Sunshine Biopharma Inc. 10-Q/A

ITEM 1. FINANCIAL STATEMENTS Sunshine Biopharma, Inc. Consolidated Balance Sheets June 30, December 31, 2024 2023 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 11,507,745 $ 16,292,347 Accounts receivable 3,973,550 2,552,362 Inventory 8,490,745 5,734,755 Prepaid expenses 1,776,480 310,591 Total Current Assets 25,748,520 24,890,055 Long-Term Assets: Property & equipment 541,410 365,868 Intangible assets 2,447,128 1,444,259 Right-of-use-asset 563,920 646,779 Total Long-Term Assets 3,552,458 2,456,906 TOTAL ASSETS $ 29,300,978 $ 27,346,961 LIABILITIES Current Liabilities: Accounts payable & accrued expenses $ 4,930,055 $ 2,585,466 Earnout payable – 2,547,831 Income tax payable 254,971 299,869 Current portion - right-of-use-liability 114,452 118,670 Total Current Liabilities 5,299,478 5,551,836 Long-Term Liabilities: Deferred tax liability 48,729 48,729 Right-of-use-liability 462,906 539,035 Total Long-Term Liabilities 511,635 587,764 TOTAL LIABILITIES 5,811,114 6,139,600 SHAREHOLDERS' EQUITY Preferred Stock, Series B $ 0.10 par value per share; 1,000,000 shares authorized; 130,000 and 10,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 13,000 1,000 Common Stock, $ 0.001 par value per share; 3,000,000,000 shares authorized; 1,170,510 and 14,012 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 1,171 14 Capital paid in excess of par value 89,842,503 84,415,900 Accumulated comprehensive income (loss) ( 683,050 ) 696,105 Accumulated (Deficit) ( 65,683,759 ) ( 63,905,658 ) TOTAL SHAREHOLDERS' EQUITY 23,489,865 21,207,361 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 29,300,978 $ 27,346,961 See Accompanying Notes To These Financial Statements 3 Sunshine Biopharma, Inc. Consolidated Statements of Operations and Comprehensive Loss (Unaudited) 3 Months Ended June 30, 6 Months Ended June 30, 2024 2023 2024 2023 Sales $ 9,303,067 $ 5,560,865 $ 16,844,113 $ 10,454,918 Cost of sales 6,946,810 3,608,118 12,133,519 6,674,049 Gross profit 2,356,257 1,952,747 4,710,594 3,780,869 General & Administrative Expenses: Accounting 88,394 75,281 440,400 245,031 Consulting 54,048 392,454 101,449 524,069 Director fees 100,000 100,000 200,000 200,000 Legal 223,436 145,815 445,434 259,572 Marketing 256,325 133,177 454,371 261,090 Office 713,245 419,650 1,673,636 938,768 R&D 436,235 368,565 658,268 801,490 Salaries 1,556,176 1,200,167 3,089,888 3,200,424 Taxes 145,805 96,649 221,706 160,367 Depreciation 50,870 34,877 93,488 69,587 Total General & Administrative Expenses: 3,624,533 2,966,635 7,378,640 6,660,398 (Loss) from operations ( 1,268,276 ) ( 1,013,888 ) ( 2,668,046 ) ( 2,879,529 ) Other Income (Expense): Foreign exchange (loss) 286,535 ( 261 ) 280,768 ( 246 ) Interest income 143,995 203,049 288,084 416,930 Interest expense ( 245 ) ( 3,331 ) ( 245 ) ( 7,746 ) Total Other Income (Expense) 430,285 199,457 568,607 408,938 Net (loss) before income taxes ( 837,991 ) ( 814,431 ) ( 2,099,439 ) ( 2,470,591 ) Provision for income taxes 343,691 ( 87,677 ) 321,338 ( 133,947 ) Net (Loss) $ ( 494,300 ) $ ( 902,108 ) $ ( 1,778,101 ) $ ( 2,604,538 ) Comprehensive Income (Loss): Gain (Loss) from foreign exchange translation ( 835,450 ) 492,049 ( 1,379,155 ) 503,209 Comprehensive Income (Loss) $ ( 1,329,750 ) $ ( 410,059 ) $ ( 3,157,256 ) $ ( 2,101,329 ) Basic (Loss) per common share $ ( 9.94 ) $ ( 71.17 ) $ ( 43.48 ) $ ( 218.62 ) Weighted Average Common Shares Outstanding (Basic) 49,726 12,675 40,896 11,914 See Accompanying Notes To These Financial Statements 4 Sunshine Biopharma, Inc. Consolidated Statements of Cash Flows (Unaudited) June 30, June 30, 2024 2023 Cash Flows From Operating Activities: Net (Loss) $ ( 1,778,101 ) $ ( 2,604,538 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 93,494 69,594 Stock issued for services 12,000 – Accounts receivable ( 1,867,693 ) ( 55,160 ) Inventory ( 2,949,128 ) ( 885,243 ) Prepaid expenses ( 272,810 ) 182,852 Accounts Payable & accrued expenses 2,794,798 ( 1,103,502 ) Earn-out payable ( 2,547,831 ) ( 1,084,169 ) Income tax payable ( 1,247,671 ) ( 147,980 ) Net Cash Flows (Used In) Operating Activities ( 7,762,942 ) ( 5,628,146 ) Cash Flows From Investing Activities: Reduction in right-of-use asset 61,074 66,846 Purchase of intangible assets ( 234,569 ) ( 17,645 ) Purchase of equipment ( 1,037,450 ) ( 454,980 ) Net Cash Flows (Used In) Investing Activities ( 1,210,944 ) ( 405,779 ) Cash Flows From Financing Activities: Proceeds from public offering net (common stock) 8,522,411 4,089,208 Exercise of warrants 45,000 1,156 Purchase of treasury stock ( 3,139,651 ) ( 506,822 ) Lease liability ( 58,194 ) ( 63,870 ) Net Cash Flows Provided by Financing Activities 5,369,566 3,519,672 Cash and Cash Equivalents at Beginning of Period 16,292,347 21,826,437 Net increase (decrease) in cash and cash equivalents ( 3,604,320 ) ( 2,514,253 ) Effect of exchange rate changes on cash – 9 Foreign currency translation adjustment ( 1,180,282 ) 417,298 Cash and Cash Equivalents at End of Period $ 11,507,745 $ 19,729,491 Supplementary Disclosure of Cash Flow Information: Cash paid for income taxes $ 956,012 $ – Stock issued for services $ 12,000 $ – See Accompanying Notes To These Financial Statements 5 Sunshine Biopharma, Inc. Consolidated Statements of Shareholders' Equity (Unaudited) Three Months Number Of Common Shares Common Capital Paid in Excess of Par Treasury Number Of Preferred Shares Preferred Comprehensive Accumulated Periods Issued Stock Value Stock Issued Stock Income Deficit Total Balance March 31, 2024 49,726 50 $ 89,843,624 $ – 130,000 $ 13,000 $ 152,400 $ ( 65,189,459 ) $ 24,819,615 Exercise of warrants 1,120,784 1,121 ( 1,121 ) – – – – – – Net (loss) – – – – – – ( 835,450 ) ( 494,300 ) ( 1,329,750 ) Balance at June 30, 2024 1,170,510 $ 1,171 $ 89,842,503 $ – 130,000 13,000 $ ( 683,050 ) $ ( 65,683,759 ) 23,489,865 Balance March 31, 2023 11,070 $ 11 $ 80,357,504 $ – 10,000 $ 1,000 $ 173,007 $ ( 61,102,044 ) $ 19,429,478 Common stock and prefunded warrants issued in a private offering 1,225 1 4,089,217 – – – – – 4,089,218 Exercise of warrants 578 1 1,155 – – – – – 1,156 Net (loss) – – – – – – 492,049 ( 902,108 ) ( 410,059 ) Balance at June 30, 2023 12,873 $ 13 $ 84,447,876 $ – 10,000 $ 1,000 $ 665,056 $ ( 62,004,152 ) $ 23,109,793 Six Months Periods Balance December 31, 2023 14,012 $ 14 $ 84,415,900 $ – 10,000 $ 1,000 $ 696,105 $ ( 63,905,658 ) $ 21,207,361 Preferred Stock issued to related party – – – – 120,000 12,000 – – 12,000 Common stock and pre-funded warrants issued in an underwritten offering 13,214 13 8,522,398 – – – – – 8,522,411 Exercise of warrants 1,143,284 1,144 43,856 – – – – – 45,000 Repurchase of warrants – – ( 3,139,651 ) – – – – – ( 3,139,651 Net (loss) – – – – – – ( 1,379,155 ) ( 1,778,101 ) ( 3,157,256 ) Balance at June 30, 2024 1,170,510 $ 1,171 $ 89,842,503 $ – 130,000 13,000 $ ( 683,050 ) $ ( 65,683,759 ) $ 23,489,865 Balance December 31, 2022 11,293 $ 11 $ 80,864,326 $ – 10,000 $ 1,000 $ 161,847 $ ( 59,399,614 ) $ 21,627,570 Repurchase Stock ( 223 ) – ( 506,822 ) – – – – – ( 506,822 ) Common stock and prefunded warrants issued in a private offering 1,225 1 4,089,217 – – – – – 4,089,218 Exercise of warrants 578 1 1,155 – – – – – 1,156 Net (loss) – – – – – – 503,209 ( 2,604,538 ) ( 2,101,329 ) Balance at June 30, 2023 12,873 $ 13 $ 84,447,876 $ – 10,000 $ 1,000 $ 665,056 $ ( 62,004,152 ) $ 23,109,793 See Accompanying Notes To These Financial Statements 6 Sunshine Biopharma, Inc. Notes to Unaudited Consolidated Financial Statements For the Six Months Ended June 30, 2024 and 2023 Note 1 – Description of Business The Company was incorporated under the name Mountain West Business Solutions, Inc. on August 31, 2006, in the State of Colorado. Effective October 15, 2009, the Company acquired Sunshine Biopharma, Inc. in a transaction classified as a reverse acquisition. Upon completion of the reverse acquisition, the Company changed its name to Sunshine Biopharma, Inc. and began operating as a pharmaceutical company. Sunshine Biopharma operates two wholly owned subsidiaries: (i) Nora Pharma Inc. (“Nora Pharma”), a Canadian corporation with a portfolio of pharmaceutical products consisting of 61 generic prescription drugs on the market in Canada, and (ii) Sunshine Biopharma Canada Inc. (“Sunshine Canada”), a Canadian corporation which develops and sells nonprescription over-the-counter (“OTC”) products. The Company has determined that it has two reportable segments: · Prescription Generic Pharmaceuticals (“Generic Pharmaceuticals”) · Nonprescription Over-The-Counter Products (“OTC Products) Through June 30, 2024, sales from the Generic Pharmaceuticals segment represented approximately 97 % of total revenues of the Company while the remaining approximately 3 % was generated from the sale of OTC Products. Based on these results, the Company deems segmentation reporting to be immaterial at June 30, 2024. The Company is not subject to material customer concentration risks as it sells its products directly to pharmacies in several Canadian provinces. However, in Canada provincial governments reimburse patients for their prescription drugs expenditures to various degrees under drug reimbursement programs, making generic drugs prices highly dependent on governmental policies which may change over time. The most recent negotiations between the pan-Canadian Pharmaceutical Alliance and the Canadian Generic Pharmaceutical Association have resulted in updated generic pricing for certain products which took effect on October 1, 2023. The updated prices are valid for three years and the agreement may be extended for an additional two years. In addition, the Company is engaged in the development of the following proprietary drugs: · Adva-27a, a small chemotherapy molecule for treatment of pancreatic cancer (IND-enabling studies were paused on November 2, 2023) · K1.1 mRNA, a lipid nano-particle (LNP) targeted for liver cancer · SBFM-PL4, a protease inhibitor for treatment of Coronavirus infections 7 Note 2 – Basis of Presentation The unaudited consolidated financial statements of the Company for the three and six months periods ended June 30, 2024 and 2023, 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, 2023, was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 28, 2024. These financial statements should be read in conjunction with that report. On April 17, 2024 and August 8, 2024, the Company completed a 1-for-100 and a 1-for-20 reverse split of its common stock, respectively (the “Reverse Splits”). The share amounts, warrants, and related parameters specified in this report have been adjusted to reflect both Reverse Splits on a retroactive basis. Note 3 – Underwritten Public Offering On February 15, 2024, the Company completed an underwritten public offering for gross proceeds of approximately $ 10 million, before deducting fees to the underwriter and other offering expenses payable by the Company. The net proceeds received by the Company were $ 8,522,411 . The offering consisted of 35,714 Units, consisting of (i) 13,214 Common Units, with each Common Unit consisting of one share of common stock, one-tenth of a Series A warrant to purchase one share of common stock (“Series A Warrant”) and two-tenths of a Series B warrant to purchase one share of common stock (“Series B Warrant”), and (ii) 22,500 Pre-Funded Units, with each Pre-Funded Unit consisting of one pre-funded warrant to purchase one share of common stock (“Pre-Funded Warrants”), one-tenth of a Series A Warrant and two-tenths of a Series B Warrant. The public offering price was $280.00 per Common Unit and $278.00 per Pre-Funded Unit. The Pre-Funded Warrants have an exercise price of $2.00 per share. The Pre-Funded Warrants are immediately exercisable and may be exercised at any time until exercised in full. The initial exercise price of each Series A Warrant was $4,200.00 per share of common stock or pursuant to an alternative cashless exercise option. Under the alternative cashless exercise provision, which became effective following stockholder approval in March 2024, each Series A Warrant was exercisable on a cashless basis for two shares of common stock. The Series A Warrants were exercisable immediately and expire 30 months after the initial issuance date. The initial exercise price of each Series B Warrant was $4,760.00 per share of common stock. The Series B Warrants are exercisable immediately and expire 60 months after the initial issuance date. In addition (effective following the stockholder approval), the Series A Warrants and Series B Warrants included a provision under which, following a reverse split of the common stock, the exercise price will be adjusted to the lowest volume weighted average price (“VWAP”) for the five trading days immediately preceding and immediately following the date of reverse stock split, and the number of shares issuable upon exercise of the Series A Warrants or Series B Warrants will be adjusted such that the aggregate exercise price of the Series A Warrants or Series B Warrants will remain unchanged. The Series B Warrants do not include an alternate cashless exercise provision and can only be exercised for cash so long as the Company’s registration statement for such warrants and underlying shares remains effective. In addition, the Company granted the underwriter, Aegis Capital Corp. ("Aegis"), a 45-day option to purchase up to an additional 15% of the total number of shares of common stock and/or Pre-Funded Warrants and/or Series A Warrants and/or Series B Warrants sold in the offering, solely to cover overallotments, if any. On February 15, 2024, Aegis partially exercised its over-allotment option for a total of 415 Series A Warrants and 830 Series B Warrants. On February 13, 2024, the Company obtained stockholder approval for (i) adjustment of the number of underlying shares and exercise price for both the Series A Warrants and the Series B warrants, and (ii) the alternate cashless exercise provision for the Series A warrants. 8 As of June 30, 2024, all of the Pre-Funded Warrants and all of the Series A warrants have been exercised resulting in the Company issuing 22,500 and 1,120,784 shares of common stock, respectively. In connection with such exercises, the Company received net proceeds of $ 45,000 and $ 0 , respectively. As of August 16, 2024, the only securities remaining outstanding in connection with this offering are 13,612,927 Series B Warrants exercisable at $ 2.7879 per share. These warrants are subject to further adjustments per the Series B Warrant Agreement. Note 4 – Acquisition of Nora Pharma Inc. On October 20, 2022, the Company acquired all of the issued and outstanding shares of Nora Pharma Inc. (“Nora Pharma”), a Canadian privately held pharmaceutical company. The purchase price for the shares was $ 18,860,637 (USD), $ 14,346,637 of which was paid in cash and the remainder was paid through the issuance of 1,850 shares of the Company’s common stock valued at $ 4,514,000 or $2,440 per share. Nora Pharma sells generic pharmaceutical products in Canada. Nora Pharma’s operations are authorized by a Drug Establishment License issued by Health Canada. The following table summarizes the allocation of the purchase price as of October 20, 2022, the acquisition date using Nora Pharma’s balance sheet assets and liabilities: Schedule of allocation of purchase price Accounts receivable $ 1,358,121 Inventory 3,181,916 Intangible assets 659,571 Equipment & furniture 210,503 Other assets 1,105,093 Total assets 6,515,204 Liabilities assumed ( 5,981,286 ) Net assets 533,918 Goodwill 18,326,719 Total Consideration $ 18,860,637 The value of the 1,850 common shares issued as part of the consideration paid for Nora Pharma was determined based on the closing market price of the Company’s common shares on the acquisition date, October 20, 2022 ($2,440 per share). 9 The Company impaired 100% of the goodwill amount in 2022 and plans to depreciate the intangible assets as detailed in Note 5 below. As part of the consideration paid for Nora Pharma, the Company agreed to a $ 5,000,000 CAD ($ 3,632,000 USD) earn-out amount payable to Mr. Malek Chamoun, the Seller of Nora Pharma and its current President. The earnout is payable in the form of twenty (20) payments of $250,000 CAD for every $1,000,000 CAD increase in gross sales (as defined in the Purchase Agreement) above Nora Pharma’s June 30, 2022 gross sales, provided that his employment with the Company is not terminated pursuant to the Company’s employment agreement with him. The total earn-out amount of $3,632,000 has been recorded as a salary payable. During the fiscal year ended December 31, 2023, the Company paid an earn-out amount of $ 1,084,169 for the fiscal year ended December 31, 2022. On April 22, 2024, the Company paid an earn-out amount of $ 3,093,878 CAD (approximately $ 2,291,761 USD) for the earn-out realized in fiscal year 2023. The current remaining earn-out balance is $ 479,207 CAD (approximately $ 354,968 USD). Note 5 – Intangible Assets Intangible assets, net consisted of the following: Schedule of intangible assets June 30, 2024 December 31, 2023 Balance at beginning of the year $ 1,444,259 776,856 Purchase of additional intangible assets (licenses) 1,077,380 710,372 Total 2,521,639 1,487,228 Less accumulated amortization ( 74,511 ) ( 42,969 ) Finite-lived intangible assets, net $ 2,447,128 $ 1,444,259 As of June 30, 2024, the estimated amortization amounts of the Company’s intangible assets for each of the next five years are as follows: Schedule of estimated amortization expense 2025 $ 73,257 2026 73,257 2027 73,257 2028 39,300 2029 1,889 Note 6 – Reverse Stock Splits Effective April 17, 2024 and August 8, 2024, the Company completed a 1-for-100 and a 1-for-20 reverse split of its common stock (the “Reverse Splits”). The Company had previously completed three (3) reverse stock splits including a 1-for-200 on February 9, 2022, and two 1-for-20 reverse stock splits, one in 2019 and the other in 2020. The Company’s financial statements included in this report reflect all five (5) reverse stock splits on a retroactive basis for all periods presented and for all references to common stock, unless specifically stated otherwise. 10 Note 7 – Capital Stock The Company’s authorized capital is comprised of 3,000,000,000 shares of common stock, par value $ 0.001 , and 30,000,000 shares of preferred stock, $ 0.10 par value. As of June 30, 2024, the Company had authorized 1,000,000 shares of Series B Preferred Stock. The Series B Preferred Stock is non-convertible and non-redeemable. It has a liquidation preference equal to the stated value of $0.10, relative to the common stock and gives the holder the right to 1,000 votes per share. As of June 30, 2024, 130,000 shares of Series B Preferred Stock were outstanding and held by the Company’s Chief Executive Officer. On February 17, 2022, the Company completed a public offering and received net proceeds of $ 6,833,071 from the offering. Pursuant to the public offering, the Company issued and sold an aggregate of 941 shares of common stock and 20,051 warrants to purchase shares of common stock (the “Tradeable Warrants”). On October 12, 2023, the Company held a special meeting of the holders of the outstanding Tradeable Warrants in which the holders of the majority of the outstanding Tradeable Warrants approved an amendment to the Warrant Agent Agreement to eliminate the provision that prohibited the Company’s CEO from exercising his voting rights under the Series B Preferred Stock, as well as to lower the exercise price of the Tradeable Warrants from $4,440 to $220.00. The Company entered into the amendment to the Warrant Agent Agreement on October 18, 2023. On March 14, 2022, the Company completed a private placement and received net proceeds of $ 6,781,199 . In connection with this private placement, the Company issued (i) 1,150 shares of its common stock together with investor warrants (“Investor Warrants”) to purchase up to 1,150 shares of common stock, and (ii) 651 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 6,511 shares of common stock. Each share of common stock and accompanying Investor Warrant was sold together at a combined offering price of $4,440.00 and each Pre-Funded Warrant and accompanying Investor Warrant were sold together at a combined offering price of $4,438.00. The Pre-Funded Warrants were immediately exercisable, at an exercise price of $2.00, 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 $4,440.00 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) 1,236 shares of its common stock together with warrants (“April Warrants”) to purchase up to 2,472 shares of common stock, and (ii) 1,195 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 2,390 shares of common stock. Each share of common stock and accompanying two April Warrants were sold together at a combined offering price of 8,020.00 and each Pre-Funded Warrant and accompanying two April Warrants were sold together at a combined offering price of $8,018.00. The Pre-Funded Warrants were immediately exercisable, at an exercise price of $2.00, 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 $7,520.00 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. 11 On October 20, 2022, the Company issued 1,850 shares of common stock as part of the acquisition of Nora Pharma. These shares were valued at $ 4,514,000 , or 2,440.00 per share. On January 19, 2023, the Company announced a stock repurchase program of up to $ 2 million (“Stock Repurchase Program”). During the six months ended June 30, 2023, the Company repurchased a total of 2,228 shares of common stock at an average price of $2,274.20 per share for a total cost of $ 506,822 . The 2,228 repurchased common shares were cancelled and returned to treasury reducing the number of issued and outstanding shares from 11,292 to 9,064. On May 16, 2023, the Company completed a private placement pursuant to a securities purchase agreement with an institutional investor for gross proceeds of approximately $ 5 million, before deducting fees to the placement agent and other offering expenses payable by the Company. The net proceeds received by the Company were $ 4,089,218 . In connection with the private placement, the Company issued (i) 1,225 shares of common stock, (ii) 1,751 pre-funded warrants (the “May Pre-Funded Warrants”), and (iii) investor warrants (the “May Warrants”) to purchase up to 5,952 shares of common stock. Each share of common stock and accompanying two May Warrants were sold together at a combined offering price of $1,680.00 and each May Pre-Funded Warrant and accompanying two May Warrants were sold together at a combined offering price of $1,678.00. The May Pre-Funded Warrants are immediately exercisable, at an exercise price of $2.00, and may be exercised at any time until all of the May Pre-Funded Warrants are exercised in full. The May Warrants have an exercise price of $1,180.00 per share (subject to adjustment as set forth therein), are exercisable upon issuance and will expire five and a half years from the date of issuance. In 2022 and 2023, the Company issued a total of 5,396 shares of common stock in connection with warrant exercises for aggregate net proceeds of $ 13,196,681 . In July 2023, the Company repurchased a total of 34 shares of common stock under the Stock Repurchase Program announced on January 19, 2023, at an average price of $1,009.20 per share for a total cost of $ 34,321 . In October 2023, the 34 repurchased common shares were cancelled and returned to treasury reducing the number of issued and outstanding shares from 12,873 to 12,839. On November 16, 2023, the Company issued 1,173 shares of common stock and received net proceeds of $ 2,346 in connection with the exercise of all 1,173 remaining May Pre-Funded Warrants at an exercise price of $2.00 per share. On February 8, 2024, the Company issued 20,000 shares of Series B Preferred Stock to the Company’s CEO for a purchase price of $ 0.10 per share. On February 15, 2024, the Company completed an underwritten public offering and in connection therewith it issued an aggregate of 35,714 shares of common stock, of which 22,500 shares were issued in connection with pre-funded warrant exercises. On March 4, 2024, the Company issued 100,000 shares of Series B Preferred Stock to the Company’s CEO for a purchase price of $ 0.10 per share. As of June 30, 2024 and December 31, 2023, the Company had a total of 1,170,510 and 14,012 shares of common stock issued and outstanding, respectively. The Company has declared no dividends since inception. 12 Note 8 – 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. In 2022, 2023, and during the six months ended June 30, 2024, the Company completed five (5) financing events, and in connection therewith, it issued warrants as follows: Schedule of warrants issued with financing Type Number Exercise Price Expiry Date 2022 Pre-Funded Warrants 1,846 $ 2.00 Unlimited Tradeable Warrants 2,051 $ 4,440.00 February 2027 Investor Warrants 1,801 $ 4,440.00 March 2027 April Warrants 4,862 $ 7,520.00 April 2027 May Pre-Funded Warrants 1,751 $ 2.00 Unlimited May Investor Warrants 5,952 $ 1,180.00 November 2028 2024 Pre-Funded Warrants 22,500 $ 2.00 Unlimited Series A Warrants 3,986 * $ 4,200.00 * August 2026 Series B Warrants 7,973 * $ 4,760.00 * February 2029 _______________________ * Subject to adjustments per the Series A and Series B Warrant Agreements. As of June 30, 2024, all of the 2022 Pre-Funded Warrants, all of the May Pre-Funded Warrants, all of the 2024 Pre-Funded Warrants, a total of 1,569 Tradeable Warrants, 1,401 Investor Warrants, and all of the Series A Warrants were exercised resulting in aggregate proceeds of $ 13,241,681 received by the Company. 13 On February 11, 2024, the Company redeemed all of the April Warrants and all of the May Investor Warrants for an aggregate purchase price of $ 3,139,651 . The Company’s outstanding warrants as of August 16, 2024 consisted of the following: Schedule of warrants outstanding Type Number Exercise Price Expiry Date Tradeable Warrants 481 $ 220.00 February 2027 Investor Warrants 400 $ 4,440.00 March 2027 Series B Warrants 13,612,927 * $ 2.7879 * February 2029 _____________________ * As adjusted and subject to further adjustments per the Series B Warrant Agreements. Note 9 – Earnings Per Share The following table sets forth the computation of basic and diluted net income per share for the quarters ended June 30: Schedule of earnings per share computation 2024 2023 Net gain (loss) attributable to common stock $ ( 494,300 ) $ ( 902,108 ) Basic weighted average outstanding shares of common stock 49,726 12,675 Dilutive common share equivalents – – Dilutive weighted average outstanding shares of common stock 49,726 12,675 Net gain (loss) per share attributable to common stock $ ( 9.94 ) $ ( 71.17 ) Note 10 – Lease The Company has obligations as a lessee for office and warehouse space with initial non-cancellable terms in excess of one year. The Company classified the lease as an operating lease. The lease contains a renewal option for a period of five years. Because the Company is certain to exercise the renewal option, the optional period is included in determining the lease term, and associated payments under the renewal option are included in the lease payments. The Company’s lease does not include termination options for either party to the lease or restrictive financial or other covenants. Payments due under the lease include fixed payments plus a variable payment. The Company’s lease requires it to make variable payments for the Company’s proportionate share of building’s property taxes, insurance, and common area maintenance. These variable lease payments are not included in lease payments used to determine lease liability and are recognized as variable costs when incurred. Amounts reported on the balance sheet as of June 30, 2024, were as follows: Schedule of lease information Operating lease ROU asset $ 563,920 Operating lease liability - Short-term $ 114,452 Operating lease liability - Long-term $ 462,906 Remaining lease term 5 years 6 months Discount rate 6 % Amounts disclosed for ROU assets obtained in exchange for lease obligations and reductions of ROU assets resulting from reductions of lease obligations include amounts reduced from the carrying amount of ROU assets resulting from deferred rent. 14 Maturities of lease liabilities under non-cancellable operating leases at June 30, 2024 are as follows: Schedule of maturities of lease liabilities 2024 $ 56,479 2025 $ 114,859 2026 $ 108,790 2027 $ 102,470 2028 $ 96,517 Thereafter $ 98,243 Note 11 – Management and Director Compensation The Company paid its officers cash compensation totaling $ 1,120,356 and $ 225,000 , and $ 1,382,842 and $ 1,045,000 for the three and six months periods ended June 30, 2024 and 2023, respectively. Of the $1,382,842 amount, $ 400,000 was paid to Advanomics Corporation, a company controlled by the CEO of the Company. The Company paid its directors aggregate cash compensation totaling $ 100,000 for each of the three months periods ended June 30, 2024 and 2023, and $ 200,000 for each of the six months periods ended June 30, 2024 and 2023. Note 12 – Income Taxes In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon currently known facts and circumstances and applies that rate to its year-to-date earnings or losses. The Company’s effective tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of discrete items, such as changes in estimates, changes in rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or regulatory or tax law changes. Our income tax (expense) / benefit of $ 343,691 and $ 321,338 for the three and six months ended June 30, 2024, respectively, is primarily due to operations outside of the United States and changes in valuation allowance related to certain deferred tax assets generated or utilized in the applicable period. Our income tax (expense) / benefit $ ( 87,677 ) and $ ( 133,947 ) for the three and six months ended June 30, 2023, respectively, is primarily due to operations outside of the United States and changes in valuation allowance related to certain deferred tax assets generated or utilized in the applicable period. Deferred tax assets are regularly reviewed for recoverability by jurisdiction and valuation allowances are established based on historical and projected future taxable losses and the expected timing of the reversal of existing temporary differences. The Company as recorded valuation allowances against the majority of its deferred tax assets of June 30, 2024, and the Company expects to maintain these valuation allowances until there is sufficient evidence that future earnings can be achieved, which is uncertain at this time. The Company's consolidated financial statements contain various tax related entries the same being due to the operations of the two Canadian subsidiaries and are in compliance with Canadian tax laws. Note 13 – Subsequent Events Effective August 8, 2024, the Company completed a 1-for-20 reverse split of its common stock (the “Reverse Split”). As a result of the Reverse Split, the exercise price of Series B Warrants adjusted to $2.7879 per share and the number of Series B Warrants adjusted to 13,612,927. All share amounts, warrants, and related parameters specified in this report have been adjusted to reflect the Reverse Split. Subsequent to June 30, 2024, the Company issued 53,831 shares of common stock upon the exercise of 53,831 Series B Warrants and received $150,075 in net proceeds. 15