| Item 1.01. |
Entry into a Material Definitive Agreement. |
On March 10, 2022 (the “Signing Date”),
Sunshine Biopharma, Inc., a Colorado corporation (the “Company”) entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with certain accredited and institutional investors for a private placement (“Private Placement”) for the
Company’s common stock (the “Common Stock”) or Pre-Funded Warrants and warrants exercisable for Common Stock (“Investor
Warrants”). Pursuant to the Purchase Agreement, the Company sold (i) 2,301,353 shares (“Shares”) of its Common Stock
together with 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 are 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. The Investor Warrants contain standard adjustments to the exercise price including for stock splits, stock dividend,
rights offerings and pro rata distributions. The Investor Warrant also contains a subsequent equity sales adjustment provision subject
to certain exceptions, pursuant to which in the event that the Company (other than with respect to an Exempt Issuance as defined in the
Investor Warrant) sells securities at less than the warrant exercise price the warrant exercise price shall be adjusted to such price.
Additionally, subject to certain exceptions, as long as more than fifty percent (50%) of the Investor Warrants are outstanding, without
the prior written consent of the holders of the seventy percent (70%) of the outstanding Investor Warrants, the Company may not issue
any Common Stock or common stock equivalents in any Dilutive Issuance (as defined in the Investor Warrant) at a price lower than $2.00
per share.
The Company received gross proceeds of approximately
$8 million before deducting transaction related expenses payable by the Company. The Private Placement closed on March 14, 2022. The Company
intends to use the net proceeds for general corporate purposes.
Pursuant to the Purchase Agreement each director
and executive officer of the Company has agreed not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any shares of the Company’s Common Stock or securities convertible into Common Stock for a period of 90 days after the registration
statement registering the Shares and shares issuable upon exercise of the Pre-Funded and Investor Warrants is declared effective by the
Securities and Exchange Commission (“SEC”).
In connection with the Purchase Agreement, the
Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the investors. Pursuant to
the Registration Rights Agreement, the Company will be required to file a resale registration statement (the "Registration Statement")
with the SEC to register for resale of the Shares, the shares issuable upon exercise of the Pre-Funded Warrants and the Investor Warrant
on the earlier of (a) fifteen (15) days after the filing of the Company’s annual report for the year ended December 31, 2021 or
(b) thirty (30) days after the Signing Date (the “Filing Date”). Pursuant to the Registration Rights Agreement the Registration
Statement shall be declared effective within 15 days after the Filing Date or 45 days following the Filing Date if the Registration Statement
is reviewed by the SEC. The Company will be obligated to pay certain liquidated damages to the investor if the Company fails to file the
resale registration statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required,
of if the Company fails to maintain the effectiveness of the Registration Statement.
The completion of the Private Placement results
in the adjustment of the exercise price of an aggregate of 3,764,706 warrants (the “Tradeable Warrants”) that trade on the
Nasdaq Capital Market under the symbol SBFMW. The new exercise price is $2.22 per warrant. The Company has notified the warrant agent
for the Tradeable Warrants of the change, and any exercise notices delivered by holders of the Tradeable Warrants beginning on March 14,
2022 shall be effected at the adjusted exercise price. This notification shall be deemed to be the Dilutive Issuance Notice pursuant to
Section 3(b) of the Tradeable Warrants.
Aegis Capital Corp. acted as the placement agent
in connection with the Private Placement. Pursuant to the engagement agreement, Aegis was paid a commission equal to 10% of the gross
proceeds received by the Company in the Private Placement and 2% of the gross proceeds as a non-accountable expense allowance. The Company
paid Aegis $100,000 for fees and expenses including attorney fees.
The foregoing descriptions of the Purchase Agreement,
Pre-Funded Warrants, Investor Warrants, Registration Rights Agreement, and the placement agent engagement agreement described herein
are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.