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

For the quarterly period ended September 30, 2021

☐

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

For the transition period from ____________ to ____________

Commission file number: 333-200529

ONE WORLD PHARMA, INC.

(Exact name of registrant as specified in its charter)

Nevada		61-1744826
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3471 W. Oquendo Road, Suite 301, Las Vegas, NV		89118
(Address of principal executive offices)		(zip code)

(800) 605-3210

(Registrant’s telephone number, including area code)

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

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 ☐

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 ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

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 12, 2021 was 61,925,983.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
	Condensed Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	2
	Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (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	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24
ITEM 4.	CONTROLS AND PROCEDURES	24
PART II - OTHER INFORMATION
ITEM 1.	Legal Proceedings	25
ITEM 1A.	RISK FACTORS	25
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	25
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	25
ITEM 4.	MINE SAFETY DISCLOSURES	25
ITEM 5.	OTHER INFORMATION	25
ITEM 6.	EXHIBITS	26
	SIGNATURES	27

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ONE WORLD PHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

Current assets:
Cash	$	698,667		$	28,920
Accounts receivable		28,923			5,636
Inventory		526,680			267,152
Other current assets		220,720			118,911
Total current assets		1,474,990			420,619

Right-of-use assets		160,792			195,029
Security deposits		1,224,561			65,114
Fixed assets, net		947,543			726,820

Total Assets	$	3,807,886		$	1,407,582

Liabilities and Stockholders’ Equity (Deficit)

Current liabilities:
Accounts payable	$	463,378		$	734,554
Accrued expenses		453,155			550,535
Dividends payable		86,482			37,236
Current portion of lease liabilities		48,932			45,271
Notes payable, net of discounts of $558,696 at September 30, 2021		360,578			334,841
Total current liabilities		1,412,525			1,702,437

Long-term lease liability		119,140			156,254

Total Liabilities		1,531,665			1,858,691

Series A convertible preferred stock, $0.001 par value, 500,000 shares authorized; 95,233 and 150,233 shares issued and outstanding at September 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; 238,502 and -0- shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		3,577,530			-
Convertible preferred stock value

Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value, 9,200,000 shares authorized; no shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		-			-
Common stock, $0.001 par value, 300,000,000 shares authorized; 61,675,983 and 53,085,305 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		61,676			53,085
Additional paid-in capital		16,191,828			14,103,672
Subscriptions payable, consisting of 1,250,000 and 750,000 at September 30, 2021 and December 31, 2020, respectively		150,062			75,000
Accumulated other comprehensive loss		(63,789	)		(52,870	)
Accumulated (deficit)		(18,593,416	)		(16,132,326	)
Total Stockholders’ Equity (Deficit)		(2,253,639	)		(1,953,439	)

Total Liabilities and Stockholders’ Equity (Deficit)	$	3,807,886		$	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
	September 30,						September 30,
	2021			2020			2021			2020

Revenues	$	7,845		$	42,598		$	73,450		$	103,384
Cost of goods sold		7,058			7,682			14,810			24,433
Gross profit		787			34,916			58,640			78,951

Operating expenses:
General and administrative		358,382			793,846			1,466,954			3,293,009
Professional fees		153,484			364,111			679,141			3,454,966
Depreciation expense		6,939			9,496			29,937			23,706
Total operating expenses		518,805			1,167,453			2,176,032			6,771,681

Operating loss		(518,018	)		(1,132,537	)		(2,117,392	)		(6,692,730	)

Other income (expense):
Sublease income		5,000			-			19,500			-
Interest income		765			-			2,323			-
Loss on disposal of fixed assets		(17,563	)		-			(17,563	)		-
Interest expense		(137,863	)		(7,517	)		(347,958	)		(28,571	)
Total other expense		(149,661	)		(7,517	)		(343,698	)		(28,571	)

Net loss	$	(667,679	)	$	(1,140,054	)	$	(2,461,090	)	$	(6,721,301	)

Other comprehensive loss:
Loss on foreign currency translation	$	(5,500	)	$	(497	)	$	(10,919	)	$	(28,700	)

Net other comprehensive loss	$	(673,179	)	$	(1,140,551	)	$	(2,472,009	)	$	(6,750,001	)
Series A convertible preferred stock declared ($0.60 per share)		(14,403	)		(14,870	)		(49,246	)		(14,870	)
Net loss attributable to common shareholders	$	(687,582	)	$	(1,155,421	)	$	(2,521,255	)	$	(6,764,871	)

Weighted average number of common shares outstanding - basic and fully diluted		61,662,287			48,588,395			59,712,489			47,982,936

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

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

See accompanying notes to financial statements.

ONE WORLD PHARMA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)


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

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
Adjustment of common stock issued for services
Adjustment of common stock issued for services, shares
Commitment shares issued pursuant to promissory note
Commitment shares issued pursuant to promissory note, shares
Exercise of cashless options
Exercise of cashless options, shares
Warrants issued as a debt discount
Series A Convertible Preferred Stock units sold for cash		107,833		1,078,330		-		-		-		-		-			-		-			-			-
Common stock sold for cash
Common stock sold for cash, shares
Conversion of series A convertible preferred stock
Conversion of series A convertible preferred stock, shares

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

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

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

Net loss		-		-		-		-		-		-		-			-		-			(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 September 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, 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	)

Series B convertible preferred stock sold for cash to our CEO		-		-		33,333		499,995		-			-			-			-		-			-			-

Adjustment of common stock issued for services		-		-		-		-		(300,000	)		(300	)		(50,700	)		-		-			-			(51,000	)

Commitment shares issued pursuant to promissory note		-		-		-		-		-			-			-			150,062		-			-			150,062

Exercise of cashless options		-		-		-		-		60,000			60			(60	)		-		-			-			-

Warrants issued as a debt discount		-		-		-		-		-			-			358,017			-		-			-			358,017

Amortization of common stock options issued for services		-		-		-		-		-			-			183,376			-		-			-			183,376

Series A convertible preferred stock dividend declared ($0.60 per share)		-		-		-		-		-			-			(14,403	)		-		-			-			(14,403	)

Loss on foreign currency translation		-		-		-		-		-			-			-			-		(5,500	)		-			(5,500	)

Net loss		-		-		-		-		-			-			-			-		-			(667,679	)		(667,679	)

Balance, September 30, 2021		95,233	$	952,330		238,502	$	3,577,530		61,675,983		$	61,676		$	16,191,828		$	150,062	$	(63,789	)	$	(18,593,416	)	$	(2,253,639	)


	For the Nine Months Ended September 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		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

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

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

Net loss		-		-		-		-		-		-		-			-			-			(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 Nine Months Ended September 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	)
Balance		150,233	$	1,502,330		-	$	-		53,085,305	$	53,085	$	14,103,672	$	75,000	$	(52,870	)	$	(16,132,326	)	$	(1,953,439	)