Business Context and Reporting Period
Company: Sunshine Biopharma Inc. (formerly Mountain West Business Solutions, Inc.)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter ended October 31, 2009 (Inception date: August 17, 2009)
Status: Smaller Reporting Company; Development Stage
On October 15, 2009, the company underwent a change in control via the acquisition of Sunshine Etopo, Inc. and a subsequent name change. The company spun off its former business (management consulting) and pivoted to a biopharmaceutical model focused on cancer treatment. The company is currently in the pre-revenue development stage.
Key Financial Metrics
| Metric | Value (Inception to Oct 31, 2009) |
|---|---|
| Revenue | $0 |
| Net Loss | $(1,133,129) |
| Loss Per Share (Basic) | $(0.12) |
| Cash and Cash Equivalents | $179,845 |
| Total Assets | $179,845 |
| Total Liabilities | $0 |
| Shareholders' Equity | $179,845 |
| Net Cash Used in Operating Activities | $(469,155) |
| Net Cash Provided by Financing Activities | $649,000 |
Material Changes and Operational Highlights
- Business Transformation: The company ceased its previous consulting operations and acquired Sunshine Etopo, Inc. to pursue pharmaceutical development. This resulted in significant one-time costs.
- Expense Drivers: Total General & Administrative expenses of $1,133,129 were driven primarily by:
- Write-down of intangible assets: $945,974
- Merger costs: $155,150
- Legal and accounting fees: $27,500
- Capital Structure: The company issued significant equity to fund the acquisition and operations, including 21,962,000 shares of common stock and 850,000 shares of preferred stock in exchange for the acquisition target. Additionally, $663,974 in stock was issued for licenses and services.
Outlook, Risks, and Management Commentary
- Plan of Operation: The company intends to develop and commercialize Difluoro-Etoposide (Adva-27a), a cancer treatment compound. Phase I clinical trials are planned for 2010 in Canada, pending financing.
- Liquidity Risk: The company holds $179,845 in cash but explicitly states it does not have sufficient funds to cover anticipated expenses for clinical trials. Management estimates a need for approximately $7.5 million in debt or equity capital to fully implement the business plan.
- Financing Uncertainty: There are no assurances that the required capital will be raised. Failure to secure funding will materially adversely affect operations.
- Regulatory Status: No filings have been made with the FDA or Health Canada as of the report date. The company anticipates a "fast-track" process for clinical trials due to the terminal nature of the target cancers.
- Subsequent Event: On November 12, 2009, $30,000 in convertible promissory notes were converted into 6,750,000 shares of common stock.
Investor Verification Checklist
- Capital Sufficiency: Verify if the company has secured the estimated $7.5 million required for clinical trials, as current cash ($179,845) is insufficient.
- Regulatory Filings: Confirm the status of IND (Investigational New Drug) applications with the FDA and Health Canada, as none were filed as of October 31, 2009.
- Intellectual Property: Validate the exclusivity and status of the license from Advanomics Corporation and the underlying patent (PCT/FR2007/000697).
- Dilution: Assess the impact of the recent issuance of 6,750,000 shares (post-period) and the 21,962,000 shares issued for the acquisition on existing shareholder value.
- Merger Costs: Review the justification for the $945,974 write-down of intangible assets to ensure it reflects fair value adjustments.