FAIR
VALUE, ASSETS MEASURED ON RECURRING BASIS
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
|
Total
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Marketable
securities
|
|
$
|
6,005,188
|
|
|
|
6,005,188
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
2,853,437
|
|
|
$
|
2,853,437
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
|
|
$
|
6,005,188
|
|
|
$
|
6,005,188
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,853,437
|
|
|
$
|
2,853,437
|
|
|
$
|
-
|
|
|
$
|
-
|
|
There
were no transfers of marketable securities into or out of Level 1 during the six months ended June 30, 2021 or 2020.
SCHEDULE
OF MARKETABLE SECURITIES
|
|
June
30, 2021
|
|
Balance at beginning of year
|
|
$
|
2,853,437
|
|
Unrealized gain on
marketable securities, net
|
|
|
3,151,751
|
|
Balance at end of
period
|
|
$
|
6,005,188
|
|
As
of June 30, 2021, the Company has no liabilities that are re-measured at fair value.
Revenue
Recognition
The
Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.
The
Company accounts for a contract when it has been approved and committed to, each party’s rights regarding the goods or services
to be transferred have been identified, the payment terms have been identified, the contract has commercial substance, and collectability
is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted
to governmental authorities. However, the Company’s sales are primarily through retail stores, purchase orders or ecommerce; thus,
currently contract liabilities are negligible. The Company does not have any multiple-element arrangements.
Some
of the Company’s contract liabilities consist of advance customer payments. Contract liability results from transactions in which
the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue
recognition criteria have been met, the contract liabilities are recognized. The company recorded $29,100 and $463,454 in advanced customer
payments as of June 30, 2021 and December 31, 2020, respectively and these amounts are included in the balance sheet line item of accounts
payable and accrued expenses.
SCHEDULE
OF REVENUE FROM CONTRACT WITH CUSTOMER
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
Balance, beginning of period
|
|
$
|
121,300
|
|
|
$
|
254,786
|
|
Payments received for unearned
revenue
|
|
|
29,100
|
|
|
|
463,454
|
|
Revenue
earned
|
|
|
132,955
|
|
|
|
596,940
|
|
Balance, end of period
|
|
$
|
17,445
|
|
|
$
|
121,300
|
|
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.
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. Some of the Company’s contract liabilities consist of advance customer payments. 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. 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.
In
2020 the Company had significant revenues from new product lines created for COVID related requirements (49% of total revenue in 2020).
We were able to use our same equipment used for CBD production for ethanol-based hand sanitizer products and our fulfillment center to
distribute other products. We anticipate a marginal revenue stream with continue throughout 2021 and 2022, but it is not a long-term
focus for the Company. For the three months and six months ending June 30, 2021, the Company reduced its inventory by transferring $4,693,397
of PPE materials to related party Quintel. Quintel had a previous outstanding note payable to the related party in the amount of $7,911,044
of principal, plus $1,819,627 of outstanding accrued interest. As a result of the purchase, the principal was reduced by $4,693,397.
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.
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. As of June 30, 2021 and December 31, 2020, we did not believe we needed to reserve for any doubtful accounts, respectively.
The Company’s accounts receivable policy changed in 2020 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.
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 and were $8,825 and $29,131 for June 30, 2021 and June 30, 2020,
respectively. The decrease is due to less PPE items being shipped out.
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.
The
Business Combination on June 30, 2021 was accounted for as a recapitalization of equity structure. Pursuant to GAAP, the Company retrospectively
recasted the weighted-average shares included within its condensed consolidated statements of operations for the three and six months
ended June 30, 2021 and June 30, 2020. 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
(deficit).
Since
all dilutive instruments were issued as of June 30, 2021, there is zero effect for the weighted average of all such instruments.
SCHEDULE
OF WEIGHTED AVERAGE SHARES
|
|
2021
|
|
|
2020
|
|
|
|
For
the three months ended June 30,
|
|
|
|
2021
|
|
|
|
2020
|
|
Restricted
Stock
|
|
|
-
|
|
|
|
-
|
|
Options
to purchase common stock
|
|
|
-
|
|
|
|
-
|
|
Warrants
to purchase common stock
|
|
|
-
|
|
|
|
-
|
|
Series
A Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Series
B-1 Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Series
B-2 Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Series
C Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Series
C-1 Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Series
D Convertible Preferred
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
-
|
|
|
|
-
|
The
following financial instruments were not included in the diluted loss per share calculation for the three and six months ending June
30, 2021 and 2020 because their effect was anti-dilutive:
SCHEDULE
OF ANTI-DILUTIVE DILUTED LOSS PER SHARE
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
For the three months ended June
30,
|
|
|
For the six months ended June
30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Restricted Stock
|
|
|
196,491
|
|
|
|
-
|
|
|
|
196,491
|
|
|
|
-
|
|
Options to purchase common stock
|
|
|
61,446
|
|
|
|
-
|
|
|
|
61,446
|
|
|
|
-
|
|
Warrants to purchase common stock
|
|
|
56,377
|
|
|
|
-
|
|
|
|
56,377
|
|
|
|
-
|
|
Series A Convertible Preferred
|
|
|
250,000
|
|
|
|
-
|
|
|
|
250,000
|
|
|
|
-
|
|
Series B-1 Convertible Preferred
|
|
|
6,679
|
|
|
|
-
|
|
|
|
6,679
|
|
|
|
-
|
|
Series B-2 Convertible Preferred
|
|
|
26,786
|
|
|
|
-
|
|
|
|
26,786
|
|
|
|
-
|
|
Series C Convertible Preferred
|
|
|
2,289,220
|
|
|
|
-
|
|
|
|
2,289,220
|
|
|
|
-
|
|
Series C-1 Convertible Preferred
|
|
|
1,064,908
|
|
|
|
-
|
|
|
|
1,064,908
|
|
|
|
-
|
|
Series D Convertible Preferred
|
|
|
1,628,126
|
|
|
|
-
|
|
|
|
1,628,126
|
|
|
|
-
|
|
Total
|
|
|
5,580,032
|
|
|
|
-
|
|
|
|
5,580,032
|
|
|
|
-
|
|
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 is currently evaluating the impact that this new guidance will have
on its consolidated financial statements.
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.
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. in October 2017 and intangible assets of $0.092 million as of June 30, 2021 and $0.123 million for as of December 31, 2020. In the
acquisition of Phoenix, the Company acquired product formulas which is classified as an intangible asset.
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
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
Computers and technological assets
|
|
$
|
3,310,024
|
|
|
$
|
2,993,626
|
|
Furniture and fixtures
|
|
|
55,951
|
|
|
|
55,951
|
|
Machinery and equipment
|
|
|
7,538,041
|
|
|
|
8,494,296
|
|
Land
|
|
|
92,222
|
|
|
|
2,293,472
|
|
Assets Under Construction
|
|
|
-
|
|
|
|
743,377
|
|
Leasehold Improvements
|
|
|
1,508,915
|
|
|
|
1,508,915
|
|
Total
|
|
|
12,505,153
|
|
|
|
16,089,637
|
|
Less accumulated depreciation
|
|
|
(3,074,364
|
)
|
|
|
(2,499,351
|
)
|
Total Property and equipment,
net
|
|
$
|
9,430,789
|
|
|
$
|
13,590,286
|
|
The
land and equipment decreased from December 31, 2020 to June 30, 2021 due to the partial sale of the farm land and equipment. See Note
10.
Depreciation
expenses for the three and six month periods ending June 30, 2021 and 2020 were $460,316, $348,476, $887,838 and $647,253 respectively.
The
asset under construction in 2020 was related to a deposit the Company made on an XL Novasep chromatography unit. The Company decided
it did not have the proper equipment needed to house the unit, so it negotiated a settlement with Novasep to return the deposit less
restocking and legal fees. The unit was never delivered to the Company. On May 24, 2021 $446,026 of the $743,377 deposit was returned
and the asset under construction was retired and the loss on the asset was recorded.
NOTE
4 – INVENTORY
Inventory
consists of the following components:
SCHEDULE
OF INVENTORY
|
|
June
30 2021
|
|
|
December
31, 2020
|
|
Raw Materials
|
|
$
|
1,053,151
|
|
|
$
|
991,523
|
|
Semi-Finished
|
|
|
1,226,593
|
|
|
|
1,372,950
|
|
Finished Goods
|
|
|
1,971,521
|
|
|
|
6,018,530
|
|
Packaging
|
|
|
16,281
|
|
|
|
20,938
|
|
Trading
|
|
|
5,793
|
|
|
|
5,793
|
|
Total
|
|
$
|
4,273,339
|
|
|
$
|
8,409,734
|
|
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 a 3-year term commencing 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, as of January 1, 2019, 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 income statement. The leases vary from
short-term monthly leases to 3-year leases, but are all cancellable.
SCHEDULE
OF RIGHT OF USE ASSET AND LIABILITY
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
Right-of-use
assets
|
|
$
|
3,767,641
|
|
|
$
|
3,937,706
|
|
|
|
|
|
|
|
|
|
|
Present value of operating lease liabilities
|
|
$
|
3,858,869
|
|
|
$
|
4,022,870
|
|
Less: Long-term portion
of operating lease liability
|
|
|
(3,521,156
|
)
|
|
|
(3,692,392
|
)
|
Short-term portion of operating lease liability
|
|
|
337,713
|
|
|
|
330,478
|
|
Unpaid balances
|
|
|
1,055,712
|
|
|
|
832,391
|
|
Total short-term lease
liability obligations
|
|
$
|
1,393,425
|
|
|
$
|
1,162,869
|
|
Weighted-average remaining
lease term (Ends December 31, 2030)
|
|
|
9.5
years
|
|
|
|
10
years
|
|
|
|
|
|
|
|
|
|
|
Weighted-average discount rate
|
|
|
|
|
|
|
3.0
|
%
|
During
the three and six months ended June 30, 2021, we recognized approximately $114,693 and $229,386, respectively in operating lease costs.
Operating lease costs are included in operating expenses in our consolidated statement of operations.
Approximate
future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2021, are as follows:
SCHEDULE
OF MATURITY OF OPERATING LEASE LIABILITIES
|
|
|
|
|
Maturity of operating lease
liabilities for the following fiscal years:
|
|
2021
|
|
$
|
223,322
|
|
2022
|
|
$
|
451,110
|
|
2023
|
|
$
|
455,622
|
|
2024
|
|
$
|
460,178
|
|
2025
|
|
$
|
464,780
|
|
Thereafter
|
|
$
|
2,394,551
|
|
Total undiscounted operating lease payments
|
|
$
|
4,449,562
|
|
Less: Imputed interest
|
|
$
|
(590,694
|
)
|
Present value of operating lease liabilities
|
|
$
|
3,858,868
|
|
NOTE
6 – NOTES PAYABLE
The
Company’s debt obligations are summarized as follows. The December 31, 2020, numbers reflect the pre-merger Panacea indebtedness,
while the June 30, 2021, now include the Panacea indebtedness, as well as Exactus’ indebtedness.
U.S.
Small Business Administration Loan
On
May 28, 2020, the Company received a secured, 30-year, Economic Injury Disaster Loan in the amount of $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 are to
be 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 June 30, 2021 the current principal balance of this note amounted to $99,100 and accrued interest was approximately
$2,047 total for the current and non-current total.
Paycheck
Protection Program Funding
On
May 22, 2020, the Exactus Company received federal funding in the amount of $236,410 through the Paycheck Protection Program (the “PPP”).
PPP funds have certain restrictions on use of the funding proceeds, and generally must be repaid within two years at 1% interest. The
PPP loan may, under circumstances, be forgiven. There shall be no payment due by the Company during the six months period beginning on
the date of this note (“Deferral Period”). Commencing one month after the expiration of the Deferral Period, the Company
shall pay the lender monthly payments of principal and interest, each in equal amount required to fully amortize by the maturity date.
If a payment on this note is more than ten days late, the lender shall charge a late fee of up to 5% of the unpaid portion of the regularly
scheduled payment. The full amount of the PPP loan and accrued interest was forgiven on May 20, 2021 and written off. It was recorded
as a forgiveness of loan in the Company’s profit and loss statement as other income.
In
April 2021, the Exactus Company borrowed a “second draw” loan of $236,410 under the PPP, as expanded pursuant to subsequent
legislation, for which the Company expects to receive a forgiveness decision in the third quarter of the fiscal year ending December
31, 2021. The unforgiven portion, if any, will bear interest at a rate of 1% and mature on April 21, 2026. We expect this loan to be
forgiven, so no interest has been calculated as it is de minimus.
Regarding
Panacea Life Sciences, Inc.’s (PLS) Small Business Administration (SBA) loans, PLS received the PPP first draw loan in the amount
of $273,300.00 on April 29, 2020. All funds were used to cover payroll expenses. The first draw loan, including any accrued interest,
was officially forgiven by the SBA and the respective lending bank, FirstBank, on March 3, 2021. On January 28, 2021, PLS received the
PPP second draw loan in the amount of $243,041.00; the second draw loan was forgiven on June 28, 2021.
PLS’s
accounting treatment of the PPP loans and forgiveness follows best practice from the AICPA and accounted for the loan as a financial
liability in accordance with FASB ASC 470 and accrue interest in accordance with the interest method under FASB ASC 835-30. The full
amount of the PPP loan and accrued interest was forgiven on June 28, 2021 and written off. It was recorded as a forgiveness of loan in
the Company’s statements of operations as other income.
Notes
payable – related party and other liability
On
June 30, 2021 Panacea received a loan from Quintel-MC Incorporated, an affiliate of the Company’s CEO, in exchange for a 12% demand
promissory note for $4,062,714 (the “Quintel Note”). The Quintel Note was secured by a pledge of certain XXII common stock
owned by Panacea (See Note 2 Going concern). On June 30, 2021, Panacea issued the Company’s 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 Panacea (See Note 2 Going concern). This demand note replaced a prior working capital note that Panacea had issued
on January 1, 2021. The Company has an additional line of credit note from Ms. Buttorff of $1,000,000 on July 1, 2021. The terms include
an annual interest rate of 10% and a maturity date in 2022.
During
October 2019, the Company issued a short-term promissory note to an officer of Exactus, for an aggregate principal amount of $55,556.
The note originally became due and payable between October 18, 2019 and December 16, 2019 and bore interest at a rate of twelve 12% per
annum prior to the maturity date, and 18% per annum if unpaid following the maturity date. The current interest rate is 18%. The note
is an unsecured obligation of the Company. The notes carry a 10% original issue discount of $5,556 which has been amortized and recorded
in interest expense on the accompanying condensed consolidated statements of operations. As of June 30, 2021, the principal balance under
the note was $55,556. The Company will pay this note off in the 4th Quarter 2021.
During
February 2021, the Company entered into a short-term promissory note for principal amount of $20,000 with a stockholder of the Company.
The note is payable on demand and bears interest at a rate of 8% per annum. The note is unsecured obligation of the Company. As of June
30, 2021, the principal balance of this note amounted to $20,000 and accrued interest was $533.
Notes
payable is summarized as follows. The PPP loan was forgiven in the 3rd Quarter, 2021. The SBA is a 30-year loan. The rest
of the loans do not have a maturity date assigned to them and are payable upon demand.
The
Company has recorded another liability which includes building leasehold improvements and SAP software and support fees. Refer to Note
9.
SCHEDULE OF NOTES PAYABLE
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
Notes payable - related party (1)
|
|
$
|
4,062,713
|
|
|
$
|
7,911,044
|
|
Notes payable – related party (2)
|
|
|
1,685,685
|
|
|
|
150,000
|
|
Notes payable -related party (3)
|
|
|
-
|
|
|
|
7,000,000
|
|
Notes payable - related
party (4)
|
|
|
75,556
|
|
|
|
-
|
|
Total related party notes
|
|
$
|
5,823,954
|
|
|
$
|
15,061,044
|
|
|
|
|
|
|
|
|
|
|
Paycheck protection loan (5)
|
|
$
|
236,410
|
|
|
$
|
273,300
|
|
SBA loan (4)
|
|
|
99,100
|
|
|
|
-
|
|
Total
paycheck protection loan, SBA loan
|
|
$
|
335,510
|
|
|
$
|
273,300
|
|
Other liability—related party
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
SAP software
and implementation and building modifications
|
|
$
|
3,042,638
|
|
|
$
|
2,698,659
|
|
(1)
|
Payable
to Quintel. Amount agreed to carry forward in reverse merger transaction and includes historical interest owed of $1,932,358. Interest
was removed from the balance sheet. In June 2021, Panacea transferred $4.7 million in PPE inventory to Quintel to facilitate a transaction.
The net effect of this transaction was credit to finished goods inventory and a debit to the Quintel loan.
|
(2)
|
Payable
to CEO, secured by XXII common stock.
|
(3)
|
Convertible
debt owed to XXII (Refer to Note 10)
|
(4)
|
Liability
carried over from Exactus
|
(5)
|
Paycheck
protection loans include Exactus’ and Panacea’s loans.
|
(6)
|
As
of June 30, 2021 the $3,042,638 includes $513,390 for a building modification and the remaining amount is the cost of the SAP software
and implementation services. In 2021, $0.320 was spent on software enhancements, while in year 2020 $1.3 million was charged for
the initial implementation.
|
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.
Common
stock options
Stock
Option Plan
On
June 30, 2021 the Company’s Board approved the 2021 Equity Incentive Plan (the “2021 Plan”). 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.
As
part of the merger of Exactus, Panacea assumed the Exactus 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 339,286. Unless sooner terminated,
the Plan shall terminate in 10 years. This plan had 196,491 fully vested options outstanding at the time of the merger. There have been
no options granted under this plan subsequent to the merger.
On
January 22, 2021, Exactus had granted 392,857 two-year options exercisable at $0.70 per share to certain officers and directors, including
125,000 options to Larry Wert who remains a director. Subsequently, at a meeting on March 31, 2021 several directors reviewed the January
grants to three of the insiders and sought to negate their 267,857 option awards in order to achieve two stated goals: to allow the directors
to vote a sufficient number of shares required to approve a matter purportedly requiring additional votes to achieve a majority under
Nevada law, and to correct an alleged mistake in the January action which was claimed to have unintentionally awarded options instead
of shares of common stock. The directors present thereupon purported to grant four directors a total of 267,857 shares and directed the
Company’s transfer agent to issue such shares. The effectiveness of the March 31, 2021 board action is currently under review and
may ultimately be determined to have been ineffective as a matter of law. All related shares and options outstanding have been reported
as if legally transacted.
Stock
Options
A
summary of the stock option activity is presented below:
SCHEDULE OF STOCK OPTIONS
|
|
Options
Outstanding as of June 30, 2021
|
|
|
|
Number
of
Shares
Subject
to
Options
|
|
|
Weighted
Average
Exercise
Price
Per
Share
|
|
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
|
|
Aggregate
Intrinsic Value
|
|
Balance at December 31,
2020
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Options assumed in merger
|
|
|
196,486
|
|
|
$
|
3.51
|
|
|
|
3.70
|
|
|
|
262,500
|
|
Options granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options canceled / expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance at June 30, 2021
|
|
|
196,486
|
|
|
$
|
3.51
|
|
|
|
3.70
|
|
|
$
|
262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
and exercisable at June 30, 2021
|
|
|
196,486
|
|
|
$
|
3.51
|
|
|
|
3.70
|
|
|
$
|
262,500
|
|
Stock
Warrants
As
a result of the Merger closing (see Note 10), as of June 30, 2021, the Company had outstanding warrants to purchase an aggregate of 56,377
(post split) shares of common stock (1,578,549 shares pre-split). The warrants were previously issued by Exactus, Inc. and assumed in
the Merger. The Company’s outstanding warrants as of June 30, 2021 are summarized as follows, and all were exercisable at that
date.
SUMMARY OF STOCK WARRANTS
Name
|
|
Expire
|
|
|
Number
of
Shares
|
|
|
Average
Exercise Price
|
|
Balance at December 31, 2020
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Assumed
in Merger
|
|
|
|
|
|
|
56,337
|
|
|
$
|
13.64
|
|
Total as of June 30,
2020
|
|
|
|
|
|
|
56,337
|
|
|
$
|
13.64
|
|
As
of June 30, 2021, the outstanding warrants have no intrinsic value.
Restricted
Stock
A
summary of the restricted stock activity is presented below:
SUMMARY OF RESTRICTED STOCK
|
|
Restricted
Stock Common Stock
|
|
Balance at December 31, 2020
|
|
-
|
|
Assumed in merger
|
|
|
107,993
|
|
Balance at June 30, 2021
|
|
|
107,993
|
|
As
of June 30, 2021, there were no unamortized or unvested stock-based compensation costs related to restricted share arrangements.
Preferred
Stock
The
Company’s authorized preferred stock consists of 50,000,000 shares with a par value of $0.0001.
In
connection with our acquisition of Panacea on June 30, 2021, we issued convertible preferred stock to our new principal shareholder and
Chief Executive Officer (and her affiliates) as follows:
1,000,000
shares of Series C Convertible Preferred Stock (the “Series C”) 10,000 shares of Series C-1 Convertible Preferred Stock (the
“Series C-1”) and 10,000 shares of Series D Convertible Preferred Stock (the “Series D”), which together convert
into approximately 17.8% of the Company’s common stock outstanding as of that date. The Series C has a liquidation preference of
$6.046 per share, is convertible at the rate of 2.29 shares of common stock per share and through December 31, 2023 has the option to
participate in the recovery by the Company of certain assets. In order to avail herself of the rights, the holder can cause the Company
to use the cash generated by the assets and repurchase Series C at a price equal to the liquidation preference per share, subject to
the Company maintaining an agreed upon level of net assets. The Series C-1 has a liquidation preference of $281.25 per share and is convertible
at the rate of 106.49 shares of common stock for each share of Series C-1. The Series D has a liquidation preference of $430 per share
and is convertible into common stock at the rate of 162.81 shares of common stock per share. The Series C, C-1 and D also vote on an
as converted basis.
In
addition, the Company entered into an exchange agreement with an investor and filed with the Secretary of State of the State of Nevada
a Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred stock under which the Note in the original
principal amount of $750,000 would be exchanged for 500 shares of a new series of our preferred stock designated 0% Series A Convertible
Preferred Stock (the “Series A Preferred”) with a stated value of $1,000 per share (the “Stated Value”).
The
Company authorized the issuance of a total of 1,000 shares of Series A Preferred for issuance. Each share of Series A Preferred is convertible
at the option of the holder, into that number of shares of our common stock (subject to certain limitations on beneficial ownership)
determined by dividing the Stated Value by $0.05 per share (the “Conversion Price”), subject to adjustment in the event of
stock dividends, stock splits, stock combinations, reclassifications or similar transactions that proportionately decrease or increase
the common stock. During the quarter ended June 30, 2021, the investor converted 50 shares of Series A Preferred stock into 35,714 shares
of common stock
The
Company is prohibited from effecting the conversion of the Series A Preferred to the extent that, as a result of such conversion, the
holder beneficially owns more than 4.99% (which may be increased to 9.99% upon 61 days’ written notice to the Company), in the
aggregate, of the issued and outstanding shares of the common stock calculated immediately after giving effect to the issuance of shares
of common stock upon the conversion of the Series A Preferred. Holders of the Series A Preferred are entitled to vote on all matters
submitted to the Company’s stockholders and are entitled to the number of votes equal to the number of shares of common stock into
which the shares of Series A Preferred stock are convertible, subject to applicable beneficial ownership limitations. The Series A Preferred
stock provides a liquidation preference equal to the Stated Value, plus any accrued and unpaid dividends, fees or liquidated damages.
The
Series A Preferred can be redeemed at the Company’s option upon payment of a redemption premium between 120% to 135% of the Stated
Value of the outstanding Series A Preferred redeemed.
On
February 16, 2021 the Company offered to our prior Series A Preferred stock holder enhanced conversion inducements to voluntarily convert
the preferred shares into our common stock and filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the
State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred stock,
all of which has been converted to common stock, in order to issue the new 0% Series A Preferred stock described herein.
On
April 7, 2021 the Company filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling
our prior Certificate of Designation of Preferences, Rights and Limitations for the previous Series C Preferred Stock, all of which has
been cancelled or converted into common stock.
On
February 16, 2021, the Company offered to holders of our prior Series D Preferred Stockholder(s) enhanced inducements to voluntarily
convert preferred shares into our common stock.
On
April 7, 2021 the Company filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling
our prior Certificate of Designation of Preferences, Rights and Limitations for the previous Series D Preferred Stock, all of which has
been cancelled or converted into common stock.
During
the quarter ended June 30, 2021 the Company withdrew its prior Series C Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock and issued shares of newly designated Series C, Series C-1 and Series D to former Panacea stockholders pursuant to the Exchange
Agreement.
PANACEA
LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
(unaudited)
SCHEDULE
OF PREFERRED STOCK
|
|
Six
Months Ended June 30, 2021
|
|
|
|
Preferred
Stock Convertible - Series A Shares
|
|
|
Preferred
Stock Series B-1 Shares
|
|
|
Preferred
Stock Series B-2 Shares
|
|
|
Preferred
Stock Series C Shares
|
|
|
Preferred
Stock Series C-1 Shares
|
|
|
Preferred
Stock Series D Shares
|
|
|
TOTAL
PREFERRED STOCK
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Balance
as of December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Shares
issued for acquisition
|
|
|
450
|
|
|
|
-
|
|
|
|
1,500,000
|
|
|
|
150
|
|
|
|
6,000,000
|
|
|
|
600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,500,450
|
|
|
$
|
750
|
|
Balance
as of June 30, 2021
|
|
|
450
|
|
|
$
|
-
|
|
|
|
1,500,000
|
|
|
$
|
150
|
|
|
|
6,000,000
|
|
|
$
|
600
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
8,520,450
|
|
|
$
|
852
|
|
|
|
Three
Months Ended June 30, 2020
|
|
|
|
Preferred
Stock Convertible - Series A Shares
|
|
|
Preferred
Stock Series B-1 Shares
|
|
|
Preferred
Stock Series B-2 Shares
|
|
|
Preferred
Stock Series C Shares
|
|
|
Preferred
Stock Series C-1 Shares
|
|
|
Preferred
Stock Series D Shares
|
|
|
TOTAL
PREFERRED STOCK
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Balance
as of March 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Shares
issued for acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Balance
as of June 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
Six
Months Ended June 30, 2020
|
|
|
|
Preferred
Stock Convertible - Series A Shares
|
|
|
Preferred
Stock Series B-1 Shares
|
|
|
Preferred
Stock Series B-2 Shares
|
|
|
Preferred
Stock Series C Shares
|
|
|
Preferred
Stock Series C-1 Shares
|
|
|
Preferred
Stock Series D Shares
|
|
|
TOTAL
PREFERRED STOCK
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Balance
as of December 31, 2019
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Beginning
balance
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Shares
issued for acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Balance
as of June 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Ending
balance
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
1,000,000
|
|
|
$
|
100
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
10,000
|
|
|
$
|
1
|
|
|
|
1,020,000
|
|
|
$
|
102
|
|
Note:
Exactus Series C, D and E were extinguished in June, 2021
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 June 30, 2021.
As
a result of our acquisition of Panacea, the Company is now involved in the following pending litigation:
On
February 16, 2021, Henley Group, Inc. filed with the Superior Court of the State of California, San Bernardino County, a complaint (Case
#: SIV SB 2105771) against Panacea for breach of contract and fraud related to Panacea’s non-delivery of product. While Panacea
refunded the purchase price, the plaintiff seeks damages including lost profits and costs which plaintiff alleged to have incurred in
the amount of approximately $45,000 as well as lost profits from expected future contracts with a prospective third-party buyer which
plaintiff alleged to be $720,000. The plaintiff also seeks attorney’s fees and costs, consequential damages and punitive damages.
Panacea attorney has submitted counterclaims and believes this complaint is frivolous as there are no contracts involved. We have not
recorded any liabilities related to these claims, as we believe a liability is not probable.
On
October 7, 2019, CMI Mechanical (“CMI”) agreed to procure, deliver, and install a dehumidification system (the “System”)
at the Company’s facility located at 16194 W. 45th Drive, Golden, Colorado 80403 (the “Property”). The Company believes
the System has failed to meet the requirements of the subject contract, and CMI has not remedied that failure for the Company. The Company
withheld certain payments as permitted under the contract. On December 10, 2020, CMI recorded a lien against the Property in the amount
of $108,001.48. On January 27, 2021, the Panacea’s attorney notified CMI that its lien was invalid, overstated, and violated the
terms of the contract. The letter also demanded that CMI remove the system at CMI’s own cost. The lien was since dropped. CMI and
Panacea plan to pursue complaints regarding this issue and possible mediation in 2022.
Concentrations
There
are no concentrations of vendors to report. As of June 30, 2021, one customer accounts for 63% of the accounts receivable total.
Executive
Employment Agreement
On
June 30, 2021 the Company entered into an updated Employment Agreement with Leslie Buttorff pursuant to which Ms. Buttorff serves as
the Company’s Chief Executive Officer for an initial term of July 1, 2021 to June 30, 2024 (the “Employment Agreement). Under
her Employment Agreement, Ms. Buttorff receives an annual base salary of $380,000. Ms. Buttorff is also entitled to receive (i) a sales
commission of 2% of revenue from sales generated by Ms. Buttorff after revenue exceeds $500,000 for three consecutive months, (ii) an
award of $2.2 million of shares of common stock upon approval of the Company’s common stock for listing on The Nasdaq Capital Market
prior to expiration of the term of the Employment Agreement, and (iii) an annual cash performance bonus of up to 100% of her base salary
based on the achievement of performance metrics for the applicable fiscal year to be set by the Board of Directors. To date, Ms. Buttorff
has not taken a salary and payments have accrued commencing in January, 2021.
Under
her Employment Agreement, she is entitled to severance payments under termination provisions which are intended to comply with Section
409A of the Internal Revenue Code of 1986, or the Code, and the Regulations thereunder.
In
the event of termination by the Company without “cause” or resignation by Ms. Buttorff for “good reason,” Ms.
Buttorff is entitled to receive two years’ base salary, or $780,000, all unreimbursed business expenses and other accrued but unpaid
compensation, and any annual bonus earned but not yet paid for any fiscal year ending prior to the fiscal year in which the date of termination
occurs. In addition, in the event of termination by the Company without “cause,” subject to execution of a general release
Ms. Buttorff will be entitled to (i) a settlement amount equal to another two years’ base salary (or a total of $1,560,000) and
(ii) an amount equal to the annual bonus which Ms. Buttorff would have been entitled to receive in respect of the year of termination
based on the achievement of any performance objectives for the Company.
Generally,
“good reason” is defined as (i) any material breach of the Employment Agreement by the Company, (ii) the Company’s
assignment of Ms. Buttorff to a position that has materially less authority, status, or functional responsibility than the position with
the Company as of the commencement date, or the assignment to her of duties that are not those of an executive at the management level,
(iii) the reduction of Ms. Buttorff’s base salary, (iv) the requirement that Ms. Buttorff move her primary place of employment
more than 30 miles from her initial place of employment, or (v) upon any change of control event as defined in Treasury Regulation Section
1.409A-3(i)(5) provided that within 12 months of the change of control event the Company terminates Ms. Buttorff or fails to obtain an
agreement from any successor to perform the Employment Agreement.
Under
the terms of her Employment Agreement, Ms. Buttorff is subject to non-competition and non-solicitation covenants during the term of her
employment and following termination of employment with the Company. The Employment Agreement also contains customary confidentiality
and non-disparagement covenants.
NOTE
9 - RELATED PARTY TRANSACTIONS
Notes
Payable and Accrued Interest – Related Parties
On
June 30, 2021 Panacea received a loan of $4,062,713 from Quintel-MC Incorporated, an affiliate of the Company’s CEO in exchange
for the Quintel Note. (see Note 6 – Notes Payable — Quintel Note).
On
June 30, 2021, Panacea issued the Company’s CEO, Ms. Buttorff, a 10% promissory note in the amount of $1,624,000 secured by a pledge
of certain XXII common stock owned by Panacea (see Note 6 – Notes Payable — Buttorff Note and Note 2 Going concern).
On
July 1, 2021, the Company issued Ms. Buttorff a $1 million line of credit note (see Note 6 – Notes Payable — Buttorff Note).
During
October 2019, the Company issued a short-term promissory notes to an officer of Exactus, for an aggregate principal amount of $55,556.
This note was carried forward from Exactus from the merger and he is a related party.
J&N
Real Estate related party owned by Ms. Buttorff—See Note 10 Exchange Agreement and Note 5 Operating lease.
Services
Agreement, dated January 1, 2019, by and between the Company and Quintel, with respect to IT, HR, accounting/periodic reporting, production
planning, and employee reporting services. Master Agreement, dated January 1, 2019, by and between the Company and Quintel/Canna Software,
LLC for the provision of the ERPCannabis solution. As of June 30, 2021 the outstanding obligation under these two service contracts is
$2,529,248. In 2021, $229,497 of the costs were capitalized and $91,482 of the costs were expensed. See Note 6.
The
interest expense recorded for related party loans are shown below.
SCHEDULE
OF RELATED PARTY TRANSACTIONS LOANS
|
|
June 30, 2021
|
|
|
December 31, 2020
|
|
Accrued Interest
|
|
|
|
|
|
|
|
|
Related party loan-Quintel
|
|
$
|
1,869,880
|
|
|
$
|
1,347,356
|
|
Related party loan-CEO loan
|
|
|
61,685
|
|
|
|
1,500
|
|
Related party loan-XXII
|
|
|
-
|
|
|
|
-
|
|
Accrued Interest, Related Party
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, 2021
|
|
|
Six months ended
June 30, 2021
|
|
|
Three months ended
June 30, 2020
|
|
|
Six months ended
June 30, 2020
|
|
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related party loan-Quintel
|
|
$
|
123,104
|
|
|
$
|
645,628
|
|
|
$
|
218,513
|
|
|
$
|
385,937
|
|
Related party loan-CEO loan
|
|
|
41,449
|
|
|
|
60,185
|
|
|
|
-
|
|
|
|
-
|
|
Related party loan-XXII
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
408,333
|
|
Interest Expense, Related Party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
The
Company continues to hold 1,297,017 shares of XXII stock which is available for trading. XXII recently moved from the NYSE to NASDAQ.
As of June 30, 2021 XXII is a common shareholder of the Company. See Note 10 for additional details related to XXII resolution.
NOTE
10 – EXCHANGE AGREEMENT BETWEEN EXACTUS, INC. AND PANACEA LIFE SCIENCES, INC.
On
June 30, 2021, Exactus legally acquired Panacea pursuant to the Exchange Agreement with the shareholders of Panacea including its founder
Leslie Buttorff and 22nd Century Group, Inc., (“XXII”), a principal investor. Panacea, which was founded by Leslie
Buttorff in 2017 as a woman-owned business, attracted $14 million in investment ($7M convertible debt, 1,297,017 XXII shares of common
stock and $5 million in cash) from XXII (NASDAQ) during 2019, a leading plant biotechnology company focused on technology to decrease
nicotine in tobacco plants also uses its expertise for genetic engineering of hemp plants to modify cannabinoid levels used in manufacturing
CBD, CBG and CBN. The transaction was accounted for as a reverse merger with Panacea the accounting acquirer. Following the closing,
XXII owns approximately 15.19% stake in the Company on a fully diluted basis.
Shares
Issuances
Pursuant
to the Exchange Agreement, on June 30, 2021 the Company issued a total of 16,915,705 shares of common stock, 1,000,000 shares of Series
C convertible into 2,289,220 shares of common stock, 10,000 shares of Series C-1 convertible into 1,064,907 shares of common stock and
10,000 shares of Series D convertible into 1,628,125 shares of common stock to the former Panacea stockholders, in exchange for one-hundred
(100%) percent of the shares of capital stock of Panacea. On a fully diluted basis, Ms. Buttorff beneficially owns approximately 62%
of outstanding Common Stock consisting of the Common Stock issuable upon conversion preferred shares and shares of Common Stock. The
Company intends to change its name to Panacea Life Sciences Holdings, Inc., subject to regulatory compliance.
On
June 29, 2021 the Company filed with the Secretary of State of the State of Nevada three new series of preferred stock (“Preferred
Stock”) designated as Series C Convertible Preferred Stock, Series C-1 Preferred Stock and Series D Preferred Stock and authorized
the filing of a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, Series C-1
Convertible Preferred Stock and Series D Convertible Preferred Stock in the State of Nevada. The Board designated for issuance 1,000,000,
10,000 and 10,000 shares, respectively, for issuance. Each share of Preferred Stock is convertible into shares of the Company’s
Common Stock as provided in the Certificate of Designation, therefore. These are reflected in the Equity sections of the balance sheet
for June 30, 2021.
On
June 30, 2021, the Board approved and adopted the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021
Plan authorizes the issuance of up to 4,049,409 shares of the Common Stock upon, subject to adjustment as described in the 2021 Plan.
Also,
on June 30, 2021, Panacea and XXII agreed to dissolve their business relationship. In terms of the agreement the following transactions
occurred in consideration for the XXII investment in Panacea of $14 million. The below four items explain how the $14 million was accounted
for.
|
1.
|
Series
B Preferred ($7,000,000) converted to Exactus common stock
|
|
|
|
|
2.
|
$500,000
of the $7,000,000 convertible debt converted to Exactus common stock.
|
|
|
|
|
3.
|
Panacea
sold to XXII the real property and improvements located in Delta County, Colorado, and comprised of approximately 234.394 acres of
land. Panacea retained 10 acres of the land for its own use. The agreed upon amount was $2,200,000 for an allocated value as follows:
(i) $1,770,000 for the real property and improvements which constitute a part of the Farm Parcel; and (ii) $430,000 for the equipment,
machinery and other personal property owned by Panacea. As a part of the agreement XXII will deliver to Panacea $500,000 of hemp
from the 2021 grow season. This is recorded as a receivable. As a part of this transaction XXII also returned 1,013,333 shares of
Panacea stock which were converted to 719,404 Exactus shares in the Exchange Agreement. There was no gain or loss on this part of
the transaction.
|
|
|
|
|
4.
|
J&N
Real Estate Company LLC (J&N), owned by Leslie Buttorff, assumed a $4.3 million note payable to XXII. In consideration of J&N’s
issuance of a $4.3 million mortgage note to XXII on real property owned by J&N, Panacea issued J&N 10,000 shares of newly
designated Series D.
|
On
June 30, 2021, the Board authorized the Company to file a certificate of amendment (the “Amendment”) to its Amended and Restated
Articles of Incorporation with the Secretary of State of the State of Nevada in order to effectuate a reverse stock split of the Company’s
issued and outstanding common stock, par value $0.0001 per share on a one (1) for twenty-eight (28) basis (the “Reverse Stock Split”).
The Reverse Stock Split was effective October 25, 2021.
As
disclosed in Note 1 and 2 the Company has accounted for this merger as a reverse merger and recapitalization.
NOTE
11 – RESTATED FINANCIAL STATEMENTS AND EXPLANATIONS
This
Amendment No. 1 on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q (the “Q2 2021 Form 10-Q”)
of Panacea Life Sciences Holdings, Inc. (F/K/A Exactus, Inc.) (the “Company”) for the quarter ended June 30, 2021, as filed
with the Securities and Exchange Commission (the “SEC”) on August 23, 2021. We are filing this Amendment to change certain
disclosures in Part I. Item 1 – Financial Statements, and Part II. Item 7 – Management’s Discussion and Analysis of
Financial Condition and Results of Operations – of the Q2 2021 Form 10-Q following the completion of review by the Company’s
independent registered public accounting firm. The Q2 2021 Form 10-Q was previously filed before the review was completed. The review
required adjustments to be made to the revenue and costs of goods sold, lease liability section, Exactus options and warrant updates
which impacted all financial statements as shown below.
The
following tables’ present reconciliation from our prior periods as previously reported to the restated values for the consolidated
balance sheets and the consolidated statement of operations. A description of restatements is listed below:
Impacts
of restatement
The
effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of June 30, 2021 are
as follows:
SCHEDULE
OF EFFECTS OF RESTATEMENT
|
(a)
|
Reflects
update of lease agreement from 3-year term to 12-year term.
|
|
(b)
|
Equipment
that was work in progress was retired.
|
|
(c)
|
Goodwill
impairment corrected.
|
|
(d)
|
To
reclassify related party payables other long-term liabilities, related party.
|
|
(e)
|
Reflects
update of lease agreement from 3-year term to 12-year term and separates current and long-term amounts.
|
|
(f)
|
The
SBA loan was broken out into its own line item.
|
|
(g)
|
The
PPE items sold to related party Quintel were removed as a liability in the reclassification.
|
|
(h)
|
Reclassification
of the lease liability into short-term and long-term.
|
Panacea
Life Sciences Holdings, Inc. and Subsidiary (f/k/a Exactus, Inc.)
Unaudited
Condensed Consolidated Balance Sheets
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
|
As
Restated
|
|
|
|
|
Adjustment
|
|
|
As
Reported
|
|
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
|
June
30, 2021
|
|
|
December
31, 2020
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
130,707
|
|
|
$
|
84,379
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
130,707
|
|
|
$
|
84,379
|
|
Accounts
receivable, net
|
|
|
289,621
|
|
|
|
147,302
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
289,621
|
|
|
|
147,302
|
|
Other
receivables, related party
|
|
|
500,000
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
Inventory,
net
|
|
|
4,273,339
|
|
|
|
8,409,734
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,273,339
|
|
|
|
8,409,734
|
|
Marketable
securities related party
|
|
|
6,005,188
|
|
|
|
2,853,437
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,005,188
|
|
|
|
2,853,437
|
|
Prepaid
expenses and other current assets
|
|
|
101,968
|
|
|
|
27,375
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
101,968
|
|
|
|
27,375
|
|
TOTAL
CURRENT ASSETS
|
|
|
11,300,823
|
|
|
|
11,522,227
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,300,823
|
|
|
|
11,934,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
lease right-of-use asset, net, related party
|
|
|
3,767,641
|
|
|
|
3,937,706
|
|
|
(a)
|
|
|
3,558,326
|
|
|
|
3,525,547
|
|
|
|
209,315
|
|
|
|
412,159
|
|
Property
and equipment, net
|
|
|
9,430,789
|
|
|
|
13,590,286
|
|
|
(b)
|
|
|
(70,656
|
)
|
|
|
(80,613
|
)
|
|
|
9,501,445
|
|
|
|
13,670,899
|
|
Intangible
assets, net
|
|
|
92,100
|
|
|
|
122,801
|
|
|
|
|
|
-
|
|
|
|
1
|
|
|
|
92,100
|
|
|
|
122,800
|
|
Goodwill
|
|
|
2,188,810
|
|
|
|
2,188,810
|
|
|
(c)
|
|
|
(344,720
|
)
|
|
|
(344,720
|
)
|
|
|
2,533,530
|
|
|
|
2,533,530
|
|
TOTAL
ASSETS
|
|
$
|
26,780,163
|
|
|
$
|
31,361,830
|
|
|
|
|
$
|
3,142,950
|
|
|
$
|
3,100,215
|
|
|
$
|
23,637,213
|
|
|
$
|
28,261,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
1,178,325
|
|
|
$
|
1,765,267
|
|
|
(d)
|
|
$
|
(1,017,394
|
)
|
|
|
(829,591
|
)
|
|
$
|
2,195,719
|
|
|
$
|
2,594,858
|
|
Operating
lease liability, current portion, related party
|
|
|
1,393,425
|
|
|
|
1,162,869
|
|
|
(e,h)
|
|
|
1,173,966
|
|
|
|
730,384
|
|
|
|
219,459
|
|
|
|
432,485
|
|
Note
payable-current, related party
|
|
|
5,823,954
|
|
|
|
15,061,044
|
|
|
(f)
|
|
|
(99,100
|
)
|
|
|
-
|
|
|
|
5,923,054
|
|
|
|
15,061,044
|
|
Paycheck
protection loan, SBA Loan
|
|
|
335,510
|
|
|
|
273,300
|
|
|
(f)
|
|
|
99,100
|
|
|
|
-
|
|
|
|
236,410
|
|
|
|
273,300
|
|
TOTAL
CURRENT LIABILITIES:
|
|
|
8,731,214
|
|
|
|
18,262,480
|
|
|
|
|
|
156,572
|
|
|
|
(99,207
|
)
|
|
|
8,574,642
|
|
|
|
18,361,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
lease liability, long-term portion, related party
|
|
|
3,521,156
|
|
|
|
3,692,392
|
|
|
(e,h)
|
|
|
3,521,156
|
|
|
|
3,692,392
|
|
|
|
|
|
|
|
|
|
Other
long-term liabilities, related party
|
|
|
3,042,638
|
|
|
|
2,698,659
|
|
|
(g)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,042,638
|
|
|
|
2,698,659
|
|
TOTAL
LIABILITIES
|
|
|
15,295,008
|
|
|
|
24,653,531
|
|
|
|
|
$
|
3,677,728
|
|
|
$
|
3,593,185
|
|
|
|
11,617,280
|
|
|
|
21,060,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 450 and 0 shares issued and outstanding on June 30, 2021 and December
31, 2020 respectively.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Series
B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 0 shares issued and outstanding on June 30, 2021 and
December 31, 2020 respectively.
|
|
|
150
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150
|
|
|
|
-
|
|
Series
B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 0 shares issued and outstanding on June 30, 2021 and
December 31, 2020 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 June 30, 2021
and December 31, 2020 respectively.
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
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 June 30, 2021 and
December 31, 2020 respectively.
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
Series
D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on June 30, 2021 and
December 31, 2020 respectively.
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
Preferred
stock, value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock: $0.0001 Par Value, 650,000,000 shares authorized; 21,321,613 and 16,915,706 shares issued and outstanding on June 30, 2021
and December 31, 2020 respectively.
|
|
|
2,132
|
|
|
|
1,692
|
|
|
|
|
|
(57,569
|
)
|
|
|
(45,672
|
)
|
|
|
59,701
|
|
|
|
47,364
|
|
Additional
paid in capital
|
|
|
23,066,921
|
|
|
|
18,689,119
|
|
|
|
|
|
(134,975
|
)
|
|
|
(144,339
|
)
|
|
|
23,201,896
|
|
|
|
18,833,458
|
|
Accumulated
deficit
|
|
|
(11,584,750
|
)
|
|
|
(11,982,614
|
)
|
|
|
|
|
(342,234
|
)
|
|
|
(302,991
|
)
|
|
|
(11,242,516
|
)
|
|
|
(11,679,623
|
)
|
TOTAL
STOCKHOLDERS’ EQUITY
|
|
|
11,485,155
|
|
|
|
6,708,299
|
|
|
|
|
|
(534,778
|
)
|
|
|
(493,002
|
)
|
|
|
12,019,933
|
|
|
|
7,201,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
26,780,163
|
|
|
$
|
31,361,830
|
|
|
|
|
$
|
3,142,950
|
|
|
$
|
3,100,183
|
|
|
$
|
23,637,213
|
|
|
$
|
28,261,615
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
The
effects of the restatement on the line items within the Company’s condensed consolidated statements of operations and comprehensive
income for the six months ended June 30, 2021are as follows:
|
(a)
|
To
reclassify a 2021 related party transaction that was initially recorded as revenue and cost of goods sold.
|
|
(b)
|
To
reclassify tenant rent and other items under other income.
|
|
(c)
|
To
reflect expenses reclassified between production related operating expenses, general and administrative expenses and asset disposal.
|
|
(d)
|
To
reflect changes to interest expense to match loan schedules.
|
|
(e)
|
Reflects
a change in value of marketable securities that was previously unrecorded.
|
|
(f)
|
Rental
income was removed from revenue and placed under Other Income.
|
|
(g)
|
Reflects
28 to 1 reverse stock split that was completed in October, 2021.
|
Panacea
Life Sciences Holdings, Inc. and Subsidiary (f/k/a Exactus, Inc.)
Unaudited Condensed
Consolidated Statements of Operations
The accompanying notes
are an integral part of these unaudited condensed consolidated financial statements.
The
effects of the restatement on the line items within the Company’s condensed statement
of stockholders’ equity as of June 30, 2021 are as follows:
|
(a)
|
The
changes in the “Accumulated Deficit” reflects the accumulated difference of the changes reported in the Statement of
Operations.
|
|
|
|
|
(b)
|
The
change in “Additional Paid-in Capital” reflects reclass and adjustments associated with the Company 1 to 28 reverse split
of its Common Stock.
|
|
|
|
|
(c)
|
The
changes in “Net Income” reflects the accumulated difference of the changes reported in the Statement of Operations for
the period.
|
Panacea
Life Sciences Holdings, Inc. and Subsidiary (f/k/a Exactus, Inc.)
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
Six
Months Ended June 30, 2021
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2021
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
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
|
|
|
(a) (b)
|
|
$
|
(144,339
|
)
|
|
$
|
(302,991
|
)
|
|
$
|
(493,002
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(11,679,623
|
)
|
|
$
|
7,201,301
|
|
Shares issued for acquisition
|
|
|
7,500,450
|
|
|
|
750
|
|
|
|
4,405,907
|
|
|
|
440
|
|
|
|
4,377,802
|
|
|
|
-
|
|
|
|
4,378,992
|
|
|
(b)
|
|
|
9,364
|
|
|
|
-
|
|
|
|
(2,533
|
)
|
|
|
7,500,450
|
|
|
|
750
|
|
|
|
123,365,399
|
|
|
|
12,337
|
|
|
|
4,368,438
|
|
|
|
|
|
|
|
4,381,525
|
|
Net Income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
397,864
|
|
|
|
397,864
|
|
|
(c)
|
|
|
-
|
|
|
|
(39,243
|
)
|
|
|
(39,243
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
437,107
|
|
|
|
437,107
|
|
Balance as of June 30, 2021
|
|
|
8,520,450
|
|
|
$
|
852
|
|
|
|
21,321,613
|
|
|
$
|
2,132
|
|
|
$
|
23,066,921
|
|
|
$
|
(11,584,750
|
)
|
|
$
|
11,485,155
|
|
|
|
|
$
|
(134,975
|
)
|
|
$
|
(342,234
|
)
|
|
$
|
(534,778
|
)
|
|
|
8,520,450
|
|
|
$
|
852
|
|
|
|
597,005,155
|
|
|
$
|
59,701
|
|
|
$
|
23,201,896
|
|
|
$
|
(11,242,516
|
)
|
|
$
|
12,019,933
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
Three
Months Ended June 30, 2020
|
|
|
|
|
|
|
|
Three
Months Ended June 30, 2020
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Additional Paid-in
|
|
|
Accumulated
|
|
|
Total Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance as of March 31, 2020
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(8,770,623
|
)
|
|
$
|
9,920,290
|
|
|
(a) (b)
|
|
$
|
(144,339
|
)
|
|
$
|
(154,408
|
)
|
|
$
|
(344,419
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(8,616,215
|
)
|
|
$
|
10,264,709
|
|
Net Income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
655,222
|
|
|
|
655,222
|
|
|
(c)
|
|
|
-
|
|
|
|
37,112
|
|
|
|
37,112
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
618,110
|
|
|
|
618,110
|
|
Balance as of June 30, 2020
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(8,115,401
|
)
|
|
$
|
10,575,512
|
|
|
|
|
$
|
(144,339
|
)
|
|
$
|
(117,296
|
)
|
|
$
|
(307,307
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(7,998,105
|
)
|
|
$
|
10,882,819
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
Six
Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended June 30, 2020
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholder’s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
Common
Stock
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Stockholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance
as of December 31, 2019
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(6,750,784
|
)
|
|
$
|
11,940,129
|
|
|
(a)
(b)
|
|
$
|
(144,339
|
)
|
|
$
|
(240,747
|
)
|
|
$
|
(430,758
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(6,510,037
|
)
|
|
$
|
12,370,887
|
|
Beginning
balance, value
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(6,750,784
|
)
|
|
$
|
11,940,129
|
|
|
(a)
(b)
|
|
$
|
(144,339
|
)
|
|
$
|
(240,747
|
)
|
|
$
|
(430,758
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(6,510,037
|
)
|
|
$
|
12,370,887
|
|
Net
(Loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,364,617
|
)
|
|
|
(1,364,617
|
)
|
|
(c)
|
|
|
-
|
|
|
|
123,451
|
|
|
|
123,451
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,488,068
|
)
|
|
|
(1,488,068
|
)
|
Net
Income (Loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,364,617
|
)
|
|
|
(1,364,617
|
)
|
|
(c)
|
|
|
-
|
|
|
|
123,451
|
|
|
|
123,451
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,488,068
|
)
|
|
|
(1,488,068
|
)
|
Balance
as of June 30, 2020
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(8,115,401
|
)
|
|
$
|
10,575,512
|
|
|
|
|
$
|
(144,339
|
)
|
|
$
|
(117,296
|
)
|
|
$
|
(307,307
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(7,998,105
|
)
|
|
$
|
10,882,819
|
|
Ending
balance, value
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
16,915,706
|
|
|
$
|
1,692
|
|
|
$
|
18,689,119
|
|
|
$
|
(8,115,401
|
)
|
|
$
|
10,575,512
|
|
|
|
|
$
|
(144,339
|
)
|
|
$
|
(117,296
|
)
|
|
$
|
(307,307
|
)
|
|
|
1,020,000
|
|
|
$
|
102
|
|
|
|
473,639,756
|
|
|
$
|
47,364
|
|
|
$
|
18,833,458
|
|
|
$
|
(7,998,105
|
)
|
|
$
|
10,882,819
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements
The
effects of the restatement on the line items within the Company’s condensed consolidated statement of cash flow as of June 30,
2021 are as follows:
|
(a)
|
Reflects
previously unrecorded expenses.
|
|
(b)
|
Reflects
previously unrecorded expenses.
|
|
(c)
|
Reflects
changes in right of use asset and liability being reported as net amount.
|
|
(d)
|
Reflects
amount being reclassified with other accounts payable
|
|
(e)
|
Reflects
previously unrecorded change in value of marketable securities.
|
|
(f)
|
Reflects
non-cash receivable being reclassified.
|
|
(g)
|
Reflects
related party PPE sale being reclassified from income, related party loan repayment with inventory and debt retired during merger.
|
|
(h)
|
Reflects
cash received in merger that was previously reported as cash outflow.
|
|
(i)
|
To
reclassify asset disposal in transaction with XXII as a non-cash item.
|
|
(j)
|
To
reclassify non-cash stock issuances to non-cash transactions section.
|
|
(k)
|
To
separately report proceeds and repayments of note payable amounts from PPP and SBA loans,
|
|
(l)
|
To
separately report proceeds and repayments of note payable amounts from reported net amounts.
|
|
(m)
|
To
separately report non-cash transaction previously presented as net amounts in cash flow sections.
|
|
(n)
|
Fixed asset sale to separate asset transaction that
was previously reported as a net amount.
|
|
(o)
|
Rounding
adjustment.
|
Panacea
Life Sciences Holdings, Inc. and Subsidiary (f/k/a Exactus, Inc.)
Unaudited
Condensed Consolidated Statements of Cash Flows
|
|
2021
|
|
|
2020
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
As
Restated
|
|
|
|
|
Adjustment
|
|
|
As
Reported
|
|
|
|
Six
Months Ended June 30,
|
|
|
|
|
Six
Months Ended June 30,
|
|
|
Six
Months Ended June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
397,864
|
|
|
$
|
(1,364,617
|
)
|
|
(a)
|
|
$
|
(39,243
|
)
|
|
$
|
123,451
|
|
|
$
|
437,107
|
|
|
$
|
(1,488,068
|
)
|
Adjustments
to reconcile net income (loss) to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
887,838
|
|
|
|
647,253
|
|
|
(b)
|
|
|
390,708
|
|
|
|
(103,778
|
)
|
|
|
497,130
|
|
|
|
751,031
|
|
Fixed
asset disposal loss
|
|
|
297,351
|
|
|
|
67,714
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
297,351
|
|
|
|
67,714
|
|
Amortization
of right of use asset
|
|
|
-
|
|
|
|
-
|
|
|
(c)
|
|
|
(202,844
|
)
|
|
|
(190,940
|
)
|
|
|
202,844
|
|
|
|
190,940
|
|
Amortization
of intangible assets
|
|
|
30,701
|
|
|
|
30,701
|
|
|
(o)
|
|
|
1
|
|
|
|
1
|
|
|
|
30,700
|
|
|
|
30,700
|
|
Non-cash interest expense
|
|
|
-
|
|
|
|
-
|
|
|
(d)
|
|
|
(581,705
|
)
|
|
|
(758,586
|
)
|
|
|
581,705
|
|
|
|
758,586
|
|
Gain
on forgiveness of Paycheck Protection Program loan
|
|
|
(518,580
|
)
|
|
|
-
|
|
|
(k)
|
|
|
1,408,815
|
|
|
|
-
|
|
|
|
(1,927,395
|
)
|
|
|
-
|
|
Unrealized
gain/loss on marketable securities
|
|
|
(3,151,751
|
)
|
|
|
435,279
|
|
|
(e)
|
|
|
-
|
|
|
|
129,702
|
|
|
|
(3,151,751
|
)
|
|
|
305,577
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(142,319
|
)
|
|
|
73,459
|
|
|
(f)
|
|
|
499,999
|
|
|
|
(1
|
)
|
|
|
(642,318
|
)
|
|
|
73,460
|
|
Inventory
|
|
|
(556,972
|
)
|
|
|
(7,555,868
|
)
|
|
(g)
|
|
|
(4,682,150
|
)
|
|
|
(216,244
|
)
|
|
|
4,125,178
|
|
|
|
(7,339,624
|
)
|
Prepaid
expense and other assets
|
|
|
(74,593
|
)
|
|
|
(373,924
|
)
|
|
(d)
|
|
|
(10,615
|
)
|
|
|
(286,787
|
)
|
|
|
(63,978
|
)
|
|
|
(87,137
|
)
|
Accounts
payable and accrued expenses
|
|
|
661,376
|
|
|
|
1,791,547
|
|
|
(d)
|
|
|
(733,011
|
)
|
|
|
1,030,172
|
|
|
|
1,394,387
|
|
|
|
761,375
|
|
Operating
lease liability, net
|
|
|
229,386
|
|
|
|
229,391
|
|
|
(c)
|
|
|
442,380
|
|
|
|
442,562
|
|
|
|
(212,994
|
)
|
|
|
(213,171
|
)
|
Unearned
revenues
|
|
|
-
|
|
|
|
-
|
|
|
(d)
|
|
|
103,856
|
|
|
|
(169,552
|
)
|
|
|
(103,856
|
)
|
|
|
169,552
|
|
Net
cash used in operating activities
|
|
|
(1,939,699
|
)
|
|
|
(6,019,065
|
)
|
|
|
|
|
(3,403,809
|
)
|
|
|
-
|
|
|
|
1,464,110
|
|
|
|
(6,019,065
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash received from acquisition
|
|
|
9,157
|
|
|
|
-
|
|
|
(h)
|
|
|
18,314
|
|
|
|
-
|
|
|
|
(9,157
|
)
|
|
|
-
|
|
Proceeds
from sale of fixed assets
|
|
|
446,026
|
|
|
|
34,920
|
|
|
(n)
|
|
|
446,026
|
|
|
|
34,920
|
|
|
|
-
|
|
|
|
-
|
|
Net
fixed asset acquisition
|
|
|
(186,197
|
)
|
|
|
(2,421,537
|
)
|
|
(i)
|
|
|
(3,570,927
|
)
|
|
|
(34,920
|
)
|
|
|
3,384,730
|
|
|
|
(2,386,617
|
)
|
Net
Cash provided by (used in) investing activities
|
|
|
268,986
|
|
|
|
(2,386,617
|
)
|
|
|
|
|
(3,106,587
|
)
|
|
|
-
|
|
|
|
3,375,573
|
|
|
|
(2,386,617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash stock issuances
|
|
|
-
|
|
|
|
-
|
|
|
(j)
|
|
|
(1,362,187
|
)
|
|
|
-
|
|
|
|
1,362,187
|
|
|
|
-
|
|
Non-cash financing activities
|
|
|
-
|
|
|
|
-
|
|
|
(j)
|
|
|
8,012,583
|
|
|
|
-
|
|
|
|
(8,012,583
|
)
|
|
|
-
|
|
Proceeds
from payroll protection loan, SBA loan
|
|
|
243,041
|
|
|
|
273,300
|
|
|
(k)
|
|
|
243,041
|
|
|
|
273,300
|
|
|
|
|
|
|
|
|
|
Payments
of principal on notes payable - related party
|
|
|
(135,000
|
)
|
|
|
(3,503,545
|
)
|
|
(l)
|
|
|
-
|
|
|
|
(3,503,545
|
)
|
|
|
(135,000
|
)
|
|
|
-
|
|
Proceeds
on note payable - related party
|
|
|
1,609,000
|
|
|
|
4,717,105
|
|
|
(l)
|
|
|
(383,041
|
)
|
|
|
3,230,245
|
|
|
|
1,992,041
|
|
|
|
1,486,860
|
|
Net
cash provided by financing activities
|
|
|
1,717,041
|
|
|
|
1,486,860
|
|
|
|
|
|
(383,041
|
)
|
|
|
(273,300
|
)
|
|
|
(4,793,355
|
)
|
|
|
1,486,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in Cash and Cash Equivalents
|
|
|
46,328
|
|
|
|
(6,918,822
|
)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,328
|
|
|
|
(6,918,822
|
)
|
Cash
and Cash Equivalents, Beginning of Period
|
|
|
84,379
|
|
|
|
8,515,509
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,379
|
|
|
|
8,515,509
|
|
Cash
and Cash Equivalents, End of Period
|
|
$
|
130,707
|
|
|
$
|
1,596,687
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
130,707
|
|
|
$
|
1,596,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|
$
|
-
|
|
|
(f)
|
|
$
|
(500,000
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Related
party loan repayment with inventory
|
|
$
|
4,693,367
|
|
|
$
|
-
|
|
|
(g)
|
|
$
|
4,693,367
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-cash fixed asset disposal as part of the reverse acquisition
|
|
$
|
3,058,457
|
|
|
$
|
-
|
|
|
(i)
|
|
$
|
1,709,357
|
|
|
$
|
-
|
|
|
$
|
1,349,100
|
|
|
$
|
-
|
|
Debt
retired in merger, related party
|
|
$
|
(12,718,441
|
)
|
|
$
|
-
|
|
|
(g)
|
|
$
|
(12,718,441
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Exactus
liabilities from acquisition
|
|
$
|
1,096,782
|
|
|
$
|
-
|
|
|
(m)
|
|
$
|
1,096,782
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Preferred
Series B-1 issuance in acquisition
|
|
$
|
150
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
150
|
|
|
$
|
-
|
|
Preferred
Series B-2 issuance in acquisition
|
|
$
|
600
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
600
|
|
|
$
|
-
|
|
Common
stock issued for the reverse merger with Exactus
|
|
$
|
4,369,085
|
|
|
$
|
-
|
|
|
(j)
|
|
$
|
4,356,748
|
|
|
$
|
-
|
|
|
$
|
12,337
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NOTE
12 – SUBSEQUENT EVENTS
Subsequent
to June 30, 2021 the Company entered a line of credit with Ms. Buttorff under which the Company may borrow up to $1 million at a 10%
annual interest rate. The terms of repayment are to pay the loan in 2022 or as determined by Ms. Buttorff. Refer to Exhibit 10.7. Subsequent
to June 30, 2021, certain preferred shareholders elected to convert one hundred shares of Preferred A stock. As a result, the Company
issue two million shares of common stock.
Effective
October 25, 2021 the Company completed the 1-for-28 reverse stock split as well as the name change from Exactus, Inc. to Panacea Life
Sciences Holdings, Inc.
On
October 25, 2021, of the 10,649,078 shares of EXDI Common Stock issued to Quintel were exchanged for 100 shares of Series C-2 Convertible
Preferred Stock (the “Parent C-2 Stock”) which are convertible 7,321,429 shares of Parent Common Stock and are entitled to
vote on an as-converted basis. Other than the conversion and voting rights, there are no other
preferences for the Parent C-2 Stock.
On
November 18, 2021, the Company and an institutional investor signed an agreement for a $1.1 million original issue discount convertible
note (the “Note”) financing in which the investor is paying $1 million in gross proceeds. The one-year Note is convertible
into common stock at $1.40 per share. The Company also issued the investor 785,715 warrants to purchase common stock at an exercise price
of $1.40 per share. The warrants are exercisable over a five-year period beginning May 18, 2022. The parties also entered into a Registration
Rights Agreement giving the investor certain demand registration rights. After payment of a 10% commission to a broker-dealer, the adjusted
net proceeds will be $900,000 before expenses including legal fees of the investor.