UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒

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

~~[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE~~

~~SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

☐

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

~~[ ] 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)~~ (800) 605-3210

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 ☒

No ☐

~~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 ☒

No ☐

~~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	~~[X]~~☒	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 ☒

~~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 ~~November 20, 2020~~August 12, 2021 was ~~51,485,305.~~61,975,983.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		1
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	2
	Consolidated ~~Statement~~Statements of Changes in Stockholders’ Equity (Deficit) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ (Unaudited)	4
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2019
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 4.	CONTROLS AND PROCEDURES	2524
PART II - OTHER INFORMATION		25
ITEM 1.	Legal Proceedings	2625
ITEM 1A.	RISK FACTORS	2625
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2625
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2625
ITEM 4.	MINE SAFETY DISCLOSURES	2625
ITEM 5.	OTHER INFORMATION	2625
ITEM 6.	EXHIBITS	2726
	SIGNATURES	2827

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ONE WORLD PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
		(Unaudited)						(Unaudited)
Assets

Current assets:
Cash	$	20,879		$	282,380		$	1,811,897		$	28,920
Accounts receivable								28,731			5,636
Inventory		226,204			24,682			413,866			267,152
Other current assets		195,811			267,106			140,551			118,911
Total current assets		442,894			574,168			2,395,045			420,619

Right-of-use assets		423,695			502,706			172,393			195,029
Security deposits		70,895			72,527			67,353			65,114
Fixed assets, net		711,950			697,863			927,744			726,820

Total Assets	$	1,649,434		$	1,847,264		$	3,562,535		$	1,407,582

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:
Accounts payable	$	602,887		$	330,521		$	559,227		$	734,554
Accrued expenses		240,102			109,665			450,372			550,535
Dividends payable		14,870			-			72,079			37,236
Current portion of lease liabilities		58,155			55,101			47,691			45,271
Convertible notes payable		-			507,332
Notes payable		119,274			130,000
Notes payable, net of discounts of $106,181 at June 30, 2021								478,093			334,841
Total current liabilities		1,035,288			1,132,619			1,607,462			1,702,437

Long-term lease liability		377,170			453,251			131,720			156,254

Total Liabilities		1,412,458			1,585,870			1,739,182			1,858,691

Series A convertible preferred stock, $0.001 par value, 500,000 shares authorized; 147,833 and -0- issued and outstanding at September 30, 2020 and December 31, 2019, respectively		1,478,330			-
Series A convertible preferred stock, $0.001 par value, 500,000 shares authorized; 95,233 and 150,233 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								952,330			1,502,330
Series B convertible preferred stock, $0.001 par value, 300,000 shares authorized; 205,169 and -0- shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								3,077,535			-
Convertible preferred stock value

Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value, 9,500,000 shares authorized; no shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		-			-
Common stock, $0.001 par value, 300,000,000 shares authorized; 51,235,305 and 44,804,305 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		51,235			44,804
Preferred stock, $0.001 par value, 9,200,000 shares authorized; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								-			-
Common stock, $0.001 par value, 300,000,000 shares authorized; 61,915,983 and 53,085,305 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively								61,916			53,085
Additional paid-in capital		13,595,826			8,150,004			15,715,598			14,103,672
Subscriptions payable, consisting of 250,000 and 500,000 shares at September 30, 2020 and December 31, 2019, respectively		45,000			250,000
Subscriptions payable, consisting of 750,000 at December 31, 2020								-			75,000
Accumulated other comprehensive loss		(44,948	)		(16,248	)		(58,289	)		(52,870	)
Accumulated (deficit)		(14,888,467	)		(8,167,166	)		(17,925,737	)		(16,132,326	)
Total Stockholders’ Equity (Deficit)		(1,241,354	)		261,394			(2,206,512	)		(1,953,439	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	1,649,434		$	1,847,264		$	3,562,535		$	1,407,582

See accompanying notes to financial statements.

ONE WORLD PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020

Revenues	$	42,598		$	-		$	103,384		$	-		$	42,323		$	60,786		$	65,605		$	60,786
Cost of goods sold		7,682			-			24,433			-			173			16,751			7,752			16,751
Gross profit		34,916			-			78,951			-			42,150			44,035			57,853			44,035

Operating expenses:
General and administrative		803,342			589,027			3,316,715			1,633,814			368,146			2,214,022			1,108,572			2,499,163
Professional fees		364,111			986,523			3,454,966			2,430,945			306,194			2,204,501			525,657			3,090,855
Depreciation expense														13,114			8,298			22,998			14,210
Total operating expenses		1,167,453			1,575,550			6,771,681			4,064,759			687,454			4,426,821			1,657,227			5,604,228

Operating loss		(1,132,537	)		(1,575,550	)		(6,692,730	)		(4,064,759	)		(645,304	)		(4,382,786	)		(1,599,374	)		(5,560,193	)

Other income (expense):
Loss on disposal of fixed assets		-			-			-			(4,087	)
Sublease income														7,500			-			14,500			-
Interest income		-			3,621			-			3,869			1,244			-			1,558			-
Interest expense		(7,517	)		(225,053	)		(28,571	)		(380,749	)		(116,634	)		(10,545	)		(210,095	)		(21,054	)
Total other expense		(7,517	)		(221,432	)		(28,571	)		(380,967	)		(107,890	)		(10,545	)		(194,037	)		(21,054	)

Net loss	$	(1,140,054	)	$	(1,796,982	)	$	(6,721,301	)	$	(4,445,726	)	$	(753,194	)	$	(4,393,331	)	$	(1,793,411	)	$	(5,581,247	)

Other comprehensive loss:
Loss on foreign currency translation	$	(497	)	$	(164,122	)	$	(28,700	)	$	(21,121	)	$	(5,779	)	$	(6,844	)	$	(5,419	)	$	(28,203	)

Net other comprehensive loss	$	(1,140,551	)	$	(1,961,104	)	$	(6,750,001	)	$	(4,466,847	)	$	(758,973	)	$	(4,400,175	)	$	(1,798,830	)	$	(5,609,450	)
Series A convertible preferred stock declared ($0.60 per share)														12,616			-			(34,843	)		-
Net loss attributable to common shareholders													$	(746,357	)	$	(4,400,175	)	$	(1,833,673	)	$	(5,609,450	)

Weighted average number of common shares outstanding - basic and fully diluted		48,588,395			42,069,859			47,982,936			39,888,654			59,329,167			46,426,789			58,721,432			46,343,690

Net loss per share - basic and fully diluted	$	(0.02	)	$	(0.04	)	$	(0.14	)	$	(0.11	)	$	(0.01	)	$	(0.09	)	$	(0.03	)	$	(0.12	)

Dividends declared per share of common stock	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to financial statements.

ONE WORLD PHARMA, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

For the Three Months Ended September 30, 2019
Series A Accumulated
Convertible 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, June 30, 2019 - $ - 39,922,899 $ 39,923 $ 4,503,966 $ - $ - $ 138,911 $ (4,608,726 ) $ - $ 74,074

Common stock sold for cash - - 4,509,000 4,509 2,249,991 - - - - - 2,254,500

Common stock payable for services - - - - - - 160,000 - - - 160,000

Cashless exercise of common stock options - - 51,040 51 (51 ) - - - - - -

Amortization of common stock options issued for services - - - - 430,270 - - - - - 430,270

Beneficial conversion feature on convertible note - - - - 207,332 - - - - - 207,332

Loss on foreign currency translation - - - - - - - (164,122 ) - - (164,122 )

Net loss for the three months ended September 30, 2019 - - - - - - - - (1,796,982 ) - (1,796,982 )

Balance, September 30, 2019 - $ - 44,482,939 $ 44,483 $ 7,391,508 $ - $ 160,000 $ (25,211 ) $ (6,405,708 ) $ - $ 1,165,072


	For the Three Months Ended June 30, 2020
	Series A Convertible				Series B Convertible								Additional				Accumulated Other						Total Stockholders’
	Preferred Stock				Preferred Stock				Common Stock				Paid-In		Subscriptions		Comprehensive			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Payable		Income (Loss)			Deficit			(Deficit)

Balance, March 31, 2020		-	$	-		-	$	-		45,710,305	$	45,710	$	8,962,376	$	-	$	(37,607	)	$	(9,355,082	)	$	(384,603	)

Series A Convertible Preferred Stock units sold for cash		40,000		400,000		-		-		-		-		-		-		-			-			-

Series B convertible preferred stock sold for cash to our CEO
Series B convertible preferred stock sold for cash to our CEO, shares
Series B convertible preferred stock sold for cash
Series B convertible preferred stock sold for cash, shares
Conversion of series A convertible preferred stock
Conversion of series A convertible preferred stock, shares
Series A convertible preferred stock dividend declared ($0.60 per share)
Common stock sold for cash		-		-		-		-		-		-		-		-		-			-			-

Common stock issued for services		-		-		-		-		4,650,000		4,650		2,582,350		-		-			-			2,587,000

Commitment shares issued pursuant to promissory note
Commitment shares issued pursuant to promissory note, shares
Amortization of common stock options issued for services		-		-		-		-		-		-		1,407,921		-		-			-			1,407,921

Loss on foreign currency translation		-		-		-		-		-		-		-		-		(6,844	)		-			(6,844	)

Net loss		-		-		-		-		-		-		-		-		-			(4,393,331	)		(4,393,331	)

Balance, June 30, 2020		40,000	$	400,000		-	$	-		50,360,305	$	50,360	$	12,952,647	$	-	$	(44,451	)	$	(13,748,413	)	$	(789,857	)

For the Three Months Ended September 30, 2020
Series A Accumulated
Convertible 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, June 30, 2020 40,000 $ 400,000 50,360,305 $ 50,360 $ 12,952,647 $ - $ - $ (44,451 ) $ (13,748,413 ) $ - $ (789,857 )

Preferred stock units sold for cash 107,833 1,078,330 - - - - - - - - -

Common stock issued for services - - 875,000 875 331,625 - - - - - 332,500

Common stock payable for services - - - - - - 45,000 - - - 45,000

Amortization of common stock options issued for services - - - - 326,424 - - - - - 326,424

Loss on foreign currency translation - - - - - - - (497 ) - - (497 )

Series A convertible preferred stock declared ($0.60 per share) - - - - (14,870 ) - - - - - (14,870 )

Net loss for the three months ended September 30, 2020 - - - - - - - - (1,140,054 ) - (1,140,054 )

Balance, September 30, 2020 147,833 $ 1,478,330 51,235,305 $ 51,235 $ 13,595,826 $ - $ 45,000 $ (44,948 ) $ (14,888,467 ) $ - $ (1,241,354 )

	For the Three Months Ended June 30, 2021
	Series A Convertible						Series B Convertible								Additional						Accumulated Other						Total Stockholders’
	Preferred Stock						Preferred Stock				Common Stock				Paid-In			Subscriptions			Comprehensive			Accumulated			Equity
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Payable			Income (Loss)			Deficit			(Deficit)

Balance, March 31, 2021		125,233		$	1,252,330			101,835	$	1,527,525		57,335,305	$	57,335	$	14,998,510		$	100,000		$	(52,510	)	$	(17,172,543	)	$	(2,069,208	)

Series B convertible preferred stock sold for cash to our CEO		-			-			103,334		1,550,010		-		-		-			-			-			-			-

Conversion of series A convertible preferred stock		(30,000	)		(300,000	)		-		-		4,000,000		4,000		396,000			(100,000	)		-			-			300,000

Common stock issued for services		-			-			-		-		580,678		581		107,215			-			-			-			107,796

Amortization of common stock options issued for services		-			-			-		-		-		-		226,489			-			-			-			226,489

Series A convertible preferred stock dividend declared ($0.60 per share)		-			-			-		-		-		-		(12,616	)		-			-			-			(12,616	)

Loss on foreign currency translation		-			-			-		-		-		-		-			-			(5,779	)		-			(5,779	)

Net loss		-			-			-		-		-		-		-			-			-			(753,194	)		(753,194	)

Balance, June 30, 2021		95,233		$	952,330			205,169	$	3,077,535		61,915,983	$	61,916	$	15,715,598		$	-		$	(58,289	)	$	(17,925,737	)	$	(2,206,512	)

For the Nine Months Ended September 30, 2019
Series A Accumulated
Convertible 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, 2018 - $ - 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

Common stock sold for cash - - 8,409,000 8,409 4,196,091 - - - - - 4,204,500

Common stock payable for services - - - - - - 160,000 - - - 160,000

Cashless exercise of common stock options - - 51,040 51 (51 ) - - - - - -

Issuance of common stock of OWP Ventures, Inc. on debt conversion - - 1,253,493 1,253 500,144 - - - - - 501,397

Common stock issued for services, OWP Ventures, Inc. - - 30,000 30 14,970 - - - - - 15,000

Amortization of common stock options issued for services, OWP Ventures, Inc. - - - - 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 )

Common stock cancelled pursuant to merger with OWP Ventures, Inc. - - (875,000 ) (875 ) 875 - - - - - -

Amortization of common stock options issued for services - - - - 991,228 - - - - - 991,228

Beneficial conversion feature on convertible note - - - - 332,332 - - - - - 332,332

Loss on foreign currency translation - - - - - - - (21,121 ) - - (21,121 )

Net loss for the nine months ended September 30, 2019 - - - - - - - - (4,445,726 ) - (4,445,726 )

Balance, September 30, 2019 - $ - 44,482,939 $ 44,483 $ 7,391,508 $ - $ 160,000 $ (25,211 ) $ (6,405,708 ) $ - $ 1,165,072

	For the Six Months Ended June 30, 2020
	Series A Convertible				Series B Convertible								Additional					Accumulated Other						Total Stockholders’
	Preferred Stock				Preferred Stock				Common Stock				Paid-In		Subscriptions			Comprehensive			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Payable			Income (Loss)			Deficit			(Deficit)

Balance, December 31, 2019		-	$	-		-	$	-		44,804,305	$	44,804	$	8,150,004	$	250,000		$	(16,248	)	$	(8,167,166	)	$	261,394

Series A convertible preferred stock units sold for cash		40,000		400,000		-		-		-		-		-		-			-			-			-

Common stock sold for cash		-		-		-		-		500,000		500		249,500		(250,000	)		-			-			-

Common stock issued for services		-		-		-		-		5,056,000		5,056		3,003,944		-			-			-			3,009,000

Amortization of common stock options issued for services		-		-		-		-		-		-		1,549,199		-			-			-			1,549,199

Series A convertible preferred stock dividend declared ($0.60 per share)		-		-		-		-		-		-		-		-			-			-			-

Loss on foreign currency translation		-		-		-		-		-		-		-		-			(28,203	)		-			(28,203	)

Net loss		-		-		-		-		-		-		-		-			-			(5,581,247	)		(5,581,247	)

Balance, June 30, 2020		40,000	$	400,000		-	$	-		50,360,305	$	50,360	$	12,952,647	$	-		$	(44,451	)	$	(13,748,413	)	$	(789,857	)

For the Nine Months Ended September 30, 2020
Series A Accumulated
Convertible 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

Preferred stock units sold for cash 147,833 1,478,330 - - - - - - - - -

Common stock sold for cash - - 500,000 500 249,500 - (250,000 ) - - - -

Common stock issued for services - - 5,931,000 5,931 3,335,569 - - - - - 3,341,500

Common stock payable for services - - - - - - 45,000 - - - 45,000

Amortization of common stock options issued for services - - - - 1,875,623 - - - - - 1,875,623

Loss on foreign currency translation - - - - - - - (28,700 ) - - (28,700 )

Series A convertible preferred stock declared ($0.60 per share)
- - - - (14,870 ) - - - - - (14,870 )

Net loss for the nine months ended September 30, 2020 - - - - - - - - (6,721,301 ) - (6,721,301 )

Balance, September 30, 2020 147,833 $ 1,478,330 51,235,305 $ 51,235 $ 13,595,826 $ - $ 45,000 $ (44,948 ) $ (14,888,467 ) $ - $ (1,241,354 )

	For the Six Months Ended June 30, 2021
	Series A Convertible						Series B Convertible								Additional						Accumulated Other						Total Stockholders’
	Preferred Stock						Preferred Stock				Common Stock				Paid-In			Subscriptions			Comprehensive			Accumulated			Equity
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Payable			Income (Loss)			Deficit			(Deficit)

Balance, December 31, 2020		150,233		$	1,502,330			-	$	-		53,085,305	$	53,085	$	14,103,672		$	75,000		$	(52,870	)	$	(16,132,326	)	$	(1,953,439	)

Series B convertible preferred stock sold for cash to our CEO		-			-			170,001		2,550,015		-		-		-			-			-			-			-

Series B convertible preferred stock sold for cash		-			-			35,168		527,520		-		-		(25	)		-			-			-			(25	)

Common stock sold for cash		-			-			-		-		750,000		750		74,250			(75,000	)		-			-			-

Conversion of series A convertible preferred stock		(55,000	)		(550,000	)		-		-		5,500,000		5,500		544,500			-			-			-			550,000

Common stock issued for services		-			-			-		-		580,678		581		107,215			-			-			-			107,796

Commitment shares issued pursuant to promissory note		-			-			-		-		2,000,000		2,000		266,250			-			-			-			268,250

Amortization of common stock options issued for services		-			-			-		-		-		-		654,579			-			-			-			654,579

Series A convertible preferred stock dividend declared ($0.60 per share)		-			-			-		-		-		-		(34,843	)		-			-			-			(34,843	)

Loss on foreign currency translation		-			-			-		-		-		-		-			-			(5,419	)		-			(5,419	)

Net loss		-			-			-		-		-		-		-			-			-			(1,793,411	)		(1,793,411	)

Balance, June 30, 2021		95,233		$	952,330			205,169	$	3,077,535		61,915,983	$	61,916	$	15,715,598		$	-		$	(58,289	)	$	(17,925,737	)	$	(2,206,512	)

See accompanying notes to financial statements.

ONE WORLD PHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Nine Months Ended						For the Six Months Ended
	September 30,						June 30,
	2020			2019			2021			2020
Cash flows from operating activities
Net loss	$	(6,721,301	)	$	(4,445,726	)	$	(1,793,411	)	$	(5,581,247	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		23,706			9,432			22,998			14,210
Loss on disposal of fixed assets		-			4,087
Amortization of debt discounts		-			332,332			13,786			-
Amortization of stock-based debt discounts								170,033			-
Stock-based compensation		3,386,498			175,000			107,796			3,009,000
Amortization of options issued for services		1,875,623			1,079,525			654,579			1,549,199
Decrease (increase) in assets:
Accounts receivable								(23,095	)		-
Inventory		(201,522	)		(22,097	)		(146,714	)		(148,458	)
Other current assets		71,295			(235,096	)		(21,640	)		55,049
Right-of-use assets		79,011			(248,541	)		22,636			56,569
Security deposits		1,632			(61,301	)		(2,239	)		1,129
Increase (decrease) in liabilities:
Accounts payable		272,366			23,123			(175,327	)		304,337
Accrued expenses		130,437			21,986			(100,163	)		31,501
Lease liability		(73,027	)		251,789			(22,114	)		(52,513	)
Net cash used in operating activities		(1,155,282	)		(3,115,487	)		(1,292,875	)		(761,224	)

Cash flows from investing activities
Purchase of fixed assets		(37,793	)		(224,597	)		(223,922	)		(2,213	)
Net cash used in investing activities		(37,793	)		(224,597	)		(223,922	)		(2,213	)

Cash flows from financing activities
Proceeds from convertible note payable		-			500,000
Repayment of convertible note payable		(507,332	)		-
Repayment of advances from shareholders		-			(314,141	)
Proceeds from notes payable		261,274			-			268,250			231,274
Repayment of notes payable		(272,000	)		-			(40,567	)		(20,000	)
Proceeds from subscriptions receivable		-			602
Proceeds from sale of preferred and common stock		1,478,332			4,004,500			3,077,510			400,000
Net cash provided by financing activities		960,274			4,190,961			3,305,193			611,274

Effect of exchange rate changes on cash		(28,700	)		(21,121	)		(5,419	)		(28,203	)

Net increase (decrease) in cash		(261,501	)		829,756			1,782,977			(180,366	)
Cash - beginning		282,380			125,846			28,920			282,380
Cash - ending	$	20,879		$	955,602		$	1,811,897		$	102,014

Supplemental disclosures:
Interest paid	$	4,983		$	35,402		$	8,175		$	-
Income taxes paid	$	-		$	-		$	-		$	-

Non-cash investing and financing transactions:
Fair value of net assets acquired in merger	$	-		$	9,306
Value of shares issued for conversion of debt	$	-		$	701,397
Beneficial conversion feature	$	-		$	332,332
Fair value of common shares issued for conversion of debt							$	1,537,750		$	-
Value of commitment shares issued as a debt discount							$	268,250		$	-
Dividends payable	$	14,870		$	-		$	34,843		$	-

See accompanying notes to financial statements.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Nature of Business and Significant Accounting Policies

Nature of Business

One World Pharma, Inc. (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”) 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~~$0.50 automatically converted into options to purchase 825,000 shares of our common stock at an exercise price of ~~$0.50;~~$0.50; (c) the outstanding principal and interest under a ~~$300,000~~$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~~$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 a producer of raw cannabis and hemp plant ingredients for both medical and industrial 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 few companies in Colombia to receive all four licenses, including seed use, cultivation of non-psychoactive cannabis, cultivation of psychoactive cannabis, and manufacturing allowing for extraction and ~~export licenses from the Colombian government.~~export. Currently, we own approximately 30 acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis. We ~~planted our first crop of cannabis in 2018, which we~~ began harvesting cannabis in the first quarter of 2019 for the purpose of further research and development activities, ~~and~~ quality control testing ~~of the cannabis we~~and extraction. We have ~~produced. We began~~been generating revenue from the sale of our seeds insince the second quarter of 2020. In August 2021, the Company initiated the construction of a vertically integrated extraction facility designed to process the cannabis flower, making the Company one of the first companies in Colombia to, both, hold licenses and the capability to extract high-quality CBD and THC oils.

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, ~~2019.~~2020. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.

ONE WORLD PHARMA, INC.

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 ~~September~~June 30, ~~2020:~~2021:

Schedule of Common Control and Ownership Interest

	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.

Reclassifications

Certain reclassifications have been made to the prior years’ financial statements to conform to current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.

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 the 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 of America requires management to make estimates and assumptions that may 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~~these 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.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Fair Value of Financial Instruments

The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820 – Fair Value Measurement and Disclosures (ASC 820). Under ASC 820-10-05, the FASB 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.

~~ONE WORLD PHARMA, INC.~~

~~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,~~$250,000, under current regulations. The Company ~~did not have~~had $1,093,935 of cash in excess of FDIC insured limits at ~~September~~June 30, ~~2020.~~2021, and has not experienced any losses in such accounts.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 — Revenue from Contracts with ~~Customers.~~Customers (ASC 606). Under ASC 606, the Company recognizes 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.

There was no impact on the Company’s financial statements from ASC 606 for the nine months ended September 30, 2020, or the year ended December 31, 2019. Inventory consisted of $93,560 of raw materials, $42,622 of work in progress and $90,022 of finished goods at September 30, 2020.

Inventory

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.

Recent 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 August ~~2018,~~2020, the FASB issued ASU No. 2020-06, Debt–Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting ~~Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820).~~for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if converted method. 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, ~~including~~and interim periods within those annual periods, beginning after December 15, ~~2019.~~2021, with early adoption permitted. The adoption of ASU 2020-06 is not expected to have a material impact on the ~~new standard did not have an effect on our~~Company’s financial ~~position, results of operations~~statements or ~~cash flows.~~related disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. 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 amount 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 new standard did not have an effect on our financial position, results of operations or cash flows.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~There~~In May 2020, the SEC adopted final rules that amend the financial statement requirements for significant business acquisitions and dispositions. Among other changes, the final rules modify the significance tests and improve the disclosure requirements for acquired or to be acquired businesses and related pro forma financial information, the periods those financial statements must cover, and the form and content of the pro forma financial information. The final rules do not modify requirements for the acquisition and disposition of significant amounts of assets that do not constitute a business. The final rules were effective January 1, 2021. The Company has considered these final rules and updated its disclosures, as applicable.

In November 2019, the FASB issued ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are nopart of an initiative to reduce complexity in accounting standards and simplify the accounting for income taxes by removing certain exceptions from Topic 740 and making minor improvements to the codification. ASU 2019-12 and its related amendments are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The provisions of this update did not have a material impact on the Company’s financial position or results of operations.

No other ~~recently issued~~new accounting pronouncements, ~~that~~issued or effective during the ~~Company has yet to adopt that~~period ended June 30, 2021, have had or are expected to have a ~~material effect~~significant impact on ~~its~~the Company’s financial ~~position, results of operations, or cash flows.~~statements.

Note 2 ~~–Going~~–Going Concern

As shown in the accompanying condensed consolidated financial statements as of ~~September~~June 30, ~~2020, the Company had~~2021, our balance of cash on hand ~~of $20,879, negative~~was $1,811,897, and we had working capital of ~~$592,394~~$587,583 and an accumulated deficit of ~~$14,888,467,~~$17,925,737. We are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and ~~the Company’s~~we may need to raise additional cash ~~on hand will not be sufficient~~ to ~~sustain~~fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. ~~Management is actively pursuing new customers~~The Company has commenced sales and continues to ~~generate revenues.~~ develop its operations, and raised an additional $499,995 from sale of series B preferred stock in July, as noted in our subsequent events footnote.

In ~~addition,~~ the ~~Company is currently seeking~~event sales do not materialize at the expected rates, management would seek additional ~~sources of capital~~financing or would attempt to ~~fund short term operations. Management believes these factors will contribute toward achieving profitability.~~conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these ~~objectives, becoming profitable or continuing our business~~objectives; therefore, without ~~either~~sufficient financing it would be unlikely for the Company to continue as a ~~temporary interruption or a permanent cessation. Additional financing may result in substantial dilution to existing stockholders.~~going concern.

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~~The condensed consolidated 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. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

Note 3 – ~~Mergers and Acquisitions~~

~~Acquisition~~

On December 6, 2019, the Company, through its wholly-owned subsidiary OWP Ventures, Inc., acquired 51% 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, Inc. and Colombian Hope’s shareholders. Colombian Hope is the holder of a 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 capital 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 acquire such shares, which were then acquired by OWP Ventures, Inc., resulting in 100% ownership. No assets or liabilities were acquired pursuant to the acquisition, resulting in $102,000 of goodwill that was impaired and expensed on December 31, 2019 due to the lack of current operations. To date, Colombian Hope has not incurred any income or expenses.

~~Note 4 –~~ Related Parties

~~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 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 (i) issued Mr. Ellins 2,000,000 shares of the Company’s Common Stock, (ii) reimbursed Mr. Ellins for $55,000 of expenses previously incurred by him on behalf of the Company, and (iii) agreed to 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”).

~~Pursuant to the Employment Agreement:~~

	●	~~Mr. Thomas is 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 vests 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.

~~ONE WORLD PHARMA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Debt Repayment, Related Party

On ~~various dates between, July 2, 2020 and July 6, 2020,~~March 29, 2021, the Company repaid a total of ~~$140,983~~$27,201 of indebtedness owed to ~~MCKP Investments LLC, consisting of $136,000 of principal and $4,983 of interest. The~~the Company’s Chairman of the Board, Dr. Kenneth Perego, II, ~~is the controlling member~~M.D., consisting of ~~MCKP Investments LLC.~~$26,000 of principal and $1,201 of interest.

Series A Preferred Stock Sales

On September 1, 2020, the Company received proceeds of ~~$26,000~~$26,000 from the sale of 2,600 units to the Company’s Chairman of the Board, Dr. Ken Perego. Each unit consisted of one share of Series A Preferred Stock and ~~five-year~~five-year warrants to purchase 50 shares of common stock at an exercise price of ~~$0.25~~$0.25 per share. The proceeds received were allocated between the preferred stock and warrants on a relative fair value basis.

On July 10, 2020, the Company received proceeds of ~~$110,000~~$110,000 from the sale of 11,000 units to the Company’s Chairman of the Board, Dr. Ken Perego. Each unit consisted of one share of Series A Preferred Stock and ~~five-year~~five-year warrants to purchase 50 shares of common stock at an exercise price of ~~$0.25~~$0.25 per share. The proceeds received were allocated between the preferred stock and warrants on a relative fair value basis.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Series B Preferred Stock Sales

On February 7, 2021, the Company and ISIAH International, LLC (“ISIAH International”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) under which ISIAH International agreed to purchase from the Company, on the dates provided for in the Purchase Agreement, an aggregate of 200,000 shares of the Company’s newly designated Series B Preferred Stock (“Series B Preferred Stock”), convertible into an aggregate of 20,000,000 shares of the Company’s common stock, for a purchase price of $15.00 per share of Preferred Stock, and an aggregate purchase price of $3 million. Each share of Series B Preferred Stock has a Stated Value of $15.00 and is convertible into common stock at a conversion price equal to $0.15. Isiah Thomas, the Company’s Chief Executive Officer, is the sole member and Chief Executive Officer of ISIAH International. Pursuant to the Purchase Agreement, ISIAH International has agreed to purchase shares of Series B Preferred Stock from the Company according to the following schedule:

Schedule of Agreement to Purchase Shares of Preferred Stock

Date	Shares		Purchase Price
Initial Closing Date		16,666	$	249,990
February 22, 2021		16,667	$	250,005
March 8, 2021		16,667	$	250,005
March 22, 2021		16,667	$	250,005
April 5, 2021		16,666	$	249,990
April 19, 2021		16,667	$	250,005
May 17, 2021		33,334	$	500,010
June 14, 2021		33,333	$	499,995
July 12, 2021		33,333	$	499,995
Total		200,000	$	3,000,000

As of June 30, 2021, a total of 166,667 shares Series B Preferred Stock have been purchased in accordance with the above schedule, for total proceeds of $2,500,005.

On various dates in May, 2021, the Company received total proceeds of $50,010 from the sale of an aggregate of 3,334 shares of Series B Preferred Stock at a price of $15.00 per share to trusts whose beneficiaries are adult children of Isiah L. Thomas III. Mr. Thomas disclaims beneficial ownership of the shares held by these trusts.

Common Stock Options Issued for Services, Officers and Directors

On May 31, 2020, the Company awarded 350,000 shares of common stock to the Company’s Chairman of the Board, Dr. Ken Perego, for services provided. The aggregate fair value of the common stock was $120,000 based on the closing price of the Company’s common stock on the date of grant.

~~Common Stock Options Issued for Services, Directors~~

~~On May 31, 2020,~~25, 2021, the Company awarded options to purchase ~~350,000~~1,000,000 shares of common stock under the Company’s ~~Common~~2019 Stock Incentive Plan (the “2019 Plan”) at an exercise price equal to ~~$0.56~~$0.1782 per share, exercisable over a ten year period to the Company’s ~~Chairman of the Board, Dr. Ken Perego.~~CFO and COO, Vahé Gabriel. The options ~~will~~vested immediately as to 500,000 shares, and vest as to ~~116,667 shares immediately, with~~ the remaining ~~233,333~~500,000 shares quarterly in 250,000 increments over the following two ~~years, beginning October 1, 2020.~~quarters. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~302%~~183% and a call option value of ~~$0.5599,~~$0.1719, was ~~$195,959.~~$171,949. The options are being expensed over the vesting period, resulting in ~~$86,263~~$85,975 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$109,696~~$85,974 of unamortized expenses are expected to be expensed over the vesting period.

On ~~May 31, 2020,~~January 1, 2021, the Company awarded options to purchase ~~350,000~~5,500,000 shares of ~~the Company’s Common Stock~~common stock at an exercise price equal to ~~$0.56~~$0.13 per share to ~~one~~Isiah L. Thomas III, the Company’s Chief Executive Officer and Vice Chairman. The options were issued outside of the ~~Company’s Directors, Bruce Raben.~~2019 Plan and are exercisable over a ten year period. The options ~~will~~vested immediately as to 2,750,000 shares, and vest as to ~~116,667 shares immediately, with~~ the remaining ~~233,333~~2,750,000 shares quarterly in 250,000 increments over the following ~~two years, beginning October 1, 2020.~~eleven quarters. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~302%~~192% and a call option value of ~~$0.5599,~~$0.1174, was ~~$195,959.~~$645,624. The options are being expensed over the vesting period, resulting in ~~$86,263~~$352,159 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$109,696~~$293,465 of unamortized expenses are expected to be expensed over the vesting period.

On January 1, 2021, the Company awarded options to purchase 350,000 shares of common stock under the 2019 Plan at an exercise price equal to $0.13 per share, exercisable over a ten year period to the Company’s Chairman of the Board, Dr. Ken Perego. The options vest in equal quarterly installments over one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 192% and a call option value of $0.1170, was $40,943. The options are being expensed over the vesting period, resulting in $20,471 of stock-based compensation expense during the six months ended June 30, 2021. As of June 30, 2021, a total of $20,472 of unamortized expenses are expected to be expensed over the vesting period.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On January 1, 2021, the Company awarded options to purchase 475,000 shares of common stock under the 2019 Plan at an exercise price equal to $0.13 per share, exercisable over a ten year period to Bruce Raben, the Company’s former Interim Chief Financial Officer and a Director of the Company. The options vest in equal quarterly installments over one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 192% and a call option value of $0.1170, was $55,565. The options are being expensed over the vesting period, resulting in $27,783 of stock-based compensation expense during the six months ended June 30, 2021. As of June 30, 2021, a total of $27,782 of unamortized expenses are expected to be expensed over the vesting period.

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.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheet as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Valuation of Financial Instruments at Fair Value on a Recurring Basis


	Fair Value Measurements at September 30, 2020								Fair Value Measurements at June 30, 2021
	Level 1		Level 2			Level 3			Level 1		Level 2			Level 3
Assets
Cash	$	20,879	$	-		$	-		$	1,811,897	$	-		$	-
Right-of-use asset		-		-			423,695			-		-			172,393
Total assets		20,879		-			423,695			1,811,897		-			172,393
Liabilities
Lease liabilities		-		-			435,325			-		-			179,411
Notes payable		-		119,274			-			-		478,093			-
Total liabilities		-		(119,274	)		(435,325	)		-		(478,093	)		(7,018	)
	$	20,879	$	(119,274	)	$	(11,630	)
Total assets and liabilities									$	1,811,897	$	(478,093	)	$	(7,018	)


	Fair Value Measurements at December 31, 2019								Fair Value Measurements at December 31, 2020
	Level 1		Level 2			Level 3			Level 1		Level 2			Level 3
Assets
Cash	$	282,380	$	-		$	-		$	28,920	$	-		$	-
Right-of-use asset		-		-			502,706			-		-			195,029
Total assets		282,380		-			502,706			28,920		-			195,029
Liabilities
Lease liabilities		-		-			508,352			-		-			201,520
Convertible note payable		-		-			507,332
Notes payable		-		130,000			-			-		334,841			-
Total liabilities		-		130,000			1,015,684			-		334,841			201,525
	$	282,380	$	(130,000	)	$	(512,978	)
Total assets and liabilities									$	28,920	$	(334,841	)	$	(6,496	)

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 or the year ended December 31, ~~2019.~~2020.

~~ONE WORLD PHARMA, INC.~~Note 5 – Inventory

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Note 6 – 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 ~~$93,560 of raw materials, $42,622 of work in progress~~the following at June 30, 2021 and ~~$90,022 of finished goods at September 30, 2020, and $24,682 of raw materials at~~ December 31, ~~2019,~~2020, respectively.

Schedule of Inventory

	June 30,			December 31,
	2021			2020
Raw materials	$	32,215		$	27,514
Work in progress		333,568			181,272
Finished goods		92,539			104,673
Inventory gross		458,322			313,459
Less obsolescence		(44,456	)		(46,307	)
Total inventory	$	413,866		$	267,152

Note 76 – Other Current Assets

Other current assets included the following as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Other Current Assets

	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
VAT tax receivable	$	80,987	$	54,814	$	116,840	$	99,199
Prepaid expenses		74,655		132,338		22,605		19,226
Other receivables		40,469		79,954		1,106		486
Total	$	195,811	$	267,106	$	140,551	$	118,911

Note 87 – Security Deposits

Security deposits included the following as of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Security Deposits

	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Utility deposits					$	1,090	$	660
Refundable deposit on equipment purchase	$	50,000	$	50,000		50,000		50,000
Security deposits on leases held in Colombia		15,741		18,033		2,234		9,960
Security deposit on office lease		4,494		4,494		14,029		4,494
Security deposit on utilities		660		-
	$	70,895	$	72,527	$	67,353	$	65,114

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 98 – Fixed Assets

Fixed assets consist of the following at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Fixed Assets

	September 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
Land	$	138,248		$	138,248		$	138,248		$	138,248
Buildings		41,665			-			41,665			41,665
Office equipment		44,027			44,027			51,976			44,027
Furniture and fixtures		27,914			27,914			27,914			27,914
Equipment and machinery		176,285			174,072			387,555			185,169
Construction in progress		329,146			335,231			358,623			345,036
		757,285			719,492
Fixed assets, gross								1,005,981			782,059
Less: accumulated depreciation		(45,335	)		(21,629	)		(78,237	)		(55,239	)
Total	$	711,950		$	697,863		$	927,744		$	726,820

Construction in progress consists of equipment and capital improvements on the Popayán farm have not yet been placed in service.

Depreciation and amortization expense totaled ~~$23,706~~$22,998 and ~~$9,432~~$14,210 for the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

~~ONE WORLD PHARMA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Note 109 – Accrued Expenses

Accrued expenses consisted of the following at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Accrued Expenses

	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Accrued payroll	$	97,132	$	67,479	$	252,673	$	266,230
Accrued withholding taxes and employee benefits		10,123		14,386		12,376		18,889
Accrued ICA fees and contributions		83,371		1,912		129,001		200,335
Accrued interest		49,476		25,888		56,322		65,081
	$	240,102	$	109,665
Accrued expenses					$	450,372	$	550,535

Note 1110 – Leases

The Company’s corporate offices and operational facility in Colombia under short-term non-cancelable real property lease agreements that expire ~~on October 31, 2021 and September 30, 2029, respectively.~~within a year. 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.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The components of lease expense were as follows:

Schedule of Components of Lease Expense

	For the Nine		For the Six
	Months Ended		Months Ended
	September 30,		June 30,
	2020		2021
Operating lease cost:
Amortization of assets	$	45,388	$	22,637
Interest on lease liabilities		23,149		6,493
Lease payments on short term leases				21,193
Total lease cost	$	68,537	$	50,323

Supplemental balance sheet information related to leases was as follows:

Schedule of Supplemental Balance Sheet Information Related to Leases

	September 30,			June 30,
	2020			2021
Operating leases:
Operating lease assets	$	423,695		$	172,393

Current portion of operating lease liabilities	$	58,155		$	47,691
Noncurrent operating lease liabilities		377,170			131,720
Total operating lease liabilities	$	435,325		$	179,411

Weighted average remaining lease term:
Operating leases		9 years			3.33 years

Weighted average discount rate:
Operating leases		6.75	%		6.75	%

~~ONE WORLD PHARMA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Supplemental cash flow and other information related to leases was as follows:

Schedule of Supplemental Cash Flow Related to Leases

	For the Nine		For the Six
	Months Ended		Months Ended
	September 30,		June 30,
	2020		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	73,027	$	22,114

Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities	$	548,216

Future minimum annual lease commitments under non-cancelable operating leases are as follows at ~~September~~June 30, ~~2020:~~2021:

Schedule of Operating Lease Liability Maturity

	Operating		Operating
	Leases		Leases

2020	$	28,566
2021		80,877
2021 (for the six months remaining)			$	28,892
2022		34,528		59,223
2023		35,909		61,000
2024		37,345		52,098
Thereafter		198,669
Total minimum lease payments		415,894		201,213
Less interest		19,431		21,802
Present value of lease liabilities		435,325		179,411
Less current portion		58,155		47,691
Long-term lease liabilities	$	377,170	$	131,720

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1211 – ~~Convertible Note Payable~~

~~Convertible note payable consists of the following at September 30, 2020 and December 31, 2019, respectively:~~

September 30, December 31,
2020 2019

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. On September 14, 2020, the principal was repaid by the issuance of 30,000 shares of Series A Convertible Preferred Stock to CSW in satisfaction of obligation to repay such principal. $ - $ 300,000

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 was convertible at the option of the holder into shares of common stock at a price of $0.50 per share. On September 14, 2020, the principal was repaid with $207,332 of such principal paid by the issuance of 20,733 shares of Series A Convertible Preferred Stock to CSW. - 207,332
Less: unamortized debt discounts - -
Convertible note payable $ - $ 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 discounts equal to $332,332 for the year ended December 31, 2019. The Company recorded finance expense in the amount of $332,332 for the nine months ended September 30, 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.~~
The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $21,516 and $17,079 for the nine months ended September 30, 2020 and 2019, respectively, and $332,332 of interest expense related to the debt discount for the nine months ended September 30, 2019.
14
~~ONE WORLD PHARMA, INC.~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~

~~Note 13 –~~ Notes Payable

Notes payable consists of the following at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively:

Schedule of Notes Payable

September 30, December 31,
2020 2019

On May 4, 2020, the Company received an advance of $20,000 from Woodman Management pursuant to an unsecured promissory note due on demand that carried a 6% interest rate. The advance was repaid by the Company on May 14, 2020. $ - $ -

On various dates between January 29, 2020 and March 31, 2020, the Company received advances from CSW Ventures, LP aggregating of $116,000, 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
$10,000 – August 17, 2020
$20,000 – August 20, 2020
On September 14, 2020, the principal was repaid with $116,000 of such principal paid by the issuance of 11,600 shares of Series A Convertible Preferred Stock to CSW.
- -

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 of 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.
119,274 -

On April 2, 2020, the Company received an advance of $6,000 from MCKP Investments LLC, a Company principally owned by the Company’s Chairman of the Board, Dr. Kenneth Perego, II, on an unsecured promissory note due on demand that carries a 6% interest rate. On July 2, 2020, the debt was repaid in full, including $90 of interest. - -

On November 14, 2019, the Company received an advance of $50,000 from MCKP Investments LLC, pursuant to an unsecured promissory note due on demand that carries a 6% interest rate. On July 2, 2020, the debt was repaid in full, including $1,882 of interest. - 50,000

On November 14, 2019, the Company received an additional advance of $80,000 from MCKP Investments LLC, pursuant to an unsecured promissory note due on demand that carries a 6% interest rate. On July 2, 2020, the debt was repaid in full, including $3,011 of interest. - 80,000

Total notes payable $ 119,274 $ 130,000

	June 30,		December 31,
	2021		2020

On January 20, 2021, the Company completed the sale of a Promissory Note in the principal amount of $290,000 (the “Note”) to AJB Capital Investments LLC (the “Investor”) for a purchase price of $281,300, pursuant to a Securities Purchase Agreement between the Company and the Investor (the “Purchase Agreement”). The Company received net proceeds of $268,250 after deductions of debt discounts, consisting of $8,700 pursuant to an original issue discount, $7,250 of legal fees and $5,800 of brokerage fees. The Note matures on October 20, 2021 (the “Maturity Date”), bears interest at a rate of 10% per annum, and, following an event of default only, is convertible into shares of the Company’s common stock at a conversion price equal to the lesser of 90% of the lowest trading price during (i) the 20 trading day period preceding the issuance date of the note, or (ii) the 20 trading day period preceding date of conversion of the Note. The Note is also subject to covenants, events of defaults, penalties, default interest and other terms and conditions customary in transactions of this nature. Pursuant to the Purchase Agreement, the Company paid a commitment fee to the Investor in the amount of $200,000 (the “Commitment Fee”) in the form of 2,000,000 shares of the Company’s common stock (the “Commitment Fee Shares”). During the six month period following the six month anniversary of the closing date (the “Adjustment Period”), the Investor shall be entitled to be issued additional shares of common stock of the Company to the extent the Investor’s sale of the Commitment Fee Shares has resulted in net proceeds in an amount less than the Commitment Fee. If the Company repays the Note on or prior to the Maturity Date, the Company may redeem 1,000,000 of the Commitment Fee Shares for a nominal redemption price of $1.00. The Commitment Fee Shares resulted in a debt discount of $268,250 that is being amortized over the life of the loan. The obligations of the Company to the Investor under the Note and the Purchase Agreement are secured by a lien on the Company’s assets pursuant to a Security Agreement between the Company and the Investor.	$	290,000	$	-

On February 3, 2020, the Company, through its wholly-owned subsidiary, One World Pharma SAS, received an advance of 100,000,000 COP, or $29,134 USD, from an individual pursuant to an unsecured promissory note due on demand that carried a 6% interest rate. The Company repaid 50,000,000 COP, or $14,567 USD, during the year ended December 31, 2020, and repaid the remaining 50,000,000 COP, or $14,567 USD, during the quarter ending June 30, 2021.		-		14,567

On December 16, 2020, the Company received an advance of $125,000 from our CEO, Isiah Thomas, III pursuant to an unsecured promissory note due on demand that carried a 6% interest rate.		125,000		125,000

On October 28, 2020, the Company received an advance of $50,000 from its CEO, Isiah Thomas, III pursuant to an unsecured promissory note due on demand that carries a 6% interest rate.		50,000		50,000

On September 14, 2020, the Company received an advance of $26,000 from its Chairman, Dr. Kenneth Perego, II, M.D. pursuant to an unsecured promissory note due on demand that carried a 6% interest rate. The advance was repaid by the Company on March 29, 2021.		-		26,000

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 of 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.		119,274		119,274

Total notes payable		584,274		334,841
Less unamortized debt discounts		106,181		-
Notes payable, net of discounts	$	478,093	$	334,841

1514

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~The Company recorded interest expense in the amount of $7,055 and $6,674 for the nine months ended September 30, 2020 and 2019, respectively.~~

The Company recognized interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, as follows:

Schedule of Interest Expenses

	September 30,		September 30,		June 30,		June 30,
	2020		2019		2021		2020

Interest on convertible notes	$	21,516	$	17,079	$	-	$	15,178
Interest on advances from shareholders		-		16,053
Interest on notes payable		7,055		6,674		18,987		2,876
Amortization of beneficial conversion features		-		332,332
Amortization of debt discounts, including $170,033 of stock-based discounts						183,819		-
Interest on accounts payable		-		8,611		7,289		-
Total interest expense	$	28,571	$	380,749	$	210,095	$	21,054

Note 1412 – ~~Series A~~Convertible Preferred Stock

Preferred Stock

The Company has 10,000,000 authorized shares of ~~$0.001~~$0.001 par value “blank check” preferred stock, of which 500,000 shares have been designated Series A Preferred Stock and 300,000 shares have been designated Series B Preferred Stock. ~~Each share~~The shares of Series A Preferred Stock isand Series B Preferred Stock are each currently convertible into ~~fifty (50)~~one hundred (100) shares of the Company’s common ~~stock.~~stock. The Series A Preferred Stock accrues dividends at the rate of 6% per annum, payable ~~annually~~ in cash as and when declared by the Board or ~~additional~~upon a liquidation. The shares of Series B Preferred Stock are not entitled to dividends, other than the right to participate in dividends payable to holders of common stock on an as-converted basis. As of June 30, 2021, there were 95,233 and 205,169 shares of Series A Preferred Stock ~~at the Company’s election. As of September 30, 2020, there were 147,833 shares of~~and Series AB Preferred Stock, respectively, issued and outstanding. The Series A and B Preferred Stock isare presented as mezzanine equity on the balance sheet due ~~to it carrying~~because they carry a stated value of ~~$10~~$10 and $15 per share, respectively, and a deemed liquidation clause, which entitles the ~~holder~~holders thereof to receive ~~before and in preference to any distribution or payment of assets of the Corporation or the~~ proceeds thereof ~~may be made or set apart for the holders of junior securities~~in an amount ~~in cash~~ equal to the stated value per share, plus ~~an amount equal to~~ any accrued and unpaid ~~dividends.~~dividends, before any payment may be made to holders of common stock. Each share of Preferred Stock carries a number of votes equal to the number of shares of common stock into which such Preferred Stock may then be converted. The Preferred Stock generally will vote together with the common stock and not as a separate class.

The Series A and B Preferred Stock have been classified outside of permanent equity and liabilities. the Series A Preferred Stock embodies conditional obligations that the Company may settle by issuing a variable number of equity shares, and in both the Series A and B Preferred Stock, monetary value of the obligation is based on a fixed monetary amount known at inception.

Series A Preferred Stock Sales

~~On various dates between April 14, 2020 and September 14, 2020, the Company received total proceeds of $1,478,330 from the sale of 147,833 units, consisting in the aggregate of 147,833~~NaN shares of Series A Preferred Stock ~~and five-year warrants to purchase 7,391,650~~were sold during the six months ending June 30, 2021.

Series A Preferred Stock Conversions

On April 6, 2021, a shareholder converted 30,000 shares of Series A Preferred Stock into 3,000,000 shares of common stock.

On March 24, 2021, a shareholder converted 10,000 shares of Series A Preferred Stock into 1,000,000 shares of common stock. The shares of common stock ~~at an exercise price~~were subsequently issued on April 7, 2021.

On January 26, 2021, a shareholder converted 5,000 shares of ~~$0.25 per share to fourteen accredited investors. The proceeds received were allocated between the~~ Series A Preferred Stock ~~and warrants on~~into 500,000 shares of common stock.

On January 12, 2021, a ~~relative fair value basis.~~shareholder converted 10,000 shares of Series A Preferred Stock into 1,000,000 shares of common stock.

Preferred Stock Dividends

The Series A Preferred Stock accrues dividends at the rate of 6%6% per annum, payable ~~annually~~ in cash as and when declared by the Board or ~~additional shares of Series A Preferred Stock, at the Company’s election.~~upon a liquidation. A total of ~~$14,870~~$72,079 of dividends ~~were payable~~had accrued as of ~~September~~June 30, ~~2020.~~2021.

1615

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Series B Preferred Stock Sales

On February 7, 2021, the Company and ISIAH International entered into a Securities Purchase Agreement under which ISIAH International agreed to purchase from the Company, on the dates provided for in the Purchase Agreement, an aggregate of 200,000 shares of the Company’s newly designated Series B Preferred Stock, convertible into an aggregate of 20,000,000 shares of common stock, for a purchase price of $15.00 per share of Preferred Stock, and an aggregate purchase price of $3 million. Each share of Series B Preferred Stock has a Stated Value of $15.00 and is convertible into common stock at a conversion price equal to $0.15. Isiah Thomas, the Company’s Chief Executive Officer, is the sole member and Chief Executive Officer of ISIAH International. Pursuant to the Purchase Agreement, ISIAH International has agreed to purchase shares of Series B Preferred Stock from the Company according to the following schedule:

Schedule to Purchase Shares of Preferred Stock

Date	Shares		Purchase Price
Initial Closing Date		16,666	$	249,990
February 22, 2021		16,667	$	250,005
March 8, 2021		16,667	$	250,005
March 22, 2021		16,667	$	250,005
April 5, 2021		16,666	$	249,990
April 19, 2021		16,667	$	250,005
May 17, 2021		33,334	$	500,010
June 14, 2021		33,333	$	499,995
July 12, 2021		33,333	$	499,995
Total		200,000	$	3,000,000

As of June 30, 2021, a total of 166,667 shares Series B Preferred Stock have been purchased in accordance with the above schedule, for total proceeds of $2,500,005.

In addition to the shares sold to ISIAH International, the Company received total proceeds of $527,520 on various dates between March 9, 2021 and April 22, 2021 from the sale of an additional 35,168 shares of Series B Preferred Stock at a price of $15.00 per share to seven accredited investors, including proceeds of $50,010 from the sale of an aggregate of 3,334 shares of Series B Preferred Stock at a price of $15.00 per share to trusts whose beneficiaries are adult children of Isiah L. Thomas III. Mr. Thomas disclaims beneficial ownership of the shares held by these trusts.

Note 1513 – Changes in Stockholders’ Equity

Common Stock

The Company is authorized to issue an aggregate of 300,000,000 shares of common stock with a par value of ~~$0.001.~~$0.001. As of ~~September~~June 30, ~~2020,~~2021, there were ~~51,235,305~~61,915,983 shares of common stock issued and outstanding.

Common Stock Issued on Subscriptions Payable

On ~~January 6, 2020,~~March 1, 2021, the Company issued ~~500,000~~750,000 shares of common stock ~~that were purchased~~ on ~~December 31, 2019~~a Subscriptions Payable for the November 27, 2020 sale of common stock at ~~$0.50~~$0.10 per share for proceeds of ~~$25,000. Prior~~$75,000.

Common Stock Issued as a Promissory Note Commitment

As disclosed in Note 11, above, pursuant to the ~~issuance,~~Purchase Agreement with AJB Capital, the ~~purchase price was reflected on~~Company paid a commitment fee to the Investor in the form of 2,000,000 shares of the Company’s ~~balance sheet as subscriptions payable.~~

~~Common Stock Awarded for Subscriptions Payable~~

~~On September 21, 2020,~~common stock. During the ~~Company awarded 250,000~~six month period following the six month anniversary of the closing date (the “Adjustment Period”), the Investor shall be entitled to be issued additional shares of common stock of the Company to the extent the Investor’s sale of the Commitment Fee Shares has resulted in net proceeds in an amount less than the $200,000 Commitment Fee. If the Company repays the Note on or prior to the Maturity Date, the Company may redeem 1,000,000 of the Commitment Fee Shares for a ~~consultant~~nominal redemption price of $1.00. The Commitment Fee Shares resulted in a debt discount of $268,250 that is being amortized over the life of the loan, resulting in $170,033 of finance expense during the six months ended June 30, 2021.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Common Stock Issued for Services

On May 25, 2021, the Company awarded a total of 300,000 shares of common stock for Advisory Board services ~~performed.~~to two individuals. The aggregate fair value of the ~~common stock~~shares was ~~$45,000~~$51,000, based on the closing price of the Company’s common stock on the date of grant.

On May 25, 2021, the Company awarded a total of 50,000 shares of common stock pursuant for consulting services to two individuals. The ~~shares were subsequently issued on November 18, 2020. Prior to the issuance, the~~aggregate fair value of the shares was ~~reflected on the Company’s balance sheet as subscriptions payable.~~

~~Common Stock Issued for Services, Employees and Consultants~~

~~On July 1, 2020, the Company awarded an aggregate of 875,000 shares of common stock to four employees and consultants for services provided. The aggregate fair value of the common stock was $332,500~~$8,500, based on the closing price of the Company’s common stock on the date of grant.

On ~~June 3, 2020,~~May 12, 2021, the Company ~~awarded 200,000~~entered into a Settlement Agreement with COR Prominence, LLC. Pursuant to the Settlement Agreement, the Company issued 118,150 shares of common ~~stock to a consultant for services performed.~~stock. The ~~aggregate~~ fair value of the ~~common stock~~shares was ~~$120,000~~$29,537, based on the closing price of the Company’s common stock on the date of grant.

~~On various dates between January 4, 2020 and May 31, 2020,~~In addition, the Company ~~awarded an aggregate~~engaged COR Prominence, LLC to provide investor relation services to the Company, in consideration for the payment of ~~2,006,000~~$7,500 per month in cash, and $5,000 per month with shares of common stock valued at 125% of the closing price of the common stock of the Company on the date of issuance. On June 1, 2021, the Company issued another 112,528 shares of common stock to ~~ten employees and consultants for services provided.~~COR Prominence, LLC. The ~~aggregate~~ fair value of the ~~common stock~~shares was ~~$1,318,000~~$18,758, based on the closing price of the Company’s common stock on the date of grant.

~~Common Stock Issued for Services, Officers and Directors~~

On June 3, 2020, the Company awarded 500,000 shares of common stock to the Company’s Chief Executive Officer, Isiah L. Thomas III, as a signing bonus. The aggregate fair value of the common stock was $275,000 based on the closing price of the Company’s common stock on the date of grant.

On June 3, 2020, the Company awarded 2,000,000 shares of common stock to the Company’s former Chief Executive Officer, Craig Ellins, pursuant to a Separation Agreement. The aggregate fair value of the common stock was $1,100,000 based on the closing price of the Company’s common stock on the date of grant.

On May 31, 2020, the Company awarded 350,000 shares of common stock to the Company’s Chairman of the Board, Dr. Ken Perego, for services provided. The aggregate fair value of the common stock was $196,000 based on the closing price of the Company’s common stock on the date of grant.

Amortization of Stock-Based Compensation

A total of ~~$1,875,623~~$654,579 of stock-based compensation expense was recognized from the amortization of options to purchase common stock over their vesting period during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Note 1614 – Common Stock Options

Stock Incentive Plan

On February 12, 2020, the Company’s stockholders approved our 2019 Stock Incentive Plan (the “2019 Plan”), which had been adopted by the Company’s Board of Directors (the “Board”) as of December 10, 2019. The 2019 Plan provides for the issuance of up to 10,000,000 shares of common stock to the Company and its subsidiaries’ employees, officers, directors, consultants and advisors, stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other performance stock awards. Options granted under the 2019 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. Unless sooner terminated in accordance with its terms, the Stock Plan will terminate on December 10, 2029.

~~ONE WORLD PHARMA, INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Common Stock Options Issued for Services

On ~~July 1, 2020,~~May 25, 2021, the Company awarded options to purchase ~~125,000~~1,000,000 shares of the ~~Company’s Common Stock~~common atock under the 2019 Plan at an exercise price equal to ~~$0.38~~$0.1782 per share, ~~to a consultant. The options were issued outside of the Company’s 2019 Plan and are~~ exercisable over a ten year ~~period.~~period to the Company’s CFO and COO, Vahé Gabriel. The options ~~will~~vested immediately as to 500,000 shares, and vest as to the remaining 500,000 shares quarterly in 250,000 increments over ~~six months.~~the following two quarters. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~303%~~183% and a call option value of ~~$0.3798,~~$0.1719, was ~~$47,476.~~$171,949. The options are being expensed over the vesting period, resulting in ~~$23,738~~$85,975 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$23,738~~$85,974 of unamortized expenses are expected to be expensed over the vesting period.

On ~~July 1, 2020,~~May 25, 2021, the Company awarded options to purchase ~~1,000,000~~an aggregate 425,000 shares of common stock under the ~~Company’s Common Stock~~2019 Plan at an exercise price equal to ~~$0.38~~$0.17 per share, ~~to a consultant. The options were issued outside of the Company’s 2019 Plan and are~~ exercisable over a ten year ~~period.~~period to three advisory board members. The options ~~will~~ vest in equal quarterly installments over ~~three~~two years. The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~303%~~183% and a call option value of ~~$0.38,~~$0.1653, was ~~$379,958.~~$70,269. The options are being expensed over the vesting period, resulting in ~~$31,663~~$5,856 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$348,295~~$64,413 of unamortized expenses are expected to be expensed over the vesting period.

On ~~July~~January 1, ~~2020,~~2021, the Company awarded options to purchase ~~125,000~~5,500,000 shares of ~~the Company’s Common Stock~~common stock at an exercise price equal to $0.38 per share to a consultant for Advisory Board services. The options were issued outside of the Company’s 2019 Plan and are exercisable over a ten year period. The options will vest quarterly over one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 303% and a call option value of $0.3799, was $47,482. The options are being expensed over the vesting period, resulting in $11,871 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $35,611 of unamortized expenses are expected to be expensed over the vesting period.

~~On June 3, 2020, the Company awarded options to purchase 5,500,000 shares of the Company’s Common Stock at an exercise price equal to $0.55~~$0.13 per share to Isiah L. Thomas III, the Company’s Chief Executive Officer and Vice Chairman. The options were issued outside of the ~~Company’s~~ 2019 Plan and are exercisable over a ten year period. The options ~~vest as to 1,500,000 shares~~vested immediately as to ~~1,000,000~~2,750,000 shares, ~~120 days following the issuance of the option (the “Second Vesting Date”),~~ and vest as to the remaining ~~3,000,000~~2,750,000 shares ~~vesting~~ quarterly in 250,000 increments over the ~~three years~~ following ~~the Second Vesting Date.~~eleven quarters. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~301%~~192% and a call option value of ~~$0.5499,~~$0.1174, was ~~$3,024,689.~~$645,624. The options are being expensed over the vesting period, resulting in ~~$1,040,366~~$352,159 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$1,984,323~~$293,465 of unamortized expenses are expected to be expensed over the vesting period.

ONE WORLD PHARMA, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On ~~May 31, 2020,~~January 1, 2021, the Company awarded options to purchase 350,000 shares of common stock under the ~~Company’s Common Stock~~2019 Plan at an exercise price equal to ~~$0.56~~$0.13 per share, exercisable over a ten year period to the Company’s Chairman of the Board, Dr. Ken Perego. The options vest ~~as to 116,667 shares immediately, with the remaining 233,333 shares vesting~~in equal quarterly installments over ~~the following two years, beginning October 1, 2020.~~one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~302%~~192% and a call option value of ~~$0.5599,~~$0.1170, was ~~$195,959.~~$40,943. The options are being expensed over the vesting period, resulting in ~~$86,263~~$20,471 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$109,696~~$20,472 of unamortized expenses are expected to be expensed over the vesting period.

On ~~May 31, 2020,~~January 1, 2021, the Company awarded options to purchase ~~350,000~~ 475,000 shares of common stock under the ~~Company’s Common Stock~~2019 Plan at an exercise price equal to ~~$0.56~~ $0.13 per share, exercisable over a ten year period to Bruce Raben, the Company’s former Interim Chief Financial Officer and a Director of the Company. The options vest ~~as to 116,667 shares immediately, with the remaining 233,333 shares vesting~~in equal quarterly installments over ~~the following two years, beginning October 1, 2020.~~one year. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~302%~~ 192% and a call option value of ~~$0.5599,~~$0.1170, was ~~$195,959.~~$55,565. The options are being expensed over the vesting period, resulting in ~~$86,263~~ $27,783 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$109,696~~ $27,782 of unamortized expenses are expected to be expensed over the vesting period.

On ~~May 31, 2020,~~January 1, 2021, the Company awarded options to purchase an aggregate ~~2,000,000~~1,842,000 shares of common stock under the ~~Company’s Common Stock~~2019 Plan at an exercise price equal to ~~$0.56~~$0.13 per share, exercisable over a ten year period to ~~eight~~seven consultants and employees. The options vest ~~as to 666,667 shares immediately, with the remaining 1,333,333 shares vesting~~in equal quarterly installments over ~~the following three years, beginning October 1, 2020.~~one year. The aggregate estimated value using the Black-Scholes Pricing Model, based on a volatility rate of ~~302%~~192% and a call option value of ~~$0.5599,~~$0.1170, was ~~$1,119,873.~~$215,475. The options are being expensed over the vesting period, resulting in ~~$454,181~~$107,737 of stock-based compensation expense during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. As of ~~September~~June 30, ~~2020,~~2021, a total of ~~$665,692~~$107,738 of unamortized expenses are expected to be expensed over the vesting period.

~~ONE WORLD PHARMA, INC.~~The Company also recognized a total of $54,598, and $1,549,199 of compensation expense during the six months ended June 30, 2021 and 2020, respectively, related to common stock options issued in the prior year to Officers, Directors, and Employees that are being amortized over the implied service term, or vesting period, of the options. The remaining unamortized balance of these options is $49,092 as of June 30, 2021.

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Note 1715 – 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 ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, and the year ended December 31, ~~2019,~~2020, 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 ~~September~~June 30, ~~2020,~~2021, the Company had approximately ~~$5,748,000~~$6,623,900 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

Note 1816 – Subsequent Events

~~Debt Financing~~Common Stock Options Exercised

On ~~October 28, 2020, the Company received an advance~~July 26, 2021, a total of ~~$50,000 from the Company’s Chief Executive Officer, Isiah L Thomas, III, pursuant~~60,000 shares of common stock were issued upon exercise on a cashless basis of options to ~~an unsecured promissory note due on demand that carried~~purchase 125,000 shares of common stock at a ~~6% interest rate.~~price $0.13 per share.

Preferred Stock Sales

On ~~October 28, 2020,~~July 12, 2021, the Company received proceeds of ~~$50,000~~$499,995 from ISIAH International pursuant to the sale of ~~5,000 units to SWC Medical LLC. Each unit consisted of one share~~33,333 shares of Series AB Preferred Stock ~~and five-year warrants to purchase 50 shares of common stock~~ at ~~an exercise~~a price of ~~$0.25~~$15.00 per ~~share. The proceeds received were allocated between~~share pursuant to the ~~preferred stock and warrants on a relative fair value basis.~~February 7, 2021 Purchase Agreement.

~~Common Stock Issued on Subscriptions Payable~~Equipment Purchase

~~On November 19, 2020,~~In August 2021, the Company ~~issued 250,000 shares~~initiated the construction of ~~common stock awarded on September 21, 2020~~a vertically integrated extraction facility designed to process the cannabis flower, and paid a ~~consultant for services performed. Prior to the issuance, the fair value of such shares was reflected~~$750,000 down payment on the ~~Company’s balance sheet as subscriptions payable.~~$1,542,103 extraction facility.

1918

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

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, ~~2019~~2020 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. 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 the Form 10-K 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

Through our wholly-owned subsidiary, One World Pharma S.A.S, a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali)~~, we~~. We plan to ~~produce~~be a producer of raw cannabis and hemp plant ingredients for both medical and industrial 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 ~~few~~only companies in Colombia to receive all four licenses, including seed use, cultivation of non-psychoactive cannabis, cultivation of psychoactive cannabis, and manufacturing allowing for extraction and ~~export licenses from the Colombian government.~~export. Currently, we own approximately 30 acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis. We ~~planted our first crop of cannabis in 2018, which we~~ began harvesting cannabis in the first quarter of 2019 for the purpose of further research and development activities, ~~and~~ quality control testing and extraction. We have been generating revenue from the sale of ~~the cannabis we have produced. We generated initial sales of fully registered non-psychoactive~~our seeds ~~during~~since the second quarter of 2020.

On 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 resigned from all of his positions with In August 2021, the Company ~~and its subsidiaries, including his positions as Chief Executive Officer and Chairman~~initiated the construction of a vertically integrated extraction facility designed to process the cannabis flower, making the Company one of the ~~Board of~~first companies in Colombia to, both, hold licenses and the ~~Company;~~capability to extract high-quality CBD and ~~appointed Dr. Kenneth Perego, II to serve as the Executive Chairman of the Company’s Board of Directors.~~THC oils.

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.

Results of Operations for the Three Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

The following table summarizes selected items from the statement of operations for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

	Three Months Ended June 30,						Increase /
	2021			2020			(Decrease)
Revenues	$	42,323		$	60,786		$	(18,463	)
Cost of goods sold		173			16,751			(16,578	)
Gross profit		42,150			44,035			(1,885	)

Operating expenses:
General and administrative		368,146			2,214,022			(1,845,876	)
Professional fees		306,194			2,204,501			(1,898,307	)
Depreciation expense		13,114			8,298			4,816
Total operating expenses:		687,454			4,426,821			(3,739,367	)

Operating loss		(645,304	)		(4,382,786	)		(3,737,482	)

Total other income (expense)		(107,890	)		(10,545	)		97,345

Net loss	$	(753,194	)	$	(4,393,331	)	$	(3,640,137	)

Three Months Ended September 30, Increase /
2020 2019 (Decrease)
Revenues $ 42,598 $ - $ 42,598
Cost of goods sold 7,682 - 7,682
Gross profit 34,916 - 34,916

Operating expenses:
General and administrative 803,342 589,027 214,315
Professional fees 356,486 986,523 (630,037 )
Total operating expenses: 1,159,828 1,575,550 (415,722 )

Operating loss (1,124,912 ) (1,575,550 ) (450,638 )

Total other income (expense) (7,517 ) (221,432 ) (213,915 )

Net loss $ (1,132,429 ) $ (1,796,982 ) $ (664,553 )

Revenues

~~Revenues~~

We began to generate revenues from the sale of seeds in the ~~current~~second quarter of the prior year. Revenues ~~were $42,598 for~~during the three months ended ~~September~~June 30, ~~2020.~~2021 were $42,323, compared to $60,786 during the three months ended June 30, 2020, a decrease of $18,463, or 30%.

Cost of Goods Sold

Cost of goods sold for the three months ended ~~September~~June 30, 2021 were $173, compared to $16,751 for the three months ended June 30, 2020, ~~were $7,682.~~a decrease of $16,578, or 99%. Cost of goods sold consists primarily of labor, agricultural raw materials, depreciation and overhead.

General and Administrative Expenses

General and administrative expenses for the three months ended ~~September~~June 30, ~~2020~~2021 were ~~$803,342,~~$368,146, compared to ~~$589,027~~$2,214,022 during the three months ended ~~September~~June 30, ~~2019, an increase~~2020, a decrease of ~~$214,315,~~$1,845,876, or ~~36%~~83%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs. General and administrative expenses decreased primarily due to ~~increased~~decreased stock-based compensation related to the amortization of stock options and shares issued to officers ~~as offset to a lesser degree by staffing reductions related to~~that were incurred in the ~~worldwide economic disruption from COVID-19~~prior year, and not awarded in the current ~~period.~~year at similar levels. General and administrative expenses included non-cash, stock-based compensation of ~~$441,567~~$115,322 and ~~$74,758~~$1,973,799 during the three months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Professional Fees

Professional fees for the three months ended ~~September~~June 30, ~~2020~~2021 were ~~$356,486,~~$306,194, compared to ~~$986,523~~$2,204,501 during the three months ended ~~September~~June 30, ~~2019,~~2020, a decrease of ~~$630,037,~~$1,898,307, or ~~64%~~86%. Professional fees included non-cash, stock-based compensation of ~~$254,732~~$218,963 and ~~$515,512~~$2,021,122 during the three months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Professional fees decreased primarily due to decreased stock-based compensation ~~and investor relations~~ efforts during the current period.

Depreciation Expense

Depreciation expense for the three months ended June 30, 2021 was $13,114, compared to $8,298 during the three months ended June 30, 2020, an increase of $4,816, or 58%. Depreciation expense increased as we placed more equipment in service in the past year.

Other Income (Expense)

Other expenses, on a net basis, for the three months ended ~~September~~June 30, ~~2020~~2021 were ~~$7,517,~~$107,890, compared to other expenses, on a net basis, of ~~$221,432~~$10,545 during the three months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase in net expenses of ~~$213,915,~~$97,345, or ~~97%~~923%. Other expenses consisted of ~~$7,517~~$116,634 of interest expense, including $96,106 of stock-based finance costs on the amortization of debt discounts, as offset by $7,500 of sublease income on sublet office space and $1,244 of interest income, for the three months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~$225,053~~$10,509 of interest expense ~~as offset by $3,621 of interest income,~~ during the three months ended ~~September~~June 30, ~~2019.~~2020.

Net Loss

Net loss for the three months ended ~~September~~June 30, ~~2020~~2021 was ~~$1,132,429,~~$753,194, or ~~$0.02~~$0.01 per share, compared to ~~$1,796,982,~~$4,393,331, or ~~$0.04~~$0.09 per share, during the three months ended ~~September~~June 30, ~~2019,~~2020, a decrease of ~~$664,553,~~$3,640,137, or ~~37%~~83%. The net loss decreased primarily due to decreased ~~professional fees and interest expense~~stock-based compensation during the current ~~period, along with reductions in operating costs related to the worldwide economic disruption from COVID-19 in the current~~ period.

2120

Results of Operations for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

The following table summarizes selected items from the statement of operations for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019.~~2020.

	Six Months Ended June 30,						Increase /
	2021			2020			(Decrease)
Revenues	$	65,605		$	60,786		$	4,819
Cost of goods sold		7,752			16,751			(8,999	)
Gross profit		57,853			44,035			13,818

Operating expenses:
General and administrative		1,108,572			2,499,163			(1,390,591	)
Professional fees		525,657			3,090,855			(2,565,198	)
Depreciation expense		22,998			14,210			8,788
Total operating expenses:		1,657,227			5,604,228			(3,947,001	)

Operating loss		(1,599,374	)		(5,560,193	)		(3,960,819	)

Total other income (expense)		(194,037	)		(21,054	)		172,983

Net loss	$	(1,793,411	)	$	(5,581,247	)	$	(3787,836	)

Nine Months Ended September 30, Increase /
2020 2019 (Decrease)
Revenues $ 103,384 $ - $ 103,384
Cost of goods sold 24,433 - 24,433
Gross profit 78,951 - 78,951

Operating expenses:
General and administrative 3,316,715 1,633,814 1,682,901
Professional fees 3,447,341 2,430,945 1,016,396
Total operating expenses: 6,764,056 4,064,759 2,699,297

Operating loss (6,685,105 ) (4,064,759 ) 2,620,346

Total other income (expense) (28,571 ) (380,967 ) (352,396 )

Net loss $ (6,713,676 ) $ (4,445,726 ) $ 2,267,950

Revenues

~~Revenues~~

We began to generate revenues from the sale of seeds in the ~~current~~second quarter of the prior year. Revenues ~~were $103,384 for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021 were $65,605, compared to $60,786 during the six months ended June 30, 2020, an increase of $4,819, or 8%.

Cost of Goods Sold

Cost of goods sold for the ~~nine~~six months ended ~~September~~June 30, 2021 were $7,752, compared to $16,751 for the six months ended June 30, 2020, ~~were $24,433.~~a decrease of $8,999, or 54%. Cost of goods sold consists primarily of labor, agricultural raw materials, depreciation and overhead.

General and Administrative Expenses

General and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, 2021 were $1,108,572, compared to $2,499,163 during the six months ended June 30, 2020, ~~were $3,316,715, compared to $1,633,814 during the nine months ended September 30, 2019, an increase~~a decrease of ~~$1,682,901,~~$1,390,591, or ~~103%~~56%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs. General and administrative expenses ~~increased~~decreased primarily due to ~~increased~~decreased stock-based compensation related to the amortization of stock options and shares issued to officers ~~as offset to a lesser degree by staffing reductions related to~~that were incurred in the ~~worldwide economic disruption from COVID-19~~prior year, and not awarded in the current ~~period.~~year at similar levels. General and administrative expenses included non-cash, stock-based compensation of ~~$2,415,366~~$438,134 and ~~$179,581~~$1,973,799 during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Professional Fees

Professional fees for the ~~nine~~six months ended ~~September~~June 30, 2021 were $525,657, compared to $3,090,855 during the six months ended June 30, 2020, ~~were $3,447,341, compared to $2,430,945 during the nine months ended September 30, 2019, an increase~~a decrease of ~~$1,016,396,~~$2,565,198, or ~~42%~~83%. Professional fees included non-cash, stock-based compensation of ~~$2,839,132~~$324,241 and ~~$971,647~~$2,584,400 during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Professional fees ~~increased~~decreased primarily due to ~~increased~~decreased stock-based compensation efforts during the current period.

Depreciation Expense

Depreciation expense for the six months ended June 30, 2021 was $22,998, compared to $14,210 during the six months ended June 30, 2020, an increase of $8,788, or 62%. Depreciation expense increased as we placed more equipment in service in the past year.

Other Income (Expense)

Other expenses, on a net basis, for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 were ~~$28,571,~~$194,037, compared to other expenses, on a net basis, of ~~$380,967~~$21,054 during the ~~nine~~six months ended ~~September~~June 30, ~~2019, a decrease~~2020, an increase in net expenses of ~~$352,396,~~$172,983, or ~~92%~~822%. Other expenses consisted of ~~$28,571~~$210,095 of interest expense, including $170,033 of stock-based finance costs on the amortization of debt discounts, as offset by $14,500 of sublease income on sublet office space and $1,558 of interest income, for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to ~~a $4,087 loss on disposal of fixed assets, and $380,749~~$21,054 of interest expense ~~as offset by $3,869 of interest income,~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

Net Loss

Net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$6,713,676,~~$1,793,411, or ~~$0.14~~$0.03 per share, compared to ~~$4,445,726,~~$5,581,247, or ~~$0.11~~$0.12 per share, during the ~~nine~~six months ended ~~September~~June 30, ~~2019, an increase~~2020, a decrease of ~~$2,267,950,~~$3,787,836, or ~~51%~~68%. The net loss ~~increased~~decreased primarily due to ~~increased~~decreased stock-based compensation during the current ~~period, as partially offset by reductions in operating costs related to the worldwide economic disruption from COVID-19 in the current~~ period.

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 ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~2019:~~2020:

	2020			2019			2021			2020
Operating Activities	$	(1,155,282	)	$	(3,115,487	)	$	(1,292,875	)	$	(761,224	)
Investing Activities		(37,793	)		(224,597	)		(223,922	)		(2,213	)
Financing Activities		960,274			4,190,961			3,305,193			611,274
Effect of Exchange Rate Changes on Cash		(28,700	)		(21,121	)		(5,419	)		(28,203	)
Net Increase (Decrease) in Cash	$	(261,501	)	$	829,756		$	1,782,977		$	(180,366	)

Net Cash Used in Operating Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, net cash used in operating activities was ~~$1,155,282,~~$1,292,875, compared to net cash used in operating activities of ~~$3,115,487~~$761,224 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The cash used in operating activities was primarily attributable to our net loss.

Net Cash Used in Investing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, net cash used in investing activities was ~~$37,793,~~$223,922, compared to net cash used in investing activities of ~~$224,597~~$2,213 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The cash used in investing activities consisted of purchases of fixed assets.

Net Cash Provided by Financing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, net cash provided by financing activities was ~~$960,274,~~$3,305,193, compared to net cash provided by financing activities of ~~$4,190,961~~$611,274 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The current period consisted of ~~$261,274~~$268,250 of proceeds received on debt financing and $3,077,510 received on the sale of preferred and common stock, less debt repayments of ~~$779,332, and $1,478,332 of proceeds from~~$40,567, compared to $400,000 received on the sale of preferred stock ~~compared to $500,000~~and $211,274 of net proceeds received on debt financing ~~debt repayments of $314,141, and $4,005,102 of equity financing received~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

Ability to Continue as a Going Concern

As of ~~September~~June 30, ~~2020,~~2021, our balance of cash on hand was ~~$20,879,~~$1,811,897, and we had ~~negative~~ working capital of ~~$592,394~~$587,583 and an accumulated deficit of ~~$14,895,712.~~$17,925,737. We ~~currently do~~are too early in our development stage to project revenue with a necessary level of certainty; therefore, we may not have sufficient funds to sustain our operations for the next twelve months and we ~~will~~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 new customers~~The Company has commenced sales and continues to ~~generate revenues.~~ develop its operations, and raised an additional $499,995 from sale of series B preferred stock in July, as noted in our subsequent events footnote.

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 financial statementsevent sales do not ~~include any adjustments that might be necessary if~~materialize at the ~~Company is unable~~expected rates, management would seek additional financing or would attempt to ~~continue as a going concern.~~conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these ~~objectives, becoming profitable or continuing our business~~objectives; therefore, without ~~either~~sufficient financing it would be unlikely for the Company to continue as a ~~temporary interruption or a permanent cessation. Additional financing may result in substantial dilution to existing stockholders.~~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.

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 recognizes revenue in accordance with ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes 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.

~~There was no impact~~

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the ~~Company’s financial statements from ASC 606 for the nine months ended September 30, 2020, or the year ended December 31, 2019. Inventory consisted~~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 ~~$93,560 of raw materials, $42,622 of work in progress and $90,022 of finished goods at September 30, 2020, and $24,682 of raw materials at September 30, 2019.~~cannabis flower grown in-house, along with produced extracts.

Stock-Based Compensation

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

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 evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2020.~~2021. 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 ~~September~~June 30, ~~2020,~~2021, our Chief Executive Officer and Chief Financial Officer 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.

2524

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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.

ITEM 1A. RISK FACTORS

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~~six month period ended ~~September~~June 30, ~~2020~~2021 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:

Preferred Stock Sales

On various dates between ~~July 1, 2020~~April 5, 2021 and ~~September~~June 14, ~~2020,~~2021, the Company received total proceeds of ~~$1,078,330~~$1,500,000 from the sale of ~~107,833 units, consisting in the aggregate of 107,833~~100,000 shares of Series AB Preferred Stock ~~and five-year warrants~~ to ~~purchase 5,391,650 shares of common stock at an exercise price of $0.25 per share to fourteen accredited investors.~~ISIAH International. Each share of Preferred Stock is currently convertible into 50100 shares of the Company’s common stock.

In addition to the shares sold to ISIAH International, the Company received total proceeds of $50,010 on April 22, 2021 from the sale of an additional 3,334 shares of Series B Preferred Stock at a price of $15.00 per share to trusts whose beneficiaries are adult children of Isiah L. Thomas III.

Common Stock Issued on Subscriptions Payable

On April 7, 2021, the Company issued 1,000,000 shares of common stock, restricted in accordance with Rule 144, pursuant to the conversion of 10,000 shares of series A convertible preferred stock on March 24, 2021.

Common Stock Issued Pursuant to the Conversion of Series A Convertible Preferred Stock

On April 6, 2021, the Company issued 3,000,000 shares of common stock, restricted in accordance with Rule 144, pursuant to the conversion of 30,000 shares of series A convertible preferred stock.

Common Stock Issued for Services

On ~~July~~June 1, ~~2020,~~2021, the Company ~~awarded an aggregate of 875,000~~issued 112,528 shares of common stock, restricted in accordance with Rule 144, to ~~four employees and consultants~~COR Prominence, LLC as payment in lieu of cash for ~~services provided.~~services.

On May 25, 2021, the Company issued a total of 300,000 shares of common stock, restricted in accordance with Rule 144, to two individuals as payment in lieu of cash for services.

On May 25, 2021, the Company awarded a total of 50,000 shares of common stock, restricted in accordance with Rule 144, to two individuals as payment in lieu of cash for services.

On May 12, 2021, the Company issued 118,150 shares of common stock, restricted in accordance with Rule 144, to COR Prominence, LLC as payment in lieu of cash for services.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

2625

ITEM 6. Exhibits

Exhibit		Description
2.1		Agreement and Plan of Merger dated February 21, 2019, among the Registrant, OWP Merger Subsidiary Inc. and OWP Ventures, Inc. (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on February 25, 2019)
3.1		Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 24, 2014)
3.2		Certificate of Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 8, 2019)
3.3		Certificate of Amendment to Articles of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 25, 2020)
3.4		Certificate of Designation of Series A Preferred Stock of the Registrant dated June 1, 2020 (incorporated by reference to Exhibit 3.4 of the Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 26, 2020)
3.5		Certificate of Designation of Series B Preferred Stock of the Registrant dated February 2, 2021 (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission on February 8, 2021)
3.6		Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 of the Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 24, 2014)
4.1		Description of Securities (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form 10-K filed with the Securities and Exchange Commission on ~~May 29, 2020)~~April 15, 2021)
~~10.1~~4.2		Promissory Note of One World Pharma, Inc. in the principal amount of $290,000 issued to AJB Capital Investments LLC, dated January 20, 2021 (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on January 25, 2021)
10.1		Promissory Note dated May 4, 2020, made by OWP Ventures, Inc. in favor of Customers Bank (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on May 8, 2020)
10.2		~~Separation~~Securities Purchase Agreement, dated February 7, 2021 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and ~~Release~~Exchange Commission by One World Pharma, Inc. on February 8, 2021)
10.3		Securities Purchase Agreement, dated January 20, 2021, between One World Pharma, Inc. and ~~Craig Ellins,~~AJB Capital Investments LLC (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on January 25, 2021)
10.4		Security Agreement, dated ~~June 3, 2020~~January 20, 2021, between One World Pharma, Inc. and AJB Capital Investments LLC (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on January 25, 2021)
10.5		Letter Agreement, dated May 28, 2021, between One World Pharma, Inc. and Vahé Gabriel (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on June ~~9, 2020)~~3, 2021)
~~10.3~~31.1*		Letter Agreement between One World Pharma, Inc. and Isiah L. Thomas III, dated June 3, 2020 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the Securities and Exchange Commission by One World Pharma, Inc. on June 9, 2020)
31.1*		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
31.2*		Certification of ~~Interim~~ Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a)
32.1*		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of ~~Interim~~ Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Labels Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

* Filed herewith.

2726

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: ~~November 23, 2020~~August 16, 2021

		One World Pharma, Inc.

		/s/ Isiah L. Thomas III
		Isiah L. Thomas III
		Chief Executive Officer
		(Principal Executive Officer)

		/s/ ~~Bruce Raben~~Vahé Gabriel
	~~Bruce Raben~~	Vahé Gabriel
	~~Interim~~	Chief Financial Officer
		(Principal Financial Officer)

2827

	For the Three Months Ended September 30, 2019
	Series A															Accumulated
	Convertible								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, June 30, 2019		-	$	-		39,922,899	$	39,923	$	4,503,966		$	-	$	-	$	138,911		$	(4,608,726	)	$	-	$	74,074

Common stock sold for cash		-		-		4,509,000		4,509		2,249,991			-		-		-			-			-		2,254,500

Common stock payable for services		-		-		-		-		-			-		160,000		-			-			-		160,000

Cashless exercise of common stock options		-		-		51,040		51		(51	)		-		-		-			-			-		-

Amortization of common stock options issued for services		-		-		-		-		430,270			-		-		-			-			-		430,270

Beneficial conversion feature on convertible note		-		-		-		-		207,332			-		-		-			-			-		207,332

Loss on foreign currency translation		-		-		-		-		-			-		-		(164,122	)		-			-		(164,122	)

Net loss for the three months ended September 30, 2019		-		-		-		-		-			-		-		-			(1,796,982	)		-		(1,796,982	)

Balance, September 30, 2019		-	$	-		44,482,939	$	44,483	$	7,391,508		$	-	$	160,000	$	(25,211	)	$	(6,405,708	)	$	-	$	1,165,072

	Three Months Ended September 30,						Increase /
	2020			2019			(Decrease)
Revenues	$	42,598		$	-		$	42,598
Cost of goods sold		7,682			-			7,682
Gross profit		34,916			-			34,916

Operating expenses:
General and administrative		803,342			589,027			214,315
Professional fees		356,486			986,523			(630,037	)
Total operating expenses:		1,159,828			1,575,550			(415,722	)

Operating loss		(1,124,912	)		(1,575,550	)		(450,638	)

Total other income (expense)		(7,517	)		(221,432	)		(213,915	)

Net loss	$	(1,132,429	)	$	(1,796,982	)	$	(664,553	)

	Nine Months Ended September 30,						Increase /
	2020			2019			(Decrease)
Revenues	$	103,384		$	-		$	103,384
Cost of goods sold		24,433			-			24,433
Gross profit		78,951			-			78,951

Operating expenses:
General and administrative		3,316,715			1,633,814			1,682,901
Professional fees		3,447,341			2,430,945			1,016,396
Total operating expenses:		6,764,056			4,064,759			2,699,297

Operating loss		(6,685,105	)		(4,064,759	)		2,620,346

Total other income (expense)		(28,571	)		(380,967	)		(352,396	)

Net loss	$	(6,713,676	)	$	(4,445,726	)	$	2,267,950