0001654954-19-004354.txt : 20190412 0001654954-19-004354.hdr.sgml : 20190412 20190412170854 ACCESSION NUMBER: 0001654954-19-004354 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20181231 FILED AS OF DATE: 20190412 DATE AS OF CHANGE: 20190412 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Sunshine Biopharma, Inc CENTRAL INDEX KEY: 0001402328 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 205566275 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52898 FILM NUMBER: 19746985 BUSINESS ADDRESS: STREET 1: 6500 TRANS-CANADA HIGHWAY STREET 2: 4TH FLOOR CITY: POINTE-CLAIRE STATE: A8 ZIP: H9R 0A5 BUSINESS PHONE: 514-426-6161 MAIL ADDRESS: STREET 1: 6500 TRANS-CANADA HIGHWAY STREET 2: 4TH FLOOR CITY: POINTE-CLAIRE STATE: A8 ZIP: H9R 0A5 FORMER COMPANY: FORMER CONFORMED NAME: Mountain West Business Solutions, Inc DATE OF NAME CHANGE: 20071030 FORMER COMPANY: FORMER CONFORMED NAME: mountain west business solutions,inc DATE OF NAME CHANGE: 20070607 10-K 1 sbfm_10k.htm ANNUAL REPORT Blueprint
 

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
 
FORM 10-K
__________________
 
(Mark one)
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018
 
 TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF1934 for the transition period from ________________ to________________________.
 
Commission File Number 000-52898
 
SUNSHINE BIOPHARMA, INC.
 (Exact name of registrant as specified in its charter)
 
Colorado
 
20-5566275
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
6500 Trans-Canada Highway
4th Floor
Pointe-Claire, Quebec, Canada H9R 0A5
 (Address of principal executive offices)
 
(514) 426-6161
(Registrant’s Telephone Number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:   None
 
Securities registered pursuant to Section 12(g) of the Act:
 
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $0.001 per share
 
OTC MARKETS
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes    No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. No ☐ Yes
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
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 Act). Yes    No
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter on June 30, 2018 was $3,970,144 .
 
As of April 11, 2019, the Registrant had 89,348,981 shares of Common Stock issued and outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE - None
 

 
 
 
TABLE OF CONTENTS
 
 
Page No.
Index
 
 
 
 
 3
 
 
 
Business
 3
 
 
 
Risk Factors
  11
 
 
 
Unresolved Staff Comments
  11
 
 
 
Properties
  11
 
 
 
Legal Proceedings
  11
 
 
 
Mine Safety Disclosures
  11
 
 
 
 12
 
 
 
Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
 12
 
 
 
Selected Financial Data
 14
 
 
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 14
 
 
 
Quantitative and Qualitative Disclosures About Market Risk
  20
 
 
 
Financial Statements and Supplementary Data
  20
 
 
 
Changes in and Disagreements on Accounting and Financial Disclosure
  21
 
 
 
Controls and Procedures
  21
 
 
 
Other Information
 22
 
 
 
 23
 
 
 
Directors, Executive Officers and Corporate Governance
 23
 
 
 
Executive Compensation
 25
 
 
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 26
 
 
 
Certain Relationships and Related Transactions, and Director Independence
 27
 
 
 
Principal Accounting Fees and Services
 28
 
 
 
 29
 
 
 
Exhibits, Financial Statement Schedules
 29
 
 
 
 
Signatures
  31
 
 
 
2
 
 
FORWARD LOOKING STATEMENTS
 
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. 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. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the SEC.
 
PART I
 
ITEM 1. BUSINESS
 
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 Brandtm product, Essential 9tm, a dietary supplement comprised of the nine amino acids which the human body cannot synthesize. Essential 9tm 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 the price per share of 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.
 
 
3
 
 
Business Operations
 
As of the date of this report our operations include the following:
  
Proprietary Drug Development Operations
 
Since inception, 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 and pending worldwide patents pertaining to Adva-27a including U.S. Patent Number 8,236,935. See “Part I, Item 1 – Business - Intellectual Property.”
 
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, and other anti-tumor drugs currently in use, Adva-27a is able to destroy Multidrug Resistant Cancer cells. Adva-27a is the only compound known today that is capable of destroying Multidrug Resistant Cancer. 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
 
 
4
 
 
 Our preclinical studies to date have shown that:
 
Adva-27a is effective at killing different types of Multidrug Resistant cancer cells, including Pancreatic Cancer Cells (Panc-1), Breast Cancer Cells (MCF-7/MDR), Small-Cell Lung Cancer Cells (H69AR), and Uterine Sarcoma Cells (MES-SA/Dx5).
 
Adva-27a is unaffected by P-Glycoprotein, the enzyme responsible for making cancer cells resistant to anti-tumor drugs.
   
Adva-27a has excellent clearance time (half-life = 54 minutes) as indicated by human microsomes stability studies and pharmacokinetics data in rats.
 
Adva-27a clearance is independent of Cytochrome P450, a mechanism that is less likely to produce toxic intermediates.
 
Adva-27a is an excellent inhibitor of Topoisomerase II with an IC50 of only 13.7 micromolar (this number has recently been reduce to 1.44 micromolar as a result of resolving the two isomeric forms of Adva-27a).
 
Adva-27a has shown excellent pharmacokinetics profile as indicated by studies done in rats.
 
Adva-27a does not inhibit tubulin assembly.
 
These and other preclinical data have been published in ANTICANCER RESEARCH, a peer-reviewed International Journal of Cancer Research and Treatment. The publication which is entitled “Adva-27a, a Novel Podophyllotoxin Derivative Found to Be Effective Against Multidrug Resistant Human Cancer Cells” [ANTICANCER RESEARCH 32: 4423-4432 (2012)] is available on our website at www.sunshinebiopharma.com.
 
We have been delayed in our clinical development program due to lack of funding. Our fund raising efforts are continuing and as soon as adequate financing is in place we will continue our clinical development program of Adva-27a by conducting the following next sequence of steps:
 
GMP Manufacturing of 2 kilogram for use in IND-Enabling Studies and Phase I Clinical Trials
IND-Enabling Studies
Regulatory Filing (Fast-Track Status Anticipated)
Phase I Clinical Trials (Pancreatic Cancer Indication)
 
Adva-27a’s initial indication will be Pancreatic Cancer for which there are currently little or no treatment options available. We are planning to conduct our clinical trials at McGill University’s Jewish General Hospital in Montreal, Canada. All aspects of the clinical trials in Canada will employ FDA standards at all levels.
  
 
5
 
 
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 as it is general chemotherapy drug. We believe that upon successful completion of Phase I Clinical Trials we may receive one or more offers from large pharmaceutical companies to buyout 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 manufacture and market our new drug. The following, Figure 3, is a space-filling molecular model of our Adva-27a.
 
 
 
Figure 3
 
  
 
6
 
 
Generic Pharmaceuticals Operations
 
In 2016, our Canadian wholly owned subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), signed Licensing Agreements with a major pharmaceutical company for four prescription generic drugs for the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. We have since been working towards commencement of marketing of these pharmaceutical products under our own, Sunshine Biopharma, label. These four generic products are as follows:
 
Anastrozole (brand name Arimidex® by AstraZeneca) for treatment of Breast Cancer;
Letrozole (brand name Femara® by Novartis) for treatment of Breast Cancer;
Bicalutamide (brand name Casodex® by AstraZeneca) for treatment of Prostate Cancer;
Finasteride (brand name Propecia® by Merck) for treatment of BPH (Benign Prostatic Hyperplasia)
 
Sunshine Canada is currently in the process of securing a Drug Identification Number (“DIN”) for each of these products from Health Canada. We are planning to use part of the already approved Atlas Pharma Inc. space as a drug warehouse to facilitate the process of obtaining a Drug Establishment License (“DEL”) from Health Canada. Upon receipt of the DEL and DIN’s, we will be able to accept orders for our own label SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride. We cannot estimate the timing in our obtaining either the DIN’s or the DEL due to variables involved that are out of our control. Figure 4 below shows our 30-Pill blister pack of Anastrozole.
 
 
Figure 4
 
We currently have a number of additional Generic Pharmaceuticals under review for in-licensing. While no assurances can be provided that we will acquire the rights to all or any of these drugs, we are confident we will acquire most, if not all of these rights. We believe that a larger product portfolio will provide us with more opportunities and a greater reach into the marketplace. We hope to further build our generics portfolio of “SBI” label Generic Pharmaceuticals over time. There are no assurances this will occur.
  
Various publicly available sources indicate that the worldwide sales of generic pharmaceuticals are approximately $200 billion per year. In the United States and Canada, the sales of generic pharmaceuticals are approximately $50 billion and $5 billion, respectively. The generic pharmaceuticals business is fairly competitive and there are several multinational players in the field including Teva (Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan (Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex (Canada). While no assurances can be provided, with our offering of Canadian approved products we believe that we will be able to access at least a small percentage of the generic pharmaceutical marketplace.
  
While no assurances can be provided and subject to the availability of adequate financing, of which there is no assurance, we anticipate that profits from the sales of Generic Products will be used to finance our proprietary drug development program, including Adva-27a, our flagship anticancer compound. In addition to near-term revenue generation, building the generics business infrastructure and securing the proper permits will render us appropriately positioned for the marketing and distribution of our proprietary Adva-27a drug candidate, provided that Adva-27a is approved for such marketing and distribution, of which there can be no assurance.
 
 
7
 
 
 Analytical Chemistry Services Operations
 
On January 1, 2018, we acquired all of the issued and outstanding shares of Atlas Pharma Inc. (“Atlas”). The purchase price was $848,000 Canadian (approximately $676,748 US). Payment of the purchase price was comprised of (i) a cash payment of $100,500 Canadian (approximately $80,300 US); (ii) the issuance of 1,000,000 shares of our Common Stock, and (iii) a promissory note in the principal amount of $450,000 Canadian (approximately $360,000 US), with interest payable at the rate of 3% per annum. We are required to make payments of $10,000 Canadian (approximately $8,000 US) per calendar quarter, due and payable on or before the end of each such calendar quarter through December 31, 2023.
 
Atlas is a Health Canada certified company dedicated to chemical analysis of pharmaceutical and other industrial samples. Atlas has 9 full-time employees and generated revenues of $580,558 and $598,109 Canadian (approximately $464,000 and $478,000 US) in 2018 and 2017, respectively. Housed in a 5,250 square foot facility, Atlas’s operations are authorized by a Drug Establishment License (DEL) issued by Health Canada and are fully compliant with the requirements of Good Laboratory Practices (GLP). Atlas is also registered with the FDA. Atlas Pharma Inc.’s website address is www.atlaspharmainc.ca.
 
In June 2018, we acquired testing and other laboratory equipment as part of our plan to expand Atlas’ business operations. Part of the expansion will include hiring additional technical and sales personnel and offering microbiology and other sample testing capabilities.
 
Dietary Supplements Operations
 
In 2018, we completed the development of Essential 9tm, the first in a line of essential micronutrients products that we are planning to launch. On December 14, 2018, Health Canada issued NPN 80089663 through which it authorized Sunshine Biopharma Inc. to manufacture and sell the Essential 9tm product. Our Essential 9tm dietary supplement tablets 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. Sunshine Biopharma’s Essential 9tm provides all 9 Essential Amino Acids in freeform and in the proportions recommended by Health Canada. In addition to our own website, Essential 9tm is available on Amazon and other outlets. Figure 5 below shows our 60-Tablet Essential 9tm product.
 
 
Figure 5
 
 
8
 
 
Intellectual Property
 
Effective October 8, 2015, we executed a patent purchase agreement, with Advanomics Corporation (“Advanomics”), a related party, pursuant to which we acquired all of the right, title and interest in and to U.S. Patent Number 8,236,935 for our anticancer compound, Adva-27a.  On December 28, 2015, we executed a second patent purchase agreement, with Advanomics, pursuant to which we acquired all of the right, title and interest in and to all of the remaining worldwide rights covered by issued and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 for our anticancer compound, Adva-27a (“Patent Purchase Agreements”).
 
Effective December 28, 2015, we entered into amendments (the “Amendments”) of these Patent Purchase Agreements pursuant to which the total purchase price was reduced from $17,142,499 to $618,810, the book value of this intellectual property on the financial statements of Advanomics.  Further, the Amendments provided for automatic conversion of the promissory notes representing the new purchase price into an aggregate of 16,065,271 shares of our Common Stock once we increased our authorized capital such that these shares can be issued. In July 2016 we increased our authorized capital and issued the 16,065,271 Common Shares to Advanomics thereby completing all aspects of the patent purchase arrangements and securing direct ownership of all worldwide patents and rights pertaining to Adva-27a.
 
In 2016 we signed Licensing Agreements with a major pharmaceutical company for four (4) prescription generic drugs for the treatment of Breast Cancer, Prostate Cancer and Enlarged Prostate. These agreements give us the right to register the four (4) generic products, Anastrozole, Letrozole, Bicalutamide and Finasteride in Canada under our own label and obtain a DIN for each in order to be able to place them on the market.
 
Our new wholly owned subsidiary, Atlas Pharma Inc., which we acquired on January 1, 2018 holds a Drug Establishment License from Health Canada and is registered with the FDA. Atlas Pharma Inc. is the owner of a relatively large portfolio of analytical chemistry methodology and Standard Operating Procedure. This intellectual property is protected as company secrets and controlled through employee and management confidentiality agreements.
 
In 2018 we completed the development of Essential 9tm, our first dietary supplement. On December 14, 2018, Health Canada issued NPN 80089663 through which it authorized Sunshine Biopharma Inc. to manufacture and sell the Essential 9tm product. We are currently preparing the necessary documents for registration of our Essential 9tm trademark in the United States.
  
Government Regulations
 
All of our business operations, including the Proprietary Drug Development Operations, the Generic Pharmaceutical Operations, the Analytical Chemistry Services Operations, and Dietary Supplements Operations are subject to extensive and frequently changing federal, state, provincial and local laws and regulations.
 
In the U.S, the Federal Government agency responsible for regulating drugs and dietary supplements is the U.S. Food and Drug Administration (“FDA”). The Canadian counterpart to the FDA is Health Canada. Both the FDA and Health Canada have similar requirements for drugs and supplements to be approved for marketing. In Canada, drugs and dietary supplements are authorized through the issuance by Health Canada of a Drug Identification Number (DIN) and a Natural Product Number (NPN) on a per product basis, respectively. In both the U.S. and Canada, the quality standards for brand name drugs and generic drugs are the same. In addition, the ingredients, manufacturing processes and facilities for all drugs and supplements must meet the guidelines for Good Manufacturing Practices (“GMP”). Moreover, all drug manufacturers must perform a series of tests, both during and after production, to show that every drug batch made meets the regulatory requirements for that product.
  
In connection with our development of the new chemical entity, Adva-27a, we will be subject to significant regulations in the U.S. in order to obtain approval of the FDA to offer our product on the market.  The approximate procedure for obtaining FDA approval involves an initial filing of an IND application following which the FDA would give the go ahead for the drug sponsor to proceed with Phase I clinical (human) trials.  Following completion of Phase I, the results are filed with the FDA and a request is made to proceed to Phase II.  Similarly, following completion of Phase II the data are filed with the FDA and a request is made to proceed to Phase III.  Following completion of Phase III, a request is made for marketing approval.  Depending on various issues and considerations, the FDA could provide limited marketing approval for “compassionate-use” if the drug treats terminally ill patients with limited other treatment options available.  As of the date of this Report we have not made any filings with the FDA or other regulatory bodies in other jurisdictions.  We have however had discussions with clinicians at the McGill University’s Jewish General Hospital in Montreal where we plan to undertake our Phase I study for pancreatic cancer and they believe that Health Canada is likely to grant us a so-called “fast-track” process on the basis of the terminal nature of the cancer type we will be treating.  There are no assurances this will occur.
 
 
9
 
 
Employees
 
As of the date of this Report we have a total of twelve (12) employees. In addition to our management which comprises three (3) employees, our new wholly owned subsidiary acquired on January 1, 2018, Atlas Pharma Inc., has 9 employees. We anticipate that if we receive financing we will need additional employees in both our generic pharmaceuticals and proprietary drug development operations including accounting, regulatory affairs, marketing, sales and laboratory personnel.
 
Competition
 
In the area of proprietary anticancer drug development, we are competing with large publicly and privately held companies engaged in developing new cancer therapies. There are numerous other entities engaged in this business that have greater resources, both financial and otherwise, than the resources presently available to us.  Nearly all major pharmaceutical companies including Amgen, Roche, Pfizer, Bristol-Myers Squibb and Novartis, to name a few, have on-going anticancer drug development programs and some of the drugs they may develop could be in direct competition with our own.  Also, a number of small companies are also working in the area of cancer and could develop drugs that may be in competition with ours.  However, none of these competitor companies can use molecules similar to ours as they would be infringing our patents.
 
The generic pharmaceuticals business is fairly competitive and there are many players in the field including several multinationals such as Teva (Israel), Novartis - Sandoz (Switzerland), Hospira (USA), Mylan (Netherlands), Sanofi (France), Fresenius Kabi (Germany) and Apotex (Canada)with annual sales in the range of approximately $2 billion to over $10. With our offering of Canadian approved generic products, we believe that we will be able to access at least a small percentage of the generic pharmaceuticals market.
 
Our analytical chemistry services business is also subject to significant competition. This competition however is entirely regional as only entities operating in Canada require Health Canada certified testing of their industrial samples. There are several local service providers operating in the same sector as ours which prevents us from obtaining greater value added for our services. We believe we have managed to secure an advantage over the completion by offering our clients faster turnaround.
 
Similarly, our Essential 9tm, together with our planned line of dietary supplement fall directly within a very crowded and highly competitive product sector. As of the date of this Report, Essential 9tm is the only Essential Amino Acid product that comprises all 9 essential amino acids in tablet form. We believe this will provide us with a competitive advantage, at least for the near future.
 
Trademarks-Tradenames
 
We are the exclusive owner of all worldwide rights pertaining to Adva-27a covered by PCT/FR2007/000697 and PCT/CA2014/000029.  The patent applications filed under PCT/FR2007/000697 have been issued in Europe, Canada, the United States (8,236,935) and India.  The patent application filed in the U.S. under PCT/CA2014/000029 has recently been allowed. The remaining international patent applications filed under the same PCT are still pending.
 
We are also the owner of Licensing Agreements for four (4) generic drugs which we are planning to market and sell under the tradenames SBI-Anastrozole, SBI-Letrozole, SBI-Bicalutamide and SBI-Finasteride.
 
Our newly acquired wholly owned subsidiary, Atlas Pharma Inc. holds Drug Establishment License Number 102041 issued by Health Canada.
 
In 2018 we completed the development of Essential 9tm, our first dietary supplement product. On December 14, 2018, Health Canada issued NPN 80089663 through which it authorized us to manufacture and sell the Essential 9tm product. We are currently preparing the necessary documents for registration of our Essential 9tm product and trademark in the United States in 2019.
 
 
10
 
 
ITEM 1A. RISK FACTORS
 
We are a smaller reporting company and not required to include this disclosure in this report.
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
None.
 
ITEM 2. PROPERTIES
 
During the first half of 2017, our principal place of business was located at 469 Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada, H3N 1R4.  On June 1, 2017 we moved our principal place of business to our current location at 6500 Trans-Canada Highway, 4th Floor, Pointe-Claire, Quebec, Canada H9R 0A5. We pay a minimum monthly rate of $227 (Canadian), including tax, for this location. Pursuant to our lease agreement our landlord is able to provide us with increased office space for additional fees as may be requested by us from time to time.
 
Our newly acquired wholly owned subsidiary, Atlas Pharma Inc. leases an office and laboratory space at 7582 Chemin Cote-de-Liesse, Montréal, Quebec, Canada H4T 1E7. The lease expires on May 21, 2021. Minimum lease payments for the next remaining three (3) years are Canadian $62,213 (approximataely $47,904 US) in 2019, $62,213 (approximately $47,904 US) in 2020, and $25,921 (approximately $19,959 US) in 2021.
 
We believe that our existing facilities and equipment are adequate. We continuously review our anticipated requirements for facilities and equipment, and on the basis of that review, may from time to time acquire or lease additional facilities or equipment, or dispose of some of the existing space or equipment.
 
ITEM 3.    LEGAL PROCEEDINGS
 
In November 2014, we entered into a Manufacturing Services Agreement with Lonza Ltd. and Lonza Sales Ltd. (hereinafter jointly referred to as “Lonza”), whereby we engaged Lonza to be the manufacturer of our Adva-27a anticancer drug. In June 2016 we received a sample of the pilot manufacturing run for evaluation. Our laboratory analyses showed that, while the sample meets all of the required chemical, physical and biological specifications, the amount of material generated (the “Yield”) by the pilot run was found to be significantly lower than anticipated. We are currently working towards finding possible solutions to increase the Yield and define a path forward. During the course of our discussions concerning the problem of the low Yield, Lonza informed us that they required us to pay them $687,818 prior to moving forward with any activity pertaining to the manufacturing agreement we have with them. We have repeatedly indicated to Lonza that a clear path defining exactly how the extremely low Yield issue would be addressed is imperative prior to us making any payments. We issued a letter to them in June 2017 advising of our position. As of the date of this Report we have not received a response to our letter and no further action has been taken by either party.
 
In June 2018 we filed an action in the Superior Court of the Province of Quebec in the District of Montreal (Canada) against one of our existing shareholders residing in Quebec City (Canada) arising out of a possible equity investment intended to be completed by August 2018. The complaint alleges among other things, claims of misrepresentations and misleading conduct resulting in damages to us in an amount of approximately $200,000 Canadian (approximately $154,000 US). As of the date of this report we are awaiting a court date for the hearings to commence.
 
To the best of our management’s knowledge and belief, there are no other material claims that have been brought against us nor any claims threatened. 
 
ITEM 4.    MINE SAFETY DISCLOSURES
 
Not applicable.
  
 
11
 
 
PART II
 
ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Market Information
 
Trading of our Common Stock commenced on the OTCBB in September 2007 under the symbol “MWBN.”  Effective November 30, 2009, the trading symbol for our Common Stock was changed to “SBFM” as a result of our name change discussed above.
 
In the third quarter of 2016 our Common Stock began trading on OTC Pink (otcmarkets.com) because the price of our stock had dropped below $0.01 per share.
 
Effective February 1, 2019 we completed a 20 to 1 reverse split of our Common Stock, reducing the issued and outstanding shares of Common Stock from 1,713,046,242 to 85,652,400 (the “Reverse Stock Split”). 
 
The table below sets forth the reported high and low transaction prices for the periods indicated taking into account and giving retroactive effect to the Reverse Stock Split.
 

Quarter Ended
  High  
  Low  
 
    
    
March 31, 2017
 $0.0502 
 $0.0502 
June 30, 2017
 $0.2680 
 $0.2200 
September 29, 2017
 $0.3100 
 $0.2810 
December 29, 2017
 $0.2600 
 $0.2000 
 
    
    
March 29, 2018
 $0.1620 
 $0.1580 
June 29, 2018
 $0.1340 
 $0.1060 
September 28, 2018
 $0.0340 
 $0.0300 
December 31, 2018
 $0.0200 
 $0.0160 
 
As of April 11, 2019, the closing bid price of our Common Stock was $0.012 per share.
 
Trading volume in our Common Stock varies between a few thousand shares to several hundred thousand shares per day.  As a result, the trading price of our Common Stock is subject to significant fluctuations.
 
The Securities Enforcement and Penny Stock Reform Act of 1990
 
The Securities and Exchange Commission (“Commission” or “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
 
As of the date of this Report, our Common Stock is defined as a “penny stock” under the Securities and Exchange Act.  It is anticipated that our Common Stock will remain a penny stock for the foreseeable future.  The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment.  Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.  Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
 
 
12
 
 
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:
 
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
 
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;
 
contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;
 
contains a toll-free telephone number for inquiries on disciplinary actions;
 
defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
 
contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation;
 
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:
 
the bid and offer quotations for the penny stock;
 
the compensation of the broker-dealer and its salesperson in the transaction;
 
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and
 
monthly account statements showing the market value of each penny stock held in the customer's account.
 
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.  These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules.  Therefore, stockholders may have difficulty selling their securities.
 
Holders
 
We had 147 holders of record of our Common Stock as of the date of this Report, not including those persons who hold their shares in “street name.”
 
Our CEO, Dr. Steve N. Slilaty, holds all 500,000 shares of our Series “B” Preferred Stock issued in 2015.
 
Stock Transfer Agent
 
The stock transfer agent for our securities is Corporate Stock Transfer, Inc.  Their address is 3200 Cherry Creek South Drive, Suite 430, Denver, Colorado, 80209.  Their phone number is (303) 282-4800.
 
 
13
 
 
Dividends
 
We have not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present, our policy is to retain earnings, if any, to develop and market our products.  The payment of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions.
 
Reports
 
We are subject to certain reporting requirements and furnish annual financial reports to our stockholders, certified by our independent accountants, and furnish unaudited quarterly financial reports in our quarterly reports filed electronically with the SEC.  All reports and information filed by us can be found at the SEC website, www.sec.gov.
 
ITEM 6.    SELECTED FINANCIAL DATA.
 
Not applicable.
 
ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein.  In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this Report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission.  Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf.  We disclaim any obligation to update forward looking statements.
 
Overview and History
 
We were incorporated in the State of Colorado on August 31, 2006 under the name “Mountain West Business Solutions, Inc.” Until October 2009, our business was to provide management consulting with regard to accounting, computer and general business issues for small and home-office based companies.
 
In October 2009, we acquired Sunshine Biopharma, Inc., a Colorado corporation holding an exclusive license to a new anticancer drug bearing the laboratory name, Adva-27a. As a result of this transaction we changed our name to “Sunshine Biopharma, Inc. and our officers and directors resigned their positions with us and were replaced by Sunshine’s management at the time, including our current CEO, Dr. Steve N. Slilaty, and our current CFO, Camille Sebaaly each of whom remain part of our current management. Our principal business became that of a pharmaceutical company focusing on the development of our licensed Adva-27a anticancer compound. In December 2015 we acquired all issued and pending patents pertaining to our Adva-27a technology and terminated the license. See “Part I, Item 1 – Business - Intellectual Property,” below for a more detailed explanation of this acquisition.
 
In July 2014, we formed a wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), for the purposes of offering generic pharmaceutical products in Canada and elsewhere around the world. 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 Brandtm product, Essential 9tm, a dietary supplement comprised of the nine amino acids which the human body cannot synthesize. Essential 9tm has been authorized for marketing by Health Canada under NPN 80089663.
 
 
14
 
 
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.
 
 
15
 
 
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.
 
 
16
 
  
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 
 
 
 
17
 
 
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.
 
 
18
 
 
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.
 
 
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Off-Balance Sheet Arrangements
 
We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.
 
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable.
 
ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Reference is made to the Financial Statements, the notes thereto, and the Report of Independent Public Accountants thereon commencing at page F-1 of this Report, which Financial Statements, notes and report are incorporated herein by reference.
 
                                                     
 
20
 
 
 
 
 
 
 
 
 
 
 
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
 
 
F-1
 
 
Sunshine Biopharma, Inc.
 
 
 
 
 
 
Consolidated Balance Sheet
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
December 31,
 
 
 
2018
 
 
2017
 
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 
 
    
    
TOTAL ASSETS
 $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 
Interest payable
  9,291 
  9,215 
 
    
    
Total Curent Liabilities
  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 
 
    
    
Accumulated (Deficit)
  (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.
 
F-2
 
 
Sunshine Biopharma, Inc.
 
 
 
 
 
 
Consolidated Statement Of Operations and Comprehensive Loss
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
Revenues
 $447,200 
 $- 
Cost of Revenues
 391,081
 
  -
 
 
    
    
Gross Profit
 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.

 
F-3
 
 
Sunshine Biopharma, Inc.
 
 
 
 
 
 
Consolidated Statement Of Cash Flows
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
December 31,
 
 
 
2018
 
 
2017
 
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.
 
 
F-4
 
 
Sunshine Biopharma, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Shareholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Number Of
 
 
 
 
 
 Capital Paid
 
 
 Number Of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Common
 
 
 Common
 
 
 in Excess
 
 
 Preferred
 
 
 Preferred
 
 
 Comprehensive
 
 
 Accumulated
 
 
 
 
 
 
 Shares Issued
 
 
 Stock
 
 
 of Par Value
 
 
 Shares Issued
 
 
 Stock
 
 
 Income
 
 
 Deficit
 
 
 Total
 
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.
 
 
F-5
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 9tm, a dietary supplement comprised of the nine amino acids which the human body cannot synthesize. Essential 9tm 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.
 
 
F-6
 
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, 2018 and 2017, 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.
 
 
F-7
 
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).
 
 
F-8
 
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.
 
 
F-9
 
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.
 
 
F-10
 
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.
 
 
F-12
 
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
 
 
F-13
 
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:
 
 
 2018
 
 
 2017
 
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.
 
 
F-14
 
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:
 
 
 
 December 31,
2018
 
 
 December 31,
2017
 
 
 
 Temporary Difference
 
 
 Tax Effect
 
 
 Temporary Difference
 
 
 Tax Effect
 
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.
 
 
F-15
 
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:
 

 
December 31,
 

 
2018
 
 
2017
 
 
U.S. Federal statutory graduated rate
  
  21.00%
  34.00%
 
State income tax rate,
net of federal benefit 
 
  4.12%
  3.06%
 
Net rate
 
  25.12%
  37.06%
 
    
    
 
Net operating loss used
 
  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%
 
Canada Provincial rate  
 
  11.80%
  11.80%
 
Net Canada rate
 
  26.80%
  26.80%
 
    
    
 
Net operating loss used (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.
 
 
F-16
 
Sunshine Biopharma, Inc.
Notes to Consolidated Financial Statements
December 31, 2018 and 2017
 
 
Note 8 – Notes Payable
 
Notes payable consist of the following: 
 
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
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- 

 
F-17
 
 
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.
 
 
F-18
 
 
Note 9 – Notes Payable Related Party
  
Notes payable to related parties consist of the following:
 
2018
 
 
2017
 
 
 
 
 
 
 
 
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
 
 
 
F-19
 
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.
 
 
F-20
 
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.
 
 
F-21
 
 
 
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None
 
ITEM 9A.    CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Disclosure Controls and Procedures  Our management, with the participation of our Chief Executive Officer, Chief Financial Officer, and Chief Operations Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report.
 
These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO 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 not effective as of December 31, 2018, at reasonable assurance level, for the following reasons:
 
ineffective control environment and lack of qualified full-time CFO who has SEC experience to focus on our financial affairs;
 
lack of qualified and sufficient personnel, and processes to adequately and timely identify making any and all required public disclosures;
 
deficiencies in the period-end reporting process and accounting policies;
 
inadequate internal controls over the application of new accounting principles or the application of existing accounting principles to new transactions;
 
inadequate internal controls relating to the authorization, recognition, capture, and review of transactions, facts, circumstances, and events that could have a material impact on the company’s financial reporting process;
 
deficient revenue recognition policies;
 
inadequate internal controls with respect to inventory tracking and transactions; and
 
improper and lack of timely accounting for accruals such as prepaid expenses, accounts payable and accrued liabilities.
 
Our Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. We are reviewing various potential solutions to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Additionally, the Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.
 
 
21
 
 
We believe that our financial statements presented in this annual report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.
 
Inherent Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.
 
Changes in Internal Control over Financial Reporting – There were no changes in our internal control over financial reporting during our fiscal year ended December 31, 2018, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
 
Management Report on Internal Control over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act.  Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: 
 
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
 
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and
 
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2018. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 
Based on an assessment carried out April 1-10, 2018, management believes that, as of December 31, 2018, our internal control over financial reporting were ineffective based in part on the issues discussed above.
 
ITEM 9B.    OTHER INFORMATION
 
None
 
 
22
 
 
PART III
 
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Following is a list of our officers and directors:
 
Name
 
Age
 
Position(s)
 
 
 
Dr. Steve N. Slilaty
  66 
President, Chief Executive Officer, and Chairman
 
    
 
Dr. Abderrazzak Merzouki
  55 
Chief Operating Officer and Director
 
    
 
Camille Sebaaly
  58 
Chief Financial Officer, Secretary and Director
 
Our directors serve as directors until our next Annual Meeting of Stockholders and the election and qualification of the director’s respective successor or until the director’s earlier death, removal or resignation.
 
               Following is biographical information of our current management:
 
Dr. Steve N. Slilaty was appointed as our CEO, President and Chairman of our Board of Directors on October 15, 2009.  Dr. Slilaty is an accomplished scientist and business executive. His scientific publications are widely cited including university textbooks. Sunshine Biopharma is the third in a line of biotechnology companies that Dr. Slilaty founded and managed through their early and mid-stages of development.  The first, Quantum Biotechnologies Inc. later known as Qbiogene Inc., was founded in 1991 and grew to over $60 million in annual sales.  Today, Qbiogene is a member of a family of companies owned by MP Biomedicals, one of the largest international suppliers of biotechnology reagents and other research products.  The second company which Dr. Slilaty founded, Genomics One Corporation, later known as Alert B&C Corporation, conducted an initial public offering (IPO) of its capital stock in 1999 and, on the basis of its ownership of Dr. Slilaty’s patented TrueBlue® Technology, Genomics One became one of the key participants in the Human Genome Project.  Formerly a research team leader of the Biotechnology Research Institute, a division of the National Research Council of Canada, Dr. Slilaty also served as a consultant in a management and advisory capacity for a major Canadian biotechnology company between 1995 and 1997 during which time the company completed one of the largest biotechnology IPO‘s in Canada. Dr. Slilaty is one of the pioneers of Gene Therapy having developed the first gene delivery system applicable to humans in 1983 [Science 220:725-727 (1983)]. Dr. Slilaty's other distinguished scientific career accomplishments include the discovery of a new class of enzymes, the S24 Family of Proteases (IUBMB Enzyme Nomenclature: EC 3.4.21.88), development of the first site-directed mutagenesis system applicable to double-stranded DNA, cloning the gene for the first yeast-lytic enzyme (lytic b-1,3-glucanase), developing a new molecular strategy for increasing the rate of enzyme reactions, inventing a powerful new cloning system for genomic cloning and gene discovery (TrueBlue® Technology) and developing a new transcriptomics technology for generating entire RNA profiles. These and other works of Dr. Slilaty are cited in research papers, editorials, review articles and textbooks.  Dr. Slilaty received his Ph.D. degree in Molecular Biology from the University of Arizona in 1983 and Bachelor of Science degree in Genetics and Biochemistry from Cornell University in 1976.  In addition, Dr. Slilaty holds a position as Adjunct Professor at Université du Québec in the Department of Microbiology and Biotechnology.  He devotes approximately 50% of his time to our business affairs.
 
Dr. Abderrazzak Merzouki was appointed as a Director and our Chief Operating Officer in February 2016.  In addition to his new positions with our Company, since January 2016 he has been self-employed as a consultant in the fields of biotechnology and pharmacology.  From July 2007 through December 2016, Dr. Merzouki worked at the Institute of Biomedical Engineering in the Department of Chemical Engineering at Ecole Polytechnique de Montreal, where he taught and acted as a senior scientist involved in the research and development of plasmid and siRNA-based therapies.  Dr. Merzouki is a molecular biologist and an immunologist with extensive experience in the area of gene therapy where he performed several preclinical studies for pharmaceutical companies involving the use of adenoviral vectors for cancer therapy and plasmid vectors for the treatment of peripheral arterial occlusions.  Dr. Merzouki also has extensive expertise in the design of expression vectors, and production and purification of recombinant proteins.  He developed technologies for production of biogeneric therapeutic proteins for the treatment of various diseases including cancer, diabetes, hepatitis and multiple sclerosis.  Dr. Merzouki obtained his Ph.D. in Virology and Immunology from Institut Armand-Frappier in Quebec and received his post-doctoral training at the University of British Columbia and the BC Center for Excellence in HIV/AIDS research.  Dr. Merzouki has over 30 publications and 70 communications in various, highly respected scientific journals in the field of cellular and molecular biology.  He will devote approximately 50% of his time to our business affairs.
 
 
23
 
 
Camille Sebaaly was appointed as our Chief Financial Officer, Secretary and a Director of our Company on October 15, 2009.  Since 2001, Mr. Sebaaly has been self-employed as a business consultant, primarily in the biotechnology and biopharmaceutical sectors.  He held a number of senior executive positions in various areas including, financial management, business development, project management and finance. As an executive and an entrepreneur, he combines expertise in strategic planning and finance with strong skills in business development and deal structure and negotiations.  In addition, Mr. Sebaaly worked in operations, general management, investor relations, marketing and business development with emphasis on international business and marketing of advanced technologies including hydrogen generation and energy saving.  In the area of marketing, Mr. Sebaaly has evaluated market demands and opportunities, created strategic marketing and business development plans, designed marketing communications and launched market penetration programs.  Mr. Sebaaly was a cofounder of Advanomics Corporation with Dr. Slilaty.  Mr. Sebaaly graduated from State University of New York at Buffalo with an Electrical and Computer Engineering Degree in 1987.  He devotes approximately 50% of his time to our business affairs.
 
There are no family relationships between any of our former or current officers and directors.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934 (the “34 Act”) requires our officers and directors and persons owning more than ten percent of the Common Stock, to file initial reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”).  Additionally, Item 405 of Regulation S-K under the 34 Act requires us to identify in our Form 10-K and proxy statement those individuals for whom one of the above referenced reports was not filed on a timely basis during the most recent year or prior years. To our best knowledge, all reports that were required to be filed were filed, though some were filed late.
 
Code of Ethics
 
Our board of directors has not adopted a code of ethics but plans to do so in the near future.
 
Committees of the Board of Directors
 
There are no committees of the Board of Directors but it is anticipated that we will establish an audit committee, nominating committee and governance committee once independent directors are appointed, which is expected to occur at such time as financing for our drug development program is secured, of which there are no assurances.
 
 
24
 
 
ITEM 11.    EXECUTIVE COMPENSATION
 
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our executive officers. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity, although we may choose to adopt a policy in the future. 
 
SUMMARY COMPENSATION TABLE
 
Name and Principal Position
 
Year
 
Salary ($)
 
Bonus ($)
 
Stock Awards ($)
 
All Other Compensation ($)
 
Total ($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dr. Steve N. Slilaty,
 
2016
 
  1,000 
 
 
  - 
 
  164,600
(1)
 
  - 
 
  165,600 
Chief Executive Officer and Director
 
2017
 
  155,641
(2)
 
  - 
 
  112,000
(3)
 
  - 
 
  267,641 
 
 
2018
 
  85,000
(4)
 
  - 
 
  200,100
(5)
 
  - 
 
  285,100 
 
 
 
    
 
 
    
 
    
 
 
    
 
    
Camille Sebaaly,
 
2016
 
  4,597 
 
 
  -
 
  164,600
(1)
 
  -
 
  169,197 
Chief Financial Officer and Director
 
2017
 
  16,099 
 
 
  -
 
  112,000
(3)
 
  - 
 
  128,099 
 
 
2018
 
  37,500 
 
 
  -
 
  200,100
(5)
 
  - 
 
  237,600 
 
 
 
    
 
 
    
 
    
 
 
    
 
    
Dr. Abderrazzak Merzouki,
 
2016
 
  -0- 
 
 
  -
 
  164,600
(1)
 
  -
 
  164,600 
Chief Operating Officer and Director
 
2017
 
  12,531 
 
 
  -
 
  112,000
(3)
 
  - 
 
  124,531 
 
 
2018
 
  32,415 
 
 
  -
 
  200,100
(5)
 
  - 
 
  232,515 
 
(1)
In 2016, each member of our Board of Directors was issued 1,300,000 and 600,000 shares of our Common Stock valued at $80,600 and $84,000, respectively.
(2)
This includes $147,695 paid to Advanomics Corporation, a company controlled by our CEO.
(3)
In 2017, each member of our Board of Directors was issued 700,000 shares of our Common Stock valued at $112,000.
(4)
This amount was paid to Advanomics Corporation, a company controlled by our CEO.
(5)
In 2018, each member of our Board of Directors was issued 1,350,000 and 1,900,000 shares of our Common Stock valued at $143,100 and $57,000, respectively.
 
Salaries are established by our Board of Directors.  We currently do not have a Compensation Committee but expect to have one in place in the future once we have independent directors.  We have not and do not expect to pay any other compensation to our current executive officers or directors until such time as we are able to secure adequate funding for our operations.
 
Employment Agreements
 
None of our executive officers is party to an employment agreement with us.
 
Stock Plan
 
We have not adopted any stock option or other employee plans as of the date of this Report.  We may adopt such plans in the future.
 
 
25
 
 
ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth certain information regarding the ownership of Common Stock and Preferred Stock voting with the Common Stock as of the date of this Report by (i) each person known to us to own more than 5% of our outstanding Common Stock as of the date of this Report, (ii) each of our directors, (iii) each of our executive officers, and (iv) all of our directors and executive officers as a group.  Unless otherwise indicated, all shares are owned directly and the indicated person has sole voting and investment power. The information provided is based upon 87,041,289 Common Shares and 500,000 Series B Preferred Shares issued and outstanding as of the date of this Report.
 
Title of Class
 
Name and Address of Beneficial Owner
 
Amount and Nature of Beneficial Ownership
 
Percent of Common Class
 
Percent of Voting Shares
 
 
 
 
 
 
 
 
 
Common
 
 
 
Dr. Steve N. Slilaty(1)
579 Rue Lajeunesse
Laval, Quebec
Canada H7X 3K4
 
16,619,930(2)
 
 
 
19.09%
 
 
 
2.83%
 
 
Series B Preferred
 
 
 
500,000,000(3)
 
0%
 
85.17%
 
 
 
 
 
 
 
 
 
Common
 
Camille Sebaaly(1)
14464 Gouin West, #B
Montreal, Quebec
Canada H9H 1B1
 
12,335,165(4)
 
14.17%
 
2.10%
 
 
 
 
 
 
 
 
 
Common
 
Dr. Abderrazzak Merzouki(1)
731 Place de l’Eeau Vive
Laval, Quebec
Canada H7Y 2E1
 
5,923,350   
 
6.81%
 
1.01%
 
 
 
 
 
 
 
 
 
Common
 
All Officers and Directors
As Group (3 persons)
 
534,878,445  
 
40.07%
 
91.11%
 
(1)
Officer and Director.
(2)
Includes 10,750,712 shares held in the name of Advanomics Corporation. Dr. Slilaty is an officer, director and principal shareholder of Advanomics Corporation and, as a result, controls the disposition of these shares.
(3)
Comprised of 500,000 shares of $0.10 par value Series “B” Preferred Stock having 1,000 votes per share. The Series “B” Preferred Stock is non-convertible, non-redeemable, non-retractable and has a superior liquidation value of $0.10 per share.
(4)
Includes 6,474,447 shares held in the name of 4019318 Canada, Inc. Mr. Sebaaly is the sole officer and director of this company and, as a result, controls the disposition of these shares.
 
 
26
 
 
ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
 
Related Party Transactions
 
On November 27, 2014, we issued a note payable in the principal amount of $128,000 to an individual who subsequently became a principal shareholder. The note accrues interest at 10% per annum and was convertible into shares of our Common Stock at a price of $0.20 per share. On June 30, 2015, we renewed this note with the addition of accrued interest of $7,540 and an origination fee of $25,600. The new Note had a face value of $161,140 and accrued interest at 12% per annum. The new note was due December 31, 2015 and was convertible any time from the date of issuance into shares of our Common Stock at a 35% discount from market price. On December 31, 2015, we again renewed this note with the addition of accrued interest amounting to $9,668 and an origination fee of $32,228. The new note now has a face value of $203,036 and accrues interest at 12% per annum. The new note was due June 30, 2016 and was convertible anytime from the date of issuance into shares of our Common Stock at a 35% discount from market price. In January 2016, $38,036 of the principal was converted, leaving a principal balance of $165,000. In connection therewith, 7,705,186 shares of our Common Stock, valued $231,156 were issued generating a loss on conversion of $193,120. On June 30, 2016, we renewed this note again with the addition of accrued interest amounting to $9,852. The renewed note had a face value of $174,852 and accrues interest at 12% per annum. It was due on March 31, 2017. In October 2016, $74,852 of the principal amount was converted, leaving a principal balance of $100,000. 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 previous note. The new note now had a face value of $111,715 and 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 its predecessor. The new note 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 previous note. The new note had a principal balance of $118,537 and 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 the prior note. 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 not convertible. In the third quarter of 2018, this individual ceased to be a principal shareholder of the Company.
 
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%. The note was convertible any time after the date of issuance into shares of our Common Stock at a price 35% below market value. In addition, the note was collateralized by all our assets. On March 31, 2017, the note, together with all accrued interest thereon and an additional principal amount of $3,000 Canadian paid to us in March 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) 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 its predecessor. The new note now having a principal balance of $101,885 Canadian ($81,640 US) 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 except that this new note is unsecured and now non-convertible. 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 accrued 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.
 
On October 8, 2015, we acquired U.S. Patent Number 8,236,935 (the “US Patent”) for the anticancer compound, Adva-27a from a related entity (Advanomics Corporation), which includes all rights to this intellectual property within the United States, in exchange for an interest-free note payable for $4,320,000 (the “October Patent Purchase Agreement”).  On December 28, 2015, we acquired the remaining worldwide issued and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 (the “Worldwide Patents”) for the Adva-27a anticancer compound from the same related entity (Advanomics Corporation) in exchange for a note payable for $12,822,499 (the “December Patent Purchase Agreement”). We believe that purchase of the US Patent and the Worldwide Patents (the “Patents”) would facilitate our ability to obtain the funding necessary to complete the development and FDA approval process for Adva-27a. In related party transactions, purchased patents are required to be recorded at the purchase price or the book value on the seller’s financial statements, whichever is lower. Effective December 28, 2015, the parties agreed to amend the October Patent Purchase Agreement and the December Patent Purchase Agreement. Pursuant to the amendment agreements (the “Amendments”), the Patents were purchased from the related party, Advanomics Corporation, at Advanomics’ cost less the amortization through December 28, 2015, the effective date of the transfer. The Amendments amended the purchase price of the Patents to $835,394, eliminated all cash payments obligations and replaced the non-convertible notes totaling $17,142,499 with two (2) convertible notes totaling $835,394 that automatically convert into an aggregate of 321,305,415 shares of our Common Stock when we successfully amend our Articles of Incorporation to increase our authorized capital of Common Stock to 3 billion. In July 2016, having completed the increase of our authorized capital to 3 billion shares of Common Stock, we issued the 321,305,415 Common Shares to Advanomics thereby completing all aspects of the patent purchase arrangements and securing direct ownership of all worldwide patents and rights pertaining to Adva-27a.
 
 
27
 
 
              In 2016 and 2017 our principal place of business was located at 469 Jean-Talon West, 3rd Floor, Montreal, Quebec, Canada, H3N 1R4.  This was also the location of our former licensor, Advanomics Corporation, who provided this space to us on a rent-free basis.  Dr. Steve N. Slilaty, our Chief Executive Officer and a Director, is an Officer, Director and principal shareholder of Advanomics.  Starting January 1 2017 we assumed the lease from Advanomics until we moved on June 1, 2017.
 
During the year ended December 31, 2018, we issued an aggregate of 9,750,000 shares of our Common Stock valued at $600,300 to the members of our Board of Directors in equal amounts. During the year ended December 31, 2018 our Directors and Officers were paid $154,915 in cash. Of this amount, $85,000 was paid to Advanomics Corporation, a company controlled by our CEO.
 
During the year ended December 31, 2018, certain of our Directors made interest-free cash advances to us totaling $49,349. At December 31, 2018, the outstanding balance of these loans was $49,349.
 
During the fiscal ended December 31, 2017, we issued 2,100,000 shares of our Common Stock to our Board of Directors in equal amounts. These shares were valued at $336,000 or $0.16 per share. During the same period, our Directors and Officers were paid $184,271 in cash. Of this amount, $147,695 was paid to Advanomics Corporation, a company controlled by our CEO.
 
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), 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 us. The holder of this note is currently a director and officer of Atlas Pharma Inc., now our wholly owned subsidiary.
 
There are no other related party transactions that are required to be disclosed pursuant to Regulation S-K promulgated under the Securities Act of 1933, as amended. 
 
Director Independence
 
None of our current directors are deemed “independent” pursuant to SEC rules.  We anticipate appointing independent directors in the foreseeable future.
 
ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES.
 
Fees Paid to Independent Registered Public Accounting Firms
 
The following table presents fees for professional audit services rendered by B F Borgers CPA PC, our independent auditors, during our fiscal years ended December 31, 2018 and 2017:
  
 
 
December 31,
2018
 
 
December 31,
2017
 
 
Audit Fees
 $81,198 
 $21,600 
Tax Fees
    
    
All Other Fees
    
    
Total
 $81,198 
 $21,600 
 
Audit Fees. Consist of amounts billed for professional services rendered for the audit of Atlas Pharma Inc. for the years ended December 31, 2018 and 2017 and for our annual financial statements included in our Annual Reports on Forms 10-K for our fiscal years ended December 31, 2018 and 2017 and for reviews of our interim financial statements included in our Quarterly Reports on Form 10-Q..
 
Tax Fees. Consists of amounts billed for professional services rendered for tax return preparation, tax planning and tax advice. 
 
All Other Fees.  Consists of amounts billed for services other than Audit Fees.
 
We do not have an audit committee and as a result our entire Board of Directors performs the duties of an audit committee.  Our Board of Directors evaluates the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.
 
 
28
 
 
PART IV
 
ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
The following exhibits are included herewith:
 
Exhibit No.
 
Description
 
 
 
 
 
 
 
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
 
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
 
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
 
101.INS
XBRL Instances Document
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
29
 
 
Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.
 
No.
 
Description
 
Filed With
 
Date
 
Articles of Incorporation
 
Form SB-2 Registration Statement
 
October 19, 2007
 
Bylaws
 
Form SB-2 Registration Statement
 
October 19, 2007
 
Articles of Amendment (Name Change)
 
Form 8-K Dated November 2, 2009
 
November 6, 2009
 
Statement of Share and Equity Capital Exchange
 
Form 10-Q For Quarter Ended 06/30/10
 
August 4, 2010
 
Articles of Amendment (Add Preferred and Series A Preferred to Authorized)
 
Form 10-Q For Quarter Ended 06/30/10
 
August 4, 2010
 
Share Exchange Agreement with Sunshine Biopharma, Inc.
 
Form 8-K Dated October 15, 2009
 
October 20, 2009
 
License Agreement with Advanomics, Inc.
 
Form 8-K/A1 Dated October 15, 2009
 
January 19, 2010
 
Amendment No. 1 to License Agreement with Advanomics, Inc.
 
Form 8-K/A1 Dated October 15, 2009
 
January 19, 2010
 
Research Agreement with The Research Foundation of the State University of New York
 
Form 8-K Dated January 17, 2011
 
January 19, 2011
 
Research Agreement with Jewish General Hospital
 
Form 8-K Dated June 14, 2011
 
June 17, 2011
 
Amendment No. 2 to License Agreement with Advanomics
 
Form 8-K Dated December 21, 2011
 
December 27, 2011
 
Investment Agreement with Dutchess Investment Group II
 
Form 8-K dated April 28, 2014
 
April 28, 2014
 
Registration Rights Agreement with Dutchess Investment Group II
 
 
 
Patent Purchase Agreement with Advanomics Corporation
 
Form 8-K dated October 8, 2016
 
October 9, 2016
 
Second Patent Purchase Agreement with Advanomics Corporation
 
Form 8-K dated December 28, 2015
 
December 28, 2015
 
Amendment No. 1 to Patent Purchase Agreement with Advanomics Corporation dated October 8, 2016, including Secured Convertible Promissory Note.
 
Form 8-K dated March 14, 2016
 
March 14, 2016
 
Amendment No. 1 to Patent Purchase Agreement with Advanomics Corporation dated December 28, 2016, including Secured Convertible Promissory Note
 
Form 8-K dated March 14, 2016
 
March 14, 2016
 
 
 
30
 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunder duly authorized.
 
 
SUNSHINE BIOPHARMA, INC.
 
 
 
 
 
Dated: April 12, 2019
By:
/s/ Dr. Steve N. Slilaty
 
 
 
Dr. Steve N. Slilaty, Principal Executive Officer
 
 
 
 
 
 
 
 
 
 
 
/s/ Camille Sebaaly
 
 
 
Camille Sebaaly, Principal Financial and Accounting Officer
 
 
 
 
 
 
In accordance with the Exchange Act, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 12, 2019.
 
s/ Dr. Steve N. Slilaty
Dr. Steve N. Slilaty, Director
 
s/ Camille Sebaaly
Camille Sebaaly, Director
 
s/ Dr. Abderrazzak Merzouki
Dr. Abderrazzak Merzouki, Director
 
 
31
EX-31.1 2 sbfm_ex311.htm CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF THE SARBANES-OXLY ACT OF 2002 Blueprint
 
Exhibit 31.1
 
 
CERTIFICATION PURSUANT TO
18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
 
I, Steve N. Slilaty, certify that:
 
1.            I have reviewed this annual report on Form 10-K of Sunshine Biopharma, Inc.;
 
2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
 
 
 
 
d.           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.            The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Dated: April 12, 2019
s/ Steve N. Slilaty
Steve N. Slilaty, Chief Executive Officer
 
 
EX-31.2 3 sbfm_ex312.htm CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A) CERTIFICATIONS SECTION 302 OF THE SARBANES-OXLY ACT OF 2002 Blueprint
 
Exhibit 31.2
 
 
CERTIFICATION PURSUANT TO
18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
 
I, Camille Sebaaly, certify that:
 
1.            I have reviewed this annual report on Form 10-K of Sunshine Biopharma, Inc.;
 
2.            Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.            Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.            The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a.           Designed such disclosure controls and procedures, or caused such disclosure controls and procedure to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b.           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c.           Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and
 
 
 
 
d.           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.            The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
a.           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b.           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
Dated: April 12, 2019
s/ Camille Sebaaly
Camille Sebaaly, Chief Financial Officer
 
 
EX-32.1 4 sbfm_ex321.htm CERTIFICATE PURSUANT TO SECTION 18 U.S.C. PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Blueprint
 
Exhibit 32
 
CERTIFICATION PURSUANT TO
18 USC, SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with this annual report of Sunshine Biopharma, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission on April 12, 2019, (the “Report”), we, the undersigned, in the capacities and on the date indicated below, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
 
1. 
The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2. 
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Dated: April 12, 2019
s/ Steve N. Slilaty
Steve N. Slilaty, Chief Executive Officer
 
 
Dated: April 12, 2019
s/ Camille Sebaaly
Camille Sebaaly, Chief Financial Officer
 
 
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Assets, Current Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Gross Profit General and Administrative Expense Operating Income (Loss) Interest Expense Induced Conversion of Convertible Debt Expense Nonoperating Income (Expense) Depreciation, Depletion and Amortization, Nonproduction Increase (Decrease) in Prepaid Expense Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Payments for Other Deposits Net Cash Provided by (Used in) Investing Activities Repayments of Notes Payable Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures Shares, Issued Net Income (Loss), Including Portion Attributable to Noncontrolling Interest Substantial Doubt about Going Concern [Text Block] Income Tax Disclosure [Text Block] RoyaltiesPayableDisclosureTextBlock AccountsReceivableDisclosureTextBlock Commitments and Contingencies Disclosure [Text Block] Deferred Tax Assets, Valuation Allowance CanadaNetStatutoryTaxRate Notes Payable [Default Label] Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities EX-101.PRE 15 sbfm-20181231_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 16 R1.htm IDEA: XBRL DOCUMENT v3.19.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2018
Apr. 11, 2019
Jun. 30, 2018
Document And Entity Information      
Entity Registrant Name Sunshine Biopharma, Inc    
Entity Central Index Key 0001402328    
Document Type 10-K    
Document Period End Date Dec. 31, 2018    
Amendment Flag false    
Current Fiscal Year End Date --12-31    
Is Entity a Well-known Seasoned Issuer? No    
Is Entity a Voluntary Filer? No    
Is Entity's Reporting Status Current? Yes    
Entity Filer Category Non-accelerated Filer    
Entity Emerging Growth Company true    
Entity Small Business true    
Entity Ex Transition Period true    
Entity Shell Company false    
Entity Public Float     $ 3,970,144
Entity Common Stock, Shares Outstanding   89,348,981  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2018    
XML 17 R2.htm IDEA: XBRL DOCUMENT v3.19.1
Balance Sheet - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Current Assets:    
Cash and cash equivalents $ 115,216 $ 107,532
Accounts receivable 94,955 0
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) 0 0
Non-current asset - Goodwill 665,697 0
Non-current asset - Deposits 0 80,290
TOTAL ASSETS 1,146,571 257,485
Current Liabilities:    
Current portion of note payable 419,663 516,867
Current portion of notes payable - related party 243,094 205,742
Related party advances 49,349 0
Accounts payable 191,080 19,314
Interest payable 9,291 9,215
Total Curent Liabilities 912,477 751,138
Long-term liabilities - relaed party note payable 289,847 79,710
TOTAL LIABILITIES 1,202,324 830,848
SHAREHOLDERS' EQUITY    
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
Capital paid in excess of par value 15,586,678 12,948,387
Accumulated other comprehensive income (3,738) 504
Accumulated (Deficit) (15,774,345) (13,618,190)
TOTAL SHAREHOLDERS' DEFICIT (55,753) (573,363)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT 1,146,571 257,485
Series A Preferred Stock    
SHAREHOLDERS' EQUITY    
Preferred Stock 0 0
Series B Preferred Stock    
SHAREHOLDERS' EQUITY    
Preferred Stock $ 50,000 $ 50,000
XML 18 R3.htm IDEA: XBRL DOCUMENT v3.19.1
Balance Sheet (Parenthetical) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Equipment depreciation $ 57,964 $ 9,132
Patent amortization 58,918 $ 58,918
Patent impairment $ 556,120  
SHAREHOLDERS' EQUITY    
Common stock, par value $ 0.001 $ 0.001
Common stock shares authorized 3,000,000,000 3,000,000,000
Common stock shares issued 85,652,400 45,936,825
Common stock shares outstanding 85,652,400 45,936,825
Common stock shares reserved for issuance 97,321,836
Series A Preferred Stock    
SHAREHOLDERS' EQUITY    
Preferred stock, par value $ 0.10 $ 0.10
Preferred stock shares authorized 5,000,000 5,000,000
Preferred stock shares issued 0 0
Preferred stock shares outstanding 0 0
Series B Preferred Stock    
SHAREHOLDERS' EQUITY    
Preferred stock, par value $ 0.10 $ 0.10
Preferred stock shares authorized 500,000 500,000
Preferred stock shares issued 500,000 500,000
Preferred stock shares outstanding 500,000 500,000
XML 19 R4.htm IDEA: XBRL DOCUMENT v3.19.1
Statement Of Operations and Comprehensive Loss - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Income Statement [Abstract]    
Revenue $ 447,200 $ 0
Cost of Revenues 391,081 0
Gross Profit 56,119 0
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 0
Amortization & Depreciation 2,408 6,629
Total General & Administrative 1,222,656 857,190
Income (Loss) from Operations (1,166,537) (857,190)
Other (expense):    
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 (Loss) per common share $ (0.04) $ (0.02)
Weighted Average Common Shares Outsanding 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 shares $ (0.04) $ (0.02)
Weighted Average Common Shares Outstanding 60,936,164 43,634,280
XML 20 R5.htm IDEA: XBRL DOCUMENT v3.19.1
Statement Of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Cash Flows From Operating Activities:    
Net (Loss) $ (2,156,155) $ (1,040,236)
Amortization & Depreciation 49,361 6,629
Foreign exchange gain (42,399) 0
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) 0
Increase (decrease) in accounts receivable (15,447) 0
(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 0
Purchase equipment (18,850) (3,718)
Deposits on business acquisition 0 (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
Notes Payable - Interest expense 26,759 33,977
Payment of notes payable (194,184) (115,000)
Note payable - related party 29,930 2,251
Note payable used to pay expenses 36,500 0
Note payable used to pay origination fees & interest 18,750 25,000
Sale of common stock 0 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 0
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
XML 21 R6.htm IDEA: XBRL DOCUMENT v3.19.1
Statement of Shareholders' Equity - USD ($)
Common Stock
Capital Paid In Excess Of Par Value
Preferred Shares
Comprehensive Income
Accumulated Deficit
Total
Begining Balance, Shares at Dec. 31, 2016 38,469,993   500,000      
Begining Balance, Amount at Dec. 31, 2016 $ 38,470 $ 12,279,390 $ 50,000 $ 394 $ (12,577,954) $ (209,700)
Stock issued for cash, Shares 1,700,000          
Stock issued for cash, Amount $ 1,700 62,212       63,912
Stock issued for services, Shares 3,090,217          
Stock issued for services, Amount $ 3,090 424,310       427,400
Common stock issued for equipment, Shares 550,208          
Common stock issued for equipment, Amount $ 550 56,150       56,700
Common stock issued for the reduction of notes payable and payment of interest, shares 2,126,406          
Common stock issued for the reduction of notes payable and payment of interest, amount $ 2,126 126,325       128,451
Net Income (Loss)         (1,040,236) (1,040,126)
Ending balance, Shares at Dec. 31, 2017 45,936,825   500,000      
Ending balance, Amount at Dec. 31, 2017 $ 45,936 12,948,387 $ 50,000 504 (13,618,190) (573,363)
Stock issued for acquisition, Shares 1,000,000          
Stock issued for acquisition, Amount $ 1,000 237,000       238,000
Stock issued for services, Shares 10,382,500          
Stock issued for services, Amount $ 10,383 665,718       676,100
Common stock issued for equipment, Shares 1,456,737          
Common stock issued for equipment, Amount $ 1,457 173,351       174,808
Common stock issued for the reduction of notes payable and payment of interest, shares 26,876,338          
Common stock issued for the reduction of notes payable and payment of interest, amount $ 26,876 1,562,223       1,589,099
Net Income (Loss)       (4,242) (2,156,155) (2,160,397)
Ending balance, Shares at Dec. 31, 2018 85,652,400   500,000      
Ending balance, Amount at Dec. 31, 2018 $ 85,652 $ 15,586,678 $ 50,000 $ (3,738) $ (15,774,345) $ (55,753)
XML 22 R7.htm IDEA: XBRL DOCUMENT v3.19.1
1. Description of Business
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
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 9tm, a dietary supplement comprised of the nine amino acids which the human body cannot synthesize. Essential 9tm 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.

XML 23 R8.htm IDEA: XBRL DOCUMENT v3.19.1
2. Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist the reader in understanding the Company's financial statements.  The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting  policies conform to generally accepted accounting principles and  have  been  consistently  applied  in  the  preparation  of  the  financial statements.

 

PRINCIPLES OF CONSOLIDATION

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

 

USE OF ESTIMATES

 

The preparation of financial statements in conformity with U.S. generally accepted accounting  principles  requires  management  to  make  estimates  and assumptions  that  affect the  reported amounts of assets and  liabilities  and disclosure of  contingent  assets and  liabilities  at the date of the financial statements  and the  reported  amounts  of  revenues  and  expenses  during  the reporting  period.  The  more  significant  estimates  and  assumptions  made by management  are valuation of equity  instruments,  depreciation  of property and equipment,  and deferred tax asset  valuation.  Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

 

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, 2018 and 2017, 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.

 

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).

 

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.

 

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 retrospective 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. 

 

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.

 

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3. Going Concern
12 Months Ended
Dec. 31, 2018
Going Concern  
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.

 

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4. Patents
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
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.

 

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5. Capital Stock
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
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 85,652,400312 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 in connection with the conversion of $684,318 in debt and interest of $32,808 resulting in a $871,973 loss on conversion

 

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.

 

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6. Earnings Per Share
12 Months Ended
Dec. 31, 2018
Earnings Per Share [Abstract]  
Earnings per share

The following table sets forth the computation of basic and diluted net income per share for the years ended December 31:

 

     2018      2017  
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 )

                       

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7. Income Taxes
12 Months Ended
Dec. 31, 2018
Income Taxes  
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.

 

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:

 

     December 31,
2018
     December 31,
2017
 
     Temporary Difference      Tax Effect      Temporary Difference      Tax Effect  
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.

 

A reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:

 

    December 31,  
    2018     2017  

 

U.S. Federal statutory graduated rate

  

    21.00 %     34.00 %

 

State income tax rate, net of federal benefit 

 

    4.12 %     3.06 %

 

Net rate

 

    25.12 %     37.06 %

 

Net operating loss used

 

    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 %

 

Canada Provincial rate  

 

    11.80 %     11.80 %

 

Net Canada rate

 

    26.80 %     26.80 %

 

Net operating loss used

 

    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.

 

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8. Notes Payable
12 Months Ended
Dec. 31, 2018
Notes Payable [Abstract]  
Notes Payable

Notes payable consist of the following:  

 

     2018      2017  
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.

 

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9. Notes Payable Related Party
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Notes Payable Related Party

Notes payable to related parties consist of the following:

 

  2018     2017  
             

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  

 

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10. Related Transactions
12 Months Ended
Dec. 31, 2018
Related Party Transactions [Abstract]  
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.

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11. Royalties Payable
12 Months Ended
Dec. 31, 2018
Royalties Payable  
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.

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12. Acquisition of Atlas Pharma Inc.
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
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 Eight 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  

 

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13. Accounts Receivable
12 Months Ended
Dec. 31, 2018
Accounts Receivable  
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.

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14. Commitments
12 Months Ended
Dec. 31, 2018
Commitments  
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.

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15. Subsequent Events
12 Months Ended
Dec. 31, 2018
Subsequent Events [Abstract]  
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. 

 

  

XML 37 R22.htm IDEA: XBRL DOCUMENT v3.19.1
2. Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2018
Summary Of Significant Accounting Policies  
PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting  principles  requires  management  to  make  estimates  and assumptions  that  affect the  reported amounts of assets and  liabilities  and disclosure of  contingent  assets and  liabilities  at the date of the financial statements  and the  reported  amounts  of  revenues  and  expenses  during  the reporting  period.  The  more  significant  estimates  and  assumptions  made by management  are valuation of equity  instruments,  depreciation  of property and equipment,  and deferred tax asset  valuation.  Actual results could differ from those estimates as the current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

 

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, 2018 and 2017, 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.

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).

 

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.

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 retrosspective 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.

 

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.

XML 38 R23.htm IDEA: XBRL DOCUMENT v3.19.1
2. Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2018
Summary Of Significant Accounting Policies Tables Abstract  
Estimated useful lives of property plant and equipment
Office Equipment: 5-7 Years
Laboratory Equipment 5 Years
Vehicles 5 Years
XML 39 R24.htm IDEA: XBRL DOCUMENT v3.19.1
6. Earnings Per Share (Tables)
12 Months Ended
Dec. 31, 2018
Earnings Per Share  
Schedule of earnings per share computation
     2018      2017  
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 )
XML 40 R25.htm IDEA: XBRL DOCUMENT v3.19.1
7. Income Taxes (Tables)
12 Months Ended
Dec. 31, 2018
Income Taxes Tables Abstract  
Temporary differences
     December 31,
2018
     December 31,
2017
 
     Temporary Difference      Tax Effect      Temporary Difference      Tax Effect  
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-       -       -  
Income tax reconciliation
    December 31,  
    2018     2017  

 

U.S. Federal statutory graduated rate

  

    21.00 %     34.00 %

 

State income tax rate, net of federal benefit 

 

    4.12 %     3.06 %

 

Net rate

 

    25.12 %     37.06 %

 

Net operating loss used

 

    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 %

 

Canada Provincial rate  

 

    11.80 %     11.80 %

 

Net Canada rate

 

    26.80 %     26.80 %

 

Net operating loss used

 

    0.00 %     0.00 %

 

Net operating loss for which no tax benefit is currently available (Canada)

 

    -26.80 %     -26.80 %
      0.00 %     0.00 %
XML 41 R26.htm IDEA: XBRL DOCUMENT v3.19.1
8. Notes Payable (Tables)
12 Months Ended
Dec. 31, 2018
Notes Payable Tables Abstract  
Notes payable

     2018      2017  
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  

 

XML 42 R27.htm IDEA: XBRL DOCUMENT v3.19.1
9. Notes Payable Related Party (Tables)
12 Months Ended
Dec. 31, 2018
Notes Payable Related Party Tables Abstract  
Summary of notes payable related party
  2018     2017  
             

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  
XML 43 R28.htm IDEA: XBRL DOCUMENT v3.19.1
12. Acquisition of Atlas Pharma Inc. (Tables)
12 Months Ended
Dec. 31, 2018
Acquisition Of Atlas Pharma Inc.  
Acquisition
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  
XML 44 R29.htm IDEA: XBRL DOCUMENT v3.19.1
2. Summary of Significant Accounting Policies (Details)
12 Months Ended
Dec. 31, 2018
Office Equipment  
Estimated useful lives 5-7 Years
Laboratory Equipment  
Estimated useful lives 5 Years
Vehicles  
Estimated useful lives 5 Years
XML 45 R30.htm IDEA: XBRL DOCUMENT v3.19.1
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Summary Of Significant Accounting Policies Details Narrative Abstract      
Cash $ 115,216 $ 107,532 $ 57,453
Patent impairment $ 556,120    
XML 46 R31.htm IDEA: XBRL DOCUMENT v3.19.1
6. Earnings Per Share (Details) - USD ($)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Earnings Per Share Details Abstract    
Net (loss) attributable to common stockholders $ (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 60,936,164 872,685,608
Net loss per share of common stock - basic and diluted $ (0.04) $ (0.02)
XML 47 R32.htm IDEA: XBRL DOCUMENT v3.19.1
7. Income Taxes (Details) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Deferred tax assets:    
Total $ 3,077,716 $ 4,004,199
Temporary Difference    
Deferred tax assets:    
Net operating loss US 12,156,020 10,611,921
Net operating loss Canada 298,661 266,498
Total 12,454,681 10,878,419
Valuation allowance (12,454,681) (10,878,419)
Total deferred tax asset 0 0
Net deferred tax asset 0 0
Tax Effect    
Deferred tax assets:    
Net operating loss US 2,997,675 3,932,778
Net operating loss Canada 80,041 71,421
Total 3,077,716 4,004,199
Valuation allowance (3,077,716) (4,004,199)
Total deferred tax asset 0 0
Net deferred tax asset $ 0 $ 0
XML 48 R33.htm IDEA: XBRL DOCUMENT v3.19.1
7. Income Taxes (Details 1)
12 Months Ended
Dec. 31, 2018
Dec. 31, 2017
Income Taxes Details Abstract    
U.S. Federal statutory graduated rate 21.00% 34.00%
State income tax rate, net of federal benefit 4.12% 3.06%
Net rate 25.12% 37.06%
Net operating loss used 0.00% 0.00%
Net operating loss for which no tax benefit is currently available (25.12%) (37.06%)
Income tax rate 0.00% 0.00%
Canada Federal statutory rate 15.00% 15.00%
Canada Provincial rate 11.80% 11.80%
Net rate 26.80% 26.80%
Net operating loss used (Canada) 0.00% 0.00%
Net operating loss for which no tax benefit is currently available (Canada) (26.80%) (26.80%)
XML 49 R34.htm IDEA: XBRL DOCUMENT v3.19.1
7. Income Taxes (Details Narrative) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Income Taxes Details Narrative Abstract    
Federal net operating loss carryforwards $ 12,454,681 $ 10,611,921
Deferred tax asset net operating loss carryforwards 3,077,716 4,004,199
Change in the valuation allowance $ 926,483 $ 342,693
XML 50 R35.htm IDEA: XBRL DOCUMENT v3.19.1
8. Notes Payable (Details) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Notes payable $ 419,663 $ 596,577
Note 1    
Notes payable 26,893 24,012
Note 2    
Notes payable 0 0
Note 3    
Notes payable 0 0
Note 4    
Notes payable 0 0
Note 5    
Notes payable 0 0
Note 6    
Notes payable 53,000 0
Note 7    
Notes payable 53,000 0
Note 8    
Notes payable 36,500 0
Note 9    
Notes payable 90,000 0
Note 10    
Notes payable 87,000 0
Note 11    
Notes payable 73,270 79,710
Note 12    
Notes payable 0 80,000
Note 13    
Notes payable 0 83,000
Note 14    
Notes payable 0 62,000
Note 15    
Notes payable 0 62,000
Note 16    
Notes payable 0 115,000
Note 17    
Notes payable $ 0 $ 113,000
XML 51 R36.htm IDEA: XBRL DOCUMENT v3.19.1
9. Notes Payable Related Party (Details) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Notes payable related party $ 532,941 $ 205,742
Long-term portion 289,847 79,710
Related Entity Note 1    
Notes payable related party 136,744 122,093
Related Entity Note 2    
Notes payable related party 86,118 83,649
Related Entity Note 3    
Notes payable related party $ 310,079 $ 0
XML 52 R37.htm IDEA: XBRL DOCUMENT v3.19.1
12. Acquisition of Atlas Pharma Inc. (Details) - USD ($)
Dec. 31, 2018
Dec. 31, 2017
Acquisition Of Atlas Pharma Inc.Details Abstract    
Cash $ 4,942  
Accounts receivable 79,508  
Prepaids 1,428  
Property and equipment 62,990  
Goodwill 665,697 $ 0
Less: Liabilities assumed ($172,899 Canadian) (137,817)  
Total consideration $ 676,748  
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