Panacea Life Sciences Holdings, Inc 10-Q for FY2020 Q1

Panacea Life Sciences Holdings, Inc. (PLSH)

10-Q 2020-06-29 For: 2020-03-31

Added on April 06, 2026

About this 10-Q

Panacea Life Sciences Holdings, Inc filed this 10-Q on June 29, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $836K; up 5131.5% from $15.98K a year earlier
Net loss: $2.95M; compared with a net loss of $1.41M a year earlier

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Nevada	27-1085858
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

		Page

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	47

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits

	Condensed Consolidated Balance Sheets as March 31, 2020 (unaudited) and December 31, 2019;
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 (unaudited);
	Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the three months ended March 31, 2020 and 2019 (unaudited);
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited);
	Notes to Unaudited Condensed Consolidated Financial Statements.

Exactus, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	March 31,	December 31,
	2020	2019
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$9,541	$18,405
Accounts receivable, net	273,493	55,725
Accounts receivable related party	107,660	18,860
Inventory, net	397,098	1,337,809
Prepaid expenses and other current assets - current	123,760	248,776
Prepaid expenses and other current assets - related party - current	622,159	622,160
Due from related parties	127,500	127,500
Total current assets	1,661,211	2,429,235

Other Assets:
Deposits	40,000	80,000
Prepaid expenses and other current assets - long-term	15,959	-
Prepaid expenses and other current assets - related party - long-term	2,333,523	2,492,045
Property and equipment, net	450,706	477,433
Intangible assets, net	1,901,061	2,147,311
Operating lease right-of-use assets, net (see Note 7)	2,056,366	2,173,253
Total other assets	6,797,615	7,370,042

TOTAL ASSETS	$8,458,826	$9,799,277

LIABILITIES AND EQUITY

Current Liabilities:
Accounts payable	$2,001,201	$1,442,409
Accounts payable - related parties	454,511	454,511
Accrued expenses	769,159	358,010
Unearned revenue - related party	-	215,000
Note payable - related parties	78,017	55,556
Subscription payable	250,000	250,000
Convertible notes, net of discounts	402,214	85,906
Derivative liability	773,924	880,410
Interest payable	25,682	16,677
Due to related party	85,000	-
Operating lease liabilities, current portion (see Note 7)	498,778	432,065
Total current liabilities	5,338,486	4,190,544

Long Term Liabilities:
Convertible notes payable	-	100,000
Operating lease liabilities, long-term portion (see Note 7)	1,646,705	1,826,887
Total long term liabilities	1,646,705	1,926,887

TOTAL LIABILITIES	6,985,191	6,117,431

Commitment and contingencies (see Note 11)

Equity:
Exactus, Inc. Stockholders' Equity
Preferred stock: 50,000,000 shares authorized; $0.0001 par value, 5,266,466 undesignated shares issued and outstanding	-	-
Preferred stock Series A: 1,000,000 shares designated; $0.0001 par value, 350,019 and 353,109 shares issued and outstanding, respectively	32	35
Preferred stock Series B-1: 32,000,000 shares designated; $0.0001 par value, 1,650,000,and 1,650,000 shares issued and outstanding, respectively	165	165
Preferred stock Series B-2: 10,000,000 shares designated; $0.0001 par value, 7,516,000 and 7,516,000 shares issued and outstanding, respectively	752	752
Preferred stock Series C: 1,733,334 shares designated; $0.0001 par value, none shares issued and outstanding	-	-
Preferred stock Series D: 200 shares designated; $0.0001 par value, 18 shares issued and outstanding	-	-
Preferred stock Series E: 10,000 shares designated; $0.0001 par value, 10,000 shares issued and outstanding	1	1
Common stock: 650,000,000 shares authorized; $0.0001 par value, 45,732,002 and 43,819,325 shares issued and outstanding, respectively	4,574	4,382
Common stock to be issued (308,330 and 664,580 shares to be issued, respectively)	30	66
Additional paid-in capital	26,080,432	25,343,293
Accumulated deficit	(23,919,063)	(21,129,379)
Total Exactus Inc. Stockholders' Equity	2,166,923	4,219,315

Non-controlling interest in subsidiary	(693,288)	(537,469)

Total Stockholders' Equity	1,473,635	3,681,846

TOTAL LIABILITIES AND EQUITY	$8,458,826	$9,799,277

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Large Accelerated Filer ☐ Non-Accelerated Filer ☑	Accelerated Filer ☐ Smaller reporting company ☑
	Emerging growth company ☐

Exactus, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

	Three Months Ended March 31,
	2020	2019
	(Unaudited)	(Unaudited)

Net revenues	$520,200	$15,980
Net revenues - related party	315,800	-

Total net revenues	836,000	15,980

Cost of sales	1,042,473	12,600
Cost of sales - related party	357,783	-

Total cost of sales	1,400,256	12,600

Gross profit (loss)	(564,256)	3,380

Operating Expenses:
General and administration	1,184,006	652,209
Selling and marketing expenses	280,890	51,878
Professional and consulting	727,871	1,880,147
Research and development	-	15,000

Total Operating Expenses	2,192,767	2,599,234

Loss from Operations	(2,757,023)	(2,595,854)

Other Income (expenses):
Derivative gain (loss)	106,486	(1,454,729)
(Loss) gain on settlement of debt, net	(6,500)	3,007,629
Interest expense	(288,466)	(366,913)

Total Other Income (Expenses), net	(188,480)	1,185,987

Loss Before Provision for Income Taxes	(2,945,503)	(1,409,867)
Provision for income taxes	-	-

Net Loss	(2,945,503)	(1,409,867)

Net Loss attributable to non-controlling interest	155,819	35,604

Net Loss Attributable to Exactus, Inc.	(2,789,684)	(1,374,263)

Deemed dividend on Preferred Stock	-	(904,450)

Net Loss available to Exactus, Inc. common stockholders	$(2,789,684)	$(2,278,713)

Net Loss per Common Share - Basic and Diluted	$(0.07)	$(0.07)
Net Loss attributable to non-controlling interest per Common Share - Basic and Diluted	$(0.00)	$0.00
Net Loss available to Exactus, Inc. common stockholders per Common Share - Basic and Diluted	$(0.06)	$(0.12)

Weighted Average Number of Common Shares Outstanding:
Basic and Diluted	45,293,865	19,485,557

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Exactus, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
For the Three Months Ended March 31, 2020 and 2019
(Unaudited)

	Preferred Stock- Series A		Preferred Stock- Series B-1		Preferred Stock- Series B-2		Preferred Stock- Series C		Preferred Stock- Series D		Preferred Stock- Series E		Common Stock		Common Stock - Unissued		Additional Paid in	Accumulated	Non-controlling
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount	Capital	Deficit	Interest	Total
Balance, December 31, 2019	353,109	$35	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1	43,819,325	$4,382	664,580	$66	$25,343,293	$(21,129,379)	$(537,469)	$3,681,846

Common stock issued for private placement	-	-	-	-	-	-	-	-	-	-	-	-	500,000	50	-	-	99,950	-	-	100,000
Common stock issued for unissued common stock	-	-	-	-	-	-	-	-	-	-	-	-	287,500	29	(287,500)	(29)	-	-	-	-
Conversion of Series A Preferred Stock to Common Stock	(3,090)	(3)	-	-	-	-	-	-	-	-	-	-	150,450	15	-	-	(12)	-	-	-
Common stock issued for services	-	-	-	-	-	-	-	-	-	-	-	-	765,000	77	-	-	378,446	-	-	378,523
Stock-based compensation in connection with restricted common stock award grants - Q1 2020	-	-	-	-	-	-	-	-	-	-	-	-	209,727	21	(68,750)	(7)	117,889	-	-	117,903
Stock options granted for services	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	140,866	-	-	140,866
Net Loss for the period	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-	-		(2,789,684)	(155,819)	(2,945,503)
Balance, March 31, 2020	350,019	$32	1,650,000	$165	7,516,000	$752	-	$-	18	$-	10,000	$1	45,732,002	$4,574	308,330	$30	$26,080,432	$(23,919,063)	$(693,288)	$1,473,635

	At March 31, 2020			At December 31, 2019
Description	Level 1	Level 2	Level 3	Level 1	Level 2	Level 3
Derivative liabilities	—	—	$773,924	—	—	$880,410

	For the Three Months Ended March 31, 2020
Balance at beginning of period	$880,410
Change in fair value included in derivative gain	(106,486)
Balance at end of period	$773,924

	2020	2019
Stock Options	4,809,822	5,434,375
Stock Warrants	2,014,299	1,362,833
Restricted stock to be issued upon vesting	3,651,379	-
Convertible Preferred Stock	9,460,845	5,542,212
Convertible Debt	10,833,865	250,000
Total	30,770,210	12,589,420

●	$400,000 paid previously for purchase of Hemp Seeds;
●	$100,000 upon execution of the LLC Operating Agreement;
●	$500,000 on or before April 1, 2019;
●	$500,000 on or before May 1, 2019;
●	$300,000 on or before August 1, 2019;
●	$450,000 on or before September 1, 2019 and,
●	$450,000 on or before October 1, 2019

●	$300,000 cash and 937,500 shares of the Company’s Common Stock to the sellers upon execution, which was paid during the year ended December 31, 2019;
●	$700,000 on April 20, 2019 which was paid on April 18, 2019;
●	On June 10, 2019, the Company was required to issue and issued the sellers an additional $450,000 of shares of Common Stock of the Company based upon the 20 day volume weighted average price per share on the date of issue which was equivalent to $0.89 per share or 503,298 shares of the Company’s Common Stock and was issued in August 2019; and
●	$500,000 on September 1, 2019 which was fully paid by November 2019.

Intangible asset – Hemp farming license	$10,000
Intangible assets – farm leases	2,930,000
Total assets acquired at fair value	2,940,000
Total purchase consideration	$2,940,000

Intangible asset – trademark	$3,500
Intangible assets – customer list	212,529
Inventory	33,971
Total assets acquired at fair value	250,000
Total purchase consideration	$250,000

	March 31, 2020	December 31, 2019

Finished goods – CBD products	$-	$-
Finished goods – hemp flowers and hemp cuttings	397,098	1,337,809
	$397,098	$1,337,809

	Estimated life	As of March 31, 2020	As of December 31,2019
		(Unaudited)
Greenhouse	10 years	$34,465	$34,465
Fencing and storage	5 years	44,543	44,543
Irrigation	5 years	387,975	387,975
Office and computer equipment	3 years	40,834	40,834
Farming Equipment	5 years	11,500	11,500
Leasehold improvement	5 years	21,886	21,886
Less: Accumulated depreciation		(90,497)	(63,770)
		$450,706	$477,433

	Useful life	March 31, 2020	December 31, 2019
		(Unaudited)
Farm leases - EOW	3 year	$2,930,000	$2,930,000
Hemp operating license - EOW	1 year	10,000	10,000
Trademark – Green Goddess	3 year	-	3,500
Customer list – Green Goddess	3 year	-	212,529
Brand - Levor	3 year	-	70,000
		2,940,000	3,226,029
Less: accumulated amortization		(1,038,939)	(828,526)
Less: impairment expense		-	(250,192)
		$1,901,061	$2,147,311

Year ending December 31:	Amount
2020 (remainder)	$732,500
2021	976,667
2022	191,894
	$1,901,061

Intangible asset – Brand	$70,000
Total assets acquired at fair value	70,000
Total purchase consideration	$70,000

	As of March 31, 2020	As of December 31, 2019
	(Unaudited)
Farm lease, ROU Asset	$506,506	$506,506
Commercial lease ROU	1,924,856	1,924,856
Less: Accumulated amortization	(374,996)	(258,109)
Balance of ROU asset	$2,056,366	$2,173,253

Year ended December 31, 2020	$682,000
Year ended December 31, 2021	696,580
Year ended December 31, 2022	560,933
Year ended December 31, 2023	531,063
Year ended December 31, 2024	315,140
Total	2,785,716
Less: undiscounted payments during the three months ended March 31, 2020	(169,000)
Total undiscounted future minimum lease payments due as of March 31, 2020	2,616,716
Imputed interest	(471,233)
Total operating lease liability	$2,145,483

	2020 (Unaudited)	2019
Convertible Notes in the aggregate amount of $100,000, issued on March 22, 2018. The Notes bear interest at a rate of 5% per annum and will mature on February 1, 2023. If a qualified financing from which at least $5 million of gross proceeds are raised occurs prior to the maturity date, then the outstanding principal balance of the notes, together with all accrued and unpaid interest thereon, shall be automatically converted into a number of shares of the Company’s Common Stock at $0.40 per Share. The Notes offers registration rights wherein the Company agrees that within 45 days of a Qualified Offering, prior to the Maturity Date, the Company shall file a registration statement with the SEC registering for resale of the shares of Company’s Common Stock into which the Notes are convertible. The Company shall send a written conversion notice to the lender pursuant to the note agreement during the second quarter of fiscal 2020 and as such the principal balance of the convertible note remains outstanding as of March 31, 2020 and December 31, 2019. The Company reclass the principal balance to current portion as of March 31, 2020.	$100,000	$100,000

Carrying Amount of Convertible Debt, net of debt discount	$402,214	$185,906
Less: Current Portion, net of debt discount	(402,214)	(85,906)
Convertible Notes, Long Term	$-	$100,000

	2020	2019
Expected Volatility	230.26%	376.76% to 567.11%
Expected Term	0.66 Years	0.25 to 1.0 Years
Risk Free Rate	0.15%	2.41% to 2.54%
Dividend Rate	0.00%	0.00%

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life (Years)
Balance at December 31, 2019	2,014,299	$0.45	3.31
Granted	—	—	—
Cancelled	—	—	—
Exercised	—	—	—
Forfeited	—	—	—
Balance at March 31, 2020	2,014,299	$0.45	3.06

Warrants exercisable at March 31, 2020	2,014,299	$0.45	3.06

Weighted average fair value of warrants granted during the period		$—

	Number of Options	Weighted Average ExercisePrice	Weighted Average Remaining Contractual Life(Years)
Balance at December 31, 2019	4,671,280	$0.29	7.29
Granted	1,000,000	0.30	10.00
Forfeited	(861,458)	0.53	0.00
Balance at March 31, 2020	4,809,822	0.29	8.94
Options exercisable at March 31, 2020	3,450,448	$0.25	8.77

Risk-free interest rate	1.55%
Expected volatility	263%
Expected term (in years)	10
Expected dividend yield	0%

	Restricted Stock Common Stock	Weighted Average Grant-Date Fair Value Per Share
Balance at December 31, 2019	3,583,328	$0.68
Granted	277,778	0.38
Vested and issued	(209,727)	(0.62)
Forfeited	-	-
Balance at March 31, 2020	3,651,379	$0.66

Exhibit Number		Description of Exhibit

10.1		Loan Agreement and Note with the U.S. Small Business Administration
31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		Materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Extensible Business Reporting Language (XBRL)

	Exactus, Inc.

June 30, 2020	/s/ Emiliano Aloi
	Emiliano Aloi
	Interim Chief Executive Officer and and Principal Executive Officer

	/s/ Kenneth E. Puzder
	Kenneth E. Puzder
	Chief Financial Officer and Principal Accounting Officer

By:	/s/ Emiliano Aloi
Name:	Emiliano Aloi
Title:	Principal Executive Officer
Date:	Date: June 30, 2020

By:	/s/ Kenneth Puzder
Name:	Kenneth Puzder
Title:	Principal Financial Officer
Date:	Date: June 30, 2020