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~~March 3031, ~~2023~~2024

☐ 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: 17,645,352 shares of common stock, par value $0.0001 per share, outstanding as ~~November~~May 1, ~~2023~~2024.

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	2824
Item 4.	Controls and Procedures	2824
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	2924
Item 1A.	Risk Factors	2924
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4324
Item 3.	Defaults Upon Senior Securities	4324
Item 4.	Mine Safety Disclosures	4325
Item 5.	Other Information	4325
Item 6.	Exhibits	4325
	Signatures	4427

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

Panacea Life Sciences Holdings, Inc. and Subsidiary

Unaudited Condensed Consolidated Balance Sheets

	September 30, 2023			December 31, 2022
	March 31, 2024			December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1107,~~495~~643		$	6100,~~951~~922
Accounts receivable, net		~~308~~270,~~810~~851			~~206~~263,~~127~~970
Other receivables, related party		~~500,000~~-			~~500,000~~-
Inventory		4,~~692~~062,~~095~~827			4,~~448~~013,~~725~~525
Marketable securities related party		789,~~420~~504			114,~~107,362~~933
Prepaid expenses and other current assets		~~292~~192,~~553~~133			~~113~~263,~~098~~003
TOTAL CURRENT ASSETS		54,~~873~~642,~~373~~958			64,~~382~~656,~~263~~353
Operating lease right-of-use asset, net, related party		23,~~970~~685,~~936~~567			3,~~242~~864,~~381~~591
Property and equipment, net		6,~~873~~069,~~810~~570			76,~~675~~448,~~995~~068
Goodwill		3,014,450			2,188,810
Intangible assets, net		-			-
TOTAL ASSETS	$	18,732,569		$	19,489,449
Goodwill		3,014,450			3,014,450
TOTAL ASSETS	$	17,412,545		$	17,983,462
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	45,~~303~~178,~~472~~214		$	24,~~666~~629,~~076~~591
Operating lease liability, current portion, related party		23,~~443~~055,~~621~~134			2,~~090~~913,~~271~~781
Note payable-current, related party		11,~~574~~772,~~800~~259			911,~~871~~397,~~803~~617
Convertible note payable, net		115,000			346,671
First Bank note payable		287,111			292,942
Convertible note payable, net		-			115,000
Paycheck protection loan, SBA Loan		99,100			99,100
TOTAL CURRENT LIABILITIES:		1820,~~535~~391,~~993~~818			1519,~~073~~448,~~921~~031
Operating lease liability, long-term portion, related party		23,~~706~~070,~~492~~391			23,~~987~~254,~~208~~021
Other long-term liabilities, related party		3,572,864			3,572,864
TOTAL LIABILITIES		2427,~~815~~035,~~349~~073			2126,~~633~~274,~~993~~916
Commitments and contingencies		-			-
STOCKHOLDERS’ EQUITY
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 0 and 350 shares issued and outstanding on September 30, 2023 and December 31, 2022 respectively.		-			-
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 0 and 350 shares issued and outstanding on March 31, 2024 and December 31, 2023 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, 2023 and December 31, 2022 respectively.		150			150
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, 2024 and December 31, 2023 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, 2023 and December 31, 2022 respectively.		600			600
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, 2024 and December 31, 2023 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, 2023 and December 31, 2022 respectively.		100			100
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, 2024 and December 31, 2023 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, 2023 and December 31, 2022 respectively.		1			1
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, 2024 and December 31, 2023 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 September 30, 2023 and December 31, 2022 respectively.		-			-
Series C-2 Preferred: $0.0001 Par Value, 100 and 0 shares designated and 100 and 0 shares issued and outstanding on March 31, 2024 and December 31, 2023 respectively.		-			-
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2023 and December 31, 2022 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 March 31, 2024 and December 31, 2023 respectively.		1			1
Series E Preferred: $0.0001 Par Value, 784 shares designated and issued on September 30, 2023.		784			-
Series E Preferred: $0.0001 Par Value, 3,853,000 shares designated and 3,853,000 and 3,853,000 shares issued and outstanding on March 31, 2024 and December 31, 2023 respectively.		385			385
Preferred stock, value		784			-
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 18,311,352 and 17,645,352 shares issued and outstanding on March 31, 2024 and December 31, 2023 respectively.		1,832			1,765
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 17,645,352 and 14,965,317 shares issued and outstanding on September 30, 2023 and December 31, 2022 respectively.		1,765			1,497
Additional paid in capital		25,743,375			25,628,442
Additional paid in capital		25,628,043			23,760,704
Accumulated deficit		(35,368,972	)		(33,922,898	)
Accumulated deficit		(31,714,224	)		(25,907,597	)
TOTAL STOCKHOLDERS’ EQUITY		(9,622,528	)		(8,291,454	)
TOTAL STOCKHOLDERS’ EQUITY		(6,082,780	)		(2,144,544	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	17,412,545		$	17,983,462
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,732,569		$	19,489,449

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

Panacea Life Sciences Holdings, Inc. and Subsidiary

Unaudited Condensed Consolidated Statements of Operations

	2023			2022			2023			2022
	2024			2023
	Three Months Ended September 30,						Nine Months Ended September 30,
	Three months ended March 31
	2023			2022			2023			2022
	2024			2023
REVENUE	$	~~347~~1,~~851~~056,447		$	~~366~~677,~~244~~481		$	~~1,424,460~~		$	~~1,302,190~~
COST OF SALES		~~201~~390,~~232~~282			~~318~~451,~~918~~872			~~849,418~~			~~1,016,509~~
GROSS PROFIT		~~146~~666,~~619~~165			47225,~~326~~609			~~575,042~~			~~285,681~~
OPERATING EXPENSES
Production related operating expenses		1,~~283~~474,~~964~~475			1,~~174~~258,~~529~~159			~~3,683,834~~			~~3,635,640~~
General and administrative expenses		~~276~~249,~~726~~038			~~261~~257,~~506~~413			~~669,352~~			~~926,736~~
TOTAL OPERATING EXPENSES		1,~~560~~723,~~690~~513			1,~~436~~515,~~035~~572			~~4,353,186~~			~~4,562,376~~
LOSS FROM OPERATIONS		(1,~~414~~057,~~071~~348	)		(1,~~388~~289,~~709~~963	)		~~(3,778,144~~	)		~~(4,276,695~~	)
OTHER INCOME (EXPENSES)
Interest expense		(~~396~~429,~~582~~672	)		(~~597~~380,~~935~~157	)		~~(1,143,683~~	)		~~(1,669,215~~	)
Unrealized gain (loss) on marketable securities, net		~~(381~~5,~~968~~053	)		(1182,~~446,848~~255	)		~~(1,028,942~~	)		~~(2,651,925~~	)
Realized gain on sale of securities		-			-			-			22,816
Realized gain (loss) on sale of securities		(376	)		-
Other income (loss)		-			-			-			~~27,598~~
Employer retention credit		-			-			-			~~253,791~~
Rental Income		4136,~~531~~269			5860,~~046~~332			~~143,394~~			~~174,137~~
Gain on extinguishment of debt		-			~~681,546~~748			~~748~~			~~681,546~~
TOTAL OTHER INCOME (EXPENSE)		(~~737~~388,~~019~~726	)		(1501,~~305,191~~332	)		~~(2,028,483~~	)		~~(3,161,252~~	)
INCOME (LOSS) BEFORE INCOME TAXES		(21,~~151~~446,~~090~~074	)		(21,~~693~~791,~~900~~295	)		~~(5,806,627~~	)		~~(7,437,947~~	)
TAXES		-			-			-			-
NET INCOME (LOSS)	$	(21,~~151~~446,~~090~~074	)	$	(21,~~693~~791,~~900~~295	)	$	~~(5,806,627~~	)	$	~~(7,437,947~~	)
Per-share data
Basic and diluted loss per share	$	(0.1309	)	$	(0.1812	)	$	~~(0.35~~	)	$	~~(0.50~~	)
Weighted average number of common shares outstanding		16,~~617~~492,~~675~~589			14,~~862~~965,~~077~~317			~~16,617,675~~			~~14,862,077~~

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

PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(unaudited)

	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
	Three Months Ended September 30, 2023
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of June 30, 2023		8,530,000	$	853		17,645,352	$	1,765	$	23,993,533	$	(29,563,134	)	$	(5,566,984	)
Balance as of December 31, 2023		12,838,350	$	1,238		17,645,352	$	1,765	$	25,628,442	$	(33,922,898	)	$	(8,291,454	)
Sale of shares to investors		-		-		-		-		-					-
Shares issued in respect of the merger						-		-		-					-
Issuance of common shares for services		-		-		-		-		-					-
Shares issued in settlement of convertible note		-		-		666,000		67		114,933					115,000
Issuance of restricted shares to employees		-		-		-		-		-					-
		-		-		-		-		-
Preferred Series E shares issued in acquisition		7,835,000		783		-		-		1,634,511					1,635,294
Net Loss		-		-		-		-		-		-			(1,446,074	)
Net Income (Loss)		-		-		-		-				(2,151,090	)		(2,151,090	)
Balance as of March 31, 2024		12,838,350	$	1,238		18,311,352	$	1,832	$	25,743,375	$	(33,922,898	)	$	(9,622,528	)
Balance as of September 30, 2023		16,365,000	$	1,636		17,645,352	$	1,765	$	25,628,043	$	(31,714,224	)	$	(6,082,780	)
Balance as of December 31, 2022		8,530,000	$	853		14,965,317	$	1,497	$	23,760,704	$	(25,907,597	)	$	(2,144,544	)
Balance		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		8,530,000	$	853		15,505,317	$	1,551	$	23,895,650	$	(27,698,892	)	$	(3,800,839	)

	Nine Months Ended September 30, 2023
	Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2022		8,530,000	$	853		14,965,317	$	1,497	$	23,760,704		$	(25,907,597	)	$	(2,144,544	)
Sale of shares to investors		-		-		454,545		46		74,955						75,000
Issuance of common shares for services						275,490		28		23,069						23,097
Issuance of restricted shares to employees						1,410,000		141		(141	)					-
Shares issued in settlement of convertible note		-		-		540,000		54		134,946						135,000
Preferred Series E shares issued in acquisition		7,835,000		783		-		-		1,634,511						1,635,294
Net Loss		-		-		-		-		-			(5,806,627	)		(5,806,627	)
Balance as of September 30, 2023		16,365,000	$	1,636		17,645,352	$	1,765	$	25,628,043		$	(31,714,224	)	$	(6,082,780	)

	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		8,530,000	$	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		8,530,000	$	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
Balance		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	)
Net Income (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	)
Balance		8,530,000		$	853		14,965,317	$	1,497	$	23,760,704		$	(24,202,960	)	$	(439,907	)

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

Panacea Life Sciences, Inc.

Statements of Cash Flows

	2023			2022
	2024			2023
	Nine Months Ended September 30,
	For the months ended March 31,
	2023			2022
	2024			2023
Cash flows from operating activities
Net income (loss)	$	(51,~~806~~446,~~627~~074	)	$	(71,~~437~~791,~~947~~295	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		1383,~~269,322~~498			1422,~~240,281~~554
Realized gain on sale of securities		-376			~~(22,816~~-	)
Unrealized (gain)/loss on marketable securities		15,~~028,942~~053			2182,~~651,925~~255
Fixed Asset Disposal Loss		-			-
Amortization of debt discount and non-cash interest expense		-			38,329
Non cash settlement of convertible note and accrued interest		74,999			(253,791	)
Amortization of intangible assets		-			46,050
Amortization of debt discount and non-cash interest expense		38,329			876,519
Gain on forgiveness of payroll protection loan		-			-
Changes in operating assets and liabilities
Accounts receivable		(~~113~~6,~~523~~881	)		22(68,~~577~~660	)
Inventory		~~157~~(49,~~404~~302	)		~~(147~~353,~~886~~662	)
Prepaid expense and other assets		~~(179~~70,~~455~~870	)		8034,~~907~~552
Accounts payable and accrued expenses		1548,~~660,494~~623			~~723~~400,~~521~~059
Operating lease liability, net		~~344~~136,~~079~~747			~~344~~114,~~080~~693
Net cash used in operating activities		(1357,~~526,036~~090	)		(1313,~~876,580~~851	)
Cash flows from investing activities
Net cash received from acquisition		-			-
Net fixed asset acquisitions		(5,000	)		(15,220	)
Proceeds from sale of marketable securities		-			46,832
Net Cash provided by (used in) investing activities		(5,000	)		(15,220	)
Proceeds from sale of fixed assets		(47,417	)		-
Net fixed asset acquisitions		-			(144,961	)
Net Cash provided by (used in) investing activities		(47,417	)		(98,129	)
Cash flows from financing activities
Repayment of notes payable		(~~135~~5,~~000~~831	)		-(135,000	)
Proceeds from payroll protection loan, SBA loan		-			253,791
Payments of principal on notes payable – related party		(74,000	)		(65,000	)
Payments of principal on notes payable		(158,189	)		(637,978	)
Proceeds from Notes payable - related party		448,642			595,352
Proceeds from Notes payable - related party		1,861,186			2,375,913
Cash provided by financing activities		368,811			395,352
Proceeds from issuance of convertible notes, net of discount		-			-
Net increase (decrease) in Cash and Cash Equivalents		6,721			66,281
Cash provided by financing activities		1,567,997			1,991,726
Cash and Cash Equivalents, Beginning of Period		100,922			6,951
Net increase (decrease) in Cash and Cash Equivalents		(5,456	)		17,017
Cash and Cash Equivalents, End of Period	$	107,643		$	73,232
Cash and Cash Equivalents, Beginning of Period		6,951			19,774
Cash and Cash Equivalents, End of Period	$	1,495		$	36,791
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes during the year	$	-		$	-
Interest payments during the year	$	-		$	-
Noncash investing and financing activity
Goodwill recorded in acuisition	$	825,640		$	-
Conversion of note payable to common stock	$	(115,000	)	$	-
Preferred shares issued in acquisition	$	1,646,134		$	-
Inventory recorded in acquisition	$	(400,774	)	$	-
Assets from acquisition	$	(419,720	)	$	-
Conversion of Preferred A shares to Note Payable	$	-		$	385,000
Issuance of Common Stock for services	$	-		$	55,000
Capitalized assets purchased on account - related party	$	-		$	220,299

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

PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~MARCH 3031, ~~2023~~2024

NOTE 1 - NATURE OF ORGANIZATION

Organization and Business Description

~~PANACEA~~Panacea ~~LIFE~~Life ~~SCIENCES~~Sciences ~~HOLDINGS~~Holdings, Inc. (~~the~~OTCQB: ~~“Company”, “we”, “us”, “our”~~PLSH) ~~was~~is ~~incorporated~~a onholding ~~January 18,~~company ~~2008~~organized inas ~~the~~a ~~State~~plant-based ofnatural ~~Nevada.~~health Iningredient ~~January 2019, the Company added to the scope of its business activities, efforts to produce, market~~ and ~~sell~~product ~~products made from industrial hemp containing cannabidiol (“CBD”). On June 30~~company, ~~2021, the Company entered into a~~ ~~Securities~~specializing ~~Exchange~~in ~~Agreement (~~the ~~“Exchange~~development, ~~Agreement”) with Panacea Life Sciences~~manufacturing, ~~Inc.~~research, ~~(“Panacea”) a seed to sale cannabinoid company~~ and ~~with~~distribution ~~the stockholders~~ of ~~Panacea.~~products ~~Pursuant~~within to the ~~Exchange~~$134B ~~Agreement,~~and ~~the~~rapidly ~~former~~growing ~~Panacea~~natural ~~stockholders~~health ~~assumed majority control of the Company~~ and ~~all~~wellness ~~operations~~market ~~are~~segment ~~now~~for ~~operated~~both byhumans ~~Panacea,~~and ~~which as a result of the share exchange, became a wholly-owned subsidiary of the Company~~animals. ~~In October 2021, the Company changed its name from Exactus Inc. to Panacea Life Sciences Holdings, Inc.~~

~~Panacea~~Established ~~Life~~in ~~Sciences Holdings~~2017, ~~Inc.~~the ~~(PLSH) is holding~~ company’s ~~structured~~first ~~to develop and facilitate manufacturing, research, product development and distribution in the high-growth, natural human and animal health and wellness market segment. Its~~ subsidiary, Panacea Life Sciences, Inc. (PLS), is ~~a woman-founded and led company~~ dedicated to ~~manufacturing~~the production, distribution, research , and ~~production~~manufacturing of ~~the highest~~premium-quality ~~nutraceutical~~ nutraceuticals, ~~cannabinoid~~cannabinoids, ~~mushroom~~mushrooms, kratom, and other natural, plant-based ingredients and products. ~~PLS~~Operating ~~operates~~from ~~out of~~ a cutting-edge 51,000 square foot, ~~state-of-the-art,~~ cGMP facility located in Golden, Colorado., ~~Panacea~~PLS ~~was~~is ~~founded~~committed byto ~~Leslie~~delivering high-quality ~~Buttorff~~solutions in ~~2017~~the asfield aof ~~woman~~natural health and well-~~owned~~being. ~~business, was~~Panacea ~~formed~~also tooffers ~~own~~the ~~and~~purest ~~engage~~natural inremedies ~~creating~~within ~~disruptive~~its ~~healthcare~~branded product ~~and~~lines ~~veterinary~~for ~~natural~~every ~~relief~~aspect ~~products~~of tolife: ~~make~~PANA aHealth™, ~~difference~~PANA inBeauty®, ~~the~~PANA ~~lives of~~Sport™, ~~humans~~PANA Pet®, PANA Pure® and ~~pets~~PANA Life™. If you would like more information, please visit www.panacealife.com.

OnPanacea ~~September 30~~Distro, ~~2023~~the ~~PLSH~~second ~~completed~~subsidiary ~~its~~of ~~asset~~Panacea ~~purchase~~Life ofSciences N7Holdings, ~~Enterprises~~Inc., ~~PLSH~~manages ~~acquired~~six ~~eight~~ retail locations and ~~one~~a distribution center situated in the Tampa, Florida area. ~~offering~~These establishments provide a diverse range of products, including Nitro Kava, Kratom, Hemp, VAPE products , and various beverages., ~~Operating~~with asa ~~PanaceaDistro,~~primary ~~the~~focus ~~acquisition~~on ~~marks an~~promoting ~~expansion~~alternative ofhealth ~~the~~and ~~Company’s~~wellness. ~~business~~The ~~into~~Panacea ~~retail~~Distro ~~stores~~business ~~from~~is ~~its~~segmented ~~historic~~into two ~~focus~~distinct onareas—the ~~its~~retail ~~branded~~stores ~~health~~ and ~~wellness~~the ~~products, ingredient~~cash ~~and~~& ~~contract~~carry ~~manufacturing~~distribution warehouse. ~~For~~The ~~the~~retail ~~fiscal~~stores ~~year~~are ~~ended~~poised ~~December~~to ~~31,~~evolve ~~2022~~into franchise stores, N7with ~~generated~~the ~~approximately~~intention ~~$2.3~~of ~~million~~eventually ofadopting ~~revenues (unaudited).~~the ~~Panacea~~name ~~plans~~“PANA onKAVA ~~expanding~~JAVA.” byThis ~~adding~~strategic ~~additional~~move ~~stores~~is ~~and~~part ~~offering~~of ~~new~~our plan ~~high~~to ~~quality~~establish ~~plant-~~a franchise model based ~~products,~~on inthe ~~addition~~success ~~to offering~~of ~~store~~these ~~franchising~~existing ~~opportunities~~retail locations.

In the coming months, a third business entity, Pana Kava Java (PKJ), is set to emerge as the franchisor company, with a scheduled launch in Q3-Q4 2024. Pana Kava Java is committed to establishing a unique franchise model, drawing inspiration from the European-style café concept. Patrons will have the opportunity to savor infused coffees and beverages, indulge in vaping, and enjoy an array of infused baked goods in a welcoming atmosphere. Pana Kava Java, as the franchisor, will offer franchise rights to individuals interested in opening stores/cafés, enabling them to sell products or services under the PKJ brand, leveraging our expertise and intellectual property. Currently, active efforts are underway in developing the franchisor plan, encompassing aspects such as business development, flagship store establishment, legal document preparation, marketing and packaging strategies, as well as the recruitment and training of franchisees.

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~~subsidiaries as of ~~September~~March 3031, ~~2023~~2024. 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~~March 3031, ~~2023~~2024, and ~~2022~~2023, and for the periods then ended, have been made. Those adjustments consist of normal and recurring adjustments. Operating results for the three ~~and nine-months~~ ended ~~September~~March 3031, ~~2023,~~2024 and 2023 ~~2022~~ are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, ~~2023~~ 2024. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.

Going concern

These unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. Panacea has combined with Panacea Life Sciences Holdings, Inc., so the below items reflect the consolidated company. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since our inception in later 2017, we have generated losses from operations. As of ~~September~~March 3031, ~~2023~~2024, our accumulated deficit was $3135.7369 million, and we had $0.~~080~~ 117 million in cash and liquid stock. As of September 30, 2023, the shares of common stock we hold in 22nd Century Group, Inc. (80,200 shares) (Nasdaq: XXII) (“XXII”) was valued at approximately $0.078 million. The XXII stock is pledged to secure a $4.063 million promissory note in favor of J&N Real Estate (“J&N”) and a $1.685 million promissory note in favor of Leslie Buttorff, CEO of the Company. J&N is owned by the CEO. These ~~items are shown on the balance sheet as related party loans. 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.

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

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~~March 3031, ~~2023~~2024, ~~the~~ the Company’s cash balances did not exceed the FDIC limit.

Accounts Receivable

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. An allowance of $1050,000 was taken at the beginning of ~~2023~~2024 to allow for any doubtful accounts to be expensed. As of ~~September~~ 30March 31, ~~2023~~2024, $~~4,978~~0 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.

Marketable securities

The Company’s marketable securities consists of 8079,200 shares of XXII which are classified as available-for-sale and included in ~~current~~ 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~~March 3031, ~~2023,~~2024 and December 31, ~~2022~~2023:

September 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Total

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Marketable securities

789,~~420~~504

~~78,420~~-

114,~~107,362~~933

Total

789,~~420~~504

~~78,420~~-

114,~~107,362~~933

The following table is a schedule of the Company’s marketable securities. The following table is schedule of the Company’s marketable securities:

	September 30, 2023
	March 31, 2024
Balance at beginning of year	$	114,~~107,362~~933
Unrealized loss on marketable securities, net		(1,028,942	)
Realized loss on marketable securities, net		376
Balance at end of period	$	78,420
Unrealized loss on marketable securities, net		5,053
Balance at end of period	$	9,504

As of ~~September~~March 3031, ~~2023~~2024, 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 10ten years when placed in service. The cost of repairs and ~~maintenance~~ 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.

Intangible Assets and Goodwill

~~The Company has no 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 $0.~~826~~ 825 million ~~of goodwill~~ from the N7 acquisition. ~~In the acquisition of Phoenix, the Company acquired product formulas which were classified as an intangible asset.~~

The following table is a schedule of the Company’s intangible assets and goodwill:

		Estimated Life
Goodwill from Phoenix Acquisition		Tested Yearly for Impairment
Goodwill from N7 Acquisition		Tested Yearly for Impairment
Goodwill from N7 Acquisition		Tested Yearly for Impairment

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Goodwill from Phoenix Acquisition	$	2,188,810	$	2,188,810
Goodwill from N7 Acquisition		825,640		-825,640
Total	$	3,014,450	$	3,014,450

Leases

The Company determines if an arrangement is a lease at inception. Contracts containing a lease are further evaluated for classification as an operating or finance lease. In determining the leases classification, the Company assesses among other criteria: (i) 75% or more of the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset; and (ii) 90% or more of the fair value of the underlying asset comprises substantially all of the fair value of the underlying asset. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company’s consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. For leases with terms greater than 12 months, the Company records the ROU asset and liability at commencement date based on the present value of lease payments according to their term.

The Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The ROU asset also includes any lease payments made and excludes lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses are recognized on a straight-line basis over the lease term or the useful life of the leased asset.

In addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

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.

Some of the Company’s contract liabilities consist of advance customer payments. Contract liability results from transactions in ~~which~~ 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 $~~361~~400,~~707~~955 and $~~368~~349,~~065~~705 in advanced customer payments as of ~~September~~March 3031, ~~2023~~2024, and December 31, ~~2022~~2023, 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:

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Balance, beginning of period	$	~~368~~349,~~065~~705	$	24368,~~585~~065
Payments received for unearned revenue		~~530~~143,~~809~~469		~~412~~156,~~891~~298
Revenue earned		~~537~~92,~~167~~219		69174,~~411~~658
Balance, end of period	$	~~361~~400,~~707~~955	$	~~368~~349,~~065~~705

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. A contract liability results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized. The Company does not have any multiple-element arrangements.

The Company also has recorded other income related to rental income it receives from leasing out space in the laboratory it occupies.

Shipping and Handling Costs

The Company accounts for shipping and handling fees in accordance with ASC 606. The amounts charged to customers for shipping products are recognized as revenues and the related freight costs of shipping products are classified in general and administrative costs as incurred. Shipping costs are included as a component of general and administrative ~~expenses~~ and were $769,~~938~~566 and $6029,~~531~~667 for the ~~nine~~three months ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022, respectively. Shipping costs were $4,791and $10,959 for the three months ended September 30,~~ 2023, ~~and 2022,~~ respectively.

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~~costs ~~and~~of ~~were~~ $282,~~552and~~486 ~~$209,254 for the nine months ended September 30, 2023,~~ and ~~2022, respectively. Advertising and marketing costs were~~ $~~220 and $168~~8,~~662~~769 for the three months ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023, 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.

Stock-Based Compensation

The Company accounts for its stock compensation under the ASC 718-10-30, Compensation - Stock Compensation using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.

The Company uses the Black-Scholes model for measuring the fair value of options and warrants. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. The Company recognizes forfeitures when they occur.

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 following financial instruments were not included in the diluted loss per share calculation for the nine months ended September 30, 2023, and 2022 because their effect was anti-dilutive:~~12

The following financial instruments were not included in the diluted loss per share calculation for the three months ended March 31, 2024 and 2023 because their effect was anti-dilutive:

	2023		2022
	2024		2023
	For the nine months ended September 30,
	For the three months ended March 31,
	2023		2022
	2024		2023
Options to purchase common stock		551,854		277,705
Restricted stock		1,793,483		107,993
Warrants to purchase common stock		1,117,092		1,117,092
Options to purchase common stock		536,854		401,854
Warrants to purchase common stock		1,078,573		1,107,250
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
Convertible Notes		-		-
Series E Convertible Preferred		3,853,000		-
Total		612,~~684~~277,~~665~~629		6,~~410~~632,~~516~~816
Anti-dilutive securities		12,277,629		6,632,816

Income Taxes

Income taxes are accounted for under the asset and liability method prescribed by FASB ASC Topic 740. These standards require a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely than not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.

Recently Issued Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contract’s in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU simplifies the diluted net income per share calculation in certain areas. The ASU is effective for annual and interim periods beginning after December 31, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company does not expect the adoption of ASU 2020-6 to have any material impact on its consolidated financial statements.

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:

	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, 2023			December 31, 2022
	March 31, 2024			December 31, 2023
Computers and technological assets	$	3,776,320		$	3,776,320
Furniture and fixtures		55166,~~950~~830			55161,~~950~~830
Machinery and equipment		87,~~232~~846,~~603~~788			7,~~765~~846,~~466~~788
Land		92,222			92,222
Leasehold improvements		1,~~508~~806,~~915~~755			1,~~508~~806,~~915~~755
Total		13,~~666~~688,~~010~~915			13,~~198~~683,~~873~~915
Less accumulated depreciation		(67,~~792~~619,~~220~~345	)		(57,~~522~~235,~~878~~847	)
Total property and equipment, net	$	6,~~873~~069,~~810~~570		$	76,~~675~~448,~~995~~068

Depreciation expenses for the three- ~~and nine-~~month ~~periods~~period ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023 were $ ~~424~~383,~~040,~~498 ~~1,269,322,~~ and ~~421,695,~~ $1422,~~240,281~~ 554 respectively.

NOTE 4 - INVENTORY

Inventory consists of the following components:

SCHEDULE OF INVENTORY

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Raw Materials	$	~~870~~892,~~151~~377	$	~~870~~850,~~530~~362
Semi-Finished		1,~~836~~785,~~307~~949		1,~~863~~870,~~501~~978
Finished Goods		1,~~958~~358,~~267~~063		1,~~694~~262,~~574~~674
Packaging		2726,~~370~~438		2029,~~120~~511
Total	$	4,~~692~~062,~~095~~827	$	4,~~448~~013,~~725~~525

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.

1514

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~~March ~~30, 2023, and December~~ 31, ~~2022:~~2024.

	September 30, 2023			December 31, 2022
	March 31, 2024			December 31, 2023
Right-of-use assets	$	23,~~970~~685,~~936~~567		$	3,~~242,381~~864591
Present value of operating lease liabilities	$	3,~~078~~793,~~254~~321		$	3,~~347~~972,~~331~~696
Less: Long-term portion of operating lease liability		(23,~~706~~070,~~492~~391	)		(23,~~987~~254,~~208~~021	)
Short-term portion of operating lease liability		~~371~~722,~~762~~930,			~~360~~718,~~123~~675
Unpaid balances		2,~~072~~300,~~853~~802			12,~~730~~185,~~136~~758
Total short-term lease liability obligations	$	23,~~444~~023,~~615~~732		$	2,~~090~~904,~~259~~433
Weighted-average remaining lease term (Ends December 31, 2030)		75.2576 years			85.96 years
Weighted-average discount rate					3.0	%

During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023, we recognized approximately $~~114~~437,~~693~~752 and $~~344~~114,~~079~~693 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 ~~September~~March 3031, ~~2023~~2024, are as follows:

2023		113,905
2024		621,570
2024		460,178
2025		830,307
2025		464,780
2026		764,830
2026		469,427
2027		474,122
Thereafter		1,451,002
Total undiscounted operating lease payments		34,~~433~~141,~~414~~831
Less: Imputed interest		(~~355~~348,~~160~~510	)
Present value of operating lease liabilities	$	3,~~078~~793,~~254~~321

1615

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 was due November 18, 2022, which is one year from the issuance date and was paid.

The Warrants can 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. 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.

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 10% original issue discount senior convertible promissory note in the principal amount of $385,000 (the “Second 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 (the “Warrants”) in exchange for 350 shares of the Company’s Series A Convertible Preferred Stock (“Series A”). The Second Note matures 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, 2023, was $0 and $38,327 and for the three and nine months ended September 30, 2022, was $56,873 and $130,437 and were recorded as interest expense. The debt discount balance on September 30, 2023, was fully amortized.

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

On May 28, 2020, the Company received a secured, 30-year, Economic Injury Disaster Loan in the amount of $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~~As ~~loan proceeds were used as working capital to alleviate economic injury caused by the Covid-19 disaster occurring in the month~~ of ~~January~~March 31, ~~2020,~~2024 ~~and continuing thereafter. As of September 30, 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 (“J&N Loans”) from J&N Real Estate ~~Company~~LLC, ~~Inc.,~~ an affiliate of the Company’s CEO, (“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 ~~(“J&N Note”)~~. The 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)~~.

On June 30, 2021, the Company issued its CEO, Ms. Buttorff, a 10% promissory note in the amount of $1,~~624~~685,~~000~~685 (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~~and ~~expired in January 2022, which Ms. Buttorff~~ has extended (see Note 6 – Notes Payable – Buttorff Note). InThe ~~June~~Company’s ~~2023, the Buttorff~~ line of credit ~~was~~from Ms. Buttorff increased to $8.5,000,000 on July ~~million~~1, ~~and~~2022. isThe ~~now~~terms ~~due~~include onan ~~January~~annual ~~31,~~interest rate of 10% and a maturity date in 2025.

Below is a summary of our notes payable as of September 30, 2023, and December 31, 2022:

SCHEDULE OF NOTES PAYABLE RELATED PARTY

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
J&N Note	$	4,062,713	$	4,062,713
CEO Notes (Initial note of $1,685,685 and line of credit)		7,512,087		5,809,090
CEO Note		7,709,546		7,334,904
Total related party notes	$	11,~~574~~772,~~800~~259	$	911,~~871~~397,~~803~~617

Other long-term liabilities, related party

The Company has recorded a related party liability (“Fixed Asset Loan”) in the ~~amount~~amounts of $3,059,474 as of ~~September~~March 3031, ~~2023,~~ 2024 and December 31, ~~2022~~2023, 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 ~~interest~~Company ~~requirement~~is ofno 6%longer ~~ended~~paying asany offees ~~December~~related ~~31,~~to these ~~2022~~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, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
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 ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, the Company issued ~~275~~666,~~490~~000 shares toof ~~vendors~~common ~~and~~stock ~~454,545~~in ~~shares~~respect toof ~~investors that contributed funds to~~ the ~~Company.~~settlement ~~The company did not issue any shares during the three months ended September 30, 2023. The issuance~~ of the ~~shares~~convertible ~~was~~note ~~exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder~~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 ~~grant~~ date of grant. Unless sooner terminated, the Plan shall terminate in 10 years. ~~This plan has 346,854 fully vested options and a total of 551,854 allocated.~~

18This plan had 196,491 fully vested options outstanding at the time of the share exchange.

Stock Options

A summary of the stock option activity is presented below:

SCHEDULE OF STOCK ~~OPTIONS~~OPTION ACTIVITY

	Options Outstanding as of September 30, 2023
	Options Outstanding as of March 31, 2024
	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		346,854	$	2.80		3.57	$	-
Balance on December 31, 2023		551,854	$	1.84		3.18	$	-
Options granted		~~205,000~~-		~~0.21~~-		-		-
Options exercised		-		-		-		-
Options canceled / expired		-15,000		-		-		-
Balance on September 30, 2023		551,854	$	1.84		2.94	$	-
Balance on March 31, 2024		536,854	$	1.88		2.91	$	-
Vested and exercisable on September 30, 2023		551,854	$	1.84		2.94	$	-
Vested and exercisable at March 31, 2024		196,491	$	1.88		2.91	$	-

~~Stock~~The ~~Warrants~~Company’s outstanding warrants as of March 31, 2024, are summarized as follows, and all were exercisable at that date.

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, 2023, 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.

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

SCHEDULE OF WARRANTS OUTSTANDING

	Warrants Outstanding as of September 30, 2023
	Warrants Outstanding as of March 31, 2024
	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, 2022		1,117,092	$	2.02		4.05		-
Balance on December 31, 2023		1,104,243	$	1.70		3.16		-
Warrants granted		-		-		-		-
Options granted		-		-		-		-
Warrants exercised		-		-		-		-
Options exercised		-		-		-		-
Warrants canceled / expired		-		-		-		-
Options canceled / expired		25,670		5.60		-		-
Balance on September 30, 2023		1,117,092	$	2.02		3.31	$	-
Balance at March 31, 2024		1,078,573	$	1.70		2.92	$	-
Vested and exercisable on September 30, 2023		1,117,092	$	2.02		3.31	$	-
Vested and exercisable at March 31, 2024		1,078,573	$	1.70		2.92	$	-

As of ~~September~~March 3031, ~~2023~~2024, the outstanding warrants ~~have~~had no intrinsic value.

1917

Restricted Stock

~~During~~A ~~the~~summary ~~nine months ended September 30, 2023, the Company issued 1,685,490 shares~~ of the ~~Company’s common stock to various employees and directors of the Company. The company did not issue any~~ restricted ~~shares during the three months ended September 30, 2023. A summary of the restricted~~ stock activity is presented below:

~~SUMMARY~~ SCHEDULE OF RESTRICTED STOCK

	Restricted Stock Common Stock
Balance on December 31, 2022		107,993
Balance at December 31, 2023		107,993
Balance on September 30, 2023		1,793,483
Balance at March 31, 2024		107,993

As of ~~September~~March 3031, ~~2023~~2024, 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.

On ~~July~~September 330, 2023, ~~the~~an ~~Company~~asset ~~entered~~purchase ~~into~~agreement ~~an APA~~ with ~~the~~ N7 Enterprises, ~~Inc~~was closed. ~~Seller,~~The ~~pursuant~~original toagreement ~~which,~~was ~~subject~~ to ~~the~~award ~~satisfaction~~N7 785 shares of ~~certain~~preferred ~~closing~~E ~~conditions,~~stock. ~~the~~Each ~~Company~~share ~~will~~is ~~acquire~~convertible ~~certain~~into of10,000 ~~the~~shares ~~assets~~ of ~~Seller~~common ~~for~~stock. ~~78,350~~The ~~shares~~agreement ofcontained a ~~newly~~provision ~~authorized~~permitting ~~class~~the oftotal ~~convertible~~number ~~preferred stock~~ of ~~the~~shares ~~Company~~to ~~(the~~be ~~“Series~~adjusted Ebased ~~Preferred”),~~on ~~including~~projected ~~eight~~sales ~~Kava~~targets ~~Nitro~~being ~~stores~~achieved. inDue ~~the~~to ~~Tampa,~~these ~~Florida area,~~sales ~~including~~targets ~~inventory,~~not ~~equipment~~being ~~and recipes~~met, ~~distribution facilities and a warehouse. The purchase price was subject~~ subsequent to ~~decrease in~~ the ~~event~~original ~~that~~award, ~~closing~~the ~~monthly~~preferred ~~revenue~~shares iswere ~~less~~reduced ~~than~~to ~~$175,000 per month~~385.

The Series E Preferred stock will have a par value $0.0001 per share and be convertible into the common stock, par value $0.0001 per share of the Company (the “Common Stock”) after 180 days following issuance and rank: (a) senior with respect to dividend rights and rights of liquidation with the Common Stock; (b) junior with respect to dividends and right of liquidation with respect to the Company’s existing outstanding preferred stock; and (c) junior with respect to dividends and right of liquidation to all existing indebtedness of the Company. Each share of Series E Preferred will be convertible into 100 shares of Common Stock, plus all accrued and unpaid dividends. The stated value of each Series E Preferred share is $1.00 per share.

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 March 31, 2024.

On February 1, 2023, Plaintiff filed Plaintiffs Original Petition (“Petition”) in a lawsuit against the Panacea Defendants related to the Purchase Order, styled Knock-Out Specialties, Inc. v. Panacea Life Sciences, LLC, Leslie Buttorff, and Ben Doucette, Cause No. 380- 00849-2023, in the 380th District Court of Collin County, Texas. On March 20, 2023, the Panacea Defendants removed the State Lawsuit to the United States District Court for the Eastern District of Texas, Sherman Division in Case No. 4:23- cv-00217. On March 27, 2023, the Panacea Defendants filed their Motion to Dismiss and Brief in Support. This matter was settled in July 2023, and the result is the Company paid the Plaintiff $80,000.

Concentrations

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

On the revenue side, in the three months ended ~~September~~March 3031, ~~2023~~2024, we have a concentration of ~~three~~two customers. All are contract manufacturing customers who represent 10%, 12%, and 27% of revenue. In the nine months ended September 30, 2023, there is a concentration of three customers. All are contract manufacturing customers, and represent 11%, 15%, and 15% of revenue.

~~The~~Both ~~other~~are ~~concentration~~contract ismanufacturing incustomers ~~the~~who ~~accounts~~represent ~~receivable~~46% ~~category,~~and ~~where four customer accounts for 61~~13% of ~~the accounts receivable~~revenues. ~~One~~In of the three ~~customer~~months ~~contracts~~ended isMarch ~~unique~~31, in2023, ~~that~~ we ~~produce~~had ~~all~~a concentration of ~~the~~two ~~products~~customers. ~~for~~Both ~~them to sell, and they pay Panacea as the items~~ are ~~sold in~~contract ~~the~~manufacturing ~~ecommerce~~customers ~~marketplace.~~who ~~Thus,~~represent ~~until~~31% ~~their~~and ~~inventory is depleted, we will have accounts receivable. This customer receivable is 20~~13% of ~~the 61%~~revenues.

The other concentration is in the accounts receivable category, where two customers account for 54% of total receivables. . One customer 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 22% of the 54%. The other is a tenant who subleases space and accounts for 31% of the total receivables.

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.

	September 30, 2023		December 31, 2022
	March 31, 2024		December 31, 2023
Accrued Interest
Related party loan- J&N	$	1,252,164	$	796,891
Related party loan-J&N	$	1,579,136	$	1,413,210
Related party loan-CEO loan		~~423~~531,~~369~~044		~~271~~476,~~585~~536
Related party loan – Line of credit		~~781~~1,~~165~~164,347		~~282~~964,~~869~~486
Accrued Interest		~~781~~1,~~165~~164,347		~~282~~964,~~869~~486

Three months ended September 30, 2023

Nine months ended September 30, 2023

Three months ended September 30, 2022

Nine months ended September 30, 2022

Three months ended March 31, 2024

Three months ended March 31, 2023

Interest Expense

Related party loan- J&N

156,310

455,273

138,717

404,032

Related party loan-J&N

165,926

147,251

Related party loan-CEO loan

5154,~~860~~507

~~151~~49,~~785~~341

~~46,944~~

~~137,397~~

Related party loan – Line of Credit

~~188~~199,~~413~~861

~~498~~144,~~296~~956

~~70,702~~

~~152,537~~

Interest Expense

~~188~~199,~~413~~861

~~498~~144,~~296~~956

~~70,702~~

~~152,537~~

Other

The Company continues to hold 80,200 shares of XXII stock which is available for sale.

NOTE 10– SUBSEQUENT EVENTS

On August 1, 2023, PLSH announced it has entered into a Letter of Intent with Melodial Global Health (ASX:ME1) (formerly Creso Pharma) to acquire Sierra Sage Herbs (“Sierra”), maker of the best-selling Green Goo, Southern Butter and Good Goo natural products and Halucenex, a company researching novel psychedelic compoundsNone. The deal would extend Panacea’s footprint into natural first aid and body care products and establishes a strong tie with Melodial through a significant stock ownership stake. As of this time, the due diligence is still in process, but the original LOI will be cancelled.

On September 26, 2023 announced it has entered into an Asset Purchase Agreement to acquire the PÜR LIFE Medical Franchise, a franchise company providing cutting-edge pain and prevention solutions as an integrative and synergistic approach to health and healing. The acquisition of PÜR LIFE added to Panacea’s unique, vertical integration strategy in the natural health and wellness space as we now control manufacturing, production, and distribution of products and services into the $3 trillion U.S. healthcare market. However, after further due diligence we plan to rescind the APA due to their financials were not verifiable.18

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

Business Overview

~~The~~We ~~Company~~are is a Nevada corporation organized in 2008. ~~The~~Exactus, ~~Company~~Inc. ~~has~~was our former name. We have pursued opportunities in ~~Cannabidiol,~~hemp-based businesses, which we refer to as “~~CBD”, since~~cannabinoids ~~December~~or ~~2018 when we expanded our focus to pursue opportunities in hemp-derived~~ CBD”. ~~Effective~~On ~~October~~June 2530, 2021, ~~we changed our name to~~ Panacea Life Sciences ~~Holdings~~, Inc. To“Panacea” ~~that end, on June 30, 2021, we~~ entered into an ~~the~~ Exchange Agreement with ~~Panacea~~Exactus and ~~the Panacea stockholders and~~ as a result became a seed-to-sale ~~CBD~~Cannabinoid company. The former Panacea stockholders have assumed majority control of ~~the~~us ~~Company,~~ and all our operations are now operated through Panacea, which because of the share exchange became aour wholly- owned subsidiary ~~of the Company~~. Leslie Buttorff, ~~who~~ became ~~the~~our ~~Company’s~~ Chief Executive Officer and a director upon the closing of the share exchange, also became our principal stockholder through common stock and Convertible Preferred Stock issued to her and entities she controls.

~~PLSH~~Panacea Life Sciences Holdings, Inc. (PLSH) is holding company structured to ~~develop~~support ~~and~~the ~~facilitate~~life ~~manufacturing,~~sciences ~~research,~~and ~~product~~health ~~development~~ and ~~distribution~~wellness inindustry. ~~the high-growth~~Panacea, which ~~natural~~was ~~human and~~founded ~~animal~~by ~~health~~Leslie &Buttorff ~~wellness~~in ~~market~~2017 ~~segment~~as a woman-owned business. ~~The~~Through ~~company~~Panacea, iswe are dedicated to ~~manufacturing,~~developing ~~distribution, research~~ and ~~production of~~producing the highest-quality ~~nutraceutical~~, ~~cannabinoid~~most medically relevant, ~~mushroom~~legal, ~~kratom~~hemp-derived ~~and~~cannabinoid ~~other~~products ~~natural,~~for ~~plant-based~~consumers ~~ingredients~~ and ~~products~~pets. ~~PLS~~Beginning ~~operates~~at a farm Panacea ~~out~~owns a parcel of located at Needle Rock, Colorado and leases laboratory space located within a 51,000 square foot, state-of-the-art, cGMP, ~~facility~~extraction, manufacturing, testing and fulfillment center located in Golden, Colorado~~. As~~, Panacea operates in every segment of ~~September~~the CBD ~~30,~~product ~~2023~~value chain. From cultivation to finished goods, Panacea ~~sells~~ensures ~~over~~its 40products with stringent testing protocols employed at ~~different~~every stage of the supply chain. Panacea endeavors to offer pure natural remedies within product ~~SKUs~~lines for every aspect of ~~CBD~~life: ~~and~~PANA Life®, ~~CBG~~PANA ~~products~~Beauty®, PANA Sport™, PANA Pet® and ~~has~~PANA Health™. Currently Panacea sells over 3550 different ~~nutraceutical~~product SKUs ~~companies~~of ~~for~~CBD ~~which~~and weCBG ~~supply~~ products.

WeIn ~~believe~~late ~~that~~2022 ~~our~~we ~~competitive~~shifted ~~advantages~~our ~~are~~focus ~~derived~~to ~~from~~contract ~~being~~manufacturing ~~vertically integrated that allows~~ for ~~extraction,~~the enutraceutical ~~enrichment and manufacturing under a cGMP quality environment~~industry. ~~Our~~Its ~~goal is to be a leader in wholesale and retail sales channels for end-products~~subsidiary, ~~such~~Panacea asLife ~~nutraceuticals~~Sciences, ~~supplements~~ ~~and pet products~~Inc. ~~As government regulation of CBD and related products becomes more lenient in certain jurisdictions, and~~ ~~other~~(PLS) ~~barriers~~is dedicated to ~~entry decline~~manufacturing, weresearch ~~anticipate experiencing an increase in competition~~ and anproducing ~~intensifying~~the ~~competitive environment~~highest-quality, ~~including potentially the introduction of new seed~~hemp-~~to-sale~~derived ~~companies~~cannabinoid, ~~and/or~~functional ~~the expansion of operations by current competitors. Further~~mushroom, ~~numerous~~Kratom ~~other factors are expected to be critical to our ability to be~~ and ~~remain~~nutraceutical ~~competitive~~products infor ~~our~~consumers ~~business~~ and ~~goals,~~pets. ~~including~~From ~~product~~cultivation ~~quality and~~to ~~prices,~~finished ~~brand strength~~goods, ~~production~~the ~~and~~company ~~distribution~~ensures ~~capabilities~~its ~~and~~products ~~geographic~~with ~~scope~~stringent GMP ofstandards ~~operations~~ and ~~market~~testing ~~presence.~~protocols ~~Additionally, market~~employed ~~conditions~~at ~~can~~every ~~shift~~stage ~~demand~~of ~~for CBD products, such as competitive pricing,~~ the ~~effects~~supply ~~of inflation, regulatory changes and economic or geopolitical turmoil~~chain.

~~In later 2022 we shifted our focus to the nutraceutical industry and to date we have closed over 35 different manufacturing contracts.~~ We ~~offer~~are ~~“white~~well ~~label”~~positioned ~~licensing~~ to ~~retail~~develop ~~businesses~~novel ~~and~~extracts ~~contract~~as ~~manufacturing~~dietary ~~services~~supplements ~~to smaller CBD companies~~ and ~~softgel manufacturing~~topical ~~to nutraceutical companies~~applications. ~~This~~Our ~~shift~~biotechnology ~~was~~plans ~~required~~focus ason ~~the~~our ~~CBD~~research at ~~industry~~Colorado ~~slowed~~State ~~given~~University ~~the~~where ~~FDA’s inaction and~~ we ~~were well~~are ~~suited~~involved toin ~~use~~several ~~our~~health-related ~~excess~~research ~~manufacturing equipment~~studies.

~~Panacea~~We ~~intends~~believe tothat ~~position~~our ~~itself~~competitive toadvantages ~~provide~~are aderived ~~comprehensive~~from ~~menu~~being ofvertically ~~natural~~integrated ~~and~~that ~~organic~~allows ~~health~~for ~~and wellness products catering to all segments of the health and wellness minded community~~extraction, ~~while~~enrichment ~~supporting research into important medical~~ and ~~health challenges, such as the effects~~manufacturing ofunder ~~CBD/CBG/psilocybin~~a oncGMP ~~conditions~~quality ~~such~~environment: as1) ~~irritable~~Using ~~bowel~~pharmaceutical ~~syndrome,~~formulation ~~pain~~methods ~~management, brain injury and PTSD. We hope~~ to ~~capture~~optimize ~~significant market share in~~ the ~~three~~delivery ~~categories~~ of ~~mushroom~~various products ~~under development -- functional~~, ~~amanita~~ and ~~psilocybin~~2) ~~-- while enhancing~~utilize ~~our~~Good ~~on-going~~Manufacturing ~~research~~Practice ~~efforts~~to atproduce ~~Colorado~~goods ~~State~~that ~~University~~are atsafe ~~the~~and ~~Panacea~~quality ~~Cannabinoid~~products ~~Lab~~that indeliver ~~order~~consistent ~~to produce valuable information about these emerging compounds~~dosing.

22We are combining human and pet 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.

Panacea Distro, the second subsidiary of Panacea Life Sciences Holdings, Inc., manages six retail locations and a distribution center situated in the Tampa, Florida area. These establishments provide a diverse range of products, including Nitro Kava, Kratom, Hemp, VAPE and mushroom products, and various beverages, with a primary focus on promoting alternative health and wellness.

Partnership with Universities

The grand opening of the Panacea Life Sciences Cannabinoid Research Center at Colorado State University was held on October 19, 2021. The first studies at the center are underway for isolation of rare cannabinoids, examining cannabidiol’s effects on Inflammatory Bowel Disease (IBS), canine and human dementia, as well as supporting research into chronic pelvic pain. These are all long-term, multi-year studies. We previously signed an agreement with the Colorado School of Mines in the area of developing hemp-based sustainability products.

Company Information Technology Infrastructure

The ERPCannabis system is based on an SAP architecture and was used to develop the base installation. All financial, human ~~resources~~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~~March 3031, ~~2023~~2024, compared to ~~the~~ the three months ended ~~September~~March 3031, ~~2022~~2023. The information which follows relates to the operations of Panacea, which under applicable ~~accounting~~ accounting rules are treated as the operation of the Company.

Three Months Ended ~~September~~March 3031, ~~2023,~~2024 and ~~2022~~2023

Net Revenues

~~Our~~In ~~primary~~2024 ~~focus~~our inrevenues ~~the~~predominately ~~last~~came ~~three~~from ~~quarters~~contract ~~has been in~~ manufacturing ~~products~~of ~~for~~ nutraceutical ~~companies. We are still engaged in the business of producing and selling~~ products ~~made from industrial hemp~~. Revenue consists of sales toof ~~nutraceutical~~our ~~companies,~~six ~~sales of~~category ~~our~~of brand ~~CBD and CBG~~ products, white label and contract manufacturing sales to other ~~CBD~~ companies, raw material sales (distillate and isolate), tolling products, and leasing space. We also have revenue from non-CBD nutraceutical companies.

Our revenues for the three months ended September 30, 2023, decreased by $18,393, or 5%, to $347,851 as compared to $366,244 for the three months ended September 30, 2022. The decrease in sales was due to lower revenues from the sale of CBD products, but we are still gearing up in the nutraceutical manufacturing areas.19

Our revenues for the three months ended March 31, 2024, increased by $378,966, or 56%, to $1,056,447as compared to $677,481 for the three months ended March 31, 2023. The increase in sales in 2023 was due to an increase in manufacturing of non-CBD nutraceutical products.

Cost of Sales

Cost of sales for the three months ended ~~September~~March 3031, ~~2023~~2024, decreased by $ ~~117~~61,~~686~~590 or 3714% to ~~201~~390,~~232~~282 as compared to $~~318~~451,~~918~~872 for the three ~~months~~ months ended ~~September~~March 3031, ~~2022~~2023. The decrease in ~~the~~ cost of sales was due primarily to lower ~~costs~~raw ofmaterial ~~raw~~prices ~~materials~~due to larger volume purchases for non-CBD contract manufacturing ingredients.

Operating Expenses

Operating expenses for the three months ended ~~September~~March 3031, ~~2023~~2024, increased by $~~124~~212,~~655~~458, or 914%, to $1,~~560~~728,~~690~~030 as compared to $1,~~436~~515,~~035~~572 for the ~~three~~ three months ended ~~September~~March 3031, ~~2022~~2023. ~~This~~The increase in operating expenses is primarily due to ~~increases~~increased in production- related operating expenses as well as increased general and administrative expenses.

Production related operating expenses for the three months ended ~~September~~March 3031, ~~2023~~2024, increased by $~~109~~216,~~435~~316, or 917%, to $1,~~283~~474,~~964~~475 as compared to $1,~~174~~258,~~529~~159 during the three months ended ~~September~~March 3031, ~~2022~~2023. The increase in production- related operating expenses is primarily due to increased head ~~building~~count ~~maintenance~~and increased labor costs.

General and administrative expenses for the three months ended ~~September~~March 3031, ~~2023~~2024, ~~increased~~decreased by $153,~~220~~858, or 61%, to $~~276~~ 353,~~726~~555 as compared to $~~261~~257,~~506~~413during ~~during~~ the three months ended ~~September~~March 3031, ~~2022~~2023. ~~The~~This ~~increase~~change ~~in general and administrative costs~~ is ~~primarily due to increased legal costs to settle an outstanding lawsuit~~immaterial.

Other income (expense)

Other income (expense) for the three months ended ~~September~~March 3031, ~~2023~~2024, decreased by $~~568~~117,~~172~~123 or 4423% to ($~~737~~384,~~019~~209) as compared to ($1501,~~305,191~~332) for ~~the~~ the three months ended ~~September~~March 3031, ~~2022~~2023. The decrease in other income is primarily due to the unrealized loss of ~~XXII’s~~ marketable ~~securities~~ securities held (XXII: NASDAQ).

Nine Months Ended September 30, 2023 and 2022

Net Revenues

We are principally engaged in the business of manufacturing products. Our primary focus in the last three quarters has been in manufacturing products for nutraceutical companies. Revenue consists of sales of our six categories of brand products, white label and contract manufacturing sales to other CBD companies, raw material sales (distillate and isolate), tolling products, and leasing space.

Our revenues for the nine months ended September 30, 2023, increased by $122,270, or 9%, to $1,424,460 as compared to $1,302,190 for the nine months ended September 30, 2022. The increase in sales in 2023 was due primarily to our refocus on using our manufacturing equipment to produce products for numerous nutraceutical companies.

Cost of Sales

Cost of sales for the nine months ended September 30, 2023, decreased by $167,091, or 16% to $849,418 as compared to $1,016,509 for the nine months ended September 30, 2022. The decrease in the cost of sales was due primarily to lower raw material costs.

Operating Expenses

Operating expenses for the nine months ended September 30, 2023, decreased by $209,191, or 5%, to $4,353,186 as compared to $4,562,377 for the nine months ended September 30, 2022. This is due to decreases in general and administrative expenses.

Production related operating expenses for the nine months ended September 30, 2023, increased by $48,193 or 1%, to $3,683,834 as compared to $3,635,641 during the nine months ended September 30, 2022. The insignificant increase in production related operating expenses is primarily due to increased overhead costs.

General and administrative expenses for the nine months ended September 30, 2023, decreased by $257,384, or 28%, to $669,352 as compared to $926,736 during the nine months ended September 30, 2022. The decrease in general and administrative costs is primarily due to decreased sales and advertising costs.

Other income (expense)

Other income for the nine months ended September 30, 2023, increased by $1,132,769 or 36% to ($2,028,483) as compared to ($3,161,252) for the nine months ended September 30, 2022. The increase in other income is primarily due to the significance of the unrealized loss of the XXII securities held.

Liquidity and Capital Resources

Cash flows from operating activities

The largest source of operating cash is from our customers. ~~Our~~A ~~white~~large ~~label~~majority ~~and~~of ~~contract~~our ~~manufacturing~~ customers ~~pay~~purchase ~~before~~CBD ~~the~~on-line, ~~products~~so credit card payments are ~~released~~collected and ~~this~~paid ~~now~~within ~~makes~~1-2 upbusiness ~~the~~days. ~~majority~~Other ofwhite ~~our~~label ~~revenue.~~and contract manufacturing customers pay before the products are released. Some larger customers have either net 10-, 2%- or 30-day net terms. ~~Our customers purchase CBD on-line, so credit card payments are collected and paid within 1-2 business days.~~ Net cash used in operating activities was $1357,~~526,036~~090 and $1313,~~876,580~~851 for three ~~the nine~~ months ended ~~September~~March ~~30,~~31 ~~2023,~~for 2024 and ~~2022~~2023, respectively. Approximately $40.1854 million of our $51.8446 million ~~annual~~ net loss in ~~2023~~2024 was non-cash.

Cash flows from investing activities

Cash outlay for the acquisition of fixed assets comprised the majority of this category and were $475,~~417~~000 and $9815,~~129~~220 for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, and ~~2022~~2023, respectively.

Cash flows from financing activities

Net cash provided by financing activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2023,~~2024 was $1368,~~567,997~~811. For the same period in ~~2022,~~2023 the financing was $1395,~~991,726~~352. In both years the primary financing was cash provided by ~~the~~ Company’s CEO. ~~In 2022 there was a cash payment received of $253,791 from the paycheck loan program.~~

AsLiquidity ~~of November 1, 2023, we had $76,732 in cash~~ and ~~liquid~~Capital stock of XXII. The Chief Executive Officer of the Company holds the XXII shares pursuant to the pledge agreement and has the power at any time to permit the Company to sell the shares to provide working capital. Panacea has borrowed substantial sums from Leslie Buttorff, our Chief Executive Officer, to meet its working capital obligations. As of September 30, 2023, Panacea owed an affiliate of Ms. Buttorff a 12% demand promissory note for $4.063 million and also held a 10% demand promissory note for $1.686 million secured by a pledge of certain XXII common stock owned by Panacea. On July 1, 2021, the Company issued a $1 million line of credit note at 10% annual rate, which Ms. Buttorff has extended to January 2025 and increased the line of credit to $8.5 million. We also secured a bank loan to finance equipment for our production wing.Resources

On March 31, 2024, we had $0.117 million in cash and liquid stock of XXII. Our Chief Executive Officer holds the XXII shares pursuant to the pledge agreement and has the power at any time to permit us to sell the shares to provide working capital. We have borrowed substantial sums from Leslie Buttorff, our Chief Executive Officer, to meet its working capital obligations. On June 30, 2021, Panacea issued an affiliate of Ms. Buttorff a 12% demand promissory note for $4.063 million and issued Ms. Buttorff a 10% demand promissory note for $1.624 million secured by a pledge of certain XXII common stock owned by Panacea. Additionally, we have a line of credit with Ms. Buttorff through which it may borrow up to $8 million at a 10% annual 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.

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~~March 3031, ~~2023~~2024, we had no material off-balance sheet arrangements.

Potential Impacts of Certain Current and Proposed Regulations on Our Business and Operations

Recently, a bill titled the Cannabis Administration and Opportunity Act, put forward by Senate Majority leader Chuck Schumer, D-NY, would amend the definition of a dietary supplement to remove the prohibition on marketing CBD as a dietary supplement. Management sees the bill, if enacted, as an opportunity for the FDA to accelerate their decision to classify CBD products as a dietary supplement. This would be a significant step for hemp/CBD companies as it would open the door to new selling opportunities, such as getting into retail stores, who have largely been hesitant to welcome CBD in their doors without a clear position from the FDA.

Many people are increasingly turning to CBD products for several reasons: CBD is non-psychoactive, so it does not produce a “high” like THC, there are few known contraindications, the properties of different cannabinoids can positively affect a wide range of ailments, and cannabinoids work directly and indirectly with the body’s endocannabinoid system to create balance known as homeostasis. As demand increases, we believe the FDA must provide more clarity about CBD’s legalization, and this bill is a promising first step.

For now, many companies that produce hemp-derived CBD products including Panacea undertake to abide by the same regulations as any other dietary supplements like ingredient filings, good manufacturing practices (GMP), and labeling and marketing provisions. Panacea will continue to sell CBD and other hemp-derived products while still awaiting a clear path from the FDA about how CBD products can be marketed and used.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements ~~regarding~~about ~~the effectiveness of~~ our ~~products, future~~new ~~studies that we may conduct , our~~ 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~~ about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that ~~relate~~ relate to our future revenue, product development, customer demand, market acceptance, growth rate, competitiveness, gross margins, and expenditures.

Although forward-looking statements in this Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Further information on the risks and uncertainties affecting our business is contained in our filings with the SEC, including this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~ 2023. 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.

Critical accounting estimates are those that the Company’s management considers the most important to the portrayal of the Company’s financial condition and results of operations because they require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. The Company’s critical accounting estimates in relation to its condensed consolidated financial statements include those related to:

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

Goodwill and Indefinite-Lived Intangibles

We allocate the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill. The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests, require significant management judgments and estimates. These estimates are made based on, among other factors, review of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the cost of capital. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of goodwill and other intangible assets, and potentially result in a different impact to our results of operations. Further, changes in business strategy and/or market conditions may significantly impact these judgments and thereby impact the fair value of these assets, which could result in an impairment of the goodwill or intangible assets.

Goodwill is not amortized but is tested for impairment annually and whenever events or circumstances change that indicate impairment may have occurred. We tested goodwill for impairment and determined there was no impairment and found not impairment charge based on the excess of a reporting unit’s carrying amount over our fair value.

Fair value of marketable securities

Marketable securities are recorded at fair value using the quoted market prices and changes in fair value are recorded as net realized gains or losses in comprehensive income. We monitor these investments for impairment and make appropriate reductions in carrying values as necessary.

Incremental Borrowing Rate used Right of Use Asset Calculations

We determine if a contract is a lease or contains a lease at the inception of the contract and reassess that conclusion if the contract is modified. All leases are assessed for classification as an operating lease or a finance lease. Operating lease right-of-use, or ROU, assets are included in non-current other assets on our consolidated balance sheet. Operating lease liabilities are separated into a current portion, included within other accrued liabilities on our consolidated balance sheet, and a non-current portion, included within other long-term liabilities on our consolidated balance sheet. We do not have any finance lease ROU assets or liabilities. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We do not obtain and control the right to use the identified asset until the lease commencement date.

Our lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. Because the interest rate implicit in the lease is not readily determinable, we generally use our incremental borrowing rate to discount the lease payments to present value. The estimated incremental borrowing rate is derived from information available at the lease commencement date. We factor in publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. Our ROU assets are also recognized at the applicable lease commencement date. The ROU asset equals the carrying amount of the related lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor. Variable lease payments are expensed as incurred and do not factor into the measurement of the applicable ROU asset or lease liability.

Business Combinations

We have applied significant estimates and judgments in order to determine the fair value of the identified assets acquired, liabilities assumed and goodwill recognized in connection with our business combinations to ensure the value of the assets and liabilities acquired are recognized at fair value as of the acquisition date. In measuring the fair value, we utilize valuation techniques consistent with the market approach, income approach, or cost approach.

The valuation of the identifiable assets and liabilities includes assumptions made in performing the valuation, such as projected revenue, weighted average cost of capital, discount rates, estimated useful lives, and other relevant assessments. These assessments can be significantly affected by our estimates, judgments, and assumptions. If actual results are not consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future that affects our fair value estimates, then adjustments to our initial fair value estimates may have a material impact to our purchase accounting or our results of operations. If actual results are not consistent with our estimates, judgments, or assumptions, or if additional or new information arises in the future, beyond our one-year measurement period, that affects our fair value estimates, then adjustments to our initial fair value estimates may have a material impact to our results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, with the participation of our Principal Executive Officer ~~(who~~and ~~also now serves as our~~ Principal Financial Officer), required by Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer ~~(who~~and ~~also now serves as our~~ Principal Financial Officer) concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

Except as noted above, there were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time–to-time, we may become involved in legal proceedings arising in the ordinary course of business. We are unable to predict the outcome of any such matters or the ultimate legal and financial liability, and at this time cannot reasonably estimate the possible loss or gain or range of loss/gain and accordingly have not accrued a related liability.

We filed suit in District Court in and for Osage, County, Oklahoma on December 19, 2019. We have sued Defendants, Mike Fisher, in his official capacity as Osage County District Attorney ex rel. State of Oklahoma as an investigating and/or prosecuting body, Eddie Virden in his official capacity as the Sheriff of the City of Osage as holder of the property, and the City of Pawhuska as the property seizing body, (collectively the “Government Defendants”) for the return of approximately 17,000 pounds of industrial hemp (the “Property”). We believe we were entitled to possession of the Property pursuant to an August 23, 2018, contract between us and Blue Circle Development, LLC (“BCD”), wherein we agreed to pay and BCD agreed to deliver the Property according to certain terms. Plaintiff performed pursuant to the contract and is entitled to possession of the Property. We believe the Government Defendants wrongfully detained the Property and is responsible for damages to the Property and to us. On or about May 4, 2020, the Government Defendants improperly released the Property to BCD in violation of a Court Order. We have asserted claims against the Government Defendants for interference with the Court Order and BCD for improperly intercepting the Property from us. The case completed most of the discovery phase including document production and depositions. The parties will complete the discovery phase, potentially engage in dispositive motion briefing, and proceed toward a trial date. The damages claim is over $3.4 million. There is no assurance that we will be successful in our efforts related to this lawsuit or if we are, which amounts we will be able to recover.

On February 1, 2023, Plaintiff filed Plaintiffs Original Petition (“Petition”) in a lawsuit against the Panacea Defendants related to the Purchase Order, styled Knock-Out Specialties, Inc. v. Panacea Life Sciences, LLC, Leslie Buttorff, and Ben Doucette, Cause No. 380- 00849-2023, in the 380th District Court of Collin County, Texas. On March 20, 2023, the Panacea Defendants removed the State Lawsuit to the United States District Court for the Eastern District of Texas, Sherman Division in Case No. 4:23- cv-00217. On March 27, 2023, the Panacea Defendants filed their Motion to Dismiss and Brief in Support. This matter was settled in July, 2023 and the result is the Company will pay the Plaintiff $80,000.

ITEM 1A. RISK FACTORS.

~~Investing~~Not ~~in our common stock involves a high degree of risk~~applicable. Investors should carefully consider the following Risk Factors before deciding whether to invest in us. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the Risk Factors below occur, our business, financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of our common stock could decline.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that you should consider before investing in our common stock. Set forth below is a summary of the principal risks we face:

● We intend to raise capital through the sale of our common stock or securities convertible or exercisable into our common stock soon which will have a dilutive effect on our existing stockholders; ● Our ability to continue as a going concern is in doubt unless we obtain adequate new debt or equity financing and achieve sufficient sales levels; ● Because we require additional capital to execute our business plan and expand our operations, our inability to generate and obtain such capital on acceptable terms, or at all, could harm our business, operating results, financial condition and prospects; ● We are highly dependent on our Chief Executive Officer, and the loss of her services or a conflict of interest arising from her loans to us, and her other business endeavors would adversely affect us;

● Our business and the CBD industry generally are subject to substantial regulation and governmental scrutiny characterized by high compliance costs and uncertainty, including the possibility that laws change in a manner adverse to us; ● Panacea’s operations and our new Chief Executive Officer were not previously subject to SEC reporting obligations, which could render us difficult to evaluate and expose us to risk; ● If we are unable to keep up with rapid technological change, consumer preferences and economic developments in our industry or in general, our products may become obsolete. ● We could become subject to data privacy and security claims or enforcement actions, particularly due to our digital marketing efforts; ● We may become subject to product liability or related claims based on our production and sale of products containing chemical compounds designed to be ingested or applied topically;

● Our Chief Executive Officer, directly and through entities she controls, owns a majority of our outstanding common stock and voting power on an as-converted basis, rendering other stockholders’ ability to influence matters before them limited in most cases; and ● Operational risks such as material weaknesses and other deficiencies in internal control over financial reporting could result in errors, potentially requiring restatements of our historical financial data, leading investors to lose confidence in our reported results.

Risks Related to Our Business

Because we need to raise additional capital any financing based on our common stock or common stock equivalents will dilute our existing stockholders and the terms of any such financing could impose restrictions on our operations.

We have depended upon loans from our Chief Executive Officer and principal stockholder and have primarily financed our operations by borrowing funds from her.

We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs and the lack of adequate financing could negatively impact our business.

There is risk that any lenders, even those with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations under existing credit commitments, including but not limited to: extending credit up to the maximum permitted by a credit facility, allowing access to additional credit features and otherwise accessing capital and/or honoring loan commitments. If our lenders failed to honor their legal commitments under our credit facility, it could be difficult in this environment to replace our credit facility on similar terms. Furthermore, we may be unable to renegotiate our existing credit facility or obtain replacement or additional financing.

Because, we are highly dependent on the services of Leslie Buttorff, our sole executive officer, the loss of her and our inability to expand our management team, could harm our business.

Our success is largely dependent on the continued services of Leslie Buttorff, our Chief Executive Officer and principal stockholder. The loss of the services of Ms. Buttorff would leave us without executive leadership, which could diminish our business and growth opportunities. Additionally, Ms. Buttorff has business interests outside our company and a real estate holding company each of which hold shares in us as a result of the recent share exchange under the Exchange Agreement. Accordingly, from time-to-time she may not devote her full time and attention to our affairs, which could have a material adverse effect on our operating results, and there can be no assurance that a conflict of interest will not arise from her other business ventures. Further, as of December 31, 2022, Ms. Buttorff holds demand promissory notes totaling $14,796,011 at various interest rates ranging from 0% to 12%. Thus, she has the power to call the notes and obtain all our assets. Additionally, we have a line of credit with Ms. Buttorff through which it may borrow up to $5 million at a 10% annual interest rate. The fact that she continues to advance money and is our principal stockholder reflects her intent to support us.

The loss of Ms. Buttorff would have a material adverse effect on us. We do not have key man insurance on the life of Ms. Buttorff. Ms. Buttorff’s Employment Agreement with us (the “Employment Agreement”) permits her to resign for good reason which includes our material breach of the Employment Agreement including our failure to pay her. In the event Ms. Buttorff terminates her Employment Agreement for good reason, this would result in the us owing her approximately $760,000 in severance pay plus any deferred compensation and earned bonuses and other benefits and would leave us without an executive officer which may have a material adverse effect upon us, your investment, and hamper our ability to continue operations. If we fail to procure the services of additional executive management or implement and execute an effective contingency or succession plan for Ms. Buttorff, the loss of Ms. Buttorff would significantly disrupt our business from which we may not be able to recover.

If we are unable to develop and maintain our brand and reputation for our product offerings, our business and prospects could be materially harmed.

Our business and prospects depend, in part, on developing and then maintaining and strengthening our brand and reputation in the markets we serve. If problems with our products cause our customers to have a negative experience or failure or delay in the delivery of our products to our customers, our brand and reputation could be diminished. If we fail to develop, promote and maintain our brand and reputation successfully, our business and prospects could be materially harmed.

Because we face intense competition, we may not be able to increase our market share which would materially and adversely affect us.

Our industry is highly competitive. It is possible that future competitors could enter our market, thereby causing us to lose market share and revenues or fail to grow our operations and market presence as intended or at all. In addition, some of our current or future competitors have significantly greater financial, technical, marketing and other resources than we do or may have more experience or advantages in the markets in which we will compete that will allow them to offer lower prices or higher quality products. If we do not successfully compete with these competitors, we could fail to develop a sufficient market share to achieve our goals and our future business prospects could be materially adversely affected.

Because the sale of our products involves the potential for product liability, we may incur significant losses and expenses in excess of our insurance coverage.

We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Our products are designed for ingestible, inhaling or topical use and contain combinations of ingredients, and there is little experience with or knowledge of the long-term effects of these combinations. In addition, interactions of these ingredients and products with other products, prescription medications and over-the-counter treatments have not been fully explored or understood and may have unintended consequences. Future research or results may lead to the discovery of unknown adverse side effects from CBD, kava or kratom-based products, which would harm our business.

Although we believe all our products will be safe when taken as directed by us, there is little long-term research on the effects of human consumption of certain of the new product ingredients or combinations in concentrated form that we use or may in the future use in developing our CBD products. Any instance of illness or negative side effects of ingesting CBD products or applying them topically on the skin, or of ingesting or inhaling kradom-based products or kava could have a material adverse effect on our business and operations by, among other things, exposing us to the risk of costly litigation and/or governmental sanctions and dramatically reducing the demand for some or all our products.

Any product liability claims or related developments from our products or CBD, kava and kratom-based products in general may increase our costs and adversely affect our revenue, product demand and operating results. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which, if adversely determined, could subject us to substantial monetary damages.

The success of our business will depend upon our ability to create and expand our brand awareness.

The health and wellness, CBD, kratom and kava bar markets we compete in are highly competitive, with many well-known brands leading the industry. Our competitors include CBD companies, vape retail distributors and kava bars who have a longer history operating in these markets than we do. Our ability to compete effectively and generate revenue will be based upon our ability to create and expand awareness of our products distinct from those of our competitors. It is imperative that we are able to convey to consumers the benefits of our products both in general and as compared to competitive offerings. However, advertising, packaging and labelling of our products is limited by various regulations. Our success will be dependent upon our ability to convey to consumers that our products are superior to those of our competitors while complying with complex and varying regulations in the markets in which we attempt to market and sell them.

If we fail to develop and introduce new products it will adversely affect our future prospects.

Our industry is subject to rapid change. New products are constantly introduced to the market. Our ability to remain competitive depends in part on our ability to enhance existing products, to develop and manufacture new products in a timely and cost-effective manner, to adequately anticipate, prepare and execute strategies for market transitions, and to effectively market our products. Management believes that our future financial results will depend to a great extent on the successful expansion of our current product offerings and on the development and introduction of new products. We cannot be certain that we will be successful in selecting, developing, manufacturing and marketing new products or in improving upon or enhancing the market for existing products.

The success of new product introductions or expansions to new territories depends on various factors, including, without limitation, the following:

● Successful sales and marketing efforts; ● Timely delivery of the products; ● Availability of raw materials and/or sufficient production facilities; ● Pricing of raw materials and labor; ● Regulatory allowance and restrictions of the products; and ● Market acceptance and consumer sentiment.

If we fail to appropriately respond to changing consumer preferences and demand for new products, it could significantly harm our customer relationships and product sales and harm our operating results and financial condition.

Our business is subject to changing consumer trends and preferences, especially with respect to targeted nutrition and natural wellness products. Our success will depend in part on our ability to anticipate and respond to these changes, and we may not respond in a timely or commercially appropriate manner to such changes. Furthermore, the health and wellness industry is characterized by rapid and frequent changes in demand for products and new product introductions and enhancements. Our failure to accurately predict these trends could negatively impact consumer opinion of our products, which in turn could harm our customer relationships and product demands and cause the loss of sales. The success of our product offerings depends upon a number of factors, including our ability to:

● Accurately anticipate consumer needs; ● Successfully commercialize new products or product enhancements in a timely manner; ● Price our products competitively; ● Arrange for the production and delivery our products in sufficient volumes and in a timely manner; ● Differentiate our products from those of our competitors; and ● Innovate and develop new products or product enhancements that meet these trends.

If we do not meet these challenges, some of our products could be rendered obsolete, which could negatively impact our operating results and financial condition.

Adverse publicity associated with our products or ingredients, or those of our competitors or similar businesses, could adversely affect our sales and revenue.

Adverse publicity concerning any actual or purported failure by us or our competitors to comply with applicable laws and regulations or concerning any other aspect of our business, the CBD industry, vape retailer distributors and kava bars could have an adverse effect on the public perception of us and our products. This, in turn, could negatively affect our ability to obtain financing, endorsers and attract distributors, retailers or consumers for our products, which would have a material adverse effect.

Our distributors’ and customers’ perception of the safety, utility and quality of our products or even similar products distributed by others can be significantly influenced by national media attention, publicized scientific research or findings, product liability claims and other publicity concerning our products or similar products distributed by others. Adverse publicity, whether accurate or not, that causes a perceived connection between consumption of our products or any similar products and illness or other adverse effects, will likely diminish the public’s perception of and in turn the demand for our products. Claims that any products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could have a material adverse effect on the market demand for our products, including reducing our sales and revenue, which would have a material adverse effect on our business.

If we are unable to manufacture our products in sufficient quantities or at defined quality specifications or are unable to maintain regulatory approvals for our production facility, we may be unable to develop or meet demand for our products and lose time to market and potential revenues.

Commercialization of our products require access to, or development of, facilities to manufacture a sufficient supply of our products. In the future we may face difficulties in the development, production or distribution of our products.

We may face competition for access to any third-party supply sources, development or production partners and facilities such as hemp growers and may be subject to production delays if any of those third parties give their other business partners a higher priority than they give to us. Even if we are able to identify additional or replacement third parties, the delays and costs associated with establishing and maintaining a relationship with such third parties may have a material adverse effect on us. Further, a reduction in the control of our production efforts would be inherent in any such outsourcing, which exposes us to a greater risk of liability, including regulatory enforcement actions for alleged noncompliance with law and product liability claims. This could also result in lower product quality which could negatively impact demand for our offerings or our competitive advantage. Any of these challenges could prevent us from achieving our business objectives and harm your investment in us.

Because we manufacture the large majority of our products, as well as for contractors who rely on us to manufacture their nutraceutical products, our business is heavily dependent upon the uninterrupted and efficient operation of our manufacturing facilities, which are subject to power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters and the need to comply with the requirements or directives of government agencies, including the FDA.

Our businesses are dependent upon the uninterrupted and efficient operation of our manufacturing facilities in Golden, Colorado. Those operations are subject to power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters and the need to comply with the requirements or directives of government agencies, including the FDA. There can be no assurance that the occurrence of these or any other operational problems at our facility would not have a material adverse effect on our business, financial condition and results of operations.

If the market opportunities for our current and potential future products are less lucrative than anticipated, our ability to generate revenues may be adversely affected and our business may suffer.

Our understanding, expectation and estimates of the market for our current and future products may prove to be incorrect, and new test results or studies, reports, legislative or regulatory developments or other factors beyond our control may result in the market for our products being lower than anticipated on a regional, national or global scale. The number of individuals in the U.S. who are willing to purchase our products may be lower than expected, or expectations for repetitive purchases and consumption may prove to be incorrect. These occurrences could materially adversely affect our prospects and operational results.

If we are unable to establish relationships with third parties to carry out sales, marketing, and distribution functions or to create effective marketing, sales, and distribution capabilities, we will be unable to market our products successfully.

Our business strategy includes using third parties to market and sell the products at the retail level. There can be no assurance that we will successfully be able to establish marketing, sales, or distribution relationships with a sufficient number of third parties to meet our goals, that such relationships, if established, will be successful, or that we will be successful in gaining market acceptance for current or future products. To the extent that we enter into any marketing, sales, or distribution arrangements with third parties, our product revenues per unit sold are expected to be lower than if we marketed, sold, and distributed our products directly, and any revenues we receive will depend upon the efforts of such third parties.

If we are unable to establish such third-party marketing and sales relationships, we would have to establish and grow in-house marketing and sales capabilities. To market any products directly, we would have to build a marketing, sales, and distribution force that has technical expertise and could support a distribution capability. Competition in the health and wellness and cannabinoid industries for technically proficient marketing, sales, and distribution personnel is intense, and attracting and retaining such personnel may significantly increase our costs. There can be no assurance that we will be able to establish internal marketing, sales, or distribution capabilities or that these capabilities will be sufficient to meet our needs.

As a part of our business strategy, we have made and expect to continue to make acquisitions that could disrupt our operations and harm our operating results.

An element of our strategy includes expanding our product offerings, gaining shelf-space and gaining access to new skills and other resources through strategic acquisitions when attractive opportunities arise. Acquiring additional businesses and the implementation of other elements of our business strategy are subject to various risks and uncertainties. Some of these factors are within our control and some are outside our control. These risks and uncertainties include, but are not limited to, the following:

● Any acquisition may result in significant expenditures of cash, stock and/or management resources; ● Acquired businesses may not perform in accordance with expectations; ● We may encounter difficulties and costs with the integration of the acquired businesses; ● Management’s attention may be diverted from other aspects of our business; ● We may face unexpected problems entering geographic and product markets in which we have limited or no direct prior experience; ● We may lose key employees of acquired or existing businesses; ● We may incur liabilities and claims arising out of acquired businesses; ● We may be unable to obtain financing; and ● We may incur indebtedness or issue additional capital stock which could be dilutive to holders of our common stock.

There can be no assurance that attractive acquisition opportunities will be available to us, that we will be able to obtain financing for or otherwise consummate any acquisitions or that any acquisitions which are consummated will prove to be successful. There can be no assurance that we can successfully execute all aspects of our business strategy.

Because of the Russian Invasion of Ukraine, the effect on the capital markets and the economy is uncertain, and as a result we may have to deal with a recessionary economy and economic uncertainty, including possible adverse effects upon our ability to raise capital as and when needed.

As a result of the Russian invasion of Ukraine, certain events are beginning to affect the global and U.S. economy including increased inflation, substantial increases in the prices of oil and gas, large Western companies ceasing to do business in Russia and uncertain capital markets with declines in leading market indexes. The duration of this war and its impact are at best uncertain. Ultimately the economy may turn into a recession with uncertain and potentially severe impacts upon public companies and us, including our ability to raise capital. We cannot predict how this will affect our operations or the industries in which we operate, however any such impact may be material and adverse.

We have a limited operating history upon which investors can evaluate our future prospects.

Panacea was founded and began operations in the CBD industry in 2017, and operations in the vape and kava industry as of this year 2023, and we therefore have a limited operating history upon which an evaluation of our business plan or performance and prospects can be made. Our business and prospects must be considered in the light of the potential problems, delays, uncertainties and complications encountered in connection with a business which is still in its early stages in a relatively new industry characterized by unexpected change. The risks include, but are not limited to, the possibility that we fail to develop functional and scalable products, or that although functional and scalable, our products will not be economical to market in order to become or remain profitable; that our competitors hold proprietary rights precluding us from marketing such products; that our competitors offer a superior or equivalent product or otherwise achieve or maintain greater market acceptance than us; that we are unable to upgrade or improve our processes and products to accommodate new features and expand our offerings; or that we fail to receive or maintain necessary regulatory clearances and compliance for our products and operations. In order to grow our revenue, we must develop and improve upon our brand name recognition and competitive advantages for our products and expand into new markets. Even if we accomplish such growth, resulting expenses may be greater than estimated, which could reduce or even eliminate any revenue gains for which such endeavors were made. There are no assurances that we can successfully address these challenges. If we are unsuccessful, our business, financial condition and operating results could be materially and adversely affected.

If the market for CBD products further declines, it would materially and adversely affect our business.

Following the passage of the 2018 Farm Bill described below, our industry experienced an influx of hemp farmers and producers which resulted in a saturated marketplace. As a result, the supply for CBD and related products has in the past exceeded demand. This trend could force us to reduce our prices to remain competitive or could result in lower sales levels than we have experienced in the past, either of which would result in a decline in revenue or growth rate and could materially adversely affect our financial condition and prospects.

Some of our products contain psychedelic substances, the use of which may generate public controversy. Adverse publicity or public perception regarding our current or future product candidates may negatively influence the success of these therapies.

Some of our products contain psychedelic substances that may generate public controversy. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for our current products and any future products we may develop or distribute. Opponents of these compounds may seek restrictions on marketing and withdrawal of any regulatory approvals. In addition, these opponents may seek to generate negative publicity in an effort to persuade the medical community to reject these products, if approved. Adverse publicity from misuse may adversely affect the commercial success or market penetration achievable by our products. Anti-psychedelic protests have historically occurred and may occur in the future and generate media coverage. Political pressures and adverse publicity could lead to delays in, and increased expenses for, and limit or restrict the introduction and marketing of, our product candidates or any future therapeutic candidates.

If we fail to attract new customers in a cost-effective manner, our business may be harmed.

A large part of our success depends on our ability to attract new customers in a cost-effective manner. We have made, and may continue to make, significant investments in attracting new customers through increased advertising spends on social media, radio, podcasts, and targeted email communications, other media and events, sponsorships, and influencer sponsorships. Marketing campaigns can be expensive and may not result in the cost-effective acquisition of customers. Further, as our brand becomes more widely known, future marketing campaigns may not attract new customers at the same rate as past campaigns and the cost of acquiring new customers may increase over time. Additionally, regulation, algorithms, or participants in the digital marketing ecosystem may change rules for our industry or access to available demographics which may result in significant changes in the ability to target key demographic pools, impacting our ability to target our customers effectively. If we are unable to attract new customers, or fail to do so in a cost-effective manner, our business may be harmed.

Even if we meet our growth objectives and our enter into new markets as intended, we may face difficulties evaluating our current and future business prospects, and we may be unable to effectively manage any growth associated with these achievements, which would increase the risk of your investment losing value and could harm our business, financial condition, and results of operations.

Our entry into new markets and/or growth in our product offering or consumer base may place a significant strain on our resources and increase demands on our executive management, personnel and operational systems, and our human, administrative and financial resources may be inadequate to meet these demands. We may also be unable to effectively manage any expanded operations or achieve planned growth on a timely or profitable basis, particularly if the number of customers using our products significantly increases within a short period of time. If we are unable to manage expanded operations effectively, we may experience operating inefficiencies, the quality of our products could decline, and our business and results of operations could be materially adversely affected.

If we cannot manage our growth effectively, our results of operations would be materially and adversely affected.

We expect to experience growth as we raise additional capital. Businesses which grow rapidly often have difficulty managing their growth while maintaining their compliance and quality standards. If we grow as rapidly as anticipated, we will need to expand our management by recruiting and employing additional executive and key personnel capable of providing the necessary support. There can be no assurance that management, along with staff, will be able to effectively manage our growth nor can there be any assurance that growth in our product offerings, customer base or contracts will translate to an increase in revenue or profitability. Any failure to meet the challenges associated with rapid growth could materially and adversely affect our business and operating results.

Existing or future governmental regulations relating to cannabinoid products may harm or prevent our ability to produce and/or sell our product offerings.

While a majority of state governments in the United States have legalized the growing, production, and use of CBD in some form and subject to certain restrictions, cannabis remains illegal under federal law. In addition, in July 2017, the United States Drug Enforcement Agency issued a statement that certain CBD extractions fall within the definition of marijuana and are therefore a Schedule I controlled substance under the Controlled Substances Act of 1970, as amended. Thus, the cannabis industry, including companies which sell products containing CBD, faces significant uncertainty surrounding regulation by the federal government, which could claim supremacy over state regulatory regimes including those with a “friendlier” view toward CBD products. While the federal government has for several years chosen to not intervene in the cannabis business conducted legally within the states that have legislated such activities, there is, nonetheless, potential that the federal government may at any time choose to begin enforcing its laws against the manufacture, possession, or use of cannabis-based products such as CBD. Similarly, there is the possibility that the federal government may enact legislation or rules that authorize the manufacturing, possession or use of those products under specific guidelines. Local, state and federal cannabis laws and regulations are broad in scope and subject to evolving interpretations. In the event the federal government was to tighten its regulation of the industry, we would likely suffer a material adverse effect on our business, including potentially substantial losses.

Because laws and regulations affecting our industry are evolving, changes to any regulation may materially affect our CBD products, and the distribution of our kratom-based and kava products.

In conjunction with the enactment of the Agriculture Improvement Act of 2018 (the “Farm Bill”), the Food and Drug Administration (the “FDA”) released a statement about the status of CBD as a nutritional supplement, and the agency’s actions in the short term with regards to CBD will guide the industry. As a company whose products contain CBD, we intend to meet all FDA guidelines as the regulations evolve. Any difficulties in compliance with future government regulation could increase our operating costs and adversely impact our results of operations in future periods. In addition, as a result of the Farm Bill’s passage, we expect that there will be a constant evolution of laws and regulations affecting the CBD industry which could affect our operations.

While kratom and kratom-based products are currently legal and accessible in many areas, and that there are no uses for kratom approved by the FDA, people report using kratom to manage drug withdrawal symptoms and cravings (especially related to opioid use), pain, fatigue and mental health problems. National Institute on Drug Abuse supports and conducts research to evaluate potential medicinal uses for kratom and related chemical compound. Rare but serious effects have been reported in people who use kratom, including psychiatric, cardiovascular, gastrointestinal and respiratory problems.

Kava is not a controlled substance in the U.S. Due to concerns of liver toxicity, many countries including Australia, Canada, France, Germany, Japan, Malaysia, Norway, Poland, Singapore, South Africa, Sweden, Switzerland, and the United Kingdom have placed regulatory controls on kava.

Local, state and federal laws and regulations which the use and manufacture of hemp, kratom-based and kava products may be broad in scope and subject to changing interpretations. These changes may require us to incur substantial costs associated with legal and compliance fees and ultimately require us to alter our business plan. Furthermore, violations of these laws, or alleged violations, could disrupt our business and result in a material adverse effect on our operations. In addition, we cannot predict the nature of any future laws, regulations, interpretations or applications, and it is possible that regulations may be enacted in the future that will be directly applicable to our business.

Costs associated with compliance with numerous laws and regulations and quality standards could adversely impact our financial results.

The manufacture, labelling and distribution of CBD products, kratom-based products and kava is regulated by various federal, state and local government agencies. These governmental authorities regulate our products and processes to ensure that the products are not adulterated or misbranded. We are subject to regulation by the federal government and other state and local agencies as a result of our products. In addition to the risks associated with the possibility of government enforcement or private litigation due to alleged noncompliance, our compliance costs associated with our day-to-day operations are high and are expected to increase as we expand into new markets and/or develop and market new products. For example, as a “seed to sale” CBD business, meaning a business which handles every step of a CBD product’s manufacture and sale in-house rather than relying on third parties for some or all the production and distribution steps, we are responsible for the quality of our product, and the means by which it is produced and marketed, at every stage. Compliance with regulations imposed on our business model means we must deploy and maintain an advanced computer monitoring system which allows us to track our production and distribution process. We must train our employees and utilize and maintain security measures to ensure our facility functions properly. Compliance with these and other government requirements for product monitoring, quality, labelling and distribution are costly which may limit our profitability.

Our products or third parties with whom we do business may not comply with health, safety and labelling standards.

We do not have control over all of the third parties involved in the sale of our products and their compliance with government health, safety and labelling standards. Even if our products meet these standards, they could otherwise become contaminated or fail, or the standards could be changed in a manner adverse to our operations or those of our business partners. A failure to meet these standards could occur in our operations or those of our distributors or suppliers. This could result in expensive production interruptions, recalls, regulatory investigations and enforcement actions and liability claims. Moreover, negative publicity could be generated from false, unfounded or nominal liability claims or limited recalls. Any of these failures or occurrences could negatively affect our business and financial performance.

A substantial amount of our leases will expire within the next three years, and we may have difficulty in re-leasing or selling our properties if tenants do not renew their leases.

Within the next three years, the majority of our leases which are based on annualized contractual minimum base rent, are due to expire. If these leases are not renewed, or if the properties cannot be re-leased on terms that yield payments comparable to those currently being received, then our rent expenses could be substantially adversely affected. The terms of any new or renewed leases of these properties may depend on market conditions prevailing at the time of lease expiration.

We do not fully control the management of our properties.

In our newly acquired stores in the Tampa, FL the landlords of net leased properties are responsible for maintenance and other day-to-day management of the premises and the buildings. If a property is not adequately maintained in accordance with the terms of the applicable lease, we may incur expenses due to delayed maintenance or other liabilities before the necessary maintenance has been completed. While our leases generally provide for protection in these instances, a landlord may defer maintenance and it may be more difficult to enforce remedies against such a landlord. Although we endeavor to monitor, on an ongoing basis, compliance by both ourselves and landlords with their lease obligations and other factors that could affect the conditions of our properties, such monitoring may not in all circumstances ascertain or forestall such deterioration of a property.

Our success is dependent on the accuracy, reliability, and proper use of sophisticated and dependable information processing systems and management information technology and any interruption in these systems could have a material adverse effect on our business, financial condition and results of operations.

Our success is dependent on the accuracy, reliability and proper use of sophisticated and dependable information processing systems and management information technology. Our information technology systems are designed and selected in order to facilitate order entry and customer billing, maintain customer records, accurately track purchases and incentive payments, manage accounting, finance and manufacturing operations, generate reports, and provide customer service and technical support. Any interruption in these systems could have a material adverse effect on our business, financial condition and results of operations. Like other companies, our information technology systems may be vulnerable to a variety of interruptions due to events beyond our control, including, but not limited to, natural disasters, terrorist attacks, telecommunications failures, computer viruses, hackers, and other security issues. We have technology security initiatives and disaster recovery plans in place or in process to mitigate our risk to these vulnerabilities, but these measures may not be adequate.

If we fail to comply with U.S. laws related to privacy, data security, and data protection, it could adversely affect our operating results and financial condition.

We rely on a variety of marketing techniques, including email, radio, display advertising, and social media marketing, targeted online advertisements, and postal mailings, and we are or may become subject to various laws and regulations that govern such marketing and advertising practices. A variety of federal and state laws and regulations, including those enforced by various federal government agencies such as the Federal Trade Commission, Federal Communications Commission, and state and local agencies, govern the collection, use, retention, sharing, and security of personal data, particularly in the context of online advertising, which we utilize to attract new customers.

The legislative and regulatory bodies or self-regulatory organizations in various jurisdictions inside the United States may expand current laws or regulations, enact new laws or regulations, or issue revised rules or guidance regarding privacy, data protection, consumer protection, information security, and online advertising. California has enacted the California Consumer Privacy Act of 2018 (the “CCPA”), which became operative on January 1, 2020, and its implementing regulations took effect in August 2020. The CCPA requires companies that process personal information on California residents to make new disclosures to consumers about such companies’ data collection, use, and sharing practices and inform consumers of their personal information rights such as deletion rights, allows consumers to opt out of certain data sharing with third parties, and provides a new cause of action for data breaches. In November 2020, California enacted the California Privacy Rights Act of 2020 (the “CPRA”), which amends and expands the scope of the CCPA, while introducing new privacy protections that extend beyond those included in the CCPA and its implementing regulations. The CCPA, as amended and expanded by the CPRA, is one of the most prescriptive general privacy law in the United States and may lead to similar laws being enacted in other U.S. states or at the federal level. For example, the State of Nevada also passed a law effective on October 1, 2019 that amends the state’s online privacy law to allow consumers to submit requests to prevent websites and online service providers (“Operators”) from selling personally identifiable information that Operators collect through a website or online service. Further, on March 2, 2021, the Governor of Virginia signed into law the Virginia Consumer Data Protection Act (the “VCDPA”). The VCDPA creates consumer rights, similar to the CCPA, but also imposes security and assessment requirements for businesses. In addition, on July 7, 2021, Colorado, the state in which we are headquartered, enacted the Colorado Privacy Act (“CoCPA”), becoming the third comprehensive consumer privacy law to be passed in the United States (after the CCPA and VCDPA). Although the CoCPA closely resembles the VCDPA, both of which do not contain a private right of action and will instead be enforced by the respective states’ Attorney General and district attorneys, the two differ in many ways and once they become enforceable in 2023, we must comply with each if our operations fall within the scope of these newly enacted comprehensive mandates. Prior efforts undertaken to comply with other recent privacy-related laws have proven that these initiatives require time to carefully plan, assess gaps in current compliance mechanisms, and implement new policies, processes and remediation efforts. Additionally, the Federal Trade Commission and state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination, and security of data. Each of these privacy, security, and data protection laws and regulations, and any other such changes or new laws or regulations, could impose significant limitations, require changes to our business model or practices, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct. In addition, any such changes could compromise our ability to develop an adequate marketing strategy and pursue our growth strategy effectively, which, in turn, could adversely affect our business, financial condition, and results of operations.

While we intend to strive to comply with applicable laws and regulations relating to privacy, data security, and data protection, given that the scope, interpretation, and application of these laws and regulations are often uncertain and may be in conflict across jurisdictions, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Any failure or perceived failure by us or third-party service providers to comply with privacy or security policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personal data, may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operating results and financial condition.

Our planned expansion into international markets will involve inherent risks that we may not be able to control.

Our business plan includes the eventual marketing and sale of our products in international markets. Specifically, we do not currently have a set time frame for entering these markets. Accordingly, our operating results could be materially and adversely affected by a variety of uncontrollable and changing factors relating to international business operations, including:

● Economic conditions adversely affecting geographic areas in which we intend to do business; ● Foreign currency exchange rates; ● Political or social unrest or economic instability in a specific country or region; ● Higher costs of doing business in foreign countries; ● Infringement claims on foreign patents, copyrights or trademark rights; ● Difficulties in staffing and managing operations across disparate geographic areas; ● Difficulties associated with enforcing agreements and intellectual property rights through foreign legal systems; ● Trade protection measures and other regulatory requirements, which may affect our ability to import or export our products from or to various countries; ● Adverse tax consequences; ● Unexpected changes in legal and regulatory requirements and challenges in complying with varying requirements across jurisdictions; and ● Military conflict, terrorist activities, natural disasters and medical epidemics.

If we are unable to overcome these or other challenges in executing our planned expansion into international markets, our prospects would be materially adversely affected.

Risks Related to Intellectual Property

We may become involved in litigation or other proceedings relating to patent and other intellectual property rights.

A third party may sue us or our strategic collaborators for infringing its intellectual property rights. Likewise, we may need to resort to litigation to enforce licensed rights or to determine the scope and validity of third-party intellectual property rights. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. If we do not prevail in this type of litigation, we or our strategic collaborators may be required to pay monetary damages; stop commercial activities relating to the affected products or services; obtain a license in order to continue manufacturing or marketing the affected products or services; or attempt to compete in the market with a substantially similar product. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue some of our operations. In addition, a court may require that we pay expenses or damages, and litigation could distract management or disrupt our commercial activities.

If we become involved in intellectual property litigation, such litigation is likely to be expensive and time-consuming and could be unsuccessful.

Our commercial success will depend in part on our avoiding infringement on the patents and proprietary rights of third parties for products we license or sell. There is substantial litigation, both within and outside the United States, involving patent and other intellectual property rights in the health and wellness industry, including patent infringement lawsuits, interferences, oppositions, and reexaminations and other post-grant proceedings before the U.S. Patent and Trademark Office, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications which are owned by third parties may exist with products we may license and sell.

Parties making intellectual property claims against us may obtain injunctive or other equitable relief, which could block our ability to further develop and commercialize one or more products. Defense of these claims, regardless of their merit, involves substantial litigation expense and would be a substantial diversion of our management’s attention from our business. If a claim of infringement against us succeeds, we may have to pay substantial damages, possibly including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

To counter infringement or unauthorized use claims against us, we may be required to file infringement claims in response, or we may be required to defend the validity or enforceability of any such intellectual property rights. In an infringement proceeding, a court may decide that either our or one or more of our licensors’ intellectual property rights are not valid or is unenforceable or may refuse to stop the other party from using the underlying concepts or technology at issue because our intellectual property rights do not cover those elements. In any event, intellectual property litigation is expensive and time consuming and we may be unsuccessful in defending or enforcing such claims, which would materially harm our business.

Any inability to protect our intellectual property rights could reduce the value of our products and brands, which could adversely affect our financial condition, results of operations and business.

Our business is partly dependent upon our trademarks, trade secrets, copyrights and other intellectual property rights. Effective intellectual property rights protection, however, may not be available under the laws of every country in which we and our sub-licensees may operate. There is a risk of certain valuable trade secrets being exposed to potential infringers. Regardless of whether our compounds and technology are or becomes protected by patents or otherwise, there is a risk that other companies may employ such compounds or technology without authorization and without recompensing us.

The efforts we take to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. In addition, protecting our intellectual property rights is costly and time consuming. There is a risk that we may have insufficient resources to counter adequately such infringements through negotiation or the use of legal remedies. It may not be practicable or cost effective for us to fully protect our intellectual property rights in some countries or jurisdictions. If we are unable to successfully identify and stop unauthorized use of our intellectual property, we could lose potential revenue and experience increased operational and enforcement costs, which could adversely affect our financial condition, results of operations and business.

The intellectual property behind our products may include unpublished know-how, which is dependent on certain key individuals, as well as existing and pending intellectual property protection.

The commercialization of our products is partially dependent upon know-how and trade secrets held by certain individuals working with and for us. Because the expertise runs deep in these few individuals, if something were to happen to any or all of these individuals, the ability to properly manufacture our products without compromising quality and performance could be diminished greatly. Further, [while our employees and contractors are subject to non-disclosure obligations,] any misappropriation of confidential information including trade secrets and know-how could allow our competitors and others to overcome any advantage we have and reduce our market share and viability.

Risks Related to Our Securities and Our Status as an SEC Reporting Company

Because our Chief Executive Officer, directly and through entities she controls, beneficially owns approximately 61% of our issued and outstanding common stock and voting power on an as-converted basis, she can exert significant control over our business and affairs which may be averse to those of our stockholders, particularly if a conflict of interest arises.

Our Chief Executive Officer and currently one of our two directors, owns approximately 61% of our issued and outstanding shares of common stock and voting power on an as-converted basis. As of December 31, 2022, Ms. Buttorff and or her companies also hold $14.796 million in demand notes which bear interest at a rate ranging from 0 to 12% per annum. The interests of Ms. Buttorff may differ from the interests of our other stockholders, including by virtue of her other businesses operated through her entities and their holdings that are not affiliated with us. As a result, Ms. Buttorff will have significant influence and control over all corporate actions including those actions requiring stockholder approval, irrespective of how our minority stockholders may vote, including the following actions:

● the election of our directors; ● charter or bylaw amendments; ● a merger, asset sale or other fundamental corporate transaction; and ● any other matter submitted to our stockholders for a vote, subject only to applicable law including the Nevada Revised Statutes.

This concentration of ownership and the conflicts of interest may have the effect of impeding a merger, consolidation, takeover or other business combination or tender offer for our common stock which other stockholders may deem desirable or could reduce our stock price or prevent our stockholders from realizing a premium over our stock price in such a transaction. Further, to the extent our other stockholders disagree with an action Ms. Buttorff elects to take as a stockholder, their ability to prevent such action or avoid the effect on their shareholdings will range from significantly limited to non-existent due to our current capital structure, subject only to applicable law and our charter documents. Therefore, if Ms. Buttorff has an interest adverse to other stockholders, or if other stockholders otherwise disagree with Ms. Buttorff with respect to a matter before the stockholders, they will have little to no control over that matter and the direction we ultimately take.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.

The federal securities laws require us to comply with SEC reporting requirements relating to our business and securities. Complying with these reporting and other regulatory obligations is time-consuming and will result in increased costs to us which could have a negative effect on our financial condition or business. These increased costs are not reflected in the financial statements contained in this Quarterly Report on Form 10-Q because during the periods covered Panacea was a private company not subject to SEC reporting obligations.

As a public company, we are subject to the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act. These requirements may place a strain on our systems and resources. We are required to file annual, quarterly and current reports with the SEC disclosing certain aspects and developments of our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional executive officers and personnel and provide for additional management oversight. We intend to implement additional procedures and processes for the purpose of addressing the standards and requirements applicable to SEC reporting companies. Sustaining our growth will also require us to commit additional managerial, operational and financial resources to identifying competent professionals to join us and to maintain appropriate operational and financial systems to adequately support our intended expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our results of operations, financial condition or business.

Due to factors beyond our control, our stock price may be volatile.

Any of the following factors could affect the market price of our common stock:

● Our failure to generate increasing material revenues from our business; ● Our failure to enhance our product offerings or expand into new markets; ● A decline in our revenue or growth rate; ● Our public disclosure of the terms of any financing which we consummate in the future; ● A decline in the economy which impacts the demand for our products and our ability to generate revenue and achieve growth metrics; ● Announcements by us or our competitors of significant contracts, new products, acquisitions, commercial relationships, joint ventures or capital commitments; ● Changes in laws, regulations or government actions affecting the cannabinoid industry in general or our products in particular; ● Our ability to list our common stock on a national securities exchange; ● Our ability to attract analyst coverage; ● The sale of large numbers of shares of common stock by our shareholders; ● Short selling activities; or ● Changes in market valuations of similar companies.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business. These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition and results of operations.

We are subject to the “penny stock” rules which will adversely affect the liquidity of our common stock.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock on the OTCQB is presently less than $5.00 per share and therefore we are considered a “penny stock” company according to SEC rules. While we intend to effect a reverse stock split pending compliance with SEC Rules, including the filing of a Schedule 14C, to increase our stock price, until such time as our stock price rises above $5.00 per share (which may not occur following the reverse stock split or at all), the “penny stock” designation requires any broker-dealer selling our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules limit the ability of broker-dealers to solicit purchases of our common stock and therefore reduce the liquidity of the public market for our shares.

Broker-dealers are increasingly reluctant to permit investors to buy or sell speculative unlisted stock and often impose costs which make it uneconomical for small shareholders to do so. Moreover, as a result of apparent regulatory pressure from the SEC and the Financial Industry Regulatory Authority (“FINRA”) a growing number of broker-dealers decline to permit investors to purchase and sell or otherwise make it difficult to sell shares of penny stocks. The “penny stock” designation may have a depressive effect upon our common stock price which the prospective reverse stock split may not sufficiently overcome.

Our ability to continue as a going concern is in doubt unless we obtain adequate new debt or equity financing and achieve sufficient sales levels.

As noted above, we have incurred significant net losses to date. We anticipate that we will continue to lose money for the foreseeable future. Additionally, we have negative cash flows from operations and we our revenue may exceed our expenses in the next 12 months. Since our inception in 2017, we have generated losses from operations. As of December 31, 2021, our accumulated deficit was $16.7 million, and we had $3.8 million in cash and liquid stock. Our continued existence is dependent upon generating sufficient working capital and obtaining adequate new debt or equity financing. These factors raise doubt about our 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 we will ultimately achieve or maintain profitable operations or become cash flow positive or raise additional debt and/or equity capital. Because of our continuing losses, without improvements in our cash flow from operations or new financing, we may have to continue to restrict our expenditures. Working capital limitations may impinge on our day-to-day operations, which may contribute to continued operating losses.

Operational risks such as material weaknesses and other deficiencies in internal control over financial reporting could result in errors, potentially requiring restatements of our historical financial data, leading investors to lose confidence in our reported results.

There are a number of factors that may impede our efforts to establish and maintain effective internal controls and a sound accounting infrastructure, including our lacking a Chief Financial Officer, our pace of growth, and general uncertainty regarding the operating effectiveness and sustainability of controls. Controls and procedures, no matter how well designed and operated, provide only reasonable assurance that material errors in our financial statements will be prevented or detected on a timely basis. Any failure to establish and maintain effective internal controls over financial reporting increases the risk of material error and/or delay in our financial reporting. Depending on the nature of a failure and any required remediation, ineffective controls could have a material adverse effect on our business and potentially result in additional restatements of our historical financial results. Financial restatements or other issues arising from ineffective controls and our recent change of our auditors could also cause investors to lose confidence in our reported financial information, which would have an adverse effect on the trading price of our securities. Delays in meeting our financial reporting obligations could affect our ability to maintain the listing of our securities. Although we seek to reduce these risks through active efforts relating to properly documented processes, adequate systems, risk culture, compliance with regulations, corporate governance and other factors supporting internal controls, such procedures may not be effective in limiting each of the operational risks.

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

During the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2022, the Company ~~issued~~Issued 1123,~~410,000~~334 shares of the Company’s common stock to ~~various~~the ~~employees and~~former ~~directors~~Chief Strategy Officer of the Company, ~~275~~in connection with the cashless exercise of stock options,~~490~~ as well as 447 shares tothe ~~vendors~~Company ~~and~~owed ~~454,545~~the former Chief Strategy Officer for inadvertently issuing less shares toof ~~investors~~common ~~that~~stock ~~contributed~~than ~~funds~~the toamount indicated on the ~~Company~~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.

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	Filed
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	Filed
3.2	Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split	8-K	10/29/21	3.1	Filed
3.2	Amended and Restated Bylaws	10-K	3/31/22	3.2	Filed
3.3	Certificate of Designation for Series B-1 Preferred Stock	8-K	3/4/16	3.1	Filed
3.4	Certificate of Designation for Series B-12 Preferred Stock	8-K/A	32/417/16	3.12	Filed
3.5	Certificate of Designation for Series ~~B-2~~C Preferred Stock	810-~~K/A~~Q	28/1723/1621	3.27	Filed
3.6	Certificate of Designation for Series C-1 Preferred Stock	10-Q	8/23/21	3.78	Filed
3.7	Certificate of Designation for Series C-12 Preferred Stock	108-QK	810/2329/21	3.82	Filed
3.8	Certificate of Designation for Series ~~C-2~~D Preferred Stock	810-KQ	108/2923/21	3.29	Filed
3.9	Certificate of ~~Designation~~Withdrawal for Series DA Preferred Stock	10-QK/A	84/2329/2122	3.910	Filed
31.1	Certification of Principal Executive Officer and Principal Financial Officer (302)				Filed
3.10	Certificate of Designation for Series N-7 Convertible Preferred Stock	10-K	4/1/24	3.10	Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished***
3.11	Amended and Restated Bylaws	10-K	3/30/23	3.2	Filed
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
4.1	Description of securities registered under Section 12 of the Exchange Act of 1934	10-K	3/30/23	4.1	Filed
101.SCH	Inline XBRL Taxonomy Extension Schema Document				Filed
10.1	Form of Exchange Agreement**	8-K	3/4/22	10.1	Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed
10.2	Form of Original Issue Discount Senior Convertible Promissory Note	8-K	3/4/22	10.2	Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed
10.3	Form of Warrant	8-K	3/4/22	10.3	Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed
10.4	Form of Registration Rights Agreement**	8-K	3/4/22	10.4
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed
10.5	Share Exchange Agreement	8-K	2/18/21	10.2	Filed
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
10.6	Asset Purchase Agreement dated as of July 3, 2023**	8-K	7/10/23	10.1	Filed
10.7	Form of Pledge and Security Agreement	8-K	10/5/23	10.3	Filed
10.8	Form of Offset Agreement	8-K	10/5/23	10.5	Filed
10.9	Form of Leakout Agreement	8-K	10/5/23	10.6	Filed
10.10	Asset Purchase Agreement dated as of September 26, 2023	10-K	4/1/24	10.10	Filed
10.11	Release and Assignment Agreement dated November 10, 2023, by and between the Issuer and PUR Life Medical, Inc.	8-K	2/5/24	10.2	Filed

10.12	Asset Purchase Agreement dated January 29, 2024, by and between the Issuer and PLM Holdings, Inc.	8-K	2/5/24	10.3	Filed
10.13	Ex. 10.14 to 10-K__Form of Amendment No. 1 to Promissory Note dated March 5, 2024 by and between the Issuer and FirstFire Global Opportunities Fund LLC	10-K	4/1/24	10.13	Filed
10.14	Amended and Restated 2021 Equity Incentive Plan*	10-K	3/30/23	10.20	Filed
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.

~~Copies~~+Portions of this ~~report~~exhibit ~~(including~~have been omitted as permitted by the ~~financial~~rules ~~statements~~of the SEC. The information excluded is both (i) not material and ~~any~~(ii) ofthe type that the ~~exhibits~~Company ~~referred~~customarily toand ~~above~~actually ~~will~~treats beas ~~furnished~~private ator noconfidential. ~~cost~~The toCompany ~~our~~undertakes ~~shareholders who~~to ~~make~~submit a ~~written~~marked ~~request~~copy toof ~~Panacea~~this exhibit ~~Life~~for ~~Sciences~~review ~~Holdings,~~by ~~Inc.~~the SEC Staff, atto the ~~address~~extent onit ~~the~~has ~~cover~~not ~~page~~been ofpreviously ~~this report~~provided, ~~Attention:~~and ~~Corporate~~provide supplemental materials to the SEC ~~Secretary~~Staff promptly upon request.

43Copies of this Report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to Panacea Life Sciences Holdings, Inc., at the address on the cover page of this Report, Attention: Corporate Secretary.

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, 2023	/s/ Leslie Buttorff
May 6, 2024	/s/ Leslie Buttorff
	Leslie Buttorff
	Chief Executive Officer

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Filing Compare · PANACEA LIFE SCIENCES HOLDINGS, INC.