UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~September 30,~~March 31, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-38190

Panacea Life Sciences Holdings, Inc.

(Exact name of registrant as specified in its charter)

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

5910 S University Blvd, C18-193, Greenwood Village, CO 80121

(Address of principal executive offices, Zip Code)

800-985-0515

(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. Yes ☒ No ☐

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). Yes ☒ No ☐

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 ☐
	Non-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 ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~14,965,317~~15,505,317 shares of common stock, par value $0.0001 per share, outstanding as ~~November 2, 2022.~~May 12, 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	2219
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2924
Item 4.	Controls and Procedures	2529

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3025
Item 1A.	Risk Factors	3025
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3025
Item 3.	Defaults Upon Senior Securities	3025
Item 4.	Mine Safety Disclosures	3025
Item 5.	Other Information	3025
Item 6.	Exhibits	3026
	Signatures	3127

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

Panacea Life Sciences Holdings, Inc. and Subsidiary

Consolidated Balance Sheets


	September 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,791		$	19,774		$	73,232		$	6,951
Accounts receivable, net		221,919			244,496			274,787			206,127
Other receivables, related party		500,000			500,000			500,000			500,000
Inventory		4,412,163			4,264,277			4,095,063			4,448,725
Marketable securities related party		1,115,542			3,791,483			925,107			1,107,362
Prepaid expenses and other current assets		197,421			278,328			78,546			113,098
TOTAL CURRENT ASSETS		6,483,836			9,098,358			5,946,735			6,382,263

Operating lease right-of-use asset, net, related party		3,331,533			3,595,100			3,152,570			3,242,381
Property and equipment, net		7,964,960			8,839,982			7,268,661			7,675,995
Intangible assets, net		15,351			61,401
Goodwill		2,188,810			2,188,810			2,188,810			2,188,810
TOTAL ASSETS	$	19,984,490		$	23,783,651		$	18,556,776		$	19,489,449

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	2,306,408		$	1,685,825		$	3,066,135		$	2,666,076
Operating lease liability, current portion, related party		1,973,684			1,624,090			2,208,025			2,090,271
Note payable-current, related party		8,179,801			6,441,866			10,402,155			9,871,803
Convertible note payable, net		1,255,886			220,005			115,000			346,671
Paycheck protection loan, SBA Loan		99,100			99,100			99,100			99,100
TOTAL CURRENT LIABILITIES:		13,814,879			10,070,886			15,890,415			15,073,921

Operating lease liability, long-term portion, related party		3,078,254			3,347,335			2,894,336			2,987,208
Other long-term liabilities, related party		3,531,264			3,263,028			3,572,864			3,572,864
TOTAL LIABILITIES		20,424,397			16,681,249			22,357,615			21,633,993

Commitments and contingencies		-			-			-			-

STOCKHOLDERS’ EQUITY
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 350 and 0 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		-			-
Series B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 1,500,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		150			150
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 6,000,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		600			600
Series C Preferred: $0.0001 Par Value, 1,000,000 shares designated; 1,000,000 and 1,000,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		100			100
Series C-1 Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		1			1
Series C-2 Preferred: $0.0001 Par Value, 10,000 and 0 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		1			1
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		1			1
Preferred stock, value
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 14,965,317 and 14,073,708 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.		1,496			1,407
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 0 and 350 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								-			-
Series B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 1,500,000 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								150			150
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 6,000,000 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								600			600
Series C Preferred: $0.0001 Par Value, 1,000,000 shares designated; 1,000,000 and 1,000,000 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								100			100
Series C-1 Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								1			1
Series C-2 Preferred: $0.0001 Par Value, 100 and 0 shares designated and 100 and 0 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								-			-
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								1			1
Preferred Stock, Value
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 15,505,317 and 14,965,317 shares issued and outstanding on March 31, 2023 and December 31, 2022 respectively.								1,551			1,497
Additional paid in capital		23,760,704			23,865,155			23,895,650			23,760,704
Accumulated deficit		(24,202,960	)		(16,765,013	)		(27,698,892	)		(25,907,597	)
TOTAL STOCKHOLDERS’ EQUITY		(439,907	)		7,102,402			(3,800,839	)		(2,144,544	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	19,984,490		$	23,783,651		$	18,556,776		$	19,489,449

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

Panacea Life Sciences Holdings, Inc. and Subsidiary

Consolidated Statements of Operations


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2022			2021			2022			2021			2023			2022
REVENUE	$	366,244		$	588,040		$	1,302,190		$	1,413,674		$	677,481		$	466,474
COST OF SALES		318,918			305,025			1,016,509			883,508			451,872			366,091
GROSS PROFIT		47,326			283,015			285,681			530,166			225,609			100,383

OPERATING EXPENSES
Production related operating expenses		1,174,529			1,250,434			3,635,640			3,407,407			1,268,159			1,287,817
General and administrative expenses		261,506			290,638			926,736			911,906			247,413			460,550
TOTAL OPERATING EXPENSES		1,436,035			1,541,072			4,562,376			4,319,313			1,515,572			1,748,367

LOSS FROM OPERATIONS		(1,388,709	)		(1,258,057	)		(4,276,695	)		(3,789,147	)		(1,289,963	)		(1,647,984	)

OTHER INCOME (EXPENSES)
Interest expense		(597,935	)		(174,727	)		(1,669,215	)		(781,671	)		(380,157	)		(501,295	)
Unrealized gain (loss) on marketable securities, net		(1,446,848	)		(2,303,218	)		(2,651,925	)		848,533			(182,255	)		(944,804	)
Realized gain on sale of securities		-			160,296			22,816			160,296
Other income (loss)		-			-			27,598			-
Employer retention credit		-			190,338			253,791			190,338			-			253,791
Rental Income		58,046			58,410			174,137			221,328			60,332			58,046
Loss on sale of assets		-			-			-			(297,351	)
Gain on extinguishment of debt		681,546			237,202			681,546			755,782			748			-
TOTAL OTHER INCOME (EXPENSE)		(1,305,191	)		(1,831,699	)		(3,161,252	)		1,097,255			(501,332	)		(1,134,262	)

INCOME (LOSS) BEFORE INCOME TAXES		(2,693,900	)		(3,089,756	)		(7,437,947	)		(2,691,892	)		(1,791,295	)		(2,782,246	)

TAXES		-			-			-			-			-			-

NET INCOME (LOSS)	$	(2,693,900	)	$	(3,089,756	)	$	(7,437,947	)	$	(2,691,892	)	$	(1,791,295	)	$	(2,782,246	)

Per-share data
Basic and diluted loss per share	$	(0.18	)	$	(0.18	)	$	(0.50	)	$	(0.16	)	$	(0.12	)	$	(0.16	)

Weighted average number of common shares outstanding		14,862,077			16,915,706			14,862,077			16,915,706			14,862,077			16,915,706

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

Panacea Life Sciences Holdings, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity

Three Months Ended September 30, 2022
Preferred Stock Common Stock Additional
Paid-in Accumulated Total
Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of June 30, 2022 8,530 $ 853 14,965,317 $ 1,497 $ 23,760,704 $ (21,509,060 ) $ 2,253,993
Shares issued for acquisition - - - - - - -
Issuance of common shares for services - - -
Net Income (Loss) - - - - - (2,693,900 ) (2,693,900 )
Balance as of September 30, 2022 8,530 $ 853 14,965,317 $ 1,497 $ 23,760,704 $ (24,202,960 ) $ (439,907 )
Shares Amount Shares Amount Capital Deficit Equity
Preferred Stock Common Stock Additional
Paid-in Accumulated Total Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of December 31, 2022 8,530,000 $ 853 14,965,317 $ 1,497 $ 23,760,704 $ (25,907,597 ) $ (2,144,544 )
Shares issued in respect of the merger - - - - - - -
Issuance of common shares for services - - - -
Shares issued in settlement of convertible note - - 540,000 54 134,946 135,000
Net Loss - - - - - (1,791,295 ) (1,791,295 )
Balance as of March 31, 2023 8,530,000 $ 853 15,505,317 $ 1,551 $ 23,895,650 $ (27,698,892 ) $ (3,800,839 )

Balance as of December 31, 2021 8,530,350 $ 853 14,073,708 $ 1,407 $ 23,865,155 $ (16,765,013 ) $ 7,102,402

Issuance of shares in respect of the merger - - 679,694 68 (68 ) - -
Issuance of common stock for services - - 8,940 1 19,999 - 20,000
Conversion of Series A Preferred Stock to convertible debt and warrants (350 ) - - - (159,362 ) 0 (159,362 )
Net Income (Loss) - - - - - (2,782,246 ) (2,782,246 )
Balance as of March 31, 2022 8,530,000 $ 853 14,762,342 $ 1,476 $ 23,725,724 $ (19,547,259 ) $ 4,180,794
Nine Months Ended September 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 8,530,350 $ 853 14,073,708 $ 1,407 $ 23,865,155 $ (16,765,013 ) $ 7,102,402
Shares issued in respect of the merger - - 834,331 83 (83 ) - -
Issuance of common shares for services 57,278 6 54,994 55,000
Conversion of Series A Preferred to convertible debt and warrants (350 ) (159,362 ) (159,362 )
Net Loss - - - - - (7,437,947 ) (7,437,947 )
Balance as of September 30, 2022 8,530,000 $ 853 14,965,317 $ 1,497 $ 23,760,704 $ (24,202,960 ) $ (439,907 )
Three Months Ended September 30, 2021
Preferred Stock
Common Stock
Additional
Paid-in Accumulated Total
Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of June 30, 2021 8,520,450 $ 852 21,321,613 $ 2,132 $ 23,066,921 $ (11,584,750 ) $ 11,485,155
Series A Preferred stock conversion to common stock (100 ) - 71,429 7 (7 ) - -
Net Loss - - - - - (3,089,756 ) (3,089,756 )
Balance as of September 30, 2021 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,066,914 $ (14,674,506 ) $ 8,395,399
Nine Months Ended September 30, 2021
Preferred Stock Common Stock Additional
Paid-in Accumulated Total
Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of December 31, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,982,614 ) $ 6,708,299
Shares issued for acquisition 7,500,450 750 4,405,907 440 4,377,802 - 4,378,992
Series A Preferred stock conversion to common stock (100 ) - 71,429 7 (7 ) -
Net Loss - - - - - (2,691,892 ) (2,691,892 )
Net income (loss) (2,691,892) (2,691,892)
Balance as of September 30, 2021 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,066,914 $ (14,674,506 ) $ 8,395,399

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

5

Panacea Life Sciences Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows

Nine Months Ended September 30,
2022 2021 For the months ended March 31
2023 2022
Cash flows from operating activities
Net income (loss) $ (7,437,947 ) $ (2,691,892 ) $ (1,791,295 ) $ (2,782,246 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation 1,240,281 1,280,324 422,554 408,691
Realized gain on sale of securities (22,816 ) (160,296 ) - -
Unrealized (gain)/loss on marketable securities 2,651,925 (848,533 ) 182,255 944,804
Fixed Asset Disposal Loss - 297,351 - -
Non cash settlement of convertible note and accrued interest (253,791 ) (752,751 ) - -
Amortization of intangible assets 46,050 46,050 - 15,350
Amortization of debt discount and non-cash interest expense 876,519 - 38,329 263,270
Gain on forgiveness of payroll protection loan - -
Changes in operating assets and liabilities
Accounts receivable 22,577 (367,793 ) (68,660 ) 81,878
Inventory (147,886 ) (628,011 ) 353,662 (60,510 )
Prepaid expense and other assets 80,907 (166,221 ) 34,552 44,715
Accounts payable and accrued expenses 723,521 955,493 400,059 533,311
Operating lease liability, net 344,080 344,076 114,693 114,694
Net cash used in operating activities (1,876,580 ) (2,692,203 ) (313,851 ) (436,043 )

Cash flows from investing activities
Net cash received from acquisition - 9,157 - -
Proceeds from sale of marketable securities 46,832 230,296 - -
Proceeds from sale of fixed assets - 446,026 - -
Net fixed asset acquisitions (144,961 ) (172,397 ) (15,220 ) (9,725 )
Net Cash provided by (used in) investing activities (98,129 ) 513,082 (15,220 ) (9,725 )

Cash flows from financing activities
Repayment of notes payable (135,000 ) -
Proceeds from payroll protection loan, SBA loan 253,791 243,041 - -
Payments of principal on notes payable (637,978 ) (135,000 ) (65,000 ) (230,201 )
Proceeds from Notes payable - related party 2,375,913 2,001,201 595,352 712,192
Proceeds from issuance of convertible notes, net of discount - -
Cash provided by financing activities 1,991,726 2,109,242 395,352 481,991

Net increase (decrease) in Cash and Cash Equivalents 17,017 (69,879 ) 66,281 36,223
Cash and Cash Equivalents, Beginning of Period 19,774 84,379 6,951 19,774
Cash and Cash Equivalents, End of Period $ 36,791 $ 14,500 $ 73,232 $ 55,997

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes during the year $ - $ - $ - $ -
Interest payments during the year $ - $ - $ - $ -

Noncash investing and financing activity
Non-cash Receivable - related party $ - $ (500,000 ) $ - $ -
Related party loan repayment with inventory $ - $ 4,693,367 $ - $ -
Non-cash fixed asset disposal as part of the reverse acquisition $ - $ 3,058,457 $ - $ -
Conversion of Preferred A shares to Note Payable $ 385,000 $ - $ - $ 385,000
Issuance of Common Stock for services $ 55,000 $ - $ - $ 20,000
Capitalized assets purchased on account - related party $ 220,299 $ 343,979 $ - $ 102,344
Liabilities from acquisition $ - $ 1,096,782 $ - $ -
Debt retired in merger, related party $ - $ (12,718,441 ) $ - $ -
Preferred Series B-1 Issuance in Acquisition $ - $ 150 $ - $ -
Preferred Series B-2 Issuance in Acquisition $ - $ 600 $ - $ -
Common stock issued for the reverse merger with Exactus $ - $ 4,369,085 $ - $ -
Discounts related to issuance of convertible debt and warrants $ - $ -
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~September 30, 2022~~MARCH 31, 2021

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 CBD company, and 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.

The Company is a GMP certified, seed-to-sale cannabinoid and nutraceutical manufacturer and research company that produces purposeful, natural pharmaceutical alternatives for consumers and pets. In addition to manufacturing raw materials from industrial hemp, we custom formulate and manufacture softgels (both bovine and vegan), gummies, tinctures, sublingual tablets, patches, K-Tape, topical pain relief and skin care ~~products.~~products for the nutraceutical industry. Panacea was founded by Leslie Buttorff in 2017 as a woman-owned business, was formed to own and engage in creating disruptive healthcare and veterinary natural relief products to make a difference in the lives of humans and pets. In late 2022 shifted its focus to contract manufacturing for nutraceutical companies to use its excess capacity given the FDA’s inaction with regard to CBD product.

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 ~~September 30, 2022.~~March 31, 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 ~~September 30,~~March 31, 2023, and 2022, ~~and 2021,~~ and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Operating results for the three ~~months~~ ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, ~~2022.~~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.
7
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 ~~late~~later 2017, we have generated losses from operations. As of ~~September 30, 2022,~~March 31, 2023, our accumulated deficit was $~~24.2~~27.7 million, and we had $~~1.152~~1 million in cash and liquid stock. As of ~~September 30, 2022~~March 31, 2023 the shares of common stock we hold in 22^nd Century Group, Inc. (~~1,203,000~~1,227,017 shares) ~~(Nasdaq:~~( Nasdaq: XXII) (“XXII”) was valued at approximately $~~1.116~~0.925 million. The XXII stock is pledged to secure a $4.063 million promissory note in favor of ~~Quintel-MC, Incorporated~~J&N Real Estate (“~~Quintel”)~~J&N “) and a $~~1.686~~1.624 million promissory note in favor of Leslie Buttorff, CEO of the Company. ~~Quintel-MC, Inc.~~J&N is owned by the CEO. These items are shown on the balance sheet as related party loans. The current plan with respect to the XXII stock is to hold this stock. These factors raise 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 or maintain 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 shareholders. In addition, adequate additional funding may not be available to us on acceptable terms, or at all. 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. ~~Also, in November 2021, the Company closed a $1.1~~ ~~million convertible note and warrants financing and received $~~1 ~~million.~~

~~COVID-19~~
The COVID-19 pandemic has resulted in a global slowdown of economic activity which may reduce the future demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply chains. The Company’s business operations have been negatively impacted by the COVID-19 pandemic and related events. While the lockdowns and disruptions have largely ended, we cannot predict whether future variants will cause adverse consequences. However, recent supply chain disruptions and delays may hinder our ability to continue our operations and generate revenue. The impact to date has included a decline in CBD product and sales demand.
The impact of the COVID-19 pandemic and related events, including actions taken by various government authorities in response, have increased market volatility and make the estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes more difficult. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.
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.

Cash and Cash ~~Equivalents~~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 ~~September 30, 2022,~~March 31, 2023, the Company’s cash balances did not exceed the FDIC limit.

8
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 $10,000 was taken at the beginning of ~~2022~~2023 to allow for any doubtful accounts to be expensed. As of ~~September 30, 2022~~March 31, 2023, $~~9,144~~1,378 of this allowance was expensed. The Company’s accounts receivable policy changed in 2021 to only provide larger, well-established companies with Net 30 payment terms. For all other sales they are paid by credit card or wires received before the product is shipped to the customer.

Inventory

Inventories are stated at ~~low~~lower of cost or net realizable value. Inventories of purchased materials are ~~valuated~~valued using a moving average method and managed byon a first in first out basis (FIFO). Inventories of internally manufactured materials are ~~valuated~~valued 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.

8
Marketable securities

The Company’s marketable securities consists of ~~1,203,000~~1,227,017 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.

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:
SCHEDULE OF FAIR VALUE ASSETS MEASURED ON RECURRING BASIS
September 30, 2022 December 31, 2021
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Marketable securities $ 1,115,542 $ 1,115,542 $   -    - $ 3,719,483 $ 3,719,483 $    - $   -
Total $ 1,115,542 $ 1,115,542 $ - $ - $ 3,719,483 $ 3,719,483 $ - $ -
9
March 31, 2023 December 31, 2022
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Marketable securities $ 925,107 $ 925,107 $     -     - $ 1,107,362 $ 1,107,362 $     - $     -
Total $ 925,107 $ 925,107 $ - $ - $ 1,107,362 $ 1,107,362 $ - $ -

~~In May 2022 there was one sale of marketable securities out of Level 1. On May 2, 2022,~~ ~~24,017~~ ~~shares of XXII securities were sold at an average price of $3.29. The net proceeds were $46,833, which was a gain recorded of $22,816. 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
September 30, 2022 March 31, 2023
Balance at beginning of year $ 3,791,483 $ 1,107,362
Sale of Securities 46,833
Unrealized loss on marketable securities, net (2,629,108 ) 182,255
Balance at end of period $ 1,115,542 $ 925,107

As of ~~September 30, 2022,~~March 31, 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 3three to ten years when placed in service. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.

9
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 $2.189 million of goodwill from the acquisition of the assets of Phoenix Life Sciences, Inc. (“Phoenix”) in October ~~2017 and intangible assets of $0.015~~ ~~million as of September 30, 2022 and $0.061~~ ~~million for as of December 31, 2021. In the acquisition of Phoenix, the Company acquired product formulas which is classified as an intangible asset.~~2017.

~~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
Tested Yearly for Impairment
Intangibles – Formulations 5 Years

September 30, 2022 December 31, 2021
Goodwill $ 2,188,810 $ 2,188,810
Intangibles – Formulations 307,001 307,001
Less accumulated amortization (291,650 ) (245,600 )
Net intangible assets $ 15,351 $ 61,401
March 31, 2023 December 31, 2022
Goodwill $ 2,188,810 $ 2,188,810

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.
10

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.

Convertible Notes Payable

The Company has previously issued convertible notes, which contain variable conversion features, whereby the outstanding principal and accrued interest automatically convert into common shares at a fixed price which may be a discount to the common stock at the time of conversion. Some of the conversion features of these notes are contingent upon future events, whereby, the holder agreed not to convert until the contingent future event has occurred. The Company currently does not hold any convertible notes.

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.

10
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 $~~251,125~~254,482 and $~~24,585~~368,065 in advanced customer payments as of ~~September 30, 2022~~March 31, 2023, and December 31, ~~2021,~~2022, respectively, and these amounts are included in the balance sheet line item of accounts payable and accrued expenses.

~~The following table shows the Company’s advanced customer payments:~~
SCHEDULE OF REVENUE FROM CONTRACT WITH CUSTOMER
September 30, 2022 December 31, 2021 March 31, 2023 December 31, 2022
Balance, beginning of period $ 24,585 $ 121,300 $ 368,065 $ 24,585
Payments received for unearned revenue 283,591 41,465 178,586 412,891
Revenue earned 57,051 138,180 292,169 69,411

Balance, end of period $ 251,125 $ 24,585 $ 254,482 $ 368,065

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 and formulation services it performs for its manufacturing customers.~~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 $~~25,732~~10,368 and $~~12,603~~ ~~for the nine months ended September 30, 2022, and 2021, respectively. Shipping costs were $7,767~~ ~~and $3,778~~14,184 for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

11
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 included in general and administrative ~~expenses and were~~costs of $~~134,930~~3,630 and $~~237,288~~ ~~for the nine months ended September 30, 2022, and 2021, respectively. Advertising and marketing costs were $36,822~~ ~~and $47,051~~66,796 for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

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.
Earnings per Share

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.

12
~~The Business Combination on June 30, 2021 was accounted for as a recapitalization of equity structure. In October 2021 the Company completed~~ ~~1-for-28 reverse stock split~~. Pursuant to GAAP, the Company retrospectively recasted the weighted-average shares included within its condensed consolidated statements of operations for the nine months ended September 30, 2021. The basic and diluted weighted-average Panacea ordinary shares are retroactively converted to shares of the Company’s common stock to conform to the recasted condensed consolidated statements of stockholders’ equity.
The following financial instruments were not included in the diluted loss per share calculation for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ because their effect was anti-dilutive:
SCHEDULE OF ANTI-DILUTIVE DILUTED LOSS PER SHARE
2023 2022
For the nine months ended
September 30, For the three months ended March 31,
2022 2021 2023 2022
Options to purchase common stock 61,446 -
Warrants to purchase common stock 56,377 343,854
Series B-1 Convertible Preferred 6,679 - 6,679 6,679
Series B-2 Convertible Preferred 26,786 - 26,786 26,786
Series C Convertible Preferred 2,289,220 - 2,289,220 2,289,220
Series C-1 Convertible Preferred 1,064,908 1,432,773 1,064,908 1,064,908
Series D Convertible Preferred 1,628,126 - 1,628,126 1,628,126
Convertible Notes - 85,451
Total 5,133,541 1,862,078 5,015,719 5,015,719

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.

12
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.
13

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 3 – 5 Years
Furniture and fixtures 3 – 5 Years
Machinery and equipment 5 – 10 Years
Leasehold improvement 10 Years

Property and equipment, net consists of the following:
SCHEDULE OF PROPERTY AND EQUIPMENT

September 30, 2022 December 31, 2021 March 31, 2023 December 31, 2022
Computers and technological assets $ 3,734,720 $ 3,514,421 $ 3,776,320 $ 3,776,320
Furniture and fixtures 55,950 55,950 55,950 55,950
Machinery and equipment 7,666,622 7,530,787 7,780,686 7,765,466
Land 92,222 92,222 92,222 92,222
Leasehold improvements 1,508,915 1,508,915 1,508,915 1,508,915
Total 13,058,429 12,702,295 13,214,093 13,198,873
Less accumulated depreciation (5,093,469 ) (3,862,313 ) (5,945,432 ) (5,522,878 )
Total property and equipment, net $ 7,964,960 $ 8,839,982 $ 7,268,661 $ 7,675,995

Depreciation expenses for the three-month period ended March 31, 2023 and 2022 were $~~1,240,281~~422,554 and $~~1,280,324~~408,691 ~~for the nine months ended September 30, 2022 and 2021, respectively. Depreciation expenses were $421,695~~ ~~and $392,485~~ ~~for the three months ended September 30, 2022 and 2021,~~ respectively.

13
NOTE 4 - INVENTORY

Inventory consists of the following components:

SCHEDULE OF INVENTORY

September 30, 2022 December 31, 2021
Raw Materials $ 967,523 $ 970,393
Semi-Finished 1,671,144 1,466,763
Finished Goods 1,753,521 1,805,779
Packaging 19,975 15,549
Trading 0 5,793
Total $ 4,412,463 $ 4,264,277
14
March 31, 2023 December 31, 2022
Raw Materials $ 720,557 $ 870,530
Semi-Finished 1,737,215 1,863,501
Finished Goods 1,617,341 1,694,574
Packaging 19,950 20,120
Trading -
Total $ 4,095,063 $ 4,448,725

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.

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 December 31, 2030. At inception, the Company recognized a Right of Use Asset and a corresponding lease liability in the amount of $4,595,509. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component. The Company has incorporated residual value obligations in leases for which there is such occurrences. Regarding short-term leases, ASC 842-10-25-2 permits an entity to make a policy election not to apply the recognition requirements of ASC 842 to Short-term leases. The Company has elected not to apply the ASC 842 recognition criteria to any leases that qualify as Short-Term Leases.

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 December 31, 2030. The lease consists of all laboratory space including testing facilities, water treatment, extraction and production. The lease of the property is based on the fair market rent and triple net lease (NNN) values competitive in the marketplace for a cGMP facility. The Company also subleases some of its laboratory space to other CBD companies. This income is presented under the Other Income line items of the statements of operations. The leases vary from short-term monthly leases to 3-year leases but are all cancellable.

Below is a summary of our right of use assets and liabilities as of ~~September 30, 2022 and December~~March 31, ~~2021:~~2023.

SCHEDULE OF RIGHT OF USE ASSET AND LIABILITY

September 30, 2022 December 31, 2021 March 31, 2023 December 31, 2022
Right-of-use assets $ 3,331,533 $ 3,595,100 $ 3,152,570 $ 3,242,381

Present value of operating lease liabilities $ 3,434,571 $ 3,692,392 $ 3,258,312 $ 3,347,331
Less: Long-term portion of operating lease liability (3,078,254 ) (3,347,335 ) (2,894,336 ) (2,987,208 )
Short-term portion of operating lease liability 356,317 345,057 363,976 360,123
Unpaid balances 1,617,359 1,279,033 1,844,042 1,730,136
Total short-term lease liability obligations $ 1,973,676 $ 1,624,090 $ 2,208,018 $ 2,090,259
Weighted-average remaining lease term (Ends December 31, 2030) 8.25 years 9 years
7.75 years
8 years

Weighted-average discount rate 3.0 % 3.0 %
14

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, we recognized approximately $114,693 ~~and $344,079~~respectively in operating lease ~~costs for both 2022 and 2021.~~costs. Operating lease costs are included in operating expenses in our consolidated statement of operations.
15

Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of ~~September 30,~~March 31, 2022, are as follows:

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Remainder of 2022 112,778
2023 455,622 341,716
2024 460,178 460,178
2025 464,780 464,780
2026 469,427 469,427
2027 474,122
Thereafter 1,925,123 1,451,002
Total undiscounted operating lease payments 3,887,908 3,661,225
Less: Imputed interest (453,337 ) (402,913 )
Present value of operating lease liabilities $ 3,434,571 $ 3,258,312

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~~ 10~~% original issue discount senior convertible promissory note in the principal amount of $1,100,000~~ ~~(the “Convertible Note”) and~~ ~~five-year warrants to purchase~~ ~~785,715~~ ~~shares of the Company’s common stock, par value $0.0001~~ ~~per share at an exercise price of $1.40~~ ~~per share (the “Warrants”) pursuant to the terms and conditions of the SPA for a total purchase price of $1,000,000~~.
~~The Note will be due~~ ~~November 18, 2022, which is one year from the issuance date. The Note initially does not bear any interest, however upon and during any event of default by the Company, the Note will accrue interest at a rate of~~ 18% per annum. Events of default include the failure to file all required reports and other documents with the SEC pursuant to Exchange Act by January 2022, suspension of trading or quotation of the Company’s common stock on the OTCQB or a national securities exchange, and failure to reserve a sufficient number of shares for the conversion or exercise of all securities sold under the SPA. Further, upon an event of default, the holder will have the right to cause the Company to redeem the outstanding principal and accrued interest on the Note at a ~~125% premium.~~
~~The principal and accrued interest on the Note is convertible into common stock at a conversion price of $1.40~~ ~~per share, subject to certain adjustments summarized as follows: (i) if an event of default has occurred prior to the maturity date, a reduction to~~ 80% of the conversion price then in effect, (iii) anti-dilution adjustment upon certain issuances of common stock or derivative securities at a price per share that is lower than the conversion price, (iii) customary adjustments for stock splits, stock dividends and similar corporate events, and (iv) adjustment upon a public offering by the Company meeting certain delineated criteria, as summarized below.
Under the terms of the Note, upon a public offering by the Company of common stock, either alone or in units or with other securities pursuant to an effective registration statement resulting in gross proceeds to the Company of at least $~~10,000,000, and in connection with which the common stock is approved for listing listed on a national securities exchange (a “Qualified Offering”), the conversion price will be reduced to~~ 90% of the offering price per share in the Qualified Offering, if that price is lower than the conversion price then in effect. Additionally, immediately prior to a Qualified Offering, the Company may redeem all or part of the outstanding principal and accrued interest on the Note at a ~~115% premium.~~
~~The Note also contains customary negative covenants prohibiting the Company from certain actions while the Note remains outstanding.~~
~~The Warrants will be exercisable for a~~ ~~five-year term beginning on May 18, 2022, at an exercise price of $1.40~~ ~~per share, subject to certain adjustments which are substantially similar to those contained in the Note, including the Qualified Offering adjustment.~~
~~Each of the Note and the Warrants contain a~~ ~~4.99~~% beneficial ownership limitation pursuant to which neither may be converted or exercised, as applicable, if and to the extent that following such conversion or exercise the holder would beneficially own more than ~~4.99% of the Company’s outstanding common stock, subject to increase to~~ ~~9.99% upon 61 days’ prior written notice by the holder.~~
16
Pursuant to the SPA, the Company entered into a Registration Rights Agreement dated November 18, 2021, by and between the Company and the Purchaser, in which the Company has agreed to file a Registration Statement on Form S-1 with the SEC following request by the Purchaser at any time following the 180-day period after the initial closing.
~~The Company calculated the fair value of the Warrants using the Black Scholes method as $877,261~~ ~~and recorded their fair value along with the $100,000~~ ~~original issue discount and relates issuance costs of $20,249~~ ~~as a debt discount which will be amortized using the straight-line method over the one year note period. Amortization of the debt discount for the year ended December 31, 2021 amounted to $117,515. The loan balance, net of discount was $220,005~~ ~~as of December 31, 2021. Amortization of the debt discount for the three and nine months ended September 30, 2022, was $251,427~~ ~~and $746,083, respectively, and was recorded as interest expense. The debt discount balance at September 30, 2022, was $133,912~~s.

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 1010%% original issue discount senior convertible promissory note in the principal amount of $385,000 (the “Second Note”) and ~~five-year~~five-year warrants to purchase 275,000 shares of the Company’s common stock, par value $0.0001 per share at an exercise price of $1.40 per share (the “Warrants”) in exchange for 350 shares of the Company’s Series A Convertible Preferred Stock (“Series A”). The Second Note ~~matures~~matured on March 3, 2023. The Agreement was entered into after the Investor exercised the most favored nations rights contained in Section 7(b) of the Company’s Certificate of Designation of Preferences, Rights and Limitations of the Series A in connection with the consummation of a private placement with the Purchaser on November 18, 2021. The warrant fair value of $190,638 and the original issue discount of $35,000 were treated as a discount to the Second Note and will be amortized over the term of the Second Note. Amortization of the debt discount for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023, was 38,329 and for the three months ended March 31, 2022, was $~~56,873~~17,309 and $~~130,437, respectively, and was~~each were recorded as interest expense. The debt discount balance ~~at September 30, 2022, was $95,201~~.on March 31, 2023, fully amortized.

Paycheck Protection Program Funding U.S. Small Business Administration Loan

On May 28, 2020, the Company received a secured, 30~~-year,~~30-year, Economic Injury Disaster Loan in the amount of $99,100 from the U.S. Small Business Administration. The loan carries interest at a rate of 3.75% per year ~~requires monthly payments of principal and interest,~~ and matures in 30 years. ~~Installment payments, including principal and interest, of $483~~ ~~monthly, will begin 12 months from the date of the promissory Note.~~ The SBA loan is secured by a security interest in the Company’s tangible and intangible assets. ~~The loan proceeds were used as working capital to alleviate economic injury caused by the Covid-19 disaster occurring in the month of January 31, 2020 and continuing thereafter.~~ As of ~~September 30, 2022~~March 31, 2023 the current principal balance of this note amounted to $99,100 and accrued interest was approximately $2,047.

Notes payable – related party and other ~~liability~~liabilities.

As part of the Exchange Agreement certain loan balances (“~~Quintel~~J&N Loans”) from ~~Quintel-MC Incorporated,~~J&N Real Estate LLC, an affiliate of the Company’s CEO, (“~~Quintel”~~J&N”) and historical interest owed of $1,932,358 were combined into a new promissory note with the principal amount of $4.062 ~~million (“Quintel Note”).~~million. The ~~Quintel~~J&N Note bears annual interest at 12% and was secured by a pledge of certain XXII common stock owned by Panacea (See Note 2 Going concern).
15

On June 30, 2021, the Company issued its CEO, Ms. Buttorff, a 10% promissory note in the amount of $1,624,000 (the “Buttorff Note”). The Buttorff Note was secured by a pledge of certain XXII common stock owned by the Company (See Note 2 Going concern). This demand note replaced a prior working capital note that the Company had issued on January 1, 2021. On July 1, 2021, the Company issued Ms. Buttorff a 10%, $1 million line of credit note at 10% annual rate which Ms. Buttorff has since increased ~~that expired in January 2022, which Ms. Buttorff~~and has extended (see Note 6 – Notes Payable – Buttorff Note). ~~In January 2022, the Buttorff~~The Company’s line of credit ~~was~~from Ms. Buttorff increased to $~~1.5~~5,000,000 ~~million, then increased again~~on July 1, 2021. The terms include an annual interest rate of 10% and a maturity date in ~~April to $3.0~~ ~~million and is now due on~~ ~~January 31, 2024. To date the balance due is $2,431,403~~.2024.

~~On June 30, 2021 the $~~7 ~~million of convertible debt (“XXII Debt”) was retired in exchange for a portion of the Needle Rock Farm ($2.2~~ ~~million), $500,000~~ ~~was converted to common stock and J&N Real Estate Company assumed a $4.3~~ ~~million loan credited against preferred Panacea stock.~~
17
~~Below is a summary of our notes payable as of September 30, 2022 and December 31, 2021:~~
SCHEDULE OF NOTES PAYABLE RELATED PARTY

September 30, 2022 December 31, 2021
Quintel Note $ 4,062,713 $ 4,062,713
CEO Notes 4,117,088 2,379,153
Total related party notes $ 8,179,801 $ 6,441,866
March 31, 2023 December 31, 2022
J&N Note $ 4,062,713 $ 4,062,713
CEO Note 6,339,442 5,809,090
Total related party notes $ 10,402,155 $ 9,871,803

Other long-term liabilities, related party

The Company has recorded a related party liability (“Fixed Asset Loan”) in the amounts of $~~3,017,874~~2,899,919 and $2,749,638 as of ~~September 30,~~March 31, 2022 and December 31, 2021, respectively, relating to SAP software and support fees which were paid by an affiliate company of the CEO. The ~~balance bears interest of~~ 6~~% and the~~ maturity date has not yet been determined. The Company is no longer paying any fees related to these services.

In 2020, the Company recorded an additional related party liability in the amount of $513,390 in respect to certain building improvements, due to J&N Real Estate Company (a company owned by the CEO) (“J&N Building Loan”). This balance bears no interest and the maturity date has not yet been determined.
SCHEDULE OF NOTES PAYABLE
September 30, 2022 December 31, 2021
Other long-term liabilities, related party
Fixed Asset Loan $ 3,017,874 $ 2,749,638
J&N Building Loan 513,390 513,390
Total $ 3,531,264 $ 3,263,028
March 31, 2023 December 31, 2022
Other long-term liabilities, related party
Fixed Asset Loan $ 3,059,474 $ 3,059,474
J&N Building Loan 513,390 513,390
Total $ 3,572,864 $ 3,572,864
NOTE 7 - STOCKHOLDERS’ EQUITY

Common stock

The Company’s authorized common stock consists of 650,000,000 shares with a par value of $0.0001 per share.

During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company issued 0 ~~and~~ ~~834,331~~540,000 shares of common stock in respect of the ~~share exchange effected in 2021.~~settlement of the convertible note payable.

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 4,049,409 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 10 years.

Previously the Company had adopted the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for the issuance of incentive awards in the form of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards. 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 or Compensation Committee may specify. Stock options expire no later than ten years from the date of grant. The aggregate number of shares of common stock which may be issued pursuant to the Plan is ~~4,049,409~~ ~~unless sooner terminated, the Plan shall terminate in~~ 10 ~~years.~~ This plan had 196,491 fully vested options outstanding at the time of the share exchange. ~~There have been no options granted under this plan subsequent to the share exchange.~~

1816
Stock Options

A summary of the stock option activity is presented below:
SCHEDULE OF STOCK OPTIONS ~~ACTIVITY~~
Options Outstanding as of September 30, 2022
Number of Shares Subject to Options Weighted Average Exercise Price Per Share
Weighted Average Remaining Contractual Life
(in years)

Aggregate Intrinsic Value

Balance on December 31, 2021 196,491 $ 3.51 3.20 $
Options granted - - - -
Options exercised - - - -
Options canceled / expired - - - -
Balance at September 30, 2022 196,491 $ 3.51 2.55 $

Vested and exercisable at September 30, 2022 196,491 $ 3.51 2.55 $
~~Stock Warrants~~
~~On March 3, 2022, the Company entered in an Exchange Agreement with an institutional investor pursuant to which the Company issued a~~ 10~~% original issue discount senior convertible promissory note in the principal amount of $385,000~~ ~~(the “Note”) and five-year warrants to purchase~~ ~~275,000~~ ~~shares of the Company’s common stock, par value $0.0001~~ ~~per share at an exercise price of $1.40~~ ~~per share in exchange for~~ ~~350~~ ~~shares of the Company’s Series A Convertible Preferred Stock.~~
~~As of September 30, 2022, the Company also had outstanding warrants to purchase an aggregate of~~ ~~56,377~~ ~~shares of common stock. These warrants were previously issued by the Company prior to the exchange agreement.~~
Options Outstanding as of March 31, 2023

Number of
Shares Subject
to Options

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic
Value

Balance on December 31, 2022 196,491 $ 3.51 3.20 $        -
Options granted - - - -
Options exercised - - - -
Options canceled / expired - - - -
Balance on March 31, 2023 196,491 $ 3.51 1.95 $

Vested and exercisable at March 31, 2023 196,491 $ 3.51 1.95 $ -

The Company’s outstanding warrants as of ~~September 30, 2022~~March 31, 2023, are summarized as follows, and all were exercisable at that date.

~~A summary of the Company’s outstanding warrants is presented below:~~
SCHEDULE OF WARRANTS OUTSTANDING
Warrants Outstanding as of September 30, 2022 Warrants Outstanding as of March 31, 2023

Number of Shares Subject to Warrants

Weighted Average Exercise Price Per Share

Weighted Average Remaining Contractual Life
(in years)
Aggregate Intrinsic Value
Number of
Shares Subject
to Warrants

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life (in years)
Aggregate
Intrinsic
Value

Balance on December 31, 2021 56,377 $ 13.64 2.01             -
Balance on December 31, 2022 331,377 $ 3.48 3.67           -
Options granted 275,000 - - - - - - -
Options exercised - - - - - - - -
Options canceled / expired - - - - - - - -
Balance at September 30, 2022 331,377 $ 3.48 3.91 $ -
Balance at March 31, 2023 331,377 $ 3.48 3.43 $ -

Vested and exercisable at September 30, 2022 331,377 $ 3.48 3.91 $ -
Vested and exercisable at March 31, 2023 331,377 $ 3.48 3.43 $ -

As of ~~September 30, 2022,~~March 31, 2023, the outstanding warrants ~~have~~had no intrinsic value.
19

Restricted Stock

A summary of the restricted stock activity is presented below:
SUMMARY OF RESTRICTED STOCK

Restricted Stock
Common Stock
Balance at December 31, ~~2021~~2022 107,993
Balance at ~~September 30, 2022~~March 31, 2023 107,993

As of ~~September 30, 2022,~~March 31, 2023, there were no unamortized or unvested stock-based compensation costs related to restricted share arrangements.

17
Preferred Stock

The Company’s authorized preferred stock consists of 50,000,000 shares with a par value of $0.0001.

On March 3, 2022, the Company entered into an Exchange Agreement with the Investor pursuant to which the company agreed to issue the Note in the principal amount of $385,000 and the Warrants in exchange for 350 shares of the Company’s Series A Convertible Preferred Stock. On April 19, 2022, the Company filed a Withdrawal of Designation of the Series A Convertible Preferred Stock with the Secretary of State and the State of Nevada.

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. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, the Company has no liabilities recorded for these provisions as of ~~September 30, 2022.~~March 31, 2023.

Concentrations

The Company has no contingencies, material commitments, or purchase obligations, or sales obligations.

On the revenue side, in the three months ended ~~September 30, 2022,~~March 31, 2023, we have a concentration of two customers. Both are contract manufacturing customers who represent 31% and 13% of revenues. In the three months ended March 31, 2022, we had a concentration of two customers. One is a customer ~~that purchases refined oils~~who purchased PPE items and ~~represents~~represented 1822% of revenue. ~~One is a contract manufacturing customer who represents~~ 12~~% of revenue. One is a~~The other is a tolling partner who ~~represents~~represented 1017% of revenue.

The other concentration is in the accounts receivable category, where ~~three~~five customer accounts for 7470% of the accounts receivable. One of the ~~three~~five customer contracts is unique in that we produced all of the products for them to sell, and they pay Panacea as the items are sold in the ecommerce marketplace. Thus, until their inventory is depleted, we will have accounts receivable. This customer receivable is 3332% of the 7470%.
20

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

September 30, 2022 December 31, 2021 March 31, 2023 December 31, 2022
Accrued Interest
Related party loan-Quintel $ 653,971 $ 249,939
Related party loan-QJ&N $ 944,142 $ 796,891
Related party loan-CEO loan 223,457 86,060 320,925 271,585
Related party loan – Line of credit 181,772 29,235 428,106 282,869
Accrued Interest 181,772 29,235 428,106 282,869

Three months ended
September 30, 2022 Nine months ended
September 30, 2022 Three months ended September 30, 2021 Nine months ended
September 30, 2021
Interest Expense
Related party loan-Quintel $ 138,717 $ 404,032 $ 123,104 $ 645,628
Related party loan-CEO loan 46,944 137,397 42,494 102,679

Related party loan – Line of Credit 70,702 152,537 9,129 9,129
Interest Expense 70,702 152,537 9,129 9,129
~~Other~~
~~The Company continues to hold~~ ~~1,203,000~~ ~~shares of XXII stock which is available for sale. On May 2, 2022~~ ~~24,017~~ ~~shares were sold and the proceeds from the sale were $46,833. On August 25, 2021~~ ~~70,000~~ ~~shares were sold and the proceeds from the sale were $230,296. XXII recently moved from the NYSE to NASDAQ. As of September 30, 2022 XXII is a common shareholder of the Company.~~
Three months ended
March 31, 2023 Three months ended
March 31, 2022
Interest Expense
Related party loan-J&N $ 147,251 $ 130,678
Related party loan-CEO loan 49,341 44,664
Related party loan – Line of Credit 145,237 30,135
Interest Expense 145,237 30,135

NOTE ~~10 –~~10– SUBSEQUENT EVENTS

~~None.~~PLSH is still pursuing the asset acquisition of N7 Enterprises, Inc. and expects to close this transaction in the second quarter of 2023.

2118
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Business Overview
~~The Company is~~We are a Nevada corporation organized in 2008. ~~The Company has~~Exactus, Inc. was our former name. We have pursued opportunities in ~~Cannabidiol,~~hemp-based businesses, which we refer to as ~~“CBD”, since December 2018 when we expanded our focus to pursue opportunities in hemp-derived CBD. Effective October 25,~~“cannabinoids or CBD”. On June 30, 2021 ~~we changed our name to~~ Panacea Life Sciences, ~~Holdings,~~ Inc. ~~To that end, on June 30, 2021 we~~“Panacea” entered into ~~the~~an Exchange Agreement with ~~Panacea and the Panacea stockholders~~Exactus and as a result became a seed-to-sale ~~CBD~~Cannabinoid company. The former Panacea stockholders have assumed majority control of ~~the Company,~~us and all our operations are now operated through Panacea which because of the share exchange became ~~a wholly-owned subsidiary of the Company.~~our wholly owned subsidiary. Leslie Buttorff, ~~who~~ became ~~the Company’s~~our 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.

Panacea Life Sciences Holdings, Inc. (PLSH) is holding company structured to support the ~~Company’s subsidiary after the share exchange,~~life sciences and health and wellness industry. Panacea, which was founded by Leslie Buttorff in 2017 as a woman-owned ~~business, attracted a $14 million investment from 22~~^nd Century Group, Inc., or XXII, a plant biotechnology company which also has a focus on CBD products and technology, during 2019. XXII has retained a 15% stake in the Company following the share exchange.business. Through Panacea, we are dedicated to developing and producing the highest-quality, most medically relevant, legal, hemp-derived cannabinoid products for consumers and pets. Beginning at a farm Panacea ~~has the option to own~~owns a parcel of ~~the farm~~ located at Needle Rock, Colorado and leases laboratory space located within a 51,000 square foot, state-of-the-art, cGMP, extraction, manufacturing, testing and fulfillment center located in Golden, Colorado, Panacea operates in every segment of the CBD product value chain. From cultivation to finished goods, Panacea ensures its products with stringent testing protocols employed at every stage of the supply chain. Panacea endeavors to offer pure natural remedies within product lines for every aspect of life: PANA ~~Health®~~Life®, PANA Beauty®, PANA ~~Sport®~~Sport™, PANA Pet®~~, PANA Pure®~~ and PANA ~~Life®~~
~~As of September 30, 2022,~~Health™. Currently Panacea sells over 50 different product SKUs of CBD and CBG products. ~~In addition, we offer “white label” licensing to retail businesses and contract manufacturing services to smaller CBD companies and softgel manufacturing to nutraceutical companies.~~

In ~~July,~~late 2022 we shifted ~~some of~~ our focus to ~~obtaining more~~ contract manufacturing ~~contracts in~~for the nutraceutical industry. ~~To date~~Its subsidiary, Panacea Life Sciences, Inc. (PLS) is dedicated to manufacturing, research and producing the highest-quality, hemp-derived cannabinoid, functional mushroom, Kratom and nutraceutical products for consumers and pets. From cultivation to finished goods, the company ensures its products with stringent GMP standards and testing protocols employed at every stage of the supply chain.
We are well positioned to develop novel extracts as dietary supplements and topical applications. Our biotechnology plans focus on our research at Colorado State University where we ~~have secured ten new contracts that should start yielding revenues~~are involved in ~~the 4~~^th ~~quarter.~~several health-related research studies.

We believe that our competitive advantages are derived from being vertically integrated that allows for extraction, 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)~~2) utilize Good Manufacturing Practice to produce goods that are safe and quality products that deliver consistent dosing. The ability to produce both full spectrum products (those that contain <0.3%) and THC-free products allows us to optimize dosage and delivery to various human conditions. Removal of the THC from products is a difficult and expensive process, but we believe this is essential for specific patient populations; such as, athletes where testing positive for THC would lead to disqualification, first responders who would be terminated for testing positive for THC, and in animal products where even a small amount of THC can lead to toxicity and potential lethality. Industrial hemp extracts are found to have particular application as neuroprotectants, for example in limiting neurological damage and increasing speed of recovery with traumatic brain injury. 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~~preclinical 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.~~

We believe a multitude (hundreds) of companies, large and small, have launched or intend to launch retail brands and white label products containing cannabinoids like CBD, including retail and seed-to-sale companies that are larger and better capitalized than we are and/or which offer products similar to ours with a larger geographic scope of operations and a market presence. Many of these are dependent upon third parties to provide raw material inventory for sale. We believe this makes many of the participants in the industry vulnerable to shortages, quality issues, reliability, and pricing variability. Our industry relationships may allow us to build an efficient supply chain that will put us among the few companies that maintain a competitive pricing and supply advantage. The CBD-based consumer product industry is highly fragmented with numerous companies. There are also large, well-funded companies that currently do not offer hemp-based consumer products including large agribusiness companies but may do so in the future and become significant competitors. 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.

2219
~~Our Industrial Hemp Supply~~
In 2019, Panacea acquired Needle Rock Farms (NRF) in Crawford, Colorado. Our 2020 hemp crop was grown at NeedleRock Farms. Also, in December, 2019 XXII made a $14 million investment in Panacea which consisted of $7 million in preferred stock and $7 million in convertible debt. XXII also was to provide an additional $10 million in funding at a later point in time. On June 30, 2021 Panacea and XXII agreed to dissolve the agreement and agreed on the following: the preferred stock was converted to common stock; a $4.3 million loan was secured against the laboratory space owned by J&N Real Estate, LLC (owned by Panacea’s CEO), the NRF and equipment would be transferred to XXII in exchange for a reduction of $2.2 million in convertible debt, 10 acres of the farm would be sub platted to Panacea, $500,000 in hemp would be delivered from the 2021 crop yield, and a 15-year agreement for hemp supply would be finalized after the deal was completed. In 2021 XXII was the grower at NRF and achieved USDA Organic certification for the farm. As of the date of this Report, XXII has not delivered the $500,000 of hemp to Panacea, nor have we closed on the 10 acres plot of land. However, we also have the 2020 NRF crop and several hemp tolling contracts in which the output of crude and or distillate is shared with the growers to process.
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 ~~described below.~~
● ~~Solving Industry Issues~~
○ ~~Problem:~~ The hemp plant is a hyperaccumulator, meaning trace elements in the soil in which the plant is grown, such as heavy metals, pesticides, and others, are readily absorbed in the plant, potentially contaminating hemp oil and rendering the material unusable.
○ ~~Solution:~~ Using analytical techniques, we have developed a method for complete removal of commonly used pesticides to remediate contaminated hemp oil to produce a safe and usable hemp product. This work has been submitted for publication to the Journal of Cannabis Research in August of this year.
● ~~Sustainability and Access to Minor Cannabinoids~~
○ ~~Problem:~~ In addition to CBD and THC, each of the other 118 cannabinoids are anticipated to have unique and beneficial health benefits. However, because they are present at less than 1% in hemp extracts, there are issues in both obtaining sufficient quantities and determining the purity of each of the minor cannabinoids.
○ ~~Solution:~~ The byproduct created during the distillation process of crude hemp oil is typically thrown away to enter the waste stream. In closer examination of the byproduct, the CRC determined that there are substantial minor cannabinoids present, such as cannabidivarin (CBDV), Cannabichromene (CBC), Cannabicyclol (CBL), and Cannabielsoin (CBE). Using the advanced technology in the CRC, the team can now access these low abundance cannabinoids while also assisting Panacea (as a member of Colorado’s Environmental Leadership Program) in attaining its sustainability goals by decreasing waste streams.
● ~~Supporting Clinical Trials~~
○ ~~To gain further insight on cannabinoid activity, Panacea and the CRC are collaborating to launch specific clinical trials in several areas. The first two studies have launched this year (2022):~~
1. In collaboration with Dr. Stephanie McGrath and Dr. Julie Moreno, to examine CBD effects in a translational model of Alzheimer’s disease. In this study, performed in aged dogs that have cognitive impairment very similar to human AD, not only will CBD be evaluated for ability to slow disease progression, but will be one of the first studies to correlate how much consumed CBD enters the brain.
2. In collaboration with Dr. Larry Good, a practicing gastroenterologist in New York, Panacea and the CRC have launched an open label study evaluating CBD and CBG for effects on irritable bowel syndrome, a condition affecting over 30 million American with no proven treatment.
well as supporting research into chronic pelvic pain. These are all long-term, multi-year studies. We ~~have also~~previously signed an agreement with the Colorado School of Mines in the area of developing hemp-based sustainability products.
23

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 ~~September 30, 2022~~March 31, 2023, compared to the three months ended ~~September 30, 2021.~~March 31, 2022. The information which follows relates to the operations of Panacea, which under applicable accounting rules are treated as the operation of the Company.

Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

Net Revenues

~~We are principally engaged in the business~~In late 2022 and first quarter of ~~producing and selling products made~~2023 our revenues predominately came from ~~industrial hemp.~~contract manufacturing of nutraceutical products. Revenue consists of sales of our six category of brand products, white label and contract manufacturing sales to other ~~CBD~~ companies, raw material sales (distillate and isolate), tolling products, and leasing space. We also have revenue from ~~the sale of our Personal Protection Equipment (PPE) inventory and~~ non-CBD nutraceutical companies.

Our revenues for the three months ended ~~September 30, 2022, decreased~~March 31, 2023, increased by ~~$221,796,~~$211,007, or ~~38%~~45%, to ~~$366,244~~$677,481 as compared to ~~$588,040~~$466,474 for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease~~increase in sales in ~~2022~~2023 was due ~~primarily~~ to ~~decreased production from hemp toll-arrangement deals and our gearing up for the contract~~an increase in manufacturing of non-CBD nutraceutical ~~business.~~products.

Cost of Sales

Cost of sales for the three months ended ~~September 30, 2022,~~March 31, 2023, increased by ~~$13,893~~$85,781 or 5%23% to ~~$318,918~~$451,872 as compared to ~~$305,025~~$366,091 for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase in cost of sales was due primarily to increased raw material ~~costs and inventory preparation~~purchases for ~~the nutraceutical contracts. The primary components of cost of sales include the cost of manufacturing the CBD products.~~non-CBD contract manufacturing.

Operating Expenses

Operating expenses for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased by ~~$105,037,~~$232,795, or 7%13%, to ~~$1,436,035~~$1,515,572 as compared to ~~$1,541,072~~$1,748,367 for the three months ended ~~September 30, 2021.~~March 31, 2022. This is due to decreases in both production related operating expenses and general and administrative expenses. The Company is continuing to decrease SG&A expenses as much as possible to conserve cash.
20

Production related operating expenses for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased by ~~$75,905~~$19,658, or 6%2%, to ~~$1,174,529~~1,268,159 as compared to ~~$1,250,434~~$1,287,817 million during the three months ended ~~September 30, 2021.~~March 31, 2022. The decrease in production related operating expenses is primarily due to decreased ~~subcontract and software costs.~~building expenditures.

General and administrative expenses for the three months ended ~~September 30, 2022,~~March 31, 2023, decreased by ~~$29,132,~~$213,137, or ~~10%~~46%, to ~~$261,506~~$247,413 as compared to ~~$290,638~~$460,550 during the three months ended ~~September 30, 2021.~~March 31, 2022. The decrease in general and administrative costs is primarily due to decreased ~~legal~~sales and ~~audit costs.~~
24
~~Other income (expense)~~
Other income for the three months ended September 30, 2022, decreased by $526,506 or 29% to ($1,305,191) as compared to ($1,831,699) for the three months ended September 30, 2021. The decrease in other income is primarily due to the unrealized loss of XXII’s marketable securities held and increased interest expense.
~~Nine Months Ended September 30, 2022 and 2021~~
~~Net Revenues~~
We are principally engaged in the business of producing and selling products made from industrial hemp. Revenue consists of sales of our six category of brand products, white label and contract manufacturing sales to other CBD companies, raw material sales (distillate and isolate), tolling products, and leasing space. We also have revenue from the sale of our Personal Protection Equipment (PPE) inventory and non-CBD nutraceutical companies but these are insignificant at this time.
Our revenues for the nine months ended September 30, 2022, decreased by $111,484, or 8%, to $1,302,190 as compared to $1,413,674 for the nine months ended September 30, 2021, The decrease in sales in 2022 was due primarily to decreased production from toll-arrangement deals.
~~Cost of Sales~~
Cost of sales for the nine months ended September 30, 2022, increased by $133,001, or 15% to $1,016,509 as compared to $883,508 for the nine months ended September 30, 2021. The increase in cost of sales was due primarily to increased raw material costs and increased sales. The primary components of cost of sales include the cost of manufacturing the CBD products.
~~Operating Expenses~~
Operating expenses for the nine months ended September 30, 2022, increased by $243,063, or 6%, to $4,562,376 as compared to $4,319,313 for the nine months ended September 30, 2021. This is due to increases in both operating expenses and general and administrative expenses.
Production related operating expenses for the nine months ended September 30, 2022, increased by $228,233, or 7%, to $3,635,640 as compared to $3,407,407 during the nine months ended September 30, 2021. The increase in production related operating expenses is primarily due to increased costs associated with building maintenance.
General and administrative expenses for the nine months ended September 30, 2022, increased by $14,830, or 2%, to $826,736 as compared to $911,906 during the nine months ended September 30, 2021. The increase in general and administrative costs is primarily due to costs associated with the formation of the Scientific Advisory Boardadvertising expenditures as well as a one-time fee ~~paid~~ for entrance into the Brazil ~~and Latin America markets.~~market which was paid in 2022.

Other income (expense)

Other income (expense) for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, decreased by ~~$4,258,507~~$632,930 or ~~388%~~56% to ($~~3,161,252)~~501,332) as compared to ~~$1,097,255~~($1,134,262) for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The decrease in other income is primarily due to the unrealized loss of ~~the XXII: NASDAQ~~ marketable securities ~~held.~~held (XXII: NASDAQ).
25

Liquidity and Capital Resources

Cash flows from operating activities

The largest source of operating cash is from our customers. A large majority of our customers purchase CBD on-line, so credit card payments are collected and paid within 1-2 business days. Other white label and contract manufacturing customers pay before the products are released. Some larger customers have either net 10-, 2%- or 30-day net terms. Net cash used in operating activities was ~~$1,876,580~~$313,851 and ~~$2,692,203~~$436,043 for ~~nine~~three months ended ~~September 30~~March 31 for ~~2022~~2023 and ~~2021,~~2022, respectively. Approximately ~~$5.1~~$1.0 million of our ~~$7.4~~$1.8 million net loss in ~~2022~~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 ~~$98,129~~$15,220 and ~~$513,082~~$9,725 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023, and 2022, ~~and 2021, respectively~~.respectively.

Cash flows from financing activities

Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023 was ~~$1,991,726.~~$395,352. For the same period in ~~2021~~2022 the financing was ~~$2,109,242.~~$481,991. 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. In 2021 there was a cash payment received of $190,338 from the same program.~~

~~As of October 27, 2022~~Liquidity and Capital Resources
On March 31, 2023, we had ~~$1.543~~$1 million in cash and liquid stock of XXII. ~~The~~Our 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~~us to sell the shares to provide working capital. ~~Panacea has~~We have borrowed substantial sums from Leslie Buttorff, our Chief Executive Officer, to meet its working capital obligations. ~~As of~~On June 30, 2021, Panacea ~~owed~~issued an affiliate of Ms. Buttorff a 12% demand promissory note for $4.063 million and ~~also held~~issued Ms. Buttorff a 10% demand promissory note for ~~$1.686~~$1.624 million secured by a pledge of certain XXII common stock owned by Panacea. ~~On July 1, 2021, the Company agreed to~~Additionally, we have a ~~$1 million~~ line of credit ~~note~~with Ms. Buttorff through which it may borrow up to $5 million at a 10% annual ~~rate, which Ms. Buttorff has extended to January, 2024 and increased the line of credit to $3.0 million.~~interest rate.

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.
21

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.

Off Balance Sheet Arrangements

As of ~~September 30, 2022,~~March 31, 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.
26

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~~about our ~~products, studies regarding the long term effects of COVID-19, future studies that we may conduct~~ ~~, our~~new operations in the hemp industry through Panacea, our expected revenue growth, our human resources following our recent acquisition of Panacea, 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.

22
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, ~~includingour~~including this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~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.

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.

27
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.
23

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.

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.
28

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.
24
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~~and Principal Financial ~~Officer),~~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~~and Principal Financial ~~Officer)~~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.

Changes in Internal Control Over Financial Reporting
29

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 previously 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 is currently waiting for a trial date.
On February 21, 2023, Plaintiff Knock-Out Specialties, Inc. (“Plaintiff” or “Knock-Out”) filed Plaintiff’s Original Petition (“Petition” or “Pet.”) in the 380th Judicial District Court of Collin County, Texas in an action styled Knock-out Specialties, Inc. vs. Panacea Life Sciences, LLC, Leslie Buttorff, Individually and Ben Doucette, Individually, Cause Number 380-00849-2023 (“State Court Action”). In the State Court Action, Plaintiff seeks damages ~~claim is over $3 million.~~arising from allegations regarding the purchase and quality of KN95 masks. The ~~trial date is set~~Panacea Defendants hereby ask for ~~February, 2023.~~removal of the State Court Action to this Court on the basis of diversity jurisdiction.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES OR USE OF PROCEEDS.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2022, the Company ~~issued 200,352~~Issued 123,334 shares of the Company’s common stock to ~~various employees~~the former Chief Strategy Officer of the Company ~~and 2,623 to a vendor.~~in connection with the cashless exercise of stock options, as well as 447 shares the Company owed the former Chief Strategy Officer for inadvertently issuing less shares of common stock than the amount indicated on the Subscription Agreement dated January 18, 2019. 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.
25
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
3.3 Certificate of Designation for Series A Preferred Stock 8-K 2/18/21 4.1
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
3.10 Certificate of Withdrawal for Series A 10-K/A 4/29/22 3.10
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)
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 Bylaws 8-K 7/7/21 3.2
3.3 Certificate of Designation for Series A Preferred Stock 8-K 2/18/21 4.1
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
3.10 Certificate of Withdrawal for Series A 10-K/A 4/29/22 3.10
10.1 Amended and Restated 2021 Equity Incentive Plan* 10-K 3/31/22 10.2
10.2 Form of Exchange Agreement** 8-K 3/4/22 10.1
10.3 Form of Original Issue Discount Senior Convertible Promissory Note 8-K 3/4/22 10.2
10.4 Form of Warrant 8-K 3/4/22 10.3
10.5 Form of Registration Rights Agreement** 8-K 3/4/22 10.4
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)

* Management contract or compensatory plan or arrangement.
** Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the Securities and Exchange Commission upon request any omitted information.
*** 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.
+Portions of this exhibit have been omitted as permitted by the rules of the SEC. The information excluded is both (i) not material and (ii) would be competitively harmful if publicly disclosed. The Company undertakes to submit a marked copy of this exhibit for review by the SEC Staff, to the extent it has not been previously provided, and provide supplemental materials to the SEC Staff promptly upon request.

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,~~Exactus, Inc., at the address on the cover page of this report, Attention: Corporate Secretary.

3026
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.

~~November 14, 2022~~May 12, 2023 /s/ Leslie Buttorff
Leslie Buttorff
Chief Executive Officer

3127


	Three Months Ended September 30, 2022
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of June 30, 2022		8,530	$	853		14,965,317	$	1,497	$	23,760,704	$	(21,509,060	)	$	2,253,993
Shares issued for acquisition		-		-		-		-		-		-			-
Issuance of common shares for services						-		-							-
Net Income (Loss)		-		-		-		-		-		(2,693,900	)		(2,693,900	)
Balance as of September 30, 2022		8,530	$	853		14,965,317	$	1,497	$	23,760,704	$	(24,202,960	)	$	(439,907	)

	Nine Months Ended September 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		8,530,350		$	853		14,073,708	$	1,407	$	23,865,155		$	(16,765,013	)	$	7,102,402
Shares issued in respect of the merger		-			-		834,331		83		(83	)		-			-
Issuance of common shares for services							57,278		6		54,994						55,000
Conversion of Series A Preferred to convertible debt and warrants		(350	)								(159,362	)					(159,362	)
Net Loss		-			-		-		-		-			(7,437,947	)		(7,437,947	)
Balance as of September 30, 2022		8,530,000		$	853		14,965,317	$	1,497	$	23,760,704		$	(24,202,960	)	$	(439,907	)

	Three Months Ended September 30, 2021
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of June 30, 2021		8,520,450		$	852		21,321,613	$	2,132	$	23,066,921		$	(11,584,750	)	$	11,485,155
Series A Preferred stock conversion to common stock		(100	)		-		71,429		7		(7	)		-			-
Net Loss		-			-		-		-		-			(3,089,756	)		(3,089,756	)
Balance as of September 30, 2021		8,520,350		$	852		21,393,042	$	2,139	$	23,066,914		$	(14,674,506	)	$	8,395,399

	Nine Months Ended September 30, 2021
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2020		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(11,982,614	)	$	6,708,299
Shares issued for acquisition		7,500,450			750		4,405,907		440		4,377,802			-			4,378,992
Series A Preferred stock conversion to common stock		(100	)		-		71,429		7		(7	)		-
Net Loss		-			-		-		-		-			(2,691,892	)		(2,691,892	)
Net income (loss)														(2,691,892)			(2,691,892)
Balance as of September 30, 2021		8,520,350		$	852		21,393,042	$	2,139	$	23,066,914		$	(14,674,506	)	$	8,395,399

	●	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.

	September 30, 2022								December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Marketable securities	$	1,115,542	$	1,115,542	$	-		-	$	3,719,483	$	3,719,483	$	-	$	-
Total	$	1,115,542	$	1,115,542	$	-	$	-	$	3,719,483	$	3,719,483	$	-	$	-

	September 30, 2022			March 31, 2023
Balance at beginning of year	$	3,791,483		$	1,107,362
Sale of Securities		46,833
Unrealized loss on marketable securities, net		(2,629,108	)		182,255
Balance at end of period	$	1,115,542		$	925,107

		Estimated Life
Goodwill from Phoenix Acquisition		Tested Yearly for Impairment
Intangibles – Formulations		5 Years

					2023		2022
	For the nine months ended September 30,				For the three months ended March 31,
	2022		2021		2023		2022
Options to purchase common stock		61,446		-
Warrants to purchase common stock		56,377		343,854
Series B-1 Convertible Preferred		6,679		-		6,679		6,679
Series B-2 Convertible Preferred		26,786		-		26,786		26,786
Series C Convertible Preferred		2,289,220		-		2,289,220		2,289,220
Series C-1 Convertible Preferred		1,064,908		1,432,773		1,064,908		1,064,908
Series D Convertible Preferred		1,628,126		-		1,628,126		1,628,126
Convertible Notes		-		85,451
Total		5,133,541		1,862,078		5,015,719		5,015,719

	Estimated Life
Computers and technological assets		3 – 5 Years
Furniture and fixtures		3 – 5 Years
Machinery and equipment		5 – 10 Years
Leasehold improvement		10 Years


	September 30, 2022		December 31, 2021
Raw Materials	$	967,523	$	970,393
Semi-Finished		1,671,144		1,466,763
Finished Goods		1,753,521		1,805,779
Packaging		19,975		15,549
Trading		0		5,793
Total	$	4,412,463	$	4,264,277


Remainder of 2022		112,778
2023		455,622			341,716
2024		460,178			460,178
2025		464,780			464,780
2026		469,427			469,427
2027					474,122
Thereafter		1,925,123			1,451,002
Total undiscounted operating lease payments		3,887,908			3,661,225
Less: Imputed interest		(453,337	)		(402,913	)
Present value of operating lease liabilities	$	3,434,571		$	3,258,312


	September 30, 2022		December 31, 2021
Quintel Note	$	4,062,713	$	4,062,713
CEO Notes		4,117,088		2,379,153
Total related party notes	$	8,179,801	$	6,441,866

	March 31, 2023		December 31, 2022
J&N Note	$	4,062,713	$	4,062,713
CEO Note		6,339,442		5,809,090
Total related party notes	$	10,402,155	$	9,871,803

	Options Outstanding as of September 30, 2022
	Number of Shares Subject to Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value

Balance on December 31, 2021		196,491	$	3.51		3.20	$
Options granted		-		-		-		-
Options exercised		-		-		-		-
Options canceled / expired		-		-		-		-
Balance at September 30, 2022		196,491	$	3.51		2.55	$

Vested and exercisable at September 30, 2022		196,491	$	3.51		2.55	$

	Options Outstanding as of March 31, 2023
	Number of Shares Subject to Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value

Balance on December 31, 2022		196,491	$	3.51		3.20	$	-
Options granted		-		-		-		-
Options exercised		-		-		-		-
Options canceled / expired		-		-		-		-
Balance on March 31, 2023		196,491	$	3.51		1.95	$

Vested and exercisable at March 31, 2023		196,491	$	3.51		1.95	$	-

	Warrants Outstanding as of September 30, 2022								Warrants Outstanding as of March 31, 2023
	Number of Shares Subject to Warrants		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value		Number of Shares Subject to Warrants		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value

Balance on December 31, 2021		56,377	$	13.64		2.01		-
Balance on December 31, 2022										331,377	$	3.48		3.67		-
Options granted		275,000		-		-		-		-		-		-		-
Options exercised		-		-		-		-		-		-		-		-
Options canceled / expired		-		-		-		-		-		-		-		-
Balance at September 30, 2022		331,377	$	3.48		3.91	$	-
Balance at March 31, 2023										331,377	$	3.48		3.43	$	-

Vested and exercisable at September 30, 2022		331,377	$	3.48		3.91	$	-
Vested and exercisable at March 31, 2023										331,377	$	3.48		3.43	$	-


	Three months ended September 30, 2022		Nine months ended September 30, 2022		Three months ended September 30, 2021		Nine months ended September 30, 2021
Interest Expense
Related party loan-Quintel	$	138,717	$	404,032	$	123,104	$	645,628
Related party loan-CEO loan		46,944		137,397		42,494		102,679

Related party loan – Line of Credit		70,702		152,537		9,129		9,129
Interest Expense		70,702		152,537		9,129		9,129

	Three months ended March 31, 2023		Three months ended March 31, 2022
Interest Expense
Related party loan-J&N	$	147,251	$	130,678
Related party loan-CEO loan		49,341		44,664
Related party loan – Line of Credit		145,237		30,135
Interest Expense		145,237		30,135

	●	Goodwill and intangible assets
	●	Fair value of marketable securities
	●	Incremental Borrowing Rate used Right of Use Asset Calculations
	●	Business combinations

		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
3.3	Certificate of Designation for Series A Preferred Stock	8-K	2/18/21	4.1
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
3.10	Certificate of Withdrawal for Series A	10-K/A	4/29/22	3.10
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)

		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 Bylaws	8-K	7/7/21	3.2
3.3	Certificate of Designation for Series A Preferred Stock	8-K	2/18/21	4.1
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
3.10	Certificate of Withdrawal for Series A	10-K/A	4/29/22	3.10
10.1	Amended and Restated 2021 Equity Incentive Plan*	10-K	3/31/22	10.2
10.2	Form of Exchange Agreement**	8-K	3/4/22	10.1
10.3	Form of Original Issue Discount Senior Convertible Promissory Note	8-K	3/4/22	10.2
10.4	Form of Warrant	8-K	3/4/22	10.3
10.5	Form of Registration Rights Agreement**	8-K	3/4/22	10.4
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)

	Panacea Life Sciences Holdings, Inc.

~~November 14, 2022~~May 12, 2023	/s/ Leslie Buttorff
	Leslie Buttorff
	Chief Executive Officer