UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-K

(Mark One)

 

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

 

For the fiscal year ended December 31, 2012

 

or

 

¨	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: 33-0680443

 

 

PANACEA GLOBAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada				33-0680443
(State or other jurisdiction of incorporation)				(I.R.S. Employer Identification No.)

 

330 Highway #7 East, Suite 502, Richmond Hill
Ontario, Canada L4B 3P8
(Address of principal executive offices)(Zip Code)

 

Registrant’s telephone number, including area code: (416) 450-6414

 

 

Securities registered under Section 12(b) of the Act:
Title of each class:		Name of each exchange on which registered:
None		None

 

Securities registered under Section 12(g) of the Act:

Common Stock, par value $0.001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No  x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes o    Nox

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 x    No o

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes S No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     S 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 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 o    No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2012 $10,909,076.

As of April 1, 2013, there were 97,015,586 shares of common stock, $0.001 par value, outstanding.

Documents incorporated by reference: None.

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TABLE OF CONTENTS

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Forward-Looking Statements

 

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions.   Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Report and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management, any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

CERTAIN TERMS USED IN THIS REPORT

When this report uses the words “we,” “us,” “our,” and the “Company,” they refer to Panacea Global, Inc. and its subsidiaries.  “SEC” refers to the Securities and Exchange Commission.

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PART I

 

Item 1. Business

Overview

Panacea Global, Inc. is a corporation incorporated under the laws of Nevada.  On June 30, 2010 Panacea Global, Inc. entered into a share exchange agreement with Panacea Global, Inc., a privately held Delaware corporation (“Panacea Delaware”), and the shareholders of Panacea Delaware pursuant to which we acquired all of the outstanding capital stock of Panacea Delaware from the Panacea Delaware shareholders and Panacea Delaware became our wholly owned subsidiary and our operating business.  

Through Panacea Delaware, we are a company that sells early detection cancer tests through our licensing agreement with Panacea Pharmaceuticals, Inc. (“Pharmaceuticals”). More specifically, Panacea Global Inc. is a biopharmaceutical company focused on providing blood (protein), serum and tissue tests to diagnose and monitor cancer through a licensing agreement with Panacea Pharmaceuticals, Inc. The Company’s mission is to discover, develop and commercialize innovative diagnostic products. Panacea’s current product development focus is on novel proteins and biochemical pathways related to cellular regulation and cell cycle abnormalities in oncology diseases.

Panacea Global, Inc. is a corporation incorporated under the laws of Nevada.  On June 30, 2010 Panacea Global, Inc. entered into a share exchange agreement with Panacea Global, Inc., a privately held Delaware corporation (“Panacea Delaware”), and the shareholders of Panacea Delaware pursuant to which we acquired all of the outstanding capital stock of Panacea Delaware from the Panacea Delaware shareholders and Panacea Delaware became our wholly owned subsidiary and our operating business.  

Through Panacea Delaware, we are a company that sells early detection cancer tests through our licensing agreement with Panacea Pharmaceuticals, Inc. (“Pharmaceuticals”). More specifically, Panacea Global Inc. is a biopharmaceutical company focused on providing blood (protein), serum and tissue tests to diagnose and monitor cancer through a licensing agreement with Panacea Pharmaceuticals, Inc. The Company’s mission is to discover, develop and commercialize innovative diagnostic products. Panacea’s current product development focus is on novel proteins and biochemical pathways related to cellular regulation and cell cycle abnormalities in oncology diseases.

Panacea Pharmaceuticals, Inc. was founded in 1999 to discover, develop and commercialize innovative therapeutic and diagnostic products for cancer and diseases of the central nervous system. In-house research and development activities are performed at an 11,000 square foot facility in Gaithersburg, Maryland.

Panacea Laboratories, Inc. is certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) to perform high complexity testing, and offers several cancer diagnostic tests to patients, physicians and clinical laboratories.

On March 24, 2010, Panacea Delaware entered into a licensing agreement (the “Licensing Agreement”) with Pharmaceuticals.  Pursuant to the Licensing Agreement, Panacea Delaware was granted the exclusive right to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies, with rights to sublicense worldwide, except for the United States of America. Panacea Global continues to market and sell products through strategic partnerships with companies in different countries by entering into sublicensing agreements to sell our products. We anticipate that our licensing agreements, with amenable profit margins, will underpin our revenue for the 2013 year.

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On November 18, 2011 we entered into an amendment to the Licensing Agreement whereby the Licensing Agreement was amended to clarify that the license granted to us is exclusive.

On June 2, 2011, we filed a Certificate of Amendment to our Articles of Incorporation with the State of Nevada changing the Company’s name to Panacea Global, Inc.

Licensing Agreement

On March 24, 2010, Panacea Delaware entered into a licensing agreement (the “Licensing Agreement”) with Pharmaceuticals.  Pursuant to the Licensing Agreement, Panacea Delaware was granted the exclusive right to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies, with rights to sublicense worldwide, except for in the United States of America.  In consideration for the License Agreement, Panacea Delaware issued 35,500,000 shares of its common stock to Pharmaceuticals and is obligated to pay Pharmaceuticals a license fee of $2,500,000, due within 30 days of the Company raising a minimum $10,000,000 equity investment.  Half of any equity investments raised shall be remitted to Pharmaceuticals, until the license fee is paid in full.  The aggregate consideration paid and therefore the fair value of the License Agreement equals $50,000,000.  Further, the Company will pay Pharmaceuticals 25% of all sublicensing revenue and will purchase all conforming reagent at a cost of $20 per test or 10% of the sale price of the individual test with a minimum $8.00 test price.

On November 18, 2011, we entered into an amendment to the Licensing Agreement whereby the Licensing Agreement was amended to clarify that the license granted to us is exclusive.

We hope to market and sell products through strategic partnerships with companies in different countries by entering into sublicensing agreements to sell our products.  We may enter into sublicensing agreements with one or more third parties under all or some of the related Pharmaceuticals patents.  Additionally, we hope to develop stand alone operations in certain countries including Canada.

On January 18, 2013, we entered into a second amendment to the Licensing Agreement (“Amendment No. 2”).  The Company entered into Amendment No. 2, extending the payment term of the Licensing Agreement.  Amendment No. 2 provides that the Company shall pay the remaining License Fee within two years from the execution date of Amendment No. 2.  

Sublicense Agreement

On November 18, 2011, we entered into an exclusive sublicense agreement by and between Panacea Global, Inc. a corporation organized under the laws of Ontario and our wholly owned subsidiary (“Panacea Canada”), Pharmaceuticals, Panacea Global, Inc., a corporation organized under the laws of the State of Delaware and our wholly subsidiary, and Panacea Laboratories, Inc., a corporation organized under the laws of Ontario (the “Sublicense Agreement.”). Pursuant to the Sublicense Agreement, we granted Panacea Laboratories the exclusive right to sublicense our license to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies throughout Canada.

Patents

 

Pursuant to the Licensing Agreement, we acquired a global diagnostic license (“GDL”) with rights to sublicense our technology worldwide, except for the United States of America.  The GDL allows the Company to develop, market and use licensed products related to HAAH based laboratory tests for the following two patents pending:

	·	Methods of Diagnosing, Predicting Therapeutic Efficacy and Screening for New Therapeutic Agents for Leukemia – Pending

	·	Methods of Diagnosing Lung Cancer – Pending

  

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Exclusive Master Purchase Agreement with Palmverse Limited

On July 7, 2011, we, through our wholly owned subsidiary, Panacea Delaware, entered into an exclusive master purchase agreement with Palmverse Limited, a Belarus corporation (“Palmverse”) (the “Agreement”) to provide Palmverse with the exclusive right to use the Company’s blood, serum and tissue testing services to diagnose and monitor cancer (the “Cancer Testing Products”) within the Republic of Belarus. We have agreed to provide Palmverse with an exclusive right to become the sole purchaser of the Company’s Cancer Testing Products within the Republic of Belarus. The initial term of the Agreement expires on December 31, 2011 (the “Initial Term”). Following the expiration of the Initial Term, the Agreement will renew automatically on an annual basis, provided Palmverse meets minimum purchase amounts, unless either party gives sixty (60) days prior written notice of its intention not to renew the Agreement.

The Agreement provides that Palmverse will be required to meet a minimum purchase amount threshold of the Cancer Testing Products for each year the Agreement is in effect. In that regard, during the Initial Term, Palmverse will be required to purchase a minimum of $280,000 in Cancer Testing Products. Thereafter, in the period ranging from January 1, 2012 to December 31, 2012 (the “First Renewal Term”), Palmverse is required to purchase a minimum of $3,500,000 in Cancer Testing Products. During the period ranging from January 1, 2013 to December 31, 2013 (the “Second Renewal Term”), Palmverse is required to purchase a minimum of $5,250,000 in Cancer Testing Products. Finally, in each renewal term commencing after the Second Renewal Term, Palmverse is required to purchase a minimum of $7,000,000 in Cancer Testing Products.

Palmverse failed to make the minimum purchase amounts during the Initial Term, and is therefore in default of the Agreement. We will not be terminating the Agreement, and we are providing Palmverse the opportunity to cure their default and begin to order the Cancer Testing Products.

Reverse Split

On September 6, 2011, the Board approved resolutions authorizing the Company to implement a reverse stock split of the outstanding shares of common stock at a ratio of up to one-to-thirty (the “Reverse Stock Split”).  On September 6, 2011, we also received approval for the Reverse Stock Split from our shareholders.  The Board may determine in its discretion whether to effect the Reverse Stock Split at any time, if at all, and if so at what exchange ratio up to one-to-thirty.  If the Board determines to effect a Reverse Stock Split, the Reverse Stock Split will become effective upon the filing of a Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Nevada.  The exact timing of the filing of the amendment will be determined by the Board based on its evaluation as to when such action will be the most advantageous to us and our stockholders, and the Board. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the amendment, the Board, in its sole discretion, determines that it is no longer in our best interests and the best interests of our stockholders. To date our Board has not yet implemented the reverse split.

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Exclusive Master Purchase Agreement with Palmverse Limited (Belarus)

On July 7, 2011, we, through our wholly owned subsidiary, Panacea Delaware, entered into an exclusive master purchase agreement with Palmverse Limited, a Belarus corporation (“Palmverse”) (the “Agreement”) to provide Palmverse with the exclusive right to use the Company’s blood, serum and tissue testing services to diagnose and monitor cancer (the “Cancer Testing Products”) within the Republic of Belarus. We have agreed to provide Palmverse with an exclusive right to become the sole purchaser of the Company’s Cancer Testing Products within the Republic of Belarus.

Palmverse failed to make the minimum purchase amounts during the Initial Term, and is therefore in default of the Agreement. We will not be terminating the Agreement, and we are providing Palmverse the opportunity to cure their default and begin to order the Cancer Testing Products.

Exclusive Sublicense Agreement with Panacea Laboratories (Canada)

On November 18, 2011, we entered into an exclusive sublicense agreement by and between Panacea Global, Inc., a corporation organized under the laws of Ontario and our wholly owned subsidiary (“Panacea Canada”), Pharmaceuticals, Panacea Global, Inc., a corporation organized under the laws of the State of Delaware and our wholly subsidiary, and Panacea Laboratories, Inc., a corporation organized under the laws of Ontario (the “Sublicense Agreement”). Pursuant to the Sublicense Agreement, we granted Panacea Laboratories the exclusive right to sublicense our license to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies throughout Canada.

2013 Objectives

Our primary goal is to attempt to sell our diagnostic screening products for the early detection of pre-cancer and cancer. Our HAAH-based early cancer detection blood testing services can be used to assist physicians in detecting the following types of cancer: Breast Cancer, Colorectal Cancer, Lung Cancer, Prostate Cancer, Chronic and Acute Myelogenous Leukemia (AML & CML)

Panacea Global will provide blood and serum tests to diagnose and monitor cancer. Our strategic roadmap to achieve this goal includes the utilization of the following key tests:

1. BC Detect® - An in vitro serum test to help to detect and identify recurrence of breast cancer

2. CC Detect® - An in vitro serum test to help to detect and identify recurrence of colorectal cancer

3. LC Detect® - An in vitro serum test to help to detect and identify recurrence of lung cancer

4. PC Detect® - An in vitro serum test to help to detect and identify recurrence of prostate cancer

5. TK Sense® - A RT-PCR (gene expression) test that predicts the response of patients with chronic Myelogenous leukemia (CML) to the drug imatinib.

2013 Priorities

In 2013, we will devote significant time and resources on our two-fold growth strategy which is both an international and domestic strategy.

International Growth Strategy:

Our international growth strategy consists of marketing and selling its products through strategic partnerships with companies around the world. This is accomplished by our entering into sublicensing agreements with various companies, giving those companies the rights to sell diagnostic tests relevant to our patents. In return, we will receive an upfront fee and royalty streams from the strategic partners. Specifically, we are endeavoring to create strategic partnerships with companies in Canada, Belarus, Near East Region, India, China, Korea, Ireland, Romania, and Japan, as well as Europe, Africa and the Middle East. In order to be considered, strategic partners must demonstrate relevant expertise and a proven track record. We hope to develop strategic partnerships with approximately ten partners in at least ten countries per year.

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Canadian Growth Strategy:

In conjunction with their international growth strategy, our Canadian growth strategy will focus on developing the Canadian market as a stand-alone operation (Panacea Laboratories Inc.). This will be accomplished through obtaining approval and subsequently distributing the product. We expect Canadian revenues to be generated by the end of 2013. Clinical diagnostic testing laboratories will initially be established in Toronto and subsequently in other provinces.

Updated Valuation Analysis of Global Diagnostic License

As of December 31, 2012, there was no updated valuation analysis regarding our Global Diagnostic License (the “License”) be to  replace the report dated December 31, 2011, and filed with our Current Report on Form 8-K with the Securities and Exchange Commission on June 30, 2010. Reznick Group performed a valuation analysis to estimate the fair value of our License as of December 31, 2011 (the “Valuation Date”).

According to the License Agreement, Panacea Pharmaceuticals granted us the global right (excluding the United States and its territories and protectorates) with respect to the development, use, and marketing of the technology, method, process, patent rights, and know-how related to the cancer testing products.  Based on the update valuation analysis, the fair market value of the License was determined to be $55.8 million as of the Valuation Date.

Employees

 

As of April 1, 2013, we had three (3) full-time employees consisting of our Chief Executive Officer, Vice President and an administrative assistant.

Item 1A. Risk Factors.

 

Smaller reporting companies are not required to provide the information required by this item.

 

Item 1B. Unresolved Staff Comments.

 

Smaller reporting companies are not required to provide the information required by this item. 

Item 2. Properties.

 As of April 1, 2013, the Company and its subsidiary operate out of a space located at330 Highway #7 East, Suite 502, Richmond Hill, Ontario, Canada, L4B 3P8. In 2011, the Company entered into a lease for this space in Toronto, Ontario.  The lease term is for 60 months. Rent expense under all operating leases (exclusive of real estate taxes and other expenses payable under the leases) was approximately $22,455 and $30,669 for the years ended December 31, 2012 and 2011 respectively.  Minimum lease commitments under non-cancellable operating leases are as follows:

Year ending December 31
2013		$         32,429
2014		34,057
2015		35,554
2016		8,982

In addition, the Company is required to pay its pro rata share of common area maintenance costs and property taxes.

Our telephone number is (416) 450-6414. Our internet website can be found under the domain name of http://www.panaceaglobalinc.com

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Item 3. Legal Proceedings.

Moneylogix Group, Inc. et al v. Panacea Global, Inc. et al.

On October 7, 2011, Moneylogix Group, Inc., Maximus Investments, Inc., Bakirkoy Financial Holdings, Inc., Bowen Financial Advisory Group Ltd., Marciafor Holdings, Inc., Alex Haditaghi and Gary Cilevitz (collectively, the "Plaintiffs") filed a lawsuit in the Superior Court of Justice in Ontario, Canada against Panacea Global, Inc. (the "Company"), Panacea Pharmaceuticals, Inc., a corporation organized under the laws of the State of Maryland and a principal shareholder of the Company, Mahnaz Alikhani, Hossein Ghanbari, Stephen Keith, the Company's Chief Executive Officer and Director Mahmood Moshiri, and the Company's Vice President and also a Director Binnay Sethi (collectively, the "Defendants").

The Plaintiffs generally allege that the Defendants have breached their obligations pursuant to a Consulting Agreement and various verbal agreements regarding the Share Exchange Agreement dated June 30, 2010 (the "Share Exchange Agreement"). Pursuant to the Share Exchange Agreement, the Company acquired its subsidiary, Panacea Delaware.

The Plaintiffs seek a number of different forms of relief, including damages in the amount of approximately $25 million, the cancellation of certain shares and the issuance of share warrants. The Defendants have obtained particulars of the claim but have not yet delivered a Statement  of Defence. The have also served a motion to dismiss the entire action on the basis of lack of jurisdiction. This motion is scheduled to be heard on May 24, 2013.

At this early stage of the litigation it is not possible to quantify the potential liability (if any) that may arise from this action. The Company believes the Plaintiffs' claims against it are entirely without merit and intends to vigorously defend itself against and pursue, as applicable, its legal recourses against the Plaintiffs in court.

Bayvvood Homes Partnership et al. v. Moneylogix Group, Inc. et al.

The Company was recently notified that Bayvvood Homes Partnership ("Baywood"), 2131059 Ontario Limited, 2206659 Ontario Limited, 2147789 Ontario Limited, 1367169 Ontario Limited and Ralph Canonaco (collectively, the "Plaintiffs") filed a lawsuit on September 9, 2010 in the Superior Court of Justice in Ontario, Canada against Moneylogix Group, Inc. (now known as Panacea Global, Inc.) (the "Company"), Alex Haditaghi, Majid Haditaghi, Moneylogix Group, Inc. (a Canadian company) ("Moneylogix Canada"), Mortgagebrokers.com, Financial Group of Companies Inc., Gary Cilevitz, Michael Knarr, and Farideh Ronhbakhsh (collectively, the "Defendants").

Among other allegations directed against the Defendants more generally, the Plaintiffs allege that Mr. Haditaghi and Mortgagebrokers.com agreed to provide Bohemian Embassy with a $12 million loan, but failed to do so, resulting in an inability on the part of Bohemian Embassy to obtain the financing it required.

The Plaintiffs further allege that Mr. Haditaghi convinced Bayvvood to sell a piece of property to the Company in exchange for a nominal payment from the Company and Mr. Haditaghi's allegedly fraudulent promise that he would raise funds for Baywood.

The Plaintiffs allege that the above actions, inter alia, formed part of a conspiracy on the part of the Company and the other Defendants to harm Baywood and its trustees by creating sufficient financial hardship and strain upon Baywood such that it was compelled to sell the property at issue to the Company, resulting in damages to the Plaintiffs.

The Plaintiffs seek a number of different forms of relief, including damages in the sum of $35 million against the Defendants collectively for fraud, fraudulent misrepresentation and conspiracy. The Plaintiffs also seek various forms of relief against specific Defendants other than the Company.

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It bears noting that the Statement of Claim is at times unclear as to whether an allegation is advanced against the Company or Moneylogix Canada. In the event future clarification reveals that it is the intention of the Plaintiffs to advance against the Company certain claims ostensibly advanced against Moneylogix Canada, the above descriptions and forms of relief sought may be subject to expansion.

With the exception of the Company, the Defendants are represented by a single law firm. Without the knowledge of the Company, those Defendants have delivered a Statement of Defence and Counterclaim on their own behalf and on behalf of the Company. The Company  has yet to determine how it will respond to the allegations set out in the Statement of Claim or  to the unauthorized delivery of the Statement of Defence and Counterclaim.

This pending litigation is a result of actions that occurred prior to the share exchange that was entered into on June 30, 2010 (the “Share Exchange”).  In connection with the Share Exchange, the Company ceased its prior operations and the prior officers and directors of the Company resigned from all of their respective positions.  Accordingly, the Company believes that the Plaintiff’s claims against its are entirely without merit.  The Company is evaluating its legal options, including, but not limited to seeking indemnification from parties in control of the Company prior to the Share Exchange, and intends to vigorously defend itself against and pursue, as applicable, its legal recourses against the Plaintiffs in court.

Item 4. Mine Safety Disclosures.

 

 Not applicable.

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is quoted on the OTC Bulletin Board (the “OTCBB”) and OTCQB under the ticker symbol “PANG”. An OTCBB or OTCQB equity security generally is any equity that is not listed or traded on a national securities exchange. The following table shows, for the periods indicated, the high and low bid prices per share of our common stock as reported by the OTCBB quotation service. These bid prices represent prices quoted by broker-dealers on the OTCBB quotation service. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not represent actual transactions.

2012	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
High	0.30	0.30	0.95	0.75
Low	0.05	0.20	0.25	0.49

2011	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
High	-	-	0.43	0.40
Low	-	-	0.25	0.025

Holders of Capital Stock

As of April 1, 2013 there were approximately 1,061 holders of record of our common stock. Because shares of our common stock are held by depositaries, brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of stockholders of record.

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Dividends

 

To date, we have paid no dividends on our shares of common stock and have no present intention of paying any dividends on our shares of common stock in the foreseeable future. The payment by us of dividends on the shares of common stock in the future, if any, rests solely within the discretion of our board of directors and will depend upon, among other things, our earnings, capital requirements and financial condition, as well as other factors deemed relevant by our board of directors. Although dividends are not limited currently by any agreements, it is anticipated that future agreements, if any, with institutional lenders or others may limit our ability to pay dividends on our shares of common stock.

Securities Authorized for Issuance under Equity Compensation Plan

As of December 31, 2012, we had one compensation plan in place, entitled “Panacea Global, Inc.’s 2011 Omnibus Incentive Plan.” The Panacea Global, Inc.’s 2011 Omnibus Incentive Plan was approved by our Board on July 26, 2011.

Plan	Total number of securities authorized	Number of securities to be issued upon exercise of outstanding options as at December 31, 2012 and 2011	Weighted-average exercise price of outstanding options as at December 31, 2012 and 2011	Number of securities remaining available for further issuance as at December 31, 2012 and 2011
2011 Omnibus Incentive Plan	10,000,000	4,500,000	$0.55	5,500,000

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

On July 26, 2011 the Board approved the issuance of non-qualified stock options (the “Options”) to each of: Mahmood Moshiri (“Moshiri”), the Company’s Chief Executive Officer, President, Chief Medical Officer and Director, and Binnay Sethi, the Company’s Vice President and Director, for each to purchase 2,000,000 shares of the Company’s common stock.  The Options were granted pursuant to, and are subject to, the Company’s 2011 Omnibus Incentive Plan which was approved by the Board on July 26, 2011.The Options vest and became exercisable on January 26, 2012 at an exercise price of $0.55 per share and expire on July 26, 2021.

On October 12, 2012, the Company issued 100,000 shares of common stock to an investor in exchange for $100,000, pursuant to two Subscription Agreements dated October 10, 2012.

All of the foregoing securities were offered and sold pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended and Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

Item 6. Selected Financial Data.

 

Not applicable as a smaller reporting company.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition for the fiscal years ended December 31, 2012, and December 31, 2011. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.  See “Forward-Looking Statements.”

Overview

Panacea Global, Inc. is a corporation incorporated under the laws of Nevada.  On June 30, 2010 Panacea Global, Inc. entered into a share exchange agreement with Panacea Global, Inc., a privately held Delaware corporation (“Panacea Delaware”), and the shareholders of Panacea Delaware pursuant to which we acquired all of the outstanding capital stock of Panacea Delaware from the Panacea Delaware shareholders and Panacea Delaware became our wholly owned subsidiary and our operating business.  

Through Panacea Delaware, we are a company that sells early detection cancer tests through our licensing agreement with Panacea Pharmaceuticals, Inc. (“Pharmaceuticals”). More specifically, Panacea Global Inc. is a biopharmaceutical company focused on providing blood (protein), serum and tissue tests to diagnose and monitor cancer through a licensing agreement with Panacea Pharmaceuticals, Inc. The Company’s mission is to discover, develop and commercialize innovative diagnostic products. Panacea’s current product development focus is on novel proteins and biochemical pathways related to cellular regulation and cell cycle abnormalities in oncology diseases.

Panacea Pharmaceuticals, Inc. was founded in 1999 to discover, develop and commercialize innovative therapeutic and diagnostic products for cancer and diseases of the central nervous system. In-house research and development activities are performed at an 11,000 square foot facility in Gaithersburg, Maryland.

Panacea Laboratories, Inc. is certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) to perform high complexity testing, and offers several cancer diagnostic tests to patients, physicians and clinical laboratories.

On March 24, 2010, Panacea Delaware entered into a licensing agreement (the “Licensing Agreement”) with Pharmaceuticals.  Pursuant to the Licensing Agreement, Panacea Delaware was granted the exclusive right to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies, with rights to sublicense worldwide, except for the United States of America. Panacea Global continues to market and sell products through strategic partnerships with companies in different countries by entering into sublicensing agreements to sell our products. We anticipate that our licensing agreements, with amenable profit margins, will underpin our revenue for the 2013 year.

On November 18, 2011 we entered into an amendment to the Licensing Agreement whereby the Licensing Agreement was amended to clarify that the license granted to us is exclusive.

On June 2, 2011, we filed a Certificate of Amendment to our Articles of Incorporation with the State of Nevada changing the Company’s name to Panacea Global, Inc.

As of December 31, 2012, we are in the development stage and have limited working capital, have not earned any revenues from operations and have accumulated a deficit.

13

Exclusive Master Purchase Agreement with Palmverse Limited (Belarus)

On July 7, 2011, we, through our wholly owned subsidiary, Panacea Delaware, entered into an exclusive master purchase agreement with Palmverse Limited, a Belarus corporation (“Palmverse”) (the “Agreement”) to provide Palmverse with the exclusive right to use the Company’s blood, serum and tissue testing services to diagnose and monitor cancer (the “Cancer Testing Products”) within the Republic of Belarus. We have agreed to provide Palmverse with an exclusive right to become the sole purchaser of the Company’s Cancer Testing Products within the Republic of Belarus.

Palmverse failed to make the minimum purchase amounts during the Initial Term, and is therefore in default of the Agreement. We will not be terminating the Agreement, and we are providing Palmverse the opportunity to cure their default and begin to order the Cancer Testing Products.

Exclusive Sublicense Agreement with Panacea Laboratories (Canada)

On November 18, 2011, we entered into an exclusive sublicense agreement by and between Panacea Global, Inc., a corporation organized under the laws of Ontario and our wholly owned subsidiary (“Panacea Canada”), Pharmaceuticals, Panacea Global, Inc., a corporation organized under the laws of the State of Delaware and our wholly subsidiary, and Panacea Laboratories, Inc., a corporation organized under the laws of Ontario (the “Sublicense Agreement”). Pursuant to the Sublicense Agreement, we granted Panacea Laboratories the exclusive right to sublicense our license to develop, use, and market Pharmaceuticals’ HAAH based cancer diagnostic technologies throughout Canada.

2013 Objectives

Our primary goal is to attempt to sell our diagnostic screening products for the early detection of pre-cancer and cancer. Our HAAH-based early cancer detection blood testing services can be used to assist physicians in detecting the following types of cancer: Breast Cancer, Colorectal Cancer, Lung Cancer, Prostate Cancer, Chronic and Acute Myelogenous Leukemia (AML & CML)

Panacea Global will provide blood and serum tests to diagnose and monitor cancer. Our strategic roadmap to achieve this goal includes the utilization of the following key tests:

1. BC Detect® - An in vitro serum test to help to detect and identify recurrence of breast cancer

2. CC Detect® - An in vitro serum test to help to detect and identify recurrence of colorectal cancer

3. LC Detect® - An in vitro serum test to help to detect and identify recurrence of lung cancer

4. PC Detect® - An in vitro serum test to help to detect and identify recurrence of prostate cancer

5. TK Sense® - A RT-PCR (gene expression) test that predicts the response of patients with chronic Myelogenous leukemia (CML) to the drug imatinib.

2013 Priorities

In 2013, we will devote significant time and resources on our two-fold growth strategy which is both an international and domestic strategy.

International Growth Strategy:

Our international growth strategy consists of marketing and selling its products through strategic partnerships with companies around the world. This is accomplished by our entering into sublicensing agreements with various companies, giving those companies the rights to sell diagnostic tests relevant to our patents. In return, we will receive an upfront fee and royalty streams from the strategic partners. Specifically, we are endeavoring to create strategic partnerships with companies in Canada, Belarus, Near East Region, India, China, Korea, Ireland, Romania, and Japan, as well as Europe, Africa and the Middle East. In order to be considered, strategic partners must demonstrate relevant expertise and a proven track record. We hope to develop strategic partnerships with approximately ten partners in at least ten countries per year.

14

Canadian Growth Strategy:

In conjunction with their international growth strategy, our Canadian growth strategy will focus on developing the Canadian market as a stand-alone operation (Panacea Laboratories Inc.). This will be accomplished through obtaining approval and subsequently distributing the product. We expect Canadian revenues to be generated by the end of 2013. Clinical diagnostic testing laboratories will initially be established in Toronto and subsequently in other provinces.

Updated Valuation Analysis of Global Diagnostic License

As of December 31, 2012, there was no updated valuation analysis regarding our Global Diagnostic License (the “License”) be to  replace the report dated December 31, 2011, and filed with our Current Report on Form 8-K with the Securities and Exchange Commission on June 30, 2010. Reznick Group performed a valuation analysis to estimate the fair value of our License as of December 31, 2011 (the “Valuation Date”).

According to the License Agreement, Panacea Pharmaceuticals granted us the global right (excluding the United States and its territories and protectorates) with respect to the development, use, and marketing of the technology, method, process, patent rights, and know-how related to the cancer testing products.  Based on the update valuation analysis, the fair market value of the License was determined to be $55.8 million as of the Valuation Date.

Results of Operations

Comparison of the years ended December 31, 2012 and 2011

Revenues

As of December 31, 2012, the Company has begun limited business operations in connection with the Licensing Agreement.  We have not had any revenues during the year ended December 31, 2012 or 2011.

We expect product royalty fees and license fees to underpin our gross revenue for the full year 2013 as opposed to the amounts recorded in 2012. We hope to recognize these revenue streams from our agreements with Palmverse and Panacea Canada, as well as other potential customers we hope to enter into agreements with during 2013 However, to date Palmverse has not purchased any of our products, in violation of our agreement, and there is no guarantee that we will succeed in entering into any additional agreements.

Total expenses for the year ended December 31, 2012 were $965,617 as compared to total expenses of $1,983,656 for the year ended December 31, 2011.  The decrease in total expenses during fiscal 2012 was primarily attributable to a decrease in stock based compensation of $1,124,367 in connection with the Options granted to our executive officers in fiscal 2011.  Since inception, the Company has incurred total expenses of $3,054,975.

The Company recorded a net loss of $1,015,402 for the year ended December 31, 2012.  We recorded a net loss of $2,067,896 for the year ended December 31, 2011.  Since inception, the Company has incurred a net loss of $3,189,000.

General and Administrative Expenses

General and administrative expenses increased to $502,411 for the year ended December 31, 2012 compared to $423,514 for the year ended December 31, 2011. This increase in general and administrative expenses includes increases of $151,312 in consulting fees, and $351,099 in office related expenses.

Professional Fees and Marketing Expenses

Professional Fees increased to $255,960 for the year ended December 31, 2012 from $205,427 for the year ended December 31, 2011. This increase was primarily due to the increase in the cost of professional services.

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Interest Income

There was no interest income for the year ended December 31, 2012.

Interest Expense

There was no interest expense for the year ended December 31, 2012.

Other Income

The Company had a loss on its investment in Panacea Laboratories, Inc. of $3,184 for the year ended December 31, 2012 compared to $84,240 for the year ended December 31, 2011.  Panacea Laboratories, Inc. is still in development and the Company’s loss on investment represents its share of consulting, legal, accounting and other expenses incurred by Panacea Laboratories, Inc.

Liquidity and Capital Resources

At December 31, 2012 the Company had $109,151 cash in hand and $51,184,337 in assets comprised of the $50,000,000 License Agreement, an investment in Panacea Laboratories, Inc. of $912,576, capital assets totaling $89,384, accounts receivable of $38,721 and prepaid expenses and deposits of $34,505. Comparatively, at December 31, 2011, we had cash of $328,662 and assets of $51,345,464 which included $50,000,000 in License Agreement. Based on our current capital needs, we expect that our current funds will fund our operations for up to approximately one or two months.  We will need to raise additional funds primarily from additional debt or equity financings during fiscal 2013.  However, the Company cannot make any guarantee that it will be successful in obtaining any additional financing or that the terms will be favorable to the Company.

At December 31, 2012 we had liabilities of $3,799,445 comprised of a balance due to related party of $943,019, the license fee payable of $1,562,500, deferred revenues from Panacea Laboratories, Inc. of $1,000,000, and accounts payable and accrued liabilities totaling $293,926. Comparatively at December 31, 2011, we had liabilities of $3,559,042 comprised of a balance due to related party of $649,609, the license fee payable of $1,762,500, deferred revenues from Panacea Laboratories, Inc. of $1,000,000, and accounts payable and accrued liabilities totaling $146,933.

Net cash used in operating activities during the year ended December 31, 2012 was $1,071,888. Net cash used in investing activities during the year ended December 31, 2012 was $54,905 due to the Company’s purchases of capital assets. Net cash provided by financing activities during the year ended December 31, 2012 was $814,524 due to the sale of shares of our common stock and advances from a related party.  There net cash outflows from operating were $564,287, investing was $1,053,013 and inflows from financing activities $1,949,609 during the year ended December 31, 2011.

As there were no revenues from operating activities as of December 31, 2012, we must rely upon the issuance of common stock and additional capital contributions from shareholders and/or loans from shareholders and third-party lenders to meet our working capital needs. It is expected by management that we will need to rely upon new capital contributions to pay our liabilities.

16

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimate; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, and revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions.  We continue to monitor significant estimates made during the preparation of our financial statements.

Recent Accounting Pronouncements

Changes to GAAP accounting are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (“ASU’s”) to the FASB’s Accounting Standards Codification.

The Company has assessed the applicability and impact of all ASU’S and they have been determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

Going Concern

These financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Accumulated Losses from inception to December 31, 2012 total $3,189,000. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.

There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in these financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Impairment of Long-lived Assets

In accordance with ASC 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets , long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. The Company continues to evaluate the Global Diagnostic License for events or changes in circumstances that would be indicative of impairment however no such indication has developed since it was acquired on March 24, 2010.

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Off-Balance Sheet Arrangements

As of December 31, 2012, we had no off-balance sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

Item 8. Financial Statements and Supplementary Data.

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INDEX TO FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	20
CONSOLIDATED BALANCE SHEETS	21
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS	22
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY	23
CONSOLIDATED STATEMENTS OF CASH FLOWS	24
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS	25

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Panacea Global, Inc.

We have audited the accompanying consolidated balance sheets of Panacea Global, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2012 and for the period since inception (February 5 2010) through December 31, 2012. Panacea Global, Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Panacea Global, Inc. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2012 and for the period since inception (February 5 2010) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements,  these conditions raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

EFP Rotenberg, LLP

Rochester, New York

April 1, 2013

20

21

	For the Year Ended December 31, 2012		For the Year Ended December 31, 2011		For the Period from February 5, 2010 (inception) to December 31, 2012
Revenue	$                     -		$                   -		$                     -
Expenses
Professional fees	255,960		205,427		527,789
Cost of reorganization	-		-		39,300
Filing fees	16,095		10,326		26,421
Office and General	502,411		423,514		925,925
Depreciation	15,145		3,389		18,534
Stock-based compensation	-		1,124,367		1,124,367
Salaries and benefits	176,006		216,633		392,639
Total expenses	965,617		1,983,656		3,054,975
Equity loss pickup (Note 5)	(3,184)		(84,240)		(87,424)
Net loss before tax	(968,801)		(2,067,896)		(3,142,399)
Tax expense	(46,601)		-		(46,601)
Net loss	(1,015,402)		(2,067,896)		(3,189,000)
Foreign currency adjustment	92,758		(3,647)		89,111
Comprehensive Loss	(922,644)		(2,071,543)		(3,099,889)
Net loss per share-basic and diluted	(0.01)		(0.02)		(0.04)
Weighted number of shares outstanding- basic and diluted	95,285,717		93,411,257		84,908,374

22

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

23

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

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Panacea Global, Inc.

(A Development Stage Company)

Notes to the Audited Consolidated Financial Statements

(Expressed in US Dollars)

December 31, 2012

1.	NATURE OF OPERATIONS AND ORGANIZATION

 

MoneyLogix Group, Inc. ("MoneyLogix" or the “Company”), which registered a change of name with the State of Nevada on January 29, 2008, was formerly known as Homelife, Inc. and is organized under the laws of the State of Nevada.

MoneyLogix Group, Inc. entered into a share exchange agreement which closed on June 30, 2010 with Panacea Global, Inc. (“Panacea”), a Delaware private corporation incorporated on February 5, 2010. The reverse merger transaction effected a change of control of the Company. The accounting acquirer is Panacea and the historical operations of the Company are the operations of Panacea.  Pursuant to the terms of the share exchange agreement, MoneyLogix agreed to issue 74,800,000 shares of its common stock to the stockholders of Panacea Global, Inc. in exchange for 100% of Panacea’s issued and outstanding stock, making Panacea a wholly owned subsidiary of the Company on June 30, 2010.

The Company is a development stage company that has currently acquired the global rights except for the United States of America for early detection cancer tests.

Effective June 2, 2011, MoneyLogix Group, Inc. registered a change of name with the State of Nevada to Panacea Global, Inc. Effective June 15, 2011, the trading symbol for the Company on the OTC Bulletin Board changed from "MLXG" to “PANG”.

2.	BASIS OF PRESENTATION

 

The Company has not earned any revenues from limited principal operations and accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in Accounting Standard Codification (“ASC”) 915 Accounting and Reporting by Development Stage Enterprises.  Among the disclosures required by ASC 915 are that the Company's consolidated financial statements be identified as those of a development stage company, and that the consolidated statements of operations, stockholders' deficit and cash flows disclose activity since the date of the Company's inception.

3.	GOING CONCERN

These consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to raise additional finance to fund its operations and develop profitable operations. Accumulated net losses from inception to December 31, 2012 totaled $3,189,000.  In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. There is no assurance that the Company will be able to obtain such financing. These conditions create material uncertainty that cast significant doubt about the Company’s ability to continue as a going concern.

4.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States. Presented below are those policies considered particularly significant:

Basis of Consolidation and Presentation

The accompanying consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary Panacea (a Delaware incorporated Company) and Panacea Global Inc. (a Canadian incorporated Company).  All inter-company transactions and balances have been eliminated upon consolidation.

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Translation of Foreign Currency Financial Statements and Foreign Currency Transactions

The functional currency of the Company is Canadian dollars. The functional currency of the Company’s subsidiaries is United States dollars.  The financial statements of the Company have been translated into United States dollars by translating balance sheet accounts at year end and period end exchange rates except for non-current assets which are translated at historical exchange rates, and statement of operations accounts at average exchange rates for the periods. Foreign currency translation gains and losses are reflected in the equity section of the Company’s consolidated balance sheet in Accumulated Other Comprehensive Income. The balance of the foreign currency translation adjustment, included in Accumulated Other Comprehensive Loss, was $92,758 for the year ended December 31, 2012. For the period from inception (February 5, 2010) through December 31, 2012, $89,111 of foreign currency translation adjustment was included in Accumulated Other Comprehensive Loss.

Earnings or Loss Per Share

The Company accounts for earnings per share pursuant to ASC 260-10-05, Earnings per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each period.

Financial Instruments

In accordance with ASC 825-10-50, Defining Fair Value Measurement, the estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgment is required in estimating fair value. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. As of December 31, 2012, the carrying value of accounts payable and accrued liabilities, due to related parties and license fee payable approximate their fair value because of the short-term maturity of these instruments.  The fair value of the investment is not readily determinable.

In accordance with ASC 820-10, Defining Fair Value Measurement, the Company adopted the standard which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. 

Income Taxes

The Company accounts for income taxes pursuant to ASC 740-10, Accounting for Income Taxes. Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities as well as loss carry forward that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.

Impairment of Long-lived Assets

In accordance with ASC 360-10-05, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value of asset less cost to sell. The Company evaluated the Global Diagnostic License on December 31, 2012 and noted no impairment.

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. The accounting estimates that require management’s most significant judgments are the valuation of the intangible asset and measurement of accrued liabilities.

Property and Equipment

Property and equipment are initially recorded at cost.  Depreciation is provided using the declining balance method at rates intended to amortize the cost of assets over their estimated useful lives.

In the year of acquisition, depreciation is taken as assets are available for use.

Equity Compensation

The Company adopted ASC 718, Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods and services. This standard focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, including issuance of stock options to employees. The Company measures stock-based compensation cost at grant date, based on the estimated fair value of the award, and recognizes the cost as expense on a straight-line basis (net of estimated forfeitures) over the employee requisite service period. The Company estimates the fair value of stock options using a Black-Scholes valuation model.

Investment in Equity Instruments

The Company has accounted for its investment in equity and debt securities using the equity method of accounting based on the guidelines established in FASB ASC 323. In applying the guidance of FASB ASC 323, the Company recognizes the investment in stock of an investee as an asset. The asset is recorded initially at cost in accordance with the guidance in FASB ASC 805-50-30. Subsequent to the initial recording the Company will recognize its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements. The Company adjusts the carrying value of the investment for its share of the earnings or losses of the investee after the date of investment and shall report the recognized earnings or losses in the statement of operations.

Recent Accounting Pronouncements

Changes to accounting principles generally accepted in the United States of America (U.S. GAAP) are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASU’s) to the FASB’s Accounting Standards Codification.

27

The Company has assessed the applicability and impact of all ASU’S and they have been determined to be either not applicable or are expected to have minimal impact on our consolidated financial position and results of operations.

5.	GLOBAL DIAGNOSTIC LICENSE

License Agreement

On March 24, 2010, the Company entered into a license agreement with Panacea Pharmaceuticals Inc. (“Pharmaceuticals”) to acquire the global diagnostic license (“GDL”), with rights to sublicense worldwide, except for the United States of America.  GDL allows the Company to develop, market and use licensed products related to HAAH based laboratory tests.

In consideration for the GDL, the Company issued 35,500,000 common shares and will pay Pharmaceuticals a license fee of $2,500,000, due within 30 days of the Company raising a minimum $10,000,000 equity investment.  One-half of any equity investments raised shall be remitted to Pharmaceuticals, until the license fee is paid in full. The aggregate consideration paid and therefore fair value of the GDL equates $50,000,000.  Further, the Company will pay Pharmaceuticals 25% of all sublicensing revenue and will purchase all conforming reagent at a cost of $20 per test or 10% of the sale price of the individual test with a minimum $8.00 test price.

As at December 31, 2011, the Company engaged a third party professional valuation firm to review the license agreement and determine an appropriate representation of fair value of the intangible asset. The valuation report considered current conditions of the Company and industry as well as projections of future performance based on management’s judgment of the likelihood of future outcomes. Results of the valuation report indicated that the intangible asset was not impaired as of December 31, 2011.  As at December 31, 2012, management is of the opinion that there has been no change to those circumstances.

For the year ended December 31, 2012, the Company made payments of $200,000 to reduce the license fee payable from $1,762,500 as of December 31, 2011 to $1,562,500 as of December 31, 2012.

Sublicense Agreement

On November 18, 2011, the Company entered into a sublicense agreement with Panacea Laboratories, Inc. (“Laboratories”) to sublicense the rights to develop, market and use licensed products related to HAAH based laboratory tests in Canada.

In consideration for the rights received under the sublicense agreement, Laboratories provided the Company with 40,000,000 shares of its common stock and will pay the Company a sublicense fee of $960,000, due within 3 years.  The fair value of the aggregate consideration paid and therefore the initial cost of the investment equated to $1,000,000, which was recognized as the initial asset balance of the investment.  Further, Laboratories must purchase all conforming reagents from the Company at a cost of $20 per test or 10% of the sale price of the individual test with a minimum $8.00 test price.

Sublicensing revenues of $1,000,000 had been recorded in deferred revenues as at December 31, 2011 and will be taken into revenues once Laboratories commences operations. The amount of deferred revenues is unchanged since year-end. Upon the recognition of revenue, the Company will recognize its liability to reimburse Panacea Pharmaceuticals 25% of all sublicensing revenue as disclosed above in under the terms of the license agreement.

Based on the accounting guidance of FASB ASC 323, the Company’s investment in Laboratories was subsequently decreased due to the Company’s share of the losses in Laboratories’ operations. The Company’s investment of 40,000,000 common shares represents a 50% ownership interest in Laboratories. Laboratories intends to raise capital in the current year through issuing additional shares and the Company’s ownership interest in Laboratories is expected to decline.  The Company has significant influence over Laboratories but does not have the level of control that would require consolidation and has thus accounted for its investment in Laboratories using the equity method.  

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The investment in Laboratories was $912,576 and $915,760 as of December 31, 2012 and December 31, 2011 respectfully.  The reduction in the investment during the year ended December 31, 2012 represents the Company’s share of the operating expenses incurred at laboratories.

6.	INTANGIBLE ASSET

The Company’s intangible asset consists of the GDL, as described in Note 5, which contains certain issued and pending patent rights. Upon commencement of licensed services to customers, amortization will be taken over the estimated useful life of the respective patent rights, which vary and are determined on a country-by-country basis.

	As at February 5, 2010 (inception)	Acquired	Accumulated Amortization	As at December 31, 2011	Accumulated Amortization	As at December 31, 2012
Global Diagnostic License	-	$ 50,000,000	-	$ 50,000,000	-	$ 50,000,000

As at December 31, 2012, the Company has not commenced any services relating to GDL and as a result, no amortization has been recorded.

7.	CAPITAL STOCK

a)

Authorized

100,000 Class A Preferred shares with a par value of $0.001. There were no shares issued and outstanding at December 31, 2012.

300,000,000 Common shares of $0.001 par value.

b)

Issued

95,363,586 Common Shares (94,063,586 common shares – December 31, 2011)

On April 5, 2012, the Company issued an additional 500,000 common shares for cash of $121,652.  On August 17, 2012, the Company issued an additional 100,000 common shares for cash of $49,985.  On September 17, 2012, the Company issued an additional 280,000 common shares for cash of $139,477.  On September 25, 2012, the Company issued an additional 320,000 common shares for cash of $160,000. On October 12, 2012, the Company issued an additional 100,000 common shares for cash of $50,000.

29

The following table provides consolidated information on the Company’s warrants for as at December 31, 2012.  Each warrant provides the warrant holder the option to purchase one share.

	Number of  Warrants	Exercise Price	Exercisable Date	Expiry Date
Warrants issued on February 16, 2011	2,000,000	$0.25	Anytime	February 16, 2013
Warrants issued on February 25, 2011	100,000	$0.25	Anytime	February 25, 2013
Warrants issued on April 10, 2011	2,000,000	$0.25	Anytime	April 10, 2013
Warrants issued on April 15, 2011	100,000	$0.25	Anytime	April 15, 2013
Warrants issued on April 5, 2012	500,000	$0.25	Anytime	April 5, 2014
Warrants outstanding at December 31, 2012	4,700,000	$0.25

8.	INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740-20. ASC 740-20 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated.

 

Under ASC 740-20 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.

 

The Company has a Delaware subsidiary which pays an asset-based tax.  Tax expense in the current year relate to asset based taxes on the Company’s Delaware subsidiary. Other than the Delaware subsidiary, the Company pays taxes based on income. The Company has income tax losses available to be applied against future year’s income as a result of the losses incurred since inception. However, due to the losses incurred since inception and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction of future income tax payments. Accordingly a 100% valuation allowance has been recorded for income tax losses available for carry forward.

As of December 31, 2012, the Company did not have any amounts recorded pertaining to uncertain tax positions.  The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable.  The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three to five years from the date of the original notice of assessment in respect of any particular taxation year.  In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period.  U.S. state statutes of limitations for income tax assessment vary from state to state.

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9.     PROPERTY AND EQUIPMENT

	As at December 31, 2012
	Cost	Accumulated Depreciation	Net Book Value
Leasehold improvements	$   84,946	$   15,665	$  69,281
Furniture & Equipment	20,248	2,080	18,168
Computer equipment	1,936	789	1,147
	$ 107,371	$ 18,534	$  89,384

	As at December 31, 2011
	Cost	Accumulated Depreciation	Net Book Value
Leasehold improvements	$  51,013	$  3,092	$  47,921
Computer equipment	2,000	297	1,703
	$  53,013	$  3,389	$  49,624

During the year, the Company began acquiring and using property and equipment which were depreciated accordingly.

10.	EQUITY COMPENSATION

The following table provides consolidated summary information on the Company’s equity compensation plans as at December 31, 2012.

As of December 31, 2012, there was no unrecognized compensation related to non-vested options.

No options were issued in 2012.

11.	RELATED PARTY TRANSACTIONS

During the year, the Company received payments from related parties to fund its operating and investing activities.  Amounts due to related parties are due on demand, are non-interest bearing and approximate fair value due to their short term to maturity.  Amounts due to related parties as at December 31, 2012 and December 31, 2011 are as follows:

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12.	LEASE COMMITMENTS

In 2011, the Company entered into lease for premise in Toronto, Ontario.  The lease term is for 60 months. Rent expense under all operating leases (exclusive of real estate taxes and other expenses payable under the leases) was approximately $22,455 and $30,669 for the years ended December 31, 2012 and 2011 respectively.  Minimum lease commitments under non-cancellable operating leases are as follows:

Year ending December 31
2013		$         32,429
2014		34,057
2015		35,554
2016		8,982

In addition, the Company is required to pay its pro rata share of common area maintenance costs and property taxes.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

 

Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of our management, including the Company’s Chief Executive Officer (“CEO”) (the Company’s principal executive officer) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012.  The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2012, the Company’s internal control over financial reporting was not effective for the purposes for which it is intended.

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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm as we are a smaller reporting company and not required to provide the report.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In connection with our management’s assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified certain material weaknesses in our internal control over financial reporting as of December 31, 2012:

 

	●	Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction.

 

	●	Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control.

 

Because of the material weaknesses above, management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2012, based on Internal Control over Financial Reporting – Guidance for Smaller Public Companies issued by COSO.

 

Remediation of Material Weaknesses in Internal Control Over Financial Reporting

In order to remedy our existing internal control deficiencies, as our finances allow, we will hire a Chief Financial Officer and additional accounting staff.

Changes in Internal Controls over Financial Reporting

 

We have not yet made any changes in our internal controls over financial reporting that occurred during the period covered by this report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.

 

None.

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PART III

 

Item 10. Directors, Executive Officers And Corporate Governance.

The following table sets forth, as of April 1, 2013 the name and age of our directors and executive officers. The directors will hold such office until the next annual meeting of shareholders and until his successors has been elected and qualified.

 

Name		Age		Position
Moshiri Mahmood		56		Chief Executive Officer, President, Chief Medical Officer and Director
Binnay Sethi		45		Vice President and Director

 

Business Experience

 

The following summarizes the occupation and business experience of our Board of Directors and Corporate Officers:

 

Moshiri Mahmood, Chief Executive Officer, President, Chief Medical Officer and Director

 

Since 1990, Mahmood Moshiri has been on the faculty at several medical universities including Zahedan University of Medical Sciences, Yazd University of Medical Sciences, Iran University of Medical Sciences, and Rajaei Cardiovascular Research Center, Tehran, Iran. Mr. Moshiri has extensive experience in teaching and practicing medicine and performing clinical researches focusing on preventive medicine, nutrition and cancer pathology, and cardiovascular health. He has published extensively on the subject of pathology in preventive and therapeutic disciplines during the last 20 years. Mr. Moshiri has hosted numerous newscasts in the health and preventive fields for Iranian National TV in Iran. In addition to his media expertise, his articles have been published in many American, European, and Asian medical journals. He has been a contributing author of medical books published in North America including Antioxidant in Human Health and Diseases, Canada, 1998 and Frontiers in Cardiovascular Health, Boston, USA. Mr. Moshiri has been an Organizing Member, and International Advisory Board Member and Speaker in many World Congresses on Clinical Nutrition and Medicine including the World Congress on Clinical Nutrition in China 1995, Iran 1996, Canada, Banff 1997, India 1999, Iran 1999, Mexico 1998, Canada, Alberta University 2007. Mr. Mahmood graduated from Esfahan Medical School in 1978, obtained his MD from Iran University of Medical Sciences, and received his degree in Clinical and Anatomical Pathology from Beheshti School of Medicine in Tehran, Iran.

From 1997 to 2007, Mr. Moshiri served as Vice President of the International College of Nutrition; and has won two Medical World Congress Awards (1997 Banff, Canada, and 2007 Alberta University, Canada). He is the President of Proteus Imaging Canada.

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Binnay Sethi, Vice President, Chief Financial Officer and Director

Binnay Sethi is currently the CEO of Binalli Vision, one of the largest building maintenance companies in Canada.  Binalli Vision has over 500 clients and employs over 400 people. He founded the company in 1995 and has grown the organization from inception.  He has started and managed numerous companies throughout his career focused in the building maintenance area along with real property administration.  Prior to Binalli Vision, Binnay owned multiple Subway franchises around Toronto and sold them in 1995.  He has studied Business and International business at Seneca College. 

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

Code of Ethics

  

We have not adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, because of the small number of persons involved in the management of the Company.

Corporate Governance

 

We are a small reporting company, not subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act respecting any director.  Each of our directors has attended all meetings either in person or via telephone conference. We have no standing committees regarding audit, compensation or other nominating committees.   Each shareholder will be given specific information on how he/she can direct communications to the officers and directors of the corporation at our annual shareholders meetings.  All communications from shareholders are relayed to the members of the Board of Directors.

Board Leadership Structure and Role in Risk Oversight

 

Our board of directors is primarily responsible for overseeing our risk management processes.  The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The board of directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our Company are consistent with the board’s appetite for risk. While the board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach. 

 

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our common stock are required to file forms reporting their beneficial ownership of our common stock and subsequent changes in that ownership with the United States Securities and Exchange Commission.  Such persons are also required to furnish Coastline Corporate Services, Inc. with copies of all forms so filed.

Based solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and amendments thereto furnished to us, we believe that as of the date of this report, our executive officers, directors and greater than 10 percent beneficial owners complied on a timely basis with all Section 16(a) filing requirements.

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Item 11. Executive Compensation.

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2012, and 2011 in all capacities for the accounts of our executives. 

 

 

Name and Position		Year		Salary				Bonus				Stock Compensation				All Other Compensation				Total
Mahmood Moshiri (Chief Executive Officer, President, Chief Medical Officer, Chief Financial Officer and Director)
		2011			56,881				-				499,719(1)				-				556,600
		2012			121,592				-				-				-				121,592
Binnay Sethi (Vice President and Director)
		2011			50,032				-				499,719(1)				-				549,751
		2012			16,755				-				-				-				16,755

(1)

Includes stock options issued on July 26, 2011 to purchase 2,000,000 shares of our common stock at an exercise price of $0.55.

Compensation of Directors

 

Other than our officers who serve as directors and whose compensation is detailed above, no compensation was paid to our directors in 2012 or 2011.

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth for each named executive officer certain information concerning the outstanding equity awards as of December 31, 2012.

 

On July 26, 2011 the Board approved the issuance of non-qualified stock options (the “Options”) to each of: Mahmood Moshiri (“Moshiri”), the Company’s Chief Executive Officer, President, Chief Medical Officer and Director, and Binnay Sethi (“Sethi,” and together with Moshiri, the “Optionees”), the Company’s Vice President and Director, for each to purchase 2,000,000 shares of the Company’s common stock.  The Options were granted pursuant to, and are subject to, the Company’s 2011 Omnibus Incentive Plan which was approved by the Board on July 26, 2011.The Options vest and become exercisable on January 26, 2012 at an exercise price of $0.55 per share and expire on July 26, 2021.

Item 12. Security Ownership Of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding our shares of common stock beneficially owned as of April 1, 2013, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group.  A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children.

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Name and Address of Beneficial Owner (1)(2)		Amount and Nature of Beneficial Ownership				Percent of Class (1)
5% Shareholders
Bowen Financial Advisory Group(3) STE 205 A- Saffrey Square, P.O. Box N 9934 Nassau			8,100,000
Majid Haditaghi 47 Ardmore Crescent, Richmond Hill, Ontario Canada L4B-3P6			8,200,000
Marciafor Holdings, Inc.(4) STE 205 A- Saffrey Square, P.O. Box N 9934 Nassau			8,000,000
Masoud Ataei Nia P.O.Box 117839 Dubai, UAE			6,400,000
Panacea Pharmaceuticals Inc.(5) 209 Perry Parkway, STE 13 Gaithersburg, MD 20877-2143			35,500,000
Directors and Executive Officers
Binnay Sethi (2) 61 Bowan Court Toronto, Ontario Canada M2K 3A7			1,000,000
Moshiri Mahmood (2) 330 Highway #7 East, Suite 502Richmond Hill, Ontario Canada L4B 3P8			16,800,000
All Executive Officers and Directors as a group (2 persons)			19,800,000(2)

	(1)	As of April 1, 2013 we have 97,015,586 common shares issued and outstanding
	(2)	Includes stock options issued on July 26, 2011 to purchase 2,000,000 shares of our common stock at an exercise price of $0.55.
	(3)	We are unaware of who the natural person with voting and investment control over these shares.
	(4)	We are unaware of who the natural person with voting and investment control over these shares.
	(5)	Hossein A. Ghanbari is the natural person with voting and investment control over these shares.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

 Transactions with Related Persons

 

The following includes a summary of transactions since the beginning of fiscal 2010, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000 and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

The Company received payments from related parties to fund its operating and investing activities.  Amounts due to related parties are due on demand, are non-interest bearing and approximate fair value due to their short term to maturity.  Amounts due to related parties as at December 31, 2012 and December 31, 2011 are as follows:

	December 31, 2012	December 31, 2011
Due from Dr. Moshiri, CEO of the Company	$         92,235	$                -
Due to a company controlled by a shareholder of the Company	_910,260	649,609
Total	$    1,002,495	$    649,609

 

Director Independence

 

Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:

 

·	the director is, or at any time during the past three years was, an employee of the company;
·	the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);

·	a family member of the director is, or at any time during the past three years was, an executive officer of the company;
·	the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

·

the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

 

We do not have any independent directors. We do not have an audit committee, compensation committee or nominating committee.

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Item 14. Principal Accounting Feeds and Services.

The following table sets forth the fees billed by our principal independent accountants, EFP Rotenberg, LLP, for each of our last two fiscal years for the categories of services indicated.

		Years Ended December 31,
Category		2012				2011
Audit Fees		$	19,000				16,400
Audit Related Fees			3,960				2,690
Tax Fees			0				0
All Other Fees			0				0

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors.

The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records addressing the percentage of pre-approved audit fees.   However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.

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PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

(1)

Filed as an Exhibit on Form SB-2 with the SEC on October 21, 1998

(2)

Filed as an Exhibit on Form 8-K with the SEC on February 21, 2013.

(3)

Filed as an Exhibit on Form 8-K with the SEC on September 28, 2012.

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

41

 SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

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Exhibit 31.1

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. 1350

(Section 302 of the Sarbanes-Oxley Act of 2002)

 

I, Mahmood Moshiri, certify that:

 

1.	I have reviewed this Annual Report on Form 10-K of Panacea Global, Inc.;

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

 

Dated:   April 1, 2013	/s/ Mahmood Moshiri
	Mahmood Moshiri, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

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Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

The undersigned hereby certifies, in his capacity as the Principal Executive Officer and Principal Financial Officer of Panacea Global, Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

 

(1)           The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated:   April 1, 2013	/s/ Mahmood Moshiri
	Mahmood Moshiri, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

  

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