxidative stress in
differentiated neuronal cells, a process that mimics neuronal
degeneration. This new patent application has a priority date of
October 1, 2021.
Effective February 9, 2022, the Company completed a 200-for-1
reverse split of its common stock. On February 15, 2022, the
Company entered into an underwriting agreement with Aegis Capital
Corp. as underwriter, for the issuance and sale in an underwritten
public offering of 1,882,353 Units, each consisting of one share of
common stock and two warrants (“Tradeable Warrants”) to purchase
shares of common stock at a public offering price of $4.25 per Unit
for total gross proceeds of $8,000,000 (“Public Offering”). On
February 17, 2022, the Public Offering closed and the Company
received net proceeds of $6,833,071.
Pursuant to the Public Offering, the Company issued and sold an
aggregate of 1,882,353
shares of common stock and 4,102,200 Tradeable
Warrants (including 337,494 Tradeable Warrants purchased at $0.01
per warrant resulting from partial exercise of the overallotment
option granted to the underwriter). In connection with these
transactions, the Company’s shares of common stock and Tradeable
Warrants began trading on Nasdaq under the symbol “SBFM” for the
common stock and “SBFMW” for the Tradeable Warrants.
On February 18, 2022, the Company entered into a research agreement
(the “SRA”) with the University of Arizona for the purposes of
conducting research focused on determining the in vivo safety,
pharmacokinetics, and dose selection properties of three University
of Arizona owned PLpro inhibitors, to be followed by efficacy
testing in mice infected with SARS-CoV-2 (the “Research Project”).
Under the SRA, the University of Arizona granted the Company a
first option to negotiate a commercial, royalty-bearing license for
all intellectual property developed by University of Arizona
personnel under the Research Project. In addition, the Company and
the University of Arizona entered into an Option Agreement whereby
the Company was granted a first option to negotiate a
royalty-bearing commercial license for the underlying technology of
the Research Project.
On February 22, 2022, the Company redeemed 990,000
shares of the Series B Preferred Stock from the CEO of the Company
at a redemption price equal to the stated value of $0.10 per
share.
On March 14, 2022, the Company completed a private placement
wherein the Company sold (i) 2,301,353 shares
of its common stock together with warrants (the “Investor
Warrants”) to purchase up to 2,301,353
shares of common stock, and (ii) 1,302,251 pre-funded
warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant
exercisable for one share of common stock, together with Investor
Warrants to purchase up to 1,302,251 shares of common stock. Each
share of common stock and accompanying Investor Warrant were sold
together at a combined offering price of $2.22, and each Pre-Funded
Warrant and accompanying Investor Warrant were sold together at a
combined offering price of $2.219. The Company received
approximately $8 million in gross proceeds, and $6,781,199 in
net proceeds in this offering.
On April 28, 2022, the Company completed another private placement
and received net proceeds of $16,752,915. In
connection with this private placement, the Company issued
(i) 2,472,820 shares
of its common stock together with warrants (“April Warrants”) to
purchase up to 4,945,640 shares of
common stock, and (ii) 2,390,025 pre-funded
warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant
exercisable for one share of common stock, together with April
Warrants to purchase up to 4,780,050 shares of common stock. Each
share of common stock and accompanying two April Warrants were sold
together at a combined offering price of $4.01, and each Pre-Funded
Warrant and accompanying two April Warrants were sold together at a
combined offering price of $4.01, and each Pre-Funded Warrant and
accompanying two April Warrants were sold together at a combined
offering price of $4.009. The Pre-Funded Warrants were immediately
exercisable, at a nominal exercise price of $0.001, and may be
exercised at any time until all of the Pre-Funded Warrants are
exercised in full. The April Warrants have an exercise price of
$3.76 per share (subject to
adjustment as set forth in the warrant), are exercisable upon
issuance and will expire five years from the date of issuance.
Note 2 – Basis of
Presentation
The unaudited financial statements of the Company for the six month
periods ended June 30, 2022 and 2021 have been prepared in
accordance with accounting principles generally accepted in the
United States of America for interim financial information and
pursuant to the requirements for reporting on Form 10-Q and
Regulation S-X. Accordingly, they do not include all the
information and footnotes required by accounting principles
generally accepted in the United States of America for complete
financial statements. However, such information reflects all
adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for the fair
presentation of the financial position and the results of
operations. Results shown for interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year.
The balance sheet information as of December 31, 2021 was derived
from the audited financial statements included in the Company's
financial statements as of and for the year ended December 31, 2021
included in the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the “SEC”) on March 21, 2022.
These financial statements should be read in conjunction with that
report.
Note 3 – Impact of
Coronavirus (COVID-19) Pandemic
In March 2020, the World Health Organization declared Coronavirus
and its associated disease, COVID-19, a global pandemic. Conditions
surrounding the Coronavirus outbreak have been and are continuing
to evolve rapidly. Government authorities in the U.S. and around
the world have implemented emergency measures to mitigate the
spread of the virus. The outbreak and related mitigation measures
have had and will continue to have a material adverse impact on the
world economies and the Company's business activities. It is not
possible for the Company to predict the duration or magnitude of
the adverse conditions of the outbreak and their effects on the
Company’s business or ability to raise funds. No adjustments have
been made to the amounts reported in the Company's financial
statements as a result of this matter.
Note 4 – Reverse Stock
Splits
Effective February 1, 2019, the Company completed a 20 to 1 reverse
split of its common stock (the “First Reverse Stock
Split”).
Effective April 6, 2020, the Company completed another 20 to 1 reverse
split of its common stock (the “Second Reverse Stock
Split”).
Effective February 9, 2022, the Company completed a 1 for 200 reverse
split of its common stock (the “Third Reverse Stock
Split”).
The Company's financial statements reflect the First, Second, and
Third Reverse Stock Split on a retroactive basis for all periods
presented and for all references to common stock, unless
specifically stated otherwise.
Note 5 – Notes
Payable
As of June 30, 2022 and December 31, 2021, the Company had
$-0-
and $1,900,000,
respectively in notes payable outstanding. At June 30, 2022 and
December 31, 2021, total accrued interest on Notes Payable was
$-0- and $48,287, respectively.
The Company’s Notes Payable at December 31, 2021 consisted of the
following:
On April 20, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $500,000 with interest accruing
at 5% due April 20, 2023. The Note was
convertible after 180 days from issuance into common stock at a
price equal to $0.30 per share. On February 17, 2022, the Company
paid off the entire principal balance of this Note, together with
accrued interest of $20,753 by
making a cash payment of $520,753.
On July 6, 2021, the Company received monies in exchange for a Note
Payable having a Face Value of $900,000 with interest accruing
at 5%, due July 6, 2023. The Note was convertible
after 180 days from issuance into common stock at a price equal to
$0.30 per share. On February 17, 2022, the Company paid off the
entire principal balance of this Note, together with accrued
interest of $27,863 by
making a cash payment of $927,863.
On August 18, 2021, the Company received monies in exchange for a
Note Payable having a Face Value of $500,000 with interest accruing
at 5%, due August 18, 2023. The Note was
convertible after 180 days from issuance into common stock at a
price equal to $0.30 per share. On February 17, 2022, the Company
paid off the entire principal balance of this Note, together with
accrued of $12,534 by
making a cash payment of $512,534.
Note 6 – Shareholders’
Equity
On February 17, 2022, the Company’s Public Offering closed and the
Company received net proceeds of $6,833,071 from the offering.
Pursuant to the Public Offering, the Company issued and sold an
aggregate of 1,882,353 shares of common stock and 4,102,200
Tradeable Warrants (including 337,494 Tradeable Warrants resulting
from partial exercise of the overallotment option granted to the
underwriter).
On February 22, 2022, the Company redeemed 990,000 shares of Series B Preferred
Stock from the CEO of the Company at a redemption price equal to
the stated value of $0.10 per share.
On March 14, 2022, the Company completed a private placement and
received net proceeds of $6,781,199.
In connection with this private placement, the Company issued
(i) 2,301,353 shares
of its common stock together with investor warrants (“Investor
Warrants”) to purchase up to 2,301,353 shares of common stock, and
(ii) 1,302,251 pre-funded
warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant
exercisable for one share of common stock, together with Investor
Warrants to purchase up to 1,302,251 shares of common stock. Each
share of common stock and accompanying Investor Warrant were sold
together at a combined offering price of $2.22, and each Pre-Funded
Warrant and accompanying Investor Warrant were sold together at a
combined offering price of $2.219. The Pre-Funded Warrants were
immediately exercisable, at a nominal exercise price of $0.001, and
may be exercised at any time until all of the Pre-Funded Warrants
are exercised in full. The Investor Warrants have an exercise price
of $2.22 per share (subject to adjustment as set forth in the
warrant), are exercisable upon issuance and will expire five years
from the date of issuance.
On April 28, 2022, the Company completed another private placement
and received net proceeds of $16,752,915. In
connection with this private placement, the Company issued
(i) 2,472,820 shares
of its common stock together with warrants (“April Warrants”) to
purchase up to 4,945,640 shares of
common stock, and (ii) 2,390,025 pre-funded
warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant
exercisable for one share of common stock, together with April
Warrants to purchase up to 4,780,050 shares of common stock. Each
share of common stock and accompanying two April Warrants were sold
together at a combined offering price of $4.01 and each Pre-Funded
Warrant and accompanying two April Warrants were sold together at a
combined offering price of $4.009. The Pre-Funded Warrants were
immediately exercisable, at a nominal exercise price of $0.001, and
may be exercised at any time until all of the Pre-Funded Warrants
are exercised in full. The April Warrants have an exercise price of
$3.76 per share (subject to
adjustment as set forth in the warrant), are exercisable upon
issuance and will expire five years from the date of issuance.
The Company declared no dividends through June 30,
2022.
Note 7 – Warrants
The Company accounts for issued warrants either as a liability or
equity in accordance with ASC 480-10 or ASC 815-40. Under ASC
480-10, warrants are considered a liability if they are mandatorily
redeemable and they require settlement in cash, other assets, or a
variable number of shares. If warrants do not meet liability
classification under ASC 480-10, the Company considers the
requirements of ASC 815-40 to determine whether the warrants should
be classified as a liability or as equity. Under ASC 815-40,
contracts that may require settlement for cash are liabilities,
regardless of the probability of the occurrence of the triggering
event. Liability-classified warrants are measured at fair value on
the issuance date and at the end of each reporting period. Any
change in the fair value of the warrants after the issuance date is
recorded in the consolidated statements of operations as a gain or
loss. If warrants do not require liability classification under ASC
815-40, in order to conclude warrants should be classified as
equity, the Company assesses whether the warrants are indexed to
its common stock and whether the warrants are classified as equity
under ASC 815-40 or other applicable GAAP standard.
Equity-classified warrants are accounted for at fair value on the
issuance date with no changes in fair value recognized after the
issuance date.
During the six months ended June 30, 2022, the Company completed
three financing events, and in connection therewith, it issued
warrants as follows:
Warrants issued with financing |
|
|
|
TYPE |
NUMBER |
EXERCISE
PRICE |
EXPIRY
DATE |
Pre-Funded
Warrants |
3,692,276 |
$0.001 |
Unlimited |
Tradeable
Warrants |
4,102,200 |
$2.22* |
February 2027 |
Investor
Warrants |
3,603,604 |
$2.22 |
March 2027
|
April
Warrants |
9,725,690 |
$3.76 |
April 2027 |
* |
The Tradeable Warrants had an initial exercise price
of $4.25, subject to adjustment. Upon the closing of the Company’s
private placement on March 14, 2022, the exercise price of the
Tradeable Warrants was reduced to $2.22, in accordance with the
terms thereof. |
During the six months ended June 30, 2022, all of the Pre-Funded
Warrants and a total of
3,138,507 Tradeable Warrants were exercised resulting in
aggregate proceeds of $6,971,178 received
by the Company. In addition, during the six months ended June 30,
2022, a total of
2,802,703 Investor Warrants and -0-
April Warrants were exercised resulting in aggregate proceeds of $
$6,222,001
received by the Company.
The Company’s outstanding warrants at June 30, 2022 consisted of
the following:
Schedule of outstanding warrants |
|
|
|
TYPE |
NUMBER |
EXERCISE
PRICE |
EXPIRY
DATE |
Pre-Funded
Warrants |
None |
$0.001 |
Unlimited |
Tradeable
Warrants |
963,693 |
$2.22 |
February 2027 |
Investor
Warrants |
800,901 |
$2.22 |
March 2027
|
April Warrants |
9,725,690 |
$3.76 |
April 2027 |
Note 8 – Net Loss Per
Common Share
Basic net loss per share is calculated by dividing the net loss by
the weighted-average number of shares of common stock outstanding
during the period, without consideration for common stock
equivalents.
Diluted net loss per share is calculated by dividing the net loss
by the weighted-average number of shares of common stock
outstanding during the period, taking into consideration common
stock equivalents.
In February 2022, the Company issued 4,102,200 Tradeable
Warrants pursuant to the Company’s Public Offering. In March and
April 2022, the Company issued 3,603,604 Investor
Warrants and 9,725,690 April Warrants
pursuant to two private placements. As of June 30, 2022,
3,138,507 Tradeable Warrants,
2,802,703 Investor Warrants, and -0-
April Warrants were exercised, leaving 963,693
Tradeable Warrants, 800,901
Investor Warrants and 9,725,690
April Warrants outstanding. These warrants are dilutive and were
included in the diluted earnings per share.
In March and April 2022, the Company issued and sold Pre-Funded
Warrants to purchase an aggregate of 3,692,276 shares of common
stock at a nominal exercise price of $0.001 per share (see Note 3).
During the six months ended June 30, 2022, all of these warrants
were exercised and therefore had no remaining dilutive effect.
Note 9 – Management and
Director Compensation
The Company paid its officers cash compensation totaling $240,000
and $25,000
and $510,000
and $125,927
for the three and six month periods ended June 30, 2022 and 2021,
respectively. Of these amounts attributable to the Company’s CEO,
$110,000
was paid to Advanomics Corporation (now known as TRT Pharma Inc.),
a company controlled by the CEO of the Company. In addition, the
Company issued 300,000
shares of common stock valued at $918,000
to its officers during the three months ended June 30, 2021. The
value of these shares was based upon the closing price of the
Company’s common stock of $3.06 on the issuance date.
The Company paid its directors cash compensation totaling
$50,000
and $-0-
for the three and six month periods ended June 30, 2022 and 2021,
respectively.
Item 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion should be read in conjunction with our
consolidated financial statements and notes thereto included
herein. This discussion includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, or the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended, or the Exchange Act. The
statements regarding Sunshine Biopharma, Inc. contained in this
Report that are not historical in nature, particularly those that
utilize terminology such as “may,” “will,” “should,” “likely,”
“expects,” “anticipates,” “estimates,” “believes” or “plans,” or
comparable terminology, are forward-looking statements based on
current expectations and assumptions, and entail various risks and
uncertainties that could cause actual results to differ materially
from those expressed in such forward-looking statements. Important
factors known to us that could cause such material differences are
identified in this report and in our annual report on Form 10-K for
the year ended December 31, 2021. We undertake no obligation to
correct or update any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
may be required under applicable law. You are advised, however, to
consult any future disclosures we make on related subjects in
future reports to the SEC.
A. Overview
We are a pharmaceutical and nutritional supplement company focusing
on the research and development of proprietary drugs including our
anticancer compound Adva-27a, our anticancer K1.1 mRNA molecules,
and anti-coronavirus lead compound, SBFM-PL4.
We also, through our wholly owned Canadian subsidiary, Sunshine
Biopharma Canada Inc. (“Sunshine Canada”), develop science-based
nutritional supplements, and currently sell one nutritional
supplement product, Essential 9tm.
B. Proprietary Drug Development Operations
SBFM-PL4 Anti-Coronavirus Treatment
The following is a summary of the development to date of our
coronavirus treatment project:
|
· |
On
May 22, 2020, we filed a patent application in the United States
for a new treatment for Coronavirus infections. Our patent
application covers composition subject matter pertaining to small
molecules for inhibition of the Coronavirus main protease (Mpro)
and papain-like protease (PLpro). Both enzymes are
essential for viral replication. In addition to being involved in
maturation of specific viral proteins, PLpro is responsible for
suppression of the human immune system making the virus more
virulent. The small molecules covered by the patent application
were designed by Dr. Steve N. Slilaty, our chief executive officer.
The patent application has a priority date of May 22,
2020. |
|
· |
In
August 2020, we completed the synthesis of four different potential
inhibitors of PLpro. These compounds are based on the technology
described in our patent application filed on May 22,
2020. |
|
· |
In
September 2020, we completed the screening of our four compounds
and subsequently identified a lead Anti-Coronavirus drug candidate
(SBFM-PL4). The screening which pinpointed the lead compound was
performed at the University of Georgia, College of Pharmacy under
the leadership of Dr. Scott D. Pegan, Director of the Center for
Drug Discovery at the time. |
|
· |
The
next steps in our SBFM-PL4 drug development plan will involve
conducting additional in vitro studies followed by cell culture
assays and assessment in Coronavirus infected mice before entering
human clinical trials. |
|
|
|
|
· |
In
February 2022, we expanded our search for additional PLpro
inhibitors by entering into a research agreement with the
University of Arizona for the purposes of conducting research
focused on determining the in vivo safety, pharmacokinetics, and
dose selection properties of three University of Arizona owned
PLpro inhibitors, to be followed by efficacy testing in mice
infected with SARS-CoV-2 (the “Research Project”). Under the
agreement, the University of Arizona granted the Company a first
option to negotiate a commercial, royalty-bearing license for all
intellectual property developed by University of Arizona personnel
under the Research Project. In addition, the Company and the
University of Arizona entered into an Option Agreement whereby the
Company was granted a first option to negotiate a royalty-bearing
commercial license for the underlying technology of the Research
Project. |
Adva-27a Anticancer Compound
In the area of oncology, our proprietary drug development
activities have been focused on the development of a small molecule
called Adva-27a for the treatment of aggressive forms of cancer. A
Topoisomerase II inhibitor, Adva-27a has been shown to be effective
at destroying Multidrug Resistant Cancer cells including Pancreatic
Cancer cells, Breast Cancer cells, Small-Cell Lung Cancer cells and
Uterine Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32,
Pages 4423-4432, October 2012). Sunshine Biopharma is direct owner
of all issued patents pertaining to Adva-27a including U.S. Patents
Number 8,236,935 and 10,272,065.
Figure 1
Adva-27a is a GEM-difluorinated C-glycoside derivative of
Podophyllotoxin (see Figure 1). Another derivative of
Podophyllotoxin called Etoposide is currently on the market and is
used to treat various types of cancer including leukemia, lymphoma,
testicular cancer, lung cancer, brain cancer, prostate cancer,
bladder cancer, colon cancer, ovarian cancer, liver cancer and
several other forms of cancer. Etoposide is one of the most widely
used anticancer drugs. Adva-27a and Etoposide are similar in that
they both attack the same target in cancer cells, namely the DNA
unwinding enzyme, Topoisomerase II. Unlike Etoposide however,
Adva-27a is able to penetrate and destroy Multidrug Resistant
Cancer cells. In addition, Adva-27a has been shown to have distinct
and more desirable biological and pharmacological properties
compared to Etoposide. In side-by-side studies using Multidrug
Resistant Breast Cancer cells and Etoposide as a reference,
Adva-27a showed markedly greater cell killing activity (see Figure
2).

Figure 2
The next sequence of steps in our Adva-27a development program
includes:
|
· |
GMP
Manufacturing of 2 kilograms for use in IND-Enabling Studies and
Phase I Clinical Trials |
|
· |
Regulatory Filing (Fast-Track status
anticipated) |
|
· |
Phase
I Clinical Trials (Pancreatic Cancer indication) |
Adva-27a’s initial indication will be pancreatic cancer for which
there are currently little or no treatment options available. We
are planning to conduct our clinical trials at McGill University’s
Jewish General Hospital in Montreal, Canada. All aspects of the
clinical trials in Canada will employ FDA standards at all
levels.
According to the American Cancer Society, nearly 1.5 million new
cases of cancer are diagnosed in the U.S. each year. While
particularly effective against Multidrug Resistant Cancer, we
believe Adva-27a can potentially treat all cancer types,
particularly those in which Topoisomerase II has been amplified. We
believe that upon successful completion of Phase I Clinical Trials
we may receive one or more offers from large pharmaceutical
companies to purchase or license our drug. However, there are no
assurances that our Phase I Trials will be successful, or if
successful, that any pharmaceutical companies will make an
acceptable offer to us. In the event we do not consummate such a
transaction, we will require significant capital in order to secure
regulatory approval, manufacture and market our new drug on our
own.
K1.1 Anti-cancer mRNA
In June 2021, we initiated a new research project in which we set
out to determine if certain mRNA molecules can be used as
anti-cancer agents. The data collected to date have shown that a
selected group of mRNA molecules are capable of destroying cancer
cells in vitro including multidrug resistant breast cancer cells
(MCF-7/MDR), ovarian adenocarcinoma cells (OVCAR-3), and pancreatic
cancer cells (SUIT-2). Other studies using non-transformed (normal)
human cells (HMEC cells) showed that these mRNA molecules had
little cytotoxic effects. These new mRNA molecules, bearing the
laboratory name K1.1, are readily adaptable for delivery into
patients using the mRNA vaccine technology. In April 2022, we filed
a provisional patent application in the United States covering the
subject mRNA molecules. We plan to commence mice xenograft studies
within approximately the next twelve months.
C. Nutritional Supplements Operations
Our wholly owned Canadian subsidiary, Sunshine Canada, focuses on
the development and marketing of science-based nutritional
supplements. In December 2018, we completed the development of our
first nutritional supplement product which we named Essential
9™. On
December 14, 2018, Health Canada issued NPN 80089663 through which
it authorized us to manufacture and sell the Essential 9™ product.
Our Essential 9™ nutritional supplement product was originally
launched as a tablet and has now been reformatted into vegan
capsules. Our Essential 9tm capsules contain a
balanced formula of the 9 Essential Amino Acids that the human body
cannot make. Essential Amino Acids are 9 out of the 20 amino acids
required for protein synthesis. Proteins are involved in all body
functions – From the musculature and immune system to hormones and
neurotransmitters. Like vitamins, Essential Amino Acids cannot be
made by the human body and must be obtained through diet.
Deficiency in one or more of the 9 Essential Amino Acids can lead
to loss of muscle mass, fatigue, weight gain and reduced ability to
build muscle mass in athletes. Our Essential 9™ provides all 9
Essential Amino Acids in freeform and in the proportions
recommended by Health Canada. Essential 9™ is currently available
on Amazon.com and Amazon.ca. Figure 3 below shows our reformatted
60-Capsule Essential 9™ product.
Figure 3
In November 2019, we received Health Canada approval for another
nutritional supplement, a new Calcium-Vitamin D tablet. Health
Canada issued NPN 80093432 through which it authorized us to
manufacture and sell the new Calcium-Vitamin D supplement under the
brand name Essential Calcium-Vitamin D™. Vitamin D is a group of
steroid-like molecules responsible for increasing intestinal
absorption of calcium, magnesium, and phosphate. They are also
involved in multiple other biological functions, including proper
functioning of the immune system, promoting healthy growth of bone,
and reduction of inflammation. The most important compounds in this
group are ergocalciferol (Vitamin D2) and cholecalciferol (Vitamin
D3). Sunshine Biopharma’s Essential Calcium-Vitamin D™ tablets
contain both of these compounds as well as calcium for optimum
health benefits. We are considering potentially launching this
product in 2022.
We are also developing additional nutritional supplement products.
We may launch additional nutritional supplement products in
2022.
D. Results of Operations
Comparison of results of operations for the three months
ended June 30, 2022 and 2021
During the three months ended June 30 2022, we generated revenues
of $150,307, compared to revenue of $52,874 for the three months
ended June 30, 2021. The increase is attributable to new
advertising campaigns. All of these revenues were generated from
our science-based nutritional supplements operations. The direct
cost for generating these revenues was $74,683 for the three months
ended June 30, 2022 (49.7%), compared to $18,515 (35.0%) for the
three months ended June 30, 2021. The increase in cost of sales in
2022 is due to increased cost of manufacturing. Our gross profit
increased to $75,624 for the three months ended June 30, 2022,
compared to a gross profit of $34,359 for the same period in
2021.
General and administrative expenses during the three month period
ended June 30, 2022 were $771,420 compared to $422,957 during the
three month period ended June 30, 2021, an increase of $348,463.
Overall, we incurred a loss of $695,796 from our operations in the
three month period ended June 30, 2022, compared to a loss from
operations of $388,598 in the similar period of 2021.
In addition, we had interest income of $146,043, interest expense
of $0, and debt release of $10,852 during the three months ended
June 30, 2022, compared to interest income of $2, interest expense
of $195,630, and debt release of $221 during the three months ended
June 30, 2021. This was primarily due to the transitioning of our
financing from convertible debt to equity. We incurred no losses
related to debt conversion during the three months ended June 30,
2022, compared to $2,295,057 in losses arising from debt conversion
during the three months ended June 30, 2021. This was also due to
the transitioning of our financing from convertible debt to
equity.
As a result, we incurred a net loss of $538,872 for the three month
period ended June 30, 2022, compared to a net loss of $2,879,054
for the three month period ended June 30, 2021.
Comparison of results of operations for the six months ended
June 30, 2022 and 2021
During the six months ended June 30 2022, we generated revenues of
$272,952, compared to revenue of $92,932 for the six months ended
June 30, 2021. The increase is attributable to new advertising
campaigns. All of these revenues were generated from our
science-based nutritional supplements operations. The direct cost
for generating these revenues was $134,528 for the six months ended
June 30, 2022 (49.3%), compared to $37,035 (39.9%) for the six
months ended June 30, 2021. The increase in cost of sales in 2022
is due to increased cost of manufacturing. Our gross profit
increased to $138,424 for the six months ended June 30, 2022,
compared to a gross profit of $55,897 for the same period in
2021.
General and administrative expenses during the six month period
ended June 30, 2022 were $2,057,584 compared to $1,720,141 during
the six month period ended June 30, 2021, an increase of $337,443.
Overall, we incurred a loss of $1,919,160 from our operations in
the six month period ended June 30, 2022, compared to a loss from
operations of $1,664,244 in the similar period of 2021.
In addition, we had interest income of $146,046, interest expense
of $12,864, and debt release of $10,852 during the six months ended
June 30, 2022, compared to interest income of $2, interest expense
of $245,341, and debt release of $51,252 during the six months
ended June 30, 2021. This was primarily due to the transitioning of
our financing from convertible debt to equity. We incurred no
losses related to debt conversion during the six months ended June
30, 2022, compared to $7,205,843 in losses arising from debt
conversion during the six months ended June 30, 2021. This was also
due to the transitioning of our financing from convertible debt to
equity.
As a result, we incurred a net loss of $1,775,106 for the six month
period ended June 30, 2022, compared to a net loss of $9,064,180
for the six month period ended June 30, 2021.
E. Liquidity and Capital Resources
As of June 30, 2022, we had cash and cash equivalents of
$41,727,775.
Net cash used in operating activities was $1,878,010 during the six
months ended June 30, 2022, compared to $916,207 during the six
month period ended June 30, 2021. The increase was a result of
expenses related to the three equity financings we completed in
February, March and April 2022.
Cash flows provided by financing activities were $41,561,363 for
the six months ended June 30, 2022, compared to $1,652,648 for the
six month period ended June 30, 2021. The increase was a result of
the three equity financings we completed in February, March and
April 2022.
Cash flows used in investing activities were $0 for the six months
ended June 30, 2022, compared to $0 for the six month period ended
June 30, 2021.
We are not generating adequate revenues from our operations to
fully implement our business plan as set forth herein. On February
17, 2022, we received net proceeds of approximately $6.8 million
from the sale of common stock and warrants in an underwritten
public offering. On March 14, 2022, we received net proceeds of
approximately $6.8 million from the sale of common stock and
warrants in a private placement. On April 28, 2022, we received net
proceeds of approximately $16.8 million from the sale of common
stock and warrants in a private placement. We believe our existing
cash will be sufficient to fund our operations, including general
and administrative expenses, expanded research and development
activities, and nutritional supplement business, for the next 24
months. There is no assurance our estimates will be accurate.
We have no committed sources of capital and we anticipate that we
will need to raise additional capital in the future, including for
further research and development activities and possibly clinical
trials. Additional capital may not be available on terms acceptable
to us, or at all.
F. 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.
For a detailed list of significant accounting policies, please see
our annual report on Form 10-K for the fiscal year ended December
31, 2021, including our financial statements and notes thereto
included therein as filed with the SEC on March 21, 2022,
Recently Adopted Accounting Standards
In February 2020, the FASB issued ASU 2020-02, Financial
Instruments-Credit Losses (Topic 326) and Leases (Topic 842) -
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting
Bulletin No. 119 and Update to SEC Section on Effective Date
Related to Accounting Standards Update No. 2016-02, Leases (Topic
842) which amends the effective date of the original
pronouncement for smaller reporting companies. ASU 2016-13 and its
amendments will be effective for the Company for interim and annual
periods in fiscal years beginning after December 15, 2022. The
Company believes the adoption will modify the way the Company
analyzes financial instruments, but it does not anticipate a
material impact on results of operations. The Company is in the
process of determining the effects adoption will have on its
consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, Debt – Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 –
40), (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for
certain financial instruments with characteristics of liabilities
and equity, including convertible instruments and contracts on an
entity’s own equity. The ASU2020-06 amendments are effective for
fiscal years beginning after December 15, 2023, and interim periods
within those fiscal years. Early adoption is permitted, but no
earlier than fiscal years beginning after December 15, 2020,
including interim periods within those fiscal years. The Company is
evaluating the impact of this guidance on its unaudited
consolidated financial statements.
G. Off Balance-Sheet Arrangements
None
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company and are not required to provide
the information under this item.
Item 4.
Controls and Procedures.
A. Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act as of the end of the period covered by this report.
These controls are designed to ensure that information required to
be disclosed in the reports we file or submit pursuant to the
Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities
and Exchange Commission, and that such information is accumulated
and communicated to our management, including our CEO and CFO, to
allow timely decisions regarding required disclosure.
Based on this evaluation, our management, including our CEO and CFO
concluded that our disclosure controls and procedures were
effective as of June 30, 2022, at reasonable assurance level.
B. Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting during the quarter ended June 30, 2022, that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II.
OTHER INFORMATION
Item 1.
Legal Proceedings.
We are not party to, and our property is not the subject of, any
material legal proceedings.
Item 1A.
Risk Factors.
We are a smaller reporting company and are not required to provide
the information under this item.
Item 2.
Unregistered Sales of Equity Securities and Use of
Proceeds.
During the three months ended June 30, 2022, the Company issued
2,802,703 shares of common stock upon exercise of warrants with an
exercise price of $2.22, and 3,692,276 shares of common stock upon
exercise of pre-funded warrants with an exercise price of
$0.001.
In connection with the foregoing, we relied upon the exemption from
registration provided by Section 4(a)(2) under the Securities Act
of 1933, as amended, for transactions not involving a public
offering.
Item 3.
Defaults Upon Senior Securities.
None.
Item 4. Mine
Safety Disclosures.
Not Applicable.
Item 5.
Other Information.
None.
Item 6.
Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on August
3, 2022.
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SUNSHINE
BIOPHARMA, INC. |
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By: |
/s/ Dr. Steve N. Slilaty |
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Dr. Steve N. Slilaty |
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Chief Executive Officer
(principal executive officer) |
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By: |
/s/ Camille Sebaaly |
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Camille Sebaaly
Chief Financial Officer (principal financial and accounting
officer)
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Sunshine Biopharma (NASDAQ:SBFM)
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