Form 8-K/A - Current report: [Amend]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

(Amendment No. 1)

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 30, 2023

 

Panacea Life Sciences Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada		000-38190		27-1085858
(State or jurisdiction of		(Commission File		(IRS Employer
incorporation or organization)		Number)		Identification No.)

 

5910 S University Blvd, C18-193

Greenwood Village, CO 80121

 

Telephone: [phone]

(Address and Telephone Number of Registrant’s Principal
Executive Offices and Principal Place of Business)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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. ☐

 

 

 

 

 

Explanatory Note

 

This Current Report on Form 8-K/A (this “Amendment”) is being filed by Panacea Life Sciences Holdings, Inc., a Nevada corporation (the “Company”), to amend the Current Report on Form 8-K (the “Prior 8-K”) filed with the Securities and Exchange Commission (the “SEC”) on October 5, 2023, in connection with the consummation on September 30, 2023 of the asset purchase agreement between N7 Enterprises and Panacea Life Sciences, Inc.

 

The Company is filing this Amendment solely to provide (i) the historical audited financial statements of N7 Enterprises as of and for the year ended December 31, 2022 and 2021 and the unaudited financial statements of N7 Enterprises, Inc. as of June 30, 2023 and for the six months ended June 30, 2022, referred to in Item 9.01(a) below and (ii) the unaudited pro forma condensed combined financial statements as of and for the six month period ended June 30, 2023 and for the year ended December 31, 2022, referred to in Item 9.01(b) below.

 

-2-

 

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed by the Company on October 5, 2023 (the “Initial Form 8-K”) to include Item 9.01(a) Financial Statements of Business Acquired and Item 9.01(b) Pro Forma Financial Information, which were not previously filed with the Initial Form 8-K and are permitted to be filed by amendment no later than 71 days after the date the Current Report on Form 8-K reporting the Company’s acquisition of the business of N7 Enterprises, Inc., a Florida corporation, through the asset purchase agreement reported in the Original Form 8-K.

 

The above description does not purport to be complete and is qualified in its entirety by reference to the merger agreement and other agreements relating to the acquisition of the business of N7 Enterprises, Inc., copies of which were filed as exhibits to the Initial Form 8-K and are incorporated by reference into this Current Report. The required historical financial statements of N7 Enterprises, Inc. and the related pro forma financial information are contained herein under Item 9.01 of this Current Report.

 

Item 9.01 Financial Statement and Exhibits.

 

(a)

Financial Statements of Business Acquired.

 

The audited financial statements of N7 Enterprises, Inc. as of and for the year ended December 31, 2022 and 2021 and the unaudited financial statements of N7 Enterprises, Inc. as of June 30, 2023 and for the six months ended June 30, 2022 are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.

 

(b)

Pro Forma Financial Information.

 

The unaudited pro forma combined statement of operations for the year ended December 31, 2022 and the six months ended June 30, 2023 and are attached hereto as Exhibit 99.3.

 

(c)

Not applicable.

 

(d)

Exhibits

 

The following exhibits are filed herewith:

 

Exhibit No.		Description
(23)		Consent of BFBorgers.
(99.1)		Audited financial statements of N7 Enterprises, Inc. as of and for the years ended December 31, 2022 and 2021.
(99.2)		Unaudited financial statements of N7 Enterprises, Inc. as of June 30, 2023 and for the six months ended June 30, 2022.
(99.3)		Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 and the six months ended June 30, 2023.
(104)		Cover Page Interactive Data File, formatted in Inline XBRL

 

-3-

 

 

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 hereunto duly authorized.

 

	PANACEA LIFE SCIENCES HOLDINGS, INC.
	By:	/s/ Leslie Buttorff
Date: December 8, 2023	Name:	Leslie Buttorff
	Title:	Chief Executive Officer

 

-4-

 

 

Exhibit 23

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation in this Form 8-K-A of our report dated December 8, 2023, relating to the financial statement of N7 Enterprises as of December 31, 2022 and 2021 and to all references to our firm included in this filing.

 

 

Certified Public Accountants

Lakewood, CO

December 8, 2023

 

 

 

Exhibit 99.1

 

Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of N7 Enterprises

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of N7 Enterprises as of December 31, 2022 and 2021, the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

/S/ BF Borgers CPA PC

 

BF Borgers CPA PC (PCAOB ID 5041)

 

We have served as the Company’s auditor since 2023

Lakewood, CO

December 8, 2023

 

1

 

 

Audited financial statements of N7 Enterprises, Inc. for the years ended December 31, 2022 and December 31, 2021.

 

N7 Enterprises

Balance Sheet

 

		December 31, 2022				December 31, 2021
ASSETS
Current Assets:
Cash and Cash Equivalents		$	94,294			$	—
Inventory			202,641				—
Total Current Assets			296,935				—
TOTAL ASSETS		$	296,935			$	—
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Credit Cards Payable		$	113,860			$	—
Total Current Liabilities			113,860				—
Total Liabilities			113,860				—
Stockholders’ Equity
Contributed Capital			265,367
Retained Earnings			(82,292	)			—
Total stockholder’s equity			183,075				—
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY		$	296,935			$	—

 

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

 

2

 

 

N7 Enterprises

Statements of Operations

 

		For the Years Ended December 31,
		2022				2021
Sales		$	326,273			$	—
Sales of Product Income			13,428				—
Cost of Goods Sold			(20,683	)			—
Gross profit			319,018				—
Expenses:
Selling, General and Administrative Expenses			353,921				—
Legal and Professional Expenses			12,646				—
Total operating expenses			366,567				—
Operating loss			(47,549	)			—
Other Income (Expense)
Miscellaneous Other Income (Expense)			(34,743	)			—
Total Other Income (Expense)			(34,743	)			—
Net Loss		$	(82,292	)		$	—

 

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

 

3

 

 

N7 Enterprises

Statement of Stockholders’ Equity

For the Year Ended December 31, 2021

 

			Retained Earnings				Total
			Amount				Amount
Balance, January 1, 2021		$	—			$	—
Owner Draws			—				—
Owner Investments			—				—
Net Loss			—				—
Balance, December 31, 2021		$	—			$	—

 

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

 

N7 Enterprises

Statement of Stockholders’ Equity

For the Year Ended December 31, 2022

 

		Retained Earnings				Total
		Amount				Amount
Balance, January 1, 2022		$	—			$	—
Owner Draws			(336,854	)			(336,854	)
Owner Investments			602,221				602,221
Net Loss			(82,292	)			(82,292	)
Balance, December 31, 2022		$	183,075			$	183,075

 

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

 

4

 

 

N7 Enterprises

Statements of Cash Flows

 

		For the Years Ended December 31,
		2022				2021
Cash Flow From Operating Activities
Net Loss		$	(82,292	)		$	—
Changes in working capital
Increase in Inventory			(202,641	)			—
Increase in Credit Cards Payable			113,860				—
Net Cash Used in Operating Activities			(171,073	)			—
Cash Flow From Investing Activities
Net Cash From Investing Activities			—				—
Cash Flow From Financing Activities
Funds Invested by Owner (net of Distributions)			265,367				—
Net Cash From Financing Activities			265,367				—
Net Change in Cash			94,294				—
Cash at Beginning of Period			—				—
Cash at End of Period		$	94,294			$	—
Net cash paid for:
Interest		$	—			$	—
Income Taxes		$	—			$	—

 

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

 

5

 

 

Exhibit 99.2

 

Unaudited financial statements of N7 Enterprises, Inc. for the six-month period ended June 30, 2023 and for the year ended December 31, 2022

 

N7 Enterprises

Balance Sheets

 

		June 30, 2023				December 31, 2022
ASSETS
Current Assets:
Cash and Cash Equivalents		$	25,029			$	94,294
Inventory			560,262				202,641
Total Current Assets			585,291				296,935
Long-Term Assets:
Property, Plant, and Equipment, net			419,720				—
Right-of-Use Assets			909,670				—
TOTAL ASSETS		$	1,914,681			$	296,935
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Lease Liability		$	909,670			$	—
Interest Payable			13,721				—
Credit Cards Payable			99,534				113,860
Total Current Liabilities			1,022,925				113,860
Total Liabilities			1,022,925				113,860
Stockholders’ Equity
Contributed Capital			1,121,210				265,367
Retained Earnings			(229,454	)			(82,292	)
Total stockholder’s equity			891,756				183,075
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY		$	1,914,681			$	296,935

 

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

 

1

 

 

N7 Enterprises

Statements of Operations

 

		For the Six Months Ended June 30,
		2023				2022
Sales		$	1,179,132			$	—
Sales of Product Income			54,228				—
Cost of Goods Sold			(59,842	)			—
Gross profit			1,173,518				—
Expenses:
Selling, General and Administrative Expenses			1,314,599				—
Legal and Professional Expenses			6,848				—
Total operating expenses			1,321,447				—
Operating loss			(147,929	)			—
Other Income (Expense)
Miscellaneous Other Income (Expense)			767				—
Total Other Income (Expense)			767				—
Net Loss		$	(147,162	)		$	—

 

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

 

2

 

 

N7 Enterprises

Statement of Stockholders’ Equity

For the Six Months Ended June 30, 2022

 

		Retained Earnings				Total
		Amount				Amount
Balance, January 1, 2022		$	—			$	—
Owner Draws			—				—
Owner Investments			—				—
Net Loss			—				—
Balance, June 30, 2022		$	—			$	—

 

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

 

3

 

 

N7 Enterprises

Statement of Stockholders’ Equity

For the Six Months Ended June 30, 2023

 

		Retained Earnings				Total
		Amount				Amount
Balance, January 1, 2023		$	183,075			$	183,075
Owner Draws			(94,294	)			(94,294	)
Owner Investments			950,137				950,137
Net Loss			(147,162	)			(147,162	)
Balance, June 30, 2023		$	891,756			$	891,756

 

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

 

4

 

 

N7 Enterprises

Statements of Cash Flows

 

		For the Six Months Ended June 30,
		2023				2022
Cash Flow From Operating Activities
Net Loss		$	(147,162	)		$	—
Changes in working capital
Increase in Inventory			(357,620	)			—
Increase in Accrued Interest			13,721				—
Decrease in Credit Cards Payable			(14,326	)			—
Net Cash Used in Operating Activities			(505,388	)			—
Cash Flow From Investing Activities
Purchases of Fixed Assets			(419,720	)			—
Net Cash From Investing Activities			(419,720	)			—
Cash Flow From Financing Activities
Funds Invested by Owner (net of Distributions)			855,842				—
Net Cash From Financing Activities			855,842				—
Net Change in Cash			(69,266	)			—
Cash at Beginning of Period			94,294				—
Cash at End of Period		$	25,029			$	—
Net cash paid for:
Interest		$	—			$	—
Income Taxes		$	—			$	—

 

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

 

5

 

 

N7 Enterprises, Inc.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the six months ending June 30, 2023 and the year ending December 31, 2022

 

NOTE 1 - NATURE OF ORGANIZATION

 

Organization and Business Description

 

The Company operates in one segment with a focus on developing and producing high-quality, medically relevant, legal, hemp-derived cannabinoid products for consumers and pets.

 

N7 Enterprises is a rapidly growing corporation that operates a chain of botanical tea bars focused on promoting health and wellness. The company is dedicated to providing customers with premium quality organic teas and wellness products, fostering a culture of well-being and mindful consumption.

 

The core of N7 Enterprises comprises eight meticulously curated botanical tea bars strategically located in the Tampa Bay metropolitan area, serving as hubs for health-conscious consumers seeking natural and revitalizing beverages. These retail locations offer a diverse range of handcrafted, ethically sourced herbal teas, blended to cater to various health preferences and dietary needs. Each store is designed to provide an immersive and tranquil atmosphere, encouraging customers to embrace a holistic lifestyle.

 

In addition to the retail stores, N7 Enterprises operates a robust cash and carry warehouse, which serves as the central distribution center for all retail locations. This strategically positioned facility enables efficient supply chain management, ensuring that each store is consistently stocked with an array of premium organic teas, wellness products, and related merchandise. The warehouse plays a pivotal role in supporting the seamless operation of the retail branches, thereby facilitating the company’s mission to provide accessible and sustainable wellness solutions to its diverse customer base.

 

N7 Enterprises is committed to maintaining the highest standards of product quality, customer service, and environmental sustainability, striving to foster a sense of community and well-being through its offerings. The company remains dedicated to expanding its market presence, nurturing strategic partnerships, and continuously innovating to meet the evolving demands of the health and wellness industry.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Company’s unaudited condensed consolidated financial statements include the financial statements of N7.

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 as of December 31, 2022. The N7 Enterprises, Inc. company commenced its operations in November, 2022. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America.

 

Going concern

 

These unaudited condensed 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. Since our inception in 2022, we have generated losses from operations, except for a slight profit in some months. These audited 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.

 

6

 

 

Marketable securities

 

The Company does not have any marketable securities.

 

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, allowance for doubtful accounts, revenue allocations, valuation allowance on deferred tax assets, assumptions used in assessing impairment of long-term assets, and fair value of non-cash equity transactions.

 

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.

 

As of December 31, 2022 the Company has no liabilities that are re-measured at fair value.

 

Revenue Recognition

 

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

 

The Company’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.

 

Accounts Receivable

 

Accounts receivable are generally unsecured. Given that all sales are final at our stores there are no account receivables. As of December 31, 2022 we did not believe we needed to reserve for any doubtful accounts, respectively as we have written off any receivables we believe we are unable to collect.

 

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. The Company decision makers determined that the Company’s operations consist of one segment.

 

7

 

 

Intangible Assets and Goodwill

 

The Company has no intangible assets nor goodwill.

 

NOTE 3 – INVENTORY

 

Inventory consists of the following components:

 

		June 30, 2023				December 31, 2022
Raw Materials							—
Work-in-Process Inventory							—
Finished Goods		$	560,262			$	202,641
Total		$	560,262			$	202,641

 

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 4 – 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”).

 

		June 30, 2023
Right-of-use assets		$	909,670
Total lease liability obligations		$	909,670
Weighted-average remaining lease term			3.50 years
Weighted-average discount rate			10.0	%

 

Approximate future minimum lease payments for our right of use assets over the remaining lease periods are as follows for the period ended June 30, 2023:

 

Maturity of operating lease liabilities for the following fiscal years:

 

2023		$	203,264
2024		$	333,803
2025		$	212,955
2026		$	178,414
2027		$	122,707
Thereafter		$	34,440
Total undiscounted operating lease payments		$	1,085,583
Less: Imputed interest		$	(175,913	)
Present value of operating lease liabilities		$	909,670

 

8

 

 

NOTE 5 – NOTES PAYABLE

 

The Company does not have any notes payable as of the year ended December 31, 2022, as well as of the six months ended June 30, 2023.

 

NOTE 6 - STOCKHOLDERS’ EQUITY

 

Common stock

 

The Company had retained earnings of $183,075 net of owner contributions and distributions as of December 31, 2022.

 

NOTE 7 - 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 December 31, 2022.

 

Concentrations

 

The Company has no on-going concentration of vendors nor customers that would impact revenue or production costs.

 

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

 

Executive Employment Agreement

 

None.

 

NOTE 8 - RELATED PARTY TRANSACTIONS

 

None.

 

NOTE 9 – SUBSEQUENT EVENTS

 

None.

 

9

 

 

Exhibit 99.3

 

Unaudited pro forma condensed consolidated financial information

 

On September 30, 2023 Panacea Life Sciences Holdings, Inc. (the “Company”) acquired the assets of N7 Enterprises, Inc. (“N7”) pursuant to the Asset Purchase Agreement (the “Agreement”) with the shareholders of N7 and its founder Gary Wilder.

 

As of the date of the Agreement, the Company had 650,000,000 authorized shares of Common Stock), par value $0.0001 per share (the “Parent Common Stock”) and 50,000,000 shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”) authorized.

 

As of the date of the Agreement, approximately 17,645,352 shares are outstanding of Parent Common Stock, 6,696 shares of Parent Common Stock may be issued upon conversion of Series B-1 Preferred, 26,786 shares of Parent Common Stock may be issued upon conversion of Series B-2 Preferred, 1,000,000 shares of Series C Convertible Preferred Stock, par value $0.0001 per share (the “Parent C Stock”) J&N Real Estate Company, LLC, a Colorado limited liability company (“J&N”) (stated value of $6,046,000) convertible into shares of Parent Common Stock at current price; 10,000 shares of Series C-1 Convertible Preferred Stock, par value $0.0001 per share (stated value of $2,812,500) (the “Parent C-1 Stock”) to J&N convertible into shares of Parent Common Stock at current price; 100 shares of Series C-2 Convertible Preferred Stock (the “Parent C-2 Stock”) which are convertible 7,321,429 shares of Parent Common Stock and are entitled to vote on an as-converted basis; 10,000 shares of Series D Convertible Preferred Stock, par value $0.0001 per share (stated value of $4,300,000) (the “Parent D Stock”) to J&N a convertible into shares of Parent Common Stock at current price.

 

The exchange of N7 assets for PLSH preferred stock 784 shares which are convertible 7,835,000 shares of Parent Common Stock is intended to constitute a reorganization within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), or such other tax-free reorganization or restructuring provisions as may be available under the Code.

 

Pro Forma Condensed Combined Financial Statements

 

The following unaudited pro forma condensed consolidated financial statements and related notes are derived from the historical condensed consolidated financial statements of N7 and Panacea after giving effect to N7’s asset acquisition. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2023 gives effect to the share exchange (as defined below) as if it occurred on that date. The unaudited pro forma condensed combined statement of operations for the six-months ended June 30, 2023, combines Panacea’s historical results for the six months ended June 30, 2023, and N7’s historical results for the six-months ended June 30, 2023. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022 give effect to the Panacea acquisition as if it occurred on November 1, 2022. N7 Enterprises was incorporated in November, 2022.

 

1

 

The unaudited pro forma condensed consolidated financial information is based upon, and should be read in conjunction with:

 

	●	The accompanying notes to the unaudited condensed combined pro forma financial statements.
	●	N7’s audited consolidated financial statements and accompanying notes as of and for the fiscal year ended December 31, 2022 and elsewhere in the Form 8-K/A current report;
	●	PLSH’s and N7’s unaudited consolidated financial statements and accompanying notes as of and for the six-month period ended June 30, 2023 included elsewhere in the Form 8-K/A current report filed herewith with the Securities and Exchange Commission (“SEC”); and
	●	PLSH’s audited financial statements for the year ended December 31, 2022 filed herewith with the Securities and Exchange Commission (“SEC”) on Form 10..

 

N7’s historical condensed consolidated statement of operations for the year ended December 31, 2022 was derived from its audited consolidated financial statements for the year ended December 31, 2022. PLSH’s historical condensed consolidated statement of operations for the six months ended June 30, 2023, and condensed consolidated balance sheet as of December 31, 2022.

 

The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent the consolidated financial position or consolidated results of operations of N7 that would have been reported had the share exchange been completed as of the dates described above, and should not be taken as indicative of any future consolidated financial position or consolidated results of operations. The historical financial information has been adjusted to give effect to estimated pro forma events that are directly attributable to the acquisition, factually supportable and, with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on the consolidated results of operations and do not reflect any sales or cost savings from synergies that may be achieved with respect to the combined companies, or the impact of non-recurring items, including restructuring liabilities, directly related to the share exchange.

 

2

 

Panacea Life Sciences Holdings, Inc. and Subsidiary

Unaudited Proforma Combined Balance Sheet

as of June 30, 2023

 

		Historical								Pro Forma								Pro Forma
		Panacea Life Sciences, Inc.				N7 Enterprises				Adjustments for N7				Notes				Panacea with N7
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	8,190			$	25,029			$	(25,029	)			(a)			$	8,190
Accounts receivable, net			272,090				-				(10,840	)							261,250
Other Receivable - related party			500,000				-				-								500,000
Inventory, net			4,357,733				560,262				(159,488	)			(b)				4,758,507
Marketable securities related party			460,388				-				-								460,388
Prepaid expenses and other current assets			149,295				-				-								149,295
TOTAL CURRENT ASSETS			5,747,696				585,291				(195,357	)							6,137,630
Operating lease right-of-use asset, net, related party			3,062,090				909,670				(909,670	)			(c)				3,062,090
Property and equipment, net			6,855,283				419,720				-								7,275,003
Goodwill, net			2,188,810								825,640								3,014,450
TOTAL ASSETS		$	17,853,879			$	1,914,681			$	(279,387	)						$	19,489,173
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	3,677,546			$	-			$	-							$	3,677,546
Operating lease liability, current portion, related party			2,325,808				909,670				(909,670	)							2,325,808
Note payable-current, related party			10,829,779				-												10,829,779
Paycheck protection loan, SBA Loan			99,100				-												99,100
Interest Payable			-				13,721				(13,721	)							-
Credit Card Debt			-				99,534				(99,534	)							-
Convertible note payable			115,000				-				-								115,000
TOTAL CURRENT LIABILITIES			17,047,233				1,022,925				(1,022,925	)							17,047,233
Operating lease liability, long-term portion, related party			2,800,766				-				-								2,800,766
Other long-term liabilities, related party			3,572,864				-				-								3,572,864
TOTAL LIABILITIES			23,420,863				1,022,925				(1,022,925	)							23,420,863
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS’ EQUITY
Series A Preferred Stock: $0.0001 Par Value, 1,000 shares designated; 0 and 350 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			0				-												0
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 June 30, 2023 and December 31, 2022 respectively.			150				-				-								150
Series B-2 Preferred: $0.0001 Par Value, 6,000,000 shares designated; 6,000,000 and 6,000,000 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			600				-				-								600
Series C Preferred: $0.0001 Par Value, 1,000,000 shares designated; 1,000,000 and 1,000,000 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			100				-				-								100
Series C-1 Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			1				-				-								1
Series C-2 Preferred: $0.0001 Par Value, 100 and 0 shares designated and 100 and 0 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			-				-				-								-
Series D Preferred: $0.0001 Par Value, 10,000 shares designated and 10,000 and 10,000 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			1				-				-								1
Series E Preferred: $0.0001 Par Value, 7,835,000 shares designated on September 30, 2023.			-								784								784
Common Stock: $0.0001 Par Value, 650,000,000 shares authorized; 17,645,352 and 14,965,317 shares issued and outstanding on June 30, 2023 and December 31, 2022 respectively.			1765				-				-								-
Owners investment (equity)							1,121,210				(1,121,210	)			(d)				-
Additional paid in capital			23,993,533								1,634,510								25,628,043
Accumulated deficit			(29,563,134	)			(229,454	)			229,454				(d)				(29,563,134	)
TOTAL STOCKHOLDERS EQUITY			(5,566,984	)			891,756				743,538								(3,931,690	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	17,853,879			$	1,914,681			$	(279,387	)						$	19,489,173

 

Notes:

(a) At the time of the asset acquisition there was no cash to be agreed to.

(b) Inventory will be written down for non-selling products.

(c) Panacea Distro will assume new leases for the stores.

(d) Investment made as a part of the asset purchase agreement of N7 and off set Accumulated Deficit

 

3

 

Panacea Life Sciences Holdings, Inc. and Subsidiary

Unaudited Proforma Combined Statement of Operations

For the six months ended June 30, 2023

 

		Historical																Panacea Life Sciences
		Panacea Life Sciences, Inc.				N7 Enterprises Financials				Pro Forma Adjustments				Notes				with N7 Pro Forma Combined
Revenues		$	1,076,609			$	1,233,360			$								$	2,309,969
Cost of sales			648,186				59,842												708,028
Gross Profit			428,423				1,173,518				-								1,601,941
Operating Expenses:
Production related operating expenses			2,399,870				-												2,399,870
General and administrative expenses			392,626				1,295,053												1,687,679
Total operating expenses			2,792,496				1,295,053				-								4,087,549
Loss from operations			(2,364,073	)			(121,535	)			-								(2,485,608	)
Other (expenses) income
Interest expense			(747,101	)			(25,627	)											(772,728	)
Unrealized gain (loss) on marketable securities, net			(646,974	)			-				-								(646,974	)
Rental income			101,863				-				-								101,863
Gain on extinguishment of debt			748				-				-								748
Total other (expense) income, net			(1,291,464	)			(25,627	)			-								(1,317,091	)
Loss before provision for income taxes			(3,655,537	)			(147,162	)			-								(3,802,699	)
Provision for income taxes			-				-				-								-
Net loss		$	(3,655,537	)		$	(147,162	)		$	-							$	(3,802,699	)
Basic net income (loss) per share		$	(0.21	)		$	(0.01	)		$								$	(0.22	)
Diluted net income (loss) per share		$	(0.21	)		$	(0.01	)		$	-							$	(0.22	)
Weighted average number of shares outstanding
Basic			17,645,352				17,645,352												17,645,352
Diluted			17,645,352				17,645,352												17,645,352

 

4

 

Panacea Life Sciences Holdings, Inc. and Subsidiaries

Unaudited Proforma Combined Statement of Operations

For the year ended December 31, 2022

 

		Historical
		Panacea Life Sciences, Inc.				N7 Enterprises				Pro Forma Adjustments				Notes				Pro Forma Combined
Net Revenues		$	1,626,978			$	339,701			$								$	1,966,679
Total Cost of Sales			1,230,508				20,683												1,251,191
Gross Profit			396,470				319,018				-								715,488
Operating Expenses:
Production related operating expenses			4,955,348				-				-								4,955,348
General and administrative expenses			1,093,364				364,553												1,457,917
Total Operating Expenses			6,048,712				364,553				-								6,413,265
Loss from Operations			(5,652,242	)			(45,535	)			-								(5,697,777	)
Other income (expenses)
Interest expense			(2,048,171	)			(2,014	)											(2,050,185	)
Unrealized gain (loss) on marketable securities, net			(2,660,105	)			-												(2,660,105	)
Realized gain on sale of securities			22,816				-												22,816
Other income (loss)			27,598				(34,743	)											(7,145	)
Employee retension credit			253,791				-				-								253,791
Rental income			232,183				-				-								232,183
Gain on extinguishment of debt			681,546				-				-								681,546
Total Other income (expense), net			(3,490,342	)			(36,757	)			-								(3,527,099	)
Net Loss			(9,142,584	)			(82,292	)			-								(9,224,876	)
Taxes			-				-				-								-
Net loss available to common stockholders		$	(9,142,584	)		$	(82,292	)		$	-							$	(9,224,876	)
Basic net income (loss) per share		$	(0.61	)		$	(0.01	)		$	-							$	(0.62	)
Diluted net income (loss) per share		$	(0.61	)		$	(0.01	)		$	-							$	(0.62	)
Weighted average number of shares outstanding
Basic			14,935,317				14,935,317				-								14,935,317
Diluted			14,935,317				14,935,317				-								14,935,317

 

5

 

Panacea Life Sciences Holdings, Inc. and

N7 Enterprises, Inc.

Notes to the unaudited pro forma combined financial information

 

Pro Forma Adjustments

 

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet at June 30, 2023

 

	(a)	Reflects cash deposits of N7 not included in the transaction
	(b)	To eliminate a receivable due to PLSH from N7
	(c)	Reflects adjustment to inventory that was deemed obsolete
	(d)	To eliminate any existing lease agreements held by N7
	(e)	Reflects goodwill created as excess of purchase price over asset values
	(f)	To eliminate interest payable owed by N7
	(g)	To eliminate outstanding debt owed by N7
	(h)	Reflects convertible preferred shares issued to N7
	(i)	To eliminate contributed capital at the time of the transaction
	(j)	Reflects value of common stock issued as part of the transaction
	(k)	To eliminate historical accumulated deficit of N7 at the time of the transaction

 

1.

Basis of Presentation

 

The unaudited pro forma combined balance sheet as of June 30, 2023 combines the historical balance sheet of Panacea and N7 as of June 30, 2023 as if the Transaction had occurred on June 30, 2023. The unaudited pro forma combined statement of comprehensive loss for the six months ended June 30, 2023 combines the historical statement of operations of N7 and the statement of operations of PLSH and have been prepared as if the share exchange (the “Share Exchange”) had closed on January 1, 2023.

 

The Share Exchange is accounted for as a reverse acquisition and recapitalization in accordance with the Financial Accounting Standards Board (ASC 805, Business Combinations). Management evaluated the guidance contained in ASC 805 with respect to the identification of the acquirer in the asset purchase agreement and concluded, based on a consideration of the pertinent facts and circumstances, that Panacea acquired N7 for financial accounting purposes.

 

The historical consolidated financial information has been adjusted in the unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the merger, (2) factually supportable and (3) with respect to the unaudited pro forma condensed consolidated statements of operations, are expected to have a continuing impact on the results of operations. The Unaudited Pro Forma Combined Statement of Operations do not reflect any sales or cost savings from synergies that may be achieved with respect to the combined companies, or the impact of non-recurring items, including restructuring liabilities, directly related to the Share Exchange.

 

The preliminary unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

 

6

 

Panacea’s historical condensed consolidated statement of operations for the year ended December 31, 2022 was derived from its audited consolidated financial statements for the year ended December 31, 2022. N7’s historical condensed consolidated statement of operations for the six months ended June 30, 2023, and condensed consolidated balance sheet as of June 30, 2023, were derived from its unaudited interim condensed consolidated financial statements for the period ended June 30, 2023.

 

N7’s historical fiscal year ends on December 31st and, for purposes of the unaudited pro forma condensed combined financial information, its historical results have been aligned to conform to the Panacea’s December 31 calendar year end:

 

	●	The unaudited pro forma condensed combined balance sheet as of June 30, 2023, combines the Panacea’s historical results as of June 30, 2023, and N7’s historical results as of June 30, 2023;
	●	The unaudited pro forma condensed combined statement of operations for the six-months ended June 30, 2023, combines Panacea’s historical results for the six months ended June 30, 2023, and N7’s historical results for the six-months ended June 30, 2023.
	●	The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2022, combines the Panacea’s historical results for the year ended December 31, 2022, and N7’s historical results for the year ended December 31, 2022.

 

2. Pro Forma Adjustments

 

The unaudited pro forma financial information is not necessarily indicative of what the financial position actually would have been had the merger been completed at the date indicated. Such information includes adjustments that are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-merger periods.

 

The following describes the pro forma adjustments related to the acquisition that have been made in the accompanying unaudited pro forma combined balance sheet as of June 30, 2023 which reflect the acquisition as if it occurred on that date. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2023 and for the year ended December 31, 2022 give effect to the acquisition as if it occurred on January 1, 2023 have been prepared to reflect the acquisition and reflect the following pro forma adjustments:

 

	a)	Reflects cash deposits of N7 not included in the transaction
	b)	To eliminate a receivable due to PLSH from N7
	c)	Reflects adjustment to inventory that was deemed obsolete
	d)	To eliminate any existing lease agreements held by N7
	e)	Reflects goodwill created as excess of purchase price over asset values
	f)	To eliminate interest payable owed by N7
	g)	To eliminate outstanding debt owed by N7
	h)	Reflects convertible preferred shares issued to N7
	i)	To eliminate contributed capital at the time of the transaction
	j)	Reflects value of common stock issued as part of the transaction
	k)	To eliminate historical accumulated deficit of N7 at the time of the transaction

 

7

Cover	Sep. 30, 2023
Cover [Abstract]
Document Type	8-K/A
Amendment Flag	true
Amendment Description	Amendment No. 1
Document Period End Date	Sep. 30, 2023
Entity File Number	000-38190
Entity Registrant Name	Panacea Life Sciences Holdings, Inc.
Entity Central Index Key	0001552189
Entity Tax Identification Number	27-1085858
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	5910 S University Blvd
Entity Address, Address Line Two	C18-193
Entity Address, City or Town	Greenwood Village
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80121
City Area Code	800
Local Phone Number	985-0515
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

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