SBFM 10-K & 10-Q changes, risk factors and insider trading

In recent years, the generic pharmaceutical business has experienced increased volatility in volumes due in large part to global supply chain issues following the COVID-19 pandemic. Since 2022, as the global economy has recovered from the impact of the COVID-19 pandemic, it has also been experiencing additional macroeconomic pressures such as rising inflation and disruptions to the global supply chain, in part resulting from the ongoing conflictconflicts between Russia and Ukraine.tariff escalations. We may experience supply discontinuities due to macroeconomic issues, regulatory actions, including sanctions and trade restrictions, labor disturbances and approval delays, which may impact our ability to timely meet demand in certain instances. These adverse market forces have a direct impact on our overall performance. Any such disruptions could have a material adverse impact on our business and our results of operation and financial condition.

If we cannot execute timely launches of new products, we may not be able to offset the increasing price erosion on existing products resulting from pricing pressures and accelerated generics approvals for competing products. Such unsuccessful launches can be caused by many factors, including delays in regulatory approvals, lack of operational or clinical readiness or patent litigation. Failure or delays in executing launches of new generic products could have a material adverse effect on our business, financial condition, and results of operations.

We have not received approval for any of our proprietary (non-generic) drug development operations product candidates from the FDA.FDA or any other regulatory bodies in other jurisdictions. Any compounds compounds we discover or in-license will require extensive and costly development, preclinical testing and clinical trials prior to seeking regulatory regulatory approval for commercial sales. Our most advanced product candidate, K1.1 mRNA and our potential Covid-19 treatment in development may may never be approved for commercial sale. We have not made any filings to date with the FDA or other regulatory bodies in other jurisdictions. The time required to attain product sales and profitability is expensive, lengthy and highly uncertain. If we fail to obtain required regulatory approvals for our pharmaceutical product candidates our business will be materially harmed.

We rely on the services of Dr. Slilaty for strategic and operational management, as well as for scientific and/or medical expertise in the development of our products. The loss of Dr. Slilaty would result in a significant negative impact on our ability to implement our business plan. The loss of Dr. Slilaty willwould also significantly delay or prevent the achievement of our business objectives.

Even if we obtain required USU.S. and foreign regulatory approvals, as applicable, factors that may inhibit our efforts to commercialize our pharmaceutical product candidates without strategic partners or licensees include:

If we cannot maintain the confidentiality of our technology and other confidential information in connection with our collaborations, then our ability to receive patent protection or protect our proprietary information will be impaired. In addition, some of the technology we have developed or licensed relies on inventions developed using U.S. and other governments’government resources. Under applicable law, the U.S. government has the right to require us to grant a nonexclusive, partially exclusive or exclusive license for such technology to a responsible applicant or applicants, upon terms that are reasonable under the circumstances, if the government determines that such action is necessary.

The failure of our service providers and suppliers to supply quality services and materials in sufficient quantities, at a favorable price, and in a timely fashion could adversely affect the results of our operations

A shortage of raw materials or an unexpected interruption of supply could also result in higher prices for those materials. We have experienced increases in various raw material costs, transportation costs and the cost of petroleum-based raw materials and packaging supplies used in our business. Increasing cost pricing pressures on raw materials and other products occurred throughout fiscal 20232024 and 2025 as a result of limited supplies of various ingredients, and the effects of higher labor and transportation costs, and the impact of Covid-19.costs. We expect these upward pressures to continue through fiscal 2024.2026. Although we may be able to raise our prices in response to significant increases in the cost of raw materials, we may not be able to raise prices sufficiently sufficiently or quickly enough to offset the negative effects such cost increases could have on our results of operations or financial condition.

Our products are manufactured at third party manufacturing facilities in Canada and overseas. As a result, we are dependent on the uninterrupted and efficient operation of these facilities. Such manufacturing operations, and those of their suppliers, are subject to power failures, blackouts, border shutdowns, telecommunications failures, computer viruses, cybersecurity vulnerabilities, human error, breakdown, failure or substandard performance. The occurrence of these or any other operational problems, including the improper installation or operation of equipment, terrorism, pandemics (including COVID-19),pandemics, natural or other disasters, intentional acts of violence, and the need to comply with the requirements or directives of governmental agencies, agencies, including the FDA and Health Canada may have a material adverse effect on our business, financial condition and results of operations.

Our common common stock currently trades on Nasdaq, where it is subject to various listing requirements.requirements, including Nasdaq Rule 5500(a)(2), which requires that our common stock maintain a minimum bid price of at least $1.00 to maintain its listing on Nasdaq (the “Bid Price Rule”).

WeOur maycommon stock has recently traded at prices slightly above the $1.00 Nasdaq required minimum bid price requirement. In addition, though we have obtained stockholder approval to authorize the board of directors to implement a reverse stock split in its discretion, in a ratio of up to 1-for-10, there is no assurance that, even if we implement a reverse split, we will be unableable to maintain compliance with the NasdaqBid Price Rule or other applicable requirements for continued listing requirements.on Nasdaq. If we are unable to maintain compliance with Nasdaq listing requirements, we could be subject to suspension and delisting proceedings. A delisting of our common stock and our inability to list on another national securities market could negatively impact us by: (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use certain registration statements to offer and sell freely tradeable securities, thereby limiting our ability to access the public capital markets; and (iv) impairing our ability to provide equity incentives to our employees.

During our fiscal year ended December 31, 2024, 2025, we generated revenues of $34,874,283,$36,305,891, compared to revenues of $24,092,787$34,874,283 in 2023.2024, an increase of approximately $1.4 million. The increase of approximately $10.8 million was the result of expansion of Nora Pharma sales efforts in the Province of Quebec as well as entry into the Provinces of Quebec, Ontario, AlbertaAlberta, and British Columbia. Another contributing factor was the increased number of products offered by Nora Pharma, which increased by 5 during 2024. The cost of sales in 20242025 and 20232024 for generating these revenues was $24,050,214 (66.2%) and $24,204,489 (69.4%) and $15,753,616 (65.4%), respectively. The 4%3.2% increase decrease in the cost of sales in 20242025 was largely due to higherlower professional allowances incurred on the sale of products outside the Province of Quebec. In the Province of Quebec,Quebec professional allowances are cappedset by government regulations. We also had lower wholesalers’ fees and discounts in 2025.

As a result,result of the foregoing, we incurred a net loss of $5,975,352 for the year ended December 31, 2025, compared to a net loss of $5,134,116 for the year ended December 31, 2024, compared to a net loss of $4,506,044 for the year ended December 31, 2023.2024.

On February 11, 2024, we redeemed allcertain ofwarrants thewe issued on May 16, 2023, and April Warrants and all of the May Investor Warrants28, 2022 for an aggregate purchase price of $3,139,651.

Cash flows used in investing activities were $2,320,847$836,306 during the year ended December 31, 2024,2025, compared to $656,150$1,979,313 during our fiscal year ended December 31, 2023.2024. The reasondecrease forof theapproximately increase$1.7 million was due to thereduced acquisition of intangible assets and purchase of equipment for Nora Pharma operations. Net cash flows provided by financing activities were $9,289,507 in 2024, compared to $3,425,587 in 2023. The increase was primarily due to a larger financing event in 2024 than in 2023 and the exercise of more warrants in 2024 than in 2023. Net cash used in operations was $12,531,180 in 2024, compared to $8,775,111 in 2023. The increase was due to expansion of Nora Pharma’s operations and increase in inventory.operations.

We believe our existing cash will be sufficient to fund our pharmaceuticals sales operations and research and development activities for the next 2418 months. There is no assurance our estimates will be accurate. We have no committed sources of capital and we anticipate that we will need to raise additional capital in the future,future including for furtherto research and development activities and possibly clinical trials, as well as expansion ofexpand our generic pharmaceutical operations. Additional capital may not be available on terms acceptable to us, or at all.

We follow the guidance in ASC 842 “– Accounting for Leases,” as amended, which requires us to evaluate the lease agreements we enter into to determine whether they represent operating operating or capital leases at the inception of the lease.

We are a pharmaceutical company offering and researching life-saving medicines in a wide variety of therapeutic areas, including oncology and antivirals. We have two wholly owned subsidiaries: (i) Nora Pharma Inc. (“Nora Pharma”), a Canadian corporation, through which we currently have 60 generic prescription drugs on the market in Canada, and (ii) Sunshine Biopharma Canada Inc. (“Sunshine Canada”),Inc., a Canadian corporation through which we develop and sell OTC supplements.

Our Anti-Coronavirus research effort has been focused on developing an inhibitor of PLpro and, on May 22, 2020, we filed a provisional patent application in the United States covering composition subject matter pertaining to small molecules for inhibition of the Coronavirus PLpro as well as Mpro. Our provisional patent application, entitled Inhibitors of Coronavirus Protease, was converted into a PCT patent application on April 30, 2021. On DecemberMay 23,12, 2025,2026, wethe receivedUnited States aPatent Noticeand Trademark Office (“USPTO”) issued U.S. Patent No. 12,624,066 B2, entitled Compounds and Methods for Treatment of AllowanceCoronavirus fromInfection. This newly issued patent protects our aforesaid technology for new chemical entities designed to inhibit coronavirus replication. We have been informed by the USPTO forthat our PCT patent application. On May 7, 2026, we received an Issue Notification from the USPTO indicating that the patent will be issued on May 12, 2026. In addition, the Issue Notification confirms that thenew patent is eligible for an extension of 706 days and will therefore expire onin April2043 6,instead 2043.of 2041.

Our current lead compound has been found to be active at sub micromolar concentrations against PLpro and exhibited antiviral activity in SRAS-CoV-2 infected cells as well as in cells infected with several different variants of concern. In addition, our compound had favorable pharmacokinetics properties in rodent species and exhibited preferred drug accumulation in the lungs over plasma. The compound was found to be orally active in a K18-human-ACE2 transgenic mouse model and to significantly reduce virus load in the lungs of infected animals in a dose-dependent manner without gross toxicities. In August 2024, we published these and other research results related to this project in the Journal of Medicinal Chemistry (J. Med. Chem. 2024, 67, 13681−13702). A copy of this article is available on our website at: www.sunshinebiopharma.com/scientific-publications. Additional research results on our lead compound have more recently been submitted forpublished publicationalso in the Journal of Medicinal Chemistry and the research article has been peer-reviewed and is currently in press.March 2026 (J. Med. Chem. 2026, 69, 8433−8450). Copies of these articles are available on our website at: www.sunshinebiopharma.com/scientific-publications/.

On May 22, 2020, we filed a provisional patent application in the United States for a new treatment for Coronavirus infections. Our patent application, entitled Inhibitors of Coronavirus Protease, 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, we 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. On DecemberMay 23,12, 2025,2026, wethe receivedUnited aStates NoticePatent and Trademark Office (“USPTO”) issued U.S. Patent No. 12,624,066 B2, entitled “Compounds and Methods for Treatment of AllowanceCoronavirus fromInfection.” This newly issued patent protects our aforesaid technology for new chemical entities designed to inhibit coronavirus replication. We have been informed by the USPTO forthat our PCT patent application. On May 7, 2026, we received an Issue Notification from the USPTO indicating that the patent will be issued on May 12, 2026. In addition, the Issue Notification confirms that thenew patent is eligible for an extension of 706 days and will therefore expire onin April2043 6,instead 2043.of 2041.

Our wholly owned subsidiary, Nora Pharma, owns 200over 190 DIN’s issued by Health Canada for prescription drugs currently on the market in Canada. These DIN’s were secured through in-licenses or cross-licenses from international manufacturers of generic pharmaceutical products. Nora Pharma also owns the rights to sell 10 generic prescription drugs in Canada through distribution agreements with various international partners under which Nora Pharma acts as distributor and receives a percentage of sales.

On September 30, 2025, we received official trademark registration from the United States Patent and Trademark OfficeUSPTO (Registration No. 7,963,385) for “Sunshine Biopharma Inc.” and Design.

Comparison of results of operations for the three months ended MarchJune 31,30, 2026 and 2025

During the three months ended MarchJune 31,30, 2026, we generated $8,088,765$9,263,687 in sales, compared to $8,901,341$9,410,230 for the three months ended MarchJune 31,30, 2025, 2025, a decrease of $812,576$146,543 (9.1%1.6%). The decrease is largely a result of termination of our distribution agreements effective December 31, 31, 2025. The direct cost for generating these sales was $5,907,775$6,837,005 (73.0%73.8%) for the three months ended MarchJune 31,30, 2026, compared to $6,170,915$5,987,364 (69.3%63.6%) for the three months ended MarchJune 31,30, 2025. The increase in cost of sales was a result of the cost of finished goods increasing by $337,530 and sales rebates increasing by $245,966. In addition, inventory obsolescence increased by $207,977. Our gross profit for the three months ended MarchJune 31,30, 2026 was $2,180,990$2,426,682 (27.0%26.2%), compared to $2,730,426$3,422,866 (30.7%36.4%) for the three months ended MarchJune 31,30, 2025, a decrease of $549,436.$996,184. The decrease was largely due to the increase in cost of sales.

General and administrative expenses during the three-month period ended MarchJune 31,30, 2026 were $3,576,587,$4,039,540, compared to $4,026,176$5,477,521 during the three-month three-month period ended MarchJune 31,30, 2025, a decrease of $449,589.$1,437,981. The decrease was the net result of decreases in certain expense categories against modest increases in others. For example,the whilethree months ended June 30, 2026, there was an increase in legal fees byof $61,877$266,008 and salariesaccounting fees of $89,190, offset by $183,038, there was a decrease in accounting fees by $117,950, consulting fees by $222,139,$417,863, marketingsalaries by $125,016, office expenses by $148,138, office expenses by $54,270,$44,418, and R&D by $183,010, $183,038.when compared to the same three-month period ended June 30, 2025. Overall, we incurred a loss of $1,395,597$1,612,858 from our operations for the three months ended MarchJune 31,30, 2026, compared to a loss of $1,295,750$2,054,655 from our operations in the three-month period ended MarchJune 31,30, 2025.2025, a decrease of $441,797.

We had interest income of $48,426$48,816 during the three months ended MarchJune 31,30, 2026, compared to interest income of $75,367$72,715 during the three months ended MarchJune 31,30, 2025, as a result of having less cash on hand.2025.

As a result, we incurred a net loss of $1,243,869 $1,564,048 ($0.25$1.15 per share) for the three months ended MarchJune 31,30, 2026, compared to a net loss of $1,179,771 $1,770,834 ($0.44$3.94 per share) for the three-month period ended MarchJune 31,30, 2025.

As of March 31,June 30, 2026, we had cash and cash equivalents of $6,913,013.$13,748,301.

Net cash used in operating activities was $2,072,100$2,990,108 during during the threesix months ended MarchJune 31,30, 2026, compared to $1,695,002$2,968,400 during the three-monthsix-month period ended MarchJune 31,30, 2025. The increase was2025, largely a result of an increase in Nora Pharma’s accounts receivable.unchanged.

Cash flows used in investing activities were $104,518 $109,638 for the three six months ended MarchJune 31,30, 2026, compared to $212,017$762,204 for the threesix months ended MarchJune 31,30, 2025. The decrease was the result of fewer purchases of equipment and intangible assets (drug licenses) by Nora Pharma.

Cash flows provided by financing activities were $7,804,185 $0 during the threesix months ended MarchJune 31,30, 2026, compared to $355,297$4,023,908 during the threesix months ended MarchJune 31,30, 2025. The decreaseincrease was a result result of noa warrantfinancing exercisesevent takingwhich placewas duringcompleted theon threeMay months19, ended March 31, 2026, compared to $355,297 in warrant exercises during the three months ended March 31, 2025.2026.

We are currently generating revenue of approximately $8 $9 million per quarter and incurring a quarterly deficit of approximately $1.2$1.5 million. Our attention is currently focused on increasing sales and streamlining operations to reduce expenses. We believeestimate thesethat measures could bring us to breakeven and make us less dependent on the capital markets for financing. Ourour existing cash on hand together with cash we generate from sales will be sufficient to fund our operations for the next 1727 months. There is no assurance our estimates will be accurate. We have no committed sources of capital and we anticipate that we will need to raise additional capital in the future for expansion of our generic pharmaceuticals sales operations and further research and development. Additional capital may not be available on terms acceptable to us, or at all.