UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedMarch 31, 20192020
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:333-200529
ONE WORLD PHARMA, INC.
(Exact name of registrant as specified in its charter)
Nevada | 61-1744826 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3471 W. Oquendo Road, Suite 301, Las Vegas, NV | 89118 | |
(Address of principal executive offices) | (zip code) |
(800) 605-3210
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | [ ] | Accelerated filer | [ ] |
Non-accelerated filer | [ | Smaller reporting company | [X] |
Emerging growth company | [X] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
The number of shares of registrant’s common stock outstanding as of May 28, 2019June 25, 2020 was 39,922,899.47,660,305.
EXPLANATORY NOTE
Reliance on SEC Relief from Filing Requirements
The Company is filing this Current Report on Form 10-Q in reliance upon the Order of the Commission dated March 25, 2020 (Release No. 34-88465) (the “Order”) permitting the delay of certain filings required under the Securities and Exchange Act of 1934, as amended. The Company filed its Current Report on Form 8-K on May 14, 2020, indicating its intent to rely upon the Order and that it required additional time to review and prepare certain information in its financial statements following delays resulting from the COVID-19 pandemic related challenges.
TABLE OF CONTENTS
2 |
PART I – FINANCIAL INFORMATION
(Formerly Punto Group, Corp.)
CONDENSED CONSOLIDATEDCONDENSEDCONSOLIDATED BALANCE SHEETS
March 31, | December 31, | |||||||||||||||
March 31, 2019 | December 31, 2018 | 2020 | 2019 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 1,462,345 | $ | 125,846 | $ | 20,782 | $ | 282,380 | ||||||||
Inventory | 118,899 | 24,682 | ||||||||||||||
Other current assets | 56,547 | 35,344 | 148,751 | 267,106 | ||||||||||||
Inventory | 8,935 | - | ||||||||||||||
Total current assets | 1,527,827 | 161,190 | 288,432 | 574,168 | ||||||||||||
Right-of-use asset, net | 268,814 | - | ||||||||||||||
Right-of-use assets | 443,815 | 502,706 | ||||||||||||||
Security deposits | 143,494 | - | 70,176 | 72,527 | ||||||||||||
Fixed assets, net | 427,329 | 356,439 | 694,164 | 697,863 | ||||||||||||
Total Assets | $ | 2,367,464 | $ | 517,629 | $ | 1,496,587 | $ | 1,847,264 | ||||||||
Liabilities and Stockholders’ Equity (Deficit) | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 145,839 | $ | 121,194 | $ | 587,036 | $ | 330,521 | ||||||||
Accrued expenses | 135,288 | 34,425 | 119,627 | 109,665 | ||||||||||||
Current portion of lease liability | 37,517 | - | ||||||||||||||
Convertible note payable | 300,000 | 300,000 | ||||||||||||||
Advances from shareholders | 464,141 | 514,141 | ||||||||||||||
Current portion of lease liabilities | 54,275 | 55,101 | ||||||||||||||
Convertible notes payable | 507,332 | 507,332 | ||||||||||||||
Notes payable | 200,000 | 200,000 | 216,000 | 130,000 | ||||||||||||
Total current liabilities | 1,282,785 | 1,169,760 | 1,484,270 | 1,132,619 | ||||||||||||
Long-term lease liability | 232,380 | - | 396,920 | 453,251 | ||||||||||||
Total Liabilities | 1,515,165 | 1,169,760 | 1,881,190 | 1,585,870 | ||||||||||||
Stockholders’ Equity (Deficit): | ||||||||||||||||
Common stock, $0.001 par value, 75,000,000 shares authorized; 39,922,899 and 34,291,905 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 39,923 | 34,292 | ||||||||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | - | - | ||||||||||||||
Common stock, $0.001 par value, 300,000,000 shares authorized; 45,710,305 and 44,804,305 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 45,710 | 44,804 | ||||||||||||||
Additional paid-in capital | 4,108,251 | 1,278,352 | 8,962,376 | 8,150,004 | ||||||||||||
Subscriptions receivable, consisting of 6,012,500 shares at December 31, 2018 | - | (602 | ) | |||||||||||||
Subscriptions payable, consisting of 500,000 shares at December 31, 2019 | - | 250,000 | ||||||||||||||
Accumulated other comprehensive loss | (12,377 | ) | (4,090 | ) | (37,607 | ) | (16,248 | ) | ||||||||
Accumulated (deficit) | (3,283,498 | ) | (1,959,982 | ) | (9,355,082 | ) | (8,167,166 | ) | ||||||||
852,299 | (652,030 | ) | ||||||||||||||
Noncontrolling Interest | - | (101 | ) | |||||||||||||
Total Stockholders’ Equity (Deficit) | 852,299 | (652,131 | ) | (384,603 | ) | 261,394 | ||||||||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 2,367,464 | $ | 517,629 | $ | 1,496,587 | $ | 1,847,264 |
See accompanying notes to financial statements.
3 |
CONDENSED(Formerly Punto Group, Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMELOSS
(Unaudited)
For the Three | From Inception | For the Three Months Ended | ||||||||||||||
Months Ended | (March 27, 2018) to | March 31, | ||||||||||||||
March 31, 2019 | March 31, 2018 | 2020 | 2019 | |||||||||||||
Revenue: | $ | - | $ | - | $ | - | $ | - | ||||||||
Expenses: | ||||||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 479,620 | - | 291,053 | 479,620 | ||||||||||||
Professional fees | 702,880 | - | 886,354 | 702,880 | ||||||||||||
Total operating expenses | 1,182,500 | - | 1,177,407 | 1,182,500 | ||||||||||||
Operating loss | (1,182,500 | ) | - | (1,177,407 | ) | (1,182,500 | ) | |||||||||
Other income (expense): | ||||||||||||||||
Interest income | 101 | - | - | 101 | ||||||||||||
Interest expense | (141,117 | ) | - | (10,509 | ) | (141,117 | ) | |||||||||
Total other expense | (141,016 | ) | - | (10,509 | ) | (141,016 | ) | |||||||||
Net loss | $ | (1,323,516 | ) | $ | - | $ | (1,187,916 | ) | $ | (1,323,516 | ) | |||||
Other comprehensive loss: | ||||||||||||||||
Loss on foreign currency translation | $ | (8,287 | ) | $ | - | $ | (21,359 | ) | $ | (8,287 | ) | |||||
Net other comprehensive loss | $ | (1,331,803 | ) | $ | - | $ | (1,209,275 | ) | $ | (1,331,803 | ) | |||||
Weighted average number of common shares outstanding - basic and fully diluted | 14,618,194 | 935,656 | ||||||||||||||
Weighted average number of common sharesoutstanding - basic and fully diluted | 45,644,327 | 14,618,194 | ||||||||||||||
Net loss per share - basic and fully diluted | $ | (0.09 | ) | $ | (0.00 | ) | $ | (0.03 | ) | $ | (0.09 | ) |
See accompanying notes to financial statements.
4 |
(Formerly Punto Group, Corp.)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
Accumulated | Total | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | Stockholders’ | Additional | Other | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-In | Subscriptions | Comprehensive | Accumulated | Noncontrolling | Equity | Preferred Stock | Common Stock | Paid-In | Subscriptions | Subscriptions | Comprehensive | Accumulated | Noncontrolling | Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Income (Loss) | Deficit | Interest | (Deficit) | Shares | Amount | Shares | Amount | Capital | Receivable | Payable | Income (Loss) | Deficit | Interest | Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 27, 2018 | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidation of One World Pharma, Inc. | - | - | (349,420 | ) | - | - | - | - | (349,420 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributed capital on related party acquisition of One World Pharma S.A.S. | - | - | 161,889 | - | - | - | - | 161,889 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock sold for cash | 23,411,905 | 23,412 | 978,703 | (602 | ) | - | - | - | 1,001,513 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services | 680,000 | 680 | 284,920 | - | - | - | - | 285,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for purchase of One World Pharma S.A.S. | 10,200,000 | 10,200 | (9,180 | ) | - | - | - | - | 1,020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributed capital | - | - | 136,440 | - | - | - | - | 136,440 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature on convertible note | - | - | 75,000 | - | - | - | - | 75,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss on foreign currency translation | - | - | - | - | (4,090 | ) | - | - | (4,090 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,959,982 | ) | (101 | ) | (1,960,083 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2018 | 34,291,905 | $ | 34,292 | $ | 1,278,352 | $ | (602 | ) | $ | (4,090 | ) | $ | (1,959,982 | ) | $ | (101 | ) | $ | (652,131 | ) | - | $ | - | 34,291,905 | $ | 34,292 | $ | 1,278,352 | $ | (602 | ) | $ | - | $ | (4,090 | ) | $ | (1,959,982 | ) | $ | (101 | ) | $ | (652,131 | ) | |||||||||||||||||||||||||||||||
Cash received on subscriptions receivable of OWP Ventures, Inc. | - | - | - | 602 | - | - | - | 602 | - | - | - | - | - | 602 | - | - | - | - | 602 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock of OWP Ventures, Inc. sold for cash | 3,900,000 | 3,900 | 1,946,100 | - | - | - | - | 1,950,000 | - | - | 3,900,000 | 3,900 | 1,946,100 | - | - | - | - | - | 1,950,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock of OWP Ventures, Inc. on debt conversion | 1,253,493 | 1,253 | 500,144 | - | - | - | - | 501,397 | - | - | 1,253,493 | 1,253 | 500,144 | - | - | - | - | - | 501,397 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for services, OWP Ventures, Inc. | 30,000 | 30 | 14,970 | - | - | - | - | 15,000 | - | - | 30,000 | 30 | 14,970 | - | - | - | - | - | 15,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of common stock options issued for services, OWP Ventures, Inc. | - | - | 88,297 | - | - | - | - | 88,297 | - | - | - | - | 88,297 | - | - | - | - | - | 88,297 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exchange of OWP Ventures, Inc. shares for One World Pharma, Inc. shares (1:1) | 1,322,501 | 1,323 | (10,730 | ) | - | - | - | 101 | (9,306 | ) | - | - | 1,322,501 | 1,323 | (10,730 | ) | - | - | - | - | 101 | (9,306 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cancelled pursuant to merger with OWP Ventures, Inc. | (875,000 | ) | (875 | ) | 875 | - | - | - | - | - | - | - | (875,000 | ) | (875 | ) | 875 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of common stock options issued for services | - | - | 165,243 | - | - | - | - | 165,243 | - | - | - | - | 165,243 | - | - | - | - | - | 165,243 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion feature on convertible note | - | - | 125,000 | - | - | - | - | 125,000 | - | - | - | - | 125,000 | - | - | - | - | - | 125,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss on foreign currency translation | - | - | - | - | (8,287 | ) | - | - | (8,287 | ) | - | - | - | - | - | - | - | (8,287 | ) | - | - | (8,287 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,323,516 | ) | - | (1,323,516 | ) | - | - | - | - | - | - | - | - | (1,323,516 | ) | - | (1,323,516 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2019 (Unaudited) | 39,922,899 | $ | 39,923 | $ | 4,108,251 | $ | - | $ | (12,377 | ) | $ | (3,283,498 | ) | $ | - | $ | 852,299 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2019 | - | $ | - | 39,922,899 | $ | 39,923 | $ | 4,108,251 | $ | - | $ | - | $ | (12,377 | ) | $ | (3,283,498 | ) | $ | - | $ | 852,299 |
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-In | Subscriptions | Subscriptions | Comprehensive | Accumulated | Noncontrolling | Stockholders’ | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Receivable | Payable | Income (Loss) | Deficit | Interest | Equity (Deficit) | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 | - | $ | - | 44,804,305 | $ | 44,804 | $ | 8,150,004 | $ | - | $ | 250,000 | $ | (16,248 | ) | $ | (8,167,166 | ) | $ | - | $ | 261,394 | ||||||||||||||||||||||
Common stock sold for cash | - | - | 500,000 | 500 | 249,500 | - | (250,000 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||
Common stock issued for services | - | - | 406,000 | 406 | 421,594 | - | - | - | - | - | 422,000 | |||||||||||||||||||||||||||||||||
Amortization of common stock options issued for services | - | - | - | - | 141,278 | - | - | - | - | - | 141,278 | |||||||||||||||||||||||||||||||||
Loss on foreign currency translation | - | - | - | - | - | - | - | (21,359 | ) | - | - | (21,359 | ) | |||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | (1,187,916 | ) | - | (1,187,916 | ) | |||||||||||||||||||||||||||||||
Balance, March 31, 2020 | - | $ | - | 45,710,305 | $ | 45,710 | $ | 8,962,376 | $ | - | $ | - | $ | (37,607 | ) | $ | (9,355,082 | ) | $ | - | $ | (384,603 | ) |
See accompanying notes to financial statements.
5 |
(Formerly Punto Group, Corp.)CONDENSED
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CASH FLOWS
(Unaudited)
For the Three | From Inception | For the Three Months Ended | ||||||||||||||
Months Ended | (March 27, 2018) to | March 31, | ||||||||||||||
March 31, 2019 | March 31, 2018 | 2020 | 2019 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | $ | (1,323,516 | ) | $ | - | $ | (1,187,916 | ) | $ | (1,323,516 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization expense | 2,436 | - | 5,912 | 2,436 | ||||||||||||
Debt discounts | 125,000 | - | ||||||||||||||
Amortization of debt discounts | - | 125,000 | ||||||||||||||
Stock-based compensation | 15,000 | - | 422,000 | 15,000 | ||||||||||||
Amortization of options issued for services | 253,540 | - | 141,278 | 253,540 | ||||||||||||
Decrease (increase) in assets: | ||||||||||||||||
Inventory | (94,217 | ) | (8,935 | ) | ||||||||||||
Other current assets | (30,509 | ) | - | 118,355 | (30,509 | ) | ||||||||||
Inventory | (8,935 | ) | - | |||||||||||||
Right-of-use assets | (268,814 | ) | - | 58,891 | (268,814 | ) | ||||||||||
Security deposits | (143,494 | ) | - | 2,351 | (143,494 | ) | ||||||||||
Increase (decrease) in liabilities: | ||||||||||||||||
Accounts payable | 24,645 | - | 256,515 | 24,645 | ||||||||||||
Accrued expenses | 102,260 | - | 9,962 | 102,260 | ||||||||||||
Lease liability | 269,897 | - | (57,157 | ) | 269,897 | |||||||||||
Net cash used in operating activities | (982,490 | ) | - | (324,026 | ) | (982,490 | ) | |||||||||
Cash flows from investing activities | ||||||||||||||||
Purchase of fixed assets | (73,326 | ) | - | (2,213 | ) | (73,326 | ) | |||||||||
Net cash used in investing activities | (73,326 | ) | - | (2,213 | ) | (73,326 | ) | |||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from convertible note payable | 500,000 | - | - | 500,000 | ||||||||||||
Repayment of advances from shareholders | (50,000 | ) | - | - | (50,000 | ) | ||||||||||
Proceeds from notes payable | 86,000 | - | ||||||||||||||
Proceeds from subscriptions receivable | 602 | - | - | 602 | ||||||||||||
Proceeds from sale of common stock | 1,950,000 | - | - | 1,950,000 | ||||||||||||
Net cash provided by financing activities | 2,400,602 | - | 86,000 | 2,400,602 | ||||||||||||
Effect of exchange rate changes on cash | (8,287 | ) | - | (21,359 | ) | (8,287 | ) | |||||||||
Net increase (decrease) in cash | 1,336,499 | - | (261,598 | ) | 1,336,499 | |||||||||||
Cash - beginning | 125,846 | - | 282,380 | 125,846 | ||||||||||||
Cash - ending | $ | 1,462,345 | $ | - | $ | 20,782 | $ | 1,462,345 | ||||||||
Supplemental disclosures: | ||||||||||||||||
Interest paid | $ | - | $ | - | $ | 394 | $ | - | ||||||||
Income taxes paid | $ | - | $ | - | $ | - | $ | - | ||||||||
Non-cash investing and financing transactions: | ||||||||||||||||
Fair value of net assets acquired in merger | $ | 9,306 | $ | - | $ | - | $ | 9,306 | ||||||||
Value of shares issued for conv of debt | $ | 501,397 | $ | - | ||||||||||||
Value of shares issued for conversion of debt | $ | - | $ | 501,397 | ||||||||||||
Beneficial conversion feature | $ | 125,000 | $ | - | $ | - | $ | 125,000 | ||||||||
Founders shares issued on subscriptions receivable | $ | - | $ | 2,105 |
See accompanying notes to financial statements.
6 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Nature of Business and Significant Accounting Policies
Nature of Business
One World Pharma, Inc. (formerly Punto Group, Corp.(the “Company,” “we,” “our” or “us”) was incorporated in Nevada on September 2, 2014. On February 21, 2019, One World Pharma, Inc. (“One World Pharma,” the “Company,” “we,” “our” or “us”Pharma”) entered into an Agreement and Plan of Merger with OWP Merger Subsidiary, Inc., our wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”), which is the parent company of One World Pharma SAS, a Colombian company (“OWP Colombia”). Pursuant to the Merger Agreement, we acquired OWP Ventures (and indirectly, OWP Colombia) by the merger of OWP Merger Subsidiary with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary (the “Merger”). As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an aggregate of 39,475,398 shares of our common stock; (b) options to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our common stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our common stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our common stock in a future “Qualified Offering”; (d) 875,000 shares of our common stock owned by OWP Ventures prior to the Merger were cancelled; and (e) OWP Ventures’ chief operating officer became our chief operating officer and two of OWP Ventures’ directors became members of our board of directors. The Company’s headquarters are located in Las Vegas, Nevada, and all of its customers are expected to be outside of the United States. On January 10, 2019, the Company changed its name from Punto Group, Corp. to One World Pharma, Inc.
OWP Ventures is a holding company formed in Delaware on March 27, 2018 to enter and support the cannabis industry, and on May 30, 2018, it acquired OWP Colombia. OWP Colombia is a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali). We plan to be the worldwide industry leader in the production and manufacturinga producer of raw cannabis and hemp plant ingredients for both medical and industrial uses.uses across the globe. We have received licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, we are one of the only companies in Colombia to receive seed, cultivation, extraction and export licenses from the Colombian government. Currently, we own approximately 30 acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp,hemp. In addition, we have entered into agreements with 221local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres available for expansion underof land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive contract.basis. We planted our first crop of cannabis in 2018, which we began harvesting in the first quarter of 2019.2019 for the purpose of further research and development activities and quality control testing of the cannabis we have produced. To date, we have not yet generated any revenues from our activities.
The Merger was accounted for as a reverse merger (recapitalization) with OWP Ventures deemed to be the accounting acquirer. Accordingly, the financial statements included in this Quarterly Report on Form 10-Q reflect the historical operations of OWP Ventures and its wholly-owned subsidiary OWP SAS prior to the Merger, and that of the combined company following the Merger. The historical financial information for One World Pharma, Inc. (formerly Punto Group Corp.) prior to the Merger has been omitted.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC). Intercompany accounts and transactions have been eliminated.
The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and Current Report on Form 8-K with respect to the Merger filed with the SEC on February 25, 2019 and amended on April 30, 2019. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K and Current Report on Form 8-K.10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.
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ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the following entities, all of which were under common control and ownership at March 31, 2019:2020:
State of | ||||||||
Name of Entity | Incorporation | Relationship | ||||||
One World Pharma, Inc.(1) | Nevada | Parent | ||||||
OWP Ventures, Inc.(2) | Delaware | Subsidiary | ||||||
One World Pharma S.A.S.(3) | Colombia | Subsidiary | ||||||
Colombian Hope, S.A.S.(4) | Colombia | Subsidiary |
(1)Holding company in the form of a corporation.
(2)Holding company in the form of a corporation and wholly-owned subsidiary of One World Pharma, Inc.
(3)Wholly-owned subsidiary of OWP Ventures, Inc. since May 30, 2018, located in Colombia and legally constituted as a simplified stock company registered in the Chamber of Commerce of Bogotá on July 18, 2017. Its headquarters are located in Bogotá.
(4)Wholly-owned subsidiary of OWP Ventures, Inc., acquired on November 19, 2019, located in Colombia and legally constituted as a simplified stock company. This company has yet to incur any income or expenses.
The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its production efforts are within Popayán, Colombia.
Foreign Currency Translation
The functional currency of the Company is Columbian Peso (COP). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar (USD) throughout this report. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.
Comprehensive Income
The Company has adopted ASCthe Financial Accounting Standards Boards (“FASB”) Accounting Standards Codification (“ASC”) 220, Reporting Comprehensive Income, which establishes standards for reporting and displaying comprehensive income, its components, and accumulated balances in a full-set of general-purpose financial statements. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments.
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.
Segment Reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards BoardFASB establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments.
Cash and Cash Equivalents
8 |
Cash and cash equivalents include cash on hand, cash on deposit with various financial institutions in Columbia, and all highly-liquid investments with original maturities of three months or less at the time of purchase. We have not held any cash equivalents to date.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Cash in Excess of FDIC Insured Limits
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, under current regulations. The Company had $1,206,762did not have cash in excess of FDIC insured limits at March 31, 2019, and has not experienced any losses in such accounts.2020.
Revenue Recognition
The Company has adoptednot yet recognized revenue. The Company will recognize revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizeswill recognize revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. The Company recognizes revenue when products are fully delivered, or services have been provided and collection is reasonably assured. We have not yet generated any revenue.
There was no impact on the Company’s financial statements from ASC 606 for the three months ended March 31, 2020, or the year ended December 31, 2019. Inventory consisted of $118,899 of raw materials at March 31, 2020.
Inventory
Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Our cannabis products consist of cannabis flower grown in-house, along with produced extracts.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 505-50 (ASC 505-50). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.
Basic and Diluted Loss Per Share
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Adoption of New Accounting Standards and Recently IssuedRecent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
In JuneAugust 2018, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”) 2018-07,Compensation-Stock CompensationNo. 2018-13, Fair Value Measurement (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period)820) (“ASU 2018-13”). The new guidance removes, modifies and adds to certain disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The update is effective for all entities for annual reporting periods, andincluding interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
In February 2018, the FASB issued ASU No. 2018-02,Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The Company is currently in the process of evaluating the impact of adoption on its financial statements.
In May 2017, the FASB issued ASU 2017-09,Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In February 2016, the FASB established Topic 842,Leases, by issuing ASU No. 2016-02, which requires lessees to recognize the rights and obligations created by leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-11,Targeted Improvements, ASU No. 2018-10,Codification Improvements to Topic 842, and ASU No. 2018-01,Land Easement Practical Expedient for Transition to Topic 842. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
The new standard became effective January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 using the modified retrospective transition approach as of the effective date of the initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits entities not to reassess under the new lease standard prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements.
The most significant effects of the adoption of the new standard relate to the recognition of new ROU assets and lease labilities on our balance sheet for office operating leases and providing significant new disclosures about our leasing activities.
The new standard also provides practical expedients for an entity’s ongoing accounting. The Company has also elected the short-term leases recognition exemption for all leases that qualify. This means that the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets and lease liabilities, for existing short-term leases of those assets in transition. The Company also currently expects to elect the practical expedient to not separate lease and non-lease components for its leases. The new standard did not have a material impact.
In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective upon inception. We have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance obligations for all material revenue streams. Based on this initial evaluation, adoption does not have a material impacteffect on our financial position, results of operations or cash flows. Related disclosures have been expanded in line
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The update simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the requirementsamount by which the carrying amount exceeds the reporting unit’s fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The update is effective for annual reporting periods, including interim periods, beginning after December 15, 2019, on a prospective basis. The adoption of the standard.new standard did not have an effect on our financial position, results of operations or cash flows.
There are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows.
9 |
ONE WORLD PHARMA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 – Going–Going Concern
As shown in the accompanying condensed consolidated financial statements as of March 31, 2019,2020, the Company hashad cash on hand of $1,462,345,$20,782, negative working capital of $245,042$1,195,838 and an accumulated deficit of $3,283,498,$9,355,082, and the Company’s cash on hand may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing its cannabis cultivation activities and expectsnew customers to begin revenue generating export operations later in 2019.generate revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. The accompanying consolidated financial statements do not include any adjustmentsThere can be no assurance that mightwe will be necessary if the Company is unablesuccessful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent cessation. Additional financing may result in substantial dilution to continue as a going concern.existing stockholders
The condensed consolidated financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
ONE WORLD PHARMA, INC.Note 3 –Mergers and Acquisitions
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3 – Reverse MergerAcquisition
On February 21,December 6, 2019, One World Pharma, Inc. entered into an Agreement and Plan of Merger with OWP Merger Subsidiary, Inc., ourthe Company, through its wholly-owned subsidiary and OWP Ventures, which is the parent company of OWP Colombia. Pursuant to the Merger Agreement, weInc., acquired OWP Ventures (and indirectly, OWP Colombia) by the merger of OWP Merger Subsidiary with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary. As a result of the Merger (a) holders51% of the outstanding shares of capital stock (the “Shares”) of Colombian Hope, S.A.S., then known as Colcannapy S.A.S., a Colombian company (“Colombian Hope”), for a purchase price of US$102,000, pursuant to a Share Purchase Agreement (the “Purchase Agreement”) among OWP Ventures, received an aggregateInc. and Colombian Hope’s shareholders. Colombian Hope is the holder of 39,475,398a Colombian seed license and 23 registered Colombian cultivars.
Concurrently, with the Company’s acquisition of the Shares, Federación Colombiana de Consejos Regionales (“Fedecoré”) was supposed to have purchased the remaining 49% of Colombian Hope’s outstanding shares of our common stock; (b) optionscapital stock from Colombian Hope’s shareholders, so that the Company and Fedecoré would be the only shareholders of Colombian Hope. However, Fedecoré, a non-profit Colombian entity, was unable to purchase 825,000acquire such shares, of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our common stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issuedwhich were then acquired by OWP Ventures, became convertible, at the option of the holder, into shares of our common stock at a conversion price equalInc., resulting in 100% ownership. No assets or liabilities were acquired pursuant to the lesseracquisition, resulting in $102,000 of $0.424 per share or 80% of the price we sell our common stock in a future “Qualified Offering”; (d) 875,000 shares of our common stock owned by OWP Ventures priorgoodwill that was impaired and expensed on December 31, 2019 due to the Merger were cancelled; and (e) OWP Ventures’ chief operating officer became our chief operating officer and twolack of OWP Ventures’ directors became members of our board of directors.
Note 4 – Related Party Transactions
Repayment and Exchanges of Advances from Shareholders
In March of 2019, we repaid a total of $50,000 owing to our CEO for loans previously advanced to us.
On various dates between October 25, 2018 and November 23, 2018, our CEO advanced funds to the Company totaling $307,141 under short-term unsecured demand loans, bearing interest at 6% per annum. On February 13, 2019, these promissory notes were exchanged for an amended and restated promissory note in the principal amount of $307,141 that bears interest at 6% and is payable upon the earlier of (i) a publiccurrent operations. To date, Colombian Hope has not incurred any income or private offering of our equity securities, resulting in gross proceeds of at least $5,000,000, or (ii) February 13, 2022.expenses.
Note 54 – Fair Value of Financial Instruments
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
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ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheet as of March 31, 20192020 and December 31, 2018,2019, respectively:
Fair Value Measurements at March 31, 2019 | Fair Value Measurements at March 31, 2020 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash | $ | 1,462,345 | $ | - | $ | - | $ | 20,782 | $ | - | $ | - | ||||||||||||
Right-of-use asset | - | 268,814 | - | - | - | 443,815 | ||||||||||||||||||
Total assets | 1,462,345 | 268,814 | - | 20,782 | - | 443,815 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Lease liabilities | - | - | 451,195 | |||||||||||||||||||||
Convertible note payable | - | - | 300,000 | - | - | 507,332 | ||||||||||||||||||
Advances from shareholders | - | 464,141 | - | |||||||||||||||||||||
Notes payable | - | - | 200,000 | - | 216,000 | - | ||||||||||||||||||
Lease liability | - | 269,897 | - | |||||||||||||||||||||
Total liabilities | - | (734,038 | ) | (500,000 | ) | - | (216,000 | ) | (958,527 | ) | ||||||||||||||
$ | 1,462,345 | $ | (465,224 | ) | $ | (500,000 | ) | $ | 20,782 | $ | (216,000 | ) | $ | (514,712 | ) |
Fair Value Measurements at December 31, 2018 | Fair Value Measurements at December 31, 2019 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Cash | $ | 125,846 | $ | - | $ | - | $ | 282,380 | $ | - | $ | - | ||||||||||||
Right-of-use asset | - | - | 502,706 | |||||||||||||||||||||
Total assets | 125,846 | - | - | 282,380 | - | 502,706 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Lease liabilities | - | - | 508,352 | |||||||||||||||||||||
Convertible note payable | - | - | 300,000 | - | - | 507,332 | ||||||||||||||||||
Advances from shareholders | - | 514,141 | - | |||||||||||||||||||||
Notes payable | - | - | 200,000 | - | 130,000 | - | ||||||||||||||||||
Total liabilities | - | (514,141 | ) | (500,000 | ) | - | 130,000 | 1,015,684 | ||||||||||||||||
$ | 125,846 | $ | (514,141 | ) | $ | (500,000 | ) | $ | 282,380 | $ | (130,000 | ) | $ | (512,978 | ) |
There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the three months ended March 31, 20192020 or the year ended December 31, 2018.2019.
Note 5 – Inventory
Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Our cannabis products consist of cannabis flower grown in-house, along with produced extracts. Inventory consisted of $118,899 and $24,682 of raw materials at March 31, 2020 and December 31, 2019, respectively.
Note 6 – Other Current Assets
Other current assets included the following as of March 31, 20192020 and December 31, 2018,2019, respectively:
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Security deposit | $ | 4,881 | $ | 4,494 | ||||||||||||
VAT tax receivable | $ | 58,027 | $ | 54,814 | ||||||||||||
Prepaid expenses | 46,700 | 30,850 | 51,423 | 132,338 | ||||||||||||
Other receivables | 4,966 | - | 39,301 | 79,954 | ||||||||||||
Total | $ | 56,547 | $ | 35,344 | $ | 148,751 | $ | 267,106 |
11 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 7 – Security Deposits
Security deposits included the following as of March 31, 2020 and December 31, 2019, respectively:
March 31, | December 31, | |||||||
2020 | 2019 | |||||||
Refundable deposit on equipment purchase | $ | 50,000 | $ | 50,000 | ||||
Security deposits on leases held in Colombia | 15,022 | 18,033 | ||||||
Security deposit on office lease | 4,494 | 4,494 | ||||||
Security deposit on utilities | 660 | - | ||||||
$ | 70,176 | $ | 72,527 |
Note 8 – Fixed Assets
Fixed assets consist of the following at March 31, 20192020 and December 31, 2018,2019, respectively:
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Land | $ | 138,248 | $ | 138,248 | ||||||||||||
Office equipment | $ | 24,923 | $ | 18,314 | 44,027 | 44,027 | ||||||||||
Furniture and fixtures | 27,914 | 23,595 | 27,914 | 27,914 | ||||||||||||
Software | 17,083 | - | ||||||||||||||
Equipment and machinery | 176,285 | 174,072 | ||||||||||||||
Construction in progress | 361,806 | 316,491 | 335,231 | 335,231 | ||||||||||||
431,726 | 358,400 | 721,705 | 719,492 | |||||||||||||
Less: accumulated depreciation | (4,397 | ) | (1,961 | ) | (27,541 | ) | (21,629 | ) | ||||||||
Total | $ | 427,329 | $ | 356,439 | $ | 694,164 | $ | 697,863 |
Construction in progress consists of equipment and capital improvements on the Popayán farm that have not yet been placed in service.
Depreciation and amortization expense totaled $5,912 and $2,436 for the three months ended March 31, 2019.2020 and 2019, respectively.
Note 89 – Accrued Expenses
Accrued expenses consisted of the following at March 31, 20192020 and December 31, 2018,2019, respectively:
March 31, | December 31, | March 31, | December 31, | |||||||||||||
2019 | 2018 | 2020 | 2019 | |||||||||||||
Accrued payroll | $ | 64,196 | $ | 6,327 | $ | 34,520 | $ | 67,479 | ||||||||
Accrued withholding taxes | 31,489 | 6,387 | ||||||||||||||
Accrued withholding taxes and employee benefits | 47,611 | 14,386 | ||||||||||||||
Accrued ICA fees and contributions | 11,959 | 8,514 | 1,494 | 1,912 | ||||||||||||
Accrued interest | 27,644 | 12,924 | 36,002 | 25,888 | ||||||||||||
Deferred rent obligations | - | 273 | ||||||||||||||
$ | 135,288 | $ | 34,425 | $ | 119,627 | $ | 109,665 |
12 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 10 – Leases
The Company’s corporate offices and operational facility in Colombia under non-cancelable real property lease agreements that expire on October 31, 2021 and September 30, 2029, respectively. The Company doesn’t have any other office or equipment leases subject to the recently adopted ASU 2016-02. In the locations in which it is economically feasible to continue to operate, management expects that lease options will be exercised. The Company’s corporate office is under a real property lease that contains a one-time renewal option for an additional 36 months that we determined would be reasonably certain to be extended, while the Company’s operational facility in Colombia contains a 60 month extension option that we did not determine to be reasonably certain to be extended. The office lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s leases do not provide an implicit discount rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
The components of lease expense were as follows:
For the Three | ||||
Months Ended | ||||
March 31, 2020 | ||||
Operating lease cost: | ||||
Amortization of assets | $ | 58,891 | ||
Interest on lease liabilities | 7,757 | |||
Total lease cost | $ | 66,648 |
Supplemental balance sheet information related to leases was as follows:
March 31, 2020 | ||||
Operating leases: | ||||
Operating lease assets | $ | 443,815 | ||
Current portion of operating lease liabilities | $ | 54,275 | ||
Noncurrent operating lease liabilities | 396,920 | |||
Total operating lease liabilities | $ | 451,195 | ||
Weighted average remaining lease term: | ||||
Operating leases | 9.5 years | |||
Weighted average discount rate: | ||||
Operating leases | 6.75 | % |
Supplemental cash flow and other information related to leases was as follows:
For the Three | ||||
Months Ended | ||||
March 31, | ||||
2020 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows used for operating leases | $ | 57,157 | ||
Leased assets obtained in exchange for lease liabilities: | ||||
Total operating lease liabilities | $ | 451,195 |
13 |
ONE WORLD PHARMA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Future minimum annual lease commitments under non-cancelable operating leases are as follows at March 31, 2020:
Operating | ||||
Leases | ||||
2020 | $ | 115,934 | ||
2021 | 80,877 | |||
2022 | 34,528 | |||
2023 | 35,909 | |||
2024 | 37,345 | |||
Thereafter | 198,669 | |||
Total minimum lease payments | 503,262 | |||
Less interest | 52,067 | |||
Present value of lease liabilities | 451,195 | |||
Less current portion | 54,275 | |||
Long-term lease liabilities | $ | 396,920 |
Note 911 – Convertible Note Payable
Convertible note payable consists of the following at March 31, 20192020 and December 31, 2018,2019, respectively:
March 31, | December 31, | March 31, 2020 | December 31, 2019 | |||||||||||||
2019 | 2018 | |||||||||||||||
On November 30, 2018, the Company received proceeds of $300,000 on a secured convertible note that carries a 6% interest rate from CSW Ventures, LP (“CSW”). The proceeds were used to fund the Company’s purchase of 875,000 shares of common stock, on a 1:4 split adjusted basis, of One World Pharma, Inc. The Note is due on demand. In the event that the Company consummated the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest may, at the option of the holder, be converted into such equity securities at a conversion price equal to eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing. A Qualified Financing subsequently occurred on February 4, 2019, at which time the convertible note became convertible at a fixed conversion price of $0.40 per share. The Company’s obligations under this Note are secured by a lien on the assets of the Company. | $ | 300,000 | $ | 300,000 | ||||||||||||
On November 30, 2018, the Company received proceeds of $300,000 on a secured convertible note that carries a 6% interest rate from CSW Ventures, LP (“CSW”). The proceeds were used to fund the Company’s purchase of 875,000 shares of common stock, on a 1:4 split adjusted basis, of One World Pharma, Inc. The Note is due on demand. In the event that the Company consummates the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest may, at the option of the holder, be converted into such equity securities at a conversion price equal to eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing. The Company’s obligations under this Note are secured by a lien on the assets of the Company. | $ | 300,000 | $ | 300,000 | ||||||||||||
On January 14, 2019, the Company received proceeds of $500,000 on an unsecured convertible promissory note that carries a 6% interest rate from The Sanguine Group LLC. The Note was due January 14, 2022. In the event that the Company consummated the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest would automatically be converted into such equity securities at a conversion price equal to the lesser of (i) eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing, or (ii) $0.424 per share. The Company’s obligations under this Note were secured by a lien on the assets of the Company. A Qualified Financing subsequently occurred on February 4, 2019, at which time the principal and interest were converted into 1,253,493 shares of the Company’s common stock. | - | - | ||||||||||||||
On July 22, 2019, a total of $207,332, consisting of $200,000 of principal and $7,332 of unpaid interest, on two outstanding demand notes owed to CSW that originated on November 26, 2018 and December 26, 2018, were exchanged for a convertible promissory note in the principal amount of $207,332, due on demand (the “Second Convertible CSW Note”). The Second Convertible CSW Note bears interest at 6% per annum and is convertible at the option of the holder into shares of common stock at a price of $0.50 per share. | 207,332 | 207,332 | ||||||||||||||
Less: unamortized debt discounts | - | - | - | - | ||||||||||||
Convertible note payable | $ | 300,000 | $ | 300,000 | $ | 507,332 | $ | 507,332 |
In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.
The aforementioned accounting treatment resulted in a total debt discountdiscounts equal to $125,000 and $75,000$332,332 for the three months ended March 31, 2019 and the year ended December 31, 2018, respectively.2019. The Company recorded finance expense in the amount of $125,000 for the three months ended March 31, 2019.
The convertible note limits the maximum number of shares that can be owned by the note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.
14 |
ONE WORLD PHARMA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $7,589 and $5,836 for the three months ended March 31, 2020 and 2019, respectively, and $125,000 of interest expense related to the debt discount for the three months ended March 31, 2019.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 10 – Advances from Shareholders
Advances from shareholders consist of the following at March 31, 2019 and December 31, 2018, respectively:
March 31, 2019 | December 31, 2018 | |||||||
On various dates between May 3, 2018 and November 23, 2018, our CEO advanced short-term unsecured demand loans, bearing interest at 6% per annum, of an aggregate $514,141 to the Company, as follows: | ||||||||
$ 10,000 – May 3, 2018 $100,000 – May 3, 2018 $ 82,000 – May 14, 2018 $ 15,000 – May 29, 2018 $ 57,141 – October 25, 2018 $100,000 – October 30, 2018 $ 50,000 – November 9, 2018 $ 50,000 – November 21, 2018 $ 50,000 – November 23, 2018 | ||||||||
A total of $50,000 was repaid in March of 2019, and $307,141 was exchanged for the note described below. | $ | 157,000 | $ | 514,141 | ||||
On February 13, 2019, a total of $307,141 of the advances from our CEO received from October 25, 2018 to November 23, 2018, as shown above, were exchanged for an amended and restated promissory note in the principal amount of $307,141 (the “Amended Note”). The Amended Note bears interest at 6% and is payable upon the earlier of (i) a public or private offering of our equity securities, resulting in gross proceeds of at least $5,000,000, or (ii) February 13, 2022. | 307,141 | - | ||||||
Total advances from shareholders | $ | 464,141 | $ | 514,141 |
The Company recorded interest expense in the amount of $7,322 for the three months ended March 31, 2019.
Note 1112 – Notes Payable
Notes payable consists of the following at March 31, 20192020 and December 31, 2018,2019, respectively:
March 31, 2019 | December 31, 2018 | |||||||
On December 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | $ | 100,000 | $ | 100,000 | ||||
On November 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | 100,000 | 100,000 | ||||||
Total notes payable | $ | 200,000 | $ | 200,000 |
March 31, 2020 | December 31, 2019 | |||||||
On various dates between January 29, 2020 and March 31, 2020, the Company received advances from CSW Ventures, LP aggregating of $86,000, pursuant to unsecured promissory notes due on demand that carry a 6% interest rate, as follows: $25,000 – January 29, 2020 $25,000 – February 13, 2020 $15,000 – February 26, 2020 $15,000 – March 11, 2020 $ 6,000 – March 31, 2020 | $ | 86,000 | $ | - | ||||
On November 14, 2019, the Company received an advance of $50,000 from MCK Investments LLC pursuant to an unsecured promissory note due on demand that carries a 6% interest rate. | 50,000 | 50,000 | ||||||
On November 14, 2019, the Company received an advance of $80,000 from MCK Investments LLC on an unsecured promissory note due on demand that carries a 6% interest rate. | 80,000 | 80,000 | ||||||
Total notes payable | $ | 216,000 | $ | 130,000 |
The Company recorded interest expense in the amount of $2,526 and $2,959 for the three months ended March 31, 2019.2020 and 2019, respectively.
The Company recognized interest expense for the three months ended March 31, 2020 and 2019, as follows:
March 31, 2020 | March 31, 2019 | |||||||
Interest on convertible notes | $ | 7,589 | $ | 5,836 | ||||
Interest on advances from shareholders | - | 7,322 | ||||||
Interest on notes payable | 2,526 | 2,959 | ||||||
Amortization of beneficial conversion features | - | 125,000 | ||||||
Interest on accounts payable | 394 | - | ||||||
Total interest expense | $ | 10,509 | $ | 141,117 |
15 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 12 – Leases
The Company’s corporate offices are within leased facilities. The Company doesn’t have any other office or equipment leases subject to the recently adopted ASU 2016-02. This real property lease contains a one-time renewal option for an additional 36 months. In the locations in which it is economically feasible to continue to operate, management expects that lease options will be exercised. The office lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s lease does not provide an implicit discount rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
The components of lease expense were as follows:
For the Three | ||||
Months Ended | ||||
March 31, 2019 | ||||
Finance lease cost: | ||||
Amortization of assets | $ | 9,911 | ||
Interest on lease liabilities | 4,654 | |||
Total lease cost | $ | 14,565 |
Supplemental balance sheet information related to leases were as follows:
March 31, 2019 | ||||
Finance lease: | ||||
Right-of-use asset | $ | 278,725 | ||
Accumulated amortization | (9,911 | ) | ||
Right-of-use asset, net | $ | 268,814 | ||
Current portion of finance lease liability | $ | 37,517 | ||
Long-term finance lease liability | 232,380 | |||
Total finance lease liability | $ | 269,897 | ||
Weighted average remaining lease term: | ||||
Operating leases | N/A | |||
Finance leases | 5.75 years | |||
Weighted average discount rate: | ||||
Operating leases | N/A | |||
Finance leases | 6.75 | % |
Supplemental cash flow and other information related to leases was as follows:
For the Three | ||||
Months Ended | ||||
March 31, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows used for finance leases | $ | 13,482 | ||
Leased assets obtained in exchange for lease liabilities: | ||||
Total operating lease liabilities | $ | - | ||
Total finance lease liabilities | $ | 278,725 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company’s maturities of lease liabilities under finance leases as of March 31, 2019 are as follows:
Finance | ||||
Leases | ||||
2019 | $ | 40,716 | ||
2020 | 55,824 | |||
2021 | 57,498 | |||
2022 | 59,223 | |||
2023 | 61,000 | |||
Thereafter | 52,097 | |||
Total | 326,358 | |||
Less interest | 56,461 | |||
Present value of lease liabilities | 269,897 | |||
Less current portion | 37,517 | |||
Long-term lease liabilities | $ | 232,380 |
There were no operating leases as of March 31, 2019.
Note 13 – Changes in Stockholders’ Equity
One World PharmaPreferred Stock
The Company has 10,000,000 authorized shares of $0.001 par value preferred stock. No shares had been issued as of March 31, 2020.
Common Stock
The Company is authorized to issue an aggregate of 75,000,000300,000,000 shares of common stock with a par value of $0.001. As of March 31, 2019,2020, there were 39,922,89945,710,305 shares of common stock issued and outstanding. The par value of OWP Ventures’ common stock was $0.0001 per share. The par value presented for OWP Ventures’ transactions have been retroactively adjusted to reflect the par value of One World Pharma in this Quarterly Report on Form 10-Q.
Reverse Stock Split
On January 10, 2019, One World Pharma, Inc. effected a 1-for-4 reverse stock split. No fractional shares were issued, and no cash or other consideration was paid in connection with the Reverse Stock Split. Instead, the Company issued one whole share of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. One World Pharma, Inc. was authorized to issue 75,000,000 shares of common stock prior to the Reverse Stock Split, which remains unaffected. The Reverse Stock Split did not have any effect on the stated par value of the common stock. Unless otherwise stated, all share and per share information in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split.
Cash Received on Subscriptions Receivable
On various dates between January 30, 2019 and February 5, 2019, the Company received $602 from two of the Company’s founders for sales of common stock of OWP Ventures during 2018 at $0.001 per share on subscriptions receivable.
Common Stock Sales
On various dates between January 3, 2019 and February 19, 2019, the Company sold an aggregate 3,900,000 shares of common stock of OWP Ventures at $0.50 per share for total proceeds of $1,950,000.
Common Stock Issued for Debt Conversionon Subscriptions Payable
On February 4, 2019, a total of 1,253,493January 6, 2020, the Company issued 500,000 shares of common stock on a Subscriptions Payable for the December 31, 2019 sale of OWP Ventures were issued pursuant to the conversioncommon stock at $0.50 per share for proceeds of $501,397 of convertible debt owed to The Sanguine Group LLC, consisting of $500,000 of principal and $1,397 of interest.$25,000.
Common Stock Issued for Services
On various dates between January 4, 2020 and February 18, 2019,4, 2020, the Company issued 30,000awarded an aggregate of 406,000 shares of common stock of OWP Ventures to a consultantfour consultants for services.services provided. The totalaggregate fair value of the common stock was $15,000$422,000 based recent independent third-party sales at $0.50 per share.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)on the closing price of the Company’s common stock on the date of grant.
Common Stock Options Issued for ServicesAmortization of Stock-Based Compensation
On February 8, 2019, the Company awarded cashless options to a service provider to acquire up to 100,000 shares
A total of common stock$141,278 of OWP Ventures, exercisable at $0.50 per share over a thirty-six (36) month periodstock-based compensation expense was recognized from the origination date. The options vest as to (i) 8,333 shares on the 8th dayamortization of each subsequent month for the following eleven months, and (ii) 8,337 shares on the one-year anniversary of the effective date.
On February 8, 2019, the Company awarded cashless options to one of our directors to acquire up to 125,000 shares of common stock of OWP Ventures, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 10,416 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 10,424 shares on the one-year anniversary of the effective date.
On January 28, 2019, the Company awarded cashless options to a service provider to acquire up to 500,000 shares of common stock of OWP Ventures, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 41,666 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 41,674 shares on the one-year anniversary of the effective date.
On January 28, 2019, the Company awarded cashless options to a service provider to acquire up to 100,000 shares of common stock of OWP Ventures, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 8,333 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 8,337 shares on the one-year anniversary of the effective date.
On October 24, 2018, the Company issued 50,000 shares of common stock of OWP Ventures to a consultant in settlement for services. The total fair value of the common stock was $21,000 based recent independent third-party sales at $0.42 per share.
Common Stock Issued for Share Exchange
On February 21, 2019, One World Pharma acquired OWP Ventures in the Merger. As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an aggregate of 39,475,398 shares of our common stock; (b) the options described above to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our common stock at an exercise price of $0.50; (c)over their vesting period during the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our common stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our common stock in a future “Qualified Offering”; and (d) 875,000 shares of our common stock owned by OWP Ventures prior to the Merger were cancelled.three months ended March 31, 2020.
Note 14 – Income Taxes
The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
For the three months ended March 31, 20192020 and the year ended December 31, 2018,2019, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At March 31, 2019,2020, the Company had approximately $2,620,000$4,975,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2038.2025.
Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at March 31, 20192020 and December 31, 2018,2019, respectively.
In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.
Note 15 – Subsequent Events
Repayments of Advances from ShareholdersDebt Financings
On May 4, 2020, the Company, through its wholly-owned subsidiary OWP Ventures, Inc., borrowed $119,274 from Customers Bank (“Lender”), pursuant to a Promissory Note issued by OWP Ventures to Lender (the “PPP Note”). The loan was made pursuant to the Payroll Protection Program established as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Note bears interest at 1.00% per annum, payable monthly beginning December 4, 2020, and is due on May 4, 2022. The PPP Note may be repaid at any time without penalty.
Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interest. The forgiveness amount will be equal to the amount that the Company spends during the 24-week period beginning May 4, 2020 on payroll costs, payment of rent on any leases in force prior to February 15, 2020 and payment on any utility for which service began before February 15, 2020. The maximum amount of loan forgiveness for non-payroll expenses is 40% of the amount of the PPP Note. No assurance is provided that the Company will obtain forgiveness under the PPP Note in whole or in part.
The PPP Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisions of the promissory note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under the PPP Note.
On May 4, 2020, the Company received proceeds of $20,000 from Woodman Management in exchange for a demand note, bearing 6% interest per annum. The note was repaid in full on May 14, 2020.
On April 2, 2020, the Company received proceeds of $6,000 from MCKP Investments LLC in exchange for a demand note, bearing 6% interest per annum.
16 |
ONE WORLD PHARMA, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Preferred Stock Sales
On various dates between April 14, 2020 and May 7, 2020, the Company received total proceeds of $210,000 on the sale of 21,000 units, consisting of 21,000 shares of Series A Preferred Stock and warrants to acquire an aggregate 1,050,000 shares of common stock at an exercise price of $0.25 per share over five years from the issuance dates, to nine accredited investors. Each share of Preferred Stock is currently convertible into fifty (50) shares of the Company’s common stock. The Series A Preferred Stock accrues dividends at the rate of 6% per annum, payable annually in cash or additional shares of Series A Preferred Stock, at the Company’s election.
Common Stock Issued for Services
On May 31, 2020, the Company awarded an aggregate of 1,950,000 shares of common stock to seven consultants for services provided. The aggregate fair value of the common stock was $1,092,000 based on the closing price of the Company’s common stock on the date of grant.
Craig Ellins Separation
On June 3, 2020, the Company entered into a Separation and Release Agreement with Craig Ellins (the “Separation Agreement”), pursuant to which Mr. Ellins has resigned from all of his positions with the Company and its subsidiaries, including his positions as Chief Executive Officer and Chairman of the Board of the Company. Pursuant to the Separation Agreement, the Company will (i) issue Mr. Ellins 2,000,000 shares of the Company’s Common Stock, (ii) reimburse Mr. Ellins for $55,000 of expenses previously incurred by him on behalf of the Company, and (iii) make 12 monthly payments to Mr. Ellins in the amount of $8,000 each in the 12-month period following the date on which the Company has raised $1.5 million in gross proceeds from the sale of its securities following the date of the Separation Agreement. The Separation Agreement also contains mutual releases and prohibits Mr. Ellins from competing with the Company for a period of two years.
Appointment of Isiah L. Thomas III as Chief Executive Officer and Vice Chairman
On June 3, 2020, Isiah L. Thomas III was appointed to serve as the Company’s Chief Executive Officer and Vice Chairman pursuant to a letter agreement with the Company (the “Employment Agreement”).
Mr. Thomas, 59, has been the Chairman and Chief Executive Officer of Isiah International, LLC, a holding company with interests in a diversified portfolio of businesses, since 2011. Mr. Thomas also has been a Commentator and Analyst for NBA TV, since 2014, and Turner Sports, since 2012. He previously served as the President & Alternate Governor of the New York Liberty of the Women’s National Basketball Association from 2015 to February 2019, the Head Basketball Coach at Florida International University, from 2009 to 2012, the General Manager, President of Basketball Operation and Head Coach of the New York Knicks of the National Basketball Association (“NBA”), from 2006 to 2008, the Head Coach of the Indiana Pacers of the NBA from 2000 to 2003, the Owner of the Continental Basketball Association from 1998 to 2000, Minority Owner & Executive Vice President of the Toronto Raptors of the NBA from 1994 to 1998 and point guard for the Detroit Pistons of the NBA from 1981 to 1994. Mr. Thomas has served as a director of Get in Chicago, an organization focused on stopping gun and related violence in Chicago, since 2013, and as a director of Madison Square Garden Entertainment Corp. since April 2020. He is also the Founder of Mary’s Court Foundation, a charitable organization established in 2010.
Pursuant to the Employment Agreement:
● | Mr. Thomas will be entitled to be paid a base salary of $120,000 in the first year of his employment; $240,000 in the second year of his employment; and $300,000 in the third year of his employment. | |
● | The Company will have the option to pay Mr. Thomas’s salary with shares of the Company’s Common Stock until the Company has raised gross proceeds of at least $1.5 million from the sale of its securities following the date of his employment. If the Company so elects to pay his salary with shares of Common Stock, the number of shares of Common Stock shall be issued be equal to (a) 1.25 times the cash payment to which he would have been otherwise entitled, divided by (b) the closing price of the Common Stock on the day such cash payment was due. |
● | The Company has awarded Mr. Thomas 500,000 shares of the Company’s Common Stock, and an option (the “Option”) to purchase 5,500,000 shares of the Company’s Common Stock at an exercise price equal to $0.55 per share. The Option will vest as to 1,500,000 shares immediately, as to 1,000,000 shares 120 days following the issuance of the Option (the “Second Vesting Date”), and as to the remaining 3,000,000 shares quarterly over the three years following the Second Vesting Date. | |
● | Mr. Thomas will be employed by the Company on at-will basis. |
Appointment of Eric Stoppenhagen as Interim Chief Financial Officer
On June 8, 2020, Eric Stoppenhagen, through NYX Advisors, Inc., was appointed to serve as the Interim Chief Financial Officer. Mr. Stoppenhagen was awarded 200,000 shares of common stock and will be compensated at $200 per hour, up to a maximum of $5,000 per month.
Dr. Kenneth Perego, II Appointment as Executive Chairman of the Board
On June 3, 2020, Dr. Kenneth Perego, II, who has been a director of the Company repaid $120,000since February 2019, was appointed to serve as the Executive Chairman of loans previously received from our CEO.the Company’s Board of Directors.
17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2018 and Current Report on Form 8-K with respect to the Merger filed with the SEC on February 25, 2019 and amended on April 30, 2019 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K and Form 8-K.10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Annual Report onthe Form 10-K for the year ended December 31, 2018 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.
Overview
On February 21, 2019,Through our wholly-owned subsidiary, One World Pharma Inc. (“Company,” “we” or “our”) entered into an Agreement and Plan of Merger (“Merger Agreement”) with OWP Merger Subsidiary, Inc. (“OWP Merger Sub), our wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”). Under the Merger Agreement, the acquisition of OWP Ventures by the Company was effected by the merger of OWP Merger Sub with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary (the “Merger”). The closing (the “Closing”) of the Merger occurred on February 21, 2019. As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an aggregate of 39,475,398 shares of our Common Stock; (b) options to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our Common Stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our Common Stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our Common Stock in a future “Qualified Offering”; (d) 875,000 shares of our Common Stock owned by OWP Ventures prior to the Merger were cancelled; and (e) OWP Ventures’ chief operating officer became our chief operating officer and two of OWP Ventures’ directors became members of our board of directors.
OWP Ventures, Inc. is a holding company formed in Delaware on March 27, 2018 to enter and support the cannabis industry, and on May 30, 2018, it acquired One World Pharma S.A.S, (“OWP SAS”). One World Pharma S.A.S, is a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali). We, we plan to be the worldwide industry leader in the production and manufacturing ofproduce raw cannabis and hemp plant ingredients for both medical and industrial uses.uses across the globe. We have received licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, we are one of the only companies in Colombia to receive seed, cultivation, extraction and export licenses from the Colombian government. Currently, we own approximately 30 acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp,hemp. In addition, we have entered into agreements with 221local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres available for expansion underof land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive contract.basis. We planted our first crop of cannabis in 2018, which we began harvesting in the first quarter of 2019. To date,2019 for the purpose of further research and development activities and quality control testing of the cannabis we have notproduced. We generated any revenues from our activities.initial sales of fully registered non-psychoactive seeds during the second quarter of 2020.
The Merger was accountedOn June 3, 2020, we appointed Isiah L. Thomas III to serve as the Company’s Chief Executive Officer and Vice Chairman pursuant to a letter agreement with the Company; entered into a Separation and Release Agreement with Craig Ellins, pursuant to which Mr. Ellins has resigned from all of his positions with the Company and its subsidiaries, including his positions as Chief Executive Officer and Chairman of the Board of the Company; and appointed Dr. Kenneth Perego, II to serve as the Executive Chairman of the Company’s Board of Directors.
Mr. Thomas, 59, has been the Chairman and Chief Executive Officer of Isiah International, LLC, a holding company with interests in a diversified portfolio of businesses, since 2011. Mr. Thomas also has been a Commentator and Analyst for NBA TV, since 2014, and Turner Sports, since 2012. He previously served as the President & Alternate Governor of the New York Liberty of the Women’s National Basketball Association from 2015 to February 2019, the Head Basketball Coach at Florida International University, from 2009 to 2012, the General Manager, President of Basketball Operation and Head Coach of the New York Knicks of the National Basketball Association (“NBA”), from 2006 to 2008, the Head Coach of the Indiana Pacers of the NBA from 2000 to 2003, the Owner of the Continental Basketball Association from 1998 to 2000, Minority Owner & Executive Vice President of the Toronto Raptors of the NBA from 1994 to 1998 and point guard for the Detroit Pistons of the NBA from 1981 to 1994. Mr. Thomas has served as a reverse merger (recapitalization) with OWP Ventures deemed to bedirector of Get in Chicago, an organization focused on stopping gun and related violence in Chicago, since 2013, and as a director of Madison Square Garden Entertainment Corp. since April 2020. He is also the accounting acquirer. Accordingly, the financial statements includedFounder of Mary’s Court Foundation, a charitable organization established in this Quarterly Report on Form 10-Q and the following discussion reflect the historical operations of OWP Ventures and its wholly-owned subsidiary OWP SAS prior to the Merger, and that of the combined company following the Merger. The historical financial information for One World Pharma, Inc. (formerly Punto Group Corp.) prior to the Merger has been omitted.2010.
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Results of Operations for the Three Months Ended March 31, 20192020 and 2019:
The following table summarizes selected items from the period from inception (March 27, 2018) tostatement of operations for the three months ended March 31, 2018:2020 and 2019.
Three Months Ended March 31, | Increase / | |||||||||||
2020 | 2019 | (Decrease) | ||||||||||
Revenues | $ | - | $ | - | $ | - | ||||||
Operating expenses: | ||||||||||||
General and administrative | 291,053 | 479,620 | (188,567 | ) | ||||||||
Professional fees | 886,354 | 702,880 | 183,474 | |||||||||
Total operating expenses: | 1,177,407 | 1,182,500 | (5,093 | ) | ||||||||
Operating loss | (1,177,407 | ) | (1,182,500 | ) | (5,093 | ) | ||||||
Total other income (expense) | (10,509 | ) | (141,016 | ) | (130,507 | ) | ||||||
Net loss | $ | (1,187,916 | ) | $ | (1,323,516 | ) | $ | (135,600 | ) |
Revenues
We havedid not generatedgenerate any revenues to date, and there were no expenses forduring the shortened comparative period from inception (March 27, 2018) tothree months ended March 31, 2018.2020 or the three months ended March 31, 2019.
General and Administrative Expenses
ForGeneral and administrative expenses for the three months ended March 31, 2020 were $291,053, compared to $479,620 during the three months ended March 31, 2019, we had generala decrease of $188,567, or 39%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs. General and administrative expenses of $479,620, whichdecreased primarily consisted of compensation expenses of $187,391, rents on office space of $22,128, and travel costs of $60,641.due to staffing reductions in the current period.
Professional Fees
ForProfessional fees for the three months ended March 31, 2020 were $886,354, compared to $702,880 during the three months ended March 31, 2019, we had professionalan increase of $183,474, or 26%. Professional fees of $702,880, which consisted of legal, accounting and consulting fees, including a total of $268,540 ofincluded non-cash, stock-based compensation which included $15,000 of stock issued for services$563,278 and $253,540 of expenses related$268,540 during the three months ended March 31, 2020 and 2019, respectively. Professional fees increased primarily due to increased stock-based compensation during the amortization of options.current period.
Other Income (Expense)
ForOther expenses, on a net basis, for the three months ended March 31, 2019, we had2020 were $10,509, compared to other expenses, on a net basis, of $141,016 whichduring the three months ended March 31, 2019, a decrease in net expenses of $130,507, or 93%. Other expenses consisted of $10,509 of interest expense for the three months ended March 31, 2020, and $141,117 of interest expense, andas offset by $101 of interest income.income, during the comparative three months ended March 31, 2019.
Net Loss
ForNet loss for the three months ended March 31, 2020 was $1,187,916, or $0.03 per share, compared to $1,323,516, or $0.09 per share, during the three months ended March 31, 2019, we had a decrease of $135,600, or 10%. The net loss of $1,323,516, or $0.09 per share, which included non-cash expensesdecreased primarily due to staffing reductions and the absence of $125,000 of amortized debt discount amortization, $2,436 of depreciation, $268,540 of stock-based compensation and $16,117 of accrued interest.discounts recognized in the comparative period that were not recognized during the current period.
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Liquidity and Capital Resources
The following is a summary of the Company’s cash flows provided by (used in) operating, investing, financing activities and effect of exchange rate changes on cash for the three month periodmonths ended March 31, 20192020 and the period from inception (March 27, 2018) to March 31, 2018:2019:
2019 | 2018 | 2020 | 2019 | |||||||||||||
Operating Activities | $ | (982,490 | ) | $ | - | $ | (324,026 | ) | $ | (982,490 | ) | |||||
Investing Activities | (73,326 | ) | - | (2,213 | ) | (73,326 | ) | |||||||||
Financing Activities | 2,400,602 | - | 86,000 | 2,400,602 | ||||||||||||
Effect of exchange rate changes on cash | (8,287 | ) | - | |||||||||||||
Effect of Exchange Rate Changes on Cash | (21,359 | ) | (8,287 | ) | ||||||||||||
Net Increase in Cash | $ | 1,336,499 | $ | - | $ | (261,598 | ) | $ | 1,336,499 |
Net Cash Used in Operating Activities
During the three months ended March 31, 2019,2020, net cash used in operating activities was $982,490.$324,026, compared to net cash used in operating activities of $982,490 for the three months ended March 31, 2019. The cash used in operating activities was primarily attributable to our net loss.
Net Cash Used in Investing Activities
During the three months ended March 31, 2019,2020, net cash used in investing activities was $73,326.$2,213, compared to net cash used in investing activities of $73,326 for the three months ended March 31, 2019. The cash used in investing activities consisted of purchases of fixed assets.
Net Cash Provided by Financing Activities
During the three months ended March 31, 2019,2020, net cash provided by financing activities was $2,400,602.$86,000, compared to net cash provided by financing activities of $2,400,602 for the three months ended March 31, 2019. The current period consisted of $500,000$86,000 of convertible debt financing, that was subsequently converted into 1,253,493 sharescompared to $450,000 of common stock at $0.40 per share, repayments of $50,000 to shareholders on previous advances, proceeds of $602 on subscriptions receivable and $1,950,000 ofnet proceeds received fromon debt financing and $1,950,602 of equity financing received during the sale of stock at $0.50 per share.three months ended March 31, 2019.
Ability to Continue as a Going Concern
As of March 31, 2019,2020, our balance of cash on hand was $1,462,345,$20,782, and we had negative working capital of $245,042$1,195,838 and an accumulated deficit of $3,283,498.$9,355,082. We currently may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations to the extent necessary to provide working capital.
The Company has incurred recurring losses from operations resulting in an accumulated deficit, and, as set forth above, the Company’s cash on hand is not sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing its cannabis cultivation activities and expectsnew customers to begin revenue generating export operations later in 2019.generate revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. In the event revenuesThe accompanying financial statements do not materialize atinclude any adjustments that might be necessary if the expected rates, management would seek additional financing or would attemptCompany is unable to conserve cash by further reducing expenses.continue as a going concern. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent cessation. Additional financing may result in substantial dilution to existing stockholders.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The unauditedcondensed consolidated financial statements do not include any adjustments relatedthat might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classificationclassifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
While our significant accounting policies are more fully described in notes to our consolidated financial statements appearing elsewhere in this Form 10-Q, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we used in the preparation of our financial statements.
Revenue Recognition
The Company has adoptednot yet recognized revenue. The Company will recognize revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizeswill recognize revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. The Company recognizes revenue when products are fully delivered,
There was no impact on the Company’s financial statements from ASC 606 for the three months ended March 31, 2020, or services have been provided and collection is reasonably assured. We have not yet generated any revenue.the year ended December 31, 2019. Inventory consisted of $118,899 of raw materials at March 31, 2020.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 505-50 (ASC 505-50). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Interim Chief Financial Officer who are one and the same, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2019.2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it 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. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2019,2020, including our inability to timely file this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer who are one and the same, concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the period of our evaluation or subsequent to the date we carried out our evaluation which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any system of controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
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We are not a party to any legal or administrative proceedings that we believe, individually or in the aggregate, would be likely to have a material adverse effect on our financial condition or results of operations.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following issuances of equity securities by the Company during the three month period ended March 31, 2020 were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof and Regulation D thereunder:
Common Stock Sales
On January 6, 2020, we issued 500,000 shares of the Securities Actcommon stock, restricted in accordance with Rule 144, to an investor, in exchange for proceeds of 1933 during the three month period ended March$250,000 received on December 31, 2019:2019.
Common Stock Issued for Services
On February 21, 2019,4, 2020, the Company issued an aggregate 39,475,398awarded 20,000 shares of common stock, restricted in accordance with Rule 144, to an investor relations firm for services provided.
On January 30, 2020, the shareholdersCompany awarded an aggregate 380,000 shares of OWP Ventures, Inc. pursuantcommon stock, restricted in accordance with Rule 144, to a merger agreement between One World Pharma, Inc and OWP Ventures, Inc.three consultants for services provided.
On January 4, 2020, the Company awarded 6,000 shares of common stock, restricted in accordance with Rule 144, to an investor relations firm for services provided.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
None.
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* Filed herewith.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: | |
One World Pharma, Inc. | |
/s/ | |
Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ Eric Stoppenhagen | |
Eric Stoppenhagen | |
Interim Chief Financial Officer | |
(Principal Financial Officer) |
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