UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2014

or

For the transition period from to

Commission File Number: 000-30424

PANACEA GLOBAL, INC.

(Exact name of registrant as specified in its charter)

(416) 450-6414

(Registrant’s telephone number, including area code)

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes    [X] No   [ ]

Indicate by a check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 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    [X] No   [ ]

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    [ ] No   [X]

There were 106,747,586 shares of the Registrant’s Common Stock outstanding at November 14, 2014.

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PANACEA GLOBAL, INC.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2014

TABLE OF CONTENTS

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CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form10-Q (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— FINANCIAL INFORMATION

Panacea Global, Inc.

Consolidated Balance Sheets

(Unaudited)

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

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Panacea Global, Inc.

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

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

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Panacea Global, Inc.

Consolidated Statement of Changes in Stockholders' Equity

For the Nine Months Ended September 30, 2014

(Unaudited)

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

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Panacea Global, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

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

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Panacea Global, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1.BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of Panacea Global Inc. (the “Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s latest annual report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements for fiscal year 2013, as reported in the Form 10-K, have been omitted.

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".

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company evaluated and adopted ASU 2014-10 for the reporting period ended September 30, 2014.

2.GOING CONCERN

These unaudited interim consolidated financial statements have been prepared assuming the Company will continue as a going-concern. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to raise additional financing to fund its operations and develop profitable operations. Accumulated net losses from inception to September 30, 2014 totaled $7,331,646.  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 significant doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recovery of assets or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

3.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:

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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.

Reclassifications

Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented.

Basis of Consolidation

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

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 September 30, 2014 and noted no impairment.

Foreign Currency Translation

The functional currency of the Company is Canadian dollars. The functional currency of the Company’s subsidiaries is United States dollars. The interim financial statements of the Company have been translated into United States dollars by translating balance sheet accounts at 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 sheets in Accumulated Other Comprehensive Income (Loss).

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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.  In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

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.

Stock-based Compensation

The Company follows 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 stock-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 (net of estimated forfeitures) over the expected service period. The Company estimates the fair value of stock options using the 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. 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 consolidated statements of operations.

Subsequent Events

The Company has evaluated all transactions through the financial statement issuance date for subsequent event disclosure consideration.

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Recent Accounting Pronouncements

The Company has assessed the applicability and impact of all recently issued accounting pronouncements and they have been determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position, results of operations, or cash flows.

4.PROPERTY AND EQUIPMENT

During the three and nine months ended September 30, 2013 and 2014, the Company recorded depreciation expense of $5,235, $4,401, $14,584, and $13,137, respectively.

5.EQUITY METHOD INVESTMENT

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 Human Aspartyl (Asparaginyl) B-Hydroxylase (“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 at December 31, 2011 and will be taken into revenues once Laboratories commences operations. The amount of deferred revenues is unchanged since December 31, 2013. Upon the recognition of revenue, the Company will recognize its liability to reimburse Panacea Pharmaceuticals 25% of all sublicensing revenue as disclosed above under the terms of the license agreement.

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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.  

Summarized Financial Information

Set out below is the summarized financial information of Laboratories at September 30, 2014, which is accounted for using the equity method. The information reflects the amounts presented in the financial statements of Laboratories adjusted for differences in accounting policies between the Company and Laboratories. Our share of income and losses from our equity method investment in Laboratories is included in loss from equity investment in the consolidated statements of operations and other comprehensive loss.

Summarized Balance Sheets

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Summarized Statements of Operations

6.INTANGIBLES AND LICENSE FEE PAYABLE

License Agreement

On March 24, 2010, the Company entered into a license agreement with Panacea Pharmaceuticals Inc. (“Pharmaceuticals”), a related party, 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 to $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 of an $8 test price.

The GDL 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 of September 30, 2014, the Company had not commenced any services relating to GDL and as a result, no amortization has been recorded.

As of September 30, 2014, management evaluated whether events and circumstances have occurred that indicate possible impairment and concluded that no impairment was noted.

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License Fee Payable

The Company made license fee payments to Laboratories of $636,100 for the nine months ended September 30, 2014 to reduce the license fee payable from $574,211 as of December 31, 2013 to $0, and have recorded a receivable of $61,889 as of September 30, 2014 included in accounts receivable.

7.CAPITAL STOCK

Common Shares

During the nine months ended September 30, 2013, the following commons shares were issued by the Company for cash:

·

On April 29, 2013, 1,184,000 common shares issued for proceeds of $592,000.

·

On May 31, 2013, 860,000 common shares for proceeds of $380,000.

·

On June 4, 2013, 20,000 common shares for proceeds of $10,000.  

·

On July 8, 2013, 680,000 common shares for proceeds of $287,105.

·

On July 26, 2013, 100,000 common shares for proceeds of $50,000.

·

On August 13, 2013, 100,000 common shares for proceeds of $50,000.

On March 1, 2013, the Company issued 40,000 common shares for services valued at $20,000 based on the grant date fair value.

On July 9, 2014, the Company issued 750,000 common shares for services valued at $375,000, based on the grant date fair value, and recorded stock-based compensation.

Warrants

The following table provides information on the Company’s warrants as of September 30, 2014.  Each warrant provides the warrant holder the option to purchase one share.

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During the nine months ended September 30, 2013, the following commons shares were issued by the Company from the exercise of warrants:

·

On February 25, 2013, 200,000 common shares for cash of $50,000.

·

On February 28, 2013, 200,000 common shares for cash of $50,000.

·

On March 22, 2013, 200,000 common shares for cash of $50,000.

·

On March 27, 2013, 600,000 common shares for cash of $152,895.

·

On May 22, 2013, 200,000 common shares for cash of $50,000.

Options

On April 10, 2014, the Company granted 1,300,000 options, with a fair market value of $802,800, based on the grant date fair value, to officers, directors and consultants of the Company as incentive compensation. The options vested and became exercisable on April 10, 2014 at an exercise price of $0.55 per share and expire on April 10, 2016.

The fair value of each option granted was estimated on the date of the grant using the Black-Scholes fair value option pricing model with the following assumptions: fair value of options of $0.62, risk-free rate of 0.37%, expected life of the options of two years, annualized volatility of 242%, and no expected dividends. Volatility was determined based on daily observations of the historical stock price over a period consistent with the expected life of the options at the date of grant.

Stock-based compensation of $0 and $802,800, respectively, was expensed during the three and nine months ended September 30, 2014 relating to current period grants ($0 during the three and nine months ended September 30, 2013).

As of September 30, 2014, there was no unrecognized compensation related to non-vested options.

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.

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The Company has income tax losses of approximately $5 million 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 September 30, 2014, 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.

9.RELATED PARTY TRANSACATIONS

During the nine months ended September 30, 2014, the Company paid back amounts due to related parties, which had been advanced in the past 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 from Dr. Moshiri, CEO, and Dr. Ghanbari relate to advances for business related travel and are short-term in nature. Amounts due from Dr. Stead relate to advances for product-related research costs. Amounts due to (from) related parties as of September 30, 2014 and December 31, 2013 are as follows:

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10.LEASE COMMITMENTS

In 2011, the Company entered into a lease for premises in Toronto, Ontario.  The lease term is 60 months. Rent expense under all operating leases was approximately $54,407 and $26,062 for the nine months ended September 30, 2014 and 2013 respectively.

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

11.LEGAL CONTINGENCIES

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 “Moneylogix Plaintiffs”) filed a lawsuit in the Superior Court of Justice in Ontario, Canada against the Company and other parties. The Moneylogix Plaintiffs generally allege that the Company breached its obligations pursuant to a Consulting Agreement and various verbal agreements regarding the Share Exchange Agreement.  The Company, on August 20, 2013, filed a Statement of Claim with the Ontario Superior Court of Justice against the Moneylogix Plaintiffs.

For procedural reasons, the Company’s Statement of Claim was discontinued and replaced by a Statement of Defence and Counterclaim, which the Court has also deemed filed on August 20, 2013. There have been no material developments in this litigation since the filing of the Statement of Defence and Counterclaim.  The Company believes the Moneylogix Plaintiffs’ claims against it are entirely without merit and intends to continue to vigorously defend itself against and pursue, as applicable, its legal recourses against the Moneylogix Plaintiffs in court.

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

On September 9, 2010, Baywood Homes Partnership, 2131059 Ontario Limited, 2206659 Ontario Limited, 2147789 Ontario Limited, 1367169 Ontario Limited and Ralph Canonaco (collectively, the " Baywood Plaintiffs") filed a lawsuit in the Superior Court of Justice in Ontario, Canada against Alex Haditaghi, Majid Haditaghi, Moneylogix Group, Inc. (a Canadian company), Mortgagebrokers.com, Financial Group of Companies Inc., Gary Cilevitz, Michael Knarr, and Farideh Ronhbakhsh (the “Baywood Non-Company Defendants”) and the Company.  As previously disclosed, the Company did not participate in the initial defence put forth by the Baywood Non-Company Defendants.  On April 18, 2013, Justice Edward Belobaba granted, in part, the Baywood Non-Company Defendants’ summary judgment motion and dismissed the Baywood Plaintiffs’ action in its entirety.  Justice Belobaba denied the Baywood Non-Company Defendants’ summary judgment motion with regard to granting their counter-claim against the Baywood Plaintiffs.   On June 9, 2014, Justice Belobaba’s decision was reversed on appeal.  The litigation, in its entirety will now proceed against all defendants.  The Company believes that the Baywood Plaintiff’s claims against it are entirely without merit and intends to vigorously defend itself against and pursue, as applicable, its legal recourses against the Baywood Plaintiffs in court.

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

On September 24, 2013, the Company, Panacea Pharmaceuticals, Inc., a corporation organized under the laws of the State of Maryland and a principal shareholder of the Company, Mahmood Moshiri, the Company's Chief Executive Officer, President, Chief Medical Officer, Interim Chief Financial Officer and Director, and Binnay Sethi, the Company's Vice President and also a Director (collectively, the “Panacea Global Plaintiffs”) filed a lawsuit in the Superior Court of Justice in Ontario, Canada against Alex Haditaghi, Gary Cilevitz, Lateral Management Corp, I Stock Daily Inc., Daniel Putnam, Marcelle Lean, Mike Knarr, Mark Lindsay, Dong-Soo Lee, Robert Hyde, David Nelson, Vince Calicha, Stephen Conville, and Joseph Ferraro (collectively, the “Panacea Global Defendants”).

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The Panacea Global Plaintiffs allege that the Panacea Global Defendants, prior to the entering into of the Share Exchange Agreement, conspired to cause the entity then known as Moneylogix Group, Inc., a Nevada Corporation (“Moneylogix USA” and the entity that is now the Company), to issue a substantial number of shares to Ferraro and Lateral Management Corp. for no or otherwise inadequate consideration.  In addition, the Panacea Global Plaintiffs allege that after the entering into of the Share Exchange Agreement, Cilevitz wrote a letter to Moneylogix USA’s transfer agent in which he engaged in fraudulent misrepresentation in order to cause Moneylogix USA to improperly issue 1,000,000 shares to Putnam, Lateral Management Corp., Lean, Knarr, Lindsay, Lee, Hyde, Nelson, I Stock, Calicha, and Conville for no or otherwise insufficient consideration.

The Panacea Global Plaintiffs seek a number of different forms of relief, including general damages in the amount of approximately $10 million, exemplary or punitive damages in the amount of approximately $1 million, and the cancellation of certain shares.  The Panacea Global Defendants have not yet delivered a Statement of Defencfe. The Company intends to vigorously pursue its legal recourses against the Panacea Global Defendants in court.

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Item 2.

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.  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.

Overview

Panacea Global, Inc. is a corporation that was incorporated under the laws of Nevada in 1995.  On June 30, 2010 we 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. In consideration for the Licensing 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 (the “License Fee”).  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 Licensing 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.  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.  We anticipate that our licensing agreements, with amenable profits margins, will underpin our revenue for the 2014 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 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.

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The License Fee was fully repaid during the three months ended September 30, 2014.

As of September 30, 2014, we are in the development stage and have limited working capital, have not earned any revenues from operations and have accumulated a deficit.

Exclusive Sublicense Agreement with Panacea Laboratories (Canada)

On November 18, 2011, we entered into an exclusive sublicense agreement by and between Panacea Global, Inc. 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 owned 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.  In consideration for the rights received under the sublicense agreement, Panacea 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.

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

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 expired on December 31, 2011 (the “Initial Term”). Following the expiration of the Initial Term, the Agreement renews 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 was 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 was 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 was 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 do not intend to terminate the Agreement at this time, and we are providing Palmverse the opportunity to cure their default and begin to order the Cancer Testing Products.

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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.

Valuation Analysis of Global Diagnostic License

As of September 30, 2014, there was no updated valuation analysis regarding our Global Diagnostic License (the “License”) to replace the report dated December 31, 2011 discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2012. 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 valuation analysis, the fair market value of the License was determined to be $55.8 million as of the Valuation Date.

Results of Operations

As of September 30, 2014, the Company had not begun its business operations in connection with the Licensing Agreement.  Accordingly, we have not had any revenues during the nine month period ended September 30, 2014 or during the period from February 5, 2010 (inception) to September 30, 2014.

Total operating expenses for the nine months ended September 30, 2014 were $2,608,972 and for the three months ended September 30, 2014 were $681,650, as compared to total expenses of $851,185 for the nine months ended September 30, 2013 and $341,298 for the three months ended September 30, 2013.  The increase in expenses for the nine months ended September 30, 2014 was primarily attributable to stock-based compensation, salaries and benefits, and office and general expenses.  

The Company recorded a net loss of $2,610,676 for the nine months ended September 30, 2014 and $681,674 for the three months ended September 30, 2014.  We recorded a net loss of $845,652 for the nine months ended September 30, 2013 and $341,411 for the three months ended September 30, 2013.

Liquidity and Capital Resources

At September 30, 2014 the Company had cash in hand of $52,208. Comparatively, at December 31, 2013 we had cash in hand of $2,309,563.

The Company had a working capital deficit at September 30, 2014 and December 31, 2013 of $1,835,489 and $325,891, respectively. The Company is currently undergoing efforts to raise capital to cover an estimated cash shortfall of approximately $750,000 over the next 12 months. The proceeds from any potential capital raise will be used to fund the current working capital deficit and operations during the first part of fiscal 2015.

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Net cash used in operating activities during the nine months ended September 30, 2014 was $2,139,141 and was $1,404,349 during the nine months ended September 30, 2013. Net cash used by investing activities was $13,011 for the nine months ended September 30, 2014 and was $14,620 during the nine months ended September 30, 2013 due to the Company’s purchase of property and equipment. Net cash used by financing activities during the nine months ended September 30, 2014 was $26,651 due to financing to related parties and net cash provided by financing activities was $1,507,240 during the nine months ended September 30, 2013 due to financing from related parties and the issuance of common stock.

As there were no revenues from operating activities as of September 30, 2014, 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.

Critical Accounting Policies

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.

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 September 30, 2014 and noted no impairment.

Foreign Currency Translation

The functional currency of the Company is Canadian dollars. The functional currency of the Company’s subsidiaries is United States dollars. The interim financial statements of the Company have been translated into United States dollars by translating balance sheet accounts at 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 sheets in Accumulated Other Comprehensive Income (Loss). The balance of the foreign currency translation gain (loss), included in Accumulated Other Comprehensive Loss, was $24,991 for the three months ended September 30, 2014 and ($78,552) for the nine months ended September 30, 2014.

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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.

Stock-based 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 stock-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 (net of estimated forfeitures) over the employee requisite service period. The Company estimates the fair value of stock options using the 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 consolidated statements of operations.

Recent Accounting Pronouncements

The Company has assessed the applicability and impact of all recently issued accounting pronouncements and they have been determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position, results of operations, or cash flows.

Off-Balance Sheet Arrangements

None.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

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

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Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2014. This evaluation was accomplished under the supervision and with the participation of our chief executive officer and chief financial officer who concluded that our disclosure controls and procedures are not effective due to material weakness to ensure that all material information required to be filed in the Form 10-Q has been made known to them.

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 September 30, 2014:

·

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 September 30, 2014, 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-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.

Legal Proceedings.

There have been no material developments in the three litigations described in our Quarterly Report on Form 10-Q for the period ended June 30, 2014 filed on August 13, 2014.

Item 1A.

Risk Factors.

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

Item 2.

Unregistered Sales Of Equity Securities And Use Of Proceeds

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Mine Safety Disclosure.

Not applicable.

Item 5.

Other Information.

None.

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Item 6.

Exhibits.

* Filed herewith.

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

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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.

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