Panacea Life Sciences Holdings, Inc 10-Q for FY2023 Q2
Panacea Life Sciences Holdings, Inc. (PLSH)
About this 10-Q
Panacea Life Sciences Holdings, Inc filed this 10-Q on August 15, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $399.13K
- down 15.0% from $469.47K a year earlier
- Net loss
- $1.86M
- compared with a net loss of $1.96M a year earlier
- Diluted EPS
- -$0.11
- compared with -$0.13 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
For the transition period from _____________ to _____________
Commission
File Number:
(Exact name of registrant as specified in its charter)
| (State or another jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices, Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the past 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.
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).
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.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | |
| Smaller
reporting company | ||
| Emerging
growth company |
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 ☐
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: shares of common stock, par value $0.0001 per share, outstanding as August 2, 2023.
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 27 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 29 |
| Item 3. | Defaults Upon Senior Securities | 29 |
| Item 4. | Mine Safety Disclosures | 29 |
| Item 5. | Other Information | 29 |
| Item 6. | Exhibits | 29 |
| Signatures | 30 |
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Panacea Life Sciences Holdings, Inc. and Subsidiary
Unaudited Condensed Consolidated Balance Sheets
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Marketable securities related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Operating lease right-of-use asset, net, related party | ||||||||
| Property and equipment, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Operating lease liability, current portion, related party | ||||||||
| Convertible note payable, net | ||||||||
| Paycheck protection loan, SBA Loan | ||||||||
| TOTAL CURRENT LIABILITIES: | ||||||||
| Operating lease liability, long-term portion, related party | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Series A Preferred Stock: $ Par Value, shares designated; and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series B-1 Preferred: $ Par Value, shares designated; and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series B-2 Preferred: $ Par Value, shares designated; and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series C Preferred: $ Par Value, shares designated; and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series C-1 Preferred: $ Par Value, shares designated and and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series C-2 Preferred: $ Par Value, and shares designated and and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Series D Preferred: $ Par Value, shares designated and and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Preferred Stock, Value | ||||||||
| Common Stock: $ Par Value, shares authorized; and shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively. | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
Panacea Life Sciences Holdings, Inc. and Subsidiary
Unaudited Condensed Consolidated Statements of Operations
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUE | $ | $ | $ | |||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Production related operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| TOTAL OPERATING EXPENSES | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSES) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Unrealized gain (loss) on marketable securities, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Realized gain on sale of securities | ||||||||||||||||
| Other income (loss) | ||||||||||||||||
| Employer retention credit | ||||||||||||||||
| Rental Income | ||||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TAXES | ||||||||||||||||
| NET INCOME (LOSS) | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Per-share data | ||||||||||||||||
| Basic and diluted loss per share | ) | $ | ) | $ | ) | $ | ) | |||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
(unaudited)
| Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholder’s | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Sale of shares to investors | - | |||||||||||||||||||||||||||
| Issuance of common shares for services | ||||||||||||||||||||||||||||
| Issuance of restricted shares to employees | ( | ) | ||||||||||||||||||||||||||
| Shares issued in settlement of convertible note | - | |||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholder’s | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Sale of shares to investors | - | |||||||||||||||||||||||||||
| Issuance of common shares for services | - | |||||||||||||||||||||||||||
| Issuance of restricted shares to employees | ( | ) | ||||||||||||||||||||||||||
| Net Income (Loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements
| 5 |
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholder’s | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Shares issued in respect of the merger | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common shares for services | ||||||||||||||||||||||||||||
| Conversion of Series A Preferred to convertible debt and warrants | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Total Stockholder’s | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Shares issued for acquisition | - | ( | ) | |||||||||||||||||||||||||
| Issuance of common shares for services | ||||||||||||||||||||||||||||
| Net Income (Loss) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
| 6 |
Panacea Life Sciences, Inc.
Statements of Cash Flows
| 2023 | 2022 | |||||||
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income (loss) | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation | ||||||||
| Realized gain on sale of securities | ( | ) | ||||||
| Unrealized (gain)/loss on marketable securities | ||||||||
| Non cash settlement of convertible note and accrued interest | ||||||||
| Amortization of intangible assets | ||||||||
| Amortization of debt discount and non-cash interest expense | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expense and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ||||||||
| Operating lease liability, net | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Proceeds from sale of marketable securities | ||||||||
| Net fixed asset acquisitions | ( | ) | ( | ) | ||||
| Net Cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Payments of principal on notes payable | ( | ) | ( | ) | ||||
| Proceeds from Notes payable - related party | ||||||||
| Cash provided by financing activities | ||||||||
| Net increase (decrease) in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents, Beginning of Period | ||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for income taxes during the year | $ | $ | ||||||
| Interest payments during the year | $ | $ | ||||||
| Noncash investing and financing activity | ||||||||
| Conversion of Preferred A shares to Note Payable | $ | $ | ||||||
| Issuance of Common Stock for services | $ | $ | ||||||
| Capitalized assets purchased on account - related party | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| 7 |
PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1 - NATURE OF ORGANIZATION
Organization and Business Description
PANACEA LIFE SCIENCES HOLDINGS, Inc. (the “Company”, “we”, “us”, “our”) was incorporated on January 18, 2008, in the State of Nevada. In January 2019, the Company added to the scope of its business activities, efforts to produce, market and sell products made from industrial hemp containing cannabidiol (“CBD”). On June 30, 2021, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) with Panacea Life Sciences, Inc., (“Panacea”) a seed to sale cannabinoid company and with the stockholders of Panacea. Pursuant to the Exchange Agreement, the former Panacea stockholders assumed majority control of the Company and all operations are now operated by Panacea, which as a result of the share exchange, became a wholly owned subsidiary of the Company. In October 2021, the Company changed its name from Exactus Inc. to Panacea Life Sciences Holdings, Inc.
Panacea
Life Sciences Holdings, Inc. (PLSH) is currently a holding company structured to develop and facilitate manufacturing, research, product
development and distribution in the high-growth, natural human and animal health and wellness market segment. Its subsidiary, Panacea
Life Sciences, Inc. (PLS) is a woman-founded and led company dedicated to manufacturing, distribution, research and production of the
highest-quality nutraceutical, cannabinoid, mushroom, kratom and other natural, plant-based ingredients and products. PLS operates out
of a
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The Company’s consolidated financial statements include the financial statements of Panacea Life Sciences, Inc., a wholly owned subsidiary acquired on June 30, 2021.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial information, which includes consolidated unaudited interim financial statements and present the consolidated unaudited interim financial statements of the Company and its wholly-owned subsidiary as of June 30, 2023. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America. All intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, stockholders’ equity and cash flows as of June 30, 2023, and 2022, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Operating results for the three ended June 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, 2023. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.
Going concern
These
unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. Panacea
has combined with Panacea Life Sciences Holdings, Inc. (formerly Exactus), so the below items reflect the consolidated company. The going
concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since our inception
in later 2017, we have generated losses from operations. As of June 30, 2023, our accumulated deficit was $
Use of Estimates
The Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with US GAAP and required management of the Company to make estimates and assumptions in preparation of these statements. Actual results may differ significantly from those estimates. Significant estimates made by management include but are not limited to the useful life of property and equipment, incremental borrowing rate used in the calculation of right of use asset and lease liability, reserves for inventory, allowance for doubtful accounts, revenue allocations, valuation allowance on deferred tax assets, assumptions used in assessing impairment of long-term assets, assumptions used in the calculation of net realizable value of inventory and fair value of non-cash equity transactions.
| 8 |
Cash and Cash Equivalents
For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents. The Company places its cash and cash equivalents with high-quality financial institutions. At times, balances in the Company’s cash accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. On June 30, 2023, the Company’s cash balances did not exceed the FDIC limit.
Accounts Receivable
Accounts
receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding
invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been
exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for
doubtful accounts. An allowance of $
Inventory
Inventories are stated at low of cost or net realizable value. Inventories of purchased materials are valuated using a moving average method and managed by first in first out basis (FIFO). Inventories of internally manufactured materials are valuated using a standard costing method and are also managed on a FIFO basis. Production related costs that are capitalized as inventory as part of the standard cost valuation include the direct materials consumed, direct labor used, indirect labor used, and manufacturing overhead. Overhead is calculated based on specific manufacturing process and allocated on an order-by-order basis. Production variances that occur between standard cost valuation and actual costs are expensed as incurred in the income statement as part of cost of goods sold.
Marketable securities
The Company’s marketable securities consists of shares of XXII which are classified as available-for-sale and included in current assets as they are pledged to secure two promissory notes (see Note 2 – Going Concern). Securities are valued based on market prices for identical assets using third party certified pricing sources. Available-for-sale securities are carried at fair value with unrealized and realized gains and losses reported as a component of income (loss). Realized gains and losses, if any, are calculated on the specific identification method and are included in other income in the condensed consolidated statements of operations.
Fair Value Measurements
The Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value, and expands disclosure of fair value measurements. The guidance prioritizes the inputs used in measuring fair value and establishes a three-tier value hierarchy that distinguishes among the following:
| ● | Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. | |
| ● | Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. | |
| ● | Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
| 9 |
The following table shows, by level within the fair value hierarchy, the Company’s assets and liabilities at fair value on a recurring basis as of June 30, 2023, and December 31, 2022:
SCHEDULE OF FAIR VALUE ASSETS MEASURED ON RECURRING BASIS
| June 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Marketable securities | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The following table is a schedule of the Company’s marketable securities. The following table is schedule of the Company’s marketable securities:
SCHEDULE OF MARKETABLE SECURITIES
| June 30, 2023 | ||||
| Balance at beginning of year | $ | |||
| Unrealized loss on marketable securities, net | ( | ) | ||
| Balance at end of period | $ | |||
As of June 30, 2023, the Company has no liabilities that are re-measured at fair value.
Property and Equipment
Property
and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method on the various
asset classes over their estimated useful lives, which range from
Intangible Assets and Goodwill
The
Company has intangible assets. Goodwill is comprised of the purchase price of business combinations in excess of the fair market value
assigned at acquisition to the tangible and intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment
on an annual basis. The Company performed its most recent goodwill impairment using a discounted cash flow analysis and found that the
fair value exceeded the carrying value. It has $
The following table is a schedule of the Company’s intangible assets and goodwill:
SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL
| Estimated Life | ||
| Goodwill from Phoenix Acquisition | ||
| Intangibles – Formulations |
| June 30, 2023 | December 31, 2022 | |||||||
| Goodwill | $ | $ | ||||||
| 10 |
Leases
The Company determines if an arrangement is a lease at inception. Contracts containing a lease are further evaluated for classification as an operating or finance lease. In determining the leases classification, the Company assesses among other criteria: (i) 75% or more of the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset; and (ii) 90% or more of the fair value of the underlying asset comprises substantially all of the fair value of the underlying asset. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. For leases with terms greater than 12 months, the Company records the ROU asset and liability at commencement date based on the present value of lease payments according to their term.
The Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses are recognized on a straight-line basis over the lease term or the useful life of the leased asset.
In addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.
The Company accounts for a contract when it has been approved and committed to, each party’s rights regarding the goods or services to be transferred have been identified, the payment terms have been identified, the contract has commercial substance, and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. However, the Company’s sales are primarily through retail stores, purchase orders or ecommerce; thus, currently contract liabilities are negligible. The Company does not have any multiple-element arrangements.
Some
of the Company’s contract liabilities consist of advance customer payments. Contract liability results from transactions in which
the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue
recognition criteria have been met, the contract liabilities are recognized. The Company recorded $
The following table shows the Company’s advanced customer payments:
SCHEDULE OF REVENUE FROM CONTRACT WITH CUSTOMER
| June 30, 2023 | December 31, 2022 | |||||||
| Balance, beginning of period | $ | $ | ||||||
| Payments received for unearned revenue | ||||||||
| Revenue earned | ||||||||
| Balance, end of period | $ | $ | ||||||
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
| 11 |
Revenue related to the sale of products is recognized once goods have been sold to the customer and the performance obligation has been completed. In both contracted purchase and retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer.
Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. A contract liability results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized. The Company does not have any multiple-element arrangements.
The Company also has recorded other income related to rental income it receives from leasing out space in the laboratory it occupies.
Shipping and Handling Costs
The
Company accounts for shipping and handling fees in accordance with ASC 606. The amounts charged to customers for shipping products are
recognized as revenues and the related freight costs of shipping products are classified in general and administrative costs as incurred.
Shipping costs are included as a component of general and administrative expenses and were $
Advertising & Marketing
Advertising
costs are expensed when incurred and are included in advertising and promotional expense in the accompanying statements of operations.
Included in this category are expenses related to public relations, investor relations, new package design, website design, design of
promotional materials, cost of trade shows, cost of products given away as promotional samples, and paid advertising. The Company recorded
advertising and marketing costs in general and administrative expenses and were $
Segment Information
The Company follows the provisions of ASC 280-10 Segment Reporting. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.
The Company accounts for its stock compensation under the ASC 718-10-30, Compensation - Stock Compensation using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
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The Company uses the Black-Scholes model for measuring the fair value of options and warrants. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. The Company recognizes forfeitures when they occur.
The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, “Earnings per Share”. Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if preferred stock converted to common stock and warrants are exercised. Preferred stock and warrants are excluded from the diluted earnings per share calculation if their effect is anti-dilutive.
SCHEDULE OF ANTI-DILUTIVE DILUTED LOSS PER SHARE
| 2023 | 2022 | |||||||
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Options to purchase common stock | ||||||||
| Warrants to purchase common stock | ||||||||
| Series B-1 Convertible Preferred | ||||||||
| Series B-2 Convertible Preferred | ||||||||
| Series C Convertible Preferred | ||||||||
| Series C-1 Convertible Preferred | ||||||||
| Series D Convertible Preferred | ||||||||
| Convertible Notes | ||||||||
| Total | ||||||||
Income Taxes
Income taxes are accounted for under the asset and liability method prescribed by FASB ASC Topic 740. These standards require a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely than not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.
Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contract’s in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU simplifies the diluted net income per share calculation in certain areas. The ASU is effective for annual and interim periods beginning after December 31, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company does not expect the adoption of ASU 2020-6 to have any material impact on its consolidated financial statements.
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In May 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as follows: i) for a modification or an exchange that is a part of or directly related to a modification or an exchange of an existing debt instrument or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a “debt” or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and the fair value of that written call option immediately before it is modified or exchanged; ii) for all other modifications or exchanges, as the excess, if any, of the fair value of the modified or exchanged written call option over the fair value of that written call option immediately before it is modified or exchanged. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 3 – PROPERTY, EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
Property and equipment, net including any major improvements, are recorded at historical cost. The cost of repairs and maintenance is charged against operations as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, generally as follows:
SCHEDULE OF PROPERTY PLANT AND EQUIPMENT USEFUL LIVES
| Estimated Life | ||
| Computers and technological assets | ||
| Furniture and fixtures | ||
| Machinery and equipment | ||
| Leasehold improvement |
Property and equipment, net consists of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT
| June 30, 2023 | December 31, 2022 | |||||||
| Computers and technological assets | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Machinery and equipment | ||||||||
| Land | ||||||||
| Leasehold improvements | ||||||||
| Total | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
expenses for the three and six month periods ended June 30, 2023 and 2022 were $
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NOTE 4 - INVENTORY
Inventory consists of the following components:
SCHEDULE OF INVENTORY
| June 30, 2023 | December 31, 2022 | |||||||
| Raw Materials | $ | $ | ||||||
| Semi-Finished | ||||||||
| Finished Goods | ||||||||
| Packaging | ||||||||
| Trading | ||||||||
| Total | $ | $ | ||||||
Inventories are stated at lower of cost or net realizable value using the standard costing method for its work in process and finished goods. For its raw materials, trading goods, and packaging supplies, the Company utilizes the moving average method for costing purposes and FIFO. At this time there are no inventory reserves required. Inventory includes all of our various storage locations: including inventory held in our VICKI machines, other warehouses, and off-site trailers. It also includes inventory purchased for customer projects.
NOTE 5 –OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES – RELATED PARTY
Right of Use
The
Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASC 842”) on January
1, 2019, the start of our 2019 fiscal year. The Company has one lease arrangement with a related
party entered into on December 22, 2018, for 3-year term starting with January 1, 2019 for certain laboratory facilities, with a nine-year
extension option. This lease was extended and now expires on
The
Company leases a portion of the property (formerly the Environmental Protection Agency building) in Golden, CO from J&N Real Estate,
owned by the CEO, a related party with a term expiring on
Below is a summary of our right of use assets and liabilities as of June 30, 2023, and December 31, 2022:
SCHEDULE OF RIGHT OF USE ASSET AND LIABILITY
| June 30, 2023 | December 31, 2022 | |||||||
| Right-of-use assets | $ | $ | ||||||
| Present value of operating lease liabilities | $ | $ | ||||||
| Less: Long-term portion of operating lease liability | ( | ) | ( | ) | ||||
| Short-term portion of operating lease liability | ||||||||
| Unpaid balances | ||||||||
| Total short-term lease liability obligations | $ | $ | ||||||
| Weighted-average remaining lease term (Ends December 31, 2030) | ||||||||
| Weighted-average discount rate | % | |||||||
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During
the three and six months ended June 30, 2023, and 2022, we recognized approximately $
Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2023, are as follows:
SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total undiscounted operating lease payments | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities | $ |
NOTE 6 – NOTES PAYABLE
Convertible Note Payable
On
November 18, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with Lincoln Park Capital Fund, LLC (the
“Purchaser”) pursuant to which the Company agreed to sell a
The
Warrants can be exercisable for a -year term beginning on May 18, 2022, at an exercise price of $
On
March 3, 2022, the Company entered into an Exchange Agreement (the “Agreement”) with an institutional investor (the “Investor”)
pursuant to which the Company agreed to issue a
Paycheck Protection Program Funding U.S. Small Business Administration Loan
On
May 28, 2020, the Company received a secured, 30-year, Economic Injury Disaster Loan in the amount of $
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Notes payable – related party and other liability
As
part of the Exchange Agreement certain loan balances (“J&N Loans) from J&N Real Estate Company, Inc., an affiliate of the
Company’s CEO, (“J&N”) and historical interest owed of $
On
June 30, 2021, the Company issued its CEO, Ms. Buttorff, a
Below is a summary of our notes payable as of June 30, 2023 and December 31, 2022:
SCHEDULE OF NOTES PAYABLE RELATED PARTY
| June 30, 2023 | December 31, 2022 | |||||||
| J&N Note | $ | $ | ||||||
| CEO Notes (Initial note of $ | ||||||||
| Total related party notes | $ | $ | ||||||
Other long-term liabilities, related party
The
Company has recorded a related party liability (“Fixed Asset Loan”) in the amount of $
In
2020, the Company recorded an additional related party liability in the amount of $
SCHEDULE OF NOTES PAYABLE
| June 30, 2023 | December 31, 2022 | |||||||
| Other long-term liabilities, related party | ||||||||
| Fixed Asset Loan | $ | $ | ||||||
| J&N Building Loan | ||||||||
| Total | $ | $ | ||||||
NOTE 7 - STOCKHOLDERS’ EQUITY
Common stock
The Company’s authorized common stock consists of shares with a par value of $ per share.
During both the three and six months ended June 30, 2023, the Company issued shares of common stock in respect of the share exchange effected in 2021. The Company issued shares to vendors and shares to investors that contributed funds to the Company. The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder.
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Common stock options
Stock Option Plan
On June 30, 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan provided for the issuance of incentive awards in the form of non-qualified and incentive stock options, restricted stock awards, restricted stock unit awards, warrants and preferred stock. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company or to a subsidiary of the Company. The exercise price for stock options must not be less than the fair market value of the underlying shares on the date of grant. The incentive awards shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board of Directors or Compensation Committee may specify. Stock options expire no later than ten years from the date of grant. Unless sooner terminated, the Plan shall terminate in years. This plan had
fully vested options and a total of allocated.
Stock Options
SCHEDULE OF STOCK OPTIONS
| Options Outstanding as of June 30, 2023 | ||||||||||||||||
| Weighted | ||||||||||||||||
| Number of | Weighted | Average | ||||||||||||||
| Shares | Average | Remaining | ||||||||||||||
| Subject | Exercise | Contractual | Aggregate | |||||||||||||
| to | Price Per | Life | Intrinsic | |||||||||||||
| Options | Share | (in years) | Value | |||||||||||||
| Balance on December 31, 2022 | $ | $ | ||||||||||||||
| Options granted | - | - | ||||||||||||||
| Options exercised | - | - | ||||||||||||||
| Options canceled / expired | - | - | ||||||||||||||
| Balance at June 30, 2023 | $ | $ | ||||||||||||||
| Vested and exercisable on June 30, 2023 | $ | $ | ||||||||||||||
Stock Warrants
On
November 18, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with Lincoln Park Capital Fund, LLC (the
“Purchaser”) pursuant to which the Company agreed to sell a
On
March 3, 2022, the Company entered in an Exchange Agreement with an institutional investor pursuant to which the Company issued a
As
of June 30, 2023, the Company also had outstanding warrants to purchase an aggregate of
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The Company’s outstanding warrants as of June 30, 2023, are summarized as follows, and all were exercisable at that date.
SCHEDULE OF WARRANTS OUTSTANDING
| Warrants Outstanding as of June 30, 2023 | ||||||||||||||||
| Weighted | ||||||||||||||||
| Number of | Weighted | Average | ||||||||||||||
| Shares | Average | Remaining | ||||||||||||||
| Subject | Exercise | Contractual | Aggregate | |||||||||||||
| to | Price Per | Life | Intrinsic | |||||||||||||
| Warrants | Share | (in years) | Value | |||||||||||||
| Balance on December 31, 2022 | $ | |||||||||||||||
| Warrants granted | - | - | ||||||||||||||
| Warrants exercised | - | - | ||||||||||||||
| Warrants canceled / expired | - | - | ||||||||||||||
| Balance on June 30, 2023 | $ | $ | ||||||||||||||
| Vested and exercisable on June 30, 2023 | $ | $ | ||||||||||||||
As of June 30, 2022, the outstanding warrants have no intrinsic value.
Restricted Stock
During both the three and six months ended June 30, 2023, the Company issued shares of the Company’s common stock to various employees and directors of the Company. A summary of the restricted stock activity is presented below:
Restricted Stock Common Stock | ||||
| Balance on December 31, 2022 | ||||
| Balance on June 30, 2023 | ||||
As of June 30, 2023, there were no unamortized or unvested stock-based compensation costs related to restricted share arrangements.
Preferred Stock
The Company’s authorized preferred stock consists of shares with a par value of $. There are no new activities related to preferred stock.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Legal Matters
In the ordinary course of business, the Company enters into agreements with third parties that include indemnification provisions which, in its judgment, are normal and customary for companies in the Company’s industry sector. These agreements are typically with business partners, and suppliers. Pursuant to these agreements, the Company generally agrees to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to the Company’s products, use of such products, or other actions taken or omitted by us. The maximum potential number of future payments the Company could be required to make under these indemnification provisions is unlimited.
On
February 1, 2023, Plaintiff filed Plaintiffs Original Petition (“Petition”) in a lawsuit against the Panacea Defendants related
to the Purchase Order, styled Knock-Out Specialties, Inc. v. Panacea Life Sciences, LLC, Leslie Buttorff, and Ben Doucette, Cause No.
380- 00849-2023, in the 380th District Court of Collin County, Texas. On March 20, 2023, the Panacea Defendants removed the State Lawsuit
to the United States District Court for the Eastern District of Texas, Sherman Division in Case No. 4:23- cv-00217. On March 27, 2023,
the Panacea Defendants filed their Motion to Dismiss and Brief in Support. This matter was settled in July 2023 and the result is the
Company will pay the Plaintiff $
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Concentrations
The Company has no contingencies, material commitments, or purchase obligations or sales obligations.
On
the revenue side, in the three months ended June 30, 2023, we have a concentration of two customers. Both are contract manufacturing
customers who represent
The
other concentration is in the accounts receivable category, where three customer accounts for
NOTE 9 - RELATED PARTY TRANSACTIONS
Notes Payable and Accrued Interest – Related Parties
For information on related party loans to the Company and other related party transactions, see Notes 5 and 6, Operating Lease and Notes Payable.
The accrued interest and interest expenses recorded for related party loans are shown below.
SCHEDULE OF RELATED PARTY TRANSACTIONS LOANS
| June 30, 2023 | December 31, 2022 | |||||||
| Accrued Interest | ||||||||
| Related party loan- J&N Real Estate | $ | $ | ||||||
| Related party loan-CEO loan | ||||||||
| Related party loan – Line of credit | ||||||||
| Accrued Interest | ||||||||
| Three months ended | Six months ended | Three months ended | Six months ended | |||||||||||||
| June 30, 2023 | June 30, 2023 | June 30, 2022 | June 30, 2022 | |||||||||||||
| Interest Expense | ||||||||||||||||
| Related party loan- J&N Real Estate | $ | $ | $ | $ | ||||||||||||
| Related party loan-CEO loan | ||||||||||||||||
| Related party loan – Line of Credit | ||||||||||||||||
| Interest Expense | ||||||||||||||||
Other
The Company continues to hold shares of XXII stock which is available for sale.
NOTE 10– SUBSEQUENT EVENTS
On
July 10, 2023, PLSH announced it had entered into agreements to acquire eight retail locations in the Tampa, Florida area, offering Kava,
Kratom, VAPE and CBD products and beverages operating as Nitro Kava & Kratom, including inventory, equipment and recipes, distribution
facilities and a warehouse located in Largo, Florida, generating $
On August 1, 2023, PLSH announced it has entered into a Letter of Intent with Melodial Global Health (ASX:ME1)(formerly Creso Pharma) to acquire Sierra Sage Herbs (“Sierra”), maker of the best-selling Green Goo, Southern Butter and Good Goo natural products and Halucenex, a company researching novel psychedelic compounds. The deal would extend Panacea’s footprint into natural first aid and body care products and establishes a strong tie with Melodial through a significant stock ownership stake.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Business Overview
The Company is a Nevada corporation organized in 2008. The Company has pursued opportunities in Cannabidiol, which we refer to as “CBD”, since December 2018 when we expanded our focus to pursue opportunities in hemp-derived CBD. Effective October 25, 2021, we changed our name to Panacea Life Sciences Holdings, Inc. To that end, on June 30, 2021 we entered into the Exchange Agreement with Panacea and the Panacea stockholders and as a result became a seed-to-sale CBD company. The former Panacea stockholders have assumed majority control of the Company, and all our operations are now operated through Panacea which because of the share exchange became a wholly-owned subsidiary of the Company. Leslie Buttorff, who became the Company’s Chief Executive Officer and a director upon the closing of the share exchange, also became our principal stockholder through common stock and Convertible Preferred Stock issued to her and entities she controls.
PLSH is structured to develop and facilitate manufacturing, research, product development and distribution in the high-growth, natural human and animal health & wellness market segment. The company is dedicated to manufacturing, distribution, research and production of the highest-quality nutraceutical, cannabinoid, mushroom, kratom and other natural, plant-based ingredients and products. PLS operates out of a 51,000 square foot, state-of-the-art, cGMP facility in Golden, Colorado. As of June 30, 2023, Panacea sells over 40 different product SKUs of CBD and CBG products.
We believe that our competitive advantages are derived from being vertically integrated that allows for extraction, e
enrichment and manufacturing under a cGMP quality environment: 1) Using pharmaceutical formulation methods to optimize the delivery of various hemp products, 2) Developing both full spectrum and THC-free products, 3) Hemp supply, and 4) utilize Good Manufacturing Practice to produce goods that are safe and quality products that deliver consistent dosing. The cannabinoids have also been reported to treat human disease conditions where currently multiple pharmacologicals are needed to address, e.g., Post Traumatic Stress Disorder (PTSD), or where there is no current cure such as Alzheimer’s, Parkinson’s Disease, and age-related dementia, to name a few. Although numerous reports describe cannabis/hemp extract health benefits the industry lacks sufficient clinical data and quality control to provide patient benefit. We are combining human and pet clinical studies with Good Manufacturing Process manufacturing to generate a panel of products. Our products are formulated with delivery methods for health benefits including an intellectual property portfolio enabling development of topical creams, sublinguals, oral soft gel capsules, patches, and sprays. Our products are derived from organic practices industrial hemp grown in Colorado.
Our goal is to be a leader in wholesale and retail sales channels for end-products, such as nutraceuticals, supplements and pet and farm products. As government regulation of CBD and related products becomes more lenient in certain jurisdictions, and other barriers to entry decline, we anticipate experiencing an increase in competition and an intensifying competitive environment, including potentially the introduction of new seed-to-sale companies and/or the expansion of operations by current competitors. Further, numerous other factors are expected to be critical to our ability to be and remain competitive in our business and goals, including product quality and prices, brand strength, production and distribution capabilities and geographic scope of operations and market presence. Additionally, market conditions can shift demand for CBD products, such as competitive pricing, the effects of inflation, regulatory changes and economic or geopolitical turmoil.
In later 2022 we shifted our focus to the nutraceutical industry and to date we have closed over 35 different manufacturing contracts. We offer “white label” licensing to retail businesses and contract manufacturing services to smaller CBD companies and softgel manufacturing to nutraceutical companies. This shift was required as the CBD industry slowed given the FDA’s inaction and we were well suited to use our excess manufacturing equipment.
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Panacea intends to position itself to provide a comprehensive menu of natural and organic health and wellness products catering to all segments of the health and wellness minded community, while supporting research into important medical and health challenges, such as the effects of CBD/CBG/psilocybin on conditions such as irritable bowel syndrome, pain management, brain injury and PTSD. We hope to capture significant market share in the three categories of mushroom products under development — functional, amanita and psilocybin — while enhancing our on-going research efforts at Colorado State University at the Panacea Cannabinoid Lab in order to produce valuable information about these emerging compounds.
Partnership with Universities
The grand opening of the Panacea Life Sciences Cannabinoid Research Center at Colorado State University was held on October 19, 2021. The first studies at the center are underway for isolation of rare cannabinoids, examining cannabidiol’s effects on Inflammatory Bowel Disease (IBS), canine and human dementia, as well as supporting research into chronic pelvic pain.
Company Information Technology Infrastructure
The ERPCannabis system is based on an SAP architecture and was used to develop the base installation. All financial, human resource, payroll, procurement, production planning and materials management business processes are represented in this system. In addition, the system is linked to our e-Commerce website www.panacealife.com. This system allows us to update product costing and determine inventory levels which will be critical as the company expands. In addition, sophisticated financial and payroll processing are inherent in the solution; thus, offering investors detailed accounting results related to company investments. We plan to expand on the use of this infrastructure for acquisitions and service offerings.
Results of Operations
Set forth below is the discussion of the results of operations of the Company for the three months ended June 30, 2023, compared to the three months ended June 30, 2022. The information which follows relates to the operations of Panacea which under applicable accounting rules are treated as the operation of the Company.
On February 23 and 24, 2023, the Golden area experienced extreme below zero temperatures which cause major damages in the laboratory. To date, we are still dealing with issues related to temperature controls and equipment problems. Insurance companies have been slow to address these required repair costs. We hope to have these all resolved and repaired by year end.
Three Months Ended June 30, 2023, and 2022
Net Revenues
Our primary focus in the last two quarters has been in manufacturing products for nutraceutical companies. We are still engaged in the business of producing and selling products made from industrial hemp. Revenue consists of sales to nutraceutical companies, sales of our brand CBD and CBG products, white label and contract manufacturing sales to other CBD companies, raw material sales (distillate and isolate), tolling products, and leasing space.
Our revenues for the three months ended June 30, 2023, decreased by $70,344, or 15%, to $399,128 as compared to $469,472 for the three months ended June 30, 2022. The decrease in sales was due to larger manufacturing contracts that were not completed by the end of the period, but will be recorded in the 3rd Q. The decrease is also due to certain projects that were delayed due to extreme heat in our production wing due to the insurance companies’ delaying equipment repairs.
Cost of Sales
Cost of sales for the three months ended June 30, 2023, decreased by $135,186 or 41% to $196,314 as compared to $331,500 for the three months ended June 30, 2023. The decrease in cost of sales was due to several larger scale projects where ingredients have not been fully consumed. And the corresponding decrease in revenues due to the building temperature issues.
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Operating Expenses
Operating expenses for the three months ended June 30, 2023, decreased by $101,049, or 7%, to $1,276,925 as compared to $1,377,974 for the three months ended June 30, 2023. This is due to decreases in general and administrative expenses.
Production related operating expenses for the three months ended June 30, 2023, decreased by $41,584 or 4% to $1,131,712 as compared to $1,173,294 during the three months ended June 30, 2023. The decrease in production related operating expenses is primarily due to lower building operational costs.
General and administrative expenses for the three months ended June 30, 2023, decreased by $59,465, or 29%, to $145,213 as compared to $204,680 during the three months ended June 30, 2023. The decrease in general and administrative costs is primarily due to decreased sales and advertising costs.
Other income (expense)
Other income for the three months ended June 30, 2023, decreased by $68,332 or 9% to ($790,131) as compared to ($721,799) for the three months ended June 30, 2023. The decrease in other income is primarily due to the unrealized loss of XXII’s marketable securities held.
Six Months Ended June 30, 2023 and 2022
Net Revenues
Our primary focus in the last two quarters has been in manufacturing products for nutraceutical companies. We are still engaged in the business of producing and selling products made from industrial hemp. Revenue consists of sales to nutraceutical companies, sales of our brand CBD and CBG products, white label and contract manufacturing sales to other CBD companies, raw material sales (distillate and isolate), tolling products, and leasing space.
Our revenues for the six months ended June 30, 2023, increased by $140,663, or 15%, to $1,076,609 as compared to $935,946 for the six months ended June 30, 2022. The increase in sales in 2023 was due primarily to our refocus on using our manufacturing equipment to produce products for numerous nutraceutical companies.
Cost of Sales
Cost of sales for the six months ended June 30, 2023, decreased by $49,405, or 7% to $648,186 as compared to $697,591 for the six months ended June 30, 2023. The decrease in cost of sales was due primarily to several larger scale projects where ingredients have not been fully consumed.
Operating Expenses
Operating expenses for the six months ended June 30, 2023, decreased by $333,844, or 11%, to $2,792,497 as compared to $3,126,341for the six months ended June 30, 2023. This is due to decreases in both operating expenses and general and administrative expenses.
Production related operating expenses for the six months ended June 30, 2023, decreased by $ 61,240, or 2%, to $2,399,871 as compared to $2,461,111 during the six months ended June 30, 2023. The decrease in production related operating expenses is primarily due to decreased building operational costs.
General and administrative expenses for the six months ended June 30, 2023, decreased by $272,604, or 41%, to $392,626 as compared to $665,230 during the six months ended June 30, 2023. The decrease in general and administrative costs is primarily due to decreased sales and advertising costs.
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Other income (expense)
Other income for the six months ended June 30, 2023, increased by $564,598 or 30% to ($1,291,463) as compared to ($1,856,061) as compared to $2,920,984 for the six months ended June 30, 2023. The increase in other income is primarily due to lower interest expense.
Liquidity and Capital Resources
Cash flows from operating activities
The largest source of operating cash is from our customers. Our white label and contract manufacturing customers pay before the products are released and this now makes up the majority of our revenue. Some larger customers have either net 10-, 2%- or 30-day net terms. Our customers purchase CBD on-line, so credit card payments are collected and paid within 1-2 business days. Net cash used in operating activities was $797,167 and $1,165,501 for six months ended June 30 for 2023 and 2022, respectively. Approximately $1.9 million of our $3.7 million net loss in 2023 was non-cash.
Cash flows from investing activities
Cash outlay for the acquisition of fixed assets comprised the majority of this category and were $24,570 and $29,229 for the six months ended June 30, 2023, and 2022, respectively.
Cash flows from financing activities
Net cash provided by financing activities for the six months ended June 30, 2023, was $822,976. For the same period in 2022 the financing was $1,153,027. In both years the primary financing was cash provided by Company’s CEO. In 2022 there was a cash payment received of $253,791 from the paycheck loan program.
As of August 2, 2023, we had $ 468,578 in cash and liquid stock of XXII. The Chief Executive Officer of the Company holds the XXII shares pursuant to the pledge agreement and has the power at any time to permit the Company to sell the shares to provide working capital. Panacea has borrowed substantial sums from Leslie Buttorff, our Chief Executive Officer, to meet its working capital obligations. As of June 30, 2021, Panacea owed an affiliate of Ms. Buttorff a 12% demand promissory note for $4.063 million and also held a 10% demand promissory note for $1.624 million secured by a pledge of certain XXII common stock owned by Panacea. On July 1, 2021, the Company issued a $1 million line of credit note at 10% annual rate, which Ms. Buttorff has extended to January 2024 and increased the line of credit to $5.5 million.
We do not have sufficient cash resources to sustain our operations for the next 12 months, particularly if the large sales agreements and purchase orders we have do not result in the revenue anticipated. We may be dependent on obtaining financing from one or more debt or equity offerings or further loans from Ms. Buttorff assuming she agrees to advance further funds.
These unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of the Company’s assets and the carrying amount of its liabilities based on the going concern uncertainty. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. In addition, due to insufficient revenue, we will need to obtain further funding through public or private equity offerings, debt financing, collaboration arrangements or other sources in order to maintain active business operations. We currently do not have sufficient cash flow to pay our ongoing financial obligations on a consistent basis. The issuance of any additional shares of common stock, preferred stock or convertible securities could be substantially dilutive to our stockholders. In addition, adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital, we will be forced to borrow additional sums from our Chief Executive Officer or delay, reduce or eliminate our research and development programs, we may not be able to continue as a going concern, and we may be forced to discontinue operations. These unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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Off Balance Sheet Arrangements
As of June 30, 2023, we had no material off-balance sheet arrangements.
Potential Impacts of Certain Current and Proposed Regulations on Our Business and Operations
Recently, a bill titled the Cannabis Administration and Opportunity Act, put forward by Senate Majority leader Chuck Schumer, D-NY, would amend the definition of a dietary supplement to remove the prohibition on marketing CBD as a dietary supplement. Management sees the bill, if enacted, as an opportunity for the FDA to accelerate their decision to classify CBD products as a dietary supplement. This would be a significant step for hemp/CBD companies as it would open the door to new selling opportunities, such as getting into retail stores, who have largely been hesitant to welcome CBD in their doors without a clear position from the FDA.
Many people are increasingly turning to CBD products for several reasons: CBD is non-psychoactive, so it does not produce a “high” like THC, there are few known contraindications, the properties of different cannabinoids can positively affect a wide range of ailments, and cannabinoids work directly and indirectly with the body’s endocannabinoid system to create balance known as homeostasis. As demand increases, we believe the FDA must provide more clarity about CBD’s legalization, and this bill is a promising first step.
For now, many companies that produce hemp-derived CBD products including Panacea undertake to abide by the same regulations as any other dietary supplements like ingredient filings, good manufacturing practices (GMP), and labeling and marketing provisions. Panacea will continue to sell CBD and other hemp-derived products while still awaiting a clear path from the FDA about how CBD products can be marketed and used.
Cautionary Statement Regarding Forward-Looking Statements
This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the effectiveness of our products, studies regarding the long term effects of COVID-19, future studies that we may conduct , our operations in the hemp industry through Panacea, our expected revenue growth, proposed federal legislation and its potential impact on the CBD industry, our business relationship with XXII, our plans to raise capital, and our liquidity. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements in this Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, customer demand, market acceptance, growth rate, competitiveness, gross margins, and expenditures.
Although forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Further information on the risks and uncertainties affecting our business is contained in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise. Such risks, uncertainties and changes in condition, significance, value, and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that may arise after the date of this Report, other than as required by law. Readers are urged to carefully review and consider the various disclosures made in this Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
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Critical Accounting Estimates and New Accounting Pronouncements
New Accounting Pronouncements
See Note 2, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES to the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this amendment No. 1 to the Quarterly Report on Form 10-Q.
Critical Accounting Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with US GAAP. The preparation of the Company’s condensed consolidated financial statements requires its management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures. The Company’s management bases its estimates, assumptions and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Different assumptions and judgments would change the estimates used in the preparation of the Company’s condensed consolidated financial statements which, in turn, could change the results from those reported. In addition, actual results may differ from these estimates and such differences could be material to the Company’s financial position and results of operations.
Critical accounting estimates are those that the Company’s management considers the most important to the portrayal of the Company’s financial condition and results of operations because they require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s critical accounting estimates in relation to its condensed consolidated financial statements include those related to:
| ● | Goodwill and intangible assets | |
| ● | Fair value of marketable securities | |
| ● | Incremental Borrowing Rate used Right of Use Asset Calculations | |
| ● | Business combinations |
Goodwill and Indefinite-Lived Intangibles
We allocate the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill. The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests, require significant management judgments and estimates. These estimates are made based on, among other factors, review of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the cost of capital. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of goodwill and other intangible assets, and potentially result in a different impact to our results of operations. Further, changes in business strategy and/or market conditions may significantly impact these judgments and thereby impact the fair value of these assets, which could result in an impairment of the goodwill or intangible assets.
Goodwill is not amortized but is tested for impairment annually and whenever events or circumstances change that indicate impairment may have occurred. We tested goodwill for impairment and determined there was no impairment and found not impairment charge based on the excess of a reporting unit’s carrying amount over our fair value.
Fair value of marketable securities
Marketable securities are recorded at fair value using the quoted market prices and changes in fair value are recorded as net realized gains or losses in comprehensive income. We monitor these investments for impairment and make appropriate reductions in carrying values as necessary.
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Incremental Borrowing Rate used Right of Use Asset Calculations
We determine if a contract is a lease or contains a lease at the inception of the contract and reassess that conclusion if the contract is modified. All leases are assessed for classification as an operating lease or a finance lease. Operating lease right-of-use, or ROU, assets are included in non-current other assets on our consolidated balance sheet. Operating lease liabilities are separated into a current portion, included within other accrued liabilities on our consolidated balance sheet, and a non-current portion, included within other long-term liabilities on our consolidated balance sheet. We do not have any finance lease ROU assets or liabilities. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We do not obtain and control the right to use the identified asset until the lease commencement date.
Our lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. Because the interest rate implicit in the lease is not readily determinable, we generally use our incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. We factor in publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. Our ROU assets are also recognized at the applicable lease commencement date. The ROU asset equals the carrying amount of the related lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor. Variable lease payments are expensed as incurred and do not factor into the measurement of the applicable ROU asset or lease liability.
Business Combinations
We have applied significant estimates and judgments in order to determine the fair value of the identified assets acquired, liabilities assumed, and goodwill recognized in connection with our business combinations to ensure the value of the assets and liabilities acquired are recognized at fair value as of the acquisition date. In measuring the fair value, we utilize valuation techniques consistent with the market approach, income approach, or cost approach.
The valuation of the identifiable assets and liabilities includes assumptions made in performing the valuation, such as projected revenue, weighted average cost of capital, discount rates, estimated useful lives, and other relevant assessments. These assessments can be significantly affected by our estimates, judgments, and assumptions. If actual results are not consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future that affects our fair value estimates, then adjustments to our initial fair value estimates may have a material impact to our purchase accounting or our results of operations. If actual results are not consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future, beyond our one-year measurement period, that affects our fair value estimates, then adjustments to our initial fair value estimates may have a material impact to our results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
A smaller reporting company is not required to provide the information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management carried out an evaluation, with the participation of our Principal Executive Officer (who also now serves as our Principal Financial Officer), required by Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer (who also now serves as our Principal Financial Officer) concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
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Changes in Internal Control Over Financial Reporting
For the year-ended December 31, 2021, our Principal Executive Officer (who also now serves as our Principal Financial Officer) concluded that our disclosure controls and procedures were ineffective as of the end of that period. Since then, the Company has implemented three primary types of accounting controls that fall into categories of detection, preventive and corrective controls. These allow us to maintain effective controls for our financial reports. Using our ERP SAP system many accounting controls are already configured such as segregation of duties, independent user IDs and passwords and bank reconciliations. Other trial balance checks are completed within the system. In addition, monthly inventory and asset reconciliations are completed. Standard Operating Procedures are used throughout the organization, not only in the financial areas, but in all areas to maintain our GMP certifications for manufacturing. As a result, we believe that we have remediated the underlying issues.
Except as noted above, there were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time–to-time, we may become involved in legal proceedings arising in the ordinary course of business. We are unable to predict the outcome of any such matters or the ultimate legal and financial liability, and at this time cannot reasonably estimate the possible loss or gain or range of loss/gain and accordingly have not accrued a related liability.
We filed suit in District Court in and for Osage, County, Oklahoma on December 19, 2019. We have sued Defendants, Mike Fisher, in his official capacity as Osage County District Attorney ex rel. State of Oklahoma as an investigating and/or prosecuting body, Eddie Virden in his official capacity as the Sheriff of the City of Osage as holder of the property, and the City of Pawhuska as the property seizing body, (collectively the “Government Defendants”) for the return of approximately 17,000 pounds of industrial hemp (the “Property”). We believe we were entitled to possession of the Property pursuant to an August 23, 2018, contract between us and Blue Circle Development, LLC (“BCD”), wherein we agreed to pay, and BCD agreed to deliver the Property according to certain terms. Plaintiff performed pursuant to the contract and is entitled to possession of the Property. We believe the Government Defendants wrongfully detained the Property and is responsible for damages to the Property and to us. On or about May 4, 2020, the Government Defendants improperly released the Property to BCD in violation of a Court Order. We have asserted claims against the Government Defendants for interference with the Court Order and BCD for improperly intercepting the Property from us. The case completed most of the discovery phase including document production and depositions. The parties will complete the discovery phase, potentially engage in dispositive motion briefing, and proceed toward a trial date. The damages claim is over $3.4 million. There is no assurance that we will be successful in our efforts related to this lawsuit or if we are, which amounts we will be able to recover.
On February 1, 2023, Plaintiff filed Plaintiffs Original Petition (“Petition”) in a lawsuit against the Panacea Defendants related to the Purchase Order, styled Knock-Out Specialties, Inc. v. Panacea Life Sciences, LLC, Leslie Buttorff, and Ben Doucette, Cause No. 380- 00849-2023, in the 380th District Court of Collin County, Texas. On March 20, 2023, the Panacea Defendants removed the State Lawsuit to the United States District Court for the Eastern District of Texas, Sherman Division in Case No. 4:23- cv-00217. On March 27, 2023, the Panacea Defendants filed their Motion to Dismiss and Brief in Support. This matter was settled in July 2023 and the result is the Company will pay the Plaintiff $80,000.
ITEM 1A. RISK FACTORS.
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Accordingly, we incorporate by reference the risk factors disclosed in Part I, Item 1A of our 2022 10-K.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES OR USE OF PROCEEDS.
During the three and six months ended June 30, 2023, the Company issued 1,410,000 shares of the Company’s common stock to various employees and directors of the Company 275,490 shares to vendors and 454,545 shares to investors that contributed funds to the Company. The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
| Incorporated by Reference | Filed or Furnished | |||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
| 3.1 | Amended Articles of Incorporation | 8-K | 7/7/21 | 3.1 | ||||||
| 3.1(a) | Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split | 8-K | 10/29/21 | 3.1 | ||||||
| 3.2 | Amended and Restated Bylaws | 10-K | 3/31/22 | 3.2 | ||||||
| 3.4 | Certificate of Designation for Series B-1 Preferred Stock | 8-K | 3/4/16 | 3.1 | ||||||
| 3.5 | Certificate of Designation for Series B-2 Preferred Stock | 8-K/A | 2/17/16 | 3.2 | ||||||
| 3.6 | Certificate of Designation for Series C Preferred Stock | 10-Q | 8/23/21 | 3.7 | ||||||
| 3.7 | Certificate of Designation for Series C-1 Preferred Stock | 10-Q | 8/23/21 | 3.8 | ||||||
| 3.8 | Certificate of Designation for Series C-2 Preferred Stock | 8-K | 10/29/21 | 3.2 | ||||||
| 3.9 | Certificate of Designation for Series D Preferred Stock | 10-Q | 8/23/21 | 3.9 | ||||||
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer (302) | Filed | ||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officer (906) | Furnished*** | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||
*** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Panacea Life Sciences Holdings, Inc., at the address on the cover page of this report, Attention: Corporate Secretary.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Panacea Life Sciences Holdings, Inc. | |
| August 15, 2023 | /s/ Leslie Buttorff |
| Leslie Buttorff | |
| Chief Executive Officer |
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Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
I, Leslie Buttorff, certify that:
1. I have reviewed this Form 10-Q of Panacea Life Sciences Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 15, 2023 | |
| /s/ Leslie Buttorff | |
| Leslie Buttorff | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Panacea Life Sciences Holdings, Inc. (the “Company”) Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Leslie Buttorff, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 15, 2023 | |
| /s/ Leslie Buttorff | |
| Leslie Buttorff | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive Officer and Principal Financial Officer) |