Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31,June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ______________

Commission File Number: 001-41282

SUNSHINE BIOPHARMA, INC.INC.

(Exact name of registrant as specified in its charter)

6500 Trans-Canada Highway

4th Floor

Pointe-Claire, Quebec, Canada H9R 0A5

 (Address of principal executive offices)

(514) 426-6161

(Issuer’s Telephone Number)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes  ☑☒  No

The number of shares of the registrant’s common stock, par value $0.001, issued and outstanding as of May 6,August 3, 2022, was 16,495,607 18,885,632shares.

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

Sunshine Biopharma, Inc.

UnauditedCondensed Consolidated Condensed Balance Sheets

See Accompanying Notes to These Financial Statements.

Notes.

Sunshine Biopharma, Inc.

UnauditedCondensed Consolidated Condensed StatementStatements of Operations and Comprehensive Loss

(Unaudited)

See Accompanying Notes to These Financial Statements.

Sunshine Biopharma, Inc.

Unaudited Consolidated Condensed Statement of Cash Flows

See Accompanying Notes to These Financial Statements.Notes.

Sunshine Biopharma, Inc.

UnauditedCondensed Consolidated StatementStatements of Shareholders' EquityCash Flows (Unaudited)

See Accompanying Notes to These Financial Statements.Notes.

Sunshine Biopharma, Inc.

Condensed Consolidated Statements of Shareholders' Equity (Unaudited)

See Accompanying Notes.

Sunshine Biopharma, Inc.

Notes to Unaudited Condensed Consolidated Condensed Financial Statements

For the ThreeSix Month Interim Periods Ended March 31,June 30, 2022 and 2021

Note 1 – Nature of Business and Basis of Presentation

Sunshine Biopharma, Inc. (the "Company"“Company”) was originally incorporated under the name Mountain West Business Solutions, Inc. on August 31, 2006, in the State of Colorado. Until October 2009, the Company was operating as a business consultancy firm.

Effective October 15, 2009, the Company acquired Sunshine Biopharma, Inc. in a transaction classified as a reverse acquisition. Sunshine Biopharma, Inc. held an exclusive license to a new anticancer drug bearing the laboratory name, Adva-27a (the “License Agreement”). Upon completion of the reverse acquisition transaction, the Company changed its name to Sunshine Biopharma, Inc. and began operating as a pharmaceutical company focusing on the development of the licensed Adva-27a anticancer drug.

In December 2015, the Company acquired all worldwide issued (US Patent Number 8,236,935, and 10,272,065) and pending patents under PCT/FR2007/000697 and PCT/CA2014/000029 for the Adva-27a anticancer compound from Advanomics Corporation, a related party, and terminated the License Agreement. In 2016, the remaining value of these patents was impaired. The Company is however continuing development of the Adva-27a anticancer drug covered by these patents.

In December 2018, the Company launched its first Science-Based Nutritional Supplements product, Essential 9^™, an over-the-counter tabletcapsule comprised of the nine (9) essential amino acids that the human body cannot make. Essential 9^™ has been authorized for marketing by Health Canada under NPN 80089663.

On May 22, 2020, the Company filed a provisional patent application in the United States for a new treatment for Coronavirus infections. The Company’s patent application covers composition subject matter pertaining to small molecules for inhibition of the main Coronavirus protease, Mpro, an enzyme that is essential for viral replication. The patent application has a priority date of May 22, 2020. On April 30, 2021, the Company filed a PCT application containing new research results and extending coverage to include the Coronavirus Papain-Like protease, PLpro. The priority date of May 22, 2020 has been maintained in the newly filed PCT application. The Company’s lead Anti-Coronavirus compound arising from these patents bears the laboratory name SBFM-PL4.

On January 26, 2021, the Company received a Notice of Allowances from the Canadian Intellectual Property Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Canada until 2033.

On March 9, 2021, the Company received a Notice of Allowance from the European Patent Office for a new patent application covering Adva-27a. The newly issued patent contains new subject matter and extends the proprietary protection of Adva-27a in Europe until 2033. The equivalent patent in the United States was issued in 2019 (US Patent Number 10,272,065).

On October 1, 2021, the Company filed a patent application for a potential new treatment for neurodegenerative disorders. The patent application contains experimental results showing that certain mRNA molecules provide protective effects against oxidative stress in differentiated neuronal cells, a process that mimics neuronal degeneration. This new patent application has a priority date of October 1, 2021.

Effective February 9, 2022, the Company completed a 200-for-1 reverse split of its common stock. On February 15, 2022, the Company entered into an underwriting agreement with Aegis Capital Corp. as underwriter, for the issuance and sale in an underwritten public offering of 1,882,353 Units, each consisting of one share of common stock and two warrants (“Tradeable Warrants”) to purchase shares of common stock at a public offering price of $4.25 per Unit for total gross proceeds of $8,000,000 (“Public Offering”). We also granted the underwriter a 45-day option to purchase additional shares of common stock and/or Tradeable Warrants in an amount equal up to 15% of the number of shares and Tradeable Warrants, respectively, sold in the Offering solely to cover overallotments, if any.

Also on February 15, 2022, the Company’s shares of common Stock and Tradeable Warrants began trading on Nasdaq under the ticker symbol “SBFM” for the common stock and “SBFMW” for the Tradeable Warrants.

On February 17, 2022, the Public Offering closed and the Company received net proceeds of $6,833,071. Pursuant to the Public Offering, the Company issued and sold an aggregate of 1,882,353 shares of common stock and 4,102,200 Tradeable Warrants (including 337,494 Tradeable Warrants purchased at $0.01 per warrant resulting from partial exercise of the overallotment option granted to the underwriter). In connection with these transactions, the Company’s shares of common stock and Tradeable Warrants began trading on Nasdaq under the symbol “SBFM” for the common stock and “SBFMW” for the Tradeable Warrants.

On February 18, 2022, the Company entered into a research agreement (the “SRA”) with the Arizona Board of Regents on behalf of the University of Arizona (the “Universityfor the purposes of Arizona”). Pursuant to theconducting research agreement, the University of Arizona agreed to use reasonable efforts to perform a research project focused on determining the in vivo safety, pharmacokinetics, and dose selection properties of three University of Arizona owned PLpro inhibitors, to be followed by efficacy testing in mice infected with SARS-CoV-2 in consideration for certain milestone payments to be made by the Company.(the “Research Project”). Under the agreement,SRA, the University of Arizona granted the Company a first option to negotiate for a commercial, royalty-bearing license for all intellectual property invented or authoreddeveloped by University of Arizona personnel under the research project.Research Project. In addition, the Company and the University of Arizona entered into an Option Agreement whereby the Company was granted a first option to negotiate a royalty-bearing commercial license for the underlying technology of the Research Project.

On February 22, 2022, the Company redeemed 990,000shares of the Series B Preferred Stock from the CEO of the Company at a redemption price equal to the stated value of $0.10 per share.

On March 14, 2022, the Company completed a private placement wherein the Company sold (i) 2,301,353shares of its Common Stockcommon stock together with Investor Warrantswarrants (the “Investor Warrants”) to purchase up to 2,301,353shares of Common Stock,common stock, and (ii) 1,302,251pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of Common Stock,common stock, together with Investor Warrants to purchase up to 1,302,251 shares of Common Stock.common stock. Each share of Common Stockcommon stock and accompanying Investor Warrant were sold together at a combined offering price of $2.22, and each Pre-Funded Warrant and accompanying Investor Warrant were sold together at a combined offering price of $2.219. The Company received approximately $8 million in gross proceeds, and $6,781,199in net proceeds in this offering.

ImpactOn April 28, 2022, the Company completed another private placement and received net proceeds of Coronavirus (COVID-19) Pandemic$16,752,915

. In March 2020,connection with this private placement, the World Health Organization declared CoronavirusCompany issued (i) 2,472,820 shares of its common stock together with warrants (“April Warrants”) to purchase up to 4,945,640 shares of common stock, and its associated disease, COVID-19,(ii) 2,390,025 pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of common stock, together with April Warrants to purchase up to 4,780,050 shares of common stock. Each share of common stock and accompanying two April Warrants were sold together at a global pandemic. Conditions surroundingcombined offering price of $4.01, and each Pre-Funded Warrant and accompanying two April Warrants were sold together at a combined offering price of $4.01, and each Pre-Funded Warrant and accompanying two April Warrants were sold together at a combined offering price of $4.009. The Pre-Funded Warrants were immediately exercisable, at a nominal exercise price of $0.001, and may be exercised at any time until all of the Coronavirus outbreakPre-Funded Warrants are exercised in full. The April Warrants have been and are continuingan exercise price of $3.76 per share (subject to evolve rapidly. Government authoritiesadjustment as set forth in the U.S. and around the world have implemented emergency measures to mitigate the spread of the virus. The outbreak and related mitigation measures have hadwarrant), are exercisable upon issuance and will continue to have a material adverse impact onexpire five years from the world economies and the Company's business activities. It is not possible for the Company to predict the duration or magnitudedate of the adverse conditions of the outbreak and their effects on the Company’s business or ability to raise funds. No adjustments have been made to the amounts reported in the Company's financial statements as a result of this matter.issuance.

Note 2 – Basis of Presentation of Unaudited Financial Information

The unaudited financial statements of the Company for the threesix month periods ended March 31,June 30, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2021 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2022. These financial statements should be read in conjunction with that report.

Note 3 – Impact of Coronavirus (COVID-19) Pandemic

In March 2020, the World Health Organization declared Coronavirus and its associated disease, COVID-19, a global pandemic. Conditions surrounding the Coronavirus outbreak have been and are continuing to evolve rapidly. Government authorities in the U.S. and around the world have implemented emergency measures to mitigate the spread of the virus. The outbreak and related mitigation measures have had and will continue to have a material adverse impact on the world economies and the Company's business activities. It is not possible for the Company to predict the duration or magnitude of the adverse conditions of the outbreak and their effects on the Company’s business or ability to raise funds. No adjustments have been made to the amounts reported in the Company's financial statements as a result of this matter.

Note 4 – Reverse Stock Splits

Effective February 1, 2019, the Company completed a 20 to 1 reverse split of its common stock.stock (the “First Reverse Stock Split”).

Effective April 6, 2020, the Company completed another 20 to 1 reverse split of its common stock (the “Second Reverse Stock Split”).

Effective February 9, 2022, the Company completed a 1 for 200 reverse split of its common stock (the “Third Reverse Stock Split”).

The Company's financial statements reflect the First, Second, and Third Reverse Stock Split on a retroactive basis for all periods presented and for all references to common stock, unless specifically stated otherwise.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12 “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This guidance removes certain exceptions to the general principles in Topic 740 and provides consistent application of U.S. GAAP by clarifying and amending existing guidance. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the timing of adoption and impact of the updated guidance on its financial statements.

Note 25 – Notes Payable

As of June 30, 2022 and December 31, 2021, the Company had $-0- and $1,900,000, respectively in notes payable outstanding. At June 30, 2022 and December 31, 2021, total accrued interest on Notes Payable was $-0- and $48,287, respectively.

The Company’s Notes Payable at December 31, 2021 consisted of the following:

On April 20, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $500,000 with interest accruing at 5% due April 20, 2023. The Note was convertible after 180 days from issuance into common stock at a price equal to $0.30 per share. On February 17, 2022, the Company paid off the entire principal balance of this Note, together with accrued interest of $20,753 by making a cash payment of $520,753.

On July 6, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $900,000 with interest accruing at 5%, dueJuly 6, 2023. The Note was convertible after 180 days from issuance into common stock at a price equal to $0.30 per share. On February 17, 2022, the Company paid off the entire principal balance of this Note, together with accrued interest of $27,863 by making a cash payment of $927,863.

On August 18, 2021, the Company received monies in exchange for a Note Payable having a Face Value of $500,000 with interest accruing at 5%, due August 18, 2023. The Note was convertible after 180 days from issuance into common stock at a price equal to $0.30 per share. On February 17, 2022, the Company paid off the entire principal balance of this Note, together with accrued of $12,534 by making a cash payment of $512,534.

As of March 31, 2022, the Company had 0 outstanding notes payable.

At March 31, 2022 and December 31, 2021, total accrued interest on Notes Payable was $-0- and $48,287, respectively.

Note 36 – Shareholders’ Equity

On February 17, 2022, the Company’s public offeringPublic Offering closed and the Company received net proceeds of $6,833,071 from the offering. Pursuant to the offering,Public Offering, the Company issued and sold an aggregate of 1,882,353 shares of common stock and 4,102,200 Tradeable Warrants (including 337,494 Tradeable Warrants resulting from partial exercise of the overallotment option granted to the underwriter).

On February 22, 2022, the Company redeemed 990,000shares of Series B Preferred Stock from the CEO of the Company at a redemption price equal to the stated value of $0.10 per share.

On March 14, 2022, the Company completed a private placement and received grossnet proceeds of approximately $8 million before deducting transaction related expenses payable by the Company. The net proceeds to the Company from this private placement were $6,781,199. In connection with this private placement, the Company issued (i) 2,301,353 shares of its common stock together with investor warrants (“Investor Warrants”) to purchase up to 2,301,353 shares of common stock, and (ii) 1,302,251 pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of common stock, together with Investor Warrants to purchase up to 1,302,251 shares of common stock. Each share of common stock and accompanying Investor Warrant were sold together at a combined offering price of $2.22, and each Pre-Funded Warrant and accompanying Investor Warrant were sold together at a combined offering price of $2.219. The Pre-Funded Warrants were immediately exercisable, at a nominal exercise price of $0.001, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The Investor Warrants have an exercise price of $2.22 per share (subject to adjustment as set forth in the warrant), are exercisable upon issuance and will expire five years from the date of issuance.

On April 28, 2022, the Company completed another private placement and received net proceeds of $16,752,915. In connection with this private placement, the Company issued (i) 2,472,820 shares of its common stock together with warrants (“April Warrants”) to purchase up to 4,945,640 shares of common stock, and (ii) 2,390,025 pre-funded warrants (“Pre-Funded Warrants”) with each Pre-Funded Warrant exercisable for one share of common stock, together with April Warrants to purchase up to 4,780,050 shares of common stock. Each share of common stock and accompanying two April Warrants were sold together at a combined offering price of $4.01 and each Pre-Funded Warrant and accompanying two April Warrants were sold together at a combined offering price of $4.009. The Pre-Funded Warrants were immediately exercisable, at a nominal exercise price of $0.001, and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. The April Warrants have an exercise price of $3.76 per share (subject to adjustment as set forth in the warrant), are exercisable upon issuance and will expire five years from the date of issuance.

The Company declared 0 dividends through March 31, 2022June 30, 2022.

Note 47 – Warrants

The Company accounts for issued warrants either as a liability or equity in accordance with ASC 480-10 or ASC 815-40. Under ASC 480-10, warrants are considered a liability if they are mandatorily redeemable and they require settlement in cash, other assets, or a variable number of shares. If warrants do not meet liability classification under ASC 480-10, the Company considers the requirements of ASC 815-40 to determine whether the warrants should be classified as a liability or as equity. Under ASC 815-40, contracts that may require settlement for cash are liabilities, regardless of the probability of the occurrence of the triggering event. Liability-classified warrants are measured at fair value on the issuance date and at the end of each reporting period. Any change in the fair value of the warrants after the issuance date is recorded in the consolidated statements of operations as a gain or loss. If warrants do not require liability classification under ASC 815-40, in order to conclude warrants should be classified as equity, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP standard. Equity-classified warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

During the threesix months ended March 31,June 30, 2022, the Company completed twothree financing events, and in connection therewith, it issued warrants as follows: 

Warrants issued with financing

*The Tradeable Warrants had an initial exercise price of $4.25, subject to adjustment. Upon the closing of the Company’s private placement on March 14, 2022, the exercise price of the Tradeable Warrants was reduced to $2.22, in accordance with the terms thereof.

During the threesix months ended March 31,June 30, 2022, all of the Pre-Funded Warrants and a total of 370,4523,138,507 Tradeable Warrants were exercised resulting in aggregate proceeds of $822,4036,971,178 received by the Company. In addition, during the six months ended June 30, 2022, a total of 2,802,703 Investor Warrants and -0- April Warrants were exercised resulting in aggregate proceeds of $ $6,222,001 received by the Company.

The Company’s outstanding warrants at March 31,June 30, 2022 consisted of the following:

Schedule of outstanding warrants

Note 58 – Net Loss Per Common Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, consideringtaking into consideration common stock equivalents.

In February 2022, the Company issued 4,102,200 Tradeable Warrants pursuant to the Company’s Public Offering. In March and April 2022, the Company issued 3,603,604 Investor Warrants and 9,725,690 April Warrants pursuant to two private placements. As of June 30, 2022, 3,138,507 Tradeable Warrants, 2,802,703 Investor Warrants, and -0- April Warrants were exercised, leaving 963,693 Tradeable Warrants, 800,901 Investor Warrants and 9,725,690 April Warrants outstanding. These warrants are dilutive and were included in the diluted earnings per share.

In March and April 2022, the Company issued and sold Pre-Funded Warrants to purchase 1,302,251an aggregate of 3,692,276 shares of common stock at a nominal exercise price of $0.001 per share (see Note 3). During the threesix months ended March 31,June 30, 2022, noneall of these warrants were exercised. As of March 31, 2021, there are 1,302,251 Pre-Funded Warrants outstanding. The shares of common stock into which the Pre-Funded Warrants may be exercised are considered outstanding for the purposes of computing earnings per share, because the shares may be issued for little orand therefore had no consideration, they are fully vested and they are immediately exercisable upon their issuance date.

In February 2022, the Company issued 4,102,200 Tradeable Warrants pursuant to the Company’s public offering (see Note 3). In March 2022, the Company issued 3,603,604 Investor Warrants in a private placement (see Note 3). 370,452 Tradeable Warrants were exercised as of March 31, 2022, leaving 3,731,748 Tradeable Warrants outstanding. These warrants areremaining dilutive and included in the diluted earnings per share.effect.

Note 69 – Management and Director Compensation

The Company paid its Officersofficers cash compensation totaling $320,000 240,000and $109,927 25,000 and $510,000 and $125,927for the three monthsand six month periods ended March 31,June 30, 2022 and 2021, respectively. Of these amounts attributable to the Company’s CEO, $60,000 110,000and $50,000 was paid to Advanomics Corporation (now known as TRT Pharma Inc.), a company controlled by the CEO of the Company.Company. In addition, the Company issued 300,000shares of common stock valued at $918,000to its Officersofficers during the three months ended March 31,June 30, 2021. The value of these shares was based upon the closing price of the Company’s common stock of $3.06 on the issuance date.

The Company paid its directors cash compensation totaling $Note 7 – Subsequent Events50,000 and $-0- for the three and six month periods ended June 30, 2022 and 2021, respectively.

On April 28, 2022, the Company completed a private placement with certain accredited institutional investors for aggregate gross proceeds of approximately $19.5 million. The Company received net proceeds of $16,752,917 from this private placement. In connection with the private placement, the Company issued and sold (i) 2,472,820 shares of its common stock, (ii) non-tradeable warrants to purchase up to 9,725,690 shares of common stock, and (iii) 2,390,025 pre-funded warrants with each pre-funded warrant exercisable for one share of common stock. Each share of common stock and accompanying two warrants were sold together at a combined offering price of $4.01, and each pre-funded warrant and accompanying two warrants were sold together at a combined offering price of $4.009. The warrants have an exercise price of $3.76 and a term equal to five years from the issuance date.

During April 2022, a total of 1,302,251 Pre-Funded Warrants, 2,768,055 Tradeable Warrants, and 2,802,703 Investor Warrants were exercised resulting in aggregate net proceeds of $12,368,385 received by the Company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. This discussion includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The statements regarding Sunshine Biopharma, Inc. contained in this Report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Important factors known to us that could cause such material differences are identified in this report and in our annual report on Form 10-K for the year ended December 31, 2021. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the SEC.

A. Overview

We are a pharmaceutical and nutritional supplement company focusing on the research and development of proprietary drugs including our anti-canceranticancer compound Adva-27a, our anticancer K1.1 mRNA molecules, and anti-coronavirus lead compound, SBFM-PL4. In addition, we are engaged in the development of specific mRNA molecules for cancer therapy.

We also, through our wholly owned Canadian subsidiary, Sunshine Biopharma Canada Inc. (“Sunshine Canada”), develop science-based nutritional supplements, and currently sell one nutritional supplement product, Essential 9^tm.

B. Proprietary Drug Development Operations

SBFM-PL4 Anti-Coronavirus Treatment

The following is a summary of the development to date of our coronavirus treatment project:

Adva-27a Anticancer DrugCompound

In the area of oncology, our proprietary drug development activities have been focused on the development of a small molecule called Adva-27a for the treatment of aggressive forms of cancer. A Topoisomerase II inhibitor, Adva-27a has been shown to be effective at destroying Multidrug Resistant Cancer cells including Pancreatic Cancer cells, Breast Cancer cells, Small-Cell Lung Cancer cells and Uterine Sarcoma cells (Published in ANTICANCER RESEARCH, Volume 32, Pages 4423-4432, October 2012). Sunshine Biopharma is direct owner of all issued patents pertaining to Adva-27a including U.S. Patents Number 8,236,935 and 10,272,065.

Figure 1

Adva-27a is a GEM-difluorinated C-glycoside derivative of Podophyllotoxin (see Figure 1). Another derivative of Podophyllotoxin called Etoposide is currently on the market and is used to treat various types of cancer including leukemia, lymphoma, testicular cancer, lung cancer, brain cancer, prostate cancer, bladder cancer, colon cancer, ovarian cancer, liver cancer and several other forms of cancer. Etoposide is one of the most widely used anticancer drugs. Adva-27a and Etoposide are similar in that they both attack the same target in cancer cells, namely the DNA unwinding enzyme, Topoisomerase II. Unlike Etoposide however, Adva-27a is able to penetrate and destroy Multidrug Resistant Cancer cells. In addition, Adva-27a has been shown to have distinct and more desirable biological and pharmacological properties compared to Etoposide. In side-by-side studies using Multidrug Resistant Breast Cancer cells and Etoposide as a reference, Adva-27a showed markedly greater cell killing activity (see Figure 2).

Figure 2

The next sequence of steps in our Adva-27a development program include:includes:

Adva-27a’s initial indication will be pancreatic cancer for which there are currently little or no treatment options available. We are planning to conduct our clinical trials at McGill University’s Jewish General Hospital in Montreal, Canada. All aspects of the clinical trials in Canada will employ FDA standards at all levels.

According to the American Cancer Society, nearly 1.5 million new cases of cancer are diagnosed in the U.S. each year. While particularly effective against Multidrug Resistant Cancer, we believe Adva-27a can potentially treat all cancer types, particularly those in which Topoisomerase II has been amplified. We believe that upon successful completion of Phase I Clinical Trials we may receive one or more offers from large pharmaceutical companies to purchase or license our drug. However, there are no assurances that our Phase I Trials will be successful, or if successful, that any pharmaceutical companies will make an acceptable offer to us. In the event we do not consummate such a transaction, we will require significant capital in order to secure regulatory approval, manufacture and market our new drug on our own.

K1.1 Anti-cancer mRNA Molecules as Anti-Cancer Agents

In June 2021, we initiated a new research project in which we set out to determine if certain mRNA molecules can be used as anti-cancer agents. The data collected to date have shown that certaina selected group of mRNA molecules are capable of destroying cancer cells in vitro including multidrug resistant breast cancer cells (MCF-7/MDR), ovarian adenocarcinoma cells (OVCAR-3), and pancreatic cancer cells (SUIT-2). Other studies using non-transformed (normal) human cells (HMEC cells) showed that these mRNA molecules had little cytotoxic effects. These new mRNA molecules, bearing the laboratory name K1.1, are readily adaptable for delivery into patients using the mRNA vaccine technology. In April 2022, we filed a provisional patent application in the United States covering the subject mRNA molecules. We plan to commence mice xenograft studies within approximately the next twelve months.

C. Nutritional Supplements Operations

Our wholly owned Canadian subsidiary, Sunshine Canada, focuses on the development and marketing of science-based nutritional supplements. In December 2018, we completed the development of our first nutritional supplement product which we named Essential 9^™. On December 14, 2018, Health Canada issued NPN 80089663 through which it authorized us to manufacture and sell the Essential 9™ product. Our Essential 9™ nutritional supplement tabletsproduct was originally launched as a tablet and has now been reformatted into vegan capsules. Our Essential 9^tm capsules contain a balanced formula of the 9 Essential Amino Acids that the human body cannot make. Essential Amino Acids are 9 out of the 20 amino acids required for protein synthesis. Proteins are involved in all body functions – From the musculature and immune system to hormones and neurotransmitters. Like vitamins, Essential Amino Acids cannot be made by the human body and must be obtained through diet. Deficiency in one or more of the 9 Essential Amino Acids can lead to loss of muscle mass, fatigue, weight gain and reduced ability to build muscle mass in athletes. Our Essential 9™ provides all 9 Essential Amino Acids in freeform and in the proportions recommended by Health Canada. Essential 9™ is currently available on Amazon.com and Amazon.ca. Figure 3 below shows our 60-Tabletreformatted 60-Capsule Essential 9™ product.

Figure 3

In November 2019, we received Health Canada approval for another nutritional supplement, a new Calcium-Vitamin D tablet. Health Canada issued NPN 80093432 through which it authorized us to manufacture and sell the new Calcium-Vitamin D supplement under the brand name Essential Calcium-Vitamin D™. Vitamin D is a group of steroid-like molecules responsible for increasing intestinal absorption of calcium, magnesium, and phosphate. They are also involved in multiple other biological functions, including proper functioning of the immune system, promoting healthy growth of bone, and reduction of inflammation. The most important compounds in this group are ergocalciferol (Vitamin D2) and cholecalciferol (Vitamin D3). Sunshine Biopharma’s Essential Calcium-Vitamin D™ tablets contain both of these compounds as well as calcium for optimum health benefits. We are considering potentially launching this product in 2022.

We are also developing additional nutritional supplement products. We may launch additional nutritional supplement products within approximately 1-2 years.

in 2022.

D. Results of Operations

Comparison of results of operations for the three months ended March 31,June 30, 2022 and 2021

During the three months ended March 31, 20212,June 30 2022, we generated $122,645 in revenues of $150,307, compared to $40,058revenue of $52,874 for the three months ended March 31, 2021, an increase of $82,587.June 30, 2021. The increase is attributable to a slightly widenednew advertising program.campaigns. All of these revenues were generated from our science-based nutritional supplements operations. The direct cost for generating these revenues was $59,845$74,683 for the three months ended March 31,June 30, 2022 (48.8%(49.7%), compared to $18,520 (46.2%$18,515 (35.0%) for the three months ended March 31,June 30, 2021. The increase in the cost of goods soldsales in 2022 is due to increased manufacturing cost.cost of manufacturing. Our gross profit increased to $62,800$75,624 for the three months ended March 31,June 30, 2022, compared to a gross profit of $21,538$34,359 for the same period in 2021.

General and administrative expenses during the three month period ended March 31,June 30, 2022 were $1,286,164$771,420 compared to $1,297,184$422,957 during the three month period ended March 31,June 30, 2021, a decreasean increase of $10,420.$348,463. Overall, we incurred a loss of $1,223,364$695,796 from our operations in the three month period ended March 31,June 30, 2022, compared to a loss from operations of $1,275,646$388,598 in the similar period of 2021.

In addition, we incurred $12,864 inhad interest income of $146,043, interest expense of $0, and debt release of $10,852 during the three months ended March 31,June 30, 2022, compared to $49,711 ininterest income of $2, interest expense of $195,630, and debt release of $221 during the similar period inthree months ended June 30, 2021. This was primarily due to the transitioning of our financing from convertible debt to equity. We incurred no losses related to debt conversion during the three months ended March 31,June 30, 2022, compared to $4,910,786$2,295,057 in losses arising from debt conversion during the three months ended March 31,June 30, 2021. This was also due to the fact that alltransitioning of our outstandingfinancing from convertible debt was paid during the quarter ended March 31, 2022 prior to the occurrence of any debt conversion events.equity.

As a result, we incurred a net loss of $1,236,234$538,872 for the three month period ended March 31,June 30, 2022, compared to a net loss of $6,185,126$2,879,054 for the three month period ended March 31,June 30, 2021.

Comparison of results of operations for the six months ended June 30, 2022 and 2021

During the six months ended June 30 2022, we generated revenues of $272,952, compared to revenue of $92,932 for the six months ended June 30, 2021. The increase is attributable to new advertising campaigns. All of these revenues were generated from our science-based nutritional supplements operations. The direct cost for generating these revenues was $134,528 for the six months ended June 30, 2022 (49.3%), compared to $37,035 (39.9%) for the six months ended June 30, 2021. The increase in cost of sales in 2022 is due to increased cost of manufacturing. Our gross profit increased to $138,424 for the six months ended June 30, 2022, compared to a gross profit of $55,897 for the same period in 2021.

General and administrative expenses during the six month period ended June 30, 2022 were $2,057,584 compared to $1,720,141 during the six month period ended June 30, 2021, an increase of $337,443. Overall, we incurred a loss of $1,919,160 from our operations in the six month period ended June 30, 2022, compared to a loss from operations of $1,664,244 in the similar period of 2021.

In addition, we had interest income of $146,046, interest expense of $12,864, and debt release of $10,852 during the six months ended June 30, 2022, compared to interest income of $2, interest expense of $245,341, and debt release of $51,252 during the six months ended June 30, 2021. This was primarily due to the transitioning of our financing from convertible debt to equity. We incurred no losses related to debt conversion during the six months ended June 30, 2022, compared to $7,205,843 in losses arising from debt conversion during the six months ended June 30, 2021. This was also due to the transitioning of our financing from convertible debt to equity.

As a result, we incurred a net loss of $1,775,106 for the six month period ended June 30, 2022, compared to a net loss of $9,064,180 for the six month period ended June 30, 2021.

E. Liquidity and Capital Resources

As of March 31,June 30, 2022, we had cash orand cash equivalents of $13,177,625.$41,727,775.

Net cash used in operating activities was $1,304,208$1,878,010 during the threesix months ended March 31,June 30, 2022, compared to $297,355$916,207 during the threesix month period ended March 31,June 30, 2021. The increase was a result of increased business activities including expenses related to the two financing transactionsthree equity financings we completed during the quarter endedin February, March 31,and April 2022. 

Cash flows provided by financing activities were $12,437,673$41,561,363 for the threesix months ended March 31,June 30, 2022, compared to $1,102,000$1,652,648 for the threesix month periodsperiod ended March 31,June 30, 2021. The increase was a result of the two financing transactionsthree equity financings we completed onin February, 17March and March 14,April 2022.