UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~Amendment No. 2~~

(Mark One)

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

For the quarterly period ended: September 30, ~~2021~~2022

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

For the transition period from _____________ to _____________

Commission File Number: 001-38190

Panacea Life Sciences Holdings, Inc.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive offices, Zip Code)

800-985-0515

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~14,073,708~~14,965,317 shares of common stock, par value $0.0001 per share, outstanding as ~~December 13, 2021.~~November 2, 2022.

~~Explanatory Note~~

This Amendment No. 2 on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q (the “Q3 2021 Form 10-Q”) of Panacea Life Sciences Holdings, Inc. (F/K/A Exactus, Inc.) (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on November 22, 2021. We are filing this Amendment to change certain disclosures in Part I. Item 1 – Financial Statements, and Part II. Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – of the Q3 2021 Form 10-Q following the completion of review by the Company’s independent registered public accounting firm. The Q3 2021 Form 10-Q was previously filed before the review was completed. The review required adjustments to be made to the revenue and costs of goods sold, lease liability section, options and warrant updates.

In addition, the Exhibit Index in Item 6 of Part II of the Q3 2021 Form 10-Q is hereby amended and restated in its entirety and currently dated certifications required under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits to this Amendment.

The Q3 2021 Form 10-Q/A Amendment No. 2 continues to speak as of its date, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Q3 2021 Form 10-Q other than as expressly indicated in this Amendment. For additional details please refer to Note 10.

~~All share and per share numbers have been retroactively adjusted to give effect to a 1-for-28 reverse stock split effective October 25, 2021.~~

TABLE OF CONTENTS

		Page

	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	43
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3022
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3529
Item 4.	Controls and Procedures	3529

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3630
Item 1A.	Risk Factors	3630
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3630
Item 3.	Defaults Upon Senior Securities	3630
Item 4.	Mine Safety Disclosures	3630
Item 5.	Other Information	3630
Item 6.	Exhibits	3730
	Signatures	3831

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

Panacea Life Sciences Holdings, Inc. and Subsidiary

~~Unaudited Condensed~~ Consolidated Balance Sheets

		1			2
	As Restated
	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	14,500		$	84,379		$	36,791		$	19,774
Accounts receivable, net		515,095			147,302			221,919			244,496
Other receivables, related party		500,000			-			500,000			500,000
Inventory, net		4,344,378			8,409,734
Inventory								4,412,163			4,264,277
Marketable securities related party		3,631,970			2,853,437			1,115,542			3,791,483
Prepaid expenses and other current assets		193,596			27,375			197,421			278,328
TOTAL CURRENT ASSETS		9,199,539			11,522,227			6,483,836			9,098,358

Operating lease right-of-use asset, net, related party		3,681,682			3,937,706			3,331,533			3,595,100
Property and equipment, net		9,024,505			13,590,286			7,964,960			8,839,982
Intangible assets, net		76,751			122,801			15,351			61,401
Goodwill		2,188,810			2,188,810			2,188,810			2,188,810
TOTAL ASSETS	$	24,171,287		$	31,361,830		$	19,984,490		$	23,783,651

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	1,474,681		$	1,765,267		$	2,306,408		$	1,685,825
Operating lease liability, current portion, related party		1,508,743			1,162,869			1,973,684			1,624,090
Note payable-current, related party		6,216,155			15,061,044			8,179,801			6,441,866
Convertible note payable, net								1,255,886			220,005
Paycheck protection loan, SBA Loan		99,100			273,300			99,100			99,100
TOTAL CURRENT LIABILITIES:		9,298,679			18,262,480			13,814,879			10,070,886

Operating lease liability, long-term portion, related party		3,434,571			3,692,392			3,078,254			3,347,335
Other long-term liabilities, related party		3,042,638			2,698,659			3,531,264			3,263,028
TOTAL LIABILITIES		15,775,888			24,653,531			20,424,397			16,681,249

Commitments and contingencies		-			-			-			-

STOCKHOLDERS’ EQUITY
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 450 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively.		-			-
Series B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively.		150			-
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively.		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, 2021 and December 31, 2020 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, 2021 and December 31, 2020 respectively.		1			1
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively.		1			1
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 21,393,041 and 16,915,706 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively.		2,139			1,692
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 350 and 0 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								-			-
Series B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 1,500,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								150			150
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 6,000,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								600			600
Series C Preferred: $0.0001 Par Value, 1,000,000 shares designated; 1,000,000 and 1,000,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								100			100
Series C-1 Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								1			1
Series C-2 Preferred: $0.0001 Par Value, 10,000 and 0 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								1			1
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								1			1
Preferred stock, value
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 14,965,317 and 14,073,708 shares issued and outstanding on September 30, 2022 and December 31, 2021 respectively.								1,496			1,407
Additional paid in capital		23,066,914			18,689,119			23,760,704			23,865,155
Accumulated deficit		(14,674,506	)		(11,982,614	)		(24,202,960	)		(16,765,013	)
TOTAL STOCKHOLDERS’ EQUITY		8,395,399			6,708,299			(439,907	)		7,102,402

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	24,171,287		$	31,361,830		$	19,984,490		$	23,783,651

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

	2021			2020			2021			2020
	As Restated
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
REVENUE	$	588,040		$	1,343,641		$	1,413,674		$	8,305,630		$	366,244		$	588,040		$	1,302,190		$	1,413,674
COST OF SALES		305,025			2,905,780			883,508			6,285,879			318,918			305,025			1,016,509			883,508
GROSS PROFIT (LOSS)		283,015			(1,562,139	)		530,166			2,019,751
GROSS PROFIT														47,326			283,015			285,681			530,166

OPERATING EXPENSES
Production related operating expenses		1,250,434			1,307,169			3,407,407			3,012,485			1,174,529			1,250,434			3,635,640			3,407,407
General and administrative expenses		290,638			478,992			911,906			2,547,438			261,506			290,638			926,736			911,906
TOTAL OPERATING EXPENSES		1,541,072			1,786,161			4,319,313			5,559,923			1,436,035			1,541,072			4,562,376			4,319,313

LOSS FROM OPERATIONS		(1,258,057	)		(3,348,300	)		(3,789,147	)		(3,540,172	)		(1,388,709	)		(1,258,057	)		(4,276,695	)		(3,789,147	)

OTHER INCOME (EXPENSES)
Interest expense		(174,727	)		(432,922	)		(781,671	)		(1,181,165	)		(597,935	)		(174,727	)		(1,669,215	)		(781,671	)
Unrealized gain (loss) on marketable securities, net		(2,303,218	)		(160,310	)		848,533			(595,590	)		(1,446,848	)		(2,303,218	)		(2,651,925	)		848,533
Realized gain on sale of securities		160,296			-			160,296			-			-			160,296			22,816			160,296
Other income (loss)		-			56,619			-			(21,090	)		-			-			27,598			-
Employer retention credit		190,338			-			190,338			-			-			190,338			253,791			190,338
Rental Income		58,410			56,577			221,328			212,778			58,046			58,410			174,137			221,328
Loss on sale of assets		-			48,621			(297,351	)		(19,093	)		-			-			-			(297,351	)
Gain on extinguishment of debt		237,202			-			755,782			-			681,546			237,202			681,546			755,782
TOTAL OTHER INCOME (EXPENSE)		(1,831,699	)		(431,415	)		1,097,255			(1,604,160	)		(1,305,191	)		(1,831,699	)		(3,161,252	)		1,097,255

LOSS BEFORE INCOME TAXES		(3,089,756	)		(3,779,715	)		(2,691,892	)		(5,144,332	)
INCOME (LOSS) BEFORE INCOME TAXES														(2,693,900	)		(3,089,756	)		(7,437,947	)		(2,691,892	)

TAXES		-			-			-			-			-			-			-			-

NET LOSS	$	(3,089,756	)	$	(3,779,715	)	$	(2,691,892	)	$	(5,144,332	)

BASIC NET LOSS PER SHARE	$	(0.14	)	$	(0.22	)	$	(0.15	)	$	(0.30	)
DILUTED NET LOSS PER SHARE	$	(0.14	)	$	(0.22	)	$	(0.15	)	$	(0.30	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		21,389,041			16,915,706			18,422,459			16,915,706
Diluted		21,389,041			16,915,706			18,422,459			16,915,706
NET INCOME (LOSS)													$	(2,693,900	)	$	(3,089,756	)	$	(7,437,947	)	$	(2,691,892	)
Per-share data
Basic and diluted loss per share													$	(0.18	)	$	(0.18	)	$	(0.50	)	$	(0.16	)
Weighted average number of common shares outstanding														14,862,077			16,915,706			14,862,077			16,915,706

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

~~Panacea Life Sciences Holdings, Inc. and Subsidiary~~

~~Unaudited Condensed Consolidated Statements of Stockholders’ Equity~~

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

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

Three Months Ended September 30, 2020
Preferred Stock Common Stock Additional
Paid-in Accumulated Total
Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of June 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (8,115,401 ) $ 10,575,512
Net Loss - - - - - (3,779,715 ) (3,779,715 )
Balance as of September 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,895,116 ) $ 6,795,797

Nine Months Ended September 30, 2020
Preferred Stock Common Stock Additional
Paid-in Accumulated Total
Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity
Balance as of December 31, 2019 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (6,750,784 ) $ 11,940,129
Net Loss - - - - - (5,144,332 ) (5,144,332 )
Net Income (Loss) - - - - - (5,144,332 ) (5,144,332 )
Balance as of September 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,895,116 ) $ 6,795,797

~~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 Cash Flows~~

2021 2020
As Restated
Nine Months Ended September 30,
2021 2020

Cash flows from operating activities
Net loss $ (2,691,892 ) $ (5,144,332 )
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation 1,280,324 1,018,567
Realized gain on sale of securities (160,296 ) -
Fixed asset disposal loss 297,351 19,093
Amortization of intangible assets 46,050 46,050
Non-cash settlement of convertible note and accrued interest (752,751 ) -
Unrealized gain/loss on marketable securities (848,533 ) 595,590
Changes in operating assets and liabilities
Accounts receivable (367,793 ) 91,952
Inventory (628,011 ) (5,463,820 )
Prepaid expense and other assets (166,221 ) 647,257
Accounts payable and accrued expenses 955,493 1,226,146
Operating lease liability, net 344,076 344,085
Net cash used in operating activities (2,692,203 ) (6,619,412 )

Cash flows from investing activities
Net cash received in from acquisitions 9,157 -
Proceeds from sale of marketable securities 230,296 -
Proceeds from sale of fixed assets 446,026 34,920
Net fixed asset acquisition (172,397 ) (3,301,527 )
Net Cash provided by (used in) investing activities 513,082 (3,266,607 )

Cash flows from financing activities
Proceeds from payroll protection loan, SBA loan - 273,300
Proceeds from payroll protection loan - related party 243,041 -
Payments of principal on notes payable - related party (135,000 ) (3,503,545 )
Proceeds from notes payable - related party 2,001,201 5,134,225
Net cash provided by financing activities 2,109,242 1,903,980

Net decrease in Cash and Cash Equivalents (69,879 ) (7,982,039 )
Cash and Cash Equivalents, Beginning of Period 84,379 8,515,509
Cash and Cash Equivalents, End of Period $ 14,500 $ 533,470

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes during the year $ - $ -
Interest payments during the year $ - $ 525,000

Noncash investing and financing activity
Non-cash receivable - related party $ (500,000 ) $ -
Related party loan repayment with inventory $ 4,693,367 $ -
Non-cash fixed asset disposal as part of the reverse acquisition $
3,058,457
$ -
Capitalized assets purchased on account - related party $ 343,979 $ 396,270
Liabilities from acquisition $ 1,096,782 $ -
Debt retired in merger, related party $ (12,718,441 ) $ -
Preferred Series B-1 Issuance in Acquisition $ 150 $ -
Preferred Series B-2 Issuance in Acquisition $ 600 $ -
Common stock issued for the reverse merger with Exactus $ 4,369,085 $ -

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

Panacea Life Sciences Holdings, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity


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

	Nine Months Ended September 30, 2022
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2021		8,530,350		$	853		14,073,708	$	1,407	$	23,865,155		$	(16,765,013	)	$	7,102,402
Shares issued in respect of the merger		-			-		834,331		83		(83	)		-			-
Issuance of common shares for services							57,278		6		54,994						55,000
Conversion of Series A Preferred to convertible debt and warrants		(350	)								(159,362	)					(159,362	)
Net Loss		-			-		-		-		-			(7,437,947	)		(7,437,947	)
Balance as of September 30, 2022		8,530,000		$	853		14,965,317	$	1,497	$	23,760,704		$	(24,202,960	)	$	(439,907	)

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

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

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

Panacea Life Sciences Holdings, Inc. and Subsidiary

Consolidated Statements of Cash Flows


	Nine Months Ended September 30,
	2022			2021

Cash flows from operating activities
Net income (loss)	$	(7,437,947	)	$	(2,691,892	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		1,240,281			1,280,324
Realized gain on sale of securities		(22,816	)		(160,296	)
Unrealized (gain)/loss on marketable securities		2,651,925			(848,533	)
Fixed Asset Disposal Loss		-			297,351
Non cash settlement of convertible note and accrued interest		(253,791	)		(752,751	)
Amortization of intangible assets		46,050			46,050
Amortization of debt discount and non-cash interest expense		876,519			-
Changes in operating assets and liabilities
Accounts receivable		22,577			(367,793	)
Inventory		(147,886	)		(628,011	)
Prepaid expense and other assets		80,907			(166,221	)
Accounts payable and accrued expenses		723,521			955,493
Operating lease liability, net		344,080			344,076
Net cash used in operating activities		(1,876,580	)		(2,692,203	)

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

Cash flows from financing activities
Proceeds from payroll protection loan, SBA loan		253,791			243,041
Payments of principal on notes payable		(637,978	)		(135,000	)
Proceeds from Notes payable - related party		2,375,913			2,001,201
Cash provided by financing activities		1,991,726			2,109,242
Net increase (decrease) in Cash and Cash Equivalents		17,017			(69,879	)
Cash and Cash Equivalents, Beginning of Period		19,774			84,379
Cash and Cash Equivalents, End of Period	$	36,791		$	14,500

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

Noncash investing and financing activity
Non-cash Receivable - related party	$	-		$	(500,000	)
Related party loan repayment with inventory	$	-		$	4,693,367
Non-cash fixed asset disposal as part of the reverse acquisition	$	-		$	3,058,457
Conversion of Preferred A shares to Note Payable	$	385,000		$	-
Issuance of Common Stock for services	$	55,000		$	-
Capitalized assets purchased on account - related party	$	220,299		$	343,979
Liabilities from acquisition	$	-		$	1,096,782
Debt retired in merger, related party	$	-		$	(12,718,441	)
Preferred Series B-1 Issuance in Acquisition	$	-		$	150
Preferred Series B-2 Issuance in Acquisition	$	-		$	600
Common stock issued for the reverse merger with Exactus	$	-		$	4,369,085

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

PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER~~September 30, ~~2021~~2022

NOTE 1 - NATURE OF ORGANIZATION

Organization and Business Description

PANACEA LIFE SCIENCES HOLDINGS, Inc. (the “Company”~~, “Exactus”~~, “we”, “us”, “our”) was incorporated on January 18, 2008 in the State of Nevada. In January 2019, the Company added to the scope of its business activities, efforts to produce, market and sell products made from industrial hemp containing cannabidiol (“CBD”). On June 30, 2021 the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”) with Panacea Life Sciences, Inc., (“Panacea”) a seed to sale CBD company, and the stockholders of Panacea. Pursuant to the Exchange Agreement, the former Panacea stockholders assumed majority control of the ~~Exactus~~Company and all operations are now operated by Panacea, which as a result of the share exchange, became a wholly-owned subsidiary of the ~~Exactus. (See Note 10 – Exchange Agreement).~~Company. In October 2021, the Company changed its name from Exactus Inc. to Panacea Life Sciences Holdings, Inc.

The Company is a GMP certified, seed-to-sale cannabinoid and nutraceutical manufacturer and research company that produces purposeful, natural pharmaceutical alternatives for consumers and pets. In addition to manufacturing raw materials from industrial hemp, we custom formulate and manufacture softgels (both bovine and vegan), gummies, tinctures, sublingual tablets, patches, K-Tape, topical pain relief and skin care products. Panacea was founded by Leslie Buttorff in 2017 as a woman-owned business, was formed to own and engage in creating disruptive healthcare and veterinary natural relief products to make a difference in the lives of humans and pets.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and principles of consolidation

The Company’s ~~unaudited condensed~~ consolidated financial statements include the financial statements of Panacea Life Sciences, Inc., a wholly owned subsidiary acquired on June 30, 2021.

The accompanying ~~interim unaudited condensed~~ consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial information, which includes consolidated unaudited interim financial statements and present the consolidated unaudited interim financial statements of the Company and its wholly-owned subsidiary as of September 30, ~~2021.~~2022. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America. All intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments necessary to present fairly our financial position, results of operations, stockholders’ equity and cash flows as of September 30, ~~2021,~~2022, and ~~2020,~~2021, 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 30, ~~2021~~2022, and ~~2020~~2021 are not necessarily indicative of the results that may be expected for any subsequent quarters or for the year ending December 31, ~~2021.~~2022. Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.

Going concern

These unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. Panacea has combined with Panacea Life Sciences Holdings, Inc. (formerly Exactus), so the below items reflect the consolidated company. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since our inception in ~~later~~late 2017, we have generated losses from operations. As of September 30, ~~2021,~~2022, our accumulated deficit was $~~14.675~~24.2 million, and we had $~~3.646~~1.152 million in cash and liquid stock. As of September 30, ~~2021~~2022 the shares of common stock we hold in 22^nd Century Group, Inc. (~~1,227,017~~1,203,000 shares) ~~(NASDAQ:~~(Nasdaq: XXII) (“XXII”) was valued at approximately $~~3.631~~1.116million. The XXII stock is pledged to secure a $4.063 million promissory note in favor of Quintel-MC, Incorporated (“Quintel”) and a $~~1.624~~1.686 million promissory note in favor of Leslie Buttorff, CEO of the Company. Quintel-MC, Inc. is ~~wholly~~ owned ~~company of~~by the CEO. These items are shown on the balance sheet as related party loans. ~~The current plan with respect to the XXII stock is to hold this stock during the short-term pending XXII’s application for MRTP FDA approval.~~ 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. ~~The~~Also, in November 2021, the Company ~~currently has~~ closed a $1.1 million convertible note and warrants ~~financing. See Note 11, “Subsequent Events.”~~financing and received $1 million.

COVID-19

The COVID-19 pandemic has resulted in a global slowdown of economic activity which ~~is likely to continue to~~may reduce the future demand for a broad variety of goods and services, while also disrupting sales channels, marketing activities and supply ~~chains for an unknown period of time until the virus is fully contained.~~chains. The Company’s business operations have been negatively impacted by the COVID-19 pandemic and related ~~events~~events. While the lockdowns and ~~the Company expects this impact on its revenue and results of operations, the size and duration of which is currently difficult to predict.~~disruptions have largely ended, we cannot predict whether future variants will cause adverse consequences. However, ~~adverse consequences from COVID-19 and~~ recent supply chain disruptions and delays may hinder our ability to continue our operations and generate revenue. The impact to date has included a decline in CBD product and sales demand. Further, in 2020, the Company (Panacea) invested in personal protective equipment (PPE) materials to sell hand sanitizers, testing kits and masks, and sales of PPE products, which constituted a significant portion of our revenue during the fiscal quarter ended June 30, 2021 and prior periods during the pandemic, have declined as vaccines continue to be administered and mask mandates and similar requirements have been lifted or reduced in many places. Although the Company is unable to predict the full impact and duration of COVID-19 on its business, the Company is actively managing its financial expenditures in response to the current uncertainty.

The impact of the COVID-19 pandemic and related events, including actions taken by various government authorities in response, have increased market volatility and make the estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes more difficult. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.

Use of Estimates

The Unaudited Condensed Consolidated Financial Statements have been prepared in conformity with US GAAP and required management of the Company to make estimates and assumptions in preparation of these statements. Actual results may differ significantly from those estimates. Significant estimates made by management include but are not limited to the useful life of property and equipment, incremental borrowing rate used in the calculation of right of use asset and lease liability, reserves for inventory, allowance for doubtful accounts, revenue allocations, valuation allowance on deferred tax assets, assumptions used in assessing impairment of long-term assets, assumptions used in the calculation of net realizable value of inventory and fair value of non-cash equity transactions.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. There were no cash equivalents. The Company places its cash and cash equivalents with high-quality financial institutions. At times, balances in the Company’s cash accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) limit. On September 30, 2022, 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 $10,000 was taken at the beginning of 2022 to allow for any doubtful accounts to be expensed. As of September 30, 2022 $9,144 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 of cost or net realizable value. Inventories of purchased materials are valuated using a moving average method and managed by first in first out basis (FIFO). Inventories of internally manufactured materials are valuated using a standard costing method and are also managed on a FIFO basis. Production related costs that are capitalized as inventory as part of the standard cost valuation include the direct materials consumed, direct labor used, indirect labor used, and manufacturing overhead. Overhead is calculated based on specific manufacturing process and allocated on an order-by-order basis. Production variances that occur between standard cost valuation and actual costs are expensed as incurred in the income statement as part of cost of goods sold.

Marketable securities

The Company’s marketable securities consists of ~~1,227,017~~1,203,000 shares of XXII which are classified as available-for-sale and included in current assets as they are pledged to secure two promissory notes (see Note 2 – Going Concern). Securities are valued based on market prices for identical assets using third party certified pricing sources. Available-for-sale securities are carried at fair value with unrealized and realized gains and losses reported as a component of income (loss). Realized gains and losses, if any, are calculated on the specific identification method and are included in other income in the condensed consolidated statements of operations.

~~Use of Estimates~~

Fair Value Measurements

The Company adopted the provisions of Accounting Standard Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value, and expands disclosure of fair value measurements. The guidance prioritizes the inputs used in measuring fair value and establishes a three-tier value hierarchy that distinguishes among the following:

	●	Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

	●	Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

	●	Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The following table shows, by level within the fair value hierarchy, the Company’s assets and liabilities at fair value on a recurring basis as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

FAIR VALUE ASSETS MEASURED ON RECURRING BASIS

	September 30, 2021								December 31, 2020								September 30, 2022								December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Marketable securities	$	3,631,970	$	3,631,970	$	-		-	$	2,853,437	$	2,853,437	$	-	$	-	$	1,115,542	$	1,115,542	$	-		-	$	3,719,483	$	3,719,483	$	-	$	-
Total	$	3,631,970	$	3,631,970	$	-	$	-	$	2,853,437	$	2,853,437	$	-	$	-	$	1,115,542	$	1,115,542	$	-	$	-	$	3,719,483	$	3,719,483	$	-	$	-

In ~~August, 2021~~May 2022 there was one sale of marketable securities out of Level 1. ~~There were no transfers in 2020.~~ On ~~August 5, 2021~~May 2, 2022, ~~70,000~~24,017 shares of XXII securities were sold at an average price of $3.29. The net proceeds were $~~230,296~~46,833, which was a gain recorded of ~~which~~ $~~160,296~~ 22,816~~was recorded as~~. The following table is a ~~realized gain on sale~~schedule of the Company’s marketable securities. The following table is schedule of the Company’s marketable securities:

SCHEDULE OF MARKETABLE SECURITIES

September 30, 2021
Balance at beginning of year $ 2,853,437
Sale of securities (230,296 )
Realized gain on sale of securities 160,296
Unrealized gain on marketable securities, net 848,533
Balance at end of period $ 3,631,970

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

As of September 30, ~~2021,~~2022, the Company has no liabilities that are re-measured at fair value.

~~Income Taxes~~Property and Equipment

~~Income taxes~~Property and equipment are ~~accounted~~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 3 to ten years when placed in service. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition.

Intangible Assets and Goodwill

The Company has intangible assets. Goodwill is comprised of the purchase price of business combinations in excess of the fair market value assigned at acquisition to the tangible and intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for ~~under~~impairment on an annual basis. The Company performed its most recent goodwill impairment using a discounted cash flow analysis and found that the fair value exceeded the carrying value. It has $2.189 million of goodwill from the acquisition of the assets of Phoenix Life Sciences, Inc. (“Phoenix”) in October 2017 and intangible assets of $0.015 million as of September 30, 2022 and $0.061 million for as of December 31, 2021. In the acquisition of Phoenix, the Company acquired product formulas which is classified as an intangible asset.

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

SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL

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


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

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 ~~method prescribed by FASB ASC Topic 740. These standards require~~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 ~~company~~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 ~~determine whether~~extend or terminate the lease when it is ~~more likely than not~~reasonably certain that the Company will exercise that option. Lease expenses are recognized on a ~~tax position will be sustained upon examination based upon~~straight-line basis over the ~~technical merits~~lease term or the useful life of the ~~position. If~~leased asset.

In addition, the ~~more likely than not threshold~~carrying amount of the ROU and lease liabilities are remeasured if there is ~~met,~~ a ~~company must measure the tax position to determine the amount to recognize~~modification, a change in the ~~financial statements. Deferred income taxes are recorded for temporary differences between financial statement carrying amounts and~~lease term, a change in the ~~tax basis of assets and liabilities. Deferred tax assets and liabilities reflect~~in-substance fixed lease payments or a change in the ~~tax rates expected~~assessment to ~~be in effect for~~purchase 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.~~underlying asset.

Convertible Notes Payable

The Company has 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.

Revenue Recognition

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers.

The Company accounts for a contract when it has been approved and committed to, each party’s rights regarding the goods or services to be transferred have been identified, the payment terms have been identified, the contract has commercial substance, and collectability is probable. Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. However, the Company’s sales are primarily through retail stores, purchase orders or ecommerce; thus, currently contract liabilities are negligible. The Company does not have any multiple-element arrangements.

Some of the Company’s contract liabilities consist of advance customer payments. Contract liability results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized. The ~~company~~Company recorded $~~31,725~~251,125 and $~~463,454~~24,585 in advanced customer payments as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, and these amounts are included in the balance sheet line item of accounts payable and accrued expenses.

The following table shows the Company’s advanced customer payments:

SCHEDULE OF REVENUE FROM CONTRACT WITH CUSTOMER

	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Balance, beginning of period	$	121,300	$	254,786	$	24,585	$	121,300
Payments received for unearned revenue		31,725		463,454		283,591		41,465
Revenue earned		132,955		596,940		57,051		138,180

Balance, end of period	$	20,070	$	121,300	$	251,125	$	24,585

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

Revenue related to the sale of products is recognized once goods have been sold to the customer and the performance obligation has been completed. In both contracted purchase and retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer.

Revenue is generally recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities. ~~Some of the Company’s contract liabilities consist of advance customer payments.~~ A contract liability results from transactions in which the Company has been paid for products by customers, but for which all revenue recognition criteria have not yet been met. Once all revenue recognition criteria have been met, the contract liabilities are recognized. ~~However, the Company’s sales are primarily through retail stores, purchase orders or ecommerce; thus, currently contract liabilities are negligible.~~ The Company does not have any multiple-element arrangements.

The Company also has recorded other income related to rental income it receives from leasing out space in the laboratory it ~~occupies.~~occupies and formulation services it performs for its manufacturing customers.

~~Accounts Receivable~~

Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. As of September 30, 2021 and December 31, 2020, we did not believe we needed to reserve for any doubtful accounts, respectively. The Company’s accounts receivable policy changed in 2020 to only provide larger, well-established companies with Net 30 payment terms. For all other sales they are paid by credit card or wires received before the product is shipped to the customer.

Shipping and Handling Costs

The Company accounts for shipping and handling fees in accordance with ASC 606. The amounts charged to customers for shipping products are recognized as revenues and the related freight costs of shipping products are classified in general and administrative costs as incurred. Shipping costs are included as a component of general and administrative expenses and were $~~12,603~~25,732 and $~~54,429~~12,603 for the nine months ended September 30, 2022, and 2021, respectively. Shipping costs were $7,767and $3,778 for the three months ended September 30, ~~2020,~~2022, and 2021, respectively. ~~The decrease is due to less PPE items being shipped out.~~

Advertising & Marketing

Advertising costs are expensed when incurred and are included in advertising and promotional expense in the accompanying statements of operations. Included in this category are expenses related to public relations, investor relations, new package design, website design, design of promotional materials, cost of trade shows, cost of products given away as promotional samples, and paid advertising. The Company recorded advertising and marketing costs in general and administrative expenses and were $134,930 and $237,288 for the nine months ended September 30, 2022, and 2021, respectively. Advertising and marketing costs were $36,822 and $47,051 for the three months ended September 30, 2022, and 2021, respectively.

Segment Information

The Company follows the provisions of ASC 280-10 Segment Reporting. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. Segment identification and selection is consistent with the management structure used by the Company’s chief operating decision maker to evaluate performance and make decisions regarding resource allocation, as well as the materiality of financial results consistent with that structure. Based on the Company’s management structure and method of internal reporting, the Company has one operating segment. The Company’s chief operating decision maker does not review operating results on a disaggregated basis; rather, the chief operating decision maker reviews operating results on an aggregate basis.

~~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 30, 2021, the Company’s cash balances did not exceed the FDIC limit.

~~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 costs included in general and administrative costs of $~~292,157~~ ~~and $1,375,962~~ ~~for the nine months ending September 30, 2021 and 2020, respectively.~~

Earnings per Share

The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, “Earnings per Share”. Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if preferred stock converted to common stock and warrants are exercised. Preferred stock and warrants are excluded from the diluted earnings per share calculation if their effect is anti-dilutive.

The Business Combination on June 30, 2021 was accounted for as a recapitalization of equity structure. In October 2021 the Company completed 1-for-28 reverse stock ~~split.~~split. Pursuant to GAAP, the Company retrospectively recasted the weighted-average shares included within its condensed consolidated statements of operations for the ~~three and~~ nine months ended September 30, ~~2021 and September 30, 2020.~~2021. The basic and diluted weighted-average Panacea ordinary shares are retroactively converted to shares of the Company’s common stock to conform to the recasted condensed consolidated statements of stockholders’ equity.

~~The following financial instruments were not included in the diluted loss per share calculation for the three months ending September 30, 2021 and 2020 because their effect was anti-dilutive:~~

~~SCHEDULE OF ANTI-DILUTIVE DILUTED LOSS PER SHARE~~

2021 2020
For the three months ended September 30,
2021 2020
Options to purchase common stock 61,446 -
Warrants to purchase common stock 56,377 -
Series A Convertible Preferred 256,211 -
Series B-1 Convertible Preferred 6,679 -
Series B-2 Convertible Preferred 26,786 -
Series C Convertible Preferred 2,289,220 -
Series C-1 Convertible Preferred 1,064,908 -
Series D Convertible Preferred 1,628,126 -
Total 5,389,753 -

The following financial instruments were not included in the diluted loss per share calculation for the nine months ~~ending~~ended September 30, ~~2021~~2022, and ~~2020~~2021 because their effect was anti-dilutive:

SCHEDULE OF ANTI-DILUTIVE LOSS PER SHARE

	2021		2020
	For the nine months ended September 30,				For the nine months ended September 30,
	2021		2020		2022		2021
Options to purchase common stock		61,446		-		61,446		-
Warrants to purchase common stock		56,377		-		56,377		343,854
Series A Convertible Preferred		250,000		-
Series B-1 Convertible Preferred		6,679		-		6,679		-
Series B-2 Convertible Preferred		26,786		-		26,786		-
Series C Convertible Preferred		2,289,220		-		2,289,220		-
Series C-1 Convertible Preferred		1,064,908		-		1,064,908		1,432,773
Series D Convertible Preferred		1,628,126		-		1,628,126		-
Convertible Notes						-		85,451
Total		5,383,541		-		5,133,541		1,862,078

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.

~~Intangible Assets and Goodwill~~

The Company has intangible assets. Goodwill is comprised of the purchase price of business combinations in excess of the fair market value assigned at acquisition to the tangible and intangible assets acquired. Goodwill is not amortized. The Company tests goodwill for impairment on an annual basis. The Company performed its most recent goodwill impairment using a discounted cash flow analysis and found that the fair value exceeded the carrying value. It has $~~2.189~~ ~~million of goodwill from the acquisition of the assets of Phoenix Life Sciences, Inc. in October 2017 and intangible assets of $0.077~~ ~~million as of September 30, 2021 and $0.123~~ ~~million for as of December 31, 2020. In the acquisition of Phoenix, the Company acquired product formulas which is classified as an intangible asset.~~

~~SCHEDULE OF INTANGIBLE ASSETS AND GOODWILL~~

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

September 30, 2021 December 31, 2020
Goodwill $ 2,188,810 $ 2,188,810
Intangibles – Formulations 307,001 307,001
Less accumulated amortization (230,250 ) (184,200 )
Net intangible assets $ 76,751 $ 122,801

NOTE 3 – PROPERTY, EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property and equipment, net including any major improvements, are recorded at historical cost. The cost of repairs and maintenance is charged against operations as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, generally as follows:

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT USEFUL LIVES

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

Property and equipment, net consists of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

September 30, 2021 December 31, 2020
Computers and technological assets $ 3,310,025 $ 2,993,626
Furniture and fixtures 55,951 55,951
Machinery and equipment 7,524,242 8,494,296
Land 92,222 2,293,472
Assets under construction - 743,377
Leasehold improvements 1,508,915 1,508,915
Total 12,491,355 16,089,637
Less accumulated depreciation (3,466,850 ) (2,499,351 )
Total property and equipment, net $ 9,024,505 $ 13,590,286

~~The land and equipment decreased from December 31, 2020 to September 30, 2021 due to the partial sale of the farmland and equipment. See Note 10.~~


	September 30, 2022			December 31, 2021
Computers and technological assets	$	3,734,720		$	3,514,421
Furniture and fixtures		55,950			55,950
Machinery and equipment		7,666,622			7,530,787
Land		92,222			92,222
Leasehold improvements		1,508,915			1,508,915
Total		13,058,429			12,702,295
Less accumulated depreciation		(5,093,469	)		(3,862,313	)
Total property and equipment, net	$	7,964,960		$	8,839,982

Depreciation expenses ~~for the three- and nine-month periods ending September 30, 2021 and 2020~~ were $~~392,485~~1,240,281, and $1,280,324~~, $371,314and $1,018,567respectively.~~

~~During~~ for the nine months ended September 30, 2022 and 2021, ~~the Company sold fixed assets of~~respectively. Depreciation expenses were $~~743,377~~421,695 and ~~recorded a loss of~~ $~~297,351~~392,485 ~~in respect of that sale. During~~for the ~~year~~three months ended ~~December 31, 2020, the Company sold fixed assets of $260,337~~September 30, 2022 and ~~recorded a loss of $140,714~~ ~~in respect of that sale.~~2021, respectively.

NOTE 4 -INVENTORY

Inventory consists of the following components:

SCHEDULE OF INVENTORY


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Raw Materials	$	1,006,096	$	991,523	$	967,523	$	970,393
Semi-Finished		1,317,948		1,372,950		1,671,144		1,466,763
Finished Goods		1,998,260		6,018,530		1,753,521		1,805,779
Packaging		16,281		20,938		19,975		15,549
Trading		5,793		5,793		0		5,793
Total	$	4,344,378	$	8,409,734	$	4,412,463	$	4,264,277

Inventories are stated at lower of cost or net realizable value using the standard costing method for its work in process and finished goods. For its raw materials, trading goods, and packaging supplies, the Company utilizes the moving average method for costing purposes and FIFO. At this time there are no inventory reserves required.

NOTE 5 –OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES – RELATED PARTY

Right of Use

The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (“ASC 842”) on January 1, 2019, the start of our 2019 fiscal year. The Company has one lease arrangement with a related party entered into on December 22, 2018 for 3-year term starting with January 1, 2019 for certain laboratory facilities, with a nine-year extension option. This lease was extended and now expires on December 31, ~~2030.~~2030. At inception, the Company recognized a Right of Use Asset and a corresponding lease liability in the amount of $4,595,509. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component. The Company has incorporated residual value obligations in leases for which there is such occurrences. Regarding short-term leases, ASC 842-10-25-2 permits an entity to make a policy election not to apply the recognition requirements of ASC 842 to Short-term leases. The Company has elected not to apply the ASC 842 recognition criteria to any leases that qualify as Short-Term Leases.

The Company ~~as of January 1, 2019,~~ leases a portion of the property (formerly the Environmental Protection Agency building) in Golden, CO from J&N Real Estate, owned by the CEO, a related party with a term expiring on December 31, ~~2030.~~2030. The lease consists of all laboratory space including testing facilities, water treatment, extraction and production. The lease of the property is based on the fair market rent and triple net lease (NNN) values competitive in the marketplace for a cGMP facility. The Company also subleases some of its laboratory space to other CBD companies. This income is presented under the Other Income line items of the statements of operations. The leases vary from short-term monthly leases to 3-year leases but are all cancellable.

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

SCHEDULE OF RIGHT OF USE ASSET AND LIABILITY

September 30, 2021 December 31, 2020
Right-of-use assets $ 3,681,682 $ 3,937,706

Present value of operating lease liabilities $ 3,775,942 $ 4,022,870
Less: Long-term portion of operating lease liability (3,434,571 ) (3,692,392 )
Short-term portion of operating lease liability 341,371 330,478
Unpaid balances 1,167,372 832,391
Total short-term lease liability obligations $ 1,508,743 $ 1,162,869
Weighted-average remaining lease term (Ends December 31, 2030) 9.25 years 10 years

Weighted-average discount rate 3.0 %


			September 30, 2022			December 31, 2021
Right-of-use assets	$	3,681,682	$	3,331,533		$	3,595,100

Total lease liability obligations	$	4,943,314
Present value of operating lease liabilities			$	3,434,571		$	3,692,392
Less: Long-term portion of operating lease liability				(3,078,254	)		(3,347,335	)
Short-term portion of operating lease liability				356,317			345,057
Unpaid balances				1,617,359			1,279,033
Total short-term lease liability obligations			$	1,973,676		$	1,624,090
Weighted-average remaining lease term (Ends December 31, 2030)		9.25 year		8.25 years			9 years

Weighted-average discount rate							3.0	%

During the three and nine months ended September 30, ~~2021,~~ we recognized approximately $114,693 and $344,079, respectively in operating lease ~~costs. During the year ended December 31, 2020, we recognized approximately $458,772, respectively in operating lease costs.~~costs for both 2022 and 2021. 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 30, ~~2021,~~2022, are as follows:

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES


2021	$	111,661
2022		451,110
Remainder of 2022					112,778
2023		455,622			455,622
2024		460,178			460,178
2025		464,780			464,780
2026					469,427
Thereafter		2,394,550			1,925,123
Total undiscounted operating lease payments		4,337,901			3,887,908
Less: Imputed interest		(561,959	)		(453,337	)
Present value of operating lease liabilities	$	3,775,942		$	3,434,571

NOTE 6 – NOTES PAYABLE

Convertible Note Payable

On November 18, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with Lincoln Park Capital Fund, LLC (the “Purchaser”) pursuant to which the Company agreed to sell a 10% original issue discount senior convertible promissory note in the principal amount of $1,100,000 (the “Convertible Note”) and five-year warrants to purchase 785,715 shares of the Company’s common stock, par value $0.0001 per share at an exercise price of $1.40 per share (the “Warrants”) pursuant to the terms and conditions of the SPA for a total purchase price of $1,000,000.

The Note will be due November 18, 2022, which is one year from the issuance date. The Note initially does not bear any interest, however upon and during any event of default by the Company, the Note will accrue interest at a rate of 18% per annum. Events of default include the failure to file all required reports and other documents with the SEC pursuant to Exchange Act by January 2022, suspension of trading or quotation of the Company’s ~~debt obligations are~~common stock on the OTCQB or a national securities exchange, and failure to reserve a sufficient number of shares for the conversion or exercise of all securities sold under the SPA. Further, upon an event of default, the holder will have the right to cause the Company to redeem the outstanding principal and accrued interest on the Note at a 125% premium.

The principal and accrued interest on the Note is convertible into common stock at a conversion price of $1.40 per share, subject to certain adjustments summarized as ~~follows.~~ follows: (i) if an event of default has occurred prior to the maturity date, a reduction to 80% of the conversion price then in effect, (iii) anti-dilution adjustment upon certain issuances of common stock or derivative securities at a price per share that is lower than the conversion price, (iii) customary adjustments for stock splits, stock dividends and similar corporate events, and (iv) adjustment upon a public offering by the Company meeting certain delineated criteria, as summarized below.

Under the terms of the Note, upon a public offering by the Company of common stock, either alone or in units or with other securities pursuant to an effective registration statement resulting in gross proceeds to the Company of at least $10,000,000, and in connection with which the common stock is approved for listing listed on a national securities exchange (a “Qualified Offering”), the conversion price will be reduced to 90% of the offering price per share in the Qualified Offering, if that price is lower than the conversion price then in effect. Additionally, immediately prior to a Qualified Offering, the Company may redeem all or part of the outstanding principal and accrued interest on the Note at a 115% premium.

The Note also contains customary negative covenants prohibiting the Company from certain actions while the Note remains outstanding.

The Warrants will be exercisable for a five-year term beginning on May 18, 2022, at an exercise price of $1.40 per share, subject to certain adjustments which are substantially similar to those contained in the Note, including the Qualified Offering adjustment.

Each of the Note and the Warrants contain a 4.99% beneficial ownership limitation pursuant to which neither may be converted or exercised, as applicable, if and to the extent that following such conversion or exercise the holder would beneficially own more than 4.99% of the Company’s outstanding common stock, subject to increase to 9.99% upon 61 days’ prior written notice by the holder.

Pursuant to the SPA, the Company entered into a Registration Rights Agreement dated November 18, 2021, by and between the Company and the Purchaser, in which the Company has agreed to file a Registration Statement on Form S-1 with the SEC following request by the Purchaser at any time following the 180-day period after the initial closing.

The Company calculated the fair value of the Warrants using the Black Scholes method as $877,261 and recorded their fair value along with the $100,000 original issue discount and relates issuance costs of $20,249 as a debt discount which will be amortized using the straight-line method over the one year note period. Amortization of the debt discount for the year ended December 31, ~~2020, numbers reflect~~2021 amounted to $117,515. The loan balance, net of discount was $220,005 as of December 31, 2021. Amortization of the ~~pre-merger Panacea indebtedness, while~~debt discount for the three and nine months ended September 30, ~~2021, now include~~2022, was $251,427 and $746,083, respectively, and was recorded as interest expense. The debt discount balance at September 30, 2022, was $133,912s.

On March 3, 2022, the ~~Panacea indebtedness,~~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 ~~well~~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, 2022, was $56,873 and $130,437, respectively, and was recorded as ~~Exactus’ indebtedness.~~interest expense. The debt discount balance at September 30, 2022, was $95,201.

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 loan proceeds ~~are to be~~were used as working capital to alleviate economic injury caused by the Covid-19 disaster occurring in the month of January 31, 2020 and continuing thereafter. As of September 30, ~~2021~~2022 the current principal balance of this note amounted to $99,100 and accrued interest was approximately $2,047.

~~Paycheck Protection Program Funding~~

~~The Exactus Company was approved for “second draw” loan of $236,410~~ under the Paycheck Protection Program (PPP) on April 12, 2021; the loan was officially forgiven by the Small Business Administration (SBA) and lending bank, West Town Bank & Trust, on September 23, 2021.

~~Regarding Panacea Life Sciences, Inc.’s (PLS) on January 26, 2021, PLS received approval for the PPP second draw loan in the amount of $243,041; the second draw loan was forgiven on September 28, 2021.~~

PLS’s accounting treatment of the PPP loans and forgiveness follows best practice from the AICPA and accounted for the loan as a financial liability in accordance with FASB ASC 470 and accrue interest in accordance with the interest method under FASB ASC 835-30. The full amount of the PPP loan and accrued interest was forgiven on September 28, 2021; whereby, the debt was extinguished including any accrued but unpaid interest. It was recorded as a forgiveness of loan in the Company’s statements of operations as other income.

~~Employer Retention Credit~~

~~Panacea received an employer retention credit from the federal government of $190,388~~.

Notes payable – related party and other liability

~~On June 30, 2021 Panacea received a~~As part of the Exchange Agreement certain loan balances (“Quintel Loans”) from Quintel-MC Incorporated, an affiliate of the Company’s CEO, ~~in exchange for~~(“Quintel”) and historical interest owed of $1,932,358 were combined into a ~~12% demand~~new promissory note ~~for~~with the principal amount of $~~4,062,714~~4.062 ~~(the “Quintel~~million (“Quintel Note”). The Quintel 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~~)concern).

On June 30, 2021, ~~Panacea~~the Company issued ~~the Company’s~~its CEO, Ms. Buttorff, a 10% promissory note in the amount of $~~1,685,685~~1,624,000 (the “Buttorff Note”). The Buttorff Note was secured by a pledge of certain XXII common stock owned by ~~Panacea~~the Company (See Note 2 Going ~~concern~~)concern). This demand note replaced a prior working capital note that ~~Panacea~~the Company had issued on January 1, 2021. ~~The~~On July 1, 2021, the Company ~~has an additional~~issued Ms. Buttorff a 10%, $1 million line of credit note ~~from~~at 10% annual rate which Ms. Buttorff has increased that expired in January 2022, which Ms. Buttorff has extended (see Note 6 – Notes Payable – Buttorff Note). In January 2022, the Buttorff line of credit was increased to $~~1,000,000~~1.5 million, then increased again in April to $3.0 million and is now due on ~~July 1, 2021. The terms include an annual interest rate of 10% These notes are all payable upon demand.~~

~~During October 2019, the Company issued a short-term promissory note to an officer of the previous company Exactus, for an aggregate principal amount of $55,556~~January 31, 2024. ~~The note originally became~~To date the balance due ~~and payable between~~ ~~October 18, 2019~~ ~~and~~ ~~December 16, 2019~~ ~~and bore interest at a rate of twelve~~ 12~~% per annum prior to the maturity date, and~~ 18~~% per annum if unpaid following the maturity date. The current interest rate~~ is 18~~%. The note is an unsecured obligation of the Company. The notes carry a~~ 10~~% original issue discount of~~ $~~5,556~~ ~~which has been amortized and recorded in interest expense on the accompanying condensed consolidated statements of operations. As of September 30, 2021, the principal balance under the note was $55,556~~2,431,403.

~~During February 2021, the Company entered into a short-term promissory note for principal amount of $20,000~~ ~~with a stockholder of the Company. The note is payable on demand and bears interest at a rate of~~ 8~~% per annum. The note is unsecured obligation of the Company. As of September~~On June 30, 2021 the ~~principal balance~~$7 million of ~~this note amounted~~convertible debt (“XXII Debt”) was retired in exchange for a portion of the Needle Rock Farm ($2.2 million), $500,000 was converted to common stock and J&N Real Estate Company assumed a $~~20,000~~4.3 ~~and accrued interest was $533~~.million loan credited against preferred Panacea stock.

~~The SBA is a 30-year loan, but we plan to pay off this loan in 2022. The rest of the loans do not have a maturity date assigned to them and are payable upon demand.~~

Below is a summary of our notes payable as of September 30, 2022 and December 31, 2021:

SCHEDULE OF NOTES PAYABLE


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

Other long-term liabilities, related party

The Company has recorded ~~another~~a related party liability ~~which includes building leasehold improvements~~(“Fixed Asset Loan”) in the amounts of $3,017,874 and $2,749,638 as of September 30, 2022 and December 31, 2021, respectively, relating to SAP software and support ~~fees. Refer to Note 9.~~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.

~~SCHEDULE OF NOTES PAYABLE~~

September 30, 2021 December 31, 2020
Notes payable - related party (1) $ 4,062,713 $ 7,911,044
Notes payable – related party (2) 2,077,886 150,000
Notes payable -related party (3) - 7,000,000
Notes payable - related party (4) 75,556 -
Total related party notes $ 6,216,155 $ 15,061,044

Paycheck protection loan (5) $ - $ 273,300
SBA loan (4) 99,100 -
Total Paycheck protection and SBA loan $ 99,100 $ 273,300

September 30, 2021 December 31, 2020
Other liability—related party
SAP software, support and building modifications (6) $ 2,529,248 $ 2,185,269
J&N Building Loan (7) 513,390 513,390
Total $ 3,042,638 $ 2,698,659

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.

~~(1)~~	~~Payable to Quintel. As part of the agreement in the reverse merger transaction the Quintel loans and historical interest owed of $1,932,358~~ ~~was combined into a new loan principal total of $4.062~~ ~~million. In May, 2021, before the exchange agreement Panacea also transferred $4.7~~ ~~million in PPE inventory to Quintel to facilitate a transaction. The net effect of this transaction was a credit to revenue, debit to finished goods inventory and a credit to the Quintel loan.~~
~~(2)~~	~~Payable to CEO, secured by XXII common stock.~~
~~(3)~~	~~Convertible debt owed to XXII. On June 30, 2021 the $~~7 ~~million in convertible debt was retired in exchange for a portion of the Needle Rock Farm ($2.2~~ ~~million), $500,000~~ ~~was converted to common stock and J&N Real Estate Company assumed a $4.3~~ ~~million loan.~~
~~(4)~~	~~Liability carried over from Exactus~~
~~(5)~~	~~Paycheck protection loans include Exactus’ and Panacea’s loans.~~
~~(6)~~	Accrued expenses related to SAP software and implementation services. Software enhancements for production related functionality and user interface were added in 2020 and 2021. In 2019 the initial implementation of the system was completed.
~~(7)~~	~~The J&N Real Estate Company loan for Panacea Building capital was made in 2020~~

	September 30, 2022		December 31, 2021
Other long-term liabilities, related party
Fixed Asset Loan	$	3,017,874	$	2,749,638
J&N Building Loan		513,390		513,390
Total	$	3,531,264	$	3,263,028

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 ~~quarter~~three and nine months ended September 30, ~~2021,~~2022, the Company issued ~~100~~0 ~~shares of Series A Preferred Shares were converted into~~and ~~71,429~~834,331 shares of common ~~stock.~~stock in respect of the share exchange effected in 2021.

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 ~~provides~~provided for the issuance of ~~339,522~~4,049,409 incentive awards in the form of non-qualified and incentive stock options, restricted stock awards, restricted stock unit awards, warrants and preferred stock. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company or to a subsidiary of the Company. The exercise price for stock options must not be less than the fair market value of the underlying shares on the date of grant. The incentive awards shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board of Directors or Compensation Committee may specify. Stock options expire no later than ten years from the date of grant. ~~The aggregate number of shares of common stock which may be issued pursuant to the Plan is~~ ~~144,621~~. Unless sooner terminated, the Plan shall terminate in 10 years.

~~As part of~~Previously the ~~merger of Exactus, Panacea assumed~~Company had adopted the ~~Exactus~~ 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan provides for the issuance of incentive awards in the form of non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, and restricted stock unit awards. The awards may be granted by the Company’s Board of Directors to its employees, directors and officers and to consultants, agents, advisors and independent contractors who provide services to the Company or to a subsidiary of the Company. The exercise price for stock options must not be less than the fair market value of the underlying shares on the date of grant. The incentive awards shall either be fully vested and exercisable from the date of grant or shall vest and become exercisable in such installments as the Board or Compensation Committee may specify. Stock options expire no later than ten years from the date of grant. The aggregate number of shares of common stock which may be issued pursuant to the Plan is ~~339,285~~4,049,409 unless sooner terminated, the Plan shall terminate in 10 years. This plan had 196,491 fully vested options outstanding at the time of the ~~merger.~~share exchange. There have been no options granted under this plan subsequent to the ~~merger.~~share exchange.

Stock Options

A summary of the stock option activity is presented below:

SCHEDULE OF STOCK OPTIONS ACTIVITY

Options Outstanding as of September 30, 2021

Number of
Shares Subject
to Options

Weighted
Average
Exercise
Price Per
Share

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

Balance on December 31, 2020 - - - -
Options assumed in merger 196,491 $ 3.64 3.70 192,500
Options granted - - - -
Options exercised - - - -
Options canceled / expired - - - -
Balance at September 30, 2021 196,491 $ 3.64 3.45 $ 192,500

Vested and exercisable at September 30, 2021 196,491 $ 3.64 3.45 $ 192,500

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

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

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

Stock Warrants

On March 3, 2022, the Company entered in an Exchange Agreement with an institutional investor pursuant to which the Company issued a 10% original issue discount senior convertible promissory note in the principal amount of $385,000 (the “Note”) and five-year warrants to purchase 275,000 shares of the Company’s common stock, par value $0.0001 per share at an exercise price of $1.40 per share in exchange for 350 shares of the Company’s Series A Convertible Preferred Stock.

As ~~a result of the Merger closing (see Note 10), as~~ of September 30, ~~2021,~~2022, the Company also had outstanding warrants to purchase an aggregate of 56,377~~(post-split)~~ shares of common ~~stock (1,578,549~~ ~~shares pre-split). The~~stock. These warrants were previously issued by ~~Exactus, Inc. and assumed in~~ the ~~Merger.~~ Company prior to the exchange agreement.

The Company’s outstanding warrants as of September 30, ~~2021~~2022 are summarized as follows, and all were exercisable at that date.

~~SUMMARY~~

A summary of the Company’s outstanding warrants is presented below:

SCHEDULE OF ~~STOCK~~ WARRANTS OUTSTANDING

Name Expire Number of Shares Average Exercise
Price
Balance on December 31, 2020 - - -
Assumed in Merger 56,337 $ 13.64
Total as of September 30, 2020 56,337 $ 13.64

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

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

Vested and exercisable at September 30, 2022		331,377	$	3.48		3.91	$	-

As of September 30, ~~2021,~~2022, the outstanding warrants have 0no intrinsic value.

Restricted Stock

A summary of the restricted stock activity is presented below:

SUMMARY OF RESTRICTED STOCK

	Restricted Stock Common Stock
Balance at December 31, ~~2020~~		-
~~Assumed in merger~~2021		107,993
Balance at September 30, ~~2021~~2022		107,993

As of September 30, ~~2021,~~2022, there were no unamortized or unvested stock-based compensation costs related to restricted share arrangements.

Preferred Stock

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

~~In connection with our acquisition of Panacea on June 30, 2021, we issued convertible preferred stock to our new principal shareholder and Chief Executive Officer (and her affiliates) as follows:~~

~~1,000,000~~ ~~shares of Series C Convertible Preferred Stock (the “Series C”)~~ ~~10,000~~ ~~shares of Series C-1 Convertible Preferred Stock (the “Series C-1”) and~~ ~~10,000~~ ~~shares of Series D Convertible Preferred Stock (the “Series D”), which together convert into approximately~~ ~~17.8% of the Company’s common stock outstanding as of that date. The Series C has a liquidation preference of $6.046~~ ~~per share, is convertible at the rate of~~ ~~2.289~~ shares of common stock per share and through December 31, 2023 has the option to participate in the recovery by the Company of certain assets. In order to avail herself of the rights, the holder can cause the Company to use the cash generated by the assets and repurchase Series C at a price equal to the liquidation preference per share, subject to the Company maintaining an agreed upon level of net assets. The Series C-1 has a liquidation preference of $~~281.25~~ ~~per share and is convertible at the rate of~~ ~~106.49~~ ~~shares of common stock for each share of Series C-1. The Series D has a liquidation preference of $430~~ ~~per share and is convertible into common stock at the rate of~~ ~~162.813~~ ~~shares of common stock per share. The Series C, C-1 and D also vote on an as converted basis.~~

~~Effective October 25, 2021, we filed a Certificate of Designation for~~ ~~100~~ ~~shares of Series C-2 Convertible Preferred Stock (the “Series C-2”). Following effectiveness our Chief Executive Officer exchanged~~ ~~2,050,000~~ ~~shares of her common stock for~~ ~~100~~ ~~shares of Series C-2.~~ ~~The Series C-2’s only rights are to convert into 2,050,000 shares of common stock on or after November 1,~~On March 3, 2022, ~~and to vote on an as-converted basis. The effect of this exchange was to increase the percentage of public float compared to outstanding common stock.~~

~~In addition,~~ the Company entered into an Exchange Agreement with the Investor pursuant to which the company agreed to issue the Note in the principal amount of $385,000 and the Warrants in exchange ~~agreement on June 30, 2021 with an investor and~~for 350 shares of the Company’s Series A Convertible Preferred Stock. On April 19, 2022, the Company filed a Withdrawal of Designation of the Series A Convertible Preferred Stock with the Secretary of State ofand the State of ~~Nevada a Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred stock under which the Note in the original principal amount of $750,000~~Nevada. ~~would be exchanged for~~ ~~500~~ ~~shares of a new series of our preferred stock designated~~ 0~~% Series A Convertible Preferred Stock (the “Series A Preferred”) with a stated value of $1,000~~ ~~per share (the “Stated Value”).~~

~~The Company authorized the issuance of a total of~~ ~~1,000~~ shares of Series A Preferred for issuance. Each share of Series A Preferred is convertible at the option of the holder, into that number of shares of our common stock (subject to certain limitations on beneficial ownership) determined by dividing the Stated Value by $~~0.05~~ per share (the “Conversion Price”), subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications or similar transactions that proportionately decrease or increase the common stock. During the quarter ended September 30, 2021, the investor converted ~~100~~ ~~shares of Series A Preferred stock into~~ ~~2,000,000~~ ~~shares of common stock.~~

The Company is prohibited from effecting the conversion of the Series A Preferred to the extent that, as a result of such conversion, the holder beneficially owns more than 4.99% (which may be increased to 9.99% upon 61 days’ written notice to the Company), in the aggregate, of the issued and outstanding shares of the common stock calculated immediately after giving effect to the issuance of shares of common stock upon the conversion of the Series A Preferred. Holders of the Series A Preferred are entitled to vote on all matters submitted to the Company’s stockholders and are entitled to the number of votes equal to the number of shares of common stock into which the shares of Series A Preferred stock are convertible, subject to applicable beneficial ownership limitations. The Series A Preferred stock provides a liquidation preference equal to the Stated Value, plus any accrued and unpaid dividends, fees or liquidated damages. ~~The Series A Preferred can be redeemed at the Company’s option upon payment of a redemption premium between 120% to 135% of the Stated Value of the outstanding Series A Preferred redeemed.~~

On February 16, 2021 the Company offered to our prior Series A Preferred stock holder enhanced conversion inducements to voluntarily convert the preferred shares into our common stock and filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for Series A Preferred stock, all of which has been converted to common stock, in order to issue the new 0% Series A Preferred stock described herein.

On April 7, 2021 the Company filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for the previous Series C Preferred Stock, all of which has been cancelled or converted into common stock.

~~On February 16, 2021, the Company offered to holders of our prior Series D Preferred Stockholder(s) enhanced inducements to voluntarily convert preferred shares into our common stock.~~

On April 7, 2021 the Company filed a Certificate of Cancellation and Withdrawal with the Secretary of State of the State of Nevada cancelling our prior Certificate of Designation of Preferences, Rights and Limitations for the previous Series D Preferred Stock, all of which has been cancelled or converted into common stock.

During the quarter ended June 30, 2021 the Company withdrew its prior Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock and issued shares of newly designated Series C, Series C-1 and Series D to former Panacea stockholders pursuant to the Exchange Agreement.

~~PANACEA LIFE SCIENCES HOLDINGS, INC. AND SUBSIDIARY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY~~

~~(unaudited)~~

~~SCHEDULE OF PREFERRED STOCK~~

Three Months Ended September 30, 2021
Preferred Stock Convertible - Series A Shares Preferred Stock Series B-1 Shares Preferred Stock Series B-2 Shares Preferred Stock Series C Shares Preferred Stock Series C-1 Shares Preferred Stock Series D Shares Total Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance as of June 30, 2021 450 $ - 1,500,000 $ 150 6,000,000 $ 600 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 8,520,450 $ 852
Shares issued for acquisition
Shares issued for acquisition, shares
Series A Preferred stock converted to common shares (100 ) - - - - - - - - - - - (100 ) -
Balance as of September 30, 2021 350 $ - 1,500,000 $ 150 6,000,000 $ 600 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 8,520,350 $ 852

Nine Months Ended September 30, 2021
Preferred Stock Convertible - Series A Shares Preferred Stock Series B-1 Shares Preferred Stock Series B-2 Shares Preferred Stock Series C Shares Preferred Stock Series C-1 Shares Preferred Stock Series D Shares Total Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2020 - $ - - $ - - - 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 1,020,000 $ 102
Shares issued for acquisition 450 - 1,500,000 150 6,000,000 600 - - - - - - 7,500,000 750
Series A Preferred stock converted to common shares (100 ) - - - - - - - - - - - (100 ) -
Balance as of September 30, 2021 350 $ - 1,500,000 $ 150 6,000,000 600 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 8,520,350 $ 852

Three Months Ended September 30, 2020
Preferred Stock Convertible - Series A Shares Preferred Stock Series B-1 Shares Preferred Stock Series B-2 Shares Preferred Stock Series C Shares Preferred Stock Series C-1 Shares Preferred Stock Series D Shares Total Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance as of June 30, 2020 - $ - - $ - - $ - 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 1,020,000 $ 102
Shares issued for acquisition - - - - - - - - - - - - - -
Balance as of September 30, 2020 - $ - - $ - - $ - 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 1,020,000 $ 102

Nine Months Ended September 30, 2020
Preferred Stock Convertible - Series A Shares Preferred Stock Series B-1 Shares Preferred Stock Series B-2 Shares Preferred Stock Series C Shares Preferred Stock Series C-1 Shares Preferred Stock Series D Shares Total Preferred Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance as of December 31, 2020 - $ - �� - $ - - $ - 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 1,020,000 $ 102
Shares issued for acquisition - - - - - - - - - - - - - -
Balance as of September 30, 2020 - $ - - $ - - $ - 1,000,000 $ 100 10,000 $ 1 10,000 $ 1 1,020,000 $ 102

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Legal Matters

In the ordinary course of business, the Company enters into agreements with third parties that include indemnification provisions which, in its judgment, are normal and customary for companies in the Company’s industry sector. These agreements are typically with business partners, and suppliers. Pursuant to these agreements, the Company generally agrees to indemnify, hold harmless, and reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to the Company’s products, use of such products, or other actions taken or omitted by us. The maximum potential number of future payments the Company could be required to make under these indemnification provisions is unlimited. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of liabilities relating to these provisions is minimal. Accordingly, the Company has no liabilities recorded for these provisions as of September 30, ~~2021.~~

~~As a result of our acquisition of Panacea, the Company is now involved in the following pending litigation:~~

On February 16, 2021, Henley Group, Inc. filed with the Superior Court of the State of California, San Bernardino County, a complaint (Case #: SIV SB 2105771) against Panacea for breach of contract and fraud related to Panacea’s non-delivery of product. While Panacea refunded the purchase price, the plaintiff seeks damages including lost profits and costs which plaintiff alleged to have incurred in the amount of approximately $~~45,000~~. The plaintiff also seeks attorney’s fees and costs, consequential damages and punitive damages. Panacea’s attorney has submitted counterclaims and we believe this complaint is frivolous. Mediation was held in October with no outcome.

On October 7, 2019, CMI Mechanical (“CMI”) agreed to procure, deliver, and install a dehumidification system (the “System”) at the Company’s facility located at 16194 W. 45th Drive, Golden, Colorado 80403 (the “Property”). The Company believes the System has failed to meet the requirements of the subject contract, and CMI has not remedied that failure for the Company. The Company withheld certain payments as permitted under the contract. On December 10, 2020, CMI recorded a lien against the Property in the amount of $108,001.48. On January 27, 2021, the Panacea’s attorney notified CMI that its lien was invalid, overstated, and violated the terms of the contract. The letter also demanded that CMI remove the system at CMI’s own cost. The lien was since dropped. CMI and Panacea plan to pursue complaints regarding this issue and possible mediation in 2022.

Concentrations

~~The Company has no concentration of vendors that would impact production costs in the longer term. On the revenue side, in the 3~~^rd ~~Quarter we signed a large contract with a convenience store chain. The revenues from the first shipment of CBD products are~~ 29~~% of the 3~~^rd ~~Q revenue.~~

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

On the revenue side, in the three months ended September 30, 2022, we have a concentration of three customers. One is a customer that purchases refined oils and represents 18% of revenue. One is a contract manufacturing customer who represents 12% of revenue. One is a is a tolling partner who represents 10% of revenue.

The other concentration is in the accounts receivable category, where three customer accounts for 6174% of the accounts receivable. One of the three customer contracts is unique in that we produced all of the products for them to sell, and they pay Panacea as the items are sold in the ecommerce marketplace. Thus, until their inventory is depleted, we will have accounts receivable. ~~The largest~~This customer receivable (is 3633% of the 6174%~~) was paid in October.~~.

NOTE 9 - RELATED PARTY TRANSACTIONS

Notes Payable and Accrued Interest – Related Parties

~~On June 30, 2021 Panacea received a loan of from Quintel-MC Incorporated, an affiliate of~~For information on related party loans to the ~~Company’s CEO in exchange for the Quintel Note. (see Note~~Company and other related party transactions, see Notes 5 –and 6, Operating Lease and Notes ~~Payable - Quintel Note). The principal of this loan is $4,062,713. The loan has a 10% interest rate and no maturity date.~~Payable.

~~On June 30, 2021, Panacea issued the Company’s CEO, Ms. Buttorff, a~~ 10~~% promissory note in the amount of $1,624,000~~ secured by a pledge of certain XXII common stock owned by Panacea (see Note 5 – Notes Payable — Buttorff Note and Note 2 Going concern). See table below for the accrued interest and interest expense recorded.

~~On July 1, 2021, the Company issued Ms. Buttorff a $~~1 ~~million line of credit note (see Note 5 – Notes Payable — Buttorff Note). To date $392,201~~ ~~of the line of credit has been consumed.~~

~~During October 2019, the Company issued a short-term promissory notes to an officer of Exactus, for an aggregate principal amount of $55,556~~.

~~J&N Real Estate related party owned by Ms. Buttorff—See Note 5 Operating lease.~~

~~The Services Agreement~~ dated January 1, 2019, by and between the Company and Quintel, with respect to IT, HR, accounting/periodic reporting, production planning, and employee reporting services. The Master Agreement dated January 1, 2019, by and between the Company and Quintel/Canna Software, LLC for the provision of the ERPCannabis solution. As of September 30, 2021 the outstanding obligation under these two service contracts is $~~2,529,248. In 2021 $229,497~~ ~~were capitalized and $91,482~~ ~~of the costs were expensed.~~

The accrued interest and interest expenses recorded for related party loans are shown below.

SCHEDULE OF RELATED PARTY TRANSACTIONS LOANS


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Accrued Interest
Related party loan-Quintel	$	123,104	$	1,347,356	$	653,971	$	249,939
Related party loan-CEO loan		42,494		1,500		223,457		86,060
Related party loan-XXII		-		-
Related party loan – Line of credit		9,129		-		181,772		29,235
Accrued Interest Related party loan
Accrued Interest						181,772		29,235


	Three months ended September 30, 2021		Nine months ended September 30, 2021		Three months ended September 30, 2020		Nine months ended September 30, 2020		Three months ended September 30, 2022		Nine months ended September 30, 2022		Three months ended September 30, 2021		Nine months ended September 30, 2021
Interest Expense
Related party loan-Quintel	$	123,104	$	645,628	$	257,234	$	643,171	$	138,717	$	404,032	$	123,104	$	645,628
Related party loan-CEO loan		42,494		102,679		-		-		46,944		137,397		42,494		102,679
Related party loan-XXII		-		-		175,000		525,000

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

Other

The Company continues to hold ~~1,227,017~~1,203,000 shares of XXII stock which is available for sale. On May 2, 2022 24,017 shares were sold and the proceeds from the sale were $46,833. On August 25, 2021 70,000 shares were sold and the proceeds from the sale ~~was~~were $230,296. XXII recently moved from the NYSE to NASDAQ. As of September 30, ~~2021~~2022 XXII is a common shareholder of the Company.

NOTE 10 –~~RESTATED FINANCIAL STATEMENTS AND EXPLANATIONS~~

This Amendment No.1 on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q (the “Q3 2021 Form 10-Q”) of Panacea Life Sciences Holdings, Inc. (F/K/A Exactus, Inc.) (the “Company”) for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on November 15, 2021. We are filing this Amendment to change certain disclosures in Part I. Item 1 – Financial Statements, and Part II. Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – of the Q3 2021 Form 10-Q following the completion of review by the Company’s independent registered public accounting firm. The Q3 202Away1 Form 10-Q was previously filed before the review was completed.

The following tables’ present reconciliation from our prior periods as previously reported to the restated values for the consolidated balance sheets and the consolidated statement of operations. A description of restatements is listed below:

~~Impacts of restatement~~

~~The effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of September 30, 2021 are as follows:~~

~~SCHEDULE OF EFFECTS OF RESTATEMENT~~

~~(a)~~

~~Amortization of right of use asset was recorded twice in initial filing.~~

~~(b)~~

~~Reflects reversal of depreciation that was previously posted on asset that was retired.~~

~~(c)~~

~~To separately report short and long-term amounts associated with right of use asset.~~

~~Panacea Life Sciences Holdings, Inc. and Subsidiary~~

~~Unaudited Condensed Consolidated Balance Sheets~~

September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
As Restated Adjustment As Reported
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
(Unaudited) (Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,500 $ 84,379 $ - $ - $ 14,500 $ 84,379
Accounts receivable, net 515,095 147,302 - - 515,095 147,302
Other receivables, related party 500,000 - - - 500,000 -
Inventory, net 4,344,378 8,409,734 - - 4,344,378 8,409,734
Marketable securities related party 3,631,970 2,853,437 - - 3,631,970 2,853,437
Prepaid expenses and other current assets 193,596 27,375 - - 193,596 27,375
TOTAL CURRENT ASSETS 9,199,539 11,522,227 - - 9,199,539 11,522,227

Operating lease right-of-use asset, net, related party 3,681,682 3,937,706 (a) 57,237 - 3,624,445 3,937,706
Property and equipment, net 9,024,505 13,590,286 (b) - 14,600 9,024,505 13,575,687
Intangible assets, net 76,751 122,801 - - 76,751 122,800
Goodwill 2,188,810 2,188,810 - - 2,188,810 2,188,810
TOTAL ASSETS $ 24,171,287 $ 31,361,830 $ 57,237 $ 14,600 $ 24,114,050 $ 31,347,230

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,474,681 $ 1,765,267 $ - $ - $ 1,474,681 $ 1,765,267
Operating lease liability, current portion, related party 1,508,743 1,162,869 (c) (3,453,787 ) (3,692,381 ) 4,962,530 4,855,250
Note payable-current, related party 6,216,155 15,061,044 - - 6,216,155 15,061,044
Paycheck protection loan, SBA Loan 99,100 273,300 - - 99,100 273,300
TOTAL CURRENT LIABILITIES: 9,298,679 18,262,480 (3,453,787 ) (3,692,381 ) 12,752,466 21,954,861

Operating lease liability, long-term portion, related party 3,434,571 3,692,392 (c) 3,434,571 3,692,392 - -
Other long-term liabilities, related party 3,042,638 2,698,659 (c) - - 3,042,638 2,698,659
TOTAL LIABILITIES 15,775,888 24,653,531 (19,216 ) 11 15,795,104 24,653,520

Commitments and contingencies - - - - - -

STOCKHOLDERS’ EQUITY -
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 450 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. - - - - - -
Series B-1 Preferred: $0.0001 Par Value, 32,000,000 shares designated; 1,500,000 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 150 - - - 150 -
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 0 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 600 - - - 600 -
Series C Preferred: $0.0001 Par Value, 1,000,000 shares designated; 1,000,000 and 1,000,000 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 100 100 - - 100 100
Series C-1 Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 1 1 - - 1 1
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 1 1 - - 1 1
Preferred stock value
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 21,393,041 and 16,915,706 shares issued and outstanding on September 30, 2021 and December 31, 2020 respectively. 2,139 1,692 - - 2,139 1,692
Additional paid in capital 23,066,914 18,689,119 (b) (14,588 ) (0 ) 23,081,502 18,689,119
Accumulated deficit (14,674,506 ) (11,982,614 ) (b) 91,041 14,589 (14,765,547 ) (11,997,203 )
TOTAL STOCKHOLDERS’ EQUITY 8,395,399 6,708,299 76,453 14,589 8,318,946 6,693,710

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 24,171,287 $ 31,361,830 $ 57,237 $ 14,600 $ 24,114,050 $ 31,347,230

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

The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations and comprehensive income for the six months ended September 30, 2021 are as follows:

~~(a)~~

~~Amortization of right of use asset was recorded twice in initial filing.~~

~~Panacea Life Sciences Holdings, Inc. and Subsidiary~~

~~Unaudited Condensed Consolidated Statements of Operations~~

2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
As Restated Adjustment As Reported
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
REVENUE $ 588,040 $ 1,343,641 $ 1,413,674 $ 8,305,630 $ - $ - $ - $ - $ 588,040 $ 1,343,641 $ 1,413,674 $ 8,305,630
COST OF SALES 305,025 2,905,780 883,508 6,285,879 - - - - 305,025 2,905,780 883,508 6,285,879
GROSS PROFIT (LOSS) 283,015 (1,562,139 ) 530,166 2,019,751 - - - - 283,015 (1,562,139 ) 530,166 2,019,751

OPERATING EXPENSES
Production related operating expenses 1,250,434 1,307,169 3,407,407 3,012,485 (a) (76,462 ) 5 (76,452 ) 10 1,326,896 1,307,164 3,483,859 3,012,475
General and administrative expenses 290,638 478,992 911,906 2,547,438 - (4,205 ) - (4,205 ) 290,638 483,197 911,906 2,551,643
TOTAL OPERATING EXPENSES 1,541,072 1,786,161 4,319,313 5,559,923 (76,462 ) (4,200 ) (76,452 ) (4,195 ) 1,617,534 1,790,361 4,395,765 5,564,118

INCOME (LOSS) FROM OPERATIONS (1,258,057 ) (3,348,300 ) (3,789,147 ) (3,540,172 ) (a) 76,462 4,200 76,452 4,195 (1,334,519 ) (3,352,500 ) (3,865,599 ) (3,544,367 )

OTHER INCOME (EXPENSES)
Interest expense (174,727 ) (432,922 ) (781,671 ) (1,181,165 ) - - - - (174,727 ) (432,922 ) (781,671 ) (1,181,165 )
Unrealized gain (loss) on marketable securities, net (2,303,218 ) (160,310 ) 848,533 (595,590 ) - (60,818 ) - 16,891 (2,303,218 ) (99,492 ) 848,533 (612,481 )
Realized gain on sale of securities 160,296 - 160,296 - - - - - 160,296 - 160,296 -
Other income (loss) - 56,619 - (21,090 ) - 56,619 - (21,090 )
Employer retention credit 190,338 - 190,338 - - - - - 190,338 - 190,338 -
Rental Income 58,410 56,577 221,328 212,778 - - - - 58,410 56,577 221,328 212,778
Gain (loss) on sale of assets - 48,621 (297,351 ) (19,093 ) - - - - - 48,621 (297,351 ) (19,093 )
Gain on extinguishment of debt 237,202 - 755,782 - - - - - 237,202 - 755,782 -
TOTAL OTHER INCOME (EXPENSE) (1,831,699 ) (431,415 ) 1,097,255 (1,604,160 ) - (4,199 ) - (4,199 ) (1,831,699 ) (427,216 ) 1,097,255 (1,599,961 )

INCOME (LOSS) BEFORE INCOME TAXES (3,089,756 ) (3,779,715 ) (2,691,892 ) (5,144,332 ) (a) 76,462 1 76,452 (4 ) (3,166,218 ) (3,779,716 ) (2,768,344 ) (5,144,328 )

TAXES - - - - - - - - - - - -

NET INCOME (LOSS) $ (3,089,756 ) $ (3,779,715 ) $ (2,691,892 ) $ (5,144,332 ) (a) $ 76,462 $ 1 $ 76,452 $ (4 ) $ (3,166,218 ) $ (3,779,716 ) $ (2,768,344 ) $ (5,144,328 )

BASIC NET INCOME (LOSS) PER SHARE $ (0.14 ) $ (0.22 ) $ (0.15 ) $ (0.30 ) $ 0.00 $ 0.00 $ (0.02 ) $ (0.00 ) $ (0.15 ) $ (0.22 ) $ (0.13 ) $ (0.30 )
DILUTED NET INCOME (LOSS) PER SHARE $ (0.14 ) $ (0.22 ) $ (0.15 ) $ (0.30 ) $ 0.00 $ 0.00 $ (0.02 ) $ (0.00 ) $ (0.15 ) $ (0.22 ) $ (0.13 ) $ (0.30 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 21,389,041 16,915,706 18,422,459 16,915,706 - - (2,966,582 ) - 21,389,041 16,915,706 21,389,041 16,915,706
Diluted 21,389,041 16,915,706 18,422,459 16,915,706 - - (2,966,582 ) - 21,389,041 16,915,706 21,389,041 16,915,706

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

~~The effects of the restatement on the line items within the Company’s condensed statement of stockholders’ equity as of September 30, 2021 are as follows:~~

	~~(a)~~	~~The changes in the “Accumulated Deficit” reflects the accumulated difference of the changes reported in the Statement of Operations.~~

	~~(b)~~	~~The change in “Additional Paid-in Capital” reflects reclass and adjustments associated with the Company 1 to 28 reverse split of its Common Stock.~~

	~~(c)~~	~~The changes in “Net Income” reflects the accumulated difference of the changes reported in the Statement of Operations for the period.~~

~~Panacea Life Sciences Holdings, Inc. and Subsidiary~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s Additional Paid-in Accumulated Total Stockholder’s Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s
As restated Adjustment
Three Months Ended September 30, 2021 Three Months Ended September 30, 2021
Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s Additional Paid-in Accumulated Total Stockholder’s Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity Capital Deficit Equity Shares Amount Shares Amount Capital Deficit Equity
Balance as of June 30, 2021 8,520,450 $ 852 21,321,613 $ 2,132 $ 23,066,921 $ (11,584,750 ) $ 11,485,155 (a) (b) $ (4,455 ) $ 4,446 $ (9 ) 8,520,450 $ 852 21,321,613 $ 2,132 $ 23,071,376 $ (11,589,196 ) $ 11,485,164
Shares issued for acquisition
Shares issued for acquisition, shares
Series A Preferred stock conversion to common stock (100 ) - 71,429 7 (7 ) - (b) - - - (100 ) - 71,429 7 (7 ) -
Net Loss - - - - - (3,089,756 ) (3,089,756 ) (c) - 76,462 76,462 - - - - - (3,166,218 ) (3,166,218 )
Balance as of September 30, 2021 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,066,914 $ (14,674,506 ) $ 8,395,399 $ (4,455 ) $ 80,908 $ 76,453 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,071,369 $ (14,755,414 ) $ 8,318,946

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity Shares Amount Shares Amount Capital Deficit Equity
Balance as of December 31, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,982,614 ) $ 6,708,299 (a) (b) $ 10,133 $ 4,456 $ 14,589 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,678,986 $ (11,987,070 ) $ 6,693,710
Shares issued for acquisition 7,500,450 750 4,405,907 440 4,377,802 4,378,992 (b) (14,588 ) - (14,588 ) 7,500,450 750 4,405,907 440 4,392,390 4,393,580
Series A Preferred stock conversion to common stock (100 ) - 71,429 7 (7 ) - - - - (100 ) - 71,429 7 (7 ) -
Net Loss - - - - - (2,691,892 ) (2,691,892 ) (c) - 76,452 76,452 - - - - - (2,768,344 ) (2,768,344 )
Balance as of September 30, 2021 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,066,914 $ (14,674,506 ) $ 8,395,399 $ (4,455 ) $ 80,908 $ 76,453 8,520,350 $ 852 21,393,042 $ 2,139 $ 23,071,369 $ (14,755,414 ) $ 8,318,946

Three Months Ended September 30, 2020 Three Months Ended September 30, 2020
Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity Shares Amount Shares Amount Capital Deficit Equity
Balance as of June 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (8,115,401 ) $ 10,575,512 (a) (b) $ 236,847 $ (10,142 ) $ 226,705 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,452,272 $ (8,105,259 ) $ 10,348,807
Net Loss - - - - - (3,779,715 ) (3,779,715 ) - - - - - - - - (3,779,715 ) (3,779,715 )
Balance as of September 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,895,116 ) $ 6,795,797 $ 236,847 $ (10,142 ) $ 226,705 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,452,272 $ (11,884,974 ) $ 6,569,092

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholder’s
Shares Amount Shares Amount Capital Deficit Equity Shares Amount Shares Amount Capital Deficit Equity
Balance as of December 31, 2019 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (6,750,784 ) $ 11,940,129 (a) (b) $ 236,847 $ (10,137 ) $ 226,710 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,452,272 $ (6,740,647 ) $ 11,713,419
Net Loss - - - - - (5,144,332 ) (5,144,332 ) (c) - (5 ) (5 ) - - - - - (5,144,327 ) (5,144,327 )
Balance as of September 30, 2020 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,689,119 $ (11,895,116 ) $ 6,795,797 $ 236,847 $ (10,142 ) $ 226,705 1,020,000 $ 102 16,915,706 $ 1,692 $ 18,452,272 $ (11,884,974 ) $ 6,569,092

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

~~The effects of the restatement on the line items within the Company’s condensed consolidated statement of cash flow as of September 30, 2021 are as follows:~~

	~~(a)~~	~~Reflects previously unrecorded expenses.~~
	~~(b)~~	~~Amortization of right of use asset being reported as a net amount with liability reduction.~~
	~~(c)~~	~~Reflects liabilities acquired in merger being reported as non-cash items.~~
	~~(d)~~	~~Reflects PPE sale to related party being reclassified as non-cash item.~~
	~~(e)~~	~~Reflects retirement of accrued interest as being reclassified to non-cash item.~~
	~~(f)~~	~~To separately report asset proceeds and disposals that were originally presented as a net amount.~~
	~~(g)~~	~~Reflects amount related to note payable that was previously reported as account payable.~~
	~~(h)~~	~~To separately report non-cash receivable due.~~
	~~(i)~~	~~To separately report asset retirement and notes payable retirement due to merger~~
	~~(j)~~	~~To reclassify non-cash items from merger to non-cash investing and financing activities~~
	~~(k)~~	~~To separately report proceeds and payments on notes payable that were originally presented as a net amount.~~
	~~(l)~~	~~To report changes in depreciation as a result of asset retirement.~~
	~~(m)~~	~~To report interest payments made that were previously not separately disclosed.~~
	~~(n)~~	~~To reclassify non-cash stock issuances to non-cash transactions section.~~
	~~(o)~~	~~To correct a footing error.~~

~~Panacea Life Sciences Holdings, Inc. and Subsidiary~~

~~Unaudited Condensed Consolidated Statements of Cash Flows~~

2021 2020 2021 2020 2021 2020
As Restated Adjustment As Reported

Nine Months Ended
September 30,

Nine Months Ended
September 30,

Nine Months Ended
September 30,

2021 2020 2021 2020 2021 2020

Cash flows from operating activities
Net income (loss) $ (2,691,892 ) $ (5,144,332 ) (a) $ 76,452 $ (5 ) $ (2,768,344 ) $ (5,144,327 )
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation 1,280,324 1,018,567 (l) - (626,635 ) 1,280,324 1,645,202
Realized gain on sale of securities (160,296 ) - (160,296 ) -
Fixed asset disposal loss 297,351 19,093 - - 297,351 19,093
Amortization of right of use asset - - (b) (313,261 ) (249,037 ) 313,261 249,037
Amortization of intangible assets 46,050 46,050 (o) 1 - 46,049 46,050
Non cash settlement of convertible note and accrued interest (752,751 ) - (c) (99,100 ) - (653,651 ) -
Unrealized gain/loss on marketable securities (848,533 ) 595,590 - - (848,533 ) 595,590
Changes in operating assets and liabilities
Accounts receivable (367,793 ) 91,952 - - (367,793 ) 91,952
Inventory (628,011 ) (5,463,820 ) (d) (2,132,450 ) - 1,504,439 (5,463,820 )
Prepaid expense and other assets (166,221 ) 647,257 - - (166,221 ) 647,257
Accounts payable and accrued expenses 955,493 1,226,146 (e)(g) 1,931,562 - (976,069 ) 1,226,146
Operating lease liability, net 344,076 344,085 (b) 236,796 249,043 107,280 95,042
Net cash used in operating activities (2,692,203 ) (6,619,412 ) (300,000 ) (626,634 ) (2,392,203 ) (5,992,778 )

Cash flows from investing activities
Net cash received in from acquisitions 9,157 - - - 9,157 -
Proceeds from sale of marketable securities 230,296 - - - 230,296 -
Proceeds from sale of fixed assets 446,026 34,920 (f) 446,026 34,920
Net fixed asset acquisition (172,397 ) (3,301,527 ) (f) (446,026 ) 474,594 273,629 (3,776,121 )
Net Cash provided by (used in) investing activities 513,082 (3,266,607 ) 1 509,514 513,082 (3,776,121 )

Cash flows from financing activities - -
Proceeds from payroll protection loan, SBA loan - 273,300 - - - 273,300
Proceeds from payroll protection loan - related party 243,041 - - - 243,041 -
Payments of principal on notes payable - related party (135,000 ) (3,503,545 ) (k) - (3,503,545 ) (135,000 ) -
Proceeds from notes payable - related party 2,001,201 5,134,225 (g) 300,000 3,620,665 1,701,201 1,513,560
Net cash provided by financing activities 2,109,242 1,903,980 300,000 117,120 1,809,242 1,786,860

Net increase (decrease) in Cash and Cash Equivalents (69,879 ) (7,982,039 ) (o) 0 1 (69,879 ) (7,982,040 )
Cash and Cash Equivalents, Beginning of Period 84,379 8,515,509 - - 84,379 8,515,509
Cash and Cash Equivalents, End of Period $ 14,500 $ 533,470 $ 0 $ 1 $ 14,500 $ 533,469

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes during the year $ - $ - $ - $ - $ - $ -
Interest payments during the year $ - $ 525,000 (m) $ - $ 525,000 $ - $ -
-
Noncash investing and financing activity
Non-Cash Receivable - related party $ (500,000 ) $ - (h) $ (3,543,858 ) $ - $ 3,043,858 $ -
Related party loan repayment with inventory $ 4,693,367 $ - (i) $ 12,543,540 $ - $ (7,850,173 ) $ -
Noncash fixed asset disposal as part of the reverse acquisition $ 3,058,457 $ - (i) $ 1,709,357 $ - $ 1,349,100 $ -
Capitalized assets purchased on account - related party $ 343,979 $ 396,270 (d) $ (341,504 ) $ 396,270 $ 685,483 $ -
Liabilities from acquisition $ 1,096,782 $ - (c) $ 860,372 $ - $ 236,410 $ -
Debt retired in merger, related party $ (12,718,441 ) $ - (j) $ (17,089,778 ) $ - $ 4,371,337 $ -
Preferred Series B-1 Issuance in Acquisition $ 150 $ - $ - $ - $ 150 $ -
Preferred Series B-2 Issuance in Acquisition $ 600 $ - $ - $ - $ 600 $ -
Common stock issued for the reverse merger with Exactus $ 4,369,085 $ - (n) $ 4,356,748 $ - $ 12,337 $ -

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

~~NOTE 11–~~ SUBSEQUENT EVENTS

~~Effective October 25, 2021 the Company completed the~~ ~~1-for-28 reverse stock split~~ ~~as well as the name change from Exactus, Inc. to Panacea Life Sciences Holdings, Inc.~~None.

~~On October 25, 2021, of the~~ ~~10,649,078~~ ~~shares of EXDI Common Stock issued to Quintel under the Agreement~~ ~~7,321,429~~ ~~shares were exchanged for~~ ~~100~~ ~~shares of Series C-2 Convertible Preferred Stock (the “Parent C-2 Stock”) which are convertible into~~ ~~7,321,429~~ ~~shares of Parent Common Stock and are entitled to vote on an as-converted basis.~~ ~~Other than the conversion and voting rights, there are no other preferences for the Parent C-2 Stock.~~

~~On November 18, 2021, the Company and an institutional investor signed an agreement for a $1.1~~ ~~million original issue discount convertible note (the “Note”) financing in which the investor is paying $~~1 ~~million in gross proceeds. The one-year Note is convertible into common stock at $1.40~~ ~~per share. The Company also issued the investor~~ ~~785,715~~ ~~warrants to purchase common stock at an exercise price of $1.40~~ per share. The warrants are exercisable over a five-year period beginning May 18, 2022. The parties also entered into a Registration Rights Agreement giving the investor certain demand registration rights. After payment of a 10~~% commission to a broker-dealer, the adjusted net proceeds will be $900,000~~ ~~before expenses including legal fees of the investor.~~

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

Business Overview

The Company is a Nevada corporation organized in 2008. The Company has pursued opportunities in Cannabidiol, which we refer to as “CBD”, since December 2018 when we expanded our focus to pursue opportunities in hemp-derived CBD. ~~We expect to change~~Effective October 25, 2021, we changed our name to Panacea Life Sciences Holdings, Inc. ~~subject to regulatory compliance.~~ To that end, on ~~September~~June 30, 2021 we entered into the Exchange Agreement with Panacea and the Panacea stockholders and as a result became a seed-to-sale CBD company. The former Panacea stockholders have assumed majority control of the Company, and all our operations are now operated through Panacea which because of the share exchange became a ~~wholly owned~~wholly-owned subsidiary of the Company. Leslie Buttorff, who became the Company’s Chief Executive Officer and a director upon the closing of the share exchange, also became our principal stockholder through common stock and Convertible Preferred Stock issued to her and entities she controls.

Panacea, the Company’s subsidiary after the share exchange, which was founded by Leslie Buttorff in 2017 as a woman-owned business, attracted a $14 million investment from 22^nd Century Group, Inc., or XXII, a plant biotechnology company which also has a focus on CBD products and technology, during 2019. XXII has retained a 15% stake in the Company following the share exchange. Through Panacea, we are dedicated to developing and producing the highest-quality, most medically relevant, legal, hemp-derived cannabinoid products for consumers and pets. Beginning at a farm Panacea ~~owns~~has the option to own a parcel of the farm located at Needle Rock, Colorado and leases laboratory space within a 51,000 square foot, state-of-the-art, cGMP, extraction, manufacturing, testing and fulfillment center located in Golden, Colorado, Panacea operates in every segment of the CBD product value chain. From cultivation to finished goods, Panacea ensures its products with stringent testing protocols employed at every stage of the supply chain. Panacea endeavors to offer pure natural remedies within product lines for every aspect of life: PANA Health®, PANA Beauty®, PANA ~~Sport™~~Sport®, PANA Pet®, PANA Pure® and PANA ~~Life™.~~Life®

~~In the third quarter~~As of fiscal year 2021 we obtained additional registration on two more of our six brands and our mark. Panacea engaged Karsh Hagan, an independent, multi-disciplined marketing, design and technology company in Denver, Colorado to assist with brand development and roll out strategies.

~~Currently~~September 30, 2022, Panacea sells over 6050 different product SKUs of CBD and CBG products. In addition, we offer “white label” licensing to retail businesses and contract manufacturing services to smaller CBD companies and softgel manufacturing to nutraceutical companies.

In July, 2022 we shifted some of our focus to obtaining more contract manufacturing contracts in the ~~sales area~~nutraceutical industry. To date we ~~were able to close a significant transaction with a national convenience store and we shipped out our first purchase order of products~~have secured ten new contracts that should start yielding revenues in ~~August, 2021.~~the 4^th quarter.

We ~~were~~believe that our competitive advantages are derived from being vertically integrated that allows for extraction, enrichment and manufacturing under a cGMP quality environment: 1) Using pharmaceutical formulation methods to optimize the delivery of various hemp products, 2) Developing both full spectrum and THC-free products, 3) Hemp supply, and 4) utilize Good Manufacturing Practice to produce goods that are safe and quality products that deliver consistent dosing. The ability to produce both full spectrum products (those that contain <0.3%) and THC-free products allows us to optimize dosage and delivery to various human conditions. Removal of the THC from products is a difficult and expensive process, but we believe this is essential for specific patient populations; such as, athletes where testing positive for THC would lead to disqualification, first responders who would be terminated for testing positive for THC, and in animal products where even a small amount of THC can lead to toxicity and potential lethality. Industrial hemp extracts are found to have particular application as neuroprotectants, for example in limiting neurological damage and increasing speed of recovery with traumatic brain injury. The cannabinoids have also ~~engaged by~~been reported to treat human disease conditions where currently multiple pharmacologicals are needed to address, e.g., Post Traumatic Stress Disorder (PTSD), or where there is no current cure such as Alzheimer’s, Parkinson’s Disease, and age-related dementia, to name a ~~third-party company to develop various formulations for pet products and human products.~~few.

Although numerous reports describe cannabis/hemp extract health benefits the industry lacks sufficient clinical data and quality control to provide patient benefit. We are combining human and pet clinical studies with Good Manufacturing Process manufacturing to generate a panel of products. Our products are formulated with delivery methods for health benefits including an intellectual property portfolio enabling development of topical creams, sublinguals, oral soft gel capsules, patches, and sprays. Our products are derived from organic practices industrial hemp grown in Colorado.

We believe a multitude (hundreds) of companies, large and small, have launched or intend to launch retail brands and white label products containing cannabinoids like CBD, including retail and seed-to-sale companies that are larger and better capitalized than we are and/or which offer products similar to ours with a larger geographic scope of operations and a market presence. Many of these are dependent upon third parties to provide raw material inventory for sale. We believe this makes many of the participants in the industry vulnerable to shortages, quality issues, reliability, and pricing variability. Our industry relationships may allow us to build an efficient supply chain that will put us among the few companies that maintain a competitive pricing and supply advantage. The CBD-based consumer product industry is highly fragmented with numerous companies. There are also large, well-funded companies that currently do not offer hemp-based consumer products including large agribusiness companies but may do so in the future and become significant competitors. Our goal is to be a leader in wholesale and retail sales channels for end-products, such as nutraceuticals, supplements and pet and farm products. As government regulation of CBD and related products becomes more lenient in certain jurisdictions, and other barriers to entry decline, we anticipate experiencing an increase in competition and an intensifying competitive environment, including potentially the introduction of new seed-to-sale companies and/or the expansion of operations by current competitors. Further, numerous other factors are expected to be critical to our ability to be and remain competitive in our business and goals, including product quality and prices, brand strength, production and distribution capabilities and geographic scope of operations and market presence. Additionally, market conditions can shift demand for CBD products, such as competitive pricing, the effects of inflation, regulatory changes and economic or geopolitical turmoil.

Our Industrial Hemp Supply

~~Panacea’s 2021 crop is being grown in NeedleRock Farms in Crawford CO. XXII is the grower and is using organic practices for the crop. XXII will provide~~In 2019, Panacea $500,000 of hemp. Panacea will also be engaged by XXII to assist with XXII’s ingredient extraction and purification processes. Working with Panacea and other companies in the industry, XXII has secured strategic partnerships to maximize and support each of the key segments of its cannabinoid value chain: plant profiling (CannaMetrix), plant biotechnology (KeyGene), plant breeding, commercial-scale plant cultivation, and ingredient extraction/purification (Sawatch Agriculture, Folium Botanical, Aurora Cannabis,acquired Needle Rock Farms (NRF) in Crawford, Colorado. Our 2020 hemp crop was grown at NeedleRock Farms. Also, in December, 2019 XXII made a $14 million investment in Panacea which consisted of $7 million in preferred stock and ~~Panacea. We~~$7 million in convertible debt. XXII also ~~continue~~was to ~~complete~~provide an additional $10 million in funding at a later point in time. On June 30, 2021 Panacea and XXII agreed to dissolve the agreement and agreed on the following: the preferred stock was converted to common stock; a $4.3 million loan was secured against the laboratory space owned by J&N Real Estate, LLC (owned by Panacea’s CEO), the NRF and equipment would be transferred to XXII in exchange for a reduction of $2.2 million in convertible debt, 10 acres of the farm would be sub platted to Panacea, $500,000 in hemp would be delivered from the 2021 crop yield, and a 15-year agreement for hemp supply would be finalized after the deal was completed. In 2021 XXII was the grower at NRF and achieved USDA Organic certification for the farm. As of the date of this Report, XXII has not delivered the $500,000 of hemp to Panacea, nor have we closed on the 10 acres plot of land. However, we also have the 2020 NRF crop and several hemp tolling ~~deals~~contracts in which the output of crude and or distillate is shared with ~~various farmer which include both CBD and CBG strains.~~the growers to process.

Partnership with Universities

The grand opening of the Panacea Life Sciences Cannabinoid Research Center at ~~CSU~~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),~~ as ~~well as supporting research into dementia and chronic pelvic pain.~~ described below.

●

Solving Industry Issues

○

Problem: The hemp plant is a hyperaccumulator, meaning trace elements in the soil in which the plant is grown, such as heavy metals, pesticides, and others, are readily absorbed in the plant, potentially contaminating hemp oil and rendering the material unusable.

○

Solution: Using analytical techniques, we have developed a method for complete removal of commonly used pesticides to remediate contaminated hemp oil to produce a safe and usable hemp product. This work has been submitted for publication to the Journal of Cannabis Research in August of this year.

●

Sustainability and Access to Minor Cannabinoids

○

Problem: In addition to CBD and THC, each of the other 118 cannabinoids are anticipated to have unique and beneficial health benefits. However, because they are present at less than 1% in hemp extracts, there are issues in both obtaining sufficient quantities and determining the purity of each of the minor cannabinoids.

○

Solution: The byproduct created during the distillation process of crude hemp oil is typically thrown away to enter the waste stream. In closer examination of the byproduct, the CRC determined that there are substantial minor cannabinoids present, such as cannabidivarin (CBDV), Cannabichromene (CBC), Cannabicyclol (CBL), and Cannabielsoin (CBE). Using the advanced technology in the CRC, the team can now access these low abundance cannabinoids while also assisting Panacea (as a member of Colorado’s Environmental Leadership Program) in attaining its sustainability goals by decreasing waste streams.

●

Supporting Clinical Trials

○

To gain further insight on cannabinoid activity, Panacea and the CRC are collaborating to launch specific clinical trials in several areas. The first two studies have launched this year (2022):

In collaboration with Dr. Stephanie McGrath and Dr. Julie Moreno, to examine CBD effects in a translational model of Alzheimer’s disease. In this study, performed in aged dogs that have cognitive impairment very similar to human AD, not only will CBD be evaluated for ability to slow disease progression, but will be one of the first studies to correlate how much consumed CBD enters the brain.

In collaboration with Dr. Larry Good, a practicing gastroenterologist in New York, Panacea and the CRC have launched an open label study evaluating CBD and CBG for effects on irritable bowel syndrome, a condition affecting over 30 million American with no proven treatment.

We have also 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 resource, payroll, procurement, production planning and materials management business processes are represented in this system. In addition, the system is linked to our e-Commerce website www.panacealife.com. This system allows us to update product costing and determine inventory levels which will be critical as the company expands. In addition, sophisticated financial and payroll processing are inherent in the solution; thus, offering investors detailed accounting results related to company investments. We plan to expand on the use of this infrastructure for acquisitions and service offerings.

Results of Operations

Set forth below is the discussion of the results of operations of the Company for the three months ended September 30, ~~2021~~2022 compared to the three months ended September 30, ~~2020.~~2021. The information which follows relates to the operations of Panacea which under applicable accounting rules are treated as the operation of the Company.

Three Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

Net Revenues

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

Our revenues for the three months ended September 30, ~~2021, the Company generated $0.588 million in revenue~~2022, decreased by $221,796, or 38%, to $366,244 as compared to ~~$1.344 million in~~$588,040 for the three months ended September 30, ~~2020.~~2021. The decrease in sales ~~is attributed~~in 2022 was due primarily to ~~less PPE items being sold in 2021. A large proportion of~~decreased production from hemp toll-arrangement deals and our ~~revenue~~gearing up for the 2020 period was attributable to sales of PPE products that we procured and produced during the COVID-19 pandemic. The Company does not intend to continue with these PPE products once they are all sold.contract manufacturing nutraceutical business.

Cost of Sales

Cost of sales for the three months ended September 30, 2022, increased by $13,893 or 5% to $318,918 as compared to $305,025 for the three months ended September 30, 2021. The increase in cost of sales was due primarily to increased raw material costs and inventory preparation for the nutraceutical contracts. The primary components of cost of sales include the cost of manufacturing the CBD products. For the three months ended September 30, 2021, the Company’s cost of sales amounted to $0.305 million and $2.906 million in 2020. The decrease in costs from 2020 to 2021 are attributed to the PPE materials. Due to COVID-19 the Company did and continues to experience delays from raw materials purchased from Asia and China. There also continues to be lack of port space in the Long Beach, CA area.

Operating Expenses

Operating expenses for the three months ended September 30, 2022, decreased by $105,037, or 7%, to $1,436,035 as compared to $1,541,072 for the three months ended September 30, 2021. This is due to decreases in production related operating expenses.

Production related operating expenses ~~were $1.250 million~~for the three months ended September 30, 2022, decreased by $75,905 or 6% to $1,174,529 as compared to $1,250,434 during the three months ended September 30, ~~2021 compared~~2021. The decrease in production related operating expenses is primarily due to ~~$1.307 million during the three months ended September 30, 2020.~~decreased subcontract and software costs.

General and administrative expenses ~~(G&A) were $0.291 million~~ for the three months ended September 30, ~~2021~~2022, decreased by $29,132, or 10%, to $261,506 as compared to ~~$0.483 million~~$290,638 during the three months ended September 30, ~~2020.~~2021. The decrease in general and administrative costs is primarily due to decreased legal and audit costs.

Other income (expense)

Other income for the three months ended September 30, 2022, decreased by $526,506 or 29% to ($1,305,191) as compared to ($1,831,699) for the three months ended September 30, 2021. The decrease in other income is primarily due to the unrealized loss of XXII’s marketable securities held and increased interest expense.

Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

Net Revenues

~~During~~We are principally engaged in the business of producing and selling products made from industrial hemp. Revenue consists of sales of our six category of brand products, white label and contract manufacturing sales to other CBD companies, raw material sales (distillate and isolate), tolling products, and leasing space. We also have revenue from the sale of our Personal Protection Equipment (PPE) inventory and non-CBD nutraceutical companies but these are insignificant at this time.

Our revenues for the nine months ended September 30, 2022, decreased by $111,484, or 8%, to $1,302,190 as compared to $1,413,674 for the nine months ended September 30, 2021, ~~the Company generated $1.414 million in revenue. In the nine months ended September 30, 2020, the revenue totaled $8.306 million.~~ The decrease in ~~revenues is~~sales in 2022 was due primarily to ~~PPE sales that occurred in 2020, but in 2021 the PPE inventory was used to offset loans made~~decreased production from Quintel. A transfer of PPE was made to Quintel, a related party, for $4.6 millions of inventory, however, this transaction was not treated as revenue, but was treated as a reduction in inventory and a reduction in the Quintel loan. Also, COVID and the conflicting messages from the FDA concerning CBD continue to hamper retail expansion activities.toll-arrangement deals.

~~Rental income of $0.221 million and $0.213 million for 2021 and 2020 was treated as Other Income.~~

Cost of Sales

Cost of sales for the nine months ended September 30, 2022, increased by $133,001, or 15% to $1,016,509 as compared to $883,508 for the nine months ended September 30, 2021. The increase in cost of sales was due primarily to increased raw material costs and increased sales. The primary components of cost of sales include the cost of manufacturing the CBD product. For the nine months ended September 30, 2021, the Company’s cost of sales amounted to $0.884 million and $6.286 million in 2020. The decrease in costs from 2020 to 2021 are attributed to the PPE materials and the decrease in CBD related revenues.products.

Operating Expenses

Operating expenses for the nine months ended September 30, 2022, increased by $243,063, or 6%, to $4,562,376 as compared to $4,319,313 for the nine months ended September 30, 2021. This is due to increases in both operating expenses and general and administrative expenses.

Production related operating expenses ~~were $3.407 million~~for the nine months ended September 30, 2022, increased by $228,233, or 7%, to $3,635,640 as compared to $3,407,407 during the nine months ended September 30, ~~2021 compared to $3.012 million during the nine months ended September 30, 2020. Currently, salaries are included~~2021. The increase in production related ~~expenses.~~operating expenses is primarily due to increased costs associated with building maintenance.

General and administrative expenses ~~were $0.912 million~~ for the nine months ended September 30, ~~2021~~2022, increased by $14,830, or 2%, to $826,736 as compared to ~~$2.552 million~~$911,906 during the nine months ended September 30, ~~2020.~~2021. The increase in general and administrative costs is primarily due to costs associated with the formation of the Scientific Advisory Board as well as a one-time fee paid for entrance into the Brazil and Latin America markets.

~~Summary of Cash Flows~~Other income (expense)

~~Cash flows from operating activities~~

~~The largest source of operating cash is from our customers. A large majority of our customers purchase CBD on-line, so credit card payments are collected and paid within 1-2 business days.~~ Other ~~white label and contract manufacturing customers pay before~~income for the ~~products are released. Some larger customers have either net 10-, 2%- or 30-day net terms. Net cash used in operating activities was ($2,692,203) and ($6,529,997) for~~ nine months ended September 30, 2022, decreased by $4,258,507 or 388% to ($3,161,252) as compared to $1,097,255 for ~~2021 and 2020, respectively.~~the nine months ended September 30, 2021. The decrease in other income is primarily due to the unrealized loss of the XXII: NASDAQ marketable securities held.

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~~Cash flows from investing activities~~

Cash received from Exactus via the share exchange, proceeds from the sales of XXII stock and cash received from disposal of assets comprised this category and were $0.513 million for the nine months ended September 30, 2021 and $0.035 million for September 30, 2020.

~~Cash flows from financing activities~~

Net cash provided by financing activities for the nine months ended September 30, 2021 was $2.109 million. For the same period in 2020 the financing was $1.904 million. In both years the primary financing was cash provided by Company’s CEO. In 2021, there was a cash payment received of $0.243 from the paycheck loan program.

Liquidity and Capital Resources

OnCash flows from operating activities

The largest source of operating cash is from our customers. A large majority of our customers purchase CBD on-line, so credit card payments are collected and paid within 1-2 business days. Other white label and contract manufacturing customers pay before the products are released. Some larger customers have either net 10-, 2%- or 30-day net terms. Net cash used in operating activities was $1,876,580 and $2,692,203 for nine months ended September 30 for 2022 and 2021, respectively. Approximately $5.1 million of our $7.4 million net loss in 2022 was non-cash.

Cash flows from investing activities

Cash outlay for the acquisition of fixed assets comprised the majority of this category and were $98,129 and $513,082 for the nine months ended September 30, 2022, and 2021, respectively.

Cash flows from financing activities

Net cash provided by financing activities for the nine months ended September 30, 2022, was $1,991,726. For the same period in 2021 the financing was $2,109,242. In both years the primary financing was cash provided by Company’s CEO. In 2022 there was a cash payment received of $253,791 from the paycheck loan program. In 2021 there was a cash payment received of $190,338 from the same program.

As of October 27, 2022 we had ~~$3,646,470~~$1.543 million in cash and liquid stock of XXII. The Chief Executive Officer of the Company holds the XXII shares pursuant to the pledge agreement and has the power at any time to permit the Company to sell the shares to provide working capital. ~~In August 70,000 shares were sold for working capital.~~ Panacea has borrowed substantial sums from Leslie Buttorff, our Chief Executive Officer, to meet its working capital obligations. ~~On September~~As of June 30, 2021 Panacea ~~issued~~owed an affiliate of Ms. Buttorff a 12% demand promissory note for $4.063 million and ~~issued Ms. Buttorff~~also held a 10% demand promissory note for ~~$1.624~~$1.686 million secured by a pledge of certain XXII common stock owned by Panacea. ~~Additionally,~~On July 1, 2021, the Company ~~has~~agreed to a $1 million line of credit ~~with~~note at 10% annual rate, which Ms. Buttorff ~~through which it may borrow up~~has extended to ~~$1 million at a 10% annual interest rate. To date $392,201 of~~January, 2024 and increased the line of credit ~~has been consumed.~~to $3.0 million.

We ~~may~~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. On November 18, 2021, the Company and an institutional investor closed in escrow a $1.1 million original issue discount convertible note (the “Note”) financing in which the investor is paying $1 million in gross proceeds of which $900,000 will go to the Company.

These unaudited condensed consolidated financial statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates the realization of assets and satisfaction of liabilities in the normal course of business. No adjustment has been made to the carrying amount and classification of the Company’s assets and the carrying amount of its liabilities based on the going concern uncertainty. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of 12 months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. In addition, due to insufficient revenue, we will need to obtain further funding through public or private equity offerings, debt financing, collaboration arrangements or other sources in order to maintain active business operations. We currently do not have sufficient cash flow to pay our ongoing financial obligations on a consistent basis. The issuance of any additional shares of common stock, preferred stock or convertible securities could be substantially dilutive to our stockholders. In addition, adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital, we will be forced to borrow additional sums from our Chief Executive Officer or delay, reduce or eliminate our research and development programs, we may not be able to continue as a going concern, and we may be forced to discontinue operations. These unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Off Balance Sheet Arrangements

As of September 30, ~~2021,~~2022, we had no material off-balance sheet arrangements.

~~Potential Impacts of the COVID-19 Pandemic on Our Business Operations~~

As disclosed in Note 2, the COVID-19 pandemic has had a notable impact on general economic conditions, including but not limited to the temporary closures of many businesses, “shelter in place” and other governmental regulations, reduced business and consumer spending due to both job losses and reduced investing activity, among many other effects attributable to the COVID-19 pandemic, and there continue to be many unknowns. During 2020, COVID-19 had a significant impact on Panacea’s CBD operations. Recognizing the sudden need for personal protective equipment, Panacea shifted its business to importing and selling PPE hand sanitizers and masks.

~~The Delta variant which is having a significant impact in August 2021 may extend the period of recovery into 2022.~~

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 ~~amendment No. 1 to the~~ 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 ~~about~~regarding the effectiveness of our ~~new~~products, studies regarding the long term effects of COVID-19, future studies that we may conduct , our operations in the hemp industry through Panacea, our expected revenue growth, ~~our future plans and developments with respect to PPE products and the COVID-19 pandemic, our human resources following our recent acquisition of Panacea,~~ proposed federal legislation and its potential impact on the CBD industry, our business relationship with XXII, our plans to raise capital, and our liquidity. Words such as “expects,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “could,” “would,” “may,” “intends,” “targets” and similar expressions or variations of such words are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements in this Report. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. All statements other than statements about historical facts are statements that could be deemed forward-looking statements, including, but not limited to, statements that relate to our future revenue, product development, customer demand, market acceptance, growth rate, competitiveness, gross margins, and expenditures.

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. ~~Consequently, forward-looking statements are inherently subject to~~Further information on the risks and uncertainties ~~discussed under~~affecting our business is contained in our filings with the ~~heading “Risk Factors” within Part I, Item 1A of the~~SEC, includingour Annual Report on Form 10-K for the ~~three and nine months~~fiscal year ended ~~September 30, 2021, and other documents we file from time-to-time with~~December 31, 2021. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the ~~SEC.~~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.

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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

~~Disclosure~~Our management carried out an evaluation, with the participation of our Principal Executive Officer (who also now serves as our Principal Financial Officer), required by Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer (who also now serves as our Principal Financial Officer) concluded that our disclosure controls and procedures are ~~controls and other procedures that are designed~~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 ~~Securities~~ Exchange Act ~~of 1934 (the “Exchange Act”) are~~is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms. Disclosure controls~~forms and ~~procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act~~ is accumulated and communicated to our management, including our ~~principal executive~~Principal Executive Officer and ~~financial officers,~~Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our Chief Executive Officer who is presently also serving as our principal financial officer, has conducted an evaluation of the design and effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this report. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on her evaluation as of the end of the period covered by this amendment No. 1 to the quarterly report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer has concluded that our disclosure controls and procedures were not effective to ensure that the information relating to our company required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosure as a result of material weaknesses in our internal control over financial reporting.

~~Changes in Internal Controls over Financial Reporting~~

As a result of the recent acquisition of Panacea, management believes that the Company’s internal controls over financial reporting have improved because Panacea uses SAP ERP system for its financial, inventory, product and human resources areas. SAP requires strict internal controls. Other than the foregoing, there have been no changes in the internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2021 that have materially affected, or is 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~~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 ~~February 16, 2021, Henley Group, Inc. filed~~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 ~~Superior~~ Court ofOrder and BCD for improperly intercepting the ~~State of California, San Bernardino County, a complaint (Case #: SIV SB 2105771) against Panacea~~Property from us. The damages claim is over $3 million. The trial date is set for breach of contract and fraud related to Panacea’s non-delivery of product. While Panacea refunded the purchase price, the plaintiff seeks damages including lost profits and costs which plaintiff alleged to have incurred in the amount of approximately $45,000. The plaintiff also seeks attorney’s fees and costs, consequential damages and punitive damages. Panacea’s attorney has submitted counterclaims and believes this complaint is frivolous.February, 2023.

ITEM 1A. RISK FACTORS.

Not applicable.

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

During the ~~three~~nine months ended September 30, ~~2021,~~2022, the Company ~~did not issue any stock.~~issued 200,352 shares of the Company’s common stock to various employees of the Company and 2,623 to a vendor. The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Incorporated by Reference Filed or Furnished
Exhibit # Exhibit Description Form Date Number Herewith
3.1 Amended Articles of Incorporation 8-K 7/7/21 3.1
3.1(a) Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split 8-K 10/29/21 3.1
3.2 Amended Bylaws 8-K 7/7/21 3.2
3.3 Certificate of Designation for Series A Preferred Stock 8-K 2/18/21 4.1
3.4 Certificate of Designation for Series B-1 Preferred Stock 8-K 3/4/16 3.1
3.5 Certificate of Designation for Series B-2 Preferred Stock 8-K/A 2/17/16 3.2
3.6 Certificate of Designation for Series C Preferred Stock 10-Q 8/23/21 3.7
3.7 Certificate of Designation for Series C-1 Preferred Stock 10-Q 8/23/21 3.8
3.8 Certificate of Designation for Series C-2 Preferred Stock 8-K 10/29/21 3.2
3.9 Certificate of Designation for Series D Preferred Stock 10-Q 8/23/21 3.9
10.1 2021 Equity Incentive Plan* 10-Q 8/23/21 10.1
10.2 Employment Agreement dated June 30, 2021 – Leslie Buttorff* 10-Q 8/23/21 10.2
10.3 Form of Securities Exchange Agreement 8-K 7/7/21 10.1
10.4 Form of Indemnification Agreement* 8-K 7/7/21 10.2
10.5 Form of Promissory Note issued to Quintel-MC Incorporated (Panacea) 10-Q 8/23/21 10.5
10.6 Form of Promissory Note issued to Leslie Buttorff (Panacea) 10-Q 8/23/21 10.6
10.7 Form of Promissory Note issued to Leslie Buttorff (Exactus) 10-Q 8/23/21 10.7
10.8 Note Exchange Agreement+** 10-Q 8/23/21 10.8
10.9 Assignment of lease 10-Q 8/23/21 10.9
31.1 Certification of Principal Executive Officer and Principal Financial Officer (302) Filed
32.1 Certification of Principal Executive and Principal Financial Officer (906) Furnished***
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by
Reference
Filed or Furnished
Exhibit # Exhibit Description Form Date Number Herewith
3.1 Amended Articles of Incorporation 8-K 7/7/21 3.1
3.1(a) Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split 8-K 10/29/21 3.1
3.2 Amended and Restated Bylaws 10-K 3/31/22 3.2
3.3 Certificate of Designation for Series A Preferred Stock 8-K 2/18/21 4.1
3.4 Certificate of Designation for Series B-1 Preferred Stock 8-K 3/4/16 3.1
3.5 Certificate of Designation for Series B-2 Preferred Stock 8-K/A 2/17/16 3.2
3.6 Certificate of Designation for Series C Preferred Stock 10-Q 8/23/21 3.7
3.7 Certificate of Designation for Series C-1 Preferred Stock 10-Q 8/23/21 3.8
3.8 Certificate of Designation for Series C-2 Preferred Stock 8-K 10/29/21 3.2
3.9 Certificate of Designation for Series D Preferred Stock 10-Q 8/23/21 3.9
3.10 Certificate of Withdrawal for Series A 10-K/A 4/29/22 3.10
31.1 Certification of Principal Executive Officer and Principal Financial Officer (302) Filed
32.1 Certification of Principal Executive and Principal Financial Officer (906) Furnished***
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement.
** Exhibits and/or Schedules have been omitted. The Company hereby agrees to furnish to the Securities and Exchange Commission upon request any omitted information.
*** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
+Portions of this exhibit have been omitted as permitted by the rules of the SEC. The information excluded is both (i) not material and (ii) would be competitively harmful if publicly disclosed. The Company undertakes to submit a marked copy of this exhibit for review by the SEC Staff, to the extent it has not been previously provided, and provide supplemental materials to the SEC Staff promptly upon request.

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

3730

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.

~~December 20, 2021~~November 14, 2022 /s/ Leslie Buttorff
Leslie Buttorff
Chief Executive Officer

3831

	Three Months Ended September 30, 2020
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of June 30, 2020		1,020,000	$	102		16,915,706	$	1,692	$	18,689,119	$	(8,115,401	)	$	10,575,512
Net Loss		-		-		-		-		-		(3,779,715	)		(3,779,715	)
Balance as of September 30, 2020		1,020,000	$	102		16,915,706	$	1,692	$	18,689,119	$	(11,895,116	)	$	6,795,797

	Nine Months Ended September 30, 2020
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance as of December 31, 2019		1,020,000	$	102		16,915,706	$	1,692	$	18,689,119	$	(6,750,784	)	$	11,940,129
Net Loss		-		-		-		-		-		(5,144,332	)		(5,144,332	)
Net Income (Loss)		-		-		-		-		-		(5,144,332	)		(5,144,332	)
Balance as of September 30, 2020		1,020,000	$	102		16,915,706	$	1,692	$	18,689,119	$	(11,895,116	)	$	6,795,797

	2021		2020
	For the three months ended September 30,
	2021		2020
Options to purchase common stock		61,446		-
Warrants to purchase common stock		56,377		-
Series A Convertible Preferred		256,211		-
Series B-1 Convertible Preferred		6,679		-
Series B-2 Convertible Preferred		26,786		-
Series C Convertible Preferred		2,289,220		-
Series C-1 Convertible Preferred		1,064,908		-
Series D Convertible Preferred		1,628,126		-
Total		5,389,753		-

	September 30, 2021		December 31, 2020
Notes payable - related party (1)	$	4,062,713	$	7,911,044
Notes payable – related party (2)		2,077,886		150,000
Notes payable -related party (3)		-		7,000,000
Notes payable - related party (4)		75,556		-
Total related party notes	$	6,216,155	$	15,061,044

Paycheck protection loan (5)	$	-	$	273,300
SBA loan (4)		99,100		-
Total Paycheck protection and SBA loan	$	99,100	$	273,300

	September 30, 2021		December 31, 2020
Other liability—related party
SAP software, support and building modifications (6)	$	2,529,248	$	2,185,269
J&N Building Loan (7)		513,390		513,390
Total	$	3,042,638	$	2,698,659

	Options Outstanding as of September 30, 2021
	Number of Shares Subject to Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value

Balance on December 31, 2020		-		-		-		-
Options assumed in merger		196,491	$	3.64		3.70		192,500
Options granted		-		-		-		-
Options exercised		-		-		-		-
Options canceled / expired		-		-		-		-
Balance at September 30, 2021		196,491	$	3.64		3.45	$	192,500

Vested and exercisable at September 30, 2021		196,491	$	3.64		3.45	$	192,500

Name	Expire		Number of Shares		Average Exercise Price
Balance on December 31, 2020		-		-		-
Assumed in Merger				56,337	$	13.64
Total as of September 30, 2020				56,337	$	13.64


	Three Months Ended September 30, 2021
	Preferred Stock Convertible - Series A Shares					Preferred Stock Series B-1 Shares				Preferred Stock Series B-2 Shares				Preferred Stock Series C Shares				Preferred Stock Series C-1 Shares				Preferred Stock Series D Shares				Total Preferred Stock
	Shares			Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares			Amount
Balance as of June 30, 2021		450		$	-		1,500,000	$	150		6,000,000	$	600		1,000,000	$	100		10,000	$	1		10,000	$	1		8,520,450		$	852
Shares issued for acquisition
Shares issued for acquisition, shares
Series A Preferred stock converted to common shares		(100	)		-		-		-		-		-		-		-		-		-		-		-		(100	)		-
Balance as of September 30, 2021		350		$	-		1,500,000	$	150		6,000,000	$	600		1,000,000	$	100		10,000	$	1		10,000	$	1		8,520,350		$	852

					Preferred Stock				Common Stock	Additional Paid-in			Accumulated			Total Stockholder’s				Additional Paid-in			Accumulated			Total Stockholder’s							Preferred Stock				Common Stock	Additional Paid-in			Accumulated			Total Stockholder’s
	As restated																			Adjustment
	Three Months Ended September 30, 2021																												Three Months Ended September 30, 2021
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s				Additional Paid-in			Accumulated			Total Stockholder’s			Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity				Capital			Deficit			Equity			Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of June 30, 2021		8,520,450		$	852		21,321,613	$	2,132	$	23,066,921		$	(11,584,750	)	$	11,485,155		(a) (b)	$	(4,455	)	$	4,446		$	(9	)		8,520,450		$	852		21,321,613	$	2,132	$	23,071,376		$	(11,589,196	)	$	11,485,164
Shares issued for acquisition
Shares issued for acquisition, shares
Series A Preferred stock conversion to common stock		(100	)		-		71,429		7		(7	)					-		(b)		-			-			-			(100	)		-		71,429		7		(7	)					-
Net Loss		-			-		-		-		-			(3,089,756	)		(3,089,756	)	(c)		-			76,462			76,462			-			-		-		-		-			(3,166,218	)		(3,166,218	)
Balance as of September 30, 2021		8,520,350		$	852		21,393,042	$	2,139	$	23,066,914		$	(14,674,506	)	$	8,395,399			$	(4,455	)	$	80,908		$	76,453			8,520,350		$	852		21,393,042	$	2,139	$	23,071,369		$	(14,755,414	)	$	8,318,946

	Nine Months Ended September 30, 2021																												Nine Months Ended September 30, 2021
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s													Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity													Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2020		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(11,982,614	)	$	6,708,299		(a) (b)	$	10,133		$	4,456		$	14,589			1,020,000		$	102		16,915,706	$	1,692	$	18,678,986		$	(11,987,070	)	$	6,693,710
Shares issued for acquisition		7,500,450			750		4,405,907		440		4,377,802						4,378,992		(b)		(14,588	)		-			(14,588	)		7,500,450			750		4,405,907		440		4,392,390						4,393,580
Series A Preferred stock conversion to common stock		(100	)		-		71,429		7		(7	)					-				-			-			-			(100	)		-		71,429		7		(7	)					-
Net Loss		-			-		-		-		-			(2,691,892	)		(2,691,892	)	(c)		-			76,452			76,452			-			-		-		-		-			(2,768,344	)		(2,768,344	)
Balance as of September 30, 2021		8,520,350		$	852		21,393,042	$	2,139	$	23,066,914		$	(14,674,506	)	$	8,395,399			$	(4,455	)	$	80,908		$	76,453			8,520,350		$	852		21,393,042	$	2,139	$	23,071,369		$	(14,755,414	)	$	8,318,946

	Three Months Ended September 30, 2020																												Three Months Ended September 30, 2020
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s													Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity													Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of June 30, 2020		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(8,115,401	)	$	10,575,512		(a) (b)	$	236,847		$	(10,142	)	$	226,705			1,020,000		$	102		16,915,706	$	1,692	$	18,452,272		$	(8,105,259	)	$	10,348,807
Net Loss		-			-		-		-		-			(3,779,715	)		(3,779,715	)			-			-			-			-			-		-		-		-			(3,779,715	)		(3,779,715	)
Balance as of September 30, 2020		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(11,895,116	)	$	6,795,797			$	236,847		$	(10,142	)	$	226,705			1,020,000		$	102		16,915,706	$	1,692	$	18,452,272		$	(11,884,974	)	$	6,569,092

	Nine Months Ended September 30, 2020																												Nine Months Ended September 30, 2020
	Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s													Preferred Stock					Common Stock				Additional Paid-in			Accumulated			Total Stockholder’s
	Shares			Amount		Shares		Amount		Capital			Deficit			Equity													Shares			Amount		Shares		Amount		Capital			Deficit			Equity
Balance as of December 31, 2019		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(6,750,784	)	$	11,940,129		(a) (b)	$	236,847		$	(10,137	)	$	226,710			1,020,000		$	102		16,915,706	$	1,692	$	18,452,272		$	(6,740,647	)	$	11,713,419
Net Loss		-			-		-		-		-			(5,144,332	)		(5,144,332	)	(c)		-			(5	)		(5	)		-			-		-		-		-			(5,144,327	)		(5,144,327	)
Balance as of September 30, 2020		1,020,000		$	102		16,915,706	$	1,692	$	18,689,119		$	(11,895,116	)	$	6,795,797			$	236,847		$	(10,142	)	$	226,705			1,020,000		$	102		16,915,706	$	1,692	$	18,452,272		$	(11,884,974	)	$	6,569,092

		Incorporated by Reference			Filed or Furnished
Exhibit #	Exhibit Description	Form	Date	Number	Herewith
3.1	Amended Articles of Incorporation	8-K	7/7/21	3.1
3.1(a)	Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split	8-K	10/29/21	3.1
3.2	Amended Bylaws	8-K	7/7/21	3.2
3.3	Certificate of Designation for Series A Preferred Stock	8-K	2/18/21	4.1
3.4	Certificate of Designation for Series B-1 Preferred Stock	8-K	3/4/16	3.1
3.5	Certificate of Designation for Series B-2 Preferred Stock	8-K/A	2/17/16	3.2
3.6	Certificate of Designation for Series C Preferred Stock	10-Q	8/23/21	3.7
3.7	Certificate of Designation for Series C-1 Preferred Stock	10-Q	8/23/21	3.8
3.8	Certificate of Designation for Series C-2 Preferred Stock	8-K	10/29/21	3.2
3.9	Certificate of Designation for Series D Preferred Stock	10-Q	8/23/21	3.9
10.1	2021 Equity Incentive Plan*	10-Q	8/23/21	10.1
10.2	Employment Agreement dated June 30, 2021 – Leslie Buttorff*	10-Q	8/23/21	10.2
10.3	Form of Securities Exchange Agreement	8-K	7/7/21	10.1
10.4	Form of Indemnification Agreement*	8-K	7/7/21	10.2
10.5	Form of Promissory Note issued to Quintel-MC Incorporated (Panacea)	10-Q	8/23/21	10.5
10.6	Form of Promissory Note issued to Leslie Buttorff (Panacea)	10-Q	8/23/21	10.6
10.7	Form of Promissory Note issued to Leslie Buttorff (Exactus)	10-Q	8/23/21	10.7
10.8	Note Exchange Agreement+**	10-Q	8/23/21	10.8
10.9	Assignment of lease	10-Q	8/23/21	10.9
31.1	Certification of Principal Executive Officer and Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished***
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		Incorporated by Reference			Filed or Furnished
Exhibit #	Exhibit Description	Form	Date	Number	Herewith
3.1	Amended Articles of Incorporation	8-K	7/7/21	3.1
3.1(a)	Certificate of Amendment to its Amended and Restated Articles of Incorporation – name change and reverse stock split	8-K	10/29/21	3.1
3.2	Amended and Restated Bylaws	10-K	3/31/22	3.2
3.3	Certificate of Designation for Series A Preferred Stock	8-K	2/18/21	4.1
3.4	Certificate of Designation for Series B-1 Preferred Stock	8-K	3/4/16	3.1
3.5	Certificate of Designation for Series B-2 Preferred Stock	8-K/A	2/17/16	3.2
3.6	Certificate of Designation for Series C Preferred Stock	10-Q	8/23/21	3.7
3.7	Certificate of Designation for Series C-1 Preferred Stock	10-Q	8/23/21	3.8
3.8	Certificate of Designation for Series C-2 Preferred Stock	8-K	10/29/21	3.2
3.9	Certificate of Designation for Series D Preferred Stock	10-Q	8/23/21	3.9
3.10	Certificate of Withdrawal for Series A	10-K/A	4/29/22	3.10
31.1	Certification of Principal Executive Officer and Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished***
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document				Filed
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				Filed
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	Panacea Life Sciences Holdings, Inc.

~~December 20, 2021~~November 14, 2022	/s/ Leslie Buttorff
	Leslie Buttorff
	Chief Executive Officer